UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 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): September 8, 2016

 

HALCÓN RESOURCES CORPORATION

(Exact name of registrant as specified in its charter)

 

Delaware

 

001-35467

 

20-0700684

(State or other jurisdiction
of incorporation)

 

(Commission File Number)

 

(IRS Employer
Identification No.)

 

1000 Louisiana, Suite 6700, Houston, Texas

 

77002

(Address of principal executive offices)

 

(Zip Code)

 

Registrant’s telephone number, including area code:  (832) 538-0300

 

Not Applicable

(Former name or former address, if changed since last report)

 

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:

 

o                   Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

o                   Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

o                   Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

o                   Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

 



 

Item 1.01 Entry into a Material Definitive Agreement.

 

Exit Credit Agreement

 

On September 9, 2016 (the “ Effective Date ”), upon consummation of the Plan (as defined below), Halcón Resources Corporation (the “ Company ”), entered into a Senior Secured Revolving Credit Agreement (the “ Exit Credit Agreement ”) with JPMorgan Chase Bank, N.A., as administrative agent, and certain other financial institutions party thereto, as lenders. Pursuant to the Exit Credit Agreement, the lenders party thereto have agreed to provide the Company with a $600 million exit senior secured reserve-based revolving credit facility (the “ Exit Facility ” and the loans thereunder, the “ Loans ”). A copy of the Exit Credit Agreement is attached as Exhibit 10.1 to this Current Report on Form 8-K and is incorporated herein by reference.

 

The maturity date of the Exit Facility is the earlier of (i) July 28, 2021 and (ii) the 120th day prior to the February 1, 2020 stated maturity date of the Company’s 2020 Second Lien Notes (as defined in the Exit Credit Agreement), if such notes have not been refinanced, redeemed or repaid in full on or prior to such 120th day.

 

Until such maturity date, the Loans under the Exit Credit Agreement shall bear interest at a rate per annum equal to (i) the alternative base rate plus an applicable margin of 1.75% to 2.75%, based on the borrowing base utilization percentage under the Exit Facility or (ii) adjusted LIBOR plus an applicable margin of 2.75% to 3.75%, based on the borrowing base utilization percentage under the Exit Facility.

 

The Company may elect, at its option, to prepay any borrowing outstanding under the Exit Credit Agreement without premium or penalty (except with respect to any break funding payments which may be payable pursuant to the terms of the Exit Credit Agreement). The Company may be required to make mandatory prepayments of the Loans under the Exit Facility in connection with certain borrowing base deficiencies. Additionally, if the Company has outstanding borrowings or letters of credit or reimbursement obligations in respect of letters of credit and the Consolidated Cash Balance (as defined in the Exit Credit Agreement) exceeds $100 million as of the close of business on the most recently ended business day, the Company may also be required to make mandatory prepayments.

 

Amounts outstanding under the Exit Credit Agreement are guaranteed by certain of the Company’s direct and indirect subsidiaries and secured by a security interest in substantially all of the assets of the Company and such direct and indirect subsidiaries.

 

The Exit Credit Agreement contains certain customary representations and warranties, including organization; powers; authority; enforceability; approvals; no conflicts; financial condition; no material adverse effect; litigation; environmental matters; compliance with laws; no defaults; Investment Company Act; taxes; ERISA; disclosure; no material misstatements; properties and titles; maintenance of properties; gas imbalances; prepayments; marketing of production; swap agreements; use of proceeds; solvency; money laundering; anti-corruption laws and sanctions.

 

The Exit Credit Agreement also contains certain affirmative and negative covenants, including delivery of financial statements; conduct of business; reserve reports; title information; indebtedness; liens; dividends and distributions; investments; sale or discount of receivables; mergers; sale of properties; termination of swap agreements; transactions with affiliates; negative pledges; dividend restrictions; gas imbalances; take-or-pay or other prepayments and swap agreements.

 

The Exit Credit Agreement also contains certain financial covenants, including the maintenance of (i) a Total Net Indebtedness Leverage Ratio (as defined in the Exit Credit Agreement) not to exceed 4.75:1.00 initially, determined as of each four fiscal quarter period and commencing with the fiscal quarter ending September 30, 2016, stepping down to 4.50:1.00 and 4.00:1.00 on September 30, 2017 and March 31, 2019, respectively, and (ii) a Current Ratio (as defined in the Exit Credit Agreement) not to be less than 1.00:1.00, commencing with the fiscal quarter ending December 31, 2016.

 

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The Exit Credit Agreement also contains certain events of default, including non-payment; breaches of representations and warranties; non-compliance with covenants or other agreements; cross-default to material indebtedness; judgments; change of control; and voluntary and involuntary bankruptcy.

 

Registration Rights Agreement

 

On the Effective Date, the Company entered into a registration rights agreement (the “ Registration Rights Agreement ”), pursuant to which the Company agreed to file with the Securities and Exchange Commission (the “ SEC ”) within 30 days following the earlier to occur of (i) the Company filing with the SEC its Annual Report on Form 10-K for the fiscal year ended December 31, 2016 and (ii) the Company meeting the eligibility requirements to file a registration statement on Form S-3, and thereafter to use its commercially reasonable efforts to cause to be declared effective as promptly as practicable, a shelf registration statement for the offer and resale of the common stock of the Company held by certain holders of more than 10% of the Company’s common stock. The Registration Rights Agreement contains other customary terms and conditions, including, without limitation, provisions with respect to blackout periods and indemnification.

 

A copy of the Registration Rights Agreement is attached as Exhibit 10.2 to this Current Report on Form 8-K and is incorporated herein by reference.

 

Warrant Agreement

 

On the Effective Date, the Company entered into a warrant agreement (the “ Warrant Agreement ”) with U.S. Bank National Association (“ U.S. Bank ”), as warrant agent, pursuant to which the Company issued warrants (the “ Warrants ”) to purchase up to 4,736,842 shares of the Company’s common stock (representing 5% of the outstanding common stock), exercisable for a four (4) year period commencing on the Effective Date at an exercise price of $14.04 per share.

 

A copy of the Warrant Agreement is attached as Exhibit 10.3 to this Current Report on Form 8-K and is incorporated herein by reference.

 

Management Incentive Plan

 

The board of directors of the Company has adopted the 2016 Plan (as defined below). The information contained in Item 5.02 of this Current Report on Form 8-K under the sub-heading “Management Incentive Plan” is incorporated herein by reference into this Item 1.01.

 

Item 1.02 Termination of a Material Definitive Agreement

 

In connection with the effectiveness of and pursuant to the terms of the Plan, on the Effective Date, the obligations of the Company and certain of its subsidiaries under the following agreements have been satisfied and discharged:

 

·                   Indenture, dated as of September 10, 2015, by and among the Company, as issuer, each of the guarantors named therein, and Wilmington Savings Funds Society, FSB (as successor to U.S. Bank), as trustee, as amended, modified, or otherwise supplemented from time to time.

 

·                   Indenture, dated as of November 6, 2012, by and among the Company, as issuer, each of the guarantors named therein, and Delaware Trust Company (as successor to U.S. Bank), as trustee, as amended, modified, or otherwise supplemented from time to time.

 

·                   Indenture dated as of August 13, 2013, by and among the Company, as issuer, each of the guarantors named therein, and Delaware Trust Company (as successor to U.S. Bank), as trustee, as amended, modified, or otherwise supplemented from time to time.

 

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·                   Indenture dated as of July 16, 2012, by and among the Company, as issuer, each of the guarantors named therein, Delaware Trust Company (as successor to U.S. Bank), as trustee, as amended, modified, or otherwise supplemented from time to time.

 

·                   Amended and Restated Convertible Promissory Note dated March 9, 2015, between the Company and HALRES LLC.

 

As required by the terms of the Plan and that certain Senior Secured Debtor-in-Possession Revolving Credit Agreement, dated as of August 1, 2016 (the “ DIP Credit Agreement ”), by and among the Company, JPMorgan Chase Bank, N.A., as administrative agent, and the lenders party thereto, on the Effective Date, all obligations outstanding under the DIP Credit Agreement were refunded, refinanced and repaid in full by a conversion or roll-over thereof into the Exit Facility under the Exit Credit Agreement with the loans and letters of credit outstanding under the DIP Credit Agreement deemed made under the Exit Credit Agreement.

 

Item 1.03 Bankruptcy or Receivership

 

As previously disclosed, on July 27, 2016, the Company and certain of its subsidiaries (collectively, the “ Debtors ”) filed voluntary petitions for relief (the cases commenced thereby, the “ Bankruptcy Cases ”) under chapter 11 of title 11 of the United States Code (the “ Bankruptcy Code ”) in the United States Bankruptcy Court for the District of Delaware (the “ Bankruptcy Court ”).  The Bankruptcy Cases were filed in order to effect the Debtors’ previously disclosed pre-packaged plan of reorganization (the “ Plan ”). A copy of the Plan and related Disclosure Statement (the “ Disclosure Statement ”) were furnished as part of the Current Report on Form 8-K filed with the SEC on June 20, 2016.

 

On September 8, 2016, the Bankruptcy Court entered an order (the “ Confirmation Order ”) confirming the Plan. A copy of the Confirmation Order, with a copy of the Plan as confirmed attached thereto, is attached as Exhibit 2.1 to this Current Report on Form 8-K and is incorporated herein by reference. A copy of the press release announcing the confirmation of the Plan is attached as Exhibit 99.1 to this Current Report on Form 8-K.

 

Exhibit 99.1 shall not be deemed to be “filed” for the purposes of Section 18 of the Exchange Act, and will not be incorporated by reference into any registration statement filed under the Securities Act of 1933, as amended (the “ Securities Act ”), unless specifically identified therein as being incorporated therein by reference.

 

The following is a summary of the transactions that occurred pursuant to the Plan. This summary only highlights certain of the substantive provisions of the Plan and is not intended to be a complete description of, or a substitute for a full and complete reading of, the Plan. This summary is qualified in its entirety by reference to the full text of the Plan.

 

Pursuant to the Plan, on the Effective Date, the following occurred:

 

·                                           the Debtors’ financing facility under the DIP Credit Agreement was converted to the Exit Facility;

 

·                                           the Debtors’ Second Lien Notes (as defined in the Plan) (consisting of $700.0 million in aggregate principal amount outstanding of 8.625% senior secured notes due 2020 and $112.8 million in aggregate principal amount outstanding of 12% senior secured notes due 2022) were unimpaired and reinstated;

 

·                                           in full and final satisfaction of their claims, the Third Lien Noteholders (as defined in the Plan) received their pro rata share of 76.5% of the common stock of the Company, together with a cash payment of $33.8 million;

 

·                                           in full and final satisfaction of their claims, the Unsecured Noteholders (as defined in the Plan) received their pro rata share of 15.5% of the common stock of the Company, together with a cash payment of $37.6 million and Warrants to purchase 4% of the common stock of the Company;

 

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·                                           in full and final satisfaction of their claims, the Convertible Noteholder (as defined in the Plan) received 4% of the common stock of the Company, together with a cash payment of $15.0 million and Warrants to purchase 1% of the common stock of the Company;

 

·                                           the Debtors’ general unsecured claims were unimpaired and paid in full in the ordinary course;

 

·                                           in full and final satisfaction of their interests, the Preferred Holders (as defined in the Plan) received their pro rata share of $11.1 million in cash; and

 

·                                           in full and final satisfaction of their interests, the existing common stockholders received their pro rata share of 4% of the common stock of the Company.

 

Each of the foregoing percentages of equity in the Company is subject to dilution from the shares issued or reserved for issuance in connection with the exercise of the Warrants and the 2016 Plan (as defined below).

 

Information regarding the assets and liabilities of the Debtors and the number of shares of common stock of the Company issued and outstanding is contained in the Disclosure Statement. On the Effective Date, there will be 90,000,002 shares of common stock issued and outstanding.

 

Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant

 

On the Effective Date, the Company entered into certain direct financial obligations under the Exit Credit Agreement. The information contained in Item 1.01 of this Current Report on Form 8-K under the sub-heading “Exit Credit Agreement” is incorporated herein by reference into this Item 2.03.

 

Item 3.02 Unregistered Sale of Equity Securities

 

On the Effective Date, all existing shares of old common stock of the Company were cancelled pursuant to the Plan, and the Company issued (i) 3,600,002 shares of common stock to the Company’s existing common stockholders, (ii) 68,850,000 shares of common stock to the Third Lien Noteholders, (iii) 13,950,000 shares of common stock to the Unsecured Noteholders, (iv) 3,600,000 shares of common stock to the Convertible Noteholder, (v) 3,789,474 Warrants to the Unsecured Noteholders, and (vi) 947,368 Warrants to the Convertible Noteholder. Based on the Confirmation Order and the Plan, the issuance of such shares of common stock of the Company and the Warrants (including shares of common stock issuable upon the exercise thereof) are exempt from registration requirements of the Securities Act, in reliance on Section 1145 of the Bankruptcy Code.

 

The information provided in Items 1.01 and 1.03 of this Current Report on Form 8-K is incorporated herein by reference into this Item 3.02.

 

Item 3.03 Material Modification to Rights of Security Holders

 

The information provided in Item 1.03 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 Registrant

 

Upon the effectiveness of the Plan, (i) Ares Management LLC, together with any funds or managed accounts affiliated with, or managed by, Ares Management LLC or an affiliate (“ Ares ”), owns approximately 20% of the common stock of the Company, and (ii) Franklin Advisers, Inc., as investment manager on behalf of certain funds

 

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and accounts (“ Franklin ”), owns approximately 38% of the common stock of the Company. Pursuant to the Plan, Ares and Franklin each designated three (3) of the new members of the board of directors of the Company.

 

The information provided in Items 1.03 and 5.02 of this Current Report on Form 8-K is 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

 

Board of Directors

 

Pursuant to the Plan, the existing board of directors appointed a new board of directors of the Company to take office as of the Effective Date, consisting of: Floyd C. Wilson, William J. Campbell, James W. Christmas, Michael L. Clark, Thomas R. Fuller, Darryl Schall, Ronald D. Scott, Eric G. Takaha, and Nathan W. Walton.  Upon the effectiveness of the Plan, on the Effective Date, the following members of the Company’s existing board of directors were deemed to have resigned as directors of the Company: Tucker S. Bridwell, John W. Brown, Kevin E. Godwin, Paul P. Huffard IV, David B. Miller, Daniel A. Rioux, Michael A. Vlasic, and Mark A. Welsh IV.

 

Information concerning the new and continuing directors has been previously disclosed in the Schedule 14F-1 which was filed by the Company with the SEC on August 30, 2016 and is incorporated herein by reference.

 

In connection with the effectiveness of the Plan, the new board of directors reconstituted the existing committees of the board of directors, to be effective as of the Effective Date. The Audit Committee consists of James W. Christmas, Chair, Michael L. Clark and Eric G. Takaha. The Compensation Committee consists of William J. Campbell, Chair, James W. Christmas and Michael L. Clark. The Nominating and Corporate Governance Committee consists of Michael L. Clark, Chair, William J. Campbell, Thomas R. Fuller and Darryl Schall. The Reserves Committee consists of Thomas R. Fuller, Chair, Ronald D. Scott and Nathan W. Walton.

 

Management Incentive Plan

 

The existing board of directors adopted the Halcón Resources Corporation 2016 Long-Term Incentive Plan (the “ 2016 Plan ”), effective as of the Effective Date. An aggregate of 10,000,000 shares of the Company’s common stock, par value $0.0001 per share, are available for grant pursuant to awards under the 2016 Plan in the form of nonqualified stock options, incentive stock options, restricted stock awards, restricted stock units, stock appreciation rights, performance units, performance bonuses, stock awards and other incentive awards.

 

Awards may be granted to eligible board members, and to employees and consultants of the Company and its affiliates. Up to 10,000,000 shares of the Company’s common stock may be made subject to incentive stock options. The aggregate number of shares of the Company’s common stock that may be made subject to the grant of options and/or stock appreciation rights to any eligible employee in any calendar year may not exceed 5,000,000; the aggregate number of shares of the Company’s common stock that may be made subject to the grant of restricted stock, restricted stock units, performance units, performance bonuses, stock awards and other incentive awards to any eligible employee in any calendar year may not exceed 10,000,000 to the extent intended to constitute “performance-based compensation” for purposes of Section 162(m) of the U.S. Internal Revenue Code of 1986, as amended; and the maximum amount that may be made to subject to the grant of a performance bonus award to any eligible employee in any calendar year may not exceed $5,000,000.

 

Any shares of common stock related to awards which terminate by expiration, forfeiture, cancellation or otherwise without the issuance of shares of common stock, or are exchanged for awards not involving the issuance of shares, shall be available again for grant under the 2016 Plan and shall not be counted against the shares authorized under the plan. Any shares issued as restricted stock awards that subsequently are forfeited without vesting shall again be available for grant under the 2016 Plan and shall not be counted against the shares authorized under the plan. Any awards that, pursuant to the terms of the applicable award agreement, are to be settled in cash, whether or

 

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not denominated in or determined with reference to shares of common stock, shall not be counted against the shares authorized under the plan.

 

The maximum term of any award under the 2016 Plan shall be ten years. All awards are subject to the terms of the 2016 Plan and individual award agreements entered into with participants thereunder.

 

Awards of nonqualified stock options to purchase an aggregate 5,000,000 shares of the Company’s common stock are expected to be granted on September 12, 2016 and will vest in three equal installments on each of the first three anniversaries of the grant date, subject to continued service with the Company or one of its affiliates through each vesting date, with accelerated vesting under certain circumstances as set forth in the corresponding award agreement or as otherwise agreed to by the Company. Awards of nonqualified stock options will have an exercise price per share equal to the greater of (i) the value per share of Company common stock calculated based on an aggregate Company equity value of $650.0 million and (ii) the weighted average trading price of the Company’s common stock for the seven trading days commencing on the first trading day immediately following the Effective Date. However, in all events, the exercise price per share must be at least equal to the closing sales price of the Company’s common stock as quoted on the New York Stock Exchange on the grant date.

 

Awards of an aggregate 2,500,000 shares of restricted stock are expected to be granted on September 12, 2016 and will be 50% vested on the grant date. The remaining 50% of each restricted stock award will vest on the first anniversary of the grant date, subject to continued service with the Company or one of its affiliates through such date, with accelerated vesting under certain circumstances as set forth in the corresponding award agreement or as otherwise agreed to by the Company. From the grant date, the participant will have beneficial ownership of the entire award, including the right to receive dividends and the right to vote the shares.

 

A copy of the 2016 Plan is attached as Exhibit 10.4 to this Current Report on Form 8-K and is incorporated herein by reference.

 

Appointment of Certain Officers; Modification of Offices for Certain Officers

 

The board of directors of the Company approved, effective as of the Effective Date, the appointment of Floyd C. Wilson to the office of President.  In addition to serving as the Company’s President, Mr. Wilson will also continue to serve as its Chairman and Chief Executive Officer.  Mr. Wilson is assuming responsibility as the Company’s President from Stephen W. Herod, who was appointed to the office of Executive Vice President, Corporate Development, also effective as of the Effective Date.  The board of directors of the Company also appointed Jon C. Wright as Executive Vice President, Operations, effective as of the Effective Time.

 

Information concerning the newly appointed executive officers of the Company is set forth below:

 

Floyd C. Wilson , 69, previously served as Chairman and Chief Executive Officer since February 2012. Prior to February 2012, he was President of HALRES LLC, an oil and natural gas company that he founded in October 2011. Mr. Wilson served as Chairman of the Board and Chief Executive Officer of Petrohawk Energy Corporation from May 25, 2004 until BHP Billiton acquired Petrohawk for $15.1 billion, including assumed debt, in August 2011. Mr. Wilson also served as President of Petrohawk from May 25, 2004 until September 8, 2009. Prior to May 25, 2004, he was President and Chief Executive Officer of PHAWK, LLC which he founded in June 2003. Mr. Wilson was the Chairman and Chief Executive Officer of 3TEC Energy Corporation from August 1999 until its merger with Plains Exploration & Production Company in June 2003. Mr. Wilson founded W/E Energy Company L.L.C., formerly known as 3TEC Energy Company L.L.C. in 1998 and served as its President until August 1999. Mr. Wilson began his career in the energy business in Houston, Texas in 1970 as a completion engineer. He moved to Wichita, Kansas in 1976 to start an oil and gas operating company, one of several private energy ventures which preceded the formation of Hugoton Energy Corporation in 1987, where he served as Chairman, President and Chief Executive Officer. In 1994, Hugoton completed an initial public offering and was merged into Chesapeake Energy Corporation in 1998.

 

Stephen W. Herod , 57, previously served as President since May 2012. Mr. Herod served as Executive Vice President—Corporate Development and Assistant Secretary of Petrohawk Energy Corporation from August 2005 until BHP Billiton acquired Petrohawk in August 2011. Mr. Herod served as Vice President—Corporate

 

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Development of Petrohawk from May 2004 until August 2005. Prior to joining Petrohawk, he was employed by PHAWK, LLC from its formation in June 2003 until May 2004. He served as Executive Vice President—Corporate Development for 3TEC Energy Corporation from December 1999 until its merger with Plains Exploration & Production Company in June 2003 and as Assistant Secretary from May 2001 until June 2003. Mr. Herod served as a director of 3TEC from July 1997 until January 2002. Mr. Herod served as the Treasurer of 3TEC from 1999 until 2001. From July 1997 to December 1999, Mr. Herod was Vice President—Corporate Development of 3TEC. Mr. Herod served as President and a director of Shore Oil Company from April 1992 until the merger of Shore with 3TEC’s predecessor in June 1997. He joined Shore’s predecessor as Controller in February 1991. Mr. Herod was employed by Conquest Exploration Company from 1984 until 1991 in various financial management positions, including Operations Accounting Manager. From 1981 to 1984, Superior Oil Company employed Mr. Herod as a financial analyst. Mr. Herod has a Bachelor of Science degree in finance and management from Oklahoma State University.

 

Jon C. Wright , 46, previously served as Senior Vice President, Operations since December 2014. Mr. Wright served as Vice President, Operations from May 2012 to December 2014. Mr. Wright served as W. Rockies Operations Manager at Newfield Exploration from 2009 until 2012. Mr. Wright also served as Lead, Production for W. Oklahoma and Lead Drilling for Woodford Shale from 2005 until 2009. Prior to that, Mr. Wright was a Senior Drilling Engineer at BP from 2004 to 2005. He also served as Drilling Engineer from 2001 to 2004. From 1997 to 2001, he held various drilling positions for Conoco. Mr. Wright has a Bachelor of Science degree in Petroleum Engineering from Texas A&M University and a Master of Business Administration degree from Rice University.

 

Item 9.01 Financial Statements and Exhibits

 

(d) Exhibits

 

Exhibit
Number

 

Description of Exhibit

2.1

 

Order of the Bankruptcy Court, dated September 8, 2016, confirming the Amended Joint Prepackaged Plan of Reorganization of Halcón Resources Corporation, et al, under Chapter 11 of the Bankruptcy Code, together with such Amended Joint Prepackaged Plan of Reorganization.

 

 

 

10.1

 

Senior Secured Revolving Credit Agreement, dated as of September 9, 2016, by and among Halcón Resources Corporation, JPMorgan Chase Bank, N.A., as administrative agent, and certain other financial institutions party thereto, as lenders.

 

 

 

10.2

 

Registration Rights Agreement, dated as of September 9, 2016, by and among Halcón Resources Corporation and the Holders parties thereto.

 

 

 

10.3

 

Warrant Agreement, dated as of September 9, 2016, by and between Halcón Resources Corporation and U.S. Bank National Association, as warrant agent.

 

 

 

10.4

 

Halcón Resources Corporation 2016 Long-Term Incentive Plan, effective as of September 9, 2016.

 

 

 

99.1

 

Press Release issued by Halcón Resources Corporation on September 9, 2016.

 

Cautionary Note Regarding Forward-Looking Statements

 

Certain statements and information included herein may constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Statements that are not strictly historical statements constitute forward-looking statements and may often, but not always, be identified by the use of such words such as “expects”, “believes”, “intends”, “anticipates”, “plans”, “estimates”, “potential”, “possible”, or “probable” or statements that certain actions, events or results

 

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“may”, “will”, “should”, or “could” be taken, occur or be achieved.  Forward-looking statements are based on current beliefs and expectations and involve certain assumptions or estimates that involve various risks and uncertainties that could cause actual results to differ materially from those reflected in the statements. These risks include, but are not limited to, those set forth in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2015 and other filings submitted by the Company to the U.S. Securities and Exchange Commission (SEC), copies of which may be obtained from the SEC’s website at www.sec.gov or through the Company’s website at www.halconresources.com. Readers should not place undue reliance on any such forward-looking statements, which are made only as of the date hereof. The Company has no duty, and assumes no obligation, to update forward-looking statements as a result of new information, future events or changes in the Company’s expectations.

 

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SIGNATURES

 

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.

 

 

HALCÓN RESOURCES CORPORATION

 

 

 

 

September 9, 2016

By :

/s/ Floyd C. Wilson

 

 

Name: Floyd C. Wilson

 

 

Title: Chairman and Chief Executive Officer

 

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Exhibit Index

 

Exhibit
Number

 

Description of Exhibit

2.1

 

Order of the Bankruptcy Court, dated September 8, 2016, confirming the Amended Joint Prepackaged Plan of Reorganization of Halcón Resources Corporation, et al, under Chapter 11 of the Bankruptcy Code, together with such Amended Joint Prepackaged Plan of Reorganization.

 

 

 

10.1

 

Senior Secured Revolving Credit Agreement, dated as of September 9, 2016, by and among Halcón Resources Corporation, JPMorgan Chase Bank, N.A., as administrative agent, and certain other financial institutions party thereto, as lenders.

 

 

 

10.2

 

Registration Rights Agreement, dated as of September 9, 2016, by and among Halcón Resources Corporation and the Holders parties thereto.

 

 

 

10.3

 

Warrant Agreement, dated as of September 9, 2016, by and between Halcón Resources Corporation and U.S. Bank National Association, as warrant agent.

 

 

 

10.4

 

Halcón Resources Corporation 2016 Long-Term Incentive Plan, effective as of September 9, 2016.

 

 

 

99.1

 

Press Release issued by Halcón Resources Corporation on September 9, 2016.

 

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Exhibit 2.1

 

UNITED STATES BANKRUPTCY COURT
DISTRICT OF DELAWARE

 

----------------------------------------------------

x

 

:

In re

:            Chapter 11

 

:

HALCÓN RESOURCES

:            Case No. 16-11724 (BLS)

CORPORATION, et al. ,

:

 

:            Jointly Administered

Debtors.(1)

:            Re: Docket Nos. 7, 17, 185, and 187

----------------------------------------------------

x

 

FINDINGS OF FACT, CONCLUSIONS OF LAW, AND ORDER (I) APPROVING
THE DEBTORS’ (A) DISCLOSURE STATEMENT PURSUANT TO SECTIONS
1125 AND 1126(b) OF THE BANKRUPTCY CODE, (B) SOLICITATION OF
VOTES AND VOTING PROCEDURES, AND (C) FORMS OF BALLOTS, AND
(II) CONFIRMING THE AMENDED JOINT PREPACKAGED CHAPTER 11
PLAN OF HALCÓN RESOURCES CORPORATION, ET AL .
UNDER CHAPTER 11 OF THE BANKRUPTCY CODE

 

Halcón Resources Corporation (“ Holdings ”) and its affiliated debtors in the above-captioned chapter 11 cases (the “ Chapter 11 Cases ”), as debtors and debtors in possession (collectively, the “ Debtors ”), having proposed and filed:

 

(A)                                that certain Joint Prepackaged Plan of Halcón Resources Corporation, Et Al. Under Chapter 11 of the Bankruptcy Code , dated June 20, 2016 (ECF No. 16) and filed with the United States Bankruptcy Court for the District of Delaware (the “ Court ”) on July 27, 2016, as amended on September 2, 2016 (ECF No. 185 (as supplemented by the Plan Supplement (as defined below), and as otherwise modified, amended or supplemented in accordance with the terms thereof and this Order, the “ Plan (2)”), annexed hereto as Exhibit A ;

 


(1)  The Debtors in these chapter 11 cases, along with the last four digits of each Debtor’s federal tax identification number, as applicable, are: Halcón Resources Corporation (0684); Halcón Holdings, Inc. (5102); HK Resources, LLC (9194); The 7711 Corporation (4003); Halcón Gulf States, LLC (2976); Halcón Louisiana Operating, L.P. (9727); Halcón Field Services, LLC (0280); Halcón Energy Properties, Inc. (5292); Halcón Operating Co., Inc. (3588); Halcón Williston I, LLC (9550); Halcón Williston II, LLC (9676); Halcón Resources Operating, Inc. (4856); HRC Energy Louisiana, LLC (1433); HRC Energy Resources (WV), Inc. (2713); HRC Production Company (3501); Halcón Energy Holdings, LLC (0538); HRC Energy, LLC (5010); HK Energy, LLC (8956); HK Louisiana Operating, LLC (4549); HK Oil & Gas, LLC (0502); HK Energy Operating, LLC (8107); HRC Operating, LLC (5129).  The Debtors’ mailing address is 1000 Louisiana Street, Suite 6700, Houston, Texas 77002.

 

(2)  Capitalized terms used but not otherwise herein defined shall have the meanings ascribed to such terms in the Plan.

 



 

(B)                                that certain supplement to the Plan, dated and filed with the Court on September 2, 2016 (ECF No. 187) (as the documents contained therein have been or may be further amended, modified or supplemented from time to time, the “ Plan Supplement ”);

 

(C)                                that certain Disclosure Statement for Joint Prepackaged Plan of Halcón Resources Corporation, Et Al. Under Chapter 11 of the Bankruptcy Code , dated June 20, 2016 (ECF No. 17) and filed with the Court on July 27, 2016 (the “ Disclosure Statement ”); and

 

(D)                                appropriate ballots (the “ Ballots ”) for voting on the Plan, in the forms attached as Exhibits “B-1” through “B-7” to the Debtors’ Motion for Entry of an Order (i) Scheduling Combined Hearing on (a) Adequacy of Disclosure Statement and (b) Confirmation of Prepackaged Plan; (ii) Fixing Deadline to Object to Disclosure Statement and Prepackaged Plan; (iii) Approving Prepetition Solicitation Procedures and Form and Manner of Notice of Commencement, Combined Hearing, and Objection Deadline; (iv) Conditionally (a) Directing the United States Trustee not to Convene Section 341 Meeting of Creditors and (b) Waiving Requirement of Filing Statements of Financial Affairs and Schedules of Assets and Liabilities; and (v) Granting Related Relief , dated July 27, 2016 (ECF No. 7) (the “ Scheduling Motion ”), with such Ballots having been duly transmitted to the holders of Claims and Interests in compliance with the procedures (the “ Solicitation Procedures ”) set forth in the Scheduling Motion and conditionally approved by the Court pursuant to the Scheduling Order (as defined below), as evidenced by that certain Declaration of Jane Sullivan on Behalf of Epiq Bankruptcy Solutions, LLC, Regarding Service of Solicitation Packages and Tabulation of Ballots Cast on Joint Prepackaged Plan of Reorganization of Halcón Resources Corporation, et al. Under Chapter 11 of the Bankruptcy Code , dated July 27, 106 (ECF No. 18) (the “ Voting Certification ”);

 

and the Court having entered the Order (i) Scheduling Combined Hearing on (a) Adequacy of Disclosure Statement and (b) Confirmation of Prepackaged Plan; (ii) Fixing Deadline to Object to Disclosure Statement and Prepackaged Plan; (iii) Approving Prepetition Solicitation Procedures and Form and Manner of Notice of Commencement, Combined Hearing, and Objection Deadline; (iv) Conditionally (a) Directing the United States Trustee not to Convene Section 341 Meeting of Creditors and (b) Waiving Requirement of Filing Statements of Financial Affairs and Schedules of Assets and Liabilities; and (v) Granting Related Relief , on July 29, 2017 (ECF No. 50) (the “ Scheduling Order ”), which, among other things, conditionally

 

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approved the Solicitation Procedures and scheduled the combined hearing to approve the Disclosure Statement and consider confirmation of the Plan for September 8, 2016 (the “ Combined Hearing ”); and due and proper notice of the Combined Hearing (the “ Combined Notice ”) having been given to holders of Claims against and Interests in the Debtors and other parties in interest in compliance with the Bankruptcy Code, the Federal Rules of Bankruptcy Procedures (the “ Bankruptcy Rules ”), the Local Rules of Bankruptcy Practice and Procedure of the United States Bankruptcy Court for the District of Delaware (the “ Local Rules ”), the Scheduling Order, and the Solicitation Procedures, as established by the affidavits of service, mailing, and/or publication filed with the Court, including (i) the Affidavit of Service of Forrest Kuffer regarding the service of the Combined Notice, dated August 9, 2016 (ECF No. 93), (ii) the Certificate of Publication—Houston Chronicle , dated August 12, 2016 (ECF No. 103), and (iii)  Certificate of Publication USA Today , dated August 12, 2016 (ECF No. 104) (such affidavits, collectively, the “ Notice Affidavits ”), and such notice being sufficient under the circumstances and no further notice being required; and due and proper notice of the Plan Supplement having been given to holders of Claims against and Interests in the Debtors and other parties in interest in compliance with the Bankruptcy Code, the Bankruptcy Rules, the Solicitation Procedures, as established by the Affidavit of Service of Cassandra Murray, dated September 7, 2016 (ECF No. 195]), and such filings and notices thereof being sufficient under the circumstances and no further notice being required; and based upon and after full consideration of the entire record of the Combined Hearing, including (i) the Disclosure Statement, (i) the Plan (including the Plan Supplement), (iii) the Voting Certification, and (iv) the Declaration of Stephen W. Herod in Support of Debtors’ Request for (i) Approval of Debtors’ Disclosure Statement, (ii) Final Approval of Solicitation Procedures, (iii) Confirmation

 

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of Amended Joint Prepackaged Plan of Halcón Resources Corporation, Et Al. Under Chapter 11 of the Bankruptcy Code and (iv) Omnibus Reply to Confirmation Objections , dated September 2, 2016 (ECF No. 189) (the “ Confirmation Declaration ”); and any objections or responses to the approval of the Disclosure Statement and/or confirmation of the Plan all having been withdrawn, resolved or otherwise overruled by the Court; and the Court being familiar with the Disclosure Statement and the Plan and other relevant factors affecting the Chapter 11 Cases; and the Court being familiar with, and having taken judicial notice of, the entire record of the Chapter 11 Cases; and upon the arguments of counsel and the evidence proffered and adduced at the Combined Hearing; and the Court having found and determined that the Disclosure Statement should be approved and the Plan should be confirmed as reflected by the Court’s rulings made herein and at the Combined Hearing; and after due deliberation and sufficient cause appearing therefor; the Court hereby FINDS, DETERMINES, AND CONCLUDES that:

 

FINDINGS OF FACT AND CONCLUSIONS OF LAW

 

A.                                     Findings and Conclusions .  The findings and conclusions set forth herein and in the record of the Combined Hearing constitute the Court’s findings of fact and conclusions of law pursuant to Rule 52 of the Federal Rules of Civil Procedure, as made applicable herein by Bankruptcy Rules 7052 and 9014.  To the extent any of the following findings of fact constitute conclusions of law, they are adopted as such.  To the extent any of the following conclusions of law constitute findings of fact, they are adopted as such.

 

B.                                     Jurisdiction, Venue, Core Proceeding (28 U.S.C. §§ 157(b)(2), 1334(a)) .  The Court has jurisdiction over the Chapter 11 Cases pursuant to 28 U.S.C. §§ 157 and 1334, and the Amended Standing Order of Reference from the United States District Court for the District of Delaware dated February 29, 2012.  Approval of the Disclosure Statement and

 

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confirmation of the Plan are core proceedings pursuant to 28 U.S.C. § 157(b) and this Court has jurisdiction to enter a final order with respect thereto.  The Debtors are eligible debtors under section 109 of the Bankruptcy Code.  Venue is proper before this Court pursuant to 28 U.S.C. §§ 1408 and 1409.  The Debtors are proper plan proponents under section 1121(a) of the Bankruptcy Code.

 

C.                                     Chapter 11 Petitions .  On July 27, 2016 (the “ Petition Date ”), each Debtor commenced with this Court a voluntary case under chapter 11 of the Bankruptcy Code.  The Debtors are authorized to continue to operate their businesses and manage their properties as debtors in possession pursuant to sections 1107(a) and 1108 of the Bankruptcy Code.  No trustee or examiner has been appointed pursuant to section 1104 of the Bankruptcy Code.  No statutory committee of unsecured creditors has been appointed pursuant to section 1102 of the Bankruptcy Code.  Further, in accordance with an order of this Court, the Debtors’ cases are being jointly administered pursuant to Bankruptcy Rule 1015(b).

 

D.                                     Judicial Notice .  The Court takes judicial notice of the docket of the Chapter 11 Cases maintained by the Clerk of the Court, including all pleadings and other documents filed, all orders entered, and all evidence and arguments made, proffered, or adduced at the hearings held before the Court during the pendency of the Chapter 11 Cases.

 

E.                                      Burden of Proof .  Each of the Debtors has met the burden of proving the elements of sections 1129(a) and (b) of the Bankruptcy Code by a preponderance of the evidence.

 

F.                                       Adequacy of Disclosure Statement .  The Disclosure Statement (a) contains sufficient information of a kind necessary to satisfy the disclosure requirements of all applicable non-bankruptcy law, including the Securities Act of 1933, as amended (the “ Securities Act ”),

 

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(b) contains “adequate information” (as such term is defined in section 1125(a)(1) and used in section 1126(b)(2) of the Bankruptcy Code) with respect to the Debtors, the Plan, and the transactions set forth therein, and (c) is approved in all respects.

 

G.                                     Voting .  As evidenced by the Voting Certification, votes to accept or reject the Plan have been solicited and tabulated fairly, in good faith, and in a manner consistent with the Bankruptcy Code, the Bankruptcy Rules, the Local Rules, and applicable non-bankruptcy law.

 

H.                                    Solicitation .  Prior to the Petition Date, the Plan, the Disclosure Statement, the Ballots, and a cover letter from the Debtors, and, subsequent to the Petition Date, the Combined Notice (collectively, the “ Solicitation and Notice Materials ”), were transmitted and served in compliance with the Bankruptcy Rules, including Bankruptcy Rules 3017 and 3018, the Local Rules, and the Scheduling Order.  The forms of the Ballots adequately addressed the particular needs of these Chapter 11 Cases and were appropriate for holders of Claims and Interests in Class 5 (Third Lien Note Claims), Class 6 (Unsecured Note Claims), Class 7 (Convertible Note Claims), and Class 11 (Preferred Stock Interests) — the Classes of Claims and Interests entitled under the Plan to vote to accept or reject the Plan.  The period during which the Debtors solicited acceptances to the Plan was a reasonable period of time for holders to make an informed decision to accept or reject the Plan.  The Debtors were not required to solicit votes from the holders of Class 1 (Other Priority Claims), Class 2 (Other Secured Claims), Class 3 (Revolving Credit Agreement Claims), Class 4 (Second Lien Note Claims), Class 8 (General Unsecured Claims), Class 9 (Intercompany Claims), and Class 10 (Intercompany Interests) as each such class is Unimpaired under the Plan.  The Debtors also were not required to solicit votes from the holders of Class 12 (Existing Equity Interests) and Class 13 (Section 510(b)

 

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Claims), as such Classes were not entitled to receive any recoveries under the Plan and are deemed to reject the Plan.  As described in and as evidenced by the Voting Certification and the Notice Affidavits, the transmittal and service of the Plan, the Disclosure Statement, the Ballots, the Combined Notice, and publication of such Combined Notice (all of the foregoing, the “ Solicitation ”) was timely, adequate, and sufficient under the circumstances.  The Solicitation of votes on the Plan complied with the Solicitation Procedures, was appropriate and satisfactory based upon the circumstances of the Chapter 11 Cases, was conducted in good faith, and was in compliance with the provisions of the Bankruptcy Code, the Bankruptcy Rules, and the Local Rules, and any other applicable rules, laws and regulations.  The Released Parties are entitled to the protection of section 1125(e) of the Bankruptcy Code.

 

I.                                         Notice .  As is evidenced by the Voting Certification and the Notice Affidavits, the transmittal and service of the Solicitation and Notice Materials was adequate and sufficient under the circumstances, and all parties required to be given notice of the Combined Hearing (including the deadline for filing and serving objections to the adequacy of the Disclosure Statement and confirmation of the Plan) have been given appropriate and satisfactory notice in accordance with the Scheduling Order and in compliance with the Bankruptcy Code, the Bankruptcy Rules, the Local Rules, and applicable non-bankruptcy law and such parties have had an opportunity to appear and be heard with respect thereto.  No other or further notice is required.

 

J.                                         Plan Supplement .  On September 2, 2016, the Debtors filed the Plan Supplement containing the following documents: (i) the Amended Organizational Documents; (ii) the Amended Revolving Credit Agreement; (iii) the New Warrants; (iv) the Management

 

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Incentive Plan; and (v) the members of the New Board and information required to be disclosed in connection with section 1129(a)(5) of the Bankruptcy Code.

 

K.                                     Modifications and Amendments to the Plan .  On September 2, 2016, the Debtors filed the Amended Joint Prepackaged Plan of Halcón Resources Corporation, Et Al. Under Chapter 11 of the Bankruptcy Code (ECF No. 185).  Modifications, amendments, and supplements made to the Plan since the Solicitation (i) complied in all respects with section 1127 of the Bankruptcy Code and Bankruptcy Rule 3019 and (ii) do not require re-solicitation of votes with respect to the Plan.  Adequate and sufficient notice of such modifications, amendments and supplements has been given, no further notice is or shall be required, and such modifications, amendments, and supplements are approved in full.  The votes cast to accept the Plan are deemed to have been cast with respect to the Plan as so modified, amended, and supplemented.

 

Compliance with the Requirements of Section 1129 of the Bankruptcy Code

 

L.                                      Plan Compliance with the Bankruptcy Code (11 U.S.C. § 1129(a)(1)) .  The Plan complies with the applicable provisions of the Bankruptcy Code and, as required by Bankruptcy Rule 3016, the Plan is dated and identifies the Debtors as proponents, thereby satisfying section 1129(a)(1) of the Bankruptcy Code.

 

(a)                                  Proper Classification (11 U.S.C. §§ 1122, 1123(a)(1)) .  In addition to Administrative Expense Claims, Fee Claims, and Priority Tax Claims, which need not be classified, Sections 3 and 4 of the Plan classify ten (10) Classes of Claims against, and three (3) Classes of Interests in, the Debtors.  The Claims and Interests placed in each Class are substantially similar to other Claims and Interests, as the case may be, in each such Class.  Valid business, factual, and legal reasons exist for separately classifying the various Classes of Claims and Interests created under the Plan, and such Classes do not unfairly discriminate between

 

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holders of Claims and Interests.  The Plan therefore satisfies sections 1122 and 1123(a)(1) of the Bankruptcy Code.

 

(b)                                  Specified Unimpaired Classes (11 U.S.C. § 1123(a)(2)) .  Sections 3 and 4 of the Plan specify that Class 1 (Other Priority Claims), Class 2 (Other Secured Claims), Class 3 (Revolving Credit Agreement Claims), Class 4 (Second Lien Note Claims), Class 8 (General Unsecured Claims), Class 9 (Intercompany Claims), and Class 10 (Intercompany Interests) are unimpaired under the Plan within the meaning of section 1124 of the Bankruptcy Code, thereby satisfying section 1123(a)(2) of the Bankruptcy Code.

 

(c)                                   Specified Treatment of Impaired Classes (11 U.S.C. § 1123(a)(3)) .  Sections 3 and 4 of the Plan designate Class 5 (Third Lien Note Claims), Class 6 (Unsecured Note Claims), Class 7 (Convertible Note Claims), Class 11 (Preferred Equity Interests), Class 12 (Existing Equity Interests), and Class 13 (Section 510(b) Claims) as impaired within the meaning of section 1124 of the Bankruptcy Code and specify the treatment of the Claims and Interests in those Classes, thereby satisfying section 1123(a)(3) of the Bankruptcy Code.

 

(d)                                  No Discrimination (11 U.S.C. § 1123(a)(4)) .  The Plan provides for the same treatment by the Debtors for each Claim or Interest in each respective Class unless the holder of a particular Claim or Interest has agreed to a less favorable treatment of such Claim or Interest, thereby satisfying section 1123(a)(4) of the Bankruptcy Code.

 

(e)                                   Implementation of the Plan (11 U.S.C. § 1123(a)(5)) .  The Plan and the various documents and agreements set forth in the Plan Supplement provide adequate and proper means for the implementation of the Plan, thereby satisfying section 1123(a)(5) of the Bankruptcy Code, including, without limitation, (i) the Amended Revolving Credit Agreement, (ii) the authorization, issuance and delivery of the New Common Shares and New Warrants, (iii)

 

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the exercise of Existing Warrants, (iv) the cancellation of certain existing security interests, including, without limitation, the Third Lien Notes, the Third Lien Note Indenture, the Unsecured Notes, the Unsecured Note Indentures, the Convertible Note Purchase Agreement, the Preferred Stock Certificate of Designation, the Existing Equity Interests, the Existing Warrants and all options and other entitlements to purchase and/or receive Existing Equity Interests or Existing Warrants, (v) the composition of the board of directors and list of officers of each Reorganized Debtor, (vi) the cancellation of liens securing certain Secured Claims, (vii) the Management Incentive Plan, and (viii) the taking of all necessary or appropriate actions by the Debtors or Reorganized Debtors, as applicable, to effectuate the Restructuring under and in connection with the Plan.

 

(f)                                    Non-Voting Equity Securities / Allocation of Voting Power (11 U.S.C. §   1123(a)(6)) .  The Amended Organizational Documents prohibit the issuance of non-voting equity securities, thereby satisfying section 1123(a)(6) of the Bankruptcy Code.  The issuance of the New Common Shares complies with section 1123(a)(6) of the Bankruptcy Code.  On the Effective Date, the boards of directors of each Reorganized Debtor shall be deemed to have adopted the Amended Organizational Documents.

 

(g)                                   Designation of Directors and Officers (11 U.S.C. § 1123(a)(7)) .  The Plan Supplement and Section 5.6 of the Plan contain provisions with respect to the manner of selection of directors and officers of the Reorganized Debtors that are consistent with the interests of creditors, equity security holders, and public policy, thereby satisfying section 1123(a)(7) of the Bankruptcy Code.  The Debtors have identified the directors and officers of each Reorganized Debtor in the Plan Supplement.

 

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(h)                                  Impairment/Unimpairment of Classes of Claims and Interests (11 U.S.C. § 1123(b)(1)) .  Pursuant to Sections 3 and 4 of the Plan, as set forth in section 1123(b)(1) of the Bankruptcy Code, (a) Class 1 (Oher Priority Claims), Class 2 (Other Secured Claims), Class 3 (Revolving Credit Agreement Claims), Class 4 (Second Lien Note Claims), Class 8 (General Unsecured Claims), Class 9 (Intercompany Claims) and Class 10 (Intercompany Interests) are unimpaired, and (b) Class 5 (Third Lien Note Claims), Class 6 (Unsecured Note Claims), Class 7 (Convertible Note Claims), Class 11 (Preferred Stock Interests), Class 12 (Existing Equity Interests), and Class 13 (Section 510(b) Claims) are impaired.

 

(i)                                      Assumption and Rejection (11 U.S.C. § 1123(b)(2)) .  Section 8 of the Plan addresses the assumption and rejection of executory contracts and unexpired leases, and meets the requirements of section 365(b) of the Bankruptcy Code.  There have been no objections to the Debtors’ assumption of executory contracts and unexpired leases pursuant to Section 8 of the Plan.

 

(j)                                     Retention of Causes of Action and Reservation of Rights (11 U.S.C. § 1123(b)(3)) .  Except as otherwise provided in the Plan, including Sections 10.5, 10.6, 10.7 and 10.8 of the Plan, pursuant to section 1123(b) of the Bankruptcy Code, the Reorganized Debtors shall retain and may enforce, sue on, settle or compromise (or decline to do any of the foregoing) all claims, rights, causes of action, suits and proceedings, whether in law or in equity, whether known or unknown, that the Debtors or their estates may hold against any Person without the approval of the Court, including, without limitation, (i) any and all Claims against any Person, to the extent such Person asserts a crossclaim, counterclaim and/or Claim for setoff which seeks affirmative relief against the Debtors, the Reorganized Debtors, their officers, directors or representatives; and (ii) the turnover of any property of the Debtors’ estates; provided , however

 

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that the Reorganized Debtors shall not retain any Claims or Causes of Action against the Released Parties (other than Claims or Causes of Action arising out of or relating to any act or omission of a Released Party that is a criminal act or constitutes fraud, gross negligence and willful misconduct, which Claims or Causes of Action are hereby preserved).  The Reorganized Debtors or their successor(s) may pursue such retained claims, rights, or causes of action, suits or proceedings, as appropriate, in accordance with the best interests of the Reorganized Debtors or their successor(s) who hold such rights.

 

(k)                                  Unaffected Rights of Holders of Classes of Claims (11 U.S.C. § 1123(b)(5)) .  The Plan leaves unaffected the rights of holders of Claims and Interests in Class 1 (Other Priority Claims), Class 2 (Other Secured Claims), Class 3 (Revolving Credit Agreement Claims), Class 4 (Second Lien Note Claims), Class 8 (General Unsecured Claims), Class 9 (Intercompany Claims), and Class 10 (Intercompany Interests).  Thus, the Plan complies with section 1123(b)(5) of the Bankruptcy Code.

 

(l)                                      Additional Plan Provisions (11 U.S.C. § 1123(b)(6)) .  The provisions of the Plan are appropriate and consistent with the applicable provisions of the Bankruptcy Code, thereby satisfying section 1123(b)(6) of the Bankruptcy Code.

 

(m)                              Cure of Defaults (11 U.S.C. § 1123(d)) .  Section 8.2 of the Plan provides for the satisfaction of default claims associated with each executory contract and unexpired lease to be assumed pursuant to the Plan in accordance with section 365(b)(1) of the Bankruptcy Code.  All Cure amounts will be determined in accordance with the underlying agreements and applicable non-bankruptcy law.  Thus, the Plan complies with section 1123(d) of the Bankruptcy Code.

 

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M.                                  The Debtors’ Compliance with the Bankruptcy Code (11 U.S.C. § 1129(a)(2)) .  The Debtors have complied with the applicable provisions of the Bankruptcy Code.  Specifically:

 

(a)                                  Each of the Debtors is an eligible debtor under section 109 of the Bankruptcy Code; and

 

(b)                                  The Debtors have complied with applicable provisions of the Bankruptcy Code, except as otherwise provided or permitted by orders of the Court, and in transmitting the Plan, the Plan Supplement, the Disclosure Statement, the Ballots, and related documents and notices, including the Combined Notice, and in soliciting and tabulating the votes on the Plan, the Debtors have complied with the applicable provisions of the Bankruptcy Code, including sections 1125 and 1126(b), the Bankruptcy Rules, the Local Rules, applicable non-bankruptcy law, the Scheduling Order, and all other applicable law.

 

N.                                     Plan Proposed in Good Faith (11 U.S.C. § 1129(a)(3)) .  The Debtors have proposed the Plan (and all documents necessary to effectuate the Plan) in good faith and not by any means forbidden by law, thereby satisfying section 1129(a)(3) of the Bankruptcy Code.  The Debtors’ good faith is evident from the facts and record of these Chapter 11 Cases, the Disclosure Statement, and the record of the Combined Hearing, and other proceedings held in these Chapter 11 Cases.  The Plan was proposed with the legitimate and honest purpose of maximizing the value of the Debtors’ Estates and to effectuate a successful reorganization of the Debtors.  The Plan (including all documents necessary to effectuate the Plan) was negotiated at arm’s length among representatives of the Debtors, the Consenting Creditors, and their respective professionals.  Each of the Consenting Creditors, and those holders of Second Lien Notes (the “ Consenting Second Lien Noteholders ”) party to that certain Lock-Up Agreement,

 

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dated as of July 22, 2016 (the “ Second Lien Support Agreement ”), supports confirmation of the Plan.  Further, the Plan’s classification, indemnification, exculpation, release, and injunction provisions have been negotiated in good faith and at arm’s length, are consistent with sections 105, 1122, 1123(b)(3)(A), 1123(b)(6), 1129, and 1142 of the Bankruptcy Code, and are each necessary for the Debtors’ successful reorganization.

 

O.                                     Payment for Services or Costs and Expenses (11 U.S.C. § 1129(a)(4)) .

 

(a)                                  Any payment made or to be made by the Debtors for services or for costs and expenses of the Debtors’ professionals in connection with their Chapter 11 Cases, or in connection with the Plan and incident to the Chapter 11 Cases, has been approved by, or is subject to the approval of, the Court as reasonable, thereby satisfying section 1129(a)(4) of the Bankruptcy Code.

 

(b)                                  As part of the negotiated terms on which the Debtors and the Consenting Creditors agreed to proceed with the consensual, prepackaged restructuring reflected in the Plan, the Debtors have agreed to pay reasonable and documented out-of-pocket fees, costs and expenses incurred by each of the Revolving Credit Agreement Agent and each of the Consenting Creditors, and expenses of their respective legal and financial advisors (but no more than one legal counsel, one local counsel in each appropriate jurisdiction and one financial advisor for each of the Revolving Credit Agreement Agent and the Consenting Third Lien Noteholders, and the Consenting Unsecured Noteholders, the Convertible Noteholder, and the Consenting Preferred Holders) (collectively, the “ Restructuring Expenses ”).

 

P.                                       Directors, Officers, and Insiders (11 U.S.C. § 1129(a)(5)) .  The Debtors have complied with section 1129(a)(5) of the Bankruptcy Code.  The identity and affiliations of the persons proposed to serve as the initial directors and officers of the Reorganized Debtors

 

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upon the Effective Date of the Plan have been fully disclosed to the extent such information is available, and the appointment to, or continuance in, such offices of such persons is consistent with the interests of holders of Claims against and Interests in the Debtors and with public policy.  The composition of the boards of directors and list of officers for each of the Reorganized Debtors has been disclosed in the Plan Supplement prior to the Combined Hearing.  Each such member will serve in accordance with the terms and subject to the conditions of the Amended Organizational Documents, as applicable.

 

Q.                                     No Rate Changes (11 U.S.C. § 1129(a)(6)) .  The Plan does not provide for rate changes by any of the Reorganized Debtors.  Thus, section 1129(a)(6) of the Bankruptcy Code is not applicable in these Chapter 11 Cases.

 

R.                                     Best Interest of Creditors (11 U.S.C. § 1129(a)(7)) .  The Plan satisfies section 1129(a)(7) of the Bankruptcy Code.  The liquidation analysis provided in the Disclosure Statement and other evidence proffered or adduced at the Combined Hearing (i) are persuasive and credible, (ii) have not been controverted by other evidence, and (iii) establish that each holder of an impaired Claim or Interest either has accepted the Plan or will receive or retain under the Plan, on account of such Claim or Interest, property of a value, as of the Effective Date, that is not less than the amount that such holder would receive or retain if the Debtors were liquidated under chapter 7 of the Bankruptcy Code on such date.

 

S.                                       Acceptance by Certain Classes (11 U.S.C. § 1129(a)(8)) .  Class 1 (Other Priority Claims), Class 2 (Other Secured Claims), Class 3 (Revolving Credit Agreement Claims), Class 4 (Second Lien Note Claims), Class 8 (General Unsecured Claims), Class 9 (Intercompany Claims) and Class 10 (Intercompany Interests) are Classes of Unimpaired Claims and Interests that are conclusively presumed to have accepted the Plan in accordance with section 1126(f) of

 

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the Bankruptcy Code.  Class 12 (Existing Equity Interests) and Class 13 (Section 510(b) Claims) are Classes of Impaired Claims and Interests that are conclusively presumed to have rejected the Plan in accordance with section 1126(g) of the Bankruptcy Code.  Class 5 (Third Lien Note Claims), Class 6 (Unsecured Note Claims), Class 7 (Convertible Note Claims), and Class 11 (Preferred Stock Interests) have voted to accept the Plan in accordance with sections 1126(b) and (c) of the Bankruptcy Code, without regard to the votes of insiders of the Debtors.

 

T.                                      Reinstatement of Second Lien Notes .  The Plan does not alter the legal, equitable, and contractual rights of the holders of Claims in Class 4 (Second Lien Note Claims).  Accordingly, Reinstatement of such Claims is fair and equitable under the circumstances.

 

U.                                     Treatment of Administrative Expense Claims, Fee Claims and Priority Tax Claims (11 U.S.C. § 1129(a)(9)) .  The treatment of Allowed Administrative Expense Claims and Fee Claims pursuant to Sections 2.1 and 2.2, respectively, of the Plan satisfies the requirements of section 1129(a)(9)(A) of the Bankruptcy Code.  The treatment of Priority Tax Claims pursuant to Section 2.3 of the Plan satisfies the requirements of section 1129(a)(9)(C) of the Bankruptcy Code.  The treatment of Other Priority Claims pursuant to Section 4.1 of the Plan satisfies the requirements of section 1129(a)(9)(B) of the Bankruptcy Code.  Pursuant to the Plan, no holder of an Administrative Expense Claim other than a holder of a Fee Claim is required to file a proof of claim or request for payment of administrative expenses under section 503(b) of the Bankruptcy Code.

 

V.                                     Acceptance by Impaired Class (11 U.S.C. § 1129(a)(10)) .  Class 5 (Third Lien Note Claims), Class 6 (Unsecured Note Claims), Class 7 (Convertible Note Claims), and Class 11 (Preferred Stock Interests) have voted to accept the Plan by the requisite majorities,

 

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determined without including any acceptance of the Plan by any insider, thereby satisfying the requirements of section 1129(a)(10) of the Bankruptcy Code.

 

W.                                  Feasibility (11 U.S.C. § 1129(a)(11)) .  The information in the Disclosure Statement, the Confirmation Declaration, and the evidence proffered or adduced at the Combined Hearing (i) is persuasive and credible, (ii) has not been controverted by other evidence, and (iii) establishes that the Plan is feasible and that there is a reasonable prospect of the Reorganized Debtors being able to meet their financial obligations under the Plan and their business in the ordinary course and that confirmation of the Plan is not likely to be followed by the liquidation or the need for further financial reorganization of the Reorganized Debtors, thereby satisfying the requirements of section 1129(a)(11) of the Bankruptcy Code.

 

X.                                     Payment of Fees (11 U.S.C. § 1129(a)(12)) .  All fees currently payable under 28 U.S.C. § 1930, as determined by the Bankruptcy Code, have been or will be paid on or before the Effective Date pursuant to Section 12.1 of the Plan, thereby satisfying the requirements of section 1129(a)(12) of the Bankruptcy Code.

 

Y.                                     Continuation of Retiree Benefits (11 U.S.C. § 1129(a)(13)) .  Section 8.4 of the Plan provides that all material employee compensation and Benefit Plans of the Debtors in effect as of June 1, 2016, shall be deemed to be, and shall be treated as if they were, executory contracts that are to be assumed under the Plan, as may be amended as provided in the Restructuring Support Agreement; provided , however , notwithstanding the foregoing, on the Effective Date, the First Amended and Restated 2012 Long-Term Incentive Plan and the Equity-Based Incentive Policy shall be terminated and any restricted shares of common stock of Holdings issued thereunder shall be treated as Existing Equity Interests as provided in Section 4.12 of the Plan.

 

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Z.                                      No Domestic Support Obligations (11 U.S.C. § 1129(a)(14)) .  The Debtors are not required by a judicial or administrative order, or by statute, to pay a domestic support obligation.  Accordingly, section 1129(a)(14) of the Bankruptcy Code is inapplicable in these Chapter 11 Cases.

 

AA.                            Debtors Are Not Individuals (11 U.S.C. § 1129(a)(15)) .  The Debtors are not individuals, and accordingly, section 1129(a)(15) of the Bankruptcy Code is inapplicable in these Chapter 11 Cases.

 

BB.                            No Applicable Non-Bankruptcy Law Regarding Transfers (11 U.S.C. § 1129(a)(16)) .  The Debtors are each a moneyed, business, or commercial corporation, and accordingly, section 1129(a)(16) of the Bankruptcy Code is inapplicable in these Chapter 11 Cases.

 

CC.                            No Unfair Discrimination; Fair and Equitable (11 U.S.C. § 1129(b)) .  Class 12 (Existing Equity Interests) and Class 13 (Section 510(b) Claims) are deemed to have rejected the Plan.  Based upon the evidence proffered, adduced, and presented by the Debtors at the Combined Hearing, the Plan does not discriminate unfairly with respect to and is fair and equitable with respect the aforementioned Classes, as required by sections 1129(b)(1) and (b)(2) of the Bankruptcy Code, because no holder of any interest that is junior to each such Class will receive or retain any property under the Plan on account of such junior interest, and no holder of a Claim or Interest in a Class senior to such Classes is receiving more than 100% recovery on account of its Claim or Interest.  Thus, the Plan may be confirmed notwithstanding the deemed rejection of the Plan by these Classes.

 

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DD.                            Only One Plan (11 U.S.C. § 1129(c)) .  The Plan is the only plan filed in each of these Chapter 11 Cases, and accordingly, section 1129(c) of the Bankruptcy Code is inapplicable in these Chapter 11 Cases.

 

EE.                              Principal Purpose of the Plan (11 U.S.C. § 1129(d)) .  The principal purpose of the Plan is not the avoidance of taxes or the avoidance of the application of section 5 of the Securities Act, and no governmental entity has objected to the confirmation of the Plan on any such grounds.  The Plan, therefore, satisfies the requirements of section 1129(d) of the Bankruptcy Code.

 

FF.                                Good Faith Solicitation (11 U.S.C. § 1125(e)) .  Based on the record before the Court in these Chapter 11 Cases, including evidence presented at the Combined Hearing, the Released Parties (i) have acted in “good faith” within the meaning of section 1125(e) of the Bankruptcy Code in compliance with the applicable provisions of the Bankruptcy Code, the Bankruptcy Rules, the Local Rules, and any applicable non-bankruptcy law, rule, or regulation governing the adequacy of disclosure in connection with all their respective activities relating to the solicitation of acceptances to the Plan and their participation in the activities described in section 1125 of the Bankruptcy Code, and (ii) shall be deemed to have participated in good faith and in compliance with the applicable provisions of the Bankruptcy Code in the offer and issuance of any securities under the Plan, and therefore are not, and on account of such offer, issuance, and solicitation will not be, liable at any time for the violation of any applicable law, rule, or regulation governing the solicitation of acceptances or rejections of the Plan or the offer and issuance of the securities under the Plan, and are entitled to the protections afforded by section 1125(e) of the Bankruptcy Code and, to the extent such parties are listed therein as Exculpated Parties, the exculpation provisions set forth in Section 10.8 of the Plan.

 

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GG.                            Satisfaction of Confirmation Requirements .  Based upon the foregoing, the Plan satisfies the requirements for confirmation set forth in section 1129 of the Bankruptcy Code.

 

HH.                          Implementation .  The Definitive Documents and all other relevant and necessary documents have been negotiated in good faith and at arm’s length and shall, upon completion of documentation and execution, be valid, binding, and enforceable agreements that are not in conflict with any federal or state law.

 

II.                                    Injunction, Releases, and Exculpation .  The Court has jurisdiction under 28 U.S.C. §§ 1334(b) and 1334 (b) to approve the injunction, releases, and exculpation set forth in Sections 10.3, 10.4, 10.5, 10.6, 10.7, and 10.8 of the Plan, respectively.  Section 105(a) of the Bankruptcy Code permits issuance of the injunction and approval of the releases set forth in Sections 10.6 and 10.7 of the Plan, respectively, if, as has been established here, based upon the record in the Chapter 11 Cases and the evidence presented at the Combined Hearing, such provisions (i) were integral to the agreement among the various parties in interest, as reflected in the Restructuring Support Agreement, and are essential to the formulation and implementation of the Plan, as provided in section 1123 of the Bankruptcy Code, (ii) confer substantial benefits on the Debtors’ Estates, (iii) are fair, equitable, and reasonable, and (iv) are in the best interests of the Debtors, their estates, and parties in interest.  The release contained in Section 10.7 of the Plan was disclosed and explained on the Ballots, in the Disclosure Statement, in the Plan, and the Combined Notice.  The release provision contained in Section 10.7 of the Plan is consensual because the releases therein are provided only by (i) holders of all Claims or Interests who voted to accept the Plan, (ii) holders of Claims or Interests that are Unimpaired under the Plan, (iii) holders of Claims or Interest whose vote to accept or reject the Plan was solicited but who did

 

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not vote either to accept or to reject the Plan, and (iv) holders of Claims or Interests who voted to reject the Plan but did not opt out of granting the releases set forth in the Plan.  See In re Indianapolis Downs, LLC , 486 B.R. 286, 303 (Bankr. D. Del. 2013).  Pursuant to section 1123(b)(3) of the Bankruptcy Code and Bankruptcy Rule 9019(a), the injunction, releases, and exculpation set forth in the Plan and implemented by this Order are fair, equitable, reasonable, and in the best interests of the Debtors and the Reorganized Debtors and their Estates, creditors, and equity holders.  The releases of non-Debtors under the Plan is fair to holders of Claims and Interests and are necessary to the proposed reorganization, thereby satisfying the applicable standards contained in In re Indianapolis Downs , 486 B.R. at 303 and are otherwise appropriate under In re W.R. Grace & Co. , 475 B.R. 34, 107 (D. Del. 2012).  Such releases are given in exchange for and are supported by fair, sufficient, and adequate consideration provided by each and all of the parties providing such releases.  The record of the Combined Hearing and these Chapter 11 Cases is sufficient to support the injunction, releases, and exculpation provided for in Sections 10.3, 10.4, 10.5, 10.6, 10.7, and 10.8 of the Plan.  Accordingly, based upon the record of these Chapter 11 Cases, the representations of the parties, and/or the evidence proffered, adduced, and/or presented at the Combined Hearing, this Court finds that the injunction, releases, and exculpation set forth in Section 10 of the Plan are consistent with the Bankruptcy Code and applicable law.  The failure to implement the injunction, releases, and exculpation would seriously impair the Debtors’ ability to confirm the Plan.

 

JJ.                                    Settlement .  Except as otherwise provided in the Plan and this Order, the Plan represents a settlement between and among the Debtors and their creditors and equity holders of all Claims and Interests and litigation against the Debtors, pending or threatened, or that was or could have been commenced against the Debtors prior to the date of entry of this

 

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Order (other than the Reorganized Debtors’ ability to prosecute objections to Claims and other retained causes of action to the extent preserved under the Plan, including, without limitation, pursuant to section 10.9 of the Plan).

 

KK.                            Good Faith .  The Debtors and the Released Parties will be acting in good faith if they proceed to (i) consummate the Plan and the agreements, settlements, transactions, and transfers set forth therein and (ii) take the actions authorized and directed by this Order.

 

LL.                              Indenture Trustees and Revolving Credit Agreement Agent .  Based upon a review of the record, the Second Lien Note Trustee, the Third Lien Note Trustee, the Unsecured Note Trustee, the Revolving Credit Agreement Agent, and the DIP Agent each, diligently and in good faith, discharged its duties and obligations pursuant to the Second Lien Note Indenture, Third Lien Note Indenture, Unsecured Note Indentures, and the Revolving Credit Agreement, as applicable, and otherwise conducted itself with respect to all matters in any way relating to the Second Lien Note Indenture, Third Lien Note Indenture, Unsecured Note Indentures, and the Revolving Credit Agreement, as applicable, with the same degree of care and skill that a prudent person would exercise or use under the circumstances in the conduct of his or her own affairs.  Accordingly, the Second Lien Note Trustee, the Third Lien Note Trustee, the Unsecured Note Trustee, and the Revolving Credit Agreement Agent each has discharged its duties fully in accordance with the Second Lien Note Indenture, Third Lien Note Indenture, Unsecured Note Indentures, and the Revolving Credit Agreement, as applicable.

 

MM.                      Valuation .  Notwithstanding the distributions contemplates under the Plan to Class 12 (Existing Equity Interests), pursuant to the valuation analysis set forth in the Disclosure Statement, the enterprise value of the Debtors is insufficient to support a distribution to holders of Existing Equity Interests under absolute priority principles.

 

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NN.                            Retention of Jurisdiction .  The Court may properly, and upon the Effective Date shall, retain exclusive jurisdiction over all matters arising out of, and related to, the Chapter 11 Cases, including the matters set forth in Section 11 of the Plan and section 1142 of the Bankruptcy Code.

 

ORDER

 

ACCORDINGLY, IT IS HEREBY ORDERED, ADJUDGED, DECREED, AND DETERMINED THAT:

 

1.                                       Findings of Fact and Conclusions of Law .  The above-referenced findings of fact and conclusions of law are hereby incorporated by reference as though fully set forth herein and shall constitute findings of fact and conclusions of law pursuant to Bankruptcy Rule 7052, made applicable herein by Bankruptcy Rule 9014.  To the extent that any finding of fact shall be determined to be a conclusion of law, it shall be deemed so, and vice versa.

 

2.                                       Notice of the Combined Hearing .  Notice of the Combined Hearing complied with the terms of the Scheduling Order, was appropriate and satisfactory based upon the circumstances of the Chapter 11 Cases, and was in compliance with the Bankruptcy Code, the Bankruptcy Rules, and the Local Rules.  The mailing of the Combined Notice to holders of Claims and Interests in Classes that were not entitled to vote to accept or reject the Plan, in accordance with the terms of the Scheduling Order, in lieu of sending such non-voting Creditors and Interest holders copies of the Disclosure Statement and the Plan constitutes good and sufficient notice of the Combined Hearing under the circumstances of these Chapter 11 Cases and, except to the extent necessary to comply with Local Rule 3017-1(c), the requirements under the Bankruptcy Rules or the Local Rules, including Bankruptcy Rule 3017(d), to transmit copies

 

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of the Disclosure Statement and Plan to such non-voting Creditors and Interest holders are hereby waived with respect to the holders of such Claim and Interests.

 

3.                                       Solicitation .  The solicitation of votes on the Plan complied with the Solicitation Procedures, was appropriate and satisfactory based upon the circumstances of the Chapter 11 Cases, and was in compliance with the Bankruptcy Code, the Bankruptcy Rules, the Local Rules, and applicable non-bankruptcy law.  The Solicitation and Notice Materials are hereby approved on a final basis.

 

4.                                       Ballots .  The forms of Ballots annexed to the Scheduling Motion are in compliance with Bankruptcy Rule 3018(c), conform to Official Form Number 14, and are approved in all respects.

 

5.                                       Plan Modifications and Amendments .  On September 2, 2016, the Debtors filed the Amended Joint Prepackaged Plan of Halcón Resources Corporation, Et Al. Under Chapter 11 of the Bankruptcy Code (ECF No. 185).  The modifications, amendments and supplements made to the Plan following the solicitation of votes thereon constitute technical changes and do not material adversely affect or change the treatment of any Claims or Interests.  Accordingly, such modifications do not require additional disclosure or re-solicitation of votes under sections 1125, 1126 or 1127 of the Bankruptcy Code or Bankruptcy Rule 3019, nor do they require that holders of Claims or Interests be afforded an opportunity to change previously cast acceptances or rejections of the Plan.  Holders of Claims of Interests who voted to accept the solicitation version of the Plan are deemed to accept the Plan as modified.

 

6.                                       The Disclosure Statement .  The Disclosure Statement (i) contains adequate information of a kind generally consistent with the disclosure requirements of applicable non-bankruptcy law, including the Securities Act, (ii) contains “adequate information” (as such term

 

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is defined in section 1125(a)(1) and used in section 1126(b)(2) of the Bankruptcy Code) with respect to the Debtors, the Plan, and the transactions contemplated therein, and (iii) is approved in all respects.  To the extent that the Debtors’ solicitation of acceptances of the Plan is deemed to constitute an offer of new securities, the Debtors are exempt from the registration requirements of the Securities Act (and of any equivalent state securities or “blue sky” laws) with respect to such solicitation under section 4(a)(2) of the Securities Act and Regulation D promulgated thereunder.  Section 4(a)(2) exempts from registration under the Securities Act all “transactions by an issuer not involving any public offering.”  15 U.S.C. § 77d(2).  The Debtors have complied with the requirements of section 4(a)(2) of the Securities Act and Regulation D thereunder, as the prepetition solicitation of acceptances would constitute a private placement of securities.  The solicitation of Third Lien Noteholders and Unsecured Noteholders was made only to those noteholders who are “Accredited Investors” as defined in Regulation D under the Securities Act, as such noteholders were required to certify on their Ballots that they were “Accredited Investors.”

 

7.                                       Confirmation of the Plan .  The Plan and each of its provisions shall be, and hereby is, CONFIRMED under section 1129 of the Bankruptcy Code.  The documents contained in the Plan Supplement are authorized and approved.  The terms of the Plan, including the Plan Supplement, are incorporated by reference into and are an integral part of this Order.

 

8.                                       Objections .  All Objections, responses to, and statements and comments, if any, in opposition to, the Plan and/or the Disclosure Statement, respectively, other than those resolved on the record or withdrawn with prejudice in their entirety prior to, or on the record at, the Combined Hearing, shall be, and hereby are, overruled in their entirety for the reasons stated on the record.

 

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9.                                       No Action .  Pursuant to the appropriate provisions of the General Corporation Law of the State of Delaware, other applicable non-bankruptcy law, and section 1142(b) of the Bankruptcy Code, no action of the respective stockholders, members, general or limited partners or directors of any of the Debtors shall be required to authorize the Debtors to enter into, execute, deliver, file, adopt, amend, restate, consummate, or effectuate, as the case may be, the Plan and any contract, instrument, or other document to be executed, delivered, adopted or amended in connection with the implementation of the Plan.

 

10.                                Binding Effect .  On or after entry of this Order and subject to the occurrence of the Effective Date, the provisions of the Plan shall bind the Debtors, the Reorganized Debtors, all holders of Claims and Interests of the Debtors (irrespective of whether such Claims or Interests are impaired under the Plan or whether the holders of such Claims or Interests accepted or are deemed to have accepted the Plan), any and all non-Debtor parties to executory contracts and unexpired leases with any of the Debtors, any other party in interest in the Chapter 11 Cases, and the respective heirs, executors, administrators, successors, or assigns, if any, of any of the foregoing.

 

11.                                Implementation of the Plan .  On and after the Effective Date, the Reorganized Debtors and the officers and members of the boards of directors thereof, are authorized to and may issue, execute, deliver, file or record such contracts, securities, instruments, releases and other agreements or documents and take such actions as may be necessary or appropriate to effectuate, implement and further evidence the terms and conditions of the Plan, including the documents set forth in the Plan Supplement, and the securities issued pursuant to the Plan in the name of and on behalf of the Reorganized Debtors, without the need

 

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for any approvals, authorization, or consents except for those expressly required pursuant to the Plan.

 

12.                                Amended Revolving Credit Agreement .  On the Effective Date, the Amended Revolving Credit Agreement and Amended Revolving Credit Facility Loan Documents shall be executed and delivered, and the Reorganized Debtors shall be authorized and directed to execute, deliver and enter into the Amended Revolving Credit Agreement and the Amended Revolving Credit Facility Loan Documents in connection with the distribution to holders of Class 3 Revolving Credit Agreement Claims and to perform all obligations under the Amended Revolving Credit Facility Loan Documents, including without limitation, payment of all fees and expenses required thereunder, without the need for any further corporate action and without further action by the holders of Claims or Interests. The Plan further provides for the entry into, and the Debtors and Reorganized Debtors, as the case may be, are hereby authorized to enter into and execute all amendments and modifications to the Amended Revolving Credit Facility and any agreements, instruments, certificates or documents, including the Amended Revolving Credit Facility Loan Documents, or transactions related thereto or contemplated thereby. The Amended Revolving Credit Agreement and Amended Revolving Credit Facility Loan Documents were proposed in good faith, are fair, reasonable and critical to the success and feasibility of the Plan and are necessary and appropriate for the consummation of the Plan, and entry into the Amended Revolving Credit Agreement and Amended Revolving Credit Facility Loan Documents are in the best interests of the Debtors, their estates and their creditors and the Reorganized Debtors. The Debtors have disclosed all material facts regarding the Reorganized Debtors’ obligations under the Amended Revolving Credit Agreement and Amended Revolving Credit Facility Loan Documents and have exercised reasonable business judgment in

 

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determining to enter into the foregoing and have provided sufficient and adequate notice thereof. The Amended Revolving Credit Agreement and the Amended Revolving Credit Facility Loan Documents are hereby approved and are or will be, and are hereby deemed to be, binding and enforceable against the Debtors, the Reorganized Debtors and their affiliates party thereto in accordance with their terms. The Amended Revolving Credit Agreement and Amended Revolving Credit Facility Loan Documents (including, without limitation, any and all terms, conditions and covenants thereof) have been negotiated in good faith and at arm’s length among the Debtors and the applicable agents and lenders under the Amended Revolving Credit Agreement and Amended Revolving Credit Facility Loan Documents (the agent and the lenders for the Amended Revolving Credit Agreement are collectively referred to herein as the “ Exit Financing Lenders ”), and any credit extended, letters of credit issued for the account of, any swap or hedging transactions entered into pursuant to or in connection with the Amended Revolving Credit Agreement, or loans made to the Reorganized Debtors by the Exit Financing Lenders pursuant to the Amended Revolving Credit Agreement or Amended Revolving Credit Facility Loan Documents shall be deemed to have been extended, issued, and made in good faith and for legitimate business purpose. All Liens and security interests granted pursuant to the Amended Revolving Credit Agreement and Amended Revolving Credit Facility Loan Documents, including without limitation, any documents required in connection with the creation or perfection of the liens securing the Amended Revolving Credit Agreement are (a) hereby approved in their entirety, (b) valid, binding, perfected, enforceable, Liens and security interests in the personal and real property described in and subject to such documents, and (c) not subject to avoidance, recharacterization or subordination under any applicable law.  On the Effective Date, (a) upon the granting of liens and the continuation of existing liens in accordance

 

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with the Amended Revolving Credit Agreement and Amended Revolving Credit Facility Loan Documents, the lenders thereunder shall have valid, binding and enforceable liens on the collateral specified in the Amended Revolving Credit Agreement and Amended Revolving Credit Facility Loan Documents and related guarantee and collateral documentation; and (b) upon the granting of guarantees, mortgages, pledges, liens and other security interests and the continuation of existing guarantees, mortgages, pledges, liens and other security interests in accordance with the Amended Revolving Credit Agreement and Amended Revolving Credit Facility Loan Documents, the guarantees, mortgages, pledges, liens and other security interests granted and continued to secure the obligations arising under the Amended Revolving Credit Agreement and Amended Revolving Credit Facility Loan Documents shall be granted and continued in good faith, for good and valuable consideration and for legitimate business purposes as an inducement to the lenders thereunder to convert to revolving exit loans and extend credit thereunder and shall be, and hereby are, deemed not to constitute a fraudulent conveyance or fraudulent transfer, shall not otherwise be subject to avoidance or recharacterization, and the priorities of such liens and security interests shall be as set forth in the Amended Revolving Credit Agreement and Amended Revolving Credit Facility Loan Documents and related guarantee and collateral documentation.  All Liens, mortgages and security interests securing the obligations arising under the Amended Revolving Credit Agreement and the other Amended Revolving Credit t Facility Loan Documents that were shared collateral securing the Revolving Credit Agreement Claims and the Second Lien Note Claims as of the Petition Date are unaltered by this Plan, and all such liens, mortgages and security interests are created and perfected with respect to the Amended Revolving Credit Facility Obligations to the same extent, in the same manner and on the same terms and priorities as they were with respect to the Revolving Credit

 

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Agreement Claims.  For purposes of all mortgages and deposit account control agreements that secured the obligations arising under the Revolving Credit Agreement and the DIP Credit Agreement, the Amended Revolving Credit Agreement is deemed an amendment and restatement of the Revolving Credit Agreement and the DIP Credit Agreement, and such mortgages and control agreements shall survive the Effective Date, shall not be cancelled and shall continue to secure the Amended Revolving Credit Facility Obligations.  The Amended Revolving Credit Facility Obligations constitute Priority Lien Obligations as defined in, and for all purposes under, the Intercreditor Agreement and the Amended Revolving Credit Agreement constitutes a Priority Credit Agreement as defined in, and for all purposes under, the Intercreditor Agreement.

 

13.                                Authorization and Issuance of Plan Securities .  The Debtors or Reorganized Debtors, as applicable, are authorized to issue all plan-related securities and documents, including, without limitation, the New Common Shares and New Warrants and any options or entitlements to purchase such plan-related securities, without the need for any further corporate, partnership or limited liability company action.  The Boards of Directors of the Debtors and the Reorganized Debtors and Reorganized Holdings shall each use their reasonable best efforts to have the New Common Shares and New Warrants listed on a nationally recognized exchange, as soon as practicable subject to meeting applicable listing requirements following the Effective Date.

 

14.                                Reinstatement of the Second Lien Notes .  Pursuant to the Plan, the Debtors are authorized and directed to Reinstate the Second Lien Notes.  Pursuant to the Second Lien Support Agreement, the Reorganized Debtors shall, on or reasonably practicable following the Effective Date (but in no event later than thirty (30) days following the Effective Date),

 

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commence an exchange solicitation consistent with the Second Lien Support Agreement and pay, as required, the Consent Fees (as defined in the Second Lien Support Agreement).  Notwithstanding anything to the contrary in this Plan, the Intercreditor Agreement, the Second Lien Notes and the liens, mortgages, and security interests securing the obligations arising thereunder remain in full force and effect after the Effective Date and after giving effect to the consummation of the Plan, and the Second Lien Notes and all obligations arising thereunder shall remain subject to and bound by the Intercreditor Agreement as Second Lien Obligations (as defined in the Intercreditor Agreement) thereunder with the same force, priority and effect as existed prior to the Petition Date.

 

15.                                Exercise Existing Warrants .  Pursuant to the Plan, holders of Existing Warrants had until the Warrant Record Date to exercise their respective rights under the Existing Warrants to purchase common stock of the Debtors and to have such common stock interests treated as Existing Equity Interests under the Plan.  To the extent a holder of Existing Warrants does not exercise its Existing Warrants prior to the Warrant Record Date, such Existing Warrants shall be cancelled on the Effective Date and the holders of such Existing Warrants shall not receive or retain any value under the Plan on account of such non-exercised Existing Warrants.

 

16.                                Cancellation of Existing Securities and Agreements .  Except as expressly provided herein and in the Plan, on the Effective Date, all notes, instruments, certificates evidencing debt of or interests in, the Debtors, including, without limitation, the Third Lien Notes, the Third Lien Note Indenture, the Unsecured Notes, the Unsecured Note Indentures, the Convertible Note Purchase Agreement, the Preferred Stock Certificate of Designation, the Existing Equity Interests, the Existing Warrants and all options and other entitlements to purchase and/or receive Existing Equity Interests or Existing Warrants, shall be deemed

 

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surrendered and cancelled and obligations of the Debtors thereunder shall be discharged; provided , however , that notwithstanding Confirmation or the occurrence of the Effective Date, the Third Lien Note Indenture, the Unsecured Note Indentures, and the Convertible Note Purchase Agreement shall continue in effect solely for purposes of enabling holders of Allowed Claims and Interests to receive distributions under the Plan; provided further , however , that the cancellation of the Third Lien Notes and the Third Lien Note Indenture and the Unsecured Notes and the Unsecured Note Indentures hereunder shall not in any way affect or diminish either (i) the rights and duties of the Third Lien Note Trustee and Unsecured Note Trustee to make distributions pursuant to the Plan to the Third Lien Noteholders and Unsecured Noteholders in accordance with the Third Lien Note Indenture and Unsecured Note Indentures, as applicable, (ii) the rights of the Third Lien Note Trustee to assert the Third Lien Note Trustee Charging Lien and the Unsecured Note Trustee to assert the Unsecured Note Trustee Charging Lien, as applicable, with respect to such distributions, (iii) the right of the Third Lien Note Trustee and the Unsecured Note Trustee to enforce any obligation owed to it under the Plan, or (iv) the right of the Third Lien Note Trustee and the Unsecured Note Trustee to appear in the Chapter 11 Cases or in any proceedings in the Bankruptcy Court or any other court.

 

17.                                Compliance with Section 1123(a)(6) of the Bankruptcy Code .  The Amended Organizational Documents, and the terms governing the issuance of the New Common Shares and New Warrants, comply in all respects with section 1123(a)(6) of the Bankruptcy Code, and are hereby approved.  The adoption and filing of the Amended Organizational Documents are hereby authorized, ratified, and approved.  The Debtors have complied in all respects, to the extent necessary, with section 1123(a)(6) of the Bankruptcy Code.

 

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18.                                Exemption from Securities Law .  The issuance of and the distribution under the Plan of the New Common Shares and New Warrants (and the New Common Shares to be issued upon exercise thereof) issued to holders of Allowed Third Lien Note Claims, Allowed Unsecured Note Claims, Allowed Convertible Note Claims and Allowed Existing Equity Interests each shall be exempt from registration under the Securities Act and any other applicable securities laws pursuant to section 1145 of the Bankruptcy Code.  These securities may be resold without registration under the Securities Act or other federal securities laws pursuant to the exemption provided by section 4(a)(1) of the Securities Act, unless the holder is an “underwriter” with respect to such securities, as that term is defined in section 1145(b) of the Bankruptcy Code.  In addition, such section 1145 exempt securities generally may be resold without registration under state securities laws pursuant to various exemptions provided by the respective laws of the several states.  The availability of the exemption under section 1145 of the Bankruptcy Code or any other applicable securities laws shall not be a condition to the occurrence of the Effective Date.

 

19.                                Other Transactions .  Prior to, or on the Effective Date, the Debtors may to the extent that such transaction would not affect the respective recoveries of the Requisite Creditors under the Plan, (a) cause any or all of the Debtor Affiliates to be liquidated or merged into one or more of the other Debtor Affiliates or any other subsidiaries of the Debtors or dissolved, (b) cause the transfer of assets between or among the Debtor Affiliates, (c) cause any or all of the Amended Organizational Documents of any Reorganized Debtor Affiliates to be implemented, effected or executed, (d) use the proceeds of the Amended Revolving Credit Agreement, plus Cash on hand, to pay all Restructuring Expenses, (e) change the name of one or more of the Reorganized Debtors to such name that may be determined in accordance with

 

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applicable law and (f) engage in any other transaction in furtherance of the Plan.  Any such transactions may be effective as of the Effective Date pursuant to this Order without any further action by the stockholders, members, general or limited partners or directors of any of the Debtors or the Debtors in Possession.

 

20.                                Cancellation of Liens .  Except as otherwise specifically provided herein and in the Plan, upon the occurrence of the Effective Date, any Lien securing any Secured Claim shall be deemed released, and the holder of such Secured Claim shall be authorized and directed to release any collateral or other property of the Debtors (including any Cash collateral) held by such holder and to take such actions as may be requested by the Reorganized Debtors, to evidence the release of such Lien, including the execution, delivery and filing or recording of such releases as may be requested by the Reorganized Debtors.  Notwithstanding the foregoing, the liens, mortgages, and other instruments evidencing the DIP Loans, which were assigned by the Revolving Credit Agreement Lenders for the benefit of the DIP Lenders pursuant to Paragraph 6(d) of the DIP Financing Orders, shall be assigned under the Amended Revolving Credit Agreement for the benefit of the lenders thereunder.

 

21.                                Directors and Officers of the Reorganized Debtors .  Upon the Effective Date, the terms of the current members of the board of directors of Holdings shall expire and, in accordance with the Plan, the persons designated to become members of the New Board as set forth in Plan Supplement or otherwise identified prior to the Effective Date shall be appointed to the New Board, without the need for any further corporate action.  Except as otherwise provided in the Plan Supplement, the officers of the respective Debtors immediately before the Effective Date shall serve as the initial officers of each of the corresponding Reorganized Debtors upon the Effective Date and in accordance with any employment agreement with the Reorganized Debtors

 

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and applicable non-bankruptcy law, as may be amended as contemplated by the Restructuring Support Agreement. After the Effective Date, the selection of officers of the Reorganized Debtors shall be as provided by their respective organizational documents. Except as otherwise provided in the Plan Supplement, the members of the board of directors for each of the Debtor Affiliates immediately before the Effective Date shall serve as the members of the board of directors of each of the corresponding Reorganized Debtor Affiliates on or after the Effective Date and thereafter shall be determined as set forth in their respective organizational documents.  The Amended Organizational Documents shall be in full force and effect on the Effective Date.

 

22.                                Management Incentive Plan .  Pursuant to the Plan, 10% of the New Common Shares shall be reserved for issuance as awards under a post-Restructuring Management Incentive Plan, as described in the Plan, and as set forth in further detail in the Plan Supplement.  All awards issued under the Management Incentive Plan shall be dilutive of all other New Common Shares issued pursuant to the Plan.

 

23.                                Withholding and Reporting Requirements .  In connection with Section 5.10 of the Plan and all instruments issued in connection therewith and distributed thereon, the Debtors shall comply with all applicable withholding and reporting requirements imposed by any federal, state or local taxing authority, and all distributions under the Plan shall be subject to any such withholding or reporting requirements.  Notwithstanding the above, each holder of an Allowed Claim or Allowed Interest that is to receive a distribution under the Plan shall have the sole and exclusive responsibility for the satisfaction and payment of any tax obligations imposed on such holder by any Governmental Unit, including income, withholding and other tax obligations, on account of such distribution.  The Debtors have the right, but not the obligation, to not make a distribution until such holder has made arrangements satisfactory to any issuing or

 

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disbursing party for payment of any such tax obligations.  The Debtors may require, as a condition to receipt of a distribution, that the holder of an Allowed Claim complete and return a Form W-8 or W-9, as applicable to each such holder.  If the Debtors make such a request and the holder fails to comply before the date that is 180 days after the request is made, the amount of such distribution shall irrevocably revert to the applicable Reorganized Debtor and any Claim or Interest in respect of such distribution shall be discharged and forever barred from assertion against such Reorganized Debtor or its respective property.

 

24.                                Exemption From Certain Transfer Taxes .  Pursuant to section 1146 of the Bankruptcy Code and Section 5.11 of the Plan, (a) the issuance, transfer or exchange of any securities, instruments or documents, (b) the creation of any Lien, mortgage, deed of trust or other security interest, (c) the making or assignment of any lease or sublease or the making or delivery of any deed or other instrument of transfer under, pursuant to, in furtherance of, or in connection with the Plan, including, without limitation, any deeds, bills of sale or assignments executed in connection with any of the transactions contemplated under the Plan or the reinvesting, transfer or sale of any real or personal property of the Debtors pursuant to, in implementation of or as contemplated in the Plan (whether to one or more of the Reorganized Debtors or otherwise), (d) the grant of collateral under the Amended Revolving Credit Agreement and (e) the issuance, renewal, modification or securing of indebtedness by such means, and the making, delivery or recording of any deed or other instrument of transfer under, in furtherance of, or in connection with, the Plan, including, without limitation, this Order, shall not be subject to any document recording tax, stamp tax, conveyance fee or other similar tax, mortgage tax, real estate transfer tax, mortgage recording tax, Uniform Commercial Code filing or recording fee, regulatory filing or recording fee, sales tax, use tax or other similar tax or

 

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governmental assessment.  Consistent with the foregoing, each recorder of deeds or similar official for any county, city or Governmental Unit in which any instrument hereunder is to be recorded shall, pursuant to this Order, be ordered and directed to accept such instrument without requiring the payment of any filing fees, documentary stamp tax, deed stamps, stamp tax, transfer tax, intangible tax or similar tax.

 

25.                                Restructuring Transactions .  On the Effective Date or as soon as reasonably practicable thereafter, the Reorganized Debtors may take all actions as may be necessary or appropriate to effect any transaction described in, approved by, contemplated by, or necessary to effectuate the Plan, including: (a) the execution and delivery of appropriate agreements or other documents of merger, consolidation, restructuring, conversion, disposition, transfer, dissolution or liquidation containing terms that are consistent with the terms of the Plan and that satisfy the applicable requirements of applicable law and any other terms to which the applicable entities may agree; (b) the execution and delivery of appropriate instruments of transfer, assignment, assumption or delegation of any asset, property, right, liability, debt or obligation on terms consistent with the terms of the Plan and having other terms for which the applicable parties agree; (c) the filing of appropriate certificates or articles of incorporation, reincorporation, amendments, merger, consolidation, conversion or dissolution pursuant to applicable state law; and (d) all other actions that the applicable entities determine to be necessary or appropriate, including making filings or recordings that may be required by applicable law, subject, in each case, to the Amended Organizational Documents and the requirements hereof and under the Plan.

 

26.                                Distributions under the Plan .  The provisions of Section 6 of the Plan, including, without limitation, the provisions governing distributions, are fair and reasonable and

 

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are approved.  Notwithstanding anything to the contrary in the Plan, the Disclosure Statement or this Order, Section 6.11 of the Plan and the corresponding provisions of the Disclosure Statement regarding allocation of distributions between principal and interest shall be deleted in their entirety and of no force and effect.

 

27.                                Disputed Claims .  The provisions of Section 7 of the Plan, including, without limitation, the provisions governing procedures for resolving Disputed Claims, are fair and reasonable and are approved.  On and after the Effective Date, except as otherwise provided herein and in the Plan, all Claims and Interests will be paid in the ordinary course of business of the Reorganized Debtors.  Except for any proofs of claims asserting damages arising out of the rejection of an executory contract or unexpired lease by any of the Debtors pursuant to Section 8.3 of the Plan and Paragraph 29 of this Order, upon the Effective Date, all proofs of claim filed against the Debtors, regardless of the time of filing, and including claims filed after the Effective Date, shall be deemed withdrawn.  To the extent not otherwise provided for in this Order or in the Plan, the deemed withdrawal of a proof of claim is without prejudice to such claimant’s rights, if any, under Section 7.1 of the Plan to assert their claims in any forum as though the Debtors’ cases had not been commenced.

 

28.                                Assumption of Contracts and Leases .  Pursuant to Section 8.1 of the Plan, as of and subject to the occurrence of the Effective Date, all executory contracts and unexpired leases to which any of the Debtors are parties shall be deemed assumed, except for an executory contract or unexpired lease that (a) previously has been assumed or rejected pursuant to Final Order of the Court, (b) is specifically designated as a contract or lease to be rejected on the Schedule of Rejected Contracts attached as Exhibit B to the Plan, as may be amended or amended and restated in the Plan Supplement, with the reasonable consent of the Requisite Third

 

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Lien Noteholders, or (c) is the subject of a separate (i) assumption motion filed by the Debtors or (ii) rejection motion filed by the Debtors under section 365 of the Bankruptcy Code before the Effective Date.  The Reorganized Debtors shall pay any Cure amounts owed, if any, under each such executory contract or unexpired lease as provided in the Plan.  Each executory contract and unexpired lease assumed pursuant to the Plan shall vest in and be fully enforceable by the applicable Reorganized Debtor in accordance with its terms, except as modified by the provisions of the Plan, any subsequent order of the Court, or applicable law.  This Order shall constitute an order of the Court under sections 365 and 1123(b) of the Bankruptcy Code approving the contract and lease assumptions described above, as of the Effective Date.

 

29.                                Rejection Claims .  This Order shall constitute the Court’s approval of the rejection of all the leases and contracts identified in the Schedule of Rejected Contracts.  In the event that the rejection of an executory contract or unexpired lease by any of the Debtors pursuant to the Plan results in damages to the other party or parties to such contract or lease, a Claim for such damages, if not heretofore evidenced by a timely filed proof of claim, shall be forever barred and shall not be enforceable against the Debtors or the Reorganized Debtors, or their respective properties or interests in property as agents, successors or assigns, unless a proof of claim is filed with the Bankruptcy Court and served upon counsel for the Debtors and the Reorganized Debtors no later than thirty (30) days after the later of (1) the Confirmation Date or (2) the effective date of rejection of such executory contract or unexpired lease.  Any such Claims, to the extent Allowed, shall be classified as Class 8 General Unsecured Claims.  For the avoidance of doubt, Claims for rejection damages shall be subject in all respects, to the extent applicable, to the limitations set forth in section 502(b) of the Bankruptcy Code.

 

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30.                                Royalty Interests .  Notwithstanding anything herein to the contrary, holders of valid royalty interests in the Debtors’ oil and gas properties will receive, in the ordinary course of business according to ordinary payment terms and practices, any revenue payments held for distribution to them by the Debtors under applicable law.  All proofs of claim filed on account of any such ordinary course revenue payments held for distribution by the Debtors shall be deemed satisfied and expunged from the official claims register to the extent such revenue payments have been distributed to the Person that filed such proof of claim without any further notice or action, order or approval of the Bankruptcy Court, as of the later of the entry of the Confirmation Order or the date of distribution of the applicable revenue payment.

 

31.                                The Lease Amendments .  Notwithstanding anything herein or in the Plan to the contrary, except as provided in this Paragraph 31, the leases that are the subject of the Lease Amendments filed as a part of the Plan Supplement are hereby assumed, as amended by the Lease Amendments, in accordance with and on the terms set forth in each of the respective Lease Amendments.

 

(a)                                  The real property lease between Holdings and 1000 Louisiana, LP, dated January 25, 2012 (as thereafter amended, modified or supplemented from time to time, the “ Wells Fargo Lease ”) is hereby conditionally assumed by the Debtors and Reorganized Debtors, subject to the terms of that certain Second Amendment to Office Lease set forth in the Plan Supplement (the “ Second Amendment ”); provided , that, in the event the “Effective Date,” as defined in the Second Amendment, has not occurred by 5:00 p.m.  (Prevailing Central Time) on September 16, 2016 (the “ Execution Deadline ”), the Debtors shall schedule a subsequent hearing

 

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on appropriate notice to the applicable parties to consider the rejection of the Wells Fargo Lease.  For the avoidance of doubt to the extent the “Effective Date” of the Second Amendment does not occur as set forth in the immediately preceding sentence, there shall be no claims or damages arising from the Second Amendment.  Notwithstanding the foregoing, neither the Landlord nor the Tenant under the Second Amendment may alter the terms of the Second Amendment until and unless the Effective Date does not occur prior to the Execution Deadline.

 

(b)                                  The real property lease between Holdings and Cathexis Holding DE, LLC pertaining to Wells Fargo Plaza, Suite 6600 (as thereafter amended, modified or supplemented from time to time, the “ Houston Sublease ”) is hereby conditionally assumed by the Debtors and Reorganized Debtors, subject to the terms of that certain First Amendment to Sublease as executed by Subtenant as of September 7, 2016 (the “ Houston Sublease Amendment ”); provided , that, in the event the “Effective Date,” as defined in the Houston Sublease Amendment, has not occurred by 5:00 p.m. (Prevailing Central Time) on September 16, 2016 (the “ Sublease Execution Deadline ”), the Debtors shall schedule a subsequent hearing on appropriate notice to the applicable parties to consider the rejection of the Houston Sublease.  For the avoidance of doubt to the extent the “Effective Date” of the Houston Sublease Amendment does not occur as set forth in the immediately preceding sentence, there shall be no claims or damages arising from the Houston Sublease Amendment.  Notwithstanding the

 

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foregoing, neither the Sublandlord nor the Subtenant under the Houston Sublease Amendment may alter the terms of the Houston Sublease Amendment until and unless the Effective Date does not occur prior to the Sublease Execution Deadline.

 

32.                                Survival of the Debtors’ Indemnification Obligations .  Any obligations of the Debtors pursuant to their corporate charters, bylaws, limited liability company agreements or other organizational documents to indemnify current and former officers, directors, members, managers, partners, agents and/or employees with respect to all present and future actions, suits and proceedings against the Debtors or such officers, directors, members, managers, partners, agents and/or employees, based upon any act or omission for or on behalf of the Debtors shall not be discharged or impaired by confirmation of the Plan provided that the Reorganized Debtors shall not indemnify directors of the Debtors for any Claims or Causes of Action arising out of or relating to any act or omission that is a criminal act unless such director had no reasonable cause to believe its conduct was unlawful, or for any other acts or omissions that are excluded under the terms of the foregoing organizational documents.  All such obligations shall be deemed and treated as executory contracts to be assumed by the Debtors under the Plan and shall continue as obligations of the Reorganized Debtors.  Any claim based on the Debtors’ obligations herein shall not be a Disputed Claim or subject to any objection in either case by reason of section 502(e)(1)(B) of the Bankruptcy Code.  In addition, after the Effective Date, the Reorganized Debtors shall not terminate or otherwise reduce the coverage under any directors’ and officers’ insurance policies (including any “tail policy”) in effect as of June 1, 2016, and all officers, directors, members and partners of the Debtors who served in such capacity at any time before the Effective Date shall be entitled to the full benefits of any such policy for the full term of such

 

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policy regardless of whether such officer, directors, members and/or partners remain in such positions after the Effective Date.

 

33.                                Compensation and Benefit Plans .  All material employee compensation and Benefit Plans of the Debtors in effect as of June 1, 2016, shall be deemed to be, and shall be treated as if they were, executory contracts that are to be assumed under the Plan, as may be amended as provided in the Restructuring Support Agreement unless rejected pursuant to Paragraphs 28 and 29 above or by agreement of the Debtors and each affected employee; provided , however , notwithstanding the foregoing, on the Effective Date, the First Amended and Restated 2012 Long-Term Incentive Plan and the Equity-Based Incentive Policy shall be terminated and any restricted shares of common stock of Holdings issued thereunder shall be treated as Existing Equity Interests as provided in Section 4.12 of the Plan.

 

34.                                US Specialty Insurance .  Notwithstanding anything else in the Plan or this Order to the contrary, the indemnity agreement(s) between the Debtors and US Specialty Insurance Company (“ US Specialty ”) are hereby assumed, and any obligations owed to US Specialty with respect thereto shall be Allowed Administrative Expense Claims under the Plan without the need for filing further proofs of claim or objecting to any proposed cure amounts and any liens and/or claims of US Specialty on collateral pursuant to such agreements and/or related agreements, including but not limited to any prepetition or post-petition letters of credit, shall not be released pursuant to the Plan or this Order. In addition, any Claim of US Specialty against HK TMS,LLC shall not be released pursuant to the Plan or this Order.  Further, to the extent that US Specialty pays any Claim of a third-party on account of its obligations as surety and subrogates to such Claim, such Claim shall not be disallowed pursuant to any provision of the Plan or this Order.

 

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35.                                Federal Lease Interests .  The United States Department of the Interior (“ Interior ”) consents to the Reorganized Debtors’ assumption of the Debtors’ interests in their federal oil and/or gas leases (collectively, “ Federal Lease Interests ”), including Indian oil and/or gas leases administered by the United States, subject to the following acknowledgments pertaining to the Federal Lease Interests, which are hereby made by the Debtors.  The Debtors are not abandoning or otherwise rejecting any Federal Lease Interests pursuant to the Plan.  The Plan does not assign any Federal Lease Interest to any entity other than the Reorganized Debtors and no purported assignment of a Federal Lease Interest under the Plan shall be effective without the express prior consent of the United States and the Indian mineral owner, if applicable.  The Reorganized Debtors (including any transferee) shall, on or after the Effective Date, assume and succeed to all financial assurance, bonding, maintenance, plugging and abandonment, and other regulatory obligations in connection with the Federal Lease Interests assumed pursuant to the Plan and United States’ consent.  Nothing in the Plan or any document implementing the Plan shall be interpreted to set cure amounts, nor limit or waive Interior’s right to such cure amounts.  However, notwithstanding the foregoing, any undisputed amounts owed to the United States as of the Effective Date of the Plan under any Federal Lease Interests shall be paid in full by the later of: (1) the Effective Date of the Plan; or (2) due date in the ordinary course.  The undisputed amount paid under this provision shall be the amount determined by Interior by the Effective Date of the Plan, subject to revision pending further discussion with the Debtors and/or the Reorganized Debtors.  The Reorganized Debtors retain all rights of the Debtors to contest any amounts owed, other than those defenses arising from bankruptcy; provided , however , that any challenge based on a defense must be raised in the United States’ administrative review process.  As preliminarily determined, as of September 1, 2016, the undisputed amount owed is

 

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$210,842.50.  Notwithstanding any other provision in the Plan or any document implementing the Plan, Interior shall retain the right to perform any audit and/or compliance review on the Federal Lease Interests, and if appropriate, collect from the Reorganized Debtors any additional monies owed by the Debtors on the Federal Lease Interests, without those rights being adversely affected by these bankruptcy proceedings.  Such rights shall be preserved in full as if this bankruptcy had not occurred.  The Reorganized Debtors will retain all defenses, other than defenses arising from the bankruptcy; provided , however , that any challenge based on a defense must be raised in the United States’ administrative review process.

 

36.                                Reservation of Rights in Favor of Governmental Units .  Nothing in the Plan, this Order or the related Definitive Documents discharges or releases the Debtors or any other entity from any debt, obligation, claim, liability or cause of action of any Governmental Unit (as that term is defined in section 101(27) if the Bankruptcy Code) or impairs the ability of any Governmental Unit to pursue any debt, obligation, claim, liability or cause of action against any Debtor, Reorganized Debtor or non-Debtor.  All claims, liabilities, or causes of action of, or to, any Governmental Unit shall survive the Chapter 11 Cases as if the cases had not been commenced and be paid and determined in the manner and by the administrative or judicial tribunals in which such rights or claims would have been resolved or adjudicated if the Chapter 11 Cases had not been commenced.  Without limiting the foregoing, for the avoidance of doubt: (1) Governmental Units shall not be required to file any claims in the Debtors’ Chapter 11 Cases; (2) nothing shall affect or impair the ability of any Governmental Unit to make demand on, be paid by, or otherwise pursue any sureties that are jointly and severally liable with the Debtors and/or the Reorganized Debtors for any debt owed to a Governmental Unit; (3) nothing shall affect or impair the exercise of any Governmental Unit’s police and regulatory powers against

 

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the Debtors and/or the Reorganized Debtors; and (4) nothing shall affect or impair any Governmental Unit’s rights to assert setoff and recoupment, including contingent or unliquidated rights, against the Debtors and/or the Reorganized Debtors.   For the avoidance of any doubt, Governmental Unit shall include State taxing authorities.

 

37.                                GeoResources Action .  Notwithstanding anything herein, in the Plan or in the Chapter 11 Cases to the contrary, nothing in this Order, the Plan or the Chapter 11 Cases shall impair or otherwise waive, release or discharge any rights, claims, appeals or defenses arising out of or relating to the action titled Warberg, et al. v. GeoResources, Inc. , Case No. 652332/12 pending before the Supreme Court of the State of New York (the “ GeoResources Action ”) or the underlying facts and circumstances that form the basis of the GeoResources Action and all rights, claims, appeals and defenses of all of the parties to the GeoResources Action are hereby preserved and deemed unimpaired, including without limitation all rights related to the bond filed in the GeoResources Action as Docket No. 642 on or about March 24, 2016.

 

38.                                Vodenichar Action .  Notwithstanding anything herein or in the Plan to the contrary, nothing in this Order (except as specifically provided in this paragraph) or in the Plan shall impair, modify, stay, enjoin, exculpate, or otherwise waive, release or discharge any claims or defenses of the representative plaintiffs, the defendants/crossclaimants MORASCYZK & POLOCHAK, Attorneys at Law and CO-EXPRISE, INC., d/b/a CX-Energy, the Class (as defined in the Stipulated Settlement Agreement (the “ SSA ”) dated July 6, 2016 between the parties to the Vodenichar Action), or the Debtors arising out of or relating to the action titled Jeffry S. Vodenichar, et al., v. Halcón Energy Properties, Inc., et al. , Case No. 2013-512 pending before the Court of Common Pleas of Mercer County, Pennsylvania (the “ Vodenichar Action ”)

 

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or the underlying facts and circumstances that form the basis of the Vodenichar Action.  All causes of action, rights, claims and defenses of the representative plaintiffs, the defendants/crossclaimants MORASCYZK & POLOCHAK, Attorneys at Law and CO-EXPRISE, INC., d/b/a CX-Energy, the Class (as defined in the SSA), and the Debtors in the Vodenichar Action, including those contained in the SSA, are hereby preserved as if the Chapter 11 cases had never been commenced.  Subject to the occurrence of the Effective Date, the Vodenichar Action is not subject to any stay or injunction and the parties thereto are authorized to take any and all steps or actions in or related to the Vodenichar Action.  Further, once the contemplated Settlement Order (as defined in the SSA) is final and non-appealable, the Debtors, on behalf of themselves, their estates, and their successors, assigns, and designees, including without limitation the Reorganized Debtors, hereby waive all rights to challenge the Settlement (as defined in the SSA), and release any claims or causes of action seeking to challenge the Settlement (as defined in the SSA) or seeking disgorgement or avoidance of any Settlement Benefits (as defined in the SSA), except in connection with a breach of obligations under the Settlement or the Settlement Order.

 

39.                                Conditions Precedent to Effective Date .  The Plan shall not become effective unless and until the conditions set forth in Section 9.1 of the Plan have been satisfied or waived pursuant to Section 9.2 of the Plan.

 

40.                                Administrative Expenses .  Except to the extent that a holder of an Allowed Administrative Expense Claim and the Debtors or the Reorganized Debtors agrees to different treatment, and subject to Paragraph 41 below with respect to Fee Claims, the Debtors (or the Reorganized Debtors, as the case may be) shall pay to each holder of an Allowed Administrative Expense Claim Cash in an amount equal to such Claim on, or as soon thereafter as is reasonably

 

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practicable, the later of (a) the Effective Date and (b) the first Business Day after the date that is thirty (30) calendar days after the date such Administrative Expense Claim becomes an Allowed Administrative Expense Claim; provided , however , that Allowed Administrative Expense Claims representing liabilities incurred in the ordinary course of business by the Debtors, as debtors in possession, or liabilities arising under loans or advances to or other obligations incurred by the Debtors, as debtors in possession, whether or not incurred in the ordinary course of business, shall be paid by the Debtors in the ordinary course of business, consistent with past practice and in accordance with the terms and subject to the conditions of any agreements governing, instruments evidencing or other documents relating to such transactions.

 

41.                                Professional Compensation .  All entities seeking awards by the Court of compensation for services rendered or reimbursement of expenses incurred on or after the Petition Date through the Effective Date by professional Persons retained by the Debtors or any statutory committee appointed in the Chapter 11 Cases pursuant to sections 327, 328, 330, 331, 503(b), or 1103 of the Bankruptcy Code in the Chapter 11 Cases shall (a) shall file their respective final applications for allowance of compensation for services rendered and reimbursement of expenses incurred by the date that is forty-five (45) days after the Effective Date, (b) shall be paid in full from the Debtors’ or Reorganized Debtors’ Cash on hand in such amounts as are Allowed by the Court (i) upon the later of (A) the Effective Date and (B) the date upon which the order relating to any such Allowed Fee Claim is entered or (ii) upon such other terms as may be mutually agreed upon between the holder of such an Allowed Fee Claim and the Debtors or, on and after the Effective Date, the Reorganized Debtors.  The Reorganized Debtors are authorized to pay compensation for services rendered or reimbursement of expenses incurred after the Effective Date in the ordinary course and without the need for Court approval.

 

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42.                                Vesting of Assets .  On the Effective Date, pursuant to sections 1141(b) and (c) of the Bankruptcy Code, all property of the Debtors’ estates shall vest in the Reorganized Debtors free and clear of all Claims, liens, encumbrances, charges and other interests, except as provided pursuant to the Plan, this Order, or the Amended Revolving Credit Agreement. The Reorganized Debtors may operate their businesses and may use, acquire and dispose of property free of any restrictions of the Bankruptcy Code or the Bankruptcy Rules and in all respects as if there were no pending cases under any chapter or provision of the Bankruptcy Code, except as provided in the Plan.  From and after the Effective Date, the Reorganized Debtors may operate each of their businesses and use, acquire, or dispose of assets free of any restrictions imposed by the Bankruptcy Code, the Court, or the U.S. Trustee (except for quarterly operating reports and fees associated therewith until the closing of the applicable Chapter 11 Cases).

 

43.                                Discharge .  Except as otherwise provided here and in the Plan, effective as of the Effective Date: (a) the rights afforded in the Plan and the treatment of all Claims and Interests shall be in exchange for and in complete satisfaction, discharge and release of all claims and interests of any nature whatsoever, including any interest accrued on such claims from and after the Petition Date, against the Debtors or any of their assets, property or estates; (b) the Plan shall bind all holders of Claims and Interests, notwithstanding whether any such holders failed to vote to accept or reject the Plan or voted to reject the Plan; (c) all Claims and Interests shall be satisfied, discharged and released in full, and the Debtors’ liability with respect thereto shall be extinguished completely, including any liability of the kind specified under section 502(g) of the Bankruptcy Code; and (d) all entities shall be precluded from asserting against the Debtors, the Debtors’ estates, the Reorganized Debtors, their successors and assigns and their assets and properties any other Claims or Interests based upon any documents, instruments or any act or

 

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omission, transaction or other activity of any kind or nature that occurred before the Effective Date.

 

44.                                Injunction Against Interference with Plan .  From and after the Effective Date, all entities are permanently enjoined from commencing or continuing in any manner, any suit, action or other proceeding, on account of or respecting any claim, demand, liability, obligation, debt, right, cause of action, interest or remedy released or to be released pursuant to the Plan or this Order.

 

45.                                Releases by the Debtors .  As of the Effective Date, except for the rights that remain in effect from and after the Effective Date to enforce the Plan and the Definitive Documents, for good and valuable consideration, the adequacy of which is hereby confirmed, including, without limitation, the service of the Released Parties to facilitate the reorganization of the Debtors and the implementation of the Restructuring, and except as otherwise provided in the Plan or in this Order, the Released Parties shall be deemed forever released and discharged, to the maximum extent permitted by law, by the Debtors, the Reorganized Debtors, and the Estates from any and all Claims, obligations, suits, judgments, damages, demands, debts, rights, Causes of Action, remedies, losses, and liabilities whatsoever, including any derivative claims, asserted or assertable on behalf of the Debtors, the Reorganized Debtors, or their Estates, whether liquidated or unliquidated, fixed or contingent, matured or unmatured, known or unknown, foreseen or unforeseen, existing or hereinafter arising, in law, equity, or otherwise, that the Debtors, the Reorganized Debtors, or their Estates would have been legally entitled to assert in their own right (whether individually or collectively) or on behalf of the holder of any Claim or Interest or other Person, based on or relating to, or in any manner arising from, in whole or in part, the Debtors, the Chapter 11 Cases, the purchase, sale, or rescission of the

 

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purchase or sale of any security of the Debtors or the Reorganized Debtors, the subject matter of, or the transactions or events giving rise to, any Claim or Interest that is treated in the Plan, the business or contractual arrangements between any Debtor and any Released Party, the Restructuring, the restructuring of any Claim or Interest before or during the Chapter 11 Cases, the Disclosure Statement, the Restructuring Support Agreement, and the Plan and related agreements, instruments, and other documents (including the Definitive Documents), and the negotiation, formulation, or preparation thereof, the solicitation of votes with respect to the Plan, or any other act or omission, other than Claims or Causes of Action arising out of or related to any act or omission of a Released Party that is a criminal act or constitutes fraud, gross negligence or willful misconduct.  For the avoidance of doubt, for purposes of Paragraphs 46 and 47 of this Order and Sections 10.6 and 10.7 of the Plan, “Definitive Documents” shall include the Revolving Credit Agreement and the payoff thereof.

 

46.                                Releases by Holders of Claims and Interests .  As of the Effective Date, except for the rights that remain in effect from and after the Effective Date to enforce the Plan and the Definitive Documents, for good and valuable consideration, the adequacy of which is hereby confirmed, including, without limitation, the service of the Released Parties to facilitate the reorganization of the Debtors and the implementation of the Restructuring, and except as otherwise provided in the Plan or in this Order, the Released Parties shall be deemed forever released and discharged, to the maximum extent permitted by law, by (i) the holders of all Claims or Interests who vote to accept the Plan, (ii) the holders of Claims or Interests that are Unimpaired under the Plan, (iii) the holders of Claims or Interests whose vote to accept or reject the Plan is solicited but who do not vote either to accept or to reject the Plan, and (iv) the holders of Claims or Interests who vote to reject the Plan but do not opt out of granting the releases set

 

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forth herein, in each case from any and all Claims, obligations, suits, judgments, damages, demands, debts, rights, Causes of Action, remedies, losses, and liabilities whatsoever, including any derivative claims, asserted or assertable on behalf of the Debtors, the Reorganized Debtors, or their Estates, whether liquidated or unliquidated, fixed or contingent, matured or unmatured, known or unknown, foreseen or unforeseen, existing or hereinafter arising, in law, equity, or otherwise, that such holders or their affiliates would have been legally entitled to assert in their own right (whether individually or collectively) or on behalf of the holder of any Claim or Interest or other Person, based on or relating to, or in any manner arising from, in whole or in part, the Debtors, the Reorganized Debtors, or their Estates, the Chapter 11 Cases, the purchase, sale, or rescission of the purchase or sale of any security of the Debtors or the Reorganized Debtors, the subject matter of, or the transactions or events giving rise to, any Claim or Interest that is treated in the Plan, the business or contractual arrangements between any Debtor and any Released Party, the Restructuring, the restructuring of any Claim or Interest before or during the Chapter 11 Cases, the Disclosure Statement, the Restructuring Support Agreement, and the Plan and related agreements, instruments, and other documents (including the Definitive Documents), and the negotiation, formulation, or preparation thereof, the solicitation of votes with respect to the Plan, or any other act or omission, other than Claims or Causes of Action arising out of or related to any act or omission of a Released Party that constitutes fraud, gross negligence or willful misconduct.  For the avoidance of doubt, nothing in this Order or in the releases set forth in Sections 10.6 or 10.7 of the Plan shall release or discharge the rights of any Claim or Interest holder to receive a payment or distribution provided for under the Plan.

 

47.                                Exculpation .  To the maximum extent permitted by applicable law, upon the Effective Date, no Exculpated Party will have or incur, and each Exculpated Party is hereby

 

52



 

released and exculpated from, any claim, obligation, suit, judgment, damage, demand, debt, right, Cause of Action, remedy, loss, and liability for any claim in connection with or arising out of the administration of the Chapter 11 Cases; the negotiation and pursuit of the Disclosure Statement, the Restructuring Support Agreement, the Restructuring Transactions, the Plan, or the solicitation of votes for, or confirmation of, the Plan; the funding of the Plan; the occurrence of the Effective Date; the administration of the Plan or the property to be distributed under the Plan; the issuance of securities under or in connection with the Plan; or the transactions in furtherance of any of the foregoing; except for fraud, gross negligence or willful misconduct. This exculpation shall be in addition to, and not in limitation of, all other releases, indemnities, exculpations and any other applicable law or rules protecting such Exculpated Parties from liability.

 

48.                                Corporate and Limited Liability Action .  Upon the Effective Date, all actions contemplated by the Plan and this Order shall be deemed authorized and approved in all respects, including (a) subject to the provisions of Section 8.5 of the Plan, the assumption of all employee compensation and Benefit Plans of the Debtors as in effect as of June 1, 2016, as may be amended as provided in the Restructuring Support Agreement, (b) the selection of the directors and officers for the Reorganized Debtors, (c) the entry into the Amended Revolving Credit Agreement, (d) the issuance and distribution of the New Common Shares and New Warrants, and (e) all other actions contemplated by the Plan (whether to occur before, on or after the Effective Date), in each case in accordance with and subject to the terms hereof.  All matters provided for in the Plan and this Order involving the corporate, limited liability company or partnership structure of the Debtors or the Reorganized Debtors, and any corporate, limited liability company or partnership action required by the Debtors or the Reorganized Debtors in

 

53



 

connection with the Plan shall be deemed to have occurred and shall be in effect, without any requirement of further action by the security holders, directors, officers, members or partners of the Debtors or the Reorganized Debtors.  On or (as applicable) before the Effective Date, the appropriate officers of the Debtors or the Reorganized Debtors, as applicable, shall be authorized and directed to issue, execute and deliver the agreements, documents, securities and instruments contemplated by the Plan (or necessary or desirable to effect the transactions contemplated by the Plan) in the name of and on behalf of the Reorganized Debtors, including with limitation, the Amended Revolving Credit Agreement and any and all other agreements, documents, securities and instruments relating thereto.  The authorizations and approvals contemplated by Section 10.13 of the Plan shall be effective notwithstanding any requirements under non-bankruptcy law.

 

49.                                Payment of Statutory Fees .  All fees payable pursuant to 28 U.S.C. § 1930, shall be paid as and when due or otherwise pursuant to an agreement between the Reorganized Debtors and the U.S. Trustee, until such time as a chapter 11 case for a Debtor shall be closed.

 

50.                                Payment of Consenting Creditors’ and Revolving Credit Agreement Agent’ Fees .  On the Effective Date, the Reorganized Debtors shall pay in Cash all reasonable and documented Restructuring Expenses of the Revolving Credit Agreement Agent and each of the Consenting Creditors, as set forth in the Restructuring Support Agreement.

 

51.                                Trustee Fees and Expenses .  On the Effective Date, the Debtors or Reorganized Debtors, as applicable, shall pay in Cash all Third Lien Note Trustee Fees and Expenses and Unsecured Note Fees and Expenses, without the need for the Third Lien Note Trustee or Unsecured Note Trustee to file fee applications or any other applications with the Bankruptcy Court, and from and after the Effective Date, the Reorganized Debtors shall pay in Cash all Third Lien Note Trustee Fees and Expenses and Unsecured Note Trustee Fees and

 

54



 

Expenses.  Nothing in this Order or the Plan shall in any way affect or diminish the right of the Third Lien Note Trustee to assert the Third Lien Note Trustee Charging Lien or the Unsecured Note Trustee to assert the Unsecured Note Trustee Charging Lien against any distribution to Third Lien Noteholders with respect to any unpaid Third Lien Note Trustee Fees and Expenses or other amounts payable to the Third Lien Note Trustee under the Third Lien Note Indenture or to Unsecured Noteholders with respect to any unpaid Unsecured Note Trustee Fees and Expenses or other amounts payable to the Unsecured Note Trustee under the Unsecured Note Indentures, as applicable.

 

52.                                Reversal/Stay/Modification/Vacatur of Order .  Except as otherwise provided in this Order, if any or all of the provisions of this Order are hereafter reversed, modified, vacated, or stayed by subsequent order of this Court, or any other court, such reversal, stay, modification, or vacatur shall not affect the validity or enforceability of any act, obligation, indebtedness, liability, priority, or lien incurred or undertaken by the Debtors or the Reorganized Debtors, as applicable, prior to the effective date of such reversal, stay, modification, or vacatur.  Notwithstanding any such reversal, stay, modification, or vacatur of this Order, any such act or obligation incurred or undertaken pursuant to, or in reliance on, this Order prior to the effective date of such reversal, stay, modification, or vacatur shall be governed in all respects by the provisions of this Order, the Plan, the Definitive Documents, or any amendments or modifications to the foregoing.

 

53.                                Retention of Jurisdiction .  Notwithstanding the entry of this Order or the occurrence of the Effective Date, pursuant to sections 105 and 1142 of the Bankruptcy Code, this Court, except as otherwise provided in the Plan, the Definitive Documents, or this Order, shall retain exclusive jurisdiction over all matters arising out of, and related to, the Chapter 11 Cases

 

55



 

to the fullest extent as is legally permissible, including, but not limited to, jurisdiction over the matters set forth in Section 11 of the Plan.

 

54.                                Modifications .  The Plan and the Definitive Documents may be amended, modified, or supplemented by the Debtors, subject to the rights of the Consenting Creditors set forth in the Restructuring Support Agreement, in the manner provided for by section 1127 of the Bankruptcy Code or as otherwise permitted by law, without additional disclosure pursuant to section 1125 of the Bankruptcy Code, except as otherwise ordered by the Court.  In addition, after the entry of this Order, so long as such action does not materially and adversely affect the treatment of holders of Allowed Claims and Interests pursuant to the Plan, the Debtors, subject to the rights of Consenting Creditors set forth in the Restructuring Support Agreement, may remedy any defect or omission or reconcile any inconsistencies in the Plan, the Definitive Documents, or this Order with respect to such matters as may be necessary to carry out the purposes of effects of the Plan, and any holder of a Claim or Interest that has accepted the Plan shall be deemed to have accepted the Plan and Definitive Documents as so amended, modified, or supplemented.  Notwithstanding anything herein to the contrary, prior to the Effective Date, the Debtors, subject to the rights of the Consenting Creditors set forth in the Restructuring Support Agreement, may make appropriate technical adjustments and modifications to the Plan and Definitive Documents without further order or approval of the Court; provided, that such technical adjustments and modifications do not adversely affect in any material way the treatment of holders of Claims or Interests under the Plan.

 

55.                                Cure/Assumption Objections .  The objections filed by (i) Seismic Exchange Inc. (ECF No. 178), (ii) Geophysical Pursuit, Inc. (ECF No. 179), and (iii) Seitel Data, Ltd., Seitel Data Corp., Seitel Offshore Corp., and Seitel Canada Ltd. (ECF No. 182)

 

56



 

(collectively, the “ Cure/Assumption Objections ” and the parties thereto, the “ Cure/Assumption Objectors ”) are hereby withdrawn solely as to confirmation of the Plan and approval of the Disclosure Statement; provided , that (1) no data owned and licensed by, or otherwise licensed by, any of the Cure/Assumption Objectors shall be transferred, sold, or assigned pursuant to the Plan or this Order; (2) no modification to any of the Cure/Assumption Objectors’ respective contracts or agreements is being affected by this Order or confirmation of the Plan; and (3) neither the Plan nor this Order shall effectuate an assumption or assumption and assignment of any of the Cure/Assumption Objectors’ respective contracts or agreements to the Debtors, the Reorganized Debtors or any other party with such Cure/Assumption Objections to be resolved in accordance with the procedures set forth in Section 8.2 of the Plan and all rights of the Cure/Assumption Objectors and the Debtors and Reorganized Debtors, as applicable, are hereby reserved with respect to thereto; provided , further , that, until such time as a resolution of the Cure/Assumption Objections is reached by the respective parties or otherwise ordered by the Bankruptcy Court, each of the Cure/Assumption Objectors, the Debtors and Reorganized Debtors shall continue to perform under their respective contracts and agreements in accordance with the respective terms and conditions thereof.

 

56.                                Provisions of Plan and Order Nonseverable and Mutually Dependent .  The provisions of the Plan and this Order, including the findings of fact and conclusions of law set forth herein, are nonseverable and mutually dependent.

 

57.                                Governing Law .  Except to the extent that the Bankruptcy Code or other federal law is applicable, or to the extent an exhibit to the Plan Supplement provides otherwise (in which case the governing law specified therein shall be applicable to such exhibit), the rights, duties, and obligations arising under the Plan shall be governed by, and construed and enforced

 

57



 

in accordance with, the laws of the State of New York without giving effect to the principles of conflict of laws.

 

58.                                Applicable Non-Bankruptcy Law .  Pursuant to section 1123(a) and 1142(a) of the Bankruptcy Code, the provisions of this Order, the Plan, the Definitive Documents, and any other related documents or any amendments or modifications thereto shall apply and be enforceable notwithstanding any otherwise applicable non-bankruptcy law.

 

59.                                Waiver of Filings and Section 341 Meeting .  Any requirement under section 521 of the Bankruptcy Code or Bankruptcy Rule 1007 obligating the Debtors to file any list, schedule, or statement with the Court or the Office of the U.S. Trustee (except for monthly operating reports or any other post-confirmation reporting obligation to the U.S. Trustee), including, without limitation, any requirement that the Debtors file statements of financial affairs and schedules of assets and liabilities, is hereby waived as to any such list, schedule, or statement not filed as of the entry of this Order.  Additionally, the requirement that the Debtors convene a meeting of creditors pursuant to 341(a) of the Bankruptcy Code is hereby waived.

 

60.                                Governmental Approvals Not Required .  This Order shall constitute all approvals and consents required, if any, by the laws, rules, or regulations of any state or other governmental authority with respect to the implementation or consummation of the Plan and Disclosure Statement, any documents, instruments, or agreements (including the Definitive Documents), and any amendments or modifications thereto, and any other acts referred to in, or contemplated by, the Plan and the Disclosure Statement.

 

61.                                Notice of Order .  In accordance with Bankruptcy Rules 2002 and 3020(c), as soon as reasonably practicable after the Effective Date, the Debtors shall serve notice of the entry of this Order, substantially in the form annexed hereto as Exhibit B , to all parties who hold

 

58



 

a Claim or Interest in these cases and the U.S. Trustee.  Such notice is hereby approved in all respects and shall be deemed good and sufficient notice of entry of this Order.

 

62.                                Substantial Consummation .  On the Effective Date, the Plan shall be deemed to be substantially consummated under sections 1101 and 1127 of the Bankruptcy Code.

 

63.                                Inconsistency .  To the extent of any inconsistency between this Order and the Plan, this Order shall govern.

 

64.                                No Waiver .  The failure to specifically include any particular provision of the Plan in this Order will not diminish the effectiveness of such provision nor constitute a waiver thereof, it being the intent of this Court that the Plan is confirmed in its entirety and incorporated herein by this reference.

 

65.                                Waiver of Stay .  The stay of this Order provided by any Bankruptcy Rule (including Bankruptcy Rules 3020(e) and 6004(h)), whether for fourteen (14) days or otherwise, is hereby waived, and this Order shall be effective and enforceable immediately upon its entry by the Court

 

Dated:

                              , 2016

 

 

Wilmington, Delaware

 

 

 

 

THE HONORABLE BRENDAN L. SHANNON

 

CHIEF UNITED STATES BANKRUPTCY JUDGE

 

59



 

Exhibit A

 

The Plan

 



 

EXECUTION COPY

 

IN THE UNITED STATES BANKRUPTCY COURT

FOR THE DISTRICT OF DELAWARE

 

 

)

 

In re:

)

Chapter 11

 

)

 

Halcón Resources Corporation, et al. , (1)

)

Case No. 16-11724 (BLS)

 

)

 

Debtors.

)

Jointly Administered

 

)

 

 

AMENDED JOINT PREPACKAGED PLAN OF REORGANIZATION OF HALCÓN RESOURCES CORPORATION, ET AL. UNDER CHAPTER 11 OF THE BANKRUPTCY CODE

 

WEIL, GOTSHAL & MANGES LLP

Gary T. Holtzer, Esq.

Joseph H. Smolinsky, Esq.

767 Fifth Avenue

New York, New York 10153

Telephone: (212) 310-8000

Facsimile: (212) 310-8007

YOUNG CONAWAY STARGATT & TAYLOR, LLP

Robert S. Brady, Esq.

Rodney Square

100 North King Street

Wilmington, Delaware 19801

Telephone: (302) 571-6600

Facsimile:  (302) 571-1253

 

 

Counsel for the Debtors and Debtors in Possession

Counsel for the Debtors and Debtors in Possession

 

 

Dated:  September 2, 2016

 

Wilmington, Delaware

 

 


(1)  The Debtors in these chapter 11 cases, along with the last four digits of each Debtor’s federal tax identification number, as applicable, are: Halcón Resources Corporation (0684); Halcón Holdings, Inc. (5102); HK Resources, LLC (9194); The 7711 Corporation (4003); Halcón Gulf States, LLC (2976); Halcón Louisiana Operating, L.P. (9727); Halcón Field Services, LLC (0280); Halcón Energy Properties, Inc. (5292); Halcón Operating Co., Inc. (3588); Halcón Williston I, LLC (9550); Halcón Williston II, LLC (9676); Halcón Resources Operating, Inc. (4856); HRC Energy Louisiana, LLC (1433); HRC Energy Resources (WV), Inc. (2713); HRC Production Company (3501); Halcón Energy Holdings, LLC (0538); HRC Energy, LLC (5010); HK Energy, LLC (8956); HK Louisiana Operating, LLC (4549); HK Oil & Gas, LLC (0502); HK Energy Operating, LLC (8107); HRC Operating, LLC (5129).  The Debtors’ mailing address is 1000 Louisiana Street, Suite 6700, Houston, Texas 77002.

 



 

TABLE OF CONTENTS

 

 

 

 

 

Page

 

 

 

 

 

Section 1.

DEFINITIONS AND INTERPRETATION.

1

 

 

 

 

 

 

A.

Definitions.

1

 

 

 

 

 

 

 

1.1.

8.625% Second Lien Note Indenture

1

 

 

 

 

 

 

 

1.2.

8.875% Senior Unsecured Note Claim

1

 

 

 

 

 

 

 

1.3.

8.875% Senior Unsecured Note Indenture

1

 

 

 

 

 

 

 

1.4.

8.875% Senior Unsecured Notes

1

 

 

 

 

 

 

 

1.5.

9.25% Senior Unsecured Note Claim

1

 

 

 

 

 

 

 

1.6.

9.25% Senior Unsecured Note Indenture

1

 

 

 

 

 

 

 

1.7.

9.25% Senior Unsecured Notes

1

 

 

 

 

 

 

 

1.8.

9.75% Senior Unsecured Note Claim

1

 

 

 

 

 

 

 

1.9.

9.75% Senior Unsecured Note Indenture

1

 

 

 

 

 

 

 

1.10.

9.75% Senior Unsecured Notes

2

 

 

 

 

 

 

 

1.11.

12.0% Second Lien Note Indenture

2

 

 

 

 

 

 

 

1.12.

Administrative Expense Claim

2

 

 

 

 

 

 

 

1.13.

Allowed

2

 

 

 

 

 

 

 

1.14.

Amended Revolving Credit Agreement or Amended Revolving Credit Facility

2

 

 

 

 

 

 

 

1.15.

Amended Revolving Credit Facility Agent

2

 

 

 

 

 

 

 

1.16.

Amended Revolving Credit Facility Lenders

2

 

 

 

 

 

 

 

1.17.

Amended Revolving Credit Facility Loan Documents

2

 

 

 

 

 

 

 

1.18.

Amended Revolving Credit Facility Obligations

2

 

 

 

 

 

 

 

1.19.

Amended Organizational Documents

3

 

 

 

 

 

 

 

1.20.

Ares

3

 

 

 

 

 

 

 

1.21.

Ballot

3

 

 

 

 

 

 

 

1.22.

Bankruptcy Code

3

 

 

 

 

 

 

 

1.23.

Bankruptcy Court

3

 

 

 

 

 

 

 

1.24.

Bankruptcy Rules

3

 

 

 

 

 

 

 

1.25.

Benefit Plans

3

 

 

 

 

 

 

 

1.26.

Business Day

3

 

 

 

 

 

 

 

1.27.

Cash

3

 

 

 

 

 

 

 

1.28.

Causes of Action

3

 

 

 

 

 

 

 

1.29.

Chapter 11 Cases

3

 



 

 

 

1.30.

Claim

4

 

 

 

 

 

 

 

1.31.

Class

4

 

 

 

 

 

 

 

1.32.

Confirmation

4

 

 

 

 

 

 

 

1.33.

Confirmation Date

4

 

 

 

 

 

 

 

1.34.

Confirmation Hearing

4

 

 

 

 

 

 

 

1.35.

Confirmation Order

4

 

 

 

 

 

 

 

1.36.

Consenting Creditors

4

 

 

 

 

 

 

 

1.37.

Consenting Preferred Holders

4

 

 

 

 

 

 

 

1.38.

Consenting Third Lien Noteholders

4

 

 

 

 

 

 

 

1.39.

Consenting Unsecured Noteholders

4

 

 

 

 

 

 

 

1.40.

Consummation

4

 

 

 

 

 

 

 

1.41.

Convertible Note

4

 

 

 

 

 

 

 

1.42.

Convertible Note Claim

4

 

 

 

 

 

 

 

1.43.

Convertible Note Purchase Agreement

4

 

 

 

 

 

 

 

1.44.

Convertible Noteholder

5

 

 

 

 

 

 

 

1.45.

Convertible Noteholder Cash Distribution

5

 

 

 

 

 

 

 

1.46.

Convertible Noteholder New Common Shares

5

 

 

 

 

 

 

 

1.47.

Convertible Noteholder New Warrants

5

 

 

 

 

 

 

 

1.48.

Cure

5

 

 

 

 

 

 

 

1.49.

Debtor Affiliates

5

 

 

 

 

 

 

 

1.50.

Debtors

5

 

 

 

 

 

 

 

1.51.

Debtors in Possession

5

 

 

 

 

 

 

 

1.52.

Definitive Documents

5

 

 

 

 

 

 

 

1.53.

DIP Agent

6

 

 

 

 

 

 

 

1.54.

DIP Credit Agreement or DIP Financing Facility

6

 

 

 

 

 

 

 

1.55.

DIP/Exit Commitment Letter

6

 

 

 

 

 

 

 

1.56.

DIP Financing Orders

6

 

 

 

 

 

 

 

1.57.

DIP Lenders

6

 

 

 

 

 

 

 

1.58.

Disclosure Statement

6

 

 

 

 

 

 

 

1.59.

Disbursing Agent

6

 

 

 

 

 

 

 

1.60.

Disputed Claim

6

 

 

 

 

 

 

 

1.61.

Distribution Record Date means the Effective Date of the Plan

6

 

 

 

 

 

 

 

1.62.

DTC

6

 

 

 

 

 

 

 

1.63.

Effective Date

7

 

 

 

 

 

 

 

1.64.

Estate or Estates

7

 

ii



 

 

 

1.65.

Equity-Based Incentive Grant Policy

7

 

 

 

 

 

 

 

1.66.

Exculpated Parties

7

 

 

 

 

 

 

 

1.67.

Existing Equity Interests

7

 

 

 

 

 

 

 

1.68.

Existing Warrants

7

 

 

 

 

 

 

 

1.69.

Fee Claim

7

 

 

 

 

 

 

 

1.70.

Final Order

7

 

 

 

 

 

 

 

1.71.

First Amended and Restated 2012 Long-Term Incentive Plan

8

 

 

 

 

 

 

 

1.72.

Franklin

8

 

 

 

 

 

 

 

1.73.

General Unsecured Claim

8

 

 

 

 

 

 

 

1.74.

Governmental Unit

8

 

 

 

 

 

 

 

1.75.

Holdings

8

 

 

 

 

 

 

 

1.76.

Holdings Certificate of Incorporation

8

 

 

 

 

 

 

 

1.77.

Impaired

8

 

 

 

 

 

 

 

1.78.

Intercompany Claim

8

 

 

 

 

 

 

 

1.79.

Intercompany Interest

8

 

 

 

 

 

 

 

1.80.

Intercreditor Agreement

8

 

 

 

 

 

 

 

1.81.

Interests

8

 

 

 

 

 

 

 

1.82.

Lease Amendments

8

 

 

 

 

 

 

 

1.83.

Lien

9

 

 

 

 

 

 

 

1.84.

Management Incentive Plan

9

 

 

 

 

 

 

 

1.85.

New Board

9

 

 

 

 

 

 

 

1.86.

New Common Shares

9

 

 

 

 

 

 

 

1.87.

New Common Shares Allocation Schedule

9

 

 

 

 

 

 

 

1.88.

New Warrant Agreement

9

 

 

 

 

 

 

 

1.89.

New Warrants

9

 

 

 

 

 

 

 

1.90.

Other Priority Claim

9

 

 

 

 

 

 

 

1.91.

Other Secured Claim

9

 

 

 

 

 

 

 

1.92.

Person

9

 

 

 

 

 

 

 

1.93.

Petition Date

9

 

 

 

 

 

 

 

1.94.

Plan

9

 

 

 

 

 

 

 

1.95.

Plan Supplement

9

 

 

 

 

 

 

 

1.96.

Preferred Holder

10

 

 

 

 

 

 

 

1.97.

Preferred Stock

10

 

 

 

 

 

 

 

1.98.

Preferred Stock Cash Distribution

10

 

 

 

 

 

 

 

1.99.

Preferred Stock Certificate of Designation

10

 

iii



 

 

 

1.100.

Preferred Stock Interests

10

 

 

 

 

 

 

 

1.101.

Priority Tax Claim

10

 

 

 

 

 

 

 

1.102.

Pro Rata

10

 

 

 

 

 

 

 

1.103.

Registration Rights Parties

10

 

 

 

 

 

 

 

1.104.

Reinstate, Reinstated or Reinstatement

10

 

 

 

 

 

 

 

1.105.

Rejecting Class

11

 

 

 

 

 

 

 

1.106.

Released Parties

11

 

 

 

 

 

 

 

1.107.

Reorganized Debtors

11

 

 

 

 

 

 

 

1.108.

Reorganized Debtor Affiliates

11

 

 

 

 

 

 

 

1.109.

Reorganized Holdings

11

 

 

 

 

 

 

 

1.110.

Requisite Creditors

11

 

 

 

 

 

 

 

1.111.

Requisite Preferred Holders

11

 

 

 

 

 

 

 

1.112.

Requisite Third Lien Noteholders

11

 

 

 

 

 

 

 

1.113.

Requisite Unsecured Noteholders

11

 

 

 

 

 

 

 

1.114.

Restructuring

12

 

 

 

 

 

 

 

1.115.

Restructuring Expenses

12

 

 

 

 

 

 

 

1.116.

Restructuring Support Agreement

12

 

 

 

 

 

 

 

1.117.

Revolving Credit Agreement or Revolving Credit Facility

12

 

 

 

 

 

 

 

1.118.

Revolving Credit Agreement Agent

12

 

 

 

 

 

 

 

1.119.

Revolving Credit Agreement Claims

12

 

 

 

 

 

 

 

1.120.

Revolving Credit Agreement Lenders

12

 

 

 

 

 

 

 

1.121.

Second Lien Note Claims

12

 

 

 

 

 

 

 

1.122.

Second Lien Note Indentures

12

 

 

 

 

 

 

 

1.123.

Second Lien Note Trustee

12

 

 

 

 

 

 

 

1.124.

Second Lien Notes

12

 

 

 

 

 

 

 

1.125.

Section 510(b) Claim

13

 

 

 

 

 

 

 

1.126.

Secured Claim

13

 

 

 

 

 

 

 

1.127.

Schedule of Rejected Contracts

13

 

 

 

 

 

 

 

1.128.

Subsidiary Interests

13

 

 

 

 

 

 

 

1.129.

Tax or Taxes

13

 

 

 

 

 

 

 

1.130.

Tax Return

13

 

 

 

 

 

 

 

1.131.

Term Sheet

13

 

 

 

 

 

 

 

1.132.

Third Lien Note Claims

13

 

 

 

 

 

 

 

1.133.

Third Lien Note Indenture

13

 

 

 

 

 

 

 

1.134.

Third Lien Noteholder New Common Shares

13

 

iv



 

 

 

1.135.

Third Lien Note Collateral Agent

14

 

 

 

 

 

 

 

1.136.

Third Lien Note Trustee

14

 

 

 

 

 

 

 

1.137.

Third Lien Note Trustee Charging Lien

14

 

 

 

 

 

 

 

1.138.

Third Lien Note Trustee Fees and Expenses

14

 

 

 

 

 

 

 

1.139.

Third Lien Noteholder

14

 

 

 

 

 

 

 

1.140.

Third Lien Noteholder Cash Distribution

14

 

 

 

 

 

 

 

1.141.

Third Lien Notes

14

 

 

 

 

 

 

 

1.142.

Third Lien Security Agreement

14

 

 

 

 

 

 

 

1.143.

Unimpaired

14

 

 

 

 

 

 

 

1.144.

Unsecured Note Claims

14

 

 

 

 

 

 

 

1.145.

Unsecured Note Indentures

14

 

 

 

 

 

 

 

1.146.

Unsecured Note Trustee

14

 

 

 

 

 

 

 

1.147.

Unsecured Note Trustee Charging Lien

14

 

 

 

 

 

 

 

1.148.

Unsecured Note Trustee Fees and Expenses

15

 

 

 

 

 

 

 

1.149.

Unsecured Noteholder

15

 

 

 

 

 

 

 

1.150.

Unsecured Noteholder Cash Distribution

15

 

 

 

 

 

 

 

1.151.

Unsecured Noteholder New Common Shares

15

 

 

 

 

 

 

 

1.152.

Unsecured Noteholder New Warrants

15

 

 

 

 

 

 

 

1.153.

Unsecured Notes

15

 

 

 

 

 

 

 

1.154.

Voting Deadline

15

 

 

 

 

 

 

 

1.155.

Voting Record Date

15

 

 

 

 

 

 

 

1.156.

Warrant Record Date

15

 

 

 

 

 

 

B.

Interpretation; Application of Definitions and Rules of Construction

16

 

 

 

 

 

C.

Reference to Monetary Figures

16

 

 

 

 

 

D.

Controlling Document

16

 

 

 

 

 

Section 2.

ADMINISTRATIVE EXPENSE AND PRIORITY CLAIMS

16

 

 

 

 

 

 

 

2.1.

Administrative Expense Claims

16

 

 

 

 

 

 

 

2.2.

Fee Claims

17

 

 

 

 

 

 

 

2.3.

Priority Tax Claims

17

 

 

 

 

 

Section 3.

CLASSIFICATION OF CLAIMS AND INTERESTS

17

 

 

 

 

 

 

 

3.1.

Summary of Classification

17

 

 

 

 

 

 

 

3.2.

Special Provision Governing Unimpaired Claims

18

 

 

 

 

 

 

 

3.3.

Elimination of Vacant Classes

18

 

 

 

 

 

Section 4.

TREATMENT OF CLAIMS AND INTERESTS

18

 

 

 

 

 

 

 

4.1.

Other Priority Claims (Class 1)

18

 

v



 

 

 

4.2.

Other Secured Claims (Class 2)

19

 

 

 

 

 

 

 

4.3.

Revolving Credit Agreement Claims (Class 3)

19

 

 

 

 

 

 

 

4.4.

Second Lien Note Claims (Class 4)

20

 

 

 

 

 

 

 

4.5.

Third Lien Note Claims (Class 5)

20

 

 

 

 

 

 

 

4.6.

Unsecured Note Claims (Class 6)

20

 

 

 

 

 

 

 

4.7.

Convertible Note Claims (Class 7)

21

 

 

 

 

 

 

 

4.8.

General Unsecured Claims (Class 8)

22

 

 

 

 

 

 

 

4.9.

Intercompany Claims (Class 9)

22

 

 

 

 

 

 

 

4.10.

Intercompany Interests (Class 10)

22

 

 

 

 

 

 

 

4.11.

Preferred Stock Interests (Class 11)

22

 

 

 

 

 

 

 

4.12.

Existing Equity Interests (Class 12)

23

 

 

 

 

 

 

 

4.13.

Section 510(b) Claims (Class 13)

24

 

 

 

 

 

Section 5.

MEANS FOR IMPLEMENTATION

24

 

 

 

 

 

 

 

5.1.

Compromise and Settlement of Claims, Interests and Controversies

24

 

 

 

 

 

 

 

5.2.

Amended Revolving Credit Agreement; Intercreditor Agreement

24

 

 

 

 

 

 

 

5.3.

Authorization and Issuance of Plan Securities

25

 

 

 

 

 

 

 

5.4.

Exercise of Existing Warrants

25

 

 

 

 

 

 

 

5.5.

Cancellation of Existing Securities and Agreements

26

 

 

 

 

 

 

 

5.6.

Reorganized Holdings

26

 

 

 

 

 

 

 

5.7.

Other Transactions

27

 

 

 

 

 

 

 

5.8.

Cancellation of Liens

27

 

 

 

 

 

 

 

5.9.

Management Incentive Plan

27

 

 

 

 

 

 

 

5.10.

Withholding and Reporting Requirements

28

 

 

 

 

 

 

 

5.11.

Exemption From Certain Transfer Taxes

29

 

 

 

 

 

 

 

5.12.

Restructuring Transactions

29

 

 

 

 

 

 

 

5.13.

Effectuating Documents; Further Transactions

29

 

 

 

 

 

 

 

5.14.

Trustee Fees and Expenses

30

 

 

 

 

 

Section 6.

DISTRIBUTIONS

30

 

 

 

 

 

 

 

6.1.

Distribution Record Date

30

 

 

 

 

 

 

 

6.2.

Date of Distributions

30

 

 

 

 

 

 

 

6.3.

Disbursing Agent

30

 

 

 

 

 

 

 

6.4.

Powers of Disbursing Agent

31

 

 

 

 

 

 

 

6.5.

Surrender of Instruments

31

 

 

 

 

 

 

 

6.6.

Delivery of Distributions

31

 

 

 

 

 

 

 

6.7.

Manner of Payment Under Plan

31

 

vi



 

 

 

6.8.

Fractional Shares and Minimum Cash Distributions

31

 

 

 

 

 

 

 

6.9.

Setoffs

32

 

 

 

 

 

 

 

6.10.

Distributions After Effective Date

32

 

 

 

 

 

Section 7.

PROCEDURES FOR DISPUTED CLAIMS AND INTERESTS

32

 

 

 

 

 

 

 

7.1.

Disputed Claims/Process

32

 

 

 

 

 

 

 

7.2.

Objections to Claims and Interests

32

 

 

 

 

 

 

 

7.3.

Estimation of Claims and Interests

33

 

 

 

 

 

 

 

7.4.

No Distributions Pending Allowance

33

 

 

 

 

 

 

 

7.5.

Distributions After Allowance

33

 

 

 

 

 

Section 8.

EXECUTORY CONTRACTS AND UNEXPIRED LEASES

33

 

 

 

 

 

 

 

8.1.

General Treatment

33

 

 

 

 

 

 

 

8.2.

Payments Related to Assumption of Contracts and Leases

34

 

 

 

 

 

 

 

8.3.

Rejection Claims

34

 

 

 

 

 

 

 

8.4.

Survival of the Debtors’ Indemnification Obligations

35

 

 

 

 

 

 

 

8.5.

Compensation and Benefit Plans

35

 

 

 

 

 

 

 

8.6.

Insurance Policies

35

 

 

 

 

 

 

 

8.7.

Federal Lease Interests

36

 

 

 

 

 

 

 

8.8.

Reservation of Rights in Favor of Governmental Units

36

 

 

 

 

 

 

 

8.9.

Reservation of Rights

37

 

 

 

 

 

Section 9.

CONDITIONS PRECEDENT TO THE EFFECTIVE DATE

37

 

 

 

 

 

 

 

9.1.

Conditions Precedent to the Effective Date

37

 

 

 

 

 

 

 

9.2.

Waiver of Conditions Precedent

38

 

 

 

 

 

Section 10.

EFFECT OF CONFIRMATION

38

 

 

 

 

 

 

 

10.1.

Subordinated Claims

38

 

 

 

 

 

 

 

10.2.

Vesting of Assets

38

 

 

 

 

 

 

 

10.3.

Discharge of Claims and Termination of Interests

38

 

 

 

 

 

 

 

10.4.

Term of Injunctions or Stays

39

 

 

 

 

 

 

 

10.5.

Injunction Against Interference with Plan

39

 

 

 

 

 

 

 

10.6.

Releases by the Debtors

39

 

 

 

 

 

 

 

10.7.

Releases By Holders of Claims and Interests

39

 

 

 

 

 

 

 

10.8.

Exculpation

40

 

 

 

 

 

 

 

10.9.

Retention of Causes of Action/Reservation of Rights

40

 

 

 

 

 

 

 

10.10.

Solicitation of the Plan

41

 

 

 

 

 

 

 

10.11.

Section 1145 Exemption

41

 

 

 

 

 

 

 

10.12.

Plan Supplement

42

 

vii



 

 

 

10.13.

Corporate and Limited Liability Company Action

42

 

 

 

 

 

 

 

10.14.

Registration Rights

42

 

 

 

 

 

Section 11.

RETENTION OF JURISDICTION

43

 

 

 

Section 12.

MISCELLANEOUS PROVISIONS

45

 

 

 

 

 

 

 

12.1.

Payment of Statutory Fees

45

 

 

 

 

 

 

 

12.2.

Substantial Consummation

45

 

 

 

 

 

 

 

12.3.

Request for Expedited Determination of Taxes

45

 

 

 

 

 

 

 

12.4.

Amendments

45

 

 

 

 

 

 

 

12.5.

Effectuating Documents and Further Transactions

45

 

 

 

 

 

 

 

12.6.

Revocation or Withdrawal of the Plan

46

 

 

 

 

 

 

 

12.7.

Severability of Plan Provisions upon Confirmation

46

 

 

 

 

 

 

 

12.8.

Governing Law

46

 

 

 

 

 

 

 

12.9.

Time

46

 

 

 

 

 

 

 

12.10.

Immediate Binding Effect

46

 

 

 

 

 

 

 

12.11.

Successor and Assigns

47

 

 

 

 

 

 

 

12.12.

Entire Agreement

47

 

 

 

 

 

 

 

12.13.

Notices

47

 

 

 

 

 

Exhibit A

Restructuring Support Agreement

 

Exhibit B

Schedule of Executory Contracts to be Rejected

 

 

viii


 


 

Each of Halcón Resources Corporation; Halcón Holdings, Inc.; HK Resources, LLC; The 7711 Corporation; Halcón Gulf States, LLC; Halcón Louisiana Operating, L.P.; Halcón Field Services, LLC; Halcón Energy Properties, Inc.; Halcón Operating Co., Inc.; Halcón Williston I, LLC; Halcón Williston II, LLC; Halcón Resources Operating Inc.; HRC Energy Louisiana, LLC; HRC Energy Resources (WV), Inc.; HRC Production Company; Halcón Energy Holdings, LLC; HRC Energy, LLC; HK Energy, LLC; HK Louisiana Operating, LLC; HK Oil & Gas, LLC; HK Energy Operating, LLC; and HRC Operating, LLC propose the following joint prepackaged chapter 11 plan of reorganization for each of the Debtors pursuant to section 1121(a) of the Bankruptcy Code.  Capitalized terms used herein shall have the meanings set forth in Section 1.A.

 

SECTION 1.                             DEFINITIONS AND INTERPRETATION.

 

A.                                     Definitions.

 

1.1.          8.625% Second Lien Note Indenture means that certain indenture, dated as of May 1, 2015, by and among Holdings, as issuer, each of the guarantors named therein, and U.S. Bank National Association, as trustee, as amended, modified, or otherwise supplemented from time to time.

 

1.2.          8.875% Senior Unsecured Note Claim means any Claim arising from, or related to, the 8.875% Senior Unsecured Notes.

 

1.3.          8.875% Senior Unsecured Note Indenture means that certain indenture, dated as of November 6, 2012, by and among Holdings, as issuer, each of the guarantors named therein, and U.S. Bank National Association, as trustee, as amended, modified, or otherwise supplemented from time to time.

 

1.4.          8.875% Senior Unsecured Notes means the 8.875% Senior Unsecured Notes due 2021 issued pursuant to the 8.875% Senior Unsecured Note Indenture in the aggregate outstanding principal amount of $287,193,000 plus all accrued prepetition interest, fees, and other amounts due under the 8.875% Senior Unsecured Notes.

 

1.5.          9.25% Senior Unsecured Note Claim means any Claim arising from, or related to, the 9.25% Senior Unsecured Notes.

 

1.6.          9.25% Senior Unsecured Note Indenture means that certain indenture dated as of August 13, 2013, by and among Holdings, as issuer, each of the guarantors named therein, and U.S. Bank National Association, as trustee, as amended, modified, or otherwise supplemented from time to time.

 

1.7.          9.25% Senior Unsecured Notes means the 9.25% Senior Unsecured Notes due 2022 issued pursuant to the 9.25% Senior Unsecured Note Indenture in the aggregate outstanding principal amount of $37,194,000 plus all accrued prepetition interest, fees, and other amounts due under the 9.25% Senior Unsecured Notes.

 

1.8.          9.75% Senior Unsecured Note Claim means any Claim arising from, or related to, the 9.75% Senior Unsecured Notes.

 

1.9.          9.75% Senior Unsecured Note Indenture means that certain indenture dated as of July 16, 2012, by and among Holdings, as issuer, each of the guarantors named therein, and U.S. Bank National Association, as trustee, as amended, modified, or otherwise supplemented from time to time.

 



 

1.10.        9.75% Senior Unsecured Notes means the 9.75% Senior Unsecured Notes due 2020 issued pursuant to the 9.75% Senior Unsecured Note Indenture in the aggregate outstanding principal amount of $315,535,000.00 plus all accrued prepetition interest, fees, and other amounts due under the 9.75% Senior Unsecured Notes.

 

1.11.        12.0% Second Lien Note Indenture means that certain indenture dated as of December 21, 2015, by and among Holdings, each of the guarantors named therein, and U.S. Bank National Association, as trustee, as amended, modified, or otherwise supplemented from time to time.

 

1.12.        Administrative Expense Claim means any Claim for costs and expenses of administration during the Chapter 11 Cases pursuant to sections 328, 330, 363, 364(c)(1), 365, 503(b) or 507(a)(2) of the Bankruptcy Code, including, (a) the actual and necessary costs and expenses incurred from and after the Petition Date and through the Effective Date of preserving the Estates and operating the businesses of the Debtors (such as wages, salaries or commissions for services and payments for goods and other services and leased premises); (b) Fee Claims; (c) Restructuring Expenses; and (d) all fees and charges assessed against the Estates pursuant to section 1911 through 1930 of chapter 123 of title 28 of the United States Code, 28 U.S.C. §§ 1-1401.

 

1.13.        Allowed means, with reference to any Claim or Interest, (a) any Claim or Interest arising on or before the Effective Date (i) as to which no objection to allowance has been interposed in accordance with Section 7.2 hereof, or (ii) as to which any objection has been determined by a Final Order to the extent such objection is determined in favor of the respective holder, (b) any Claim or Interest as to which the liability of the Debtors and the amount thereof are determined by a Final Order of a court of competent jurisdiction other than the Bankruptcy Court or (c) any Claim or Interest expressly allowed hereunder; provided , however , that notwithstanding the foregoing, the Reorganized Debtors shall retain all claims and defenses with respect to Allowed Claims that are Reinstated or otherwise Unimpaired pursuant to the Plan.

 

1.14.        Amended Revolving Credit Agreement or Amended Revolving Credit Facility means the credit agreement in the form attached as Exhibit D to the DIP/Exit Commitment Letter with aggregate maximum revolving loan commitments of not less than $600,000,000 thereunder.  The Amended Revolving Credit Agreement shall be in form and substance (a) reasonably satisfactory to the Requisite Unsecured Noteholders, and (b) satisfactory to the Requisite Third Lien Noteholders.

 

1.15.        Amended Revolving Credit Facility Agent means JPMorgan Chase Bank, N.A. in its capacity as administrative and collateral agent for the Amended Revolving Credit Facility Lenders. together with its successors and assigns.

 

1.16.        Amended Revolving Credit Facility Lenders means each lender and issuing bank party to the Amended Revolving Credit Agreement and together with all other Secured Parties (as defined in the Amended Revolving Credit Agreement).

 

1.17.        Amended Revolving Credit Facility Loan Documents means the Amended Revolving Credit Agreement, the DIP/Exit Commitment Letter, the Secured Swap Agreements (as defined in the Amended Revolving Credit Agreement) and all other loan and security documents, instruments, mortgages, control agreements and other agreements to be entered into pursuant to the Amended Revolving Credit Agreement.

 

1.18.        Amended Revolving Credit Facility Obligations means all obligations of the Reorganized Debtors or any other loan party under the Amended Revolving Credit Facility Loan Documents, including all Secured Obligations (as defined in the Amended Revolving Credit Agreement).

 

2



 

1.19.        Amended Organizational Documents means the forms of certificate of formation, certification of incorporation, limited liability company agreement, and other forms of organizational documents and bylaws for the Reorganized Debtors reasonably satisfactory to the Requisite Third Lien Noteholders, the Requisite Unsecured Noteholders and the Convertible Noteholder and consistent with section 1123(a)(6) of the Bankruptcy Code, if applicable.  To the extent such Amended Organizational Documents reflect material changes to the Debtors’ existing forms of organizational documents and bylaws, substantially final forms of such Amended Organizational Documents will be included in the Plan Supplement.

 

1.20.        Ares means Ares Management LLC together with any funds or managed accounts affiliated with, or managed by, Ares Management LLC or an affiliate.

 

1.21.        Ballot means the form of ballot approved by the Bankruptcy Court and distributed to holders of Impaired Claims and Interests entitled to vote on the Plan on which such holders shall indicate the acceptance or rejection of the Plan.

 

1.22.        Bankruptcy Code means title 11 of the United States Code, 11 U.S.C. §§ 101, et seq. , as amended from time to time, as applicable to the Chapter 11 Cases.

 

1.23.        Bankruptcy Court means the United States Bankruptcy Court for the District of Delaware having jurisdiction over the Chapter 11 Cases.

 

1.24.        Bankruptcy Rules  means the Federal Rules of Bankruptcy Procedure as promulgated by the United States Supreme Court under section 2075 of title 28 of the United States Code, as amended from time to time, applicable to the Chapter 11 Cases, and any Local Rules of the Bankruptcy Court.

 

1.25.        Benefit Plans means all benefit plans, policies and programs sponsored by the Debtors, including all savings plans and health and welfare plans.

 

1.26.        Business Day means any day other than a Saturday, a Sunday or any other day on which banking institutions in Wilmington, Delaware are required or authorized to close by law or executive order.

 

1.27.        Cash means legal tender of the United States of America.

 

1.28.        Causes of Action means any action, claim, cause of action, controversy, demand, right, lien, indemnity, guaranty, suit, obligation, liability, damage, judgment, account, defense, offset, power, privilege, license and franchise of any kind or character whatsoever, known, unknown, contingent or non-contingent, matured or unmatured, suspected or unsuspected, liquidated or unliquidated, disputed or undisputed, secured or unsecured, assertable directly or derivatively, whether arising before, on, or after the Petition Date, in contract or in tort, in law or in equity or pursuant to any other theory of law.  Cause of Action also includes: (a) any right of setoff, counterclaim or recoupment and any claim for breach of contract or for breach of duties imposed by law or in equity; (b) the right to object to Claims or Interests; (c) any claim pursuant to sections 362 or chapter 5 of the Bankruptcy Code; (d) any claim or defense including fraud, mistake, duress and usury and any other defenses set forth in section 558 of the Bankruptcy Code; and (e) any state law fraudulent transfer claim.

 

1.29.        Chapter 11 Cases means the jointly administered cases under chapter 11 of the Bankruptcy Code commenced by the Debtors on July 27, 2016, in the Bankruptcy Court and styled In re Halcón Resources Corporation, et. al. , Case No. 16–11724 (BLS).

 

3



 

1.30.        Claim has the meaning set forth in section 101(5) of the Bankruptcy Code.

 

1.31.        Class  means any group of Claims or Interests classified by the Plan pursuant to section 1122(a)(1) of the Bankruptcy Code.

 

1.32.        Confirmation means the entry on the docket of the Chapter 11 Cases of the Confirmation Order.

 

1.33.        Confirmation Date means the date on which the Clerk of the Bankruptcy Court enters the Confirmation Order.

 

1.34.        Confirmation Hearing means the hearing to be held by the Bankruptcy Court regarding confirmation of the Plan, as such hearing may be adjourned or continued from time to time.

 

1.35.        Confirmation Order means the order of the Bankruptcy Court confirming the Plan pursuant to section 1129 of the Bankruptcy Code, which shall be consistent in all respects with this Plan and otherwise in form and substance reasonably satisfactory to the Debtors and the Requisite Third Lien Noteholders, the Requisite Unsecured Noteholders and the Convertible Noteholder.

 

1.36.        Consenting Creditors means the Consenting Third Lien Noteholders, the Consenting Unsecured Noteholders, the Convertible Noteholder and the Consenting Preferred Holders.

 

1.37.        Consenting Preferred Holders means the Preferred Holders that are party to the Restructuring Support Agreement together with their respective successors and permitted assigns and any subsequent Preferred Holder that becomes party to the Restructuring Support Agreement prior to the Voting Deadline in accordance with the terms of the Restructuring Support Agreement.

 

1.38.        Consenting Third Lien Noteholders means the Third Lien Noteholders that are party to the Restructuring Support Agreement together with their respective successors and permitted assigns and any subsequent Third Lien Noteholder that becomes party to the Restructuring Support Agreement prior to the Voting Deadline in accordance with the terms of the Restructuring Support Agreement.

 

1.39.        Consenting Unsecured Noteholders means the Unsecured Noteholders that are party to the Restructuring Support Agreement together with their respective successors and permitted assigns and any subsequent Unsecured Noteholder that becomes party to the Restructuring Support Agreement prior to the Voting Deadline in accordance with the terms of the Restructuring Support Agreement.

 

1.40.        Consummation means the occurrence of the Effective Date for the Plan.

 

1.41.        Convertible Note means the 8.0% Senior Unsecured Convertible Note due 2020 issued on February 8, 2012, pursuant to the Convertible Note Purchase Agreement.

 

1.42.        Convertible Note Claim means any Claim arising under or in connection with the Convertible Note.

 

1.43.        Convertible Note Purchase Agreement means that certain Securities Purchase Agreement, effective December 21, 2011, by and between Halcón Resources LLC (now HALRES LLC) and RAM Energy Resources, Inc. (now Holdings), as amended, modified or otherwise supplemented from time to time prior to the date hereof.

 

4



 

1.44.        Convertible Noteholder means the holder of the Convertible Note.

 

1.45.        Convertible Noteholder Cash Distribution means Cash in the amount of $15,000,000 to be distributed, in accordance with Section 4.7 below, to the holder of the Allowed Convertible Note Claims.

 

1.46.        Convertible Noteholder New Common Shares means New Common Shares, representing, after giving effect to the Restructuring, in the aggregate, 4.0% of the total outstanding shares of common stock of Reorganized Holdings (subject to dilution by the Management Incentive Plan and, to the extent applicable, the exercise of the New Warrants), to be distributed to the Convertible Noteholder in accordance with, and subject to the limitations set forth in, Section 4.7 below.

 

1.47.        Convertible Noteholder New Warrants means warrants to purchase New Common Shares representing 1.0% of the total issued and outstanding New Common Shares on the Effective Date (including New Common Shares issuable upon full exercise of the New Warrants but excluding any New Common Shares issued or reserved pursuant to the Management Incentive Plan), subject to dilution by the Management Incentive Plan, exercisable for a four (4) year period commencing on the Effective Date at a per share exercise price of $14.04, which amount is equal to $1,330,000,000 divided by the total number of issued and outstanding New Common Shares on the Effective Date (including New Common Shares issuable upon full exercise of the New Warrants but excluding any New Common Shares issued or reserved pursuant to the Management Incentive Plan), as more fully set forth in the New Warrant Agreement, to be distributed in accordance with, and subject to the limitations set forth in, Section 4.7 below.  For example, if, on the Effective Date, nine hundred and ninety thousand (990,000) New Common Shares are issued (exclusive of any New Common Shares issuable upon exercise of the New Warrants and any New Common Shares issued pursuant to the Management Incentive Plan), the number of New Common Shares to be reserved for issuance upon exercise of the Convertible Noteholder New Warrants shall be ten thousand (10,000) New Common Shares.

 

1.48.        Cure means the payment of Cash by the Debtors, or the distribution of other property (as the parties may agree or the Bankruptcy Court may order), as necessary to (a) cure a monetary default by the Debtors in accordance with the terms of an executory contract or unexpired lease of the Debtors and (b) permit the Debtors to assume such executory contract or unexpired lease under section 365(a) of the Bankruptcy Code.

 

1.49.        Debtor Affiliates means the Debtors, other than Holdings.

 

1.50.        Debtors means Holdings, Halcón Holdings, Inc., HK Resources, LLC, The 7711 Corporation, Halcón Gulf States, LLC, Halcón Louisiana Operating, L.P., Halcón Field Services, LLC, Halcón Energy Properties, Inc., Halcón Operating Co., Inc., Halcón Williston I, LLC, Halcón Williston II, LLC, Halcón Resources Operating Inc., HRC Energy Louisiana, LLC, HRC Energy Resources (WV), Inc., HRC Production Company, Halcón Energy Holdings, LLC, HRC Energy, LLC, HK Energy, LLC, HK Louisiana Operating, LLC, HK Oil & Gas, LLC, HK Energy Operating, LLC, and HRC Operating, LLC.

 

1.51.        Debtors in Possession means the Debtors in their capacity as debtors in possession in the Chapter 11 Cases pursuant to sections 1101, 1107(a) and 1108 of the Bankruptcy Code.

 

1.52.        Definitive Documents means the documents prepared by or for the benefit of the Debtors (including any related orders, agreements, instruments, schedules or exhibits) that are contemplated herein and that are otherwise necessary or desirable to implement, or otherwise relate to the Restructuring, including the Plan, the Plan Supplement, the Disclosure Statement (together with any

 

5



 

voting and solicitation related materials), any motion seeking the approval thereof, the Confirmation Order, any documents relating to the New Common Shares and the New Warrants (including the New Warrant Agreement) (as applicable), the DIP Financing Facility and the DIP Credit Agreement, any exit financing, and definitive documentation relating to the use of cash collateral, the Amended Revolving Credit Agreement, Amended Organizational Documents, advisory or management services agreements, the Management Incentive Plan, shareholder and member related agreements or other related documents, each of which shall contain terms and conditions consistent in all respects with the Plan and shall otherwise be reasonably satisfactory in form and substance to the Debtors and the Requisite Third Lien Noteholders, the Requisite Unsecured Noteholders and the Convertible Noteholder (except for the definitive loan agreements with respect to the DIP Financing Facility and Amended Revolving Credit Agreement, which also must be satisfactory to Requisite Third Lien Noteholders).

 

1.53.        DIP Agent has the meaning ascribed to such term in the DIP Financing Orders.

 

1.54.        DIP Credit Agreement or DIP Financing Facility means $600 million reserve based revolving credit facility provided pursuant to the DIP Financing Orders.

 

1.55.        DIP/Exit Commitment Letter means the $600 million Senior Secured Debtor-in-Possession and Exit Reserve-Based Revolving Facility Commitment Letter, dated as of July 26, 2016, among Holdings, each of the other Debtors and each of the financial institutions party thereto.

 

1.56.        DIP Financing Orders means, collectively, the interim (ECF No. 46) and final orders (ECF No. 130) (i) authorizing the Debtors to enter into, and borrow under, the DIP Credit Agreement, (ii)  authorizing the use of prepetition collateral and cash collateral, and (iii) granting adequate protection to the Revolving Credit Agreement Lenders, the Second Lien Noteholders and the Third Lien Noteholders on terms reasonably satisfactory to the Requisite Third Lien Noteholders, the Requisite Unsecured Noteholders and the Convertible Noteholder.

 

1.57.        DIP Lenders has the meaning ascribed to such term in the DIP Financing Orders.

 

1.58.        Disclosure Statement means the disclosure statement for the Plan, in form and substance reasonably satisfactory to the Requisite Third Lien Noteholders, the Requisite Unsecured Noteholders and the Convertible Noteholder, which is prepared and distributed in accordance with sections 1125, 1126(b) and/or 1145 of the Bankruptcy Code, Bankruptcy Rules 3016 and 3018 and/or other applicable law.

 

1.59.        Disbursing Agent means any entity (including any applicable Debtor if it acts in such capacity) in its capacity as a disbursing agent under Section 6.3 hereof.

 

1.60.        Disputed Claim means with respect to a Claim or Interest, any such Claim or Interest (a) to the extent neither Allowed nor disallowed under the Plan or a Final Order nor deemed Allowed under section 502, 503 or 1111 of the Bankruptcy Code, or (b) for which a proof of claim or interest for payment has been made, to the extent the Debtors or any party in interest has interposed a timely objection or request for estimation before the Confirmation Date in accordance with the Plan, which objection or request for estimation has not been withdrawn or determined by a Final Order.

 

1.61.        Distribution Record Date means the Effective Date of the Plan.

 

1.62.        DTC means The Depository Trust Company.

 

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1.63.        Effective Date means the date on which all conditions to the effectiveness of the Plan set forth in Section 9 hereof have been satisfied or waived in accordance with the terms of the Plan and the Plan is consummated.

 

1.64.        Estate or Estates means individually or collectively, the estate or estates of the Debtors created under section 541 of the Bankruptcy Code.

 

1.65.        Equity-Based Incentive Grant Policy means the policy established by the compensation committee of Holdings, which sets forth the timing of equity awards to employees of Holdings and the procedures for making awards and, in the case of stock options and stock appreciation rights, for determining the exercise price or grant value, respectively, of the award.

 

1.66.        Exculpated Parties means collectively: (a) the Debtors; (b) the Revolving Credit Agreement Agent; (c) the Revolving Credit Agreement Lenders; (d) the other Secured Parties under and as defined in the Revolving Credit Agreement; (e) the Consenting Third Lien Noteholders; (f) the Consenting Unsecured Noteholders; (g) the Convertible Noteholder; (h) the Consenting Preferred Holders; (i) the Third Lien Note Trustee and Third Lien Note Collateral Agent; (j) the Unsecured Note Trustee; (k) the DIP Agent and DIP Lenders; (l) the Amended Revolving Credit Facility Agent and Amended Revolving Credit Facility Lenders; and (m) with respect to each of the foregoing entities in clauses (a) through (l), such entities’ predecessors, successors and assigns, subsidiaries, affiliates, managed accounts or funds, and all of their respective current and former officers, directors, principals, shareholders, members, partners, employees, agents, advisory board members, financial advisors, attorneys, accountants, investment bankers, consultants, representatives, management companies, fund advisors and other professionals, and such Persons’ respective heirs, executors, estates, servants and nominees, in each case in their capacity as such.

 

1.67.        Existing Equity Interests means any Interests held in Holdings (other than the Preferred Stock Interests or Existing Warrants), including common stock or units.

 

1.68.        Existing Warrants means any warrants or other options to purchase or rights to acquire common stock or units or any other Interests in any of the Debtors, including, without limitation, those certain five year warrants to purchase 7.3 million shares of Holdings’ common stock issued to HALRES LLC pursuant to the Securities Purchase Agreement.

 

1.69.        Fee Claim means a Claim for professional services rendered or costs incurred on or after the Petition Date through the Effective Date by professional Persons retained by the Debtors or any statutory committee appointed in the Chapter 11 Cases pursuant to sections 327, 328, 329, 330, 331, 503(b) or 1103 of the Bankruptcy Code in the Chapter 11 Cases.

 

1.70.        Final Order means an order or judgment of a court of competent jurisdiction that has been entered on the docket maintained by the clerk of such court, which has not been reversed, vacated or stayed and as to which (a) the time to appeal, petition for certiorari , or move for a new trial, reargument or rehearing has expired and as to which no appeal, petition for certiorari , or other proceedings for a new trial, reargument or rehearing shall then be pending, or (b) if an appeal, writ of certiorari , new trial, reargument or rehearing thereof has been sought, such order or judgment shall have been affirmed by the highest court to which such order was appealed, or certiorari shall have been denied, or a new trial, reargument or rehearing shall have been denied or resulted in no modification of such order, and the time to take any further appeal, petition for certiorari or move for a new trial, reargument or rehearing shall have expired; provided , however , that no order or judgment shall fail to be a “Final Order” solely because of the possibility that a motion pursuant to section 502(j) or 1144 of the

 

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Bankruptcy Code or under Rule 60 of the Federal Rules of Civil Procedure or Bankruptcy Rule 9024 has been or may be filed with respect to such order or judgment.

 

1.71.        First Amended and Restated 2012 Long-Term Incentive Plan means the First Amended and Restated 2012 Long-Term Incentive Plan of Holdings (as modified, amended or supplemented in accordance with the terms thereof).

 

1.72.        Franklin means Franklin Advisers, Inc. as investment manager on behalf of certain funds and accounts.

 

1.73.        General Unsecured Claim means any unsecured Claim against any Debtor (other than an Unsecured Note Claim, a Convertible Note Claim or an Intercompany Claim) that is not entitled to priority under the Bankruptcy Code or any order of the Bankruptcy Court.

 

1.74.        Governmental Unit has the meaning set forth in section 101(27) of the Bankruptcy Code.

 

1.75.        Holdings means Halcón Resources Corporation.

 

1.76.        Holdings Certificate of Incorporation means the Amended and Restated Certificate of Incorporation of Holdings dated May 6, 2015 (as amended, modified or otherwise supplemented from time to time prior to the date hereof).

 

1.77.        Impaired means, with respect to a Claim, Interest or Class of Claims or Interests, “impaired” within the meaning of section 1123(a)(4) and 1124 of the Bankruptcy Code.

 

1.78.        Intercompany Claim means any Claim against a Debtor held by another Debtor.

 

1.79.        Intercompany Interest means an Interest in a Debtor held by another Debtor or an Interest in a Debtor held by an affiliate of a Debtor (other than any Preferred Stock Interest or Equity Interest in Holdings).

 

1.80.        Intercreditor Agreement means that certain Intercreditor Agreement, dated as of May 1, 2015, between the Revolving Credit Agreement Agent and the Second Lien Note Trustee (as amended, modified or otherwise supplemented from time to time including by the Priority Confirmation Joinder dated as of September 10, 2015, between and among, the Revolving Credit Agreement Agent, the Second Lien Trustee, and the Third Lien Trustee, and including by the Priority Confirmation Joinder dated as of December 21, 2015, between and among the Revolving Credit Agreement Agent and the Second Lien Trustee).

 

1.81.        Interests means any equity security in a Debtor as defined in section 101(16) of the Bankruptcy Code, including all common stock or units, preferred stock or units or other instruments evidencing an ownership interest in any of the Debtors, whether or not transferable, and any option, warrant or right, contractual or otherwise, to acquire any such interests in a Debtor that existed immediately before the Effective Date.

 

1.82.        Lease Amendments means those certain amendments, letters of intent and/or other documents and agreements (including any schedules and exhibits thereto) modifying or amending certain real property leases to be assumed by the Debtors, as amended or modified by the terms of the Lease Amendments, pursuant to Section 8.1 of the Plan, and to be filed as a part of the Plan Supplement.

 

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1.83.        Lien has the meaning set forth in section 101(37) of the Bankruptcy Code.

 

1.84.        Management Incentive Plan means a post-Restructuring management incentive plan, substantially in the form to be filed as a part of the Plan Supplement, under which 10% of the New Common Shares will be reserved for issuance as awards under the Management Incentive Plan in accordance with Section 5.9 of the Plan.

 

1.85.        New Board means the board of directors of Reorganized Holdings.

 

1.86.        New Common Shares means the shares of common stock, par value $0.0001 per share, in Reorganized Holdings that shall be issued on the Effective Date and shall also refer to the shares of common stock reserved for issuance under the New Warrants and the Management Incentive Plan.

 

1.87.        New Common Shares Allocation Schedule means the allocation schedule summarizing the pro forma equity ownership of Reorganized Holdings to be filed as a part of the Plan Supplement.

 

1.88.        New Warrant Agreement means the warrant agreement that will govern the terms of the New Warrants, the form of which shall be included in the Plan Supplement, and which will be in form and substance reasonably acceptable to the Debtors and the Requisite Third Lien Noteholders, the Requisite Unsecured Noteholders and the Convertible Noteholder.

 

1.89.        New Warrants means the Unsecured Noteholder New Warrants and the Convertible Noteholder New Warrants.

 

1.90.        Other Priority Claim means any Claim against any of the Debtors other than an Administrative Expense Claim or a Priority Tax Claim, entitled to priority in payment as specified in section 507(a)(3), (4), (5), (6), (7) or (9) of the Bankruptcy Code.

 

1.91.        Other Secured Claim means a Secured Claim, other than an Administrative Expense Claim, a Priority Tax Claim, a Revolving Credit Agreement Claim, a Second Lien Note Claim or a Third Lien Note Claim.

 

1.92.        Person means an individual, corporation, partnership, joint venture, association, joint stock company, limited liability company, limited liability partnership, trust, estate, unincorporated organization, Governmental Unit or other entity.

 

1.93.        Petition Date means the date on which each of the respective Debtors files its voluntary petition for reorganization relief under chapter 11 of the Bankruptcy Code.

 

1.94.        Plan means this joint prepackaged chapter 11 plan of reorganization, including the exhibits hereto (including the Plan Supplement), which shall be consistent with the Restructuring Support Agreement and otherwise reasonably satisfactory in form and substance to the Requisite Third Lien Noteholders, the Requisite Unsecured Noteholders and the Convertible Noteholder, as the same may be amended or modified from time to time in accordance with the terms hereof and of the Restructuring Support Agreement.

 

1.95.        Plan Supplement means a supplemental appendix to the Plan containing, among other things, substantially final forms of the Amended Organizational Documents, the Amended Revolving Credit Agreement, the New Warrant Agreement, the Management Incentive Plan, the Lease Amendments, the New Common Shares Allocation Schedule, and, to the extent known, with respect to

 

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the members of the New Board, information required to be disclosed in accordance with section 1129(a)(5) of the Bankruptcy Code that will be filed with the Bankruptcy Court no later than five (5) Business Days before the Confirmation Hearing; provided , that through the Effective Date, the Debtors shall have the right to amend documents contained in, and exhibits to, the Plan Supplement provided that the documents constituting the Plan Supplement (as may be amended) shall be consistent with the Restructuring Support Agreement and Plan in all respects and otherwise in form and substance reasonably satisfactory in all respects to the Requisite Third Lien Noteholders, the Requisite Unsecured Noteholders, and the Convertible Noteholder; provided , further if the Plan Supplement contains documents related to the Amended Revolving Credit Agreement or DIP Financing Facility, such documents shall be satisfactory to Requisite Third Lien Noteholders.

 

1.96.        Preferred Holder means any holder of Preferred Stock Interests.

 

1.97.        Preferred Stock means the 5.75% Convertible Series A Perpetual Preferred Stock issued by Holdings pursuant to the Preferred Stock Certificate of Designation.

 

1.98.        Preferred Stock Cash Distribution means Cash in the amount of $11,100,000, to be distributed, in accordance with, and subject to the limitations set forth in, Section 4.11 below, on a Pro Rata basis to holders of Allowed Preferred Stock Interests.  For the avoidance of doubt, the foregoing monies shall be reserved by the Debtors, or the Reorganized Debtors, as the case may be, but shall not be held in a segregated account.

 

1.99.        Preferred Stock Certificate of Designation means that certain Certificate of Designations, Preferences, Rights and Limitations of 5.75% Series A Convertible Perpetual Preferred Stock of Holdings, dated as of June 17, 2013.

 

1.100.      Preferred Stock Interests means an Interest in Preferred Stock.

 

1.101.      Priority Tax Claim means any secured or unsecured Claim of a Governmental Unit of the kind entitled to priority in payment as specified in sections 502(i) and 507(a)(8) of the Bankruptcy Code.

 

1.102.      Pro Rata means the proportion that an Allowed Claim or Interest in a particular Class bears to the aggregate amount of Allowed Claims or Interests in that Class, or the proportion that Allowed Claims or Interests in a particular Class bear to the aggregate amount of Allowed Claims and Disputed Claims or Allowed Interests and Disputed Interests in a particular Class and other Classes entitled to share in the same recovery as such Allowed Class under the Plan.

 

1.103.      Registration Rights Parties means each recipient of New Common Shares who, together with its affiliates and related funds, receives 10% or more of the New Common Shares.

 

1.104.      Reinstate, Reinstated or Reinstatement means (a) leaving unaltered the legal, equitable, and contractual rights to which a Claim entitles the holder of such Claim in accordance with section 1124 of the Bankruptcy Code, or (b) if applicable under section 1124 of the Bankruptcy Code: (i) curing all prepetition and postpetition defaults other than defaults relating to the insolvency or financial condition of the applicable Debtor or its status as a debtor under the Bankruptcy Code; (ii) reinstating the maturity date of the Claim; (iii) compensating the holder of such Claim for damages incurred as a result of its reasonable reliance on a contractual provision or such applicable law allowing the Claim’s acceleration; and (iv) not otherwise altering the legal, equitable or contractual rights to which the Claim entitles the holder thereof.

 

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1.105.      Rejecting Class  means an Impaired Class that does not vote to accept the Plan in accordance with section 1126 of the Bankruptcy Code.

 

1.106.      Released Parties means collectively:  (a) the Debtors; (b) the Revolving Credit Agreement Agent; (c) the Revolving Credit Agreement Lenders; (d) the other Secured Parties under and as defined in the Revolving Credit Agreement; (e) the Consenting Third Lien Noteholders; (f) the Consenting Unsecured Noteholders; (g) the Convertible Noteholder; (h) the Consenting Preferred Holders; (i) the Third Lien Note Trustee and Third Lien Note Collateral Agent; (j) the Unsecured Note Trustee; (k) the DIP Agent and DIP Lenders; (l) the Amended Revolving Credit Facility Agent and Amended Revolving Credit Facility Lenders; and (m) with respect to each of the foregoing entities in clauses (a) through (l), such entities’ predecessors, successors and assigns, subsidiaries, affiliates, managed accounts or funds, and all of their respective current and former officers, directors, principals, shareholders, members, partners, employees, agents, advisory board members, financial advisors, attorneys, accountants, investment bankers, consultants, representatives, management companies, fund advisors and other professionals, and such Persons’ respective heirs, executors, estates, servants and nominees.

 

1.107.      Reorganized Debtors means the Debtors, as reorganized on the Effective Date in accordance with the Plan.

 

1.108.      Reorganized Debtor Affiliates means the Debtor Affiliates, as reorganized on the Effective Date in accordance with the Plan.

 

1.109.      Reorganized Holdings means Holdings as reorganized on the Effective Date in accordance with the Plan.

 

1.110.      Requisite Creditors means, as of the date of determination, each of the Requisite Third Lien Noteholders, the Requisite Unsecured Noteholders, the Convertible Noteholder and the Requisite Preferred Holders.

 

1.111.      Requisite Preferred Holders means as of the date of determination, Consenting Preferred Holders holding at least a majority of the aggregate number of shares of Preferred Stock Interests held by the Consenting Preferred Holders as of such date.

 

1.112.      Requisite Third Lien Noteholders means as of the date of determination, Consenting Third Lien Noteholders holding at least a majority in aggregate principal amount outstanding of the Third Lien Notes held by the Consenting Third Lien Noteholders as of such date; provided that Requisite Third Lien Noteholders shall include (a) Ares, for so long as it, together with its affiliated funds that are Consenting Third Lien Noteholders, holds greater than 20% in aggregate principal outstanding amount of the Third Lien Notes, and (b) Franklin, for so long as it, together with its affiliated funds that are Consenting Third Lien Noteholders, holds greater than 20% in aggregate principal outstanding amount of the Third Lien Notes.

 

1.113.      Requisite Unsecured Noteholders means as of the date of determination, Consenting Unsecured Noteholders holding at least a majority in aggregate principal amount outstanding of the Unsecured Notes held by the Consenting Unsecured Noteholders as of such date; provided , that any Unsecured Notes acquired by Ares and Franklin after June 9, 2016 shall not be included in either the numerator or denominator of the foregoing calculation, except for any Unsecured Notes acquired by them from other Consenting Unsecured Noteholders.

 

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1.114.      Restructuring means the proposed financial restructuring pursuant to, and in accordance with, this Plan and the Definitive Documents.

 

1.115.      Restructuring Expenses means the reasonable and documented fees and expenses incurred by each of the Revolving Credit Agreement Agent, and each of the Consenting Creditors, and the fees, costs and expenses of their respective legal and financial advisors (but no more than one legal counsel, one local counsel in each appropriate jurisdiction and one financial advisor for each of the Revolving Credit Agreement Agent, the Consenting Third Lien Noteholders, the Consenting Unsecured Noteholders, the Convertible Noteholder, and the Consenting Preferred Holders) without the requirement for the filing of retention applications, fee applications or any other applications in the Chapter 11 Cases, and the Third Lien Note Trustee Fees and Expenses, which, in each case, shall be Allowed in full, payable in accordance herewith and shall not be subject to any offset, defense, counterclaim, reduction or credit of any kind whatsoever.

 

1.116.      Restructuring Support Agreement means that certain Restructuring Support Agreement, dated as of June 9, 2016, by and among the Debtors, the Consenting Third Lien Noteholders, the Consenting Unsecured Noteholders, the Convertible Noteholder and the Consenting Preferred Holders, as may be amended, supplemented or modified from time to time in accordance with the terms thereof, a copy of which, with individual holdings redacted from the signature pages, is annexed hereto as Exhibit A .

 

1.117.      Revolving Credit Agreement or Revolving Credit Facility means that certain Senior Revolving Credit Agreement, dated as of February 8, 2012, by and among Holdings, as borrower, each of the guarantors named therein, the Revolving Credit Agreement Agent, Wells Fargo Bank, N.A., as syndication agent, and the lenders party thereto, as amended, modified or otherwise supplemented from time to time.

 

1.118.      Revolving Credit Agreement Agent means JPMorgan Chase Bank, N.A. in its capacity as administrative agent under the Revolving Credit Agreement.

 

1.119.      Revolving Credit Agreement Claims means all Claims against the Debtors arising under or in connection with the Revolving Credit Agreement and all documents relating thereto, including, without limitation, any Claims against the Debtors arising under or in connection with a roll-up of the Revolving Credit Agreement into the DIP Financing Facility.

 

1.120.      Revolving Credit Agreement Lenders means the lenders from time to time party to the Revolving Credit Agreement as lenders thereunder, including any applicable assignees and participants thereof.

 

1.121.      Second Lien Note Claims means all Claims against the Debtors arising under or in connection with the Second Lien Note Indentures.

 

1.122.      Second Lien Note Indentures means the 8.625% Second Lien Note Indenture and the 12.0% Second Lien Note Indenture.

 

1.123.      Second Lien Note Trustee means U.S. Bank National Association in its capacity as trustee agent under the Second Lien Notes Indentures, and its successors and assigns.

 

1.124.      Second Lien Notes means, collectively, (a) the 8.625% Senior Secured Notes due 2020 issued pursuant to the 8.625% Second Lien Note Indenture in the aggregate principal outstanding amount of $700,000,000, and (b) the 12.0% Senior Secured Notes due 2020 issued pursuant to the 12.0%

 

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Senior Secured Note Indenture in the aggregate principal outstanding amount of $112,800,000, plus all accrued prepetition interest, fees, and other expenses due under the Second Lien Notes.

 

1.125.      Section 510(b) Claim means a Claim subject to subordination under section 510(b) of the Bankruptcy Code, and any Claim for or that arises from the rescission of a purchase, sale, issuance or offer of a Security of any of the Debtors, or for damages arising from the purchase of sale of such a Security, or for reimbursement, indemnification, or contribution allowed under section 502 of the Bankruptcy Code on account of such Claim.

 

1.126.      Secured Claim means a Claim to the extent (a) secured by property of the estate, the amount of which is equal to or less than the value of such property (i) as set forth in the Plan, (i) as agreed to by the holder of such Claim and the Debtors or (iii) as determined by a Final Order in accordance with section 506(a) of the Bankruptcy Code, or (b) secured by the amount of any rights of setoff of the holder thereof under section 553 of the Bankruptcy Code.

 

1.127.      Schedule of Rejected Contracts means the schedule of contracts and leases to be rejected by the applicable Debtor(s), with the reasonable consent of the Requisite Third Lien Noteholders, to be filed as part of the Plan Supplement.

 

1.128.      Subsidiary Interests means the Interests in the Debtors, other than Holdings.

 

1.129.      Tax or Taxes means any federal, state, local, or non-U.S. income, gross receipts, license, payroll, employment, excise, severance, stamp, occupation, premium, windfall profits, environmental (including taxes under §59A of the Internal Revenue Code of 1986, as amended), customs duties, capital stock, franchise, profits, withholding, social security (or similar), unemployment, disability, real property, personal property, sales, use, transfer, registration, value added, alternative or add-on minimum, estimated or other tax of any kind whatsoever, including any interest, penalty, or addition thereto, whether disputed or not, and including any liability under Treasury Regulation § 1.1502-6 or any analogous or similar state, local or non-U.S. law or regulation.

 

1.130.      Tax Return means any return, declaration, report, claim for refund, or information return or statement relating to Taxes, including any schedule or attachment thereto, and including any amendment thereof.

 

1.131.      Term Sheet means the term sheet attached to the Restructuring Support Agreement as Exhibit A including any schedules and exhibits attached thereto and as may be modified in accordance with Section 9 of the Restructuring Support Agreement.

 

1.132.      Third Lien Note Claims means all Claims against the Debtors arising under or in connection with the Third Lien Note Indenture.

 

1.133.      Third Lien Note Indenture means that certain indenture, dated as of September 10, 2015, by and among Holdings, as issuer, each of the guarantors named therein, and U.S. Bank, National Association, as trustee, as amended, modified, or otherwise supplemented from time to time.

 

1.134.      Third Lien Noteholder New Common Shares means New Common Shares representing, after giving effect to the Restructuring, in the aggregate, 76.5% of the total outstanding shares of common stock of Reorganized Holdings (subject to dilution by the Management Incentive Plan and, to the extent applicable, the exercise of the New Warrants), which shall be distributed on a Pro Rata basis to holders of Allowed Third Lien Note Claims in accordance with Section 4.5 below.

 

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1.135.      Third Lien Note Collateral Agent means U.S. Bank National Association in its capacity as collateral agent under the Third Lien Security Agreement, and any successor collateral agent appointed under, and in accordance with, the Third Lien Note Indenture.

 

1.136.      Third Lien Note Trustee means Wilmington Savings Funds Society, FSB, in its capacity as successor trustee to U.S. Bank National Association under the Third Lien Note Indenture, and its predecessor, successors and assigns.

 

1.137.      Third Lien Note Trustee Charging Lien means any Lien or other priority in payment arising prior to the Effective Date to which the Third Lien Note Trustee is entitled, pursuant to the Third Lien Note Indenture, against distributions to be made to Third Lien Noteholders for payment of any Third Lien Note Trustee Fees and Expenses.

 

1.138.      Third Lien Note Trustee Fees and Expenses means the reasonable and documented compensation, fees, expenses, disbursements, and indemnity claims arising under the Third Lien Note Indenture, including attorneys’ and agents’ fees, expenses and disbursements, incurred under the Third Lien Note Indenture by the Third Lien Note Trustee, whether prior to or after the Petition Date and whether prior to or after the Effective Date.

 

1.139.      Third Lien Noteholder means a holder of Third Lien Notes.

 

1.140.      Third Lien Noteholder Cash Distribution means Cash in the amount of $33,825,588 to be distributed, in accordance with Section 4.5 below, on a Pro Rata basis to the holders of Allowed Third Lien Note Claims.

 

1.141.      Third Lien Notes means the 13.0% Senior Secured Notes due 2022 issued pursuant to the Third Lien Note Indenture, in the aggregate outstanding principal amount of $1,017,970,000, plus all accrued prepetition interest, fees, and other expenses due under the Third Lien Notes.

 

1.142.      Third Lien Security Agreement means the Third Lien Security Agreement, dated as of September 10, 2015, between and among Holdings, each of the guarantors named therein, and the Third Lien Note Collateral Agent.

 

1.143.      Unimpaired means, with respect to a Claim, Interest or Class of Claims or Interests, not “impaired” within the meaning of section 1123(a)(4) and 1124 of the Bankruptcy Code.

 

1.144.      Unsecured Note Claims means any Claim arising under or in connection with the Unsecured Note Indentures.

 

1.145.      Unsecured Note Indentures means the 8.875% Senior Unsecured Note Indenture, the 9.25% Senior Unsecured Note Indenture, and the 9.75% Senior Unsecured Note Indenture.

 

1.146.      Unsecured Note Trustee means Delaware Trust Company, as successor trustee to U.S. Bank National Association in its capacity as trustee under each of the Unsecured Note Indentures, and its predecessor, successors and assigns.

 

1.147.      Unsecured Note Trustee Charging Lien means any Lien or other priority in payment arising prior to the Effective Date to which the Unsecured Note Trustee is entitled, pursuant to the Unsecured Note Indentures, against distributions to be made to Unsecured Noteholders for payment of

 

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any Unsecured Note Trustee Fees and Expenses, which Lien or other priority in payment shall be deemed a separate right of each Unsecured Note Trustee arising under this Plan.

 

1.148.      Unsecured Note Trustee Fees and Expenses means the Claims for reasonable and documented compensation, fees, expenses, disbursements, and indemnity claims arising under the Unsecured Note Indentures, including, without limitation, internal default fees, attorneys’, financial advisors’ and agents’ fees, expenses and disbursements, incurred under the Unsecured Note Indentures by the Unsecured Note Trustee, whether prior to or after the Petition Date and whether prior to or after the Effective Date.

 

1.149.      Unsecured Noteholder means a holder of Unsecured Notes.

 

1.150.      Unsecured Noteholder Cash Distribution means Cash in the amount of $37,595,657 plus the Unsecured Note Trustee Fees and Expenses to be distributed, in accordance with, and subject to the limitations set forth in, Section 4.6 below, on a Pro Rata basis to the holders of Allowed Unsecured Note Claims.

 

1.151.      Unsecured Noteholder New Common Shares means New Common Shares, representing, after giving effect to the Restructuring, in the aggregate, 15.5% of the total outstanding shares of common stock of Reorganized Holdings (subject to dilution by the Management Incentive Plan and, to the extent applicable, the exercise of the New Warrants), to be distributed on a Pro Rata basis to holders of Allowed Unsecured Note Claims in accordance with, and subject to the limitations set forth in, Section 4.6 below.

 

1.152.      Unsecured Noteholder New Warrants means warrants to purchase New Common Shares representing 4.0% of the total issued and outstanding New Common Shares on the Effective Date (including New Common Shares issuable upon full exercise of the New Warrants but excluding any New Common Shares issued pursuant to the Management Incentive Plan), subject to dilution by the Management Incentive Plan, exercisable for a four (4) year period commencing on the Effective Date at a per share exercise price of $14.04, which amount is equal to $1,330,000,000 divided by the total number of issued and outstanding New Common Shares on the Effective Date (including New Common Shares issuable upon full exercise of the New Warrants but excluding any New Common Shares issued pursuant to the Management Incentive Plan), as more fully set forth in the New Warrant Agreement, which shall be distributed in accordance with, and subject to the limitations set forth in, Section 4.6 below.  For example, if, on the Effective Date, nine hundred and sixty thousand (960,000) New Common Shares are issued (exclusive of any New Common Shares issuable upon exercise of the New Warrants and any New Common Shares issued pursuant to the Management Incentive Plan), the number of New Common Shares to be reserved for issuance upon exercise of the Unsecured Noteholder New Warrants shall be forty thousand (40,000) New Common Shares.

 

1.153.      Unsecured Notes means the 8.875% Senior Unsecured Notes, the 9.25% Senior Unsecured Notes, and the 9.75% Senior Unsecured Notes.

 

1.154.      Voting Deadline means 5:00 p.m. Eastern Time on July 20, 2016

 

1.155.      Voting Record Date means 5:00 p.m. Eastern Time on June 13, 2016.

 

1.156.      Warrant Record Date means 5:00 p.m. Eastern Time on June 13, 2016.

 

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B.                                     Interpretation; Application of Definitions and Rules of Construction.

 

Unless otherwise specified, all section or exhibit references in the Plan are to the respective section in, or exhibit to, the Plan, as the same may be amended, waived or modified from time to time.  The words “herein,” “hereof,” “hereto,” “hereunder” and other words of similar import refer to the Plan as a whole and not to any particular section, subsection or clause contained therein.  The headings in the Plan are for convenience of reference only and shall not limit or otherwise affect the provisions hereof.  For purposes herein: (1) in the appropriate context, each term, whether stated in the singular or the plural, shall include both the singular and the plural, and pronouns stated in the masculine, feminine or neuter gender shall include the masculine, feminine and the neuter gender; (2) any reference herein to a contract, lease, instrument, release, indenture or other agreement or document being in a particular form or on particular terms and conditions means that the referenced document shall be substantially in that form or on those terms and conditions, and in each case shall include any amendment, restatement or other modification made in accordance herewith; (3) unless otherwise specified, all references herein to “Sections” are references to Sections hereof or hereto; (4) the rules of construction set forth in section 102 of the Bankruptcy Code shall apply; and (5) any term used in capitalized form herein that is not otherwise defined but that is used in the Bankruptcy Code or the Bankruptcy Rules shall have the meaning assigned to that term in the Bankruptcy Code or the Bankruptcy Rules, as the case may be.

 

C.                                     Reference to Monetary Figures.

 

All references in the Plan to monetary figures shall refer to the legal tender of the United States of America, unless otherwise expressly provided.

 

D.                                     Controlling Document.

 

Following the commencement of the Chapter 11 Cases, in the event of an inconsistency between the Plan and Disclosure Statement, the terms of the Plan shall control in all respects.  In the event of an inconsistency between the Plan and the Plan Supplement, the terms of the relevant document in the Plan Supplement shall control (unless stated otherwise in such Plan Supplement document).  The provisions of the Plan and of the Confirmation Order shall be construed in a manner consistent with each other so as to effect the purposes of each; provided , that if there is determined to be any inconsistency between any Plan provision and any provision of the Confirmation Order that cannot be so reconciled, then, solely to the extent of such inconsistency, the provisions of the Confirmation Order shall govern and any such provision of the Confirmation Order shall be deemed a modification of the Plan and shall control and take precedence.

 

SECTION 2.                             ADMINISTRATIVE EXPENSE AND PRIORITY CLAIMS.

 

2.1.          Administrative Expense Claims .

 

Except to the extent that a holder of an Allowed Administrative Expense Claim and the Debtors or the Reorganized Debtors agrees to different treatment, the Debtors (or the Reorganized Debtors, as the case may be) shall pay to each holder of an Allowed Administrative Expense Claim Cash in an amount equal to such Claim on, or as soon thereafter as is reasonably practicable, the later of (a) the Effective Date and (b) the first Business Day after the date that is thirty (30) calendar days after the date such Administrative Expense Claim becomes an Allowed Administrative Expense Claim; provided , however , that Allowed Administrative Expense Claims representing liabilities incurred in the ordinary course of business by the Debtors, as debtors in possession, or liabilities arising under loans or advances to or other obligations incurred by the Debtors, as debtors in possession, whether or not incurred in the ordinary course of business, shall be paid by the Debtors in the ordinary course of business, consistent

 

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with past practice and in accordance with the terms and subject to the conditions of any agreements governing, instruments evidencing or other documents relating to such transactions.

 

2.2.          Fee Claims .

 

All entities seeking an award by the Bankruptcy Court of Fee Claims (a) shall file their respective final applications for allowance of compensation for services rendered and reimbursement of expenses incurred by the date that is forty-five (45) days after the Effective Date, (b) shall be paid in full from the Debtors’ or Reorganized Debtors’ Cash on hand in such amounts as are Allowed by the Bankruptcy Court (i) upon the later of (A) the Effective Date and (B) the date upon which the order relating to any such Allowed Fee Claim is entered or (ii) upon such other terms as may be mutually agreed upon between the holder of such an Allowed Fee Claim and the Debtors or, on and after the Effective Date, the Reorganized Debtors.  The Reorganized Debtors are authorized to pay compensation for services rendered or reimbursement of expenses incurred after the Effective Date in the ordinary course and without the need for Bankruptcy Court approval.

 

2.3.          Priority Tax Claims .

 

Except to the extent that a holder of an Allowed Priority Tax Claim agrees to a different treatment, each holder of an Allowed Priority Tax Claim shall receive, at the sole option of the Debtors or the Reorganized Debtors, with the reasonable consent of the Requisite Third Lien Noteholders, (a) Cash in an amount equal to such Allowed Priority Tax Claim on, or as soon thereafter as is reasonably practicable, the later of the Effective Date and the first Business Day after the date that is thirty (30) calendar days after the date such Priority Tax Claim becomes an Allowed Priority Tax Claim, or (b) equal annual Cash payments in an aggregate amount equal to such Allowed Priority Tax Claim, together with interest at the applicable rate under section 511 of the Bankruptcy Code, over a period not exceeding five (5) years after the date of assessment of such Allowed Priority Tax Claim; provided, that the Debtors reserve the right to prepay all or a portion of any such amounts at any time under this option.  All Allowed Priority Tax Claims that are not due and payable on or before the Effective Date shall be paid in the ordinary course of business or under applicable non-bankruptcy law as such obligations become due.

 

SECTION 3.                             CLASSIFICATION OF CLAIMS AND INTERESTS.

 

3.1.          Summary of Classification .

 

The following table designates the Classes of Claims against and Interests in each of the Debtors and specifies which of those Classes are (a) Impaired or Unimpaired by the Plan, (b) entitled to vote to accept or reject the Plan in accordance with section 1126 of the Bankruptcy Code and (c) presumed to accept or deemed to reject the Plan.  In accordance with section 1123(a)(1) of the Bankruptcy Code, Administrative Expense Claims and Priority Tax Claims have not been classified and, thus, are excluded from the Classes of Claims and Interests set forth in this Section 3.  The classification of Claims and Interests set forth herein shall apply separately to each of the Debtors.  All of the potential Classes for the Debtors are set forth herein.  Certain of the Debtors may not have holders of Claims or Interests in a particular Class or Classes, and such Classes shall be treated as set forth in Section 3.3.

 

Class

 

Designation

 

Treatment

 

Entitled to Vote

1

 

Other Priority Claims

 

Unimpaired

 

No

(presumed to accept)

2

 

Other Secured Claims

 

Unimpaired

 

No

(presumed to accept)

3

 

Revolving Credit Agreement Claims

 

Unimpaired

 

No

(presumed to accept)

 

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4

 

Second Lien Note Claims

 

Unimpaired

 

No

(presumed to accept)

5

 

Third Lien Note Claims

 

Impaired

 

Yes

6

 

Unsecured Note Claims

 

Impaired

 

Yes

7

 

Convertible Note Claims

 

Impaired

 

Yes

8

 

General Unsecured Claims

 

Unimpaired

 

No

(presumed to accept)

9

 

Intercompany Claims

 

Unimpaired

 

No

(presumed to accept)

10

 

Intercompany Interests

 

Unimpaired

 

No

(presumed to accept)

11

 

Preferred Stock Interests

 

Impaired

 

Yes

12

 

Existing Equity Interests

 

Impaired

 

No

(deemed to reject)

13

 

Section 510(b) Claims

 

Impaired

 

No

(deemed to reject)

 

3.2.          Special Provision Governing Unimpaired Claims .

 

Except as otherwise provided in the Plan, nothing under the Plan shall affect the rights of the Debtors or the Reorganized Debtors, as applicable, in respect of any Unimpaired Claims, including all rights in respect of legal and equitable defenses to, or setoffs or recoupments against, any such Unimpaired Claims.

 

3.3.          Elimination of Vacant Classes .

 

Any Class of Claims or Interests that, as of the commencement of the Confirmation Hearing, does not have at least one holder of a Claim or Interest that is Allowed in an amount greater than zero for voting purposes shall be considered vacant, deemed eliminated from the Plan for purposes of voting to accept or reject the Plan, and disregarded for purposes of determining whether the Plan satisfies section 1129(a)(8) of the Bankruptcy Code with respect to that Class.

 

SECTION 4.                             TREATMENT OF CLAIMS AND INTERESTS.

 

4.1.          Other Priority Claims (Class 1) .

 

(a)           Classification :  Class 1 consists of Other Priority Claims.

 

(b)           Treatment :  Except to the extent that a holder of an Allowed Other Priority Claim against any of the Debtors has agreed to less favorable treatment of such Claim, each such holder shall receive, in full and final satisfaction of such Claim, Cash in an amount equal to such Claim, payable on the later of the Effective Date and the date on which such Other Priority Claim becomes an Allowed Other Priority Claim, in each case, or as soon as reasonably practical thereafter.

 

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(c)           Voting :  Class 1 is Unimpaired, and the holders of Other Priority Claims are conclusively presumed to have accepted the Plan pursuant to section 1126(f) of the Bankruptcy Code.  Therefore, holders of Other Priority Claims are not entitled to vote to accept or reject the Plan.

 

4.2.          Other Secured Claims (Class 2) .

 

(a)           Classification :  Class 2 consists of the Other Secured Claims.  To the extent that Other Secured Claims are secured by different collateral or different interests in the same collateral, such Claims shall be treated as separate subclasses of Class 2.

 

(b)           Treatment :  Except to the extent that a holder of an Allowed Other Secured Claim against any of the Debtors has agreed to less favorable treatment of such Claim, each holder of an Allowed Other Secured Claim shall receive, at the option of the Debtors or the Reorganized Debtors with the reasonable consent of the Requisite Third Lien Noteholders, either (i) payment in full in Cash in full and final satisfaction of such claim, payable on the later of the Effective Date and the date on which such Other Secured Claim becomes an Allowed Other Secured Claim, or, in each case, as soon as reasonably practical thereafter, (ii) Reinstatement pursuant to section 1124 of the Bankruptcy Code, or (iii) such other recovery necessary to satisfy section 1129 of the Bankruptcy Code.

 

(c)           Voting :  Class 2 is Unimpaired, and the holders of Other Secured Claims are conclusively presumed to have accepted the Plan pursuant to section 1126(f) of the Bankruptcy Code.  Therefore, holders of Other Secured Claims are not entitled to vote to accept or reject the Plan.

 

4.3.          Revolving Credit Agreement Claims (Class 3) .

 

(a)           Classification :  Class 3 consists of the Revolving Credit Agreement Claims.

 

(b)           Allowance :  The Revolving Credit Agreement Claims shall be Allowed as Secured Claims with respect to funded loans and the face amount of undrawn letters of credit as of the Effective Date in the approximate aggregate principal (or face) amount of $450,000,000 as of the Effective Date (which amount shall be reduced by any portion of the Revolving Credit Agreement Claims that are repaid or otherwise “rolled up” into the DIP Financing Facility), plus any unpaid accrued interest, letter of credit fees, other fees, and unpaid reasonable fees and expenses as of the Effective Date, in each case as required under the terms of the Revolving Credit Agreement and to the extent not already paid pursuant to the DIP Financing Orders.

 

(c)           Treatment :  On the Effective Date, or as soon as practicable thereafter, each holder of an Allowed Revolving Credit Agreement Claim shall receive, in full and final satisfaction of such Allowed Revolving Credit Agreement Claim, its Pro Rata share of the commitments and/or loans made pursuant to the Amended Revolving Credit Agreement and shall receive its benefits and be bound by the obligations therein, which shall also provide for the renewal of existing letters of credit and the issuance of new letters of credit on the terms and conditions set forth in the Amended Revolving Credit Agreement.  The terms of the Amended Revolving Credit Agreement shall be (a) in form and substance reasonably satisfactory to the Requisite Unsecured Noteholders, and (b) in form and substance satisfactory to the Debtors and the Requisite Third Lien Noteholders.

 

(d)           Voting :  Allowed Revolving Credit Agreement Claims are Unimpaired, and the holders of Revolving Credit Agreement Claims are not entitled to vote to accept or reject the Plan.

 

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4.4.          Second Lien Note Claims (Class 4) .

 

(a)           Classification :  Class 4 consists of Second Lien Note Claims.

 

(b)           Allowance :  The Second Lien Note Claims are Allowed in the amount of $824,413,181 (including accrued and unpaid interest as of the Effective Date), plus any other amounts and obligations payable under the Second Lien Note Indenture as of the Effective Date, and shall not be subject to any avoidance, reductions, setoff, offset, recoupment, recharacterization, subordination (whether equitable, contractual, or otherwise), counterclaims, cross-claims, defenses, disallowance, impairment, objection, or any other challenges under any applicable law or regulation by any Person.

 

(c)           Treatment :  The legal, equitable, and contractual rights of the holders of Allowed Second Lien Note Claims are unaltered by the Plan.  On the Effective Date, the holders of Allowed Second Lien Note Claims shall have their Allowed Second Lien Note Claims Reinstated.

 

(d)           Voting :  Class 4 is Unimpaired.  In accordance with section 1126(f) of the Bankruptcy Code, the holders of Allowed Second Lien Note Claims are conclusively presumed to accept the Plan and are not entitled to vote to accept or reject the Plan, and the votes of such holders will not be solicited with respect to such Allowed Secured Lien Note Claims.

 

4.5.          Third Lien Note Claims (Class 5) .

 

(a)           Classification :  Class 5 consists of Third Lien Note Claims.

 

(b)           Allowance :  The Third Lien Note Claims are Allowed in the amount of $1,045,907,621 (including accrued and unpaid interest as of the Petition Date), plus any other amounts and obligations payable under the Third Lien Note Indenture as of the Petition Date, and shall not be subject to any avoidance, reductions, setoff, offset, recoupment, recharacterization, subordination (whether equitable, contractual, or otherwise), counterclaims, cross-claims, defenses, disallowance, impairment, objection, or any other challenges under any applicable law or regulation by any Person.

 

(c)           Treatment :  On the Effective Date, each holder of an Allowed Third Lien Note Claim shall be entitled to receive, in full and final satisfaction of such Allowed Third Lien Note Claim, its Pro Rata share of: (i) the Third Lien Noteholder New Common Shares; and (ii) the Third Lien Noteholder Cash Distribution.  Distributions to each holder of an Allowed Third Lien Note Claim shall be subject to the rights and terms of the Third Lien Note Indenture and the rights of the Third Lien Note Trustee to assert its Third Lien Note Trustee Charging Lien.

 

(d)           Voting :  Class 5 is Impaired, and holders of Third Lien Note Claims in Class 5 are entitled to vote to accept or reject the Plan.

 

4.6.          Unsecured Note Claims (Class 6) .

 

(a)           Classification :  Class 6 consists of Unsecured Note Claims.

 

(b)           Allowance :  The Unsecured Note Claims are Allowed in the amount of $662,074,303 (including accrued and unpaid interest as of the Petition Date), plus any other amounts and obligations payable under the Unsecured Note Indentures as of the Petition Date, and shall not be subject to any avoidance, reductions, setoff, offset, recoupment, recharacterization, subordination (whether equitable, contractual, or otherwise), counterclaims, cross-claims, defenses, disallowance, impairment, objection, or any other challenges under any applicable law or regulation by any Person.

 

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(c)           Treatment :  On the Effective Date, each holder of an Allowed Unsecured Note Claim shall be entitled to receive, in full and final satisfaction of such Allowed Unsecured Note Claim, its Pro Rata share  of: (i) the Unsecured Noteholder Cash Distribution; (ii) the Unsecured Noteholder New Common Shares; and (iii) the Unsecured Noteholder New Warrants; provided , however , that if the Unsecured Note Claims Class is a Rejecting Class, then: (1) the Convertible Noteholder New Warrants shall not be issued under the Plan; (2) the New Common Shares that were to be distributed to the holder of Allowed Convertible Note Claims and Allowed Existing Equity Interests shall be reallocated and distributed Pro Rata to the holders of Allowed Third Lien Note Claims on the Effective Date; and (3) if the Debtors elect not to terminate the Restructuring Support Agreement, then the distributions to be received by the holders of Allowed General Unsecured Claims shall be modified so as to comply with section 1129(b) of the Bankruptcy Code, subject to the Consenting Third Lien Noteholders’ rights under Section 9 of the Restructuring Support Agreement.  Distributions to each holder of an Allowed Unsecured Note Claim shall be subject to the rights and terms of the Unsecured Note Indentures and the rights of the Unsecured Note Trustee to assert its Unsecured Note Trustee Charging Lien.

 

(d)           Voting :  Class 6 is Impaired, and the holders of Unsecured Note Claims are entitled to vote to accept or reject the Plan.

 

4.7.          Convertible Note Claims (Class 7) .

 

(a)           Classification :  Class 7 consists of Convertible Note Claims.

 

(b)           Allowance :  The Convertible Note Claims are Allowed in the amount of $297,586,588 (including accrued and unpaid interest as of the Petition Date), plus any other amounts and obligations payable under the Convertible Note Purchase Agreement as of the Petition Date, and shall not be subject to any avoidance, reductions, setoff, offset, recoupment, recharacterization, subordination (whether equitable, contractual, or otherwise), counterclaims, cross-claims, defenses, disallowance, impairment, objection, or any other challenges under any applicable law or regulation by any Person.

 

(c)           Treatment :  On the Effective Date, the holder of the Allowed Convertible Note Claims shall be entitled to receive, in full and final satisfaction of such Allowed Convertible Note Claims: (i) the Convertible Noteholder Cash Distribution; (ii) the Convertible Noteholder New Common Shares; and (iii) the Convertible Noteholder New Warrants; provided , however , that if the Unsecured Note Claims Class is a Rejecting Class then: (1) the Convertible Noteholder New Warrants shall not be issued under the Plan; (2) the New Common Shares that would have been distributed to the holder of Allowed Convertible Note Claims under the Plan shall be reallocated and distributed Pro Rata to the holders of Allowed Third Lien Note Claims on the Effective Date; and (3) the Cash that was to be distributed to the holder of Allowed Convertible Note Claims pursuant to the Convertible Noteholder Cash Distribution shall remain property of the Debtors and vest in the Reorganized Debtors on the Effective Date; provided , further , however , that if the Unsecured Note Claims Class accepts the Plan and the Convertible Note Claims Class is a Rejecting Class, then: (x) the Convertible Noteholder New Warrants shall not be issued under the Plan; (y) the New Common Shares that would have been distributed to the holder of Allowed Convertible Note Claims under the Plan shall be reallocated and distributed on the Effective Date to the holders of Allowed Third Lien Note Claims and Allowed Unsecured Note Claims pro rata based on their respective holdings of New Common Shares to be distributed to such Classes pursuant to the Plan; and (z) the Cash that was to be distributed to the holder of Allowed Convertible Note Claims pursuant to the Convertible Noteholder Cash Distribution shall remain property of the Debtors and vest in the Reorganized Debtors on the Effective Date.

 

(d)           Voting :  Class 7 is Impaired, and the holder of the Convertible Note Claims is entitled to vote to accept or reject the Plan.

 

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4.8.          General Unsecured Claims (Class 8) .

 

(a)           Classification :  Class 8 consists of General Unsecured Claims.

 

(b)           Treatment :  Except to the extent that a holder of an Allowed General Unsecured Claim against any of the Debtors has agreed to less favorable treatment of such Claim, the legal, equitable, and contractual rights of the holders of General Unsecured Claims are unaltered by the Plan.  On and after the Effective Date, except to the extent that a holder of a General Unsecured Claim agrees to different treatment, the Debtors or Reorganized Debtors, as applicable, shall continue to pay or dispute each General Unsecured Claim in the ordinary course of business as if the Chapter 11 Cases had never been commenced; provided , however , that if the Unsecured Note Claims Class is a Rejecting Class then the distributions to be received by the General Unsecured Claims shall be modified so as to comply with section 1129(b) of the Bankruptcy Code, subject to the Consenting Third Lien Noteholders’ rights under Section 9 of the Restructuring Support Agreement.

 

(c)           Voting : Allowed General Unsecured Claims are Unimpaired. In accordance with section 1126(f) of the Bankruptcy Code, the holders of Allowed General Unsecured Claims are conclusively presumed to accept the Plan and are not entitled to vote to accept or reject the Plan, and the votes of such holders will not be solicited with respect to such Allowed General Unsecured Claims.

 

4.9.          Intercompany Claims (Class 9) .

 

(a)           Classification :  Class 9 consists of Intercompany Claims.

 

(b)           Treatment : On the Effective Date, all Intercompany Claims shall be paid, adjusted, reinstated or discharged to the extent reasonably determined to be appropriate by the Debtors subject to the consent of the Requisite Third Lien Noteholders and Requisite Unsecured Noteholders, which consent shall not be unreasonably withheld.

 

(c)           Voting :  Pursuant to sections 1126(f) and 1126(g) of the Bankruptcy Code, the holders of Intercompany Claims against the Debtors are not entitled to vote to accept or reject the Plan.

 

4.10.        Intercompany Interests (Class 10) .

 

(a)           Classification :  Class 10 consists of Intercompany Interests.

 

(b)           Treatment :  The Intercompany Interests will be Unimpaired under the Plan.

 

(c)           Voting :  Class 10 is Unimpaired, and the holders of Intercompany Interests are conclusively presumed to have accepted the Plan pursuant to section 1126(f) of the Bankruptcy Code.  Therefore, holders of Intercompany Interests are not entitled to vote to accept or reject the Plan.

 

4.11.        Preferred Stock Interests (Class 11).

 

(a)           Classification :  Class 10 consists of Preferred Stock Interests.

 

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(b)           Allowance :  The Preferred Stock Interests are Allowed in the amount of $222,454,000, and shall not be subject to any avoidance, reductions, setoff, offset, recoupment, recharacterization, subordination (whether equitable, contractual, or otherwise), counterclaims, cross-claims, defenses, disallowance, impairment, objection, or any other challenges under any applicable law or regulation by any Person.

 

(c)           Treatment :  On the Effective Date, each holder of an Allowed Preferred Stock Interest shall be entitled to receive, in full and final satisfaction of such Allowed Preferred Stock Interest, its Pro Rata share of the Preferred Stock Cash Distribution; provided , however , that if any of the Unsecured Note Claims, the Convertible Note Claims or the Preferred Stock Interests Classes is a Rejecting Class, then the Preferred Holders shall not receive or retain any value under the Plan and the Cash to be distributed pursuant to the Preferred Stock Cash Distribution shall remain property of the Debtors and shall vest in the Reorganized Debtors on the Effective Date.

 

(d)           Voting :  Class 11 is Impaired, and the holders of Preferred Stock Interests are entitled to vote to accept or reject the Plan.

 

4.12.        Existing Equity Interests (Class 12) .

 

(a)           Classification :  Class 12 consists of Existing Equity Interests.

 

(b)           Treatment :  On the Effective Date, (i) all Existing Equity Interests shall be cancelled, and (ii) the holders of Existing Equity Interests will receive New Common Shares representing, in the aggregate, 4.0% of the total outstanding shares of Reorganized Holdings (subject to dilution by the Management Incentive Plan and, to the extent applicable, the exercise of the New Warrants); provided , however , that if: (i) the Unsecured Note Claims Class is a Rejecting Class, then Existing Equity Interests shall not receive or retain any value under the Plan and the New Common Shares that would have been distributed to Existing Equity Interests under the Plan shall be reallocated and distributed Pro Rata to the holders of Allowed Third Lien Note Claims on the Effective Date; (ii) the Unsecured Note Claims Class accepts the Plan and the Convertible Noteholder Claims is a Rejecting Class, then Existing Equity Interests will not receive or retain any value under the Plan and the New Common Shares that would have been distributed to Existing Equity Interests under the Plan shall be reallocated and distributed on the Effective Date pro rata to the holders of Allowed Third Lien Note Claims and Allowed Unsecured Note Claims based on their respective holdings of New Common Shares to be distributed to such Classes pursuant to the Plan; and (iii) the Unsecured Note Claims and the Convertible Note Claims Classes accept the Plan and the Preferred Stock Interests Class is a Rejecting Class, then Existing Equity Interests shall not receive or retain any value under the Plan and the New Common Shares that would have been distributed to Existing Equity Interests under the Plan will be reallocated and distributed on the Effective Date pro rata to the holders of Allowed Third Lien Note Claims, Allowed Unsecured Note Claims and Allowed Convertible Note Claims based on their respective holdings of New Common Shares to be distributed to such Classes pursuant to the Plan.  Notwithstanding anything herein to the contrary, any restricted shares of common stock of Holdings issued pursuant to the First Amended and Restated 2012 Long-Term Incentive Plan and the Equity-Based Incentive Policy shall vest immediately prior to the Effective Date and be treated as Existing Equity Interests hereunder.

 

(c)           Voting :  Class 12 is Impaired by the Plan, and holders of Allowed Existing Equity Interests are conclusively deemed to have rejected the Plan pursuant to section 1126(g) of the Bankruptcy Code.  Therefore, holders of Allowed Existing Equity Interests are not entitled to vote to accept or reject the Plan.

 

23



 

4.13.        Section 510(b) Claims (Class 13) .

 

(a)           Classification :  Class 13 consists of Section 510(b) Claims.

 

(b)           Treatment :  The holders of Section 510(b) Claims shall not receive or retain any property under the Plan on account of such Section 510(b) Claims and the obligations of the Debtors and the Reorganized Debtors on account of Section 510(b) Claims shall be discharged.

 

(c)           Voting :  Class 13 is Impaired by the Plan, and holders of Allowed Section 510(b) Claims are conclusively deemed to have rejected the Plan pursuant to section 1126(g) of the Bankruptcy Code.  Therefore, holders of Allowed Section 510(b) Claims are not entitled to vote to accept or reject the Plan.

 

SECTION 5.                             MEANS FOR IMPLEMENTATION.

 

5.1.          Compromise and Settlement of Claims, Interests and Controversies .

 

Pursuant to sections 363 and 1123(b)(3) of the Bankruptcy Code and Bankruptcy Rule 9019 and in consideration for the distributions and other benefits provided pursuant to the Plan, the provisions of the Plan shall constitute a good faith compromise of all Claims, Interests and controversies relating to the contractual, legal and subordination rights that a holder of a Claim may have with respect to any Allowed Claim or any distribution to be made on account of such Allowed Claim.  The entry of the Confirmation Order shall constitute the Bankruptcy Court’s approval of the compromise or settlement of all such Claims, Interests and controversies, as well as a finding by the Bankruptcy Court that such compromise or settlement is in the best interests of the Debtors, their Estates and holders of Claims and Interests and is fair, equitable and reasonable.  In accordance with the provisions of the Plan, pursuant to sections 363 and 1123(b)(3) of the Bankruptcy Code and Bankruptcy Rule 9019(a), without any further notice to or action, order or approval of the Bankruptcy Court, prior to the Effective Date, the Debtors (with the consent of the Requisite Third Lien Noteholders) and after the Effective Date, the Reorganized Debtors, may compromise and settle Claims against the Debtors or the Reorganized Debtors, as applicable, and Causes of Action against other entities.

 

5.2.          Amended Revolving Credit Agreement; Intercreditor Agreement.

 

On the Effective Date, the Amended Revolving Credit Agreement shall be executed and delivered, and the Reorganized Debtors shall be authorized to execute, deliver and enter into the Amended Revolving Credit Agreement and the other Amended Revolving Credit Facility Loan Documents in connection with the distribution to holders of Class 3 Revolving Credit Agreement Claims, without the need for any further corporate action and without further action by the holders of Claims or Interests.  The form of Amended Revolving Credit Agreement will be filed as part of the Plan Supplement.

 

All Liens and security interests granted pursuant to the Amended Revolving Credit Agreement are intended to be (a) valid, binding, perfected, enforceable, Liens and security interests in the personal and real property described in and subject to such documents, with the priorities established in respect thereof under applicable non-bankruptcy law and (b) not subject to avoidance, recharacterization or subordination under any applicable law.

 

All Liens, mortgages and security interests securing the obligations arising under the Amended Revolving Credit Agreement and the other Amended Revolving Credit Loan Documents that were shared collateral securing the Revolving Credit Agreement Claims and the Second Lien Note Claims

 

24



 

as of the Petition Date are unaltered by this Plan, and all such liens, mortgages and security interests are created and perfected with respect to the Amended Revolving Credit Facility Obligations to the same extent, in the same manner and on the same terms and priorities as they were with respect to the Revolving Credit Agreement Claims.  For purposes of all mortgages and deposit account control agreements that secured the obligations arising under the Revolving Credit Agreement and the DIP Credit Agreement, the Amended Revolving Credit Agreement is deemed an amendment and restatement of the Revolving Credit Agreement and the DIP Credit Agreement, and such mortgages and control agreements shall survive the Effective Date, shall not be cancelled and shall continue to secure the Amended Revolving Credit Facility Obligations.

 

The Amended Revolving Credit Facility Obligations constitute Priority Lien Obligations as defined in, and for all purposes under, the Intercreditor Agreement and the Amended Revolving Credit Agreement constitutes a Priority Credit Agreement as defined in, and for all purposes under, the Intercreditor Agreement. Notwithstanding anything to the contrary in this Plan, the Intercreditor Agreement remains in full force and effect after the Effective Date and after giving effect to the consummation of the Plan, and the Second Lien Notes and all obligations arising thereunder shall remain subject to and bound by the Intercreditor Agreement as Second Lien Obligations (as defined in the Intercreditor Agreement) thereunder with the same force, priority and effect as existed prior to the Petition Date.

 

5.3.          Authorization and Issuance of Plan Securities .

 

The Debtors or Reorganized Debtors, as applicable, are authorized to issue all plan-related securities and documents, including, without limitation, the New Common Shares and New Warrants and any options or entitlements to purchase such plan-related securities, without the need for any further corporate, partnership or limited liability company action.

 

The Boards of Directors of the Debtors and the Reorganized Debtors and Reorganized Holdings shall each use their reasonable best efforts to have the New Common Shares and New Warrants listed on a nationally recognized exchange, as soon as practicable subject to meeting applicable listing requirements following the Effective Date.

 

The Debtors intend that all Plan-related securities, including, without limitation, the New Common Shares shall meet the eligibility requirements of DTC, and the Third Lien Note Trustee and the Unsecured Note Trustee shall not be required to distribute any New Common Shares or New Warrants that do not meet the eligibility requirements of DTC.

 

5.4.          Exercise of Existing Warrants .

 

The holders of Existing Warrants shall have until the Warrant Record Date to exercise their respective rights under the Existing Warrants to purchase common stock of the Debtors and to have such common stock interests treated as Existing Equity Interests under the Plan.

 

To the extent a holder of Existing Warrants does not exercise its Existing Warrants prior to the Warrant Record Date, such Existing Warrants shall be cancelled and the holders of such Existing Warrants shall not receive or retain any value under the Plan on account of such non-exercised Existing Warrants.

 

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5.5.          Cancellation of Existing Securities and Agreements .

 

Except as expressly provided herein, on the Effective Date, all notes, instruments, certificates evidencing debt of, or interests in, the Debtors, including, without limitation, the Third Lien Notes, the Third Lien Note Indenture, the Unsecured Notes, the Unsecured Note Indentures, the Convertible Note Purchase Agreement, the Preferred Stock Certificate of Designation, the Existing Equity Interests, the Existing Warrants and all options and other entitlements to purchase and/or receive Existing Equity Interests or Existing Warrants, shall be deemed surrendered and cancelled and obligations of the Debtors thereunder shall be discharged; provided , however , that notwithstanding Confirmation or the occurrence of the Effective Date, the Third Lien Note Indenture, the Unsecured Note Indentures, and the Convertible Note Purchase Agreement shall continue in effect solely for purposes of enabling holders of Allowed Claims and Interests to receive distributions under the Plan; provided further , however , that the cancellation of the Third Lien Notes and the Third Lien Note Indenture and the Unsecured Notes and the Unsecured Note Indentures hereunder shall not in any way affect or diminish (i) the rights and duties of the Third Lien Note Trustee and Unsecured Note Trustee to make distributions pursuant to the Plan to the Third Lien Noteholders and Unsecured Noteholders in accordance with the Third Lien Note Indenture and Unsecured Note Indentures, as applicable, (ii) the rights of the Third Lien Note Trustee to assert the Third Lien Note Trustee Charging Lien and the Unsecured Note Trustee to assert its respective Unsecured Note Trustee Charging Lien, as applicable, with respect to such distributions, (iii) the right of the Third Lien Note Trustee and the Unsecured Note Trustee to enforce any obligation owed to it under the Plan, (iv) the right of the Third Lien Note Trustee and the Unsecured Note Trustee to appear in the Chapter 11 Cases or in any proceedings in the Bankruptcy Court or any other court, or (v) the right of the Third Lien Note Trustee or Unsecured Note Trustee, as applicable, to perform any functions that are necessary to effectuate the foregoing.

 

5.6.          Reorganized Holdings .

 

(a)           Board of Directors . Upon the Effective Date, the New Board shall be a nine (9) member board comprised of (i) the Chief Executive Officer, (ii) three (3) directors designated by Ares (provided that one such board selection shall be subject to the written consent of Franklin, which consent shall not be unreasonably withheld), (iii) three (3) directors designated by Franklin, in the cases of clauses (ii) and (iii) for so long as Ares or Franklin, respectively, is included in the definition of “Requisite Third Lien Noteholders,” and, if Ares or Franklin is not a Requisite Third Lien Noteholder, then its three (3) directors shall be designated by Requisite Third Lien Noteholders (and if Franklin is not so included, it shall also lose its consent right to one of Ares’ board selections set forth above), (iv) one (1) director designated by the Requisite Unsecured Noteholders (the “ Unsecured Director ”), and (v) one (1) existing director of the Debtors designated by the Chief Executive Officer, which shall be reasonably acceptable to the Requisite Unsecured Noteholders and Requisite Third Lien Noteholders.  The New Board shall have a three-tiered structure classified into staggered 3-year terms, with two directors initially serving a one-year term, four directors (including the Unsecured Director) initially serving a two-year term, and three directors initially serving a three-year term.  The members of the New Board shall be identified no later than the Confirmation Hearing or otherwise in accordance with section 1129(a)(5) of the Bankruptcy Code.  On the Effective Date, the terms of the current members of the boards of directors of Holdings shall expire.

 

(b)           Directors and Officers of the Reorganized Debtor Affiliates . Except as otherwise provided in the Plan Supplement, the officers of the respective Debtors immediately before the Effective Date shall serve as the initial officers of each of the corresponding Reorganized Debtors upon the Effective Date and in accordance with any employment agreement with the Reorganized Debtors and applicable non-bankruptcy law, as may be amended as contemplated by the Restructuring Support Agreement. After the Effective Date, the selection of officers of the Reorganized Debtors shall be as

 

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provided by their respective organizational documents. Except as otherwise provided in the Plan Supplement, the members of the board of directors for each of the Debtor Affiliates immediately before the Effective Date shall serve as the members of the board of directors of each of the corresponding Reorganized Debtor Affiliates on or after the Effective Date and thereafter shall be determined as set forth in their respective organizational documents.

 

(c)           Amended Organizational Documents.   The Amended Organizational Documents shall be in full force and effect on the Effective Date.

 

5.7.          Other Transactions .

 

Prior to, or on the Effective Date, the Debtors may to the extent that such transaction would not affect the respective recoveries of the Requisite Creditors under the Plan, (a) cause any or all of the Debtor Affiliates to be liquidated or merged into one or more of the other Debtor Affiliates or any other subsidiaries of the Debtors or dissolved, (b) cause the transfer of assets between or among the Debtor Affiliates, (c) cause any or all of the Amended Organizational Documents of any Reorganized Debtor Affiliates to be implemented, effected or executed, (d) use the proceeds of the Amended Revolving Credit Agreement, plus Cash on hand, to pay all Restructuring Expenses, (e) change the name of one or more of the Reorganized Debtors to such name that may be determined in accordance with applicable law and (f) engage in any other transaction in furtherance of the Plan.  Any such transactions may be effective as of the Effective Date pursuant to the Confirmation Order without any further action by the stockholders, members, general or limited partners or directors of any of the Debtors or the Debtors in Possession.

 

5.8.          Cancellation of Liens .

 

Except as otherwise specifically provided herein, upon the occurrence of the Effective Date, any Lien securing any Secured Claim shall be deemed released, and the holder of such Secured Claim shall be authorized and directed to release any collateral or other property of the Debtors (including any Cash collateral) held by such holder and to take such actions as may be requested by the Reorganized Debtors, to evidence the release of such Lien, including the execution, delivery and filing or recording of such releases as may be requested by the Reorganized Debtors.

 

5.9.          Management Incentive Plan.

 

Pursuant to the Plan, 10% of the New Common Shares (inclusive of all shares issued or reserved for issuance as awards under the Management Incentive Plan) will be reserved for issuance as awards under a post-Restructuring Management Incentive Plan, as described below, and as set forth in further detail in the Plan Supplement.  For example, if, on the Effective Date, nine hundred thousand (900,000) New Common Shares are issued (exclusive of any New Common Shares issued pursuant to the Management Incentive Plan), the number of New Common Shares issued or reserved for issuance under the Management Incentive Plan shall be one hundred thousand (100,000) New Common Shares.  All awards issued under the Management Incentive Plan will be dilutive of all other New Common Shares issued pursuant to the Plan.

 

·                   Participants: All employees of the Reorganized Debtors and their subsidiaries.

 

·                   Pool: 10% of the total New Common Shares (as described above) (subject to dilution by the New Warrants to the same extent other New Common Shares are diluted), with: (i) 75.0% of the pool, equivalent to 7.5% of the total New Common Shares (as described above) (“ Exit Awards ”) to be granted on the first full day of trading of the New Common Shares following the Effective Date

 

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with such awards to be allocated to employees as determined by the Chief Executive Officer; and (ii) 25% of the pool, equivalent to 2.5% of the total New Common Shares (as described above), to be allocated in such form and with such terms and conditions as determined by the Compensation Committee of the New Board following the Effective Date.

 

·                   Exit Awards:  Two-thirds (2/3) of the Exit Awards, equivalent to 5% of the total New Common Shares (as described above), will be in the form of stock options (“ Options ”) granted on the first full day of trading of the New Common Shares following the Effective Date.  The exercise price per share of the Options will be equal to the greater of (1) the per share value based on a Reorganized Debtor equity value of $650.0 million or (2) the weighted average trading price of the New Common Shares for the seven (7) trading days commencing on the first trading day immediately following the Effective Date (assuming the New Common Shares are then publicly traded).  The Options will vest over 3 years in equal annual installments provided the recipient remains employed by the Reorganized Debtors as of the respective annual vesting dates.  One-third (1/3) of the Exit Awards, equivalent to 2.5% of the total New Common Shares (as described above), will be granted in the form of Restricted Stock or Restricted Stock Units (collectively, the “ RSUs ”) on the first full day of trading of the New Common Shares following the Effective Date.  Of the RSUs, 50% ( i.e. , 1.25% of the total New Common Shares (as described above) will be vested in full at grant and 50% will vest on the first anniversary of the grant, in each case provided the recipient remains employed by the Reorganized Debtors as of such vesting date.

 

·                   Accelerated Vesting:  Notwithstanding the foregoing, if, prior to the vesting dates set forth above, any one of the following shall occur, then any Options and/or RSUs (as applicable) granted to an employee as set forth above shall immediately vest in full: (i) with respect to management employees who are party to employment agreements with the Debtors as of June 1, 2016, upon (a) termination of the employee by the Debtors without Cause, (b) resignation by the employee for Good Reason, and (c) the death or disability of the employee; and (ii) with respect to all other employees, upon the death or disability of the employee.  If, prior to the vesting dates set forth above, an employee is terminated with Cause, or resigns without Good Reason, the employee will forfeit any remaining and unvested Options and/or RSUs.  For purposes of the Management Incentive Plan, (a) “Cause” will be defined in a manner that is consistent with its definition under existing management employment agreements, and (b) “Good Reason” will be defined in a manner consistent with its definition under existing management employment agreements, excluding any component of such definition relating to reductions in the budget over which the employee has authority.

 

5.10.        Withholding and Reporting Requirements.

 

In connection with the Plan and all instruments issued in connection therewith and distributed thereon, the Debtors shall comply with all applicable withholding and reporting requirements imposed by any federal, state or local taxing authority, and all distributions under the Plan shall be subject to any such withholding or reporting requirements.  Notwithstanding the above, each holder of an Allowed Claim or Allowed Interest that is to receive a distribution under the Plan shall have the sole and exclusive responsibility for the satisfaction and payment of any tax obligations imposed on such holder by any Governmental Unit, including income, withholding and other tax obligations, on account of such distribution.  The Debtors have the right, but not the obligation, to not make a distribution until such holder has made arrangements satisfactory to any issuing or disbursing party for payment of any such tax obligations.  The Debtors may require, as a condition to receipt of a distribution, that the holder of an Allowed Claim complete and return a Form W-8 or W-9, as applicable to each such holder.  If the Debtors make such a request and the holder fails to comply before the date that is 180 days after the request is made, the amount of such distribution shall irrevocably revert to the applicable Reorganized

 

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Debtor and any Claim or Interest in respect of such distribution shall be discharged and forever barred from assertion against such Reorganized Debtor or its respective property.

 

5.11.        Exemption From Certain Transfer Taxes.

 

Pursuant to section 1146 of the Bankruptcy Code, (a) the issuance, transfer or exchange of any securities, instruments or documents, (b) the creation of any Lien, mortgage, deed of trust or other security interest, (c) the making or assignment of any lease or sublease or the making or delivery of any deed or other instrument of transfer under, pursuant to, in furtherance of, or in connection with the Plan, including, without limitation, any deeds, bills of sale or assignments executed in connection with any of the transactions contemplated under the Plan or the reinvesting, transfer or sale of any real or personal property of the Debtors pursuant to, in implementation of or as contemplated in the Plan (whether to one or more of the Reorganized Debtors or otherwise), (d) the grant of collateral under the Amended Revolving Credit Agreement and (e) the issuance, renewal, modification or securing of indebtedness by such means, and the making, delivery or recording of any deed or other instrument of transfer under, in furtherance of, or in connection with, the Plan, including, without limitation, the Confirmation Order, shall not be subject to any document recording tax, stamp tax, conveyance fee or other similar tax, mortgage tax, real estate transfer tax, mortgage recording tax, Uniform Commercial Code filing or recording fee, regulatory filing or recording fee, sales tax, use tax or other similar tax or governmental assessment.  Consistent with the foregoing, each recorder of deeds or similar official for any county, city or Governmental Unit in which any instrument hereunder is to be recorded shall, pursuant to the Confirmation Order, be ordered and directed to accept such instrument without requiring the payment of any filing fees, documentary stamp tax, deed stamps, stamp tax, transfer tax, intangible tax or similar tax.

 

5.12.        Restructuring Transactions.

 

On the Effective Date or as soon as reasonably practicable thereafter, the Reorganized Debtors may take all actions as may be necessary or appropriate to effect any transaction described in, approved by, contemplated by, or necessary to effectuate the Plan, including: (a) the execution and delivery of appropriate agreements or other documents of merger, consolidation, restructuring, conversion, disposition, transfer, dissolution or liquidation containing terms that are consistent with the terms of the Plan and that satisfy the applicable requirements of applicable law and any other terms to which the applicable entities may agree; (b) the execution and delivery of appropriate instruments of transfer, assignment, assumption or delegation of any asset, property, right, liability, debt or obligation on terms consistent with the terms of the Plan and having other terms for which the applicable parties agree; (c) the filing of appropriate certificates or articles of incorporation, reincorporation, amendments, merger, consolidation, conversion or dissolution pursuant to applicable state law; and (d) all other actions that the applicable entities determine to be necessary or appropriate, including making filings or recordings that may be required by applicable law, subject, in each case, to the Amended Organizational Documents and the requirements hereof.

 

5.13.        Effectuating Documents; Further Transactions.

 

On and after the Effective Date, the Reorganized Debtors and the officers and members of the boards of directors thereof, are authorized to and may issue, execute, deliver, file or record such contracts, securities, instruments, releases and other agreements or documents and take such actions as may be necessary or appropriate to effectuate, implement and further evidence the terms and conditions of the Plan, the Amended Revolving Credit Agreement, and the securities issued pursuant to the Plan in the name of and on behalf of the Reorganized Debtors, without the need for any approvals, authorization, or consents except for those expressly required pursuant to the Plan.

 

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5.14.        Trustee Fees and Expenses.

 

On the Effective Date, the Debtors or Reorganized Debtors, as applicable, shall pay in Cash all Third Lien Note Trustee Fees and Expenses and Unsecured Note Fees and Expenses, without the need for the Third Lien Note Trustee or Unsecured Note Trustee to file fee applications or any other applications with the Bankruptcy Court, and from and after the Effective Date, the Reorganized Debtors shall pay in Cash all Third Lien Note Trustee Fees and Expenses and Unsecured Note Trustee Fees and Expenses.  Nothing in the Plan shall in any way affect or diminish the right of the Third Lien Note Trustee to assert the Third Lien Note Trustee Charging Lien or the Unsecured Note Trustee to assert the Unsecured Note Trustee Charging Lien against any distribution to Third Lien Noteholders with respect to any unpaid Third Lien Note Trustee Fees and Expenses or other amounts payable to the Third Lien Note Trustee under the Third Lien Note Indenture or to Unsecured Noteholders with respect to any unpaid Unsecured Note Trustee Fees and Expenses or other amounts payable to the Unsecured Note Trustee under the Unsecured Note Indentures, as applicable.

 

SECTION 6.                             DISTRIBUTIONS .

 

6.1.          Distribution Record Date .

 

Except with respect to publicly traded securities, as of the close of business on the Distribution Record Date, the various transfer registers for each of the Classes of Claims or Interests as maintained by the Debtors or their respective agents, shall be deemed closed, and there shall be no further changes in the record holders of any of the Claims or Interests.  The Debtors or the Reorganized Debtors shall have no obligation to recognize any transfer of record ownership of the Claims or Interests occurring on or after the Distribution Record Date.

 

6.2.          Date of Distributions .

 

Except as otherwise provided herein, any distributions and deliveries to be made hereunder shall be made on the Effective Date or as soon thereafter as is practicable.  In the event that any payment or act under the Plan is required to be made or performed on a date that is not a Business Day, then the making of such payment or the performance of such act may be completed on or as soon as reasonably practicable after the next succeeding Business Day, but shall be deemed to have been completed as of the required date.

 

6.3.          Disbursing Agent .

 

All distributions hereunder shall be made by Reorganized Holdings (or such other entity designated by Reorganized Holdings), as Disbursing Agent, on or after the Effective Date or as otherwise provided herein; provided , however , that (a) the Revolving Credit Agreement Agent shall be the Disbursing Agent for the Revolving Credit Agreement Claims, (b) the Third Lien Note Trustee shall be the Disbursing Agent for the Third Lien Note Claims in accordance with the Third Lien Note Indenture (and all such distributions shall be subject in all respects to the right of the Third Lien Note Trustee to assert the Third Lien Note Charging Lien against such distributions), and (c) the Unsecured Note Trustee shall be the Disbursing Agent for the Unsecured Note Claims in accordance with the Unsecured Note Indentures (and all such distributions shall be subject in all respects to the right of the Unsecured Note Trustee to assert the Unsecured Note Charging Lien against such distributions).  A Disbursing Agent shall not be required to give any bond or surety or other security for the performance of its duties, and all reasonable fees and expenses incurred by such Disbursing Agents shall be reimbursed by the Reorganized Debtors.

 

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The Third Lien Note Trustee and the Unsecured Note Trustee may direct the distributions to the Third Lien Noteholders and Unsecured Noteholders, as applicable, under the Plan to be made through DTC, and the Third Lien Notes Trustee and Unsecured Notes Trustee will be entitled to recognize and deal for all purposes under the Plan with Third Lien Noteholders and Unsecured Noteholders to the extent consistent with the customary practices of DTC

 

6.4.          Powers of Disbursing Agent .

 

A Disbursing Agent shall be empowered to (a) effect all actions and execute all agreements, instruments and other documents necessary to perform its duties hereunder, (b) make all distributions contemplated hereby and (c) exercise such other powers as may be vested in the Disbursing Agent by order of the Bankruptcy Court, pursuant to the Plan, or as deemed by the Disbursing Agent to be necessary and proper to implement the provisions hereof.

 

6.5.          Surrender of Instruments .

 

As a condition to receiving any distribution under the Plan, each holder of a certificated instrument or note must surrender such instrument or note held by it to the Disbursing Agent or its designee.  Any holder of such instrument or note that fails to (a) surrender such instrument or note, or (b) execute and deliver an affidavit of loss and/or indemnity reasonably satisfactory to the Disbursing Agent and furnish a bond in form, substance and amount reasonably satisfactory to the Disbursing Agent on the Effective Date or as soon as reasonably practicable thereafter shall be deemed to have forfeited all rights, Claims and Interests and may not participate in any distribution hereunder.  Any distribution so forfeited shall become property of the Reorganized Debtors.

 

6.6.          Delivery of Distributions .

 

Subject to Bankruptcy Rule 9010, all distributions to any holder of an Allowed Claim or Allowed Interest shall be made to a Disbursing Agent, who shall transmit such distribution to the applicable holders of Allowed Claims and Allowed Interests.  In the event that any distribution to any holder is returned as undeliverable, no further distributions shall be made to such holder unless and until such Disbursing Agent is notified in writing of such holder’s then-current address, at which time all currently-due, missed distributions shall be made to such holder as soon as reasonably practicable thereafter.  Undeliverable distributions or unclaimed distributions shall remain in the possession of the Debtors until such time as a distribution becomes deliverable or holder accepts distribution, or such distribution reverts back to the Debtors or Reorganized Debtors, as applicable, and shall not be supplemented with any interest, dividends or other accruals of any kind.  Such distributions shall be deemed unclaimed property under section 347(b) of the Bankruptcy Code at the expiration of three (3) months from the Effective Date.  After such date, all unclaimed property or interest in property shall revert to the Reorganized Debtors, and the Claim or Interests of any other holder to such property or interest in property shall be discharged and forever barred.

 

6.7.          Manner of Payment Under Plan .

 

At the option of the Debtors, any Cash payment to be made hereunder may be made by a check or wire transfer or as otherwise required or provided in applicable agreements.

 

6.8.          Fractional Shares and Minimum Cash Distributions .

 

If any distributions of New Common Shares or New Warrants pursuant to the Plan would result in the issuance of a fractional share of New Common Shares, then the number of shares of New

 

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Common Shares or New Warrants to be issued in respect of such distribution will be calculated to one decimal place and rounded up or down to the closest whole share (with a half share rounded up).  The total number of New Common Shares or New Warrants to be distributed in connection with the Plan shall be adjusted as necessary to account for the rounding provided for in this paragraph.  Neither the Reorganized Debtors nor the Disbursing Agent shall have any obligation to make a distribution that is less than one (1) New Common Share, (1) New Warrant or Fifty Dollars ($50.00) in Cash.  New Common Shares and New Warrants that are not distributed in accordance with this section shall be returned to, and ownership thereof shall vest in, Reorganized Holdings.

 

6.9.          Setoffs .

 

Except for Claims that are expressly Allowed hereunder, the Debtors and the Reorganized Debtors may, but shall not be required to, set off against any Claim or Interest (for purposes of determining the Allowed amount of such Claim or Interest on which distribution shall be made), any claims of any nature whatsoever that the Debtors or the Reorganized Debtors may have against the holder of such Claim or Interest; provided , that neither the failure to do so nor the allowance of any Claim or Interest hereunder shall constitute a waiver or release by the Debtors or the Reorganized Debtors of any such claim the Debtors or the Reorganized Debtors may have against the holder of such Claim or Interest.

 

6.10.        Distributions After Effective Date .

 

Distributions made after the Effective Date to holders of Disputed Claims and Disputed Interests that are not Allowed Claims or Allowed Interests as of the Effective Date but which later become Allowed Claims and Allowed Interests shall be deemed to have been made on the Effective Date.

 

SECTION 7.                             PROCEDURES FOR DISPUTED CLAIMS AND INTERESTS.

 

7.1.          Disputed Claims/Process .

 

On and after the Effective Date, except as otherwise provided herein, all Claims and Interests will be paid in the ordinary course of business of the Reorganized Debtors; provided that the Reorganized Debtors reserve the right to establish a bar date for parties to file Claims and Interests, which bar date will be approved by an order of the Bankruptcy Court.  To the extent a proof of claim is filed, if the Debtors dispute any Claim or Interest, such dispute shall be determined, resolved or adjudicated, as the case may be, in a manner as if the Chapter 11 Cases had not been commenced and shall survive the Effective Date as if the Chapter 11 Cases had not been commenced.  Notwithstanding section 502(a) of the Bankruptcy Code, and considering the Unimpaired treatment of all holders of General Unsecured Claims under the Plan, all proofs of claim filed in these Chapter 11 Cases shall be considered objected to and disputed without further action by the Debtors.  Except for proofs of claim asserting damages arising out of the rejection of an executory contract or unexpired lease by any of the Debtors pursuant to Section 8.3 of the Plan, upon the Effective Date, all proofs of claim filed against the Debtors, regardless of the time of filing, and including claims filed after the Effective Date, shall be deemed withdrawn.  To the extent not otherwise provided in the Plan, the deemed withdrawal of a proof of claim is without prejudice to such claimant’s rights, if any, under this Section 7.1 of the Plan to assert their claims in any forum as though the Debtors’ cases had not been commenced.

 

7.2.          Objections to Claims and Interests .

 

Except insofar as a Claim or Interest is Allowed under the Plan, notwithstanding Section 7.1 above, the Debtors, the Reorganized Debtors or any other party in interest shall be entitled to object to Claims and Interests.  Any objections to Claims or Interests shall be served and filed (a) on or before the

 

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ninetieth (90th) day following the later of (i) the Effective Date and (ii) the date that a proof of Claim or proof of Interest is filed or amended or a Claim or Interest is otherwise asserted or amended in writing by or on behalf of a holder of such Claim or Interest, or (b) such later date as ordered by the Bankruptcy Court upon motion filed by the Reorganized Debtors.

 

7.3.          Estimation of Claims and Interests .

 

The Reorganized Debtors may at any time request that the Bankruptcy Court estimate any contingent, unliquidated or Disputed Claim or Disputed Interest pursuant to section 502(c) of the Bankruptcy Code regardless of whether the Debtor previously objected to such Claim or Interest or whether the Bankruptcy Court has ruled on any such objection, and the Bankruptcy Court will retain jurisdiction to estimate any Claim or Interest at any time during litigation concerning any objection to any Claim or Interest, including, without limitation, during the pendency of any appeal relating to any such objection.  In the event that the Bankruptcy Court estimates any contingent, unliquidated or Disputed Claim or Disputed Interest, the amount so estimated shall constitute either the Allowed amount of such Claim or Interest or a maximum limitation on such Claim or Interest, as determined by the Bankruptcy Court.  If the estimated amount constitutes a maximum limitation on the amount of such Claim or Interest, the Reorganized Debtors may pursue supplementary proceedings to object to the allowance of such Claim or Interest.  All of the aforementioned objection, estimation and resolution procedures are intended to be cumulative and not exclusive of one another.  Claims and Interests may be estimated and subsequently compromised, settled, withdrawn or resolved by any mechanism approved by the Bankruptcy Court.

 

7.4.          No Distributions Pending Allowance .

 

If an objection to a Claim or Interest is filed as set forth in Section 7.2, no payment or distribution provided under the Plan shall be made on account of such Claim or Interest unless and until such Disputed Claim or Disputed Interest becomes an Allowed Claim or Allowed Interest.

 

7.5.          Distributions After Allowance .

 

To the extent that a Disputed Claim or Disputed Interest ultimately becomes an Allowed Claim or Allowed Interest, distributions (if any) shall be made to the holder of such Allowed Claim or Allowed Interest in accordance with the provisions of the Plan.  As soon as practicable after the date that the order or judgment of the Bankruptcy Court allowing any Disputed Claim or Disputed Interest becomes a Final Order, the Disbursing Agent shall provide to the holder of such Claim or Interest the distribution (if any) to which such holder is entitled under the Plan as of the Effective Date, without any interest to be paid on account of such Claim or Interest unless required under applicable bankruptcy law.

 

SECTION 8.                             EXECUTORY CONTRACTS AND UNEXPIRED LEASES .

 

8.1.          General Treatment .

 

All executory contracts and unexpired leases to which any of the Debtors are parties are hereby assumed, including those unexpired leases identified as leases to be assumed, as amended, in the Plan Supplement, except for an executory contract or unexpired lease that (a) previously has been assumed or rejected pursuant to Final Order of the Bankruptcy Court, (b) is specifically designated as a contract or lease to be rejected on the Schedule of Rejected Contracts attached hereto as Exhibit B , as may be amended or amended and restated in the Plan Supplement, with the reasonable consent of the Requisite Third Lien Noteholders, or (c) is the subject of a separate (i) assumption motion filed by the

 

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Debtors or (ii) rejection motion filed by the Debtors under section 365 of the Bankruptcy Code before the Effective Date.

 

8.2.          Payments Related to Assumption of Contracts and Leases .

 

Any monetary amounts by which any executory contract and unexpired lease to be assumed hereunder is in default shall be satisfied, under section 365(b)(1) of the Bankruptcy Code, by the Debtors upon assumption thereof.  Any objection by a counterparty to a proposed assumption of an executory contract or unexpired lease or amount of any Cure must be filed, served and actually received by the Debtors on or before thirty (30) days after the Effective Date of the Plan applicable to the Debtor that is the counterparty to the executory contract or unexpired lease.  Any counterparty to an executory contract or unexpired lease that fails to object timely to the proposed assumption and assignment of such executory contract or unexpired lease or to the amount of such Cure will be deemed to have assented to such matters and shall be forever barred, stopped and enjoined from asserting such objection against the Debtors.  If there is a dispute regarding (a) the nature or amount of any Cure, (b) the ability of the Debtors or any assignee to provide “adequate assurance of future performance” (within the meaning of section 365 of the Bankruptcy Code) under the contract or lease to be assumed or (c) any other matter pertaining to assumption, resolution of the Cure amount shall occur following the entry of a Final Order of the Bankruptcy Court resolving the dispute and approving the assumption or assumption and assignment, as the case may be; provided , that the Debtors or the Reorganized Debtors, as applicable (in the case of the Debtors, with the consent of the Requisite Third Lien Noteholders (which consent shall not be unreasonably withheld or delayed)) may settle any dispute regarding the nature or amount of Cure without any further notice to any party or any action, order or approval of the Bankruptcy Court.  If there is a dispute as referred to above, the Debtors reserve the right to reject, or nullify the assumption or assignment of any executory contract or unexpired lease no later than 30 days after a Final Order determining the Cure, any request for adequate assurance of future performance required to assume and assign such executory contract or unexpired lease, and any other matter pertaining to assumption and/or assignment.

 

Assumption and assignment of any executory contract or unexpired lease pursuant to the Plan (including assumption of those unexpired leases identified as leases to be assumed, as amended, in the Plan Supplement), or otherwise, shall result in the full release and satisfaction of any Claims or defaults, subject to satisfaction of the Cure, whether monetary or nonmonetary, including defaults of provisions restricting the change in control or ownership interest composition or other bankruptcy-related defaults, arising under any assumed executory contract or unexpired lease at any time before the effective date of assumption and/or assignment.  Any proofs of claim filed with respect to an executory contract or unexpired lease that has been assumed shall be deemed disallowed and expunged, without further notice to or action, order or approval of the Bankruptcy Court or any other entity.

 

8.3.          Rejection Claims .

 

The Confirmation Order shall constitute the Bankruptcy Court’s approval of the rejection of all the leases and contracts identified in the Schedule of Rejected Contracts.  In the event that the rejection of an executory contract or unexpired lease by any of the Debtors pursuant to the Plan results in damages to the other party or parties to such contract or lease, a Claim for such damages, if not heretofore evidenced by a timely filed proof of claim, shall be forever barred and shall not be enforceable against the Debtors or the Reorganized Debtors, or their respective properties or interests in property as agents, successors or assigns, unless a proof of claim is filed with the Bankruptcy Court and served upon counsel for the Debtors and the Reorganized Debtors no later than thirty (30) days after the later of (1) the Confirmation Date or (2) the effective date of rejection of such executory contract or unexpired lease.  Any such Claims, to the extent Allowed, shall be classified as Class 8 General Unsecured Claims.

 

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8.4.          Survival of the Debtors’ Indemnification Obligations .

 

Any obligations of the Debtors pursuant to their corporate charters, bylaws, limited liability company agreements or other organizational documents to indemnify current and former officers, directors, members, managers, partners, agents and/or employees with respect to all present and future actions, suits and proceedings against the Debtors or such officers, directors, members, managers, partners, agents and/or employees, based upon any act or omission for or on behalf of the Debtors shall not be discharged or impaired by confirmation of the Plan provided that the Reorganized Debtors shall not indemnify directors of the Debtors for any Claims or Causes of Action arising out of or relating to any act or omission that is a criminal act unless such director had no reasonable cause to believe its conduct was unlawful, or for any other acts or omissions that are excluded under the terms of the foregoing organizational documents.  All such obligations shall be deemed and treated as executory contracts to be assumed by the Debtors under the Plan and shall continue as obligations of the Reorganized Debtors.  Any claim based on the Debtors’ obligations herein shall not be a Disputed Claim or subject to any objection in either case by reason of section 502(e)(1)(B) of the Bankruptcy Code.

 

In addition, after the Effective Date, the Reorganized Debtors shall not terminate or otherwise reduce the coverage under any directors’ and officers’ insurance policies (including any “tail policy”) in effect as of June 1, 2016, and all officers, directors, members and partners of the Debtors who served in such capacity at any time before the Effective Date shall be entitled to the full benefits of any such policy for the full term of such policy regardless of whether such officer, directors, members and/or partners remain in such positions after the Effective Date.

 

8.5.          Compensation and Benefit Plans.

 

All material employee compensation and Benefit Plans of the Debtors in effect as of June 1, 2016, shall be deemed to be, and shall be treated as if they were, executory contracts that are to be assumed under the Plan, as may be amended as provided in the Restructuring Support Agreement unless rejected pursuant to Section 8.1 above or by agreement of the Debtors and each affected employee; provided , however , notwithstanding the foregoing, on the Effective Date, the First Amended and Restated 2012 Long-Term Incentive Plan and the Equity-Based Incentive Policy shall be terminated and any restricted shares of common stock of Holdings issued thereunder shall be treated as Existing Equity Interests as provided in Section 4.12 above.

 

8.6.          Insurance Policies .

 

All insurance policies pursuant to which the Debtors have any obligations in effect as of the Effective Date shall be deemed and treated as executory contracts pursuant to the Plan and shall be assumed by the respective Debtors and Reorganized Debtors and shall continue in full force and effect.  All other insurance policies shall revest in the Reorganized Debtors.

 

To the extent the Debtors plan to extend existing insurance coverage or purchase new insurance coverage covering its current and former officers, directors, members, managers and partners from claims and causes of action of any third party (including without limitation any holder of a claim) that remain unreleased as of the Effective Date, such extended or newly purchased insurance shall be in such amounts, for such terms or periods of time, and placed with such insurers as are determined by the Debtors with the reasonable consent of Requisite Third Lien Noteholders, the Requisite Unsecured Noteholders, and the Convertible Noteholder.

 

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8.7.          Federal Lease Interests .

 

The United States Department of the Interior (“ Interior ”) consents to the Reorganized Debtors’ assumption of the Debtors’ interests in their federal oil and/or gas leases (collectively, “ Federal Lease Interests ”), including Indian oil and/or gas leases administered by the United States, subject to the following acknowledgments pertaining to the Federal Lease Interests, which are hereby made by the Debtors.  The Debtors are not abandoning or otherwise rejecting any Federal Lease Interests pursuant to the Plan.  The Plan does not assign any Federal Lease Interest to any entity other than the Reorganized Debtors and no purported assignment of a Federal Lease Interest under the Plan shall be effective without the express prior consent of the United States and the Indian mineral owner, if applicable.  The Reorganized Debtors (including any transferee) shall, on or after the Effective Date, assume and succeed to all financial assurance, bonding, maintenance, plugging and abandonment, and other regulatory obligations in connection with the Federal Lease Interests assumed pursuant to the Plan and United States’ consent.  Nothing in the Plan or any document implementing the Plan shall be interpreted to set cure amounts, nor limit or waive Interior’s right to such cure amounts.  However, notwithstanding the foregoing, any undisputed amounts owed to the United States as of the Effective Date of the Plan under any Federal Lease Interests shall be paid in full by the later of: (1) the Effective Date of the Plan; or (2) due date in the ordinary course.  The undisputed amount paid under this provision shall be the amount determined by Interior by the Effective Date of the Plan, subject to revision pending further discussion with the Debtors and/or the Reorganized Debtors.  The Reorganized Debtors retain all rights of the Debtors to contest any amounts owed, other than those defenses arising from bankruptcy; provided , however , that any challenge based on a defense must be raised in the United States’ administrative review process.  As preliminarily determined, as of September 1, 2016, the undisputed amount owed is $210,842.50.

 

Notwithstanding any other provision in the Plan or any document implementing the Plan, Interior shall retain the right to perform any audit and/or compliance review on the Federal Lease Interests, and if appropriate, collect from the Reorganized Debtors any additional monies owed by the Debtors on the Federal Lease Interests, without those rights being adversely affected by these bankruptcy proceedings.  Such rights shall be preserved in full as if this bankruptcy had not occurred.  The Reorganized Debtors will retain all defenses, other than defenses arising from the bankruptcy; provided, however, that any challenge based on a defense must be raised in the United States’ administrative review process.

 

8.8.          Reservation of Rights in Favor of Governmental Units .

 

Nothing in the Plan, the Confirmation Order or the related Definitive Documents discharges or releases the Debtors or any other entity from any debt, obligation, claim, liability or cause of action of any Governmental Unit or impairs the ability of any Governmental Unit to pursue any debt, obligation, claim, liability or cause of action against any Debtor, Reorganized Debtor or non-Debtor.  All claims, liabilities, or causes of action of, or to, any Governmental Unit shall survive the Chapter 11 Cases as if the cases had not been commenced and be paid and determined in the manner and by the administrative or judicial tribunals in which such rights or claims would have been resolved or adjudicated if the Chapter 11 Cases had not been commenced.  Without limiting the foregoing, for the avoidance of doubt: (1) Governmental Units shall not be required to file any claims in the Debtors’ Chapter 11 Cases; (2) nothing shall affect or impair the ability of any Governmental Unit to make demand on, be paid by, or otherwise pursue any sureties that are jointly and severally liable with the Debtors and/or the Reorganized Debtors for any debt owed to a Governmental Unit; (3) nothing shall affect or impair the exercise of any Governmental Unit’s police and regulatory powers against the Debtors and/or the Reorganized Debtors; and (4) nothing shall affect or impair any Governmental Unit’s rights to assert setoff and recoupment, including contingent or unliquidated rights, against the Debtors and/or the

 

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Reorganized Debtors.   For the avoidance of any doubt, Governmental Unit shall include State taxing authorities.

 

8.9.          Reservation of Rights .

 

Neither the exclusion nor inclusion of any contract or lease by the Debtors on any exhibit, schedule or other annex to the Plan or in the Plan Supplement, nor anything contained in the Plan, will constitute an admission by the Debtors that any such contract or lease is or is not in fact an Executory Contract or Unexpired Lease or that the Debtors or the Reorganized Debtors or their respective affiliates has any liability thereunder.

 

Nothing in the Plan will waive, excuse, limit, diminish or otherwise alter any of the defenses, Claims, Causes of Action or other rights of the Debtors and the Reorganized Debtors under any executory or non executory contract or any unexpired or expired lease.

 

Nothing in the Plan will increase, augment or add to any of the duties, obligations, responsibilities or liabilities of the Debtors or the Reorganized Debtors under any executory or non executory contract or any unexpired or expired lease.

 

If there is a dispute regarding whether a contract or lease is or was executory or unexpired at the time of assumption or rejection, the Debtors or Reorganized Debtors, as applicable, shall have thirty (30) days following entry of a Final Order resolving such dispute to alter their treatment of such contract or lease.

 

SECTION 9.                             CONDITIONS PRECEDENT TO THE EFFECTIVE DATE.

 

9.1.          Conditions Precedent to the Effective Date .

 

The occurrence of the Effective Date of the Plan is subject to the following conditions precedent:

 

(a)           the Definitive Documents (except as otherwise expressly provided in subparagraph (e) below with respect to the Amended Revolving Credit Agreement) shall contain terms and conditions consistent in all respects with the Plan and the Restructuring Support Agreement and shall otherwise be reasonably satisfactory in all respects to the Requisite Third Lien Noteholder, Requisite Unsecured Noteholders and the Convertible Noteholder;

 

(b)           the Bankruptcy Court shall have entered the Confirmation Order, such Confirmation Order shall have become a Final Order;

 

(c)           the Restructuring Support Agreement shall not have been terminated by the Debtors or Requisite Third Lien Noteholders, and shall be in full force and effect;

 

(d)           all Restructuring Expenses shall have been paid in full in Cash;

 

(e)           the Amended Revolving Credit Agreement, including all documentation related thereto, shall each be in form and substance (1) reasonably satisfactory to the Requisite Unsecured Noteholders, and (2) satisfactory to the Debtors and the Requisite Third Lien Noteholders, and shall have been consummated, including the funding (or deemed funding) thereunder and the other transactions contemplated therein; and

 

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(f)            all governmental and third party approvals and consents, including Bankruptcy Court approval, necessary in connection with the transactions contemplated by the Plan shall have been obtained, not be subject to unfulfilled conditions and be in full force and effect, and all applicable waiting periods shall have expired without any action being taken or threatened by any competent authority that would restrain, prevent or otherwise impose materially adverse conditions on such transactions.

 

9.2.          Waiver of Conditions Precedent.

 

Each of the conditions precedent in Section 9.1 may be waived in writing by the Debtors together with the Requisite Third Lien Noteholders, the Requisite Unsecured Noteholders and the Convertible Noteholder.

 

SECTION 10.                      EFFECT OF CONFIRMATION.

 

10.1.        Subordinated Claims .

 

The allowance, classification and treatment of all Allowed Claims and Interests and the respective distributions and treatments under the Plan take into account and conform to the relative priority and rights of the Claims and Interests in each Class in connection with any contractual, legal and equitable subordination rights relating thereto, whether arising under general principles of equitable subordination, section 510(b) of the Bankruptcy Code, or otherwise.  Pursuant to section 510 of the Bankruptcy Code, the Debtors reserve the right to re-classify any Allowed Claim or Interest in accordance with any contractual, legal or equitable subordination relating thereto.

 

10.2.        Vesting of Assets .

 

On the Effective Date, pursuant to sections 1141(b) and (c) of the Bankruptcy Code, all property of the Debtors’ estates shall vest in the Reorganized Debtors free and clear of all Claims, liens, encumbrances, charges and other interests, except as provided pursuant to the Plan, the Confirmation Order, or the Amended Revolving Credit Agreement and the other Amended Revolving Credit Facility Loan Documents.  The Reorganized Debtors may operate their businesses and may use, acquire and dispose of property free of any restrictions of the Bankruptcy Code or the Bankruptcy Rules and in all respects as if there were no pending cases under any chapter or provision of the Bankruptcy Code, except as provided herein.

 

10.3.        Discharge of Claims and Termination of Interests .

 

Except as otherwise provided in the Plan, effective as of the Effective Date: (a) the rights afforded in the Plan and the treatment of all Claims and Interests shall be in exchange for and in complete satisfaction, discharge and release of all claims and interests of any nature whatsoever, including any interest accrued on such claims from and after the Petition Date, against the Debtors or any of their assets, property or estates; (b) the Plan shall bind all holders of Claims and Interests, notwithstanding whether any such holders failed to vote to accept or reject the Plan or voted to reject the Plan; (c) all Claims and Interests shall be satisfied, discharged and released in full, and the Debtors’ liability with respect thereto shall be extinguished completely, including any liability of the kind specified under section 502(g) of the Bankruptcy Code; and (d) all entities shall be precluded from asserting against the Debtors, the Debtors’ estates, the Reorganized Debtors, their successors and assigns and their assets and properties any other Claims or Interests based upon any documents, instruments or any act or omission, transaction or other activity of any kind or nature that occurred before the Effective Date.

 

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10.4.        Term of Injunctions or Stays .

 

Unless otherwise provided, all injunctions or stays arising under or entered during the Chapter 11 Cases under section 105 or 362 of the Bankruptcy Code, or otherwise, and in existence on the Confirmation Date, shall remain in full force and effect until the later of the Effective Date and the date indicated in the order providing for such injunction or stay.

 

10.5.        Injunction Against Interference with Plan .

 

From and after the Effective Date, all entities are permanently enjoined from commencing or continuing in any manner, any suit, action or other proceeding, on account of or respecting any claim, demand, liability, obligation, debt, right, cause of action, interest or remedy released or to be released pursuant to the Plan or the Confirmation Order.

 

10.6.        Releases by the Debtors .

 

As of the Effective Date, except for the rights that remain in effect from and after the Effective Date to enforce the Plan and the Definitive Documents, for good and valuable consideration, the adequacy of which is hereby confirmed, including, without limitation, the service of the Released Parties to facilitate the reorganization of the Debtors and the implementation of the Restructuring, and except as otherwise provided in the Plan or in the Confirmation Order, the Released Parties will be deemed forever released and discharged, to the maximum extent permitted by law, by the Debtors, the Reorganized Debtors, and the Estates from any and all Claims, obligations, suits, judgments, damages, demands, debts, rights, Causes of Action, remedies, losses, and liabilities whatsoever, including any derivative claims, asserted or assertable on behalf of the Debtors, the Reorganized Debtors, or their Estates, whether liquidated or unliquidated, fixed or contingent, matured or unmatured, known or unknown, foreseen or unforeseen, existing or hereinafter arising, in law, equity, or otherwise, that the Debtors, the Reorganized Debtors, or their Estates would have been legally entitled to assert in their own right (whether individually or collectively) or on behalf of the holder of any Claim or Interest or other Person, based on or relating to, or in any manner arising from, in whole or in part, the Debtors, the Chapter 11 Cases, the purchase, sale, or rescission of the purchase or sale of any security of the Debtors or the Reorganized Debtors, the subject matter of, or the transactions or events giving rise to, any Claim or Interest that is treated in the Plan, the business or contractual arrangements between any Debtor and any Released Party, the Restructuring, the restructuring of any Claim or Interest before or during the Chapter 11 Cases, the Disclosure Statement, the Restructuring Support Agreement, and the Plan and related agreements, instruments, and other documents (including the Definitive Documents), and the negotiation, formulation, or preparation thereof, the solicitation of votes with respect to the Plan, or any other act or omission, other than Claims or Causes of Action arising out of or related to any act or omission of a Released Party that is a criminal act or constitutes fraud, gross negligence or willful misconduct.

 

10.7.        Releases By Holders of Claims and Interests .

 

As of the Effective Date, except for the rights that remain in effect from and after the Effective Date to enforce the Plan and the Definitive Documents, for good and valuable consideration, the adequacy of which is hereby confirmed, including, without limitation, the service of the Released Parties to facilitate the reorganization of the Debtors and the implementation of the Restructuring, and except as otherwise provided in the Plan or in the Confirmation Order, the Released Parties will be deemed forever released and discharged, to the maximum extent permitted by law, by (i) the holders of all Claims or Interests who vote to accept the Plan, (ii) the holders of

 

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Claims or Interests that are Unimpaired under the Plan, (iii) the holders of Claims or Interests whose vote to accept or reject the Plan is solicited but who do not vote either to accept or to reject the Plan, and (iv) the holders of Claims or Interests who vote to reject the Plan but do not opt out of granting the releases set forth herein, in each case from any and all Claims, obligations, suits, judgments, damages, demands, debts, rights, Causes of Action, remedies, losses, and liabilities whatsoever, including any derivative claims, asserted or assertable on behalf of the Debtors, the Reorganized Debtors, or their Estates, whether liquidated or unliquidated, fixed or contingent, matured or unmatured, known or unknown, foreseen or unforeseen, existing or hereinafter arising, in law, equity, or otherwise, that such holders or their affiliates would have been legally entitled to assert in their own right (whether individually or collectively) or on behalf of the holder of any Claim or Interest or other Person, based on or relating to, or in any manner arising from, in whole or in part, the Debtors, the Reorganized Debtors, or their Estates, the Chapter 11 Cases, the purchase, sale, or rescission of the purchase or sale of any security of the Debtors or the Reorganized Debtors, the subject matter of, or the transactions or events giving rise to, any Claim or Interest that is treated in the Plan, the business or contractual arrangements between any Debtor and any Released Party, the Restructuring, the restructuring of any Claim or Interest before or during the Chapter 11 Cases, the Disclosure Statement, the Restructuring Support Agreement, and the Plan and related agreements, instruments, and other documents (including the Definitive Documents), and the negotiation, formulation, or preparation thereof, the solicitation of votes with respect to the Plan, or any other act or omission, other than Claims or Causes of Action arising out of or related to any act or omission of a Released Party that constitutes fraud, gross negligence or willful misconduct.

 

10.8.        Exculpation .

 

To the maximum extent permitted by applicable law, no Exculpated Party will have or incur, and each Exculpated Party is hereby released and exculpated from, any claim, obligation, suit, judgment, damage, demand, debt, right, Cause of Action, remedy, loss, and liability for any claim in connection with or arising out of the administration of the Chapter 11 Cases; the negotiation and pursuit of the Disclosure Statement, the Restructuring Support Agreement, the Restructuring Transactions, the Plan, or the solicitation of votes for, or confirmation of, the Plan; the funding of the Plan; the occurrence of the Effective Date; the administration of the Plan or the property to be distributed under the Plan; the issuance of securities under or in connection with the Plan; or the transactions in furtherance of any of the foregoing; except for fraud, gross negligence or willful misconduct. This exculpation shall be in addition to, and not in limitation of, all other releases, indemnities, exculpations and any other applicable law or rules protecting such Exculpated Parties from liability.

 

10.9.        Retention of Causes of Action/Reservation of Rights .

 

(a)           Except as otherwise provided herein, including Sections 10.5, 10.6, 10.7 and 10.8, pursuant to section 1123(b) of the Bankruptcy Code, the Reorganized Debtors shall retain and may enforce, sue on, settle or compromise (or decline to do any of the foregoing) all claims, rights, causes of action, suits and proceedings, whether in law or in equity, whether known or unknown, that the Debtors or their estates may hold against any Person without the approval of the Bankruptcy Court, including, without limitation, (i) any and all Claims against any Person, to the extent such Person asserts a crossclaim, counterclaim and/or Claim for setoff which seeks affirmative relief against the Debtors, the Reorganized Debtors, their officers, directors or representatives; and (ii) the turnover of any property of the Debtors’ estates; provided , however that the Reorganized Debtors shall not retain any Claims or Causes of Action against the Released Parties (other than Claims or Causes of Action arising out of or relating to any act or omission of a Released Party that is a criminal act or constitutes fraud, gross

 

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negligence and willful misconduct, which Claims or Causes of Action are hereby preserved).  The Reorganized Debtors or their successor(s) may pursue such retained claims, rights, or causes of action, suits or proceedings, as appropriate, in accordance with the best interests of the Reorganized Debtors or their successor(s) who hold such rights.

 

(b)           Except as otherwise provided herein, including Sections 10.5, 10.6, 10.7 and 10.8, nothing contained herein or in the Confirmation Order shall be deemed to be a waiver or relinquishment of any Claim, Cause of Action, right of setoff or other legal or equitable defense which the Debtors had immediately before the Petition Date, against or with respect to any Claim left Unimpaired by the Plan; provided , however that the Reorganized Debtors shall not retain any Claims or Causes of Action against the Released Parties (other than Claims or Causes of Action arising out of or relating to any act or omission of a Released Party that is a criminal act or constitutes fraud, gross negligence or willful misconduct, which Claims or Causes of Action are hereby preserved).  The Reorganized Debtors shall have, retain, reserve and be entitled to assert all such claims, Causes of Action, rights of setoff and other legal or equitable defenses which they had immediately before the Petition Date with respect to any Claim left Unimpaired by the Plan as if the Chapter 11 Cases had not been commenced, and all of the Reorganized Debtors’ legal and equitable rights respecting any Claim left Unimpaired by the Plan may be asserted after the Confirmation Date to the same extent as if the Chapter 11 Cases had not been commenced.

 

10.10.      Solicitation of the Plan .

 

As of and subject to the occurrence of the Confirmation Date:  (a) the Debtors shall be deemed to have solicited acceptances of the Plan in good faith and in compliance with the applicable provisions of the Bankruptcy Code, including without limitation, sections 1125(a) and (e) of the Bankruptcy Code, and any applicable non-bankruptcy law, rule or regulation governing the adequacy of disclosure in connection with such solicitation and (b) the Debtors and each of their respective directors, officers, employees, affiliates, agents, financial advisors, investment bankers, professionals, accountants and attorneys shall be deemed to have participated in good faith and in compliance with the applicable provisions of the Bankruptcy Code in the offer and issuance of any securities under the Plan, and therefore are not, and on account of such offer, issuance and solicitation will not be, liable at any time for any violation of any applicable law, rule or regulation governing the solicitation of acceptances or rejections of the Plan or the offer and issuance of any securities under the Plan.

 

10.11.      Section 1145 Exemption .

 

The issuance of and the distribution under the Plan of (i) New Common Shares to the Third Lien Noteholders, the Unsecured Noteholders, the Convertible Noteholder and the Existing Equity Interests and (ii) New Warrants to the Unsecured Noteholders and the Convertible Noteholder and the New Common Shares issuable upon exercise thereof under Sections 4.5, 4.6, 4.7 and 4.12 of the Plan shall be exempt from registration under the Securities Act of 1933 or applicable securities laws without further act or action by any Person pursuant to section 1145(a) of the Bankruptcy Code and/or any other applicable exemptions.

 

In addition, under section 1145 of the Bankruptcy Code, any securities issued under the Plan which are exempt from such registration pursuant to section 1145(a) of the Bankruptcy Code will be freely tradable by the recipients thereof, subject to (a) the provisions of section 1145(b)(1) of the Bankruptcy Code relating to the definition of an underwriter in section 2(a)(11) of the Securities Act of 1933; (b) compliance with any rules and regulations of the Securities and Exchange Commission, if any, applicable at the time of any future transfer of such securities or instruments; (c) the restrictions, if any, on the transferability of such securities and instruments; and (d) applicable regulatory approval.

 

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10.12.      Plan Supplement .

 

The Plan Supplement shall be filed with the Clerk of the Bankruptcy Court by no later than five (5) Business Days before the Confirmation Hearing.  Upon its filing with the Bankruptcy Court, the Plan Supplement may be inspected in the office of the Clerk of the Bankruptcy Court during normal court hours.  Documents to be included in the Plan Supplement will be posted at the website of the Debtors’ notice, claims and solicitation agent as they become available, but no later than five Business Days before the Confirmation Hearing.  The Plan Supplement shall contain, among other things, substantially final forms of the Amended Organizational Documents, the Amended Revolving Credit Agreement, the form of Management Incentive Plan, the New Warrant Agreement, the Lease Amendments, the New Common Shares Allocation Schedule, and, to the extent known, information required to be disclosed in accordance with section 1129(a)(5) of the Bankruptcy Code regarding members of the New Board.

 

10.13.      Corporate and Limited Liability Company Action .

 

Upon the Effective Date, all actions contemplated by the Plan shall be deemed authorized and approved in all respects, including (a) subject to the provisions of Section 8.5 above, the assumption of all employee compensation and Benefit Plans of the Debtors as in effect as of June 1, 2016, as may be amended as provided in the Restructuring Support Agreement, (b) the selection of the directors and officers for the Reorganized Debtors, (c) the distribution of the New Common Shares, (d) the entry into the Amended Revolving Credit Agreement, (e) the issuance and distribution of the New Common Shares and New Warrants, and (f) all other actions contemplated by the Plan (whether to occur before, on or after the Effective Date), in each case in accordance with and subject to the terms hereof.  All matters provided for in the Plan involving the corporate, limited liability company or partnership structure of the Debtors or the Reorganized Debtors, and any corporate, limited liability company or partnership action required by the Debtors or the Reorganized Debtors in connection with the Plan shall be deemed to have occurred and shall be in effect, without any requirement of further action by the security holders, directors, officers, members or partners of the Debtors or the Reorganized Debtors.  On or (as applicable) before the Effective Date, the appropriate officers of the Debtors or the Reorganized Debtors, as applicable, shall be authorized and directed to issue, execute and deliver the agreements, documents, securities and instruments contemplated by the Plan (or necessary or desirable to effect the transactions contemplated by the Plan) in the name of and on behalf of the Reorganized Debtors, including with limitation, the Amended Revolving Credit Agreement and any and all other agreements, documents, securities and instruments relating thereto.  The authorizations and approvals contemplated by this Section 10.13 shall be effective notwithstanding any requirements under non-bankruptcy law.

 

10.14.      Registration Rights

 

On the Effective Date, the Reorganized Debtors shall enter into a registration rights agreement in form and substance reasonably acceptable to the Registration Rights Parties and the Debtors or Reorganized Debtors, as applicable (“ Registration Rights Agreement ”).  The Registration Rights Agreement shall provide the Registration Rights Parties with certain demand registration rights and with piggyback registration rights.  The Registration Rights Agreement shall also provide that the Reorganized Debtors shall use reasonable best efforts to file on or before the date that is ninety (90) days after the Effective Date, and shall thereafter use their commercially reasonable efforts to cause to be declared effective as promptly as practicable, a registration statement on Form S-1 (or other appropriate form) for the offer and resale of the New Common Shares held by the Registration Rights Parties.  The Registration Rights Agreement shall contain customary terms and conditions, including, without limitation, provisions with respect to blackout periods.

 

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SECTION 11.                      RETENTION OF JURISDICTION.

 

On and after the Effective Date, the Bankruptcy Court shall retain jurisdiction over all matters arising in, arising under, and related to the Chapter 11 Cases for, among other things, the following purposes:

 

(a)           to hear and determine motions and/or applications for the assumption or rejection of executory contracts or unexpired leases and the allowance, classification, priority, compromise, estimation or payment of Claims or Interests resulting therefrom;

 

(b)           to determine any motion, adversary proceeding, application, contested matter and other litigated matter pending on or commenced after the Confirmation Date;

 

(c)           to ensure that distributions to holders of Allowed Claims and Allowed Interests are accomplished as provided herein;

 

(d)           to consider Claims or Interests or the allowance, classification, priority, compromise, estimation or payment of any Claim or Interest;

 

(e)           to resolve any matters related to (a) the assumption, assumption and assignment, or rejection of any executory contract or unexpired lease to which a Debtor or Reorganized Debtor is party or with respect to which a Debtor or Reorganized Debtor may be liable and to hear, determine, and, if necessary, liquidate, any Claims arising therefrom, including Cure amounts pursuant to section 365 of the Bankruptcy Code; (b) the Reorganized Debtors amending, modifying, or supplementing, after the Effective Date, pursuant to Section 8 of the Plan, any executory contracts or unexpired leases to the Schedule of Rejected Contracts or otherwise; and (c) any dispute regarding whether a contract or lease is or was executory or expired;

 

(f)            to enter, implement or enforce such orders as may be appropriate in the event the Confirmation Order is for any reason stayed, reversed, revoked, modified or vacated;

 

(g)           to issue injunctions, enter and implement other orders, and take such other actions as may be necessary or appropriate to restrain interference by any Person with the consummation, implementation or enforcement of the Plan, the Confirmation Order, or any other order of the Bankruptcy Court;

 

(h)           to hear and determine any application to modify the Plan in accordance with section 1127 of the Bankruptcy Code, to remedy any defect or omission or reconcile any inconsistency in the Plan, the Disclosure Statement, the Plan Supplement or any order of the Bankruptcy Court, including the Confirmation Order, in such a manner as may be necessary to carry out the purposes and effects thereof;

 

(i)            to hear and determine all applications under sections 330, 331 and 503(b) of the Bankruptcy Code for awards of compensation for services rendered and reimbursement of expenses incurred before the Confirmation Date;

 

(j)            to hear and determine disputes arising in connection with the interpretation, implementation or enforcement of the Plan, the Plan Supplement, the Confirmation Order, any transactions or payments contemplated hereby, or any agreement, instrument or other document governing or relating to any of the foregoing;

 

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(k)           to take any action and issue such orders as may be necessary to construe, interpret, enforce, implement, execute and consummate the Plan or to maintain the integrity of the Plan following consummation;

 

(l)            to hear any disputes arising out of, and to enforce, the order approving alternative dispute resolution procedures to resolve personal injury, employment litigation and similar claims pursuant to section 105(a) of the Bankruptcy Code;

 

(m)          to determine such other matters and for such other purposes as may be provided in the Confirmation Order;

 

(n)           to hear and determine matters concerning state, local and federal taxes in accordance with sections 346, 505 and 1146 of the Bankruptcy Code (including any requests for expedited determinations under section 505(b) of the Bankruptcy Code);

 

(o)           to adjudicate, decide or resolve any Causes of Actions;

 

(p)           to adjudicate, decide or resolve any and all matters related to section 1141 of the Bankruptcy Code;

 

(q)           to resolve any cases, controversies, suits, disputes or Causes of Action with respect to the repayment or return of distributions and the recovery of additional amounts owed by the holder of a Claim or Interest for amounts not timely repaid;

 

(r)            to adjudicate any and all disputes arising from or relating to distributions under the Plan;

 

(s)            to resolve any disputes concerning whether a Person had sufficient notice of the Chapter 11 Cases, the Disclosure Statement, any solicitation conducted in connection with the Chapter 11 Cases, any bar date established in the Chapter 11 Cases, or any deadline for responding or objecting to the amount of a Cure, in each case, for the purpose of determining whether a Claim or Interest is discharged hereunder or for any other purpose;

 

(t)            to hear and determine any other matters related hereto and not inconsistent with the Bankruptcy Code and title 28 of the United States Code;

 

(u)           to enter a final decree closing the Chapter 11 Cases;

 

(v)           to recover all assets of the Debtors and property of the Debtors’ estates, wherever located; and

 

(w)          to hear and determine any rights, Claims or causes of action held by or accruing to the Debtors pursuant to the Bankruptcy Code or pursuant to any federal statute or legal theory.

 

Notwithstanding anything herein to the contrary in this Section 11, the Amended Revolving Credit Agreement and the other Amended Revolving Credit Facility Loan Documents shall be governed by the jurisdictional provisions therein and the Bankruptcy Court shall not retain jurisdiction with respect thereto.

 

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SECTION 12.                      MISCELLANEOUS PROVISIONS.

 

12.1.        Payment of Statutory Fees .

 

On the Effective Date, and thereafter as may be required, the Debtors shall pay all fees payable pursuant to section 1930 of chapter 123 of title 28 of the United States Code.

 

12.2.        Substantial Consummation .

 

On the Effective Date, the Plan shall be deemed to be substantially consummated under sections 1101 and 1127(b) of the Bankruptcy Code.

 

12.3.        Request for Expedited Determination of Taxes .

 

The Reorganized Debtors shall have the right to request an expedited determination under section 505(b) of the Bankruptcy Code with respect to tax returns filed, or to be filed, for any and all taxable periods ending after the Petition Date through the Effective Date.

 

12.4.        Amendments .

 

(a)           Plan Modifications .  The Plan may be amended, modified or supplemented by the Debtors in the manner provided for by section 1127 of the Bankruptcy Code or as otherwise permitted by law without additional disclosure pursuant to section 1125 of the Bankruptcy Code; provided , that such amendments, modifications or supplements shall be reasonably satisfactory in all respects to the Debtors and the Requisite Third Lien Noteholders, the Requisite Unsecured Noteholders and the Convertible Noteholder, and, to the extent any such amendment, modification or supplement reduces the Preferred Stock Cash Distribution or materially adversely affects the rights of the Preferred Holders under the Plan, the Requisite Preferred Holders; provided , further , that, except as otherwise set forth in the Restructuring Support Agreement, Requisite Creditors shall not unreasonably withhold consent to waivers, modifications, amendments and supplements to the Plan, as long as the Plan, as so altered, is consistent with the Term Sheet.

 

(b)           Other Amendments .  Before the Effective Date, the Debtors may amend, modify or supplement the Plan and the documents contained in the Plan Supplement to cure any non-substantive ambiguity, defect (including any technical defect) or inconsistency without further order or approval of the Bankruptcy Court; provided , that any such amendments, modifications or supplements do not adversely affect the rights, interests or treatment of any Consenting Creditors under such Plan and Disclosure Statement, in each case without such adversely affected Consenting Creditors’ prior written consent; provided , further , that the consent of the Consenting Preferred Holders shall not be required in respect of any amendment, modification or supplement to the Plan or Disclosure Statement that relates solely to matters following the Effective Date.

 

12.5.        Effectuating Documents and Further Transactions .

 

Each of the officers of the Reorganized Debtors is authorized, in accordance with his or her authority under the resolutions of the applicable board of directors, members(s) or partners, to execute, deliver, file or record such contracts, instruments, releases, indentures and other agreements or documents and take such actions as may be necessary or appropriate to effectuate and further evidence the terms and conditions of the Plan.

 

45



 

12.6.        Revocation or Withdrawal of the Plan .

 

The Debtors may not revoke or withdraw the Plan before the Effective Date without the consent of the Requisite Third Lien Noteholders, the Requisite Unsecured Noteholders and the Convertible Noteholder; provided , however , that the Debtors may revoke or withdraw the Plan only if it is permitted under the Restructuring Support Agreement.  If the Debtors take such action, the Plan shall be deemed null and void.  In such event, nothing contained herein shall constitute or be deemed to be a waiver or release of any Claims by or against, or Interests in, the Debtors or any other Person or to prejudice in any manner the rights of the Debtors or any Person in further proceedings involving the Debtors.

 

12.7.        Severability of Plan Provisions upon Confirmation .

 

If, before the entry of the Confirmation Order, any term or provision of the Plan is held by the Bankruptcy Court to be invalid, void or unenforceable, the Bankruptcy Court, at the request of the Debtors with the reasonable consent of the Requisite Third Lien Noteholders, the Requisite Unsecured Noteholders and the Convertible Noteholder shall have the power to alter and interpret such term or provision to make it valid or enforceable to the maximum extent practicable, consistent with the original purpose of the term or provision held to be invalid, void or unenforceable, and such term or provision shall then be applicable as altered or interpreted.  Notwithstanding any such holding, alteration or interpretation, the remainder of the terms and provisions of the Plan will remain in full force and effect and will in no way be affected, impaired or invalidated by such holding, alteration or interpretation.  The Confirmation Order shall constitute a judicial determination and shall provide that each term and provision of the Plan, as it may have been altered or interpreted in accordance with the foregoing, is (a) valid and enforceable pursuant to its terms; (b) integral to the Plan and may not be deleted or modified without the consent of the Debtors or the Reorganized Debtors (as the case may be) and the Requisite Third Lien Noteholders, the Requisite Unsecured Noteholders and the Convertible Noteholder; and (c) nonseverable and mutually dependent.

 

12.8.        Governing Law .

 

Except to the extent that the Bankruptcy Code or other federal law is applicable, or to the extent an exhibit hereto or a schedule in the Plan Supplement provides otherwise, the rights, duties and obligations arising under the Plan shall be governed by, and construed and enforced in accordance with, the laws of the State of New York, without giving effect to the principles of conflict of laws thereof.

 

12.9.        Time .

 

In computing any period of time prescribed or allowed by the Plan, unless otherwise set forth herein or determined by the Bankruptcy Court, the provisions of Bankruptcy Rule 9006 shall apply.

 

12.10.      Immediate Binding Effect .

 

Notwithstanding Bankruptcy Rules 3020(e), 6004(h) or 7062 or otherwise, upon the occurrence of the Effective Date, the terms of the Plan and Plan Supplement shall be immediately effective and enforceable and deemed binding upon and inure to the benefit of the Debtors, the holders of Claims and Interests, the Released Parties, the Exculpated Parties and each of their respective successors and assigns, including, without limitation, the Reorganized Debtors.

 

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12.11.      Successor and Assigns .

 

The rights, benefits and obligations of any Person named or referred to in the Plan shall be binding on, and shall inure to the benefit of any heir, executor, administrator, successor or permitted assign, if any, of each Person.

 

12.12.      Entire Agreement .

 

On the Effective Date, the Plan, the Plan Supplement and the Confirmation Order shall supersede all previous and contemporaneous negotiations, promises, covenants, agreements, understandings and representations on such subjects, all of which have become merged and integrated into the Plan.

 

12.13.      Notices .

 

All notices, requests and demands to or upon the Debtors to be effective shall be in writing (including by facsimile transmission) and, unless otherwise expressly provided herein, shall be deemed to have been duly given or made when actually delivered or, in the case of notice by facsimile transmission, when received and telephonically confirmed, addressed as follows:

 

(a) if to the Debtors:

 

Halcón Resources Corporation

1000 Louisiana Street
Suite 6700

Houston, Texas 77002

Attn: David S. Elkouri, Esq.

Telephone: (832) 538-0300

Facsimile:  (713) 589-8019

 

- and -

 

Young Conaway Stargatt & Taylor, LLP

Robert S. Brady, Esq.

Rodney Square

100 North King Street

Wilmington, Delaware 19801

Telephone: (302) 571-6600

Facsimile:  (302) 571-1253

 

- and -

 

Weil, Gotshal & Manges LLP

767 Fifth Avenue
New York, New York 10153

Attn:  Gary T. Holtzer, Esq.

Joseph H. Smolinsky, Esq.

Telephone:  (212) 310-8000

Facsimile:  (212) 310-8007

 

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(b) if to the Consenting Third Lien Noteholders:

 

Latham & Watkins LLP

885 Third Avenue

New York, New York 10022

Attn: Richard A. Levy, Esq.

J. Michael Chambers, Esq.

Telephone:  (212) 906-1200

Facsimile:  (212) 751-4864

 

(c) if to the Consenting Unsecured Noteholders:

 

Paul, Weiss, Rifkind, Wharton & Garrison LLP

1285 Avenue of the Americas

New York, New York 10019-6064

Attn: Andrew N. Rosenberg, Esq.

Samuel E. Lovett, Esq.

Telephone: (212) 373-3000

Facsimile: (212) 757-3990

 

(f) If to the Convertible Noteholder:

 

HALRES LLC

3811 Turtle Creek Boulevard, Suite 1000

Dallas, Texas 75219

Attn: Mark A. Welsh IV

Telephone: (214) 599-0800
Facsimile: (214) 599-0200

 

- and -

 

Jones Day

2727 North Harwood Street

Dallas, TX  75201

Attn:  Gregory M. Gordon, Esq.

Dan Prieto, Esq.

Telephone:  (214) 969-3759

Facsimile:  (214) 969-5100

 

After the Effective Date, the Debtors have authority to send a notice to entities that to continue to receive documents pursuant to Bankruptcy Rule 2002, they must file a renewed request to receive documents pursuant to Bankruptcy Rule 2002.  After the Effective Date, the Debtors are authorized to limit the list of entities receiving documents pursuant to Bankruptcy Rule 2002 to those entities who have filed such renewed requests.

 

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Dated:    September 2, 2016

 

 

Respectfully submitted,

 

 

 

 

Halcón Resources Corporation and each of the Debtors

 

 

 

 

 

 

 

By:

/s/ Floyd C. Wilson

 

 

 

 

 

Name: Floyd C. Wilson

 

 

Title:  Chief Executive Office

 

SIGNATURE PAGE TO AMENDED JOINT PREPACKAGED PLAN OF REORGANIZATION OF HALCÓN

RESOURCES CORPORATION, ET AL. UNDER CHAPTER 11 OF THE BANKRUPTCY CODE

 



 

Exhibit A

 

Restructuring Support Agreement

 



 

EXECUTION VERSION

 

RESTRUCTURING SUPPORT AGREEMENT

 

This RESTRUCTURING SUPPORT AGREEMENT (as amended, supplemented or otherwise modified from time to time in accordance with the terms hereof, this “ Agreement ”), dated as of June 9, 2016, is entered into by and among (i) Halcón Resources Corporation (“ Holdings ” and, together with certain of its subsidiaries that are parties hereto and listed on Schedule 1 hereto, the “ Company ”), (ii) the undersigned beneficial holders, or investment advisors or managers for the account of beneficial holders (the “ Third Lien Noteholders ” and, together with their respective successors and permitted assigns and any subsequent Third Lien Noteholder that becomes party hereto in accordance with the terms hereof, the “ Consenting Third Lien Noteholders ”), of the 13.0% Senior Secured Third Lien Notes due 2022 (the “ Third Lien Notes ”) issued under that certain Indenture, dated as of September 10, 2015, by and among Holdings, as issuer, each of the guarantors named therein, and U.S. Bank National Association, as indenture trustee, as amended, modified, or otherwise supplemented from time to time (the “ Third Lien Indenture ”), (iii) the undersigned beneficial holders, or investment advisors or managers for the account of beneficial holders (the “ Unsecured Noteholders ” and, together with their respective successors and permitted assigns and any subsequent Unsecured Noteholder that becomes party hereto in accordance with the terms hereof, the “ Consenting Unsecured Noteholders ”), of the Unsecured Notes (as defined below) issued under the Unsecured Indentures (as defined below), (iv) the undersigned beneficial holder, or investment advisor or manager for the account of the beneficial holder (together with its successors and permitted assigns and any subsequent holder of the Convertible Note (as defined below) that becomes party hereto in accordance with the terms hereof, the “ Convertible Noteholder ”), of the 8.0% Senior Unsecured Convertible Note due 2020 (the “ Convertible Note ”) and (v) the undersigned beneficial holders (the “ Preferred Holders ” and, together with their respective successors and permitted assigns and any subsequent Preferred Holder that becomes party hereto in accordance with the terms hereof, the “ Consenting Preferred Holders ,” and together with the Consenting Third Lien Noteholders, the Consenting Unsecured Noteholders and the Convertible Noteholder, the “ Consenting Creditors ”)) of the 5.75% Series A Convertible Perpetual Preferred Stock (the “ Preferred Stock ”) issued by Holdings.  The Company, each Consenting Creditor, and any subsequent person or entity that becomes a party hereto in accordance with the terms hereof are referred herein as the “ Parties ” and individually as a “ Party .”  Capitalized terms used but not defined herein shall have the meanings ascribed to them in the term sheet attached hereto as Exhibit A (the “ Term Sheet ,” including any schedules and exhibits attached thereto, which is expressly incorporated herein and made part of this Agreement, and as may be modified in accordance with Section 9 hereof);

 

WHEREAS, the Parties have agreed to a restructuring of the Company in accordance with the Definitive Documents (the “ Restructuring ”), which is anticipated to be effected through the Plan (as defined below) through a solicitation of votes for the Plan (the “ Solicitation ”) pursuant to the Bankruptcy Code (as defined below) (and to the extent required, applicable non-bankruptcy law) and the commencement by the Company of voluntary cases (the “ Chapter 11 Cases ”) under chapter 11 of title 11 of the United States Code, 11 U.S.C. §§ 101-1532 (the “ Bankruptcy Cod e”), in the United States Bankruptcy Court for the District of Delaware (the “ Bankruptcy Court ”);

 



 

WHEREAS, as of the date hereof, the Consenting Third Lien Noteholders hold, in the aggregate, 80.2% of the aggregate outstanding principal amount of the Third Lien Notes;

 

WHEREAS, as of the date hereof, the Consenting Unsecured Noteholders hold, in the aggregate, 56.6% of the aggregate outstanding principal amount of the Unsecured Notes;

 

WHEREAS , as of the date hereof, the Convertible Noteholder holds 100% of the aggregate outstanding principal amount of the Convertible Note;

 

WHEREAS , as of the date hereof, the Consenting Preferred Holders hold, in the aggregate, approximately 63.3% of the outstanding Preferred Stock; and

 

WHEREAS , the Parties desire to express to each other their mutual support and commitment in respect of the matters discussed in the Term Sheet and hereunder.

 

NOW, THEREFORE , in consideration of the premises and the mutual covenants and agreements set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties, intending to be legally bound, agree as follows:

 

1.                                       Certain Definitions.

 

As used in this Agreement, the following terms have the following meanings:

 

(a)                                        8.875% Senior Unsecured Notes ” means the 8.875% Senior Unsecured Notes due 2021 issued pursuant to that certain Indenture (as amended, supplemented or otherwise modified from time to time, the “ 8.875% Senior Unsecured Note Indenture ”) dated as of November 6, 2012, by and among Holdings, as issuer, each of the guarantors named therein, and U.S. Bank National Association, as indenture trustee, as amended, modified, or otherwise supplemented from time to time.

 

(b)                                        9.25% Senior Unsecured Notes ” means the 9.25% Senior Unsecured Notes due 2022 issued pursuant to the Indenture (as amended, supplemented or otherwise modified from time to time, the “ 9.25% Senior Unsecured Note Indenture ”) dated as of August 13, 2013, by and among Holdings, as issuer, each of the guarantors named therein, and U.S. Bank National Association, as indenture trustee, as amended, modified, or otherwise supplemented from time to time.

 

(c)                                         9.75% Senior Unsecured Notes ” means the 9.75% Senior Unsecured Notes due 2020 issued pursuant to the Indenture (as amended, supplemented or otherwise modified from time to time, the “ 9.75% Senior Unsecured Note Indenture ”) dated as of July 16, 2012, by and among Holdings, as issuer, each of the guarantors named therein, and U.S. Bank National Association, as indenture trustee, as amended, modified, or otherwise supplemented from time to time.

 

(d)                                        Bankruptcy Rules ” means The Federal Rules of Bankruptcy Procedure as promulgated by the United States Supreme Court under section 2075 of title 28 of the

 

2



 

United States Code, as amended from time to time, applicable to the Chapter 11 Cases, and any Local Rules of the Bankruptcy Court.

 

(e)                                         Closing ” means the consummation of the Plan.

 

(f)                                          Confirmation Order ” means the order of the Bankruptcy Court confirming the Plan in the Chapter 11 Cases, which order will be in form and substance reasonably satisfactory to the Company and the Requisite Creditors.

 

(g)                                         Consenting Class ” means the Third Lien Noteholders, the Unsecured Noteholders, the Convertible Noteholder or the Preferred Holders, as applicable.

 

(h)                                        Convertible Noteholder New Warrants ” means warrants to be issued by Reorganized Holdings and distributed to the Convertible Noteholder on the Effective Date under the Plan.

 

(i)                                            Definitive Documents ” means the documents (including any related orders, agreements, instruments, schedules or exhibits) that are contemplated by the Term Sheet and/or that are otherwise necessary or desirable to implement, the Restructuring in accordance with the Term Sheet, including the Plan, the agreements and other documents to be filed in the supplement to the Plan (collectively, the “ Plan Supplement ”), the Disclosure Statement and this Agreement (together with any voting and solicitation related materials), and any motion seeking the approval thereof, the Confirmation Order, any documents relating to the New Common Shares and the New Warrants (as applicable), the DIP Financing, any exit financing, use of cash collateral, organizational documents, shareholder related agreements or other related documents, all of which definitive documents shall contain terms and conditions consistent in all respects with this Agreement and shall otherwise be reasonably satisfactory in form and substance to the Company and the Requisite Third Lien Noteholders, the Requisite Unsecured Noteholders and the Convertible Noteholder (except (i) for the loan agreements with respect to DIP Financing and exit financing, which also must be satisfactory to Requisite Third Lien Noteholders and (ii) as otherwise provided in Section 5(b)(iii)).

 

(j)                                           DIP Financing ” means funding for the Chapter 11 Cases that the Company may elect to seek, by means of debtor-in-possession financing pursuant to section 364 of the Bankruptcy Code.

 

(k)                                        Disclosure Statement ” means the disclosure statement in respect of the Plan, in form and substance reasonably satisfactory to the Requisite Creditors, which is prepared and distributed in accordance with sections 1125, 1126(b) and/or 1145 of the Bankruptcy Code, Bankruptcy Rules 3016 and 3018 and/or other applicable law including, without limitation, all exhibits and schedules thereto, as approved or ratified by the Bankruptcy Court pursuant to section 1125 of the Bankruptcy Code.  References to “Disclosure Statement” hereunder shall include all amendments, restatements and other modifications made thereto following the Commencement Date in accordance with this Agreement.

 

3



 

(l)                                            Effective Date ” means the date on which all conditions to the effectiveness of the Plan have been satisfied or waived in accordance with its terms and the Plan shall have become effective.

 

(m)                                    Local Counsel ” means Delaware counsel retained by the Third Lien Noteholders, Unsecured Noteholders and Convertible Noteholder.

 

(n)                                        New Common Shares ” means the common shares, par value $0.0001 per share, of Reorganized Holdings to be issued under the Plan.

 

(o)                                        New Warrants ” means the Unsecured Noteholder New Warrants and the Convertible Noteholder New Warrants.

 

(p)                                        Note Claims ” means all claims arising under the Notes.

 

(q)                                        Notes ” means the Third Lien Notes, the Unsecured Notes and the Convertible Note.

 

(r)                                           Noteholder Counsel ” means Latham & Watkins LLP, as counsel to the Third Lien Noteholders, Paul, Weiss, Rifkind, Wharton & Garrison LLP, as counsel to the Unsecured Noteholders and Jones Day, as counsel to the Convertible Noteholder.

 

(s)                                          Noteholders Financial Advisors ” means Houlihan Lokey Capital, Inc., as financial advisor to the Third Lien Noteholders.

 

(t)                                           Plan ” means the plan of reorganization for the Company pursuant to sections 1125, 1126 and 1145 of the Bankruptcy Code (as applicable), to be implemented in the Chapter 11 Cases, which Plan will be: (i) consistent in all respects with the Term Sheet and this Agreement; (ii) included in the solicitation package sent with the Disclosure Statement; (iii) filed with the Bankruptcy Court on the Commencement Date; and (iv) otherwise reasonably satisfactory in form and substance to the Requisite Creditors.  References to “Plan” hereunder shall include all amendments, restatements and other modifications made thereto following the Commencement Date in accordance with its terms and this Agreement.

 

(u)                                        Reorganized Holdings ” means Holdings after giving effect to consummation of the Restructuring under the Plan.

 

(v)                                        Requisite Creditors ” means, as of the date of determination, each of (i) the Requisite Third Lien Noteholders, (ii) the Requisite Unsecured Noteholders, (iii) the Convertible Noteholder and (iv) the Requisite Preferred Holders.

 

(w)                                      Requisite Preferred Holders ” means, as of the date of determination, Consenting Preferred Holders holding at least a majority in aggregate liquidation preference value or number of shares of the outstanding Preferred Stock held by the Consenting Preferred Holders as of such date.

 

4



 

(x)                                        Requisite Third Lien Noteholders ” means, as of the date of determination, Consenting Third Lien Noteholders holding at least a majority in aggregate principal amount outstanding of the Third Lien Notes held by the Consenting Third Lien Noteholders as of such date; provided that Requisite Third Lien Noteholders shall include (i) Ares, for so long as it, together with its affiliated funds that are Consenting Third Lien Noteholders, holds greater than 20% in aggregate principal outstanding amount of the Third Lien Notes, and (ii) Franklin, for so long as it, together with its affiliated funds that are Consenting Third Lien Noteholders, holds greater than 20% in aggregate principal outstanding amount of the Third Lien Notes.

 

(y)                                        Requisite Unsecured Noteholders ” means, as of the date of determination, Consenting Unsecured Noteholders holding at least a majority in aggregate principal amount outstanding of the Unsecured Notes held by the Consenting Unsecured Noteholders as of such date; provided , that any Unsecured Notes acquired by Ares and Franklin after the date of this Agreement shall not be included in either the numerator or denominator of the foregoing calculation except for any Unsecured Notes acquired by them from other Consenting Unsecured Noteholders.

 

(z)                                         Securities Act ” means the Securities Act of 1933, as amended.

 

(aa)                                 Support Effective Date ” means the date on which (A) counterpart signature pages to this Agreement shall have been executed and delivered by (i) the Company, (ii) Consenting Third Lien Noteholders holding at least 66 2/3% in aggregate principal amount outstanding of the Third Lien Notes, (iii) Consenting Unsecured Noteholders holding at least 50% in aggregate principal amount outstanding of the Unsecured Notes, (iv) Convertible Noteholder and (v) Consenting Preferred Holders holding at least 50% of the outstanding Preferred Stock and (B) all accrued fees, costs and expenses pursuant to outstanding invoices of each of (i) Noteholder Counsel, (ii) Local Counsel, if applicable, and (iii) Houlihan Lokey Capital, Inc. as financial advisor to the Third Lien Noteholders, under their respective engagement letters or other contractual arrangements have been paid in full in immediately available funds by the Company.

 

(bb)                                 Support Period ” means the period commencing on the Support Effective Date and ending on the earlier of the (i) date on which this Agreement is terminated in accordance with Section 5 hereof and (ii) the Effective Date.

 

(cc)                                   Unsecured Indentures ” means the 8.875% Senior Unsecured Note Indenture, the 9.25% Senior Unsecured Note Indenture, and the 9.75% Senior Unsecured Note Indenture.

 

(dd)                                 Unsecured Noteholder New Warrants ” means warrants to be issued by Reorganized Holdings and distributed to the Unsecured Noteholders on the Effective Date under the Plan.

 

(ee)                                   Unsecured Notes ” means the 8.875% Senior Unsecured Notes, the 9.25% Senior Unsecured Notes, and the 9.75% Senior Unsecured Notes.

 

5



 

2.                                       Bankruptcy Process; Plan of Reorganization

 

(a)                                  Term Sheet. The Term Sheet is expressly incorporated herein by reference and made part of this Agreement as if fully set forth herein.  The Term Sheet sets forth certain of the material terms and conditions of the Restructuring transactions contemplated by the Plan (the “ Restructuring Transactions ”), as supplemented by the terms and conditions of this Agreement.  In the event of any inconsistency between the Term Sheet and this Agreement, this Agreement shall control, subject however to the provisions of footnote 5 of the Term Sheet relating to certain Creditor Termination Event dates.

 

(b)                                  Commencement of the Chapter 11 Cases .  Provided the Support Effective Date has occurred and, unless waived by the Company, (i) the holders of at least 66 2 / 3 % of the outstanding principal amount and greater than one half in number of each of the Third Lien Notes, Unsecured Notes and Convertible Note and (ii) holders of at least 66 2 / 3 % of the outstanding shares of Preferred Stock, that have submitted ballots vote to support the Plan, the Company hereby agrees that, as soon as reasonably practicable, but in no event later than 11:59 p.m. prevailing Eastern Time on August 2, 2016 (the “ Outside Petition Date ”), the Company shall file with the Bankruptcy Court voluntary petitions for relief under chapter 11 of the Bankruptcy Code and any and all other documents necessary to commence the Chapter 11 Cases (the date on which such filing occurs, the “ Commencement Date ”).

 

(c)                                   Filing of the Plan .  On the Commencement Date, the Company shall file the Plan along with the Disclosure Statement, each in form and substance reasonably satisfactory to the Requisite Creditors.

 

(d)                                  Confirmation of the Plan .  The Company shall use reasonable best efforts to obtain confirmation of the Plan as soon as reasonably practicable following the Commencement Date in accordance with the Bankruptcy Code and this Agreement, and each Consenting Creditor shall use its reasonable best efforts to cooperate fully in connection therewith as provided herein.

 

(e)                                   Amendments and Modifications of the Plan and Disclosure Statement .  The Plan and Disclosure Statement may be amended from time to time following the Commencement Date in accordance with Section 9 .  Each of the Parties agrees to negotiate in good faith all amendments and modifications to the Plan and Disclosure Statement as are reasonably necessary to obtain Bankruptcy Court confirmation of the Plan pursuant to a final order of the Bankruptcy Court; provided that the Consenting Creditors shall have no obligation to agree to, or negotiate in good faith with respect to, any modification that (i) is inconsistent with the Plan or the Term Sheet, (ii) creates any new material obligation on any Party that was not reflected in the Plan filed on the Commencement Date, or (iii)  modifies, impairs or otherwise adversely affects the treatment or rights of such Party under the Plan and other Definitive Documents (it being agreed that, for the avoidance of doubt, any change to the Plan that results in actual or potential diminution of the value of the property to be received by a Consenting Class under the Plan shall be deemed to adversely affect such Consenting Class) whether such change is made directly to the treatment of a Consenting Class or to the treatment of another Consenting Class or otherwise; provided , further, that the consent of the Consenting Preferred Holders shall not be required in respect of any amendment, modification or supplement

 

6



 

to the Plan or Disclosure Statement that relates solely to matters following the Effective Date.  Notwithstanding the foregoing, the Company may amend, modify or supplement the Plan and Disclosure Statement, from time to time, without the consent of any Consenting Creditor, to cure any non-substantive ambiguity, defect (including any technical defect) or inconsistency, provided that any such amendments, modifications or supplements do not adversely affect the rights, interests or treatment of such Consenting Creditors under such Plan and Disclosure Statement.

 

3.                                       Agreements of the Consenting Creditors.

 

(a)                                  Treatment .  Subject to the terms and conditions hereof, each Consenting Creditor irrevocably agrees to the treatment of its Note Claims and/or Preferred Stock contemplated in the Term Sheet under the Plan in the Chapter 11 Cases.

 

(b)                                  Voting, Support .  Subject to the terms and conditions hereof, each Consenting Creditor agrees that, for so long as the Support Period is in effect for such Consenting Creditor, such Consenting Creditor shall:

 

(i)                                      (A) timely vote or cause to be voted its Note Claims and/or Preferred Stock to accept the Plan by delivering its duly executed and completed ballot or ballots, as applicable, accepting the Plan on a timely basis following commencement of the Solicitation, (B) not change or withdraw such vote (or cause or direct such vote to be changed or withdrawn); provided , however , that such vote may, upon written notice to the Company and the other Parties, be revoked (and, upon such revocation, deemed void ab initio ) by any Consenting Creditor at any time following the expiration of the Support Period with respect to such Consenting Creditor, including, without limitation, if the Support Period expires following the Plan voting deadline, and (C) timely vote (or cause to be voted) its Note Claims and/or Preferred Stock against any plan, plan proposal, restructuring proposal, offer of dissolution, winding up, liquidation, sale or disposition, reorganization, merger or restructuring of the Company other than the Plan (each, a “ Alternative Restructuring ”), (D) not directly or indirectly, through any person or entity, (x) seek, solicit, propose, support, assist, engage in negotiations in connection with or participate in the formulation, preparation, filing or prosecution of any Alternative Restructuring or take any other action that is inconsistent with or that would reasonably be expected to prevent, interfere with, delay or impede the Solicitation, approval of the Disclosure Statement, and the confirmation and consummation of the Plan and the Restructuring, without prejudice to the termination rights set out under Section 5 hereof, (y) object to or otherwise contest the amount, priority, secured status, or allowance of the Third Lien Note Claim, Unsecured Note Claim, or Convertible Note Claim;

 

(ii)                                   in their capacities as holders of Notes and/or Preferred Stock, support and take such commercially reasonable actions necessary or reasonably requested by the Company to obtain the approval of the Disclosure Statement, and confirmation and consummation of the Plan and the Restructuring; and

 

(iii)                                to the extent any legal or structural impediment arises that would prevent, hinder, or delay the consummation of the Restructuring, negotiate in good faith

 

7



 

appropriate additional or alternative provisions to address any such impediment; provided that there shall be no obligation to negotiate in good faith with respect to any additional or alternative provisions of the types described in Section 2(e)(i)-(iii).

 

(c)                                   Transfers .

 

(i)                                      Each Consenting Creditor agrees that, for so long as the Support Period is in effect for such Consenting Creditor, such Consenting Creditor shall not sell, transfer, loan, issue, pledge, hypothecate, assign or otherwise dispose of (other than ordinary course pledges and/or swaps) (each, a “ Transfer ”), directly or indirectly, in whole or in part, any of its Note Claims and Preferred Stock, as applicable, or any option thereon or any right or interest therein (including grant any proxies, deposit any Notes or Preferred Stock into a voting trust or entry into a voting agreement with respect to any such Notes or Preferred Stock), unless the transferee thereof either (i) is a Consenting Creditor or its affiliate, provided that such affiliate shall agree in writing to be bound by this Agreement as if an original Party hereto, or (ii) prior to such Transfer, agrees in writing for the benefit of the Parties to become a Consenting Creditor and to be bound by all of the terms of this Agreement applicable to Consenting Creditors (including with respect to any and all claims or interests it already may hold against or in the Company prior to such Transfer) by executing a joinder agreement, a form of which is attached hereto as Exhibit B (a “ Joinder Agreement ”), and delivering an executed copy thereof within two (2) business days of such execution, to Noteholder Counsel and Weil, Gotshal & Manges LLP (“ Weil ”), as counsel to the Company, in which event (a) the transferee (including the Consenting Creditor transferee, if applicable) shall be deemed to be a Consenting Creditor hereunder to the extent of such transferred rights and obligations and (b) the transferor shall be deemed to relinquish its rights (and be released from its obligations) under this Agreement to the extent of such transferred rights and obligations.  Each Consenting Creditor agrees that any Transfer of any Note Claim and/or Preferred Stock that does not comply with the terms and procedures set forth herein shall be deemed void ab initio , and the Company and each other Consenting Creditor shall have the right to enforce the voiding of such Transfer.  Notwithstanding anything contained herein to the contrary, for so long as the Support Period is in effect for a Consenting Creditor, such Consenting Creditor may offer, sell or otherwise Transfer any or all of its Note Claims, Preferred Stock and/or any other interests to any entity that, as of the date of Transfer, controls, is controlled by or is under common control with such Consenting Creditor; provided , however , that such entity shall automatically be subject to the terms of this Agreement and deemed a Party hereto and shall have executed a joinder hereto.

 

(ii)                                   Notwithstanding Section 3(c)(i) : (A) a Consenting Creditor may Transfer its Notes or Preferred Stock to an entity that is acting in its capacity as a Qualified Marketmaker without the requirement that the Qualified Marketmaker become a Party to, and bound by, this Agreement; provided that (1) such Qualified Marketmaker must Transfer such right, title or interest within five (5) business days following its receipt thereof, (2) any subsequent Transfer by such Qualified Marketmaker of the right, title or interest in such Notes or Preferred Stock is to a transferee that is or becomes a Consenting Creditor effective as of the time of such transfer and (3) such transferor Consenting Creditor shall be solely responsible for the transferee Qualified

 

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Marketmaker’s failure to comply with the requirements of this Section 3 ; and (B) to the extent that a Consenting Creditor is acting in its capacity as a Qualified Marketmaker, it may Transfer any right, title or interest in Notes or Preferred Stock that such Consenting Creditor, in its capacity as a Qualified Marketmaker, acquires from a holder of the Notes or Preferred Stock who is not a Consenting Creditor without the requirement that the transferee be or become a Consenting Creditor.  For these purposes, a “ Qualified Marketmaker ” means an entity that (x) holds itself out to the market as standing ready in the ordinary course of its business to purchase from customers and sell to customers claims against the Company (including debt securities or other debt) or enter with customers into long and short positions in claims against the Company (including debt securities or other debt), in its capacity as a dealer or market maker in such claims against the Company, and (y) is in fact regularly in the business of making a market in claims against issuers or borrowers (including debt securities or other debt).

 

(d)                                  Additional Claims or Equity Interests .  To the extent any Consenting Creditor (i) acquires additional Note Claims or (ii)  acquires any Preferred Stock entitled to vote on the Plan, then, in each case, each such Consenting Creditor shall promptly notify Weil and Noteholder Counsel and each such Consenting Creditor agrees that such Note Claims or Preferred Stock shall be subject to this Agreement, and that, for so long as the Support Period is in effect for such Consenting Creditor, it shall vote (or cause to be voted) any such additional Note Claims or Preferred Stock entitled to vote on the Plan (to the extent still held by it or on its behalf at the time of such vote), in a manner consistent with Section 3(b)  hereof.

 

4.                                       Agreements of the Company.

 

(a)                                  Covenants .  The Company agrees that, for the duration of the Support Period, the Company shall, and shall cause each of its subsidiaries included in the definition of Company, to:

 

(i)                                      (A) act in good faith and use reasonable best efforts to support and complete successfully the Solicitation in accordance with the terms of this Agreement, including all milestones, and applicable law; (B) use reasonable best efforts to obtain any and all required regulatory and/or third-party approvals for the Restructuring embodied in the Plan, if any; (C) not take any action that is inconsistent with, or is intended or is reasonably likely to interfere with, this Agreement, the Plan, and any other Definitive Documents executed by the Company or consummation of the Restructuring; (D) not directly or indirectly seek or solicit any discussions relating to, or enter into any agreements relating to, any alternative proposal other than the Restructuring, nor shall the Company solicit or direct any person or entity, including, without limitation, any member of the Company’s board of directors or any holder of equity in the Company, to undertake any of the foregoing; and (E) support and take all reasonable actions necessary and appropriate to facilitate approval of the Disclosure Statement, confirmation and consummation of the Plan and the Restructuring in accordance with, and within the time frames contemplated by, this Agreement and the Definitive Documents;  provided that the Company shall not be obligated to agree to any modification of any document that is inconsistent with the Plan.

 

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(ii)                                   provide draft copies of all material motions or applications and other documents (including all “first day” and “second day” motions and orders, the Plan, the Disclosure Statement, ballots and other Solicitation materials in respect of the Plan and any proposed amended version of the Plan or the Disclosure Statement, and a proposed Confirmation Order) the Company intends to file with the Bankruptcy Court to the Noteholder Counsel, if reasonably practical, at least three (3) business days prior to the date when the Company intends to file any such pleading or other document (provided that if delivery of such motions, orders or materials (other than the Plan, the Disclosure Statement, a proposed Confirmation Order or cash collateral and/or adequate protection order) at least three (3) business days in advance is not reasonably practicable, such motion, order or material shall be delivered as soon as reasonably practicable prior to filing) and, without limiting any of the other terms of this Agreement, shall consult in good faith with such counsel regarding the form and substance of any such proposed filing with the Bankruptcy Court.

 

(iii)                                to the extent any legal or structural impediment arises that would prevent, hinder, or delay the consummation of the Restructuring, negotiate in good faith appropriate additional or alternative provisions to address any such impediment.

 

(iv)                               (A) unless otherwise agreed by the Company and the applicable firm, on the date that is at least one (1) calendar day prior to the Commencement Date, pay to (i) Noteholder Counsel, (ii) Local Counsel, and (iii) Noteholder Financial Advisors, in each case, all then accrued unpaid reasonable and documented fees and expenses, outstanding and payable in connection with this matter and (B)  continue to pay all outstanding reasonable and documented fees and expenses incurred after the Commencement Date on a current basis by (i) Noteholder Counsel, (ii) Local Counsel, and (iii) Noteholder Financial Advisors, under their respective engagement letters or other contractual arrangements, in connection with the Restructuring without the need to file any interim or final fee applications with the Bankruptcy Court subject to the Company obtaining Bankruptcy Court approval of any such payments.

 

(b)                                  Automatic Stay .  The Company acknowledges and agrees and shall not dispute that after the commencement of the Chapter 11 Cases, the termination of this Agreement and the giving of notice of termination by any Party pursuant to this Agreement shall not be a violation of the automatic stay of section 362 of the Bankruptcy Code (and the Company hereby waives, to fullest extent permitted by law, the applicability of the automatic stay to the giving of such notice); provided that nothing herein shall prejudice any Party’s rights to argue that the giving of notice of default or termination was not proper under the terms of this Agreement.

 

5.                                       Termination of Agreement.

 

(a)                                  This Agreement shall terminate upon the receipt of written notice to the other Parties, delivered in accordance with Section 19 hereof, from (i) the Requisite Third Lien Noteholders, the Requisite Unsecured Noteholders, the Convertible Noteholder or the Requisite Preferred Holders, as applicable at any time after and during the continuance of any Creditor Termination Event or Convertible/Preferred Termination Event (as defined below), as applicable; provided that termination by the Requisite Third Lien Noteholders, the Requisite

 

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Unsecured Noteholders, the Convertible Noteholder, or the Requisite Preferred Holders  shall only be effective as to the applicable Consenting Class.  In addition, this Agreement shall terminate as to all Consenting Creditors upon the receipt of written notice, delivered in accordance with Section 19 hereof, from the Company to the Consenting Creditors at any time after the occurrence and during the continuance of any Company Termination Event (defined below). Notwithstanding the foregoing, this Agreement shall be automatically terminated upon the occurrence of a Creditor Termination Event set forth in Sections 5(b)(x) or (xiv), unless written notice of waiver of such Creditor Termination Event is delivered in accordance with Section 19 hereof by the Requisite Third Lien Noteholders, the Requisite Unsecured Noteholders, the Convertible Noteholder and the Requisite Preferred Holders; provided that automatic termination of this Agreement shall only be effective as to the applicable Consenting Class that does not deliver written notice of waiver of such Creditor Termination Event. No Party may exercise any of its respective termination rights as set herein, if such Party has failed to perform or comply in all material respects with the terms and conditions of this Agreement (unless such failure to perform or comply arises as a result of another Party’s actions or inactions), with such failure to perform or comply causing, or resulting in, the occurrence of the Creditor Termination Event or Company Termination Event specified herein.

 

(b)                                  A “ Creditor Termination Event ” shall mean any of the following:

 

(i)                                      the breach by the Company of (a) any covenant contained in this Agreement or (b) any other obligations of the Company set forth in this Agreement, in each case, in any material respect and, in either respect, such breach remains uncured five (5) days following the Company’s receipt of written notice pursuant to Sections 5(a)  and 19 hereto (as applicable);

 

(ii)                                   any representation or warranty in this Agreement made by the Company shall have been untrue in any material respect when made or shall have become untrue in any material respect, and such breach remains uncured five (5) days following the Company’s receipt of notice pursuant to Sections 5(a)  and 19 hereto (as applicable);

 

(iii)                                any term or condition of any of the Definitive Documents and any amendments, modifications, or supplements thereto, whether filed with the Bankruptcy Court or otherwise finalized, shall be (whether due to an order of the Bankruptcy Court or otherwise) inconsistent in any respect with the Term Sheet or, if not addressed by the Term Sheet, shall not be in form and substance (A) reasonably satisfactory to the Requisite Third Lien Noteholders, Requisite Unsecured Noteholders and other than with respect to the documents referenced in clause (B) hereof, the Convertible Noteholder, and (B) in the case of the loan agreements with respect to the DIP Financing and exit financing (including, any amendment or amendment and restatement of the Company’s Senior Revolving Credit Facility), satisfactory to Requisite Third Lien Noteholders, and such event remains unremedied five (5) days following the Company’s receipt of notice pursuant to Sections 5(a)  and 19 hereto (as applicable);

 

(iv)                               the issuance by any governmental authority, including any regulatory authority or court of competent jurisdiction, of any ruling, judgment or order enjoining the consummation of or rendering illegal the Plan or the Restructuring or any

 

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material portion hereof, and either (A) such ruling, judgment or order has been issued at the request of or with the acquiescence of the Company, or (B) in all other circumstances, such ruling, judgment or order has not been not stayed, reversed or vacated within ten (10) calendar days after such issuance;

 

(v)                                  the Company shall not have commenced the Solicitation in accordance with section 1126(b) of the Bankruptcy Code on or before June 20, 2016;

 

(vi)                               [reserved];

 

(vii)                            the Company shall not have (A) kept the Requisite Third Lien Noteholders and Requisite Unsecured Noteholders reasonably informed of the progress of, and all material developments in, the negotiation of the covenants, conditions and other material terms of the proposed exit financing, or (B) obtained a firm commitment for exit financing on terms acceptable to the Requisite Third Lien Noteholders and reasonably acceptable to the Requisite Unsecured Noteholders prior to the Effective Date;

 

(viii)                         the Chapter 11 Cases shall not have been filed as of 11:59 p.m. Eastern Time on the Outside Petition Date, as such date may be extended with the consent of the Requisite Creditors;

 

(ix)                               the Company shall not have filed the Plan and Disclosure Statement with the Bankruptcy Court within one (1) business day of the Commencement Date;

 

(x)                                  the Company shall not have filed a motion with the Bankruptcy Court seeking authorization to assume this Agreement (the “ RSA Assumption Motion ”) within one (1) business day of the Commencement Date;

 

(xi)                               an order approving the use of cash collateral and/or DIP Financing on an interim basis in form and substance consistent with this Agreement and otherwise in form and substance reasonably satisfactory to the Requisite Creditors (the “ Interim Cash Collateral Order ”) shall not have been entered by the Bankruptcy Court on or before four (4) business days after the Commencement Date;

 

(xii)                            an order approving the use of cash collateral and/or DIP Financing on a final basis in form and substance substantially identical to the Interim Cash Collateral Order (or as otherwise modified in a manner reasonably acceptable to the Requisite Creditors) shall not have been entered by the Bankruptcy Court on or before 35 days after the Commencement Date;

 

(xiii)                         the Company files any motion or pleading with the Bankruptcy Court that is not consistent with this Agreement and such motion or pleading has not been withdrawn with prejudice within five (5) days following the Company’s receipt of written notice pursuant to Sections 5(a)  and 19 hereto (as applicable);

 

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(xiv)                        the Company shall not have obtained an order of the Bankruptcy Court approving the RSA Assumption Motion on or before the first business day after thirty-five (35) calendar days after the Commencement Date or the assumption of this Agreement shall not have become effective on or before the first business day after thirty-five (35) calendar days after the Commencement Date;

 

(xv)                           the orders approving Disclosure Statement and confirming the Plan shall not have been entered by the Bankruptcy Court on or before the first business day after forty-five (45) calendar days after the Commencement Date;

 

(xvi)                        the Effective Date shall not have occurred on or before the first business day after sixty (60) calendar days after the Commencement Date;

 

(xvii)                     the Company loses the exclusive right to file and/or solicit acceptance of a chapter 11 plan;

 

(xviii)                  upon the filing by the Company of any motion or other request for relief seeking, or the Bankruptcy Court entering an order (A) directing the appointment of an examiner with expanded powers or a trustee, (B) converting any of the Chapter 11 Cases to cases under chapter 7 of the Bankruptcy Code, (C) dismissing any of the Chapter 11 Cases, or (D) the effect of which would render the Plan incapable of consummation on the terms set forth herein;

 

(xix)                        except pursuant to a termination under Section 5(c) , at the option of any non-terminating Consenting Class, if this Agreement is terminated as to Requisite Third Lien Noteholders, the Requisite Unsecured Noteholders, the Convertible Noteholder, or the Requisite Preferred Holders;

 

(xx)                           if any necessary consents and waivers, as applicable, under the Company’s Senior Revolving Credit Facility have not been obtained by the Commencement Date in form and substance reasonably satisfactory to the Requisite Third Lien Noteholders and Requisite Unsecured Noteholders;

 

(xxi)                        if the Company (x) seeks to sell any material assets, (y) enters into any material contractual obligations, or (z) enters into any material settlements, in each case, outside the ordinary course of business unless the Company obtains the prior written consent of Requisite Third Lien Noteholders;

 

(xxii)                     if any of the orders approving the use of cash collateral and the granting of adequate protection, the Plan, or the Disclosure Statement are reversed, stayed, dismissed, vacated, reconsidered, modified, or amended without the prior written consent of the Requisite Creditors;

 

(xxiii)                  if the Company files any motion, application, or adversary proceeding challenging the amount, scope, extent, validity, enforceability, perfection, priority of, or seeking avoidance of, the Note Claims, or (with respect to the Third Lien Notes) the liens securing such Note Claims, or any other cause of action against and/or seeking to restrict the rights of the Consenting Creditors, either directly or through the

 

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respective agents or indenture trustees (or if the Company supports any such motion, application, or adversary proceeding commenced by any third party or consents to the standing of any such third party); or

 

(xxiv)                 if giving effect to the Restructuring Transactions would breach or otherwise violate the Second Lien Note Indentures, unless waived by the requisite holders of Second Lien Notes.

 

(c)                                   A “ Convertible/Preferred Termination Event ” means that the Company shall not have obtained votes accepting the Plan from holders of Unsecured Notes sufficient to satisfy the conditions for acceptance set forth in section 1126(c) of the Bankruptcy Code, and as a result (i) the Convertible Noteholder would receive no distribution under the Plan, in which case the Convertible Noteholder shall be entitled to terminate this Agreement as to itself, and (ii) the Preferred Holders would receive no distribution under the Plan, in which case each Consenting Preferred Holder shall be entitled to terminate this Agreement as to itself.

 

(d)                                  A “ Company Termination Event ” shall mean any of the following:

 

(i)                                      the breach in any material respect by one or more of the Consenting Creditors in any Class, of any of the undertakings, representations, warranties or covenants of the Consenting Creditors set forth herein in any material respect which remains uncured five (5) days after the receipt of written notice of such breach pursuant to Section 5(a)  and 19 hereof (as applicable), but only if the non-breaching Consenting Creditors in such Class hold less than 66 2 / 3 % of the aggregate principal amount of claims in such Class, and only with respect to such breaching Class;

 

(ii)                                   the board of directors, managers, members or partners, as applicable, of a Company reasonably determines in good faith based upon the advice of outside counsel that continued performance under this Agreement would be inconsistent with the exercise of its fiduciary duties under applicable law; provided, that the Company provides notice of such determination to the Consenting Creditors within five (5) days after the date thereof;

 

(iii)                                the Company shall not have obtained votes accepting the Plan from holders of Third Lien Notes, Unsecured Notes, Convertible Note and the Preferred Stock sufficient to satisfy the conditions for acceptance set forth in section 1126(c) of the Bankruptcy Code on or before July 29, 2016;

 

(iv)                               any Consenting Third Lien Noteholder or Consenting Unsecured Noteholder files any motion or pleading with the Bankruptcy Court that is not substantially consistent with this Agreement and such motion or pleading has not been withdrawn for a period of five (5) days following such Party’s receipt of written notice pursuant to Sections 5(a)  and 19 hereof (as applicable) that such motion or pleading is materially inconsistent with this Agreement, unless such motion or pleading (A) does not seek, and could not result in, relief that would have any adverse impact on the Restructuring or (B) is supported by less than half of Third Lien Noteholders and less than half of Unsecured Noteholders, in each case holding 33 1/3% or less of the

 

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aggregate principal amount of the Third Lien Notes and Unsecured Notes, respectively, that have voted on the Plan;

 

(v)                                  the Effective Date shall not have occurred on or before the first business day after sixty (60) calendar days after the Commencement Date;

 

(vi)                               the issuance (other than at the request or with the acquiescence of the Company) by any governmental authority, including any regulatory authority or court of competent jurisdiction, of any ruling, judgment or order enjoining the consummation of or rendering illegal the Plan or the Restructuring, and such ruling, judgment or order has not been stayed, reversed or vacated within fifteen (15) calendar days after such issuance;

 

(vii)                            except pursuant to a termination under Section 5(c) , if the Consenting Third Lien Noteholders, Consenting Unsecured Noteholders, Convertible Noteholder or Consenting Preferred Holders give a notice of termination of this Agreement;

 

(viii)                         (A) if any necessary consents and waivers, as applicable, under the Company’s Senior Revolving Credit Facility have not been obtained by the Commencement Date in form and substance satisfactory to the Company or (B) if applicable, the Company shall not have obtained a firm commitment for DIP Financing and exit financing in form and substance satisfactory to the Company prior to the Commencement Date;

 

(ix)                               if the Company shall not have obtained a firm commitment for exit financing in form and substance satisfactory to the Company prior to the Effective Date; or

 

(x)                                  if the Company shall have obtained an acceptable proposal for DIP Financing or exit financing, and within three (3) business days of notification to the Consenting Third Lien Noteholders and the Consenting Unsecured Noteholders (A) such Consenting Third Lien Noteholders or Consenting Unsecured Noteholders do not consent to such DIP Financing or exit financing in accordance with the terms hereof (in the case of the Consenting Unsecured Noteholders, on the basis that the proposed DIP Financing or exit financing is not reasonably satisfactory in form and substance to the Consenting Unsecured Noteholders), and the Company and the Consenting Third Lien Holders and/or Consenting Unsecured Noteholders, as applicable, are unable to resolve such objection within three (3) business days following receipt of the objection or (B) the Company does not receive a consent or notice of objection from the Consenting Third Lien Noteholders or the Consenting Unsecured Noteholders.

 

(e)                                   Mutual Termination .   This Agreement may be terminated by mutual agreement of the Company and the Requisite Creditors upon the receipt of written notice delivered in accordance with Section 19 hereof.

 

(f)                                    Effect of Termination .  Upon the termination of this Agreement in accordance with this Section 5 , and except as provided in Section 13 hereof, this Agreement shall forthwith

 

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become void and of no further force or effect and each Party shall, except as provided otherwise in this Agreement, be immediately released from its liabilities, obligations, commitments, undertakings and agreements under or related to this Agreement and shall have all the rights and remedies that it would have had and shall be entitled to take all actions, whether with respect to the Restructuring or otherwise, that it would have been entitled to take had it not entered into this Agreement, including all rights and remedies available to it under applicable law, the Third Lien Indenture, the Unsecured Notes, the Convertible Note or the Certificate of Designations, Preferences, Rights and Limitations pursuant to which the Preferred Stock was created (as applicable) and any ancillary documents or agreements thereto; provided , however , that in no event shall any such termination relieve a Party from liability for its breach or non-performance of its obligations hereunder prior to the date of such termination.  Upon any such termination of this Agreement, any and all consents and ballots tendered by the Consenting Creditors prior to such termination shall be deemed, for all purposes, automatically null and void ab initio , shall not be considered or otherwise used in any manner by the Parties in connection with the Plan and this Agreement or otherwise, and such consents or ballots may be changed or resubmitted regardless of whether the applicable voting deadline has passed (without the need to seek a court order or consent from the Company allowing such change or resubmission), and the Company shall not oppose any such change or resubmission.  The Consenting Creditors shall have no liability to the Company or to each other in respect of any termination of this Agreement in accordance with the terms of this Section 5 and Section 19 hereof.

 

(g)                                   If the Restructuring Transactions are not consummated pursuant to the Plan concurrently with the date of termination of this Agreement, nothing herein shall be construed as a waiver by any Party of any or all of such Party’s rights and the Parties expressly reserve any and all of their respective rights. Pursuant to Federal Rule of Evidence 408 and any other applicable rules of evidence, this Agreement and all negotiations relating hereto shall not be admissible into evidence in any proceeding other than a proceeding to enforce its terms.

 

6.                                       Definitive Documents; Good Faith Cooperation; Further Assurances.

 

Each Party hereby covenants and agrees to cooperate with each other in good faith in connection with, and shall exercise reasonable best efforts with respect to the pursuit, approval, implementation and consummation of the Plan and the Restructuring, as well as the negotiation, drafting, execution and delivery of the Definitive Documents.  Furthermore, subject to the terms hereof, each of the Parties shall take such action as may be reasonably necessary or reasonably requested by the other Parties to carry out the purposes and intent of this Agreement, including making and filing any required regulatory filings and voting any claims against or securities of the Company in favor of the Plan, and shall refrain from taking any action that would frustrate the purposes and intent of this Agreement. Any Third Lien Noteholder who, after giving effect to the Restructuring Transactions, would otherwise own a majority of the New Common Shares, agrees to cooperate in good faith with the Company to modify the treatment of its Third Lien Notes so that it would receive less than a majority of the New Common Shares but would receive additional cash consideration / Plan consideration of a different form that had, as of the Effective Date, equivalent value to the New Common Shares that such Third Lien Noteholder would otherwise be entitled to receive under the Plan.

 

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7.                                       Representations and Warranties.

 

(a)                                  Each Party, severally and not jointly, represents and warrants to the other Parties that the following statements are true, correct and complete as of the date hereof (or as of the date a Consenting Creditor becomes a party hereto):

 

(i)                                      such Party is validly existing and in good standing under the laws of its jurisdiction of incorporation or organization, and has all requisite corporate, partnership, limited liability company or similar authority to enter into this Agreement and carry out the transactions contemplated hereby and perform its obligations contemplated hereunder; and the execution and delivery of this Agreement and the performance of such Party’s obligations hereunder have been duly authorized by all necessary corporate, limited liability company, partnership or other similar action on its part;

 

(ii)                                   the execution, delivery and performance by such Party of this Agreement does not and will not (A) violate any material provision of law, rule or regulation applicable to it or any of its subsidiaries or its charter or bylaws (or other similar governing documents) or those of any of its subsidiaries, or (B) conflict with, result in a breach of or constitute (with due notice or lapse of time or both) a default under any material contractual obligation to which it or any of its subsidiaries is a party;

 

(iii)                                the execution, delivery and performance by such Party of this Agreement does not and will not require any material registration or filing with, consent or approval of, or notice to, or other action, with or by, any federal, state or governmental authority or regulatory body, except such filings as may be necessary and/or required by the SEC or other securities regulatory authorities under applicable securities laws; and

 

(iv)                               this Agreement is the legally valid and binding obligation of such Party, enforceable against it in accordance with its terms, except as enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws relating to or limiting creditors’ rights generally or by equitable principles relating to enforceability or a ruling of the Bankruptcy Court.

 

(b)                                  Each Consenting Creditor severally (and not jointly), represents and warrants to the Company that, as of the date hereof (or as of the date such Consenting Creditor becomes a party hereto), such Consenting Creditor (i) is the beneficial owner of the aggregate principal amount of Notes or number of shares of Preferred Stock set forth below its name on the signature page hereof (or below its name on the signature page of a Joinder Agreement for any Consenting Creditor that becomes a party hereto after the date hereof), or is the nominee, investment manager, or advisor for one or more beneficial holders thereof, and does not beneficially own any other Notes or Preferred Stock, and/or (ii) has, with respect to the beneficial owners of such Notes or Preferred Stock, (A) sole investment or voting discretion with respect to such Notes or Preferred Stock, (B) full power and authority to vote on and consent to matters concerning such Notes or Preferred Stock or to exchange, assign and transfer such Notes or Preferred Stock, and (C) full power and authority to bind or act on the behalf of, such beneficial owners.

 

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(c)                                   Each Consenting Creditor severally (and not jointly) makes the representations and warranties set forth in Section 22(c)  hereof, in each case, to the other Parties.

 

(d)                                  The Company hereby represents and warrants to each Consenting Creditor that will receive New Common Shares or New Warrants, as applicable, in connection with the Restructuring, that such shares, upon issuance, shall be duly authorized, validly issued, fully paid and non-assessable and such warrants shall be duly authorized and validly issued.

 

(e)                                   The Company hereby represents and warrants to each Consenting Creditor that as of the date hereof there are recorded mortgages in respect of at least 94% of the PV 10 of the Company’s proved reserves as of December 31, 2015 as estimated by the Company’s independent reserve engineers using March 31, 2016 strip pricing.

 

8.                                       Disclosure; Publicity.

 

(a)                                  Within one business day following the Support Effective Date, subject to the provisions set forth in Section 8(b)  hereof, the Company shall disseminate a Current Report on Form 8-K or a press release disclosing the existence of this Agreement and the terms hereof, with such redactions as may be reasonably requested by any Consenting Creditor’s counsel to maintain the confidentiality of the items identified in Section 8(b)  hereof, except as otherwise required by law.  In the event that the Company fails to make the foregoing disclosures in compliance with the terms specified herein, any such Consenting Creditor may publicly disclose the foregoing, including, without limitation, this Agreement and all of its exhibits and schedules (subject to the redactions called for by Section 8 hereof), and the Company hereby irrevocably waives and releases any claims against the Consenting Creditors arising as a result of such disclosure by a Consenting Creditor in compliance with this Agreement.

 

(b)                                  The Company shall submit drafts to Noteholder Counsel of any press releases, public documents and any and all filings with the SEC that constitute disclosure of the existence or terms of this Agreement or any amendment to the terms of this Agreement at least two (2) business days prior to making any such disclosure.  Except as required by applicable law, and notwithstanding any provision of any other agreement between the Company and such Consenting Creditor to the contrary, no Party or its advisors shall disclose to any person (including, for the avoidance of doubt, any other Consenting Creditor), other than advisors to the Company, the principal amount or percentage of any Notes, any other securities of the Company or any other claims against the Company held by any Consenting Creditor, in each case, without such Consenting Creditor’s prior written consent; provided , however , that (i) if such disclosure is required by law, subpoena, or other legal process or regulation, the disclosing Party shall afford the relevant Consenting Creditor a reasonable opportunity to review and comment in advance of such disclosure and shall take all reasonable measures to limit such disclosure (the expense of which, if any, shall be borne by the relevant Consenting Creditor) and (ii) the foregoing shall not prohibit the disclosure of the aggregate percentage or aggregate principal amount of Notes held by all the Consenting Creditors collectively.  Notwithstanding the provisions in this Section 8 , any Consenting Creditor may disclose such Consenting Creditor’s individual holdings to any Person.  Any public filing of this Agreement, with the Bankruptcy Court or otherwise, which includes executed signature pages to this Agreement shall include such signature pages only in redacted form with respect to the holdings of each Consenting Creditor (provided that the

 

18



 

holdings disclosed in such signature pages may be filed in unredacted form with the Bankruptcy Court under seal).

 

9.                                       Amendments and Waivers.

 

(a)                                  Other than as set forth in Section 9(b), this Agreement and the Definitive Documents, including any exhibits or schedules hereto or thereto (including the Term Sheet), may not be waived, modified, amended or supplemented except with the written consent of the Company and Requisite Creditors; provided that (i) Requisite Creditors shall not unreasonably withhold consent to waivers, modifications, amendments and supplements to any of the Definitive Documents (other than this Agreement), as long as such Definitive Documents (other than this Agreement), as so altered, are consistent with the Term Sheet, and (ii) any waivers, modifications, amendments and supplements to the loan agreements with respect to DIP Financing and exit financing shall be satisfactory to the Requisite Third Lien Noteholders.

 

(b)                                  Notwithstanding Section 9(a):

 

(i)                                      any waiver, modification, amendment or supplement to this Agreement that would have the effect of changing this Section 9 shall require the written consent of all of the Parties;

 

(ii)                                   any waiver, modification, amendment or supplement to this Agreement that would have the effect of changing the definition of Requisite Creditors, Requisite Third Lien Noteholders, Requisite Unsecured Noteholders, Convertible Noteholder, or Requisite Preferred Holders shall require the written consent of each Consenting Creditor included in such definition;

 

(iii)                                any waiver, modification, amendment or supplement to this Agreement or the Definitive Documents that has the effect of treating or affecting any Consenting Creditor in a manner that is disproportionately adverse, on an economic or non-economic basis, to the manner in which any of the other Consenting Creditors are treated (after taking into account each of the Consenting Creditors’ respective holdings and interests in the Company and the recoveries contemplated by the Term Sheet (as in effect on the date hereof)) shall require the written consent of such Consenting Creditor and the Company; and

 

(iv)                               any waiver, modification, amendment or supplement to this Agreement or the Definitive Documents that materially, adversely affect the rights of a Consenting Class shall require the consent of each Consenting Creditor in such Consenting Class, and the Company (it being agreed that, for the avoidance of doubt, (A) any change to this Agreement or the Plan that results in a diminution of the value of the property to be received by a Consenting Class under the Plan shall be deemed to materially, adversely affect such Consenting Class, whether such change is made directly to the treatment of a Consenting Class or to the treatment of another Consenting Class or otherwise, and (B) any change to this Agreement or the Plan that (x) reduces the Unsecured Noteholder Cash Distribution or the percentage of Unsecured Noteholder New Common Shares, (y) changes the duration, strike price or equity percentage of the

 

19



 

Unsecured Noteholder New Warrants, or (z) modifies the Requisite Unsecured Creditors’ consent rights with respect to the board of directors set forth in the Term Sheet, in each case, shall be deemed to materially, adversely affect the Consenting Class of Unsecured Noteholders).

 

(c)                                         In the event that a Consenting Creditor does not consent to a waiver, modification, amendment or supplement to this Agreement (“ Non-Consenting Creditor ”) requiring the consent of such Consenting Creditor, but such waiver, change, modification or amendment receives the consent of Consenting Creditors owning at least 66 2 / 3 % of the principal outstanding amount of Notes or Preferred Stock of the affected Class of which such Non-Consenting Creditor is a member, this Agreement shall be deemed to have been terminated only as to such Non-Consenting Creditors, but this Agreement shall continue in full force and effect in respect to the Company and all other Consenting Creditors of the Consenting Class who have so consented.

 

10.                                Effectiveness.

 

This Agreement shall become effective and binding upon each Party upon the execution and delivery by such Party of an executed signature page hereto and shall become effective and binding on all Parties on the Support Effective Date, provided that the Support Effective Date occurs within five (5) business days of the date hereof; provided , however , that signature pages executed by Consenting Creditors shall be delivered to (a) other Consenting Creditors in a redacted form that removes such Consenting Creditors’ holdings of the Notes and (b) the Company, Weil and Noteholder Counsel in an unredacted form (to be held by Weil and Noteholder Counsel on a professionals’ eyes only basis).

 

11.                                GOVERNING LAW; JURISDICTION; WAIVER OF JURY TRIAL.

 

(a)                                  This Agreement shall be construed and enforced in accordance with, and the rights of the parties shall be governed by, the law of the State of New York, without giving effect to the conflict of laws principles thereof.

 

(b)                                  Each of the Parties irrevocably agrees that any legal action, suit or proceeding arising out of or relating to this Agreement brought by any party or its successors or assigns shall be brought and determined in any federal or state court in the State of New York, and each of the Parties hereby irrevocably submits to the exclusive jurisdiction of the aforesaid courts for itself and with respect to its property, generally and unconditionally, with regard to any such proceeding arising out of or relating to this Agreement or the Restructuring Transactions.  Each of the Parties agrees not to commence any proceeding relating hereto or thereto except in the courts described above in New York, other than proceedings in any court of competent jurisdiction to enforce any judgment, decree or award rendered by any such court in New York as described herein.  Each of the Parties further agrees that notice as provided herein shall constitute sufficient service of process and the Parties further waive any argument that such service is insufficient.  Each of the Parties hereby irrevocably and unconditionally waives, and agrees not to assert, by way of motion or as a defense, counterclaim or otherwise, in any proceeding arising out of or relating to this Agreement or the Restructuring Transactions, (i) any

 

20



 

claim that it is not personally subject to the jurisdiction of the courts in New York as described herein for any reason, (ii) that it or its property is exempt or immune from jurisdiction of any such court or from any legal process commenced in such courts (whether through service of notice, attachment prior to judgment, attachment in aid of execution of judgment, execution of judgment or otherwise) and (iii) that (A) the proceeding in any such court is brought in an inconvenient forum, (B) the venue of such proceeding is improper or (C) this Agreement, or the subject matter hereof, may not be enforced in or by such courts.  Notwithstanding the foregoing, during the pendency of the Chapter 11 Cases, all proceedings contemplated by this Section 11(b)  shall be brought in the Bankruptcy Court.

 

(c)                                   EACH PARTY HEREBY 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 THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY).  EACH PARTY (I) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (II) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

 

12.                                Specific Performance/Remedies.

 

It is understood and agreed by the Parties that money damages would not be a sufficient remedy for any breach of this Agreement by any Party and each non-breaching Party shall be entitled to specific performance and injunctive or other equitable relief (including attorneys’ fees and costs) as a remedy of any such breach, without the necessity of proving the inadequacy of money damages as a remedy, including an order of the Bankruptcy Court requiring any Party to comply promptly with any of its obligations hereunder.

 

13.                                Survival.

 

Notwithstanding the termination of this Agreement pursuant to Section 5 hereof, the agreements and obligations of the Parties in this Section 13 , and Sections 5(f) , 8 , 10 , 11 , 12 , 14 , 15(b) , 16 , 17 , 18 , 19 , 21 , and 22 hereof (and any defined terms used in any such Sections) shall survive such termination and shall continue in full force and effect in accordance with the terms hereof; provided , however , that any liability of a Party for failure to comply with the terms of this Agreement shall survive such termination; provided , further, that the representations and warranties contained in this Agreement shall not survive the expiration of the Support Period.

 

14.                                Headings.

 

The headings of the sections, paragraphs and subsections of this Agreement are inserted for convenience only and shall not affect the interpretation hereof or, for any purpose, be deemed a part of this Agreement.

 

21



 

15.                                Successors and Assigns; Severability; Several Obligations.

 

(a)                                  This Agreement is intended to bind and inure to the benefit of the Parties and their respective successors, permitted assigns, heirs, executors, administrators and representatives; provided , however , that nothing contained in this Section 15 shall be deemed to permit Transfers of the Notes or claims arising under the Notes other than in accordance with the express terms of this Agreement.

 

(b)                                  If any provision of this Agreement, or the application of any such provision to any person or entity or circumstance, shall be held invalid or unenforceable in whole or in part, such invalidity or unenforceability shall attach only to such provision or part thereof and the remaining part of such provision hereof and this Agreement shall continue in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any Party.  Upon any such determination of invalidity, the Parties shall negotiate in good faith to modify this Agreement so as to effect the original intent of the Parties as closely as possible in a reasonably satisfactory manner in order that the transactions contemplated hereby are consummated as originally contemplated to the greatest extent possible.  The agreements, representations and obligations of the Parties are, in all respects, ratable and several and neither joint nor joint and several.

 

16.                                No Third-Party Beneficiaries.

 

Unless expressly stated herein, this Agreement shall be solely for the benefit of the Parties and no other person or entity shall be a third-party beneficiary hereof.

 

17.                                Prior Negotiations; Entire Agreement.

 

This Agreement, including the exhibits and schedules hereto (including the Term Sheet) constitutes the entire agreement of the Parties, and supersedes all other prior negotiations, with respect to the subject matter hereof and thereof, except that the Parties acknowledge that any confidentiality agreements (if any) heretofore executed between the Company and each Consenting Creditor shall continue in full force and effect for the duration of such confidentiality agreement.

 

18.                                Counterparts.

 

This Agreement may be executed in several counterparts, each of which shall be deemed to be an original, and all of which together shall be deemed to be one and the same agreement.  Execution copies of this Agreement may be delivered by facsimile, electronic mail or otherwise, which shall be deemed to be an original for the purposes of this paragraph.

 

19.                                Notices.

 

All notices hereunder shall be deemed given if in writing and delivered, if contemporaneously sent by electronic mail, facsimile, courier or by registered or certified mail (return receipt requested) to the following addresses and facsimile numbers:

 

22



 

 

(1) If to the Company, to:

 

 

 

Halcón Resources Corporation

 

1000 Louisiana Street

 

Suite 6700

 

Houston, Texas 77002

 

Fax: (832) 538-0220

 

Attn: David S. Elkouri

 

Email: delkouri@halconresources.com

 

 

 

With a copy to:

 

 

 

Weil, Gotshal & Manges LLP

 

767 Fifth Avenue

 

New York, NY 10153

 

Fax: (212) 310-8007

 

Attention:

Gary T. Holtzer, Esq

 

 

(gary.holtzer@weil.com)

 

 

- and -

 

 

Joseph H. Smolinsky, Esq

 

 

(joseph.smolinsky@weil.com)

 

 

- and -

 

 

Ted S. Waksman, Esq.

 

 

(ted.waksman@weil.com)

 

 

 

(2) If to a Consenting Creditor, or a transferee thereof, to the addresses or facsimile numbers set forth below following the Consenting Creditor’s signature (or as directed by any transferee thereof), as the case may be, with copies to:

 

 

 

 

 

With respect to any Consenting Unsecured Noteholder:

 

 

 

Paul, Weiss, Rifkind, Wharton & Garrison LLP

 

1285 Avenue of the Americas

 

New York, NY 10019-6064

 

Fax: (212) 492-0158

 

Attention:

Andrew N. Rosenberg

 

 

(arosenberg@paulweiss.com)

 

 

- and -

 

 

Samuel E. Lovett

 

 

(slovett@paulweiss.com)

 

23



 

 

With respect to any Consenting Third Lien Noteholder:

 

 

 

Latham & Watkins LLP

 

330 North Wabash Ave.

 

Suite 2800

 

Fax: (312) 993-9767

 

Attention:

Richard Levy

 

 

(Richard.levy@lw.com)

 

 

- and -

 

 

Peter Knight

 

 

(peter.knight@lw.com)

 

 

-and-

 

 

James Ktsanes

 

 

(james.ktsanes@lw.com)

 

Any notice given by delivery, mail or courier shall be effective when received.  Any notice given by facsimile or electronic mail shall be effective upon oral, machine or electronic mail (as applicable) confirmation of transmission.

 

20.                                Creditors’ Committee.

 

Notwithstanding anything herein to the contrary, if any Consenting Creditor is appointed to and serves on an official committee of unsecured creditors in the Chapter 11 Cases, the terms of this Agreement shall not be construed so as to limit such Consenting Creditor’s exercise of its fiduciary duties to any person arising from its service on such committee, and any such exercise of such fiduciary duties shall not be deemed to constitute a breach of the terms of this Agreement. All Parties agree they shall not oppose the participation of any of the Consenting Creditors or any trustee under the Third Lien Indenture or the Unsecured Indentures on any official committee of unsecured creditors formed in the Chapter 11 Cases.

 

21.                                Qualification on Consenting Noteholders Representations.

 

The Parties acknowledge that all representations, warranties, covenants, and other agreements made by any Consenting Creditor that is a separately managed account of an investment manager are being made only with respect to the Claims managed by such investment manager (in the amount identified on the signature pages hereto), and shall not apply to (or be deemed to be made in relation to) any Claims that may be beneficially owned by such Consenting Creditor that are not held through accounts managed by such investment manager.

 

22.                                No Solicitation; Representation by Counsel; Adequate Information.

 

(a)                                  This Agreement is not and shall not be deemed to be a solicitation for votes in favor of the Plan in the Chapter 11 Cases from the Noteholders or the Preferred Holders.  The acceptances of the Consenting Creditors with respect to the Plan will not be solicited until such Consenting Creditor has received the Disclosure Statement and related ballots and solicitation materials, each as approved or ratified by the Bankruptcy Court.

 

(b)                                  Each Party acknowledges that it has had an opportunity to receive information from the Company and that it has been represented by counsel in connection with this Agreement and the transactions contemplated hereby. Accordingly, any rule of law or any legal

 

24



 

decision that would provide any Party with a defense to the enforcement of the terms of this Agreement against such Party based upon lack of legal counsel shall have no application and is expressly waived.

 

(c)                                   Each Consenting Creditor acknowledges, agrees and represents to the other Parties that it (i) is an “accredited investor” as such term is defined in Rule 501 of Regulation D under the Securities Act, (ii) understands that the securities to be acquired by it (if any) pursuant to the Restructuring Transactions have not been registered under the Securities Act and that such securities are, to the extent not acquired pursuant to section 1145 of the Bankruptcy Code, being offered and sold pursuant to an exemption from registration contained in the Securities Act, based in part upon such Consenting Creditor’s representations contained in this Agreement and cannot be sold unless subsequently registered under the Securities Act or an exemption from registration is available and (iii) has such knowledge and experience in financial and business matters that such Consenting Creditor is capable of evaluating the merits and risks of the securities to be acquired by it (if any) pursuant to the Restructuring Transactions and understands and is able to bear any economic risks with such investment.

 

(d)                                  The Company (i) is a sophisticated party with respect to the subject matter of this Agreement, (ii) has been represented and advised by legal counsel in connection with this Agreement, (iii) has adequate information concerning the matters that are the subject of this Agreement, and (iv) has independently and without reliance upon any other party and based on such information as it has deemed appropriate, made its own analysis and decision to enter into this Agreement, except that it has relied upon the Consenting Creditors’ express representations, warranties, and covenants in this Agreement, and has entered into this Agreement voluntarily and of its own choice and not under coercion or duress.

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

25



 

IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed and delivered by their respective duly authorized officers, solely in their respective capacity as officers of the undersigned and not in any other capacity, as of the date first set forth above.

 

 

HALĆON PARTIES

 

 

 

HALĆON RESOURCES CORPORATION

 

 

 

 

 

 

 

By:

/s/ Floyd C. Wilson

 

 

Name:

Floyd Wilson

 

 

Title:

Chairman of the Board and Chief Executive Officer

 

SIGNATURE PAGE TO RESTRUCTURING SUPPORT AGREEMENT

 



 

 

HALCÓN HOLDINGS, INC.

 

 

 

 

 

 

 

By:

/s/ Floyd C. Wilson

 

 

Name:

Floyd Wilson

 

 

Title:

Chief Executive Officer

 

SIGNATURE PAGE TO RESTRUCTURING SUPPORT AGREEMENT

 



 

 

HK RESOURCES, LLC

 

 

 

 

 

 

 

By:

/s/ Floyd C. Wilson

 

 

Name:

Floyd Wilson

 

 

Title:

Chief Executive Officer

 

SIGNATURE PAGE TO RESTRUCTURING SUPPORT AGREEMENT

 



 

 

THE 7711 CORPORATION

 

 

 

 

 

 

 

By:

/s/ Floyd C. Wilson

 

 

Name:

Floyd Wilson

 

 

Title:

Chief Executive Officer

 

SIGNATURE PAGE TO RESTRUCTURING SUPPORT AGREEMENT

 



 

 

HALCÓN GULF STATES, LLC

 

 

 

 

 

 

 

By:

/s/ Floyd C. Wilson

 

 

Name:

Floyd Wilson

 

 

Title:

Chief Executive Officer

 

SIGNATURE PAGE TO RESTRUCTURING SUPPORT AGREEMENT

 



 

 

HALCÓN LOUISIANA OPERATING, L.P.

 

 

 

 

 

 

 

By:

Halcón Gulf States, LLC,

 

 

its general partner

 

 

 

 

 

 

 

By:

/s/ Floyd C. Wilson

 

 

Name:

Floyd Wilson

 

 

Title:

Chief Executive Officer

 

SIGNATURE PAGE TO RESTRUCTURING SUPPORT AGREEMENT

 



 

 

HALCÓN FIELD SERVICES, LLC

 

 

 

 

 

 

 

By:

/s/ Floyd C. Wilson

 

 

Name:

Floyd Wilson

 

 

Title:

President and Chief Executive Officer

 

SIGNATURE PAGE TO RESTRUCTURING SUPPORT AGREEMENT

 



 

 

HALCÓN ENERGY PROPERTIES, INC.

 

 

 

 

 

 

 

By:

/s/ Floyd C. Wilson

 

 

Name:

Floyd Wilson

 

 

Title:

Chief Executive Officer

 

SIGNATURE PAGE TO RESTRUCTURING SUPPORT AGREEMENT

 



 

 

HALCÓN OPERATING CO., INC.

 

 

 

 

 

 

 

By:

/s/ Floyd C. Wilson

 

 

Name:

Floyd Wilson

 

 

Title:

Chief Executive Officer

 

SIGNATURE PAGE TO RESTRUCTURING SUPPORT AGREEMENT

 



 

 

HALCÓN WILLISTON I, LLC

 

 

 

 

 

 

 

By:

/s/ Floyd C. Wilson

 

 

Name:

Floyd Wilson

 

 

Title:

Chief Executive Officer

 

SIGNATURE PAGE TO RESTRUCTURING SUPPORT AGREEMENT

 



 

 

HALCÓN WILLISTON II, LLC

 

 

 

 

 

 

 

By:

/s/ Floyd C. Wilson

 

 

Name:

Floyd Wilson

 

 

Title:

Chief Executive Officer

 

SIGNATURE PAGE TO RESTRUCTURING SUPPORT AGREEMENT

 



 

 

HALCÓN RESOURCES OPERATING, INC.

 

 

 

 

 

 

 

By:

/s/ Floyd C. Wilson

 

 

Name:

Floyd Wilson

 

 

Title:

Chief Executive Officer

 

SIGNATURE PAGE TO RESTRUCTURING SUPPORT AGREEMENT

 



 

 

HRC ENERGY LOUISIANA, LLC

 

 

 

 

 

 

 

By:

/s/ Floyd C. Wilson

 

 

Name:

Floyd Wilson

 

 

Title:

Chief Executive Officer

 

SIGNATURE PAGE TO RESTRUCTURING SUPPORT AGREEMENT

 



 

 

HRC ENERGY RESOURCES (WV), INC.

 

 

 

 

 

 

 

By:

/s/ Floyd C. Wilson

 

 

Name:

Floyd Wilson

 

 

Title:

Chief Executive Officer

 

SIGNATURE PAGE TO RESTRUCTURING SUPPORT AGREEMENT

 



 

 

HRC PRODUCTION COMPANY

 

 

 

 

 

 

 

By:

/s/ Floyd C. Wilson

 

 

Name:

Floyd Wilson

 

 

Title:

Chief Executive Officer

 

SIGNATURE PAGE TO RESTRUCTURING SUPPORT AGREEMENT

 



 

 

HALCÓN ENERGY HOLDINGS, LLC

 

 

 

 

 

 

 

By:

/s/ Floyd C. Wilson

 

 

Name:

Floyd Wilson

 

 

Title:

Chief Executive Officer

 

SIGNATURE PAGE TO RESTRUCTURING SUPPORT AGREEMENT

 



 

 

HRC ENERGY, LLC

 

 

 

 

 

 

 

By:

/s/ Floyd C. Wilson

 

 

Name:

Floyd Wilson

 

 

Title:

Chief Executive Officer

 

SIGNATURE PAGE TO RESTRUCTURING SUPPORT AGREEMENT

 



 

 

HK ENERGY, LLC

 

 

 

 

 

 

 

By:

/s/ Floyd C. Wilson

 

 

Name:

Floyd Wilson

 

 

Title:

Chief Executive Officer

 

SIGNATURE PAGE TO RESTRUCTURING SUPPORT AGREEMENT

 



 

 

HK LOUISIANA OPERATING, LLC

 

 

 

 

 

 

 

By:

/s/ Floyd C. Wilson

 

 

Name:

Floyd Wilson

 

 

Title:

Chief Executive Officer

 

SIGNATURE PAGE TO RESTRUCTURING SUPPORT AGREEMENT

 



 

 

HK OIL & GAS, LLC

 

 

 

 

 

 

 

By:

/s/ Floyd C. Wilson

 

 

Name:

Floyd Wilson

 

 

Title:

Chief Executive Officer

 

SIGNATURE PAGE TO RESTRUCTURING SUPPORT AGREEMENT

 



 

 

HK ENERGY OPERATING, LLC

 

 

 

 

 

 

 

By:

/s/ Floyd C. Wilson

 

 

Name:

Floyd Wilson

 

 

Title:

Chief Executive Officer

 

SIGNATURE PAGE TO RESTRUCTURING SUPPORT AGREEMENT

 



 

 

HRC OPERATING, LLC

 

 

 

 

 

 

 

By:

/s/ Floyd C. Wilson

 

 

Name:

Floyd Wilson

 

 

Title:

Chief Executive Officer

 

SIGNATURE PAGE TO RESTRUCTURING SUPPORT AGREEMENT

 



 

CONSENTING CREDITOR

 

ARES DYNAMIC CREDIT ALLOCATION FUND, INC.

 

By:

Ares Capital Management II LLC, its Adviser

 

 

 

 

 

By:

/s/ Darryl Schall

 

 

 

Name: Darryl Schall

 

 

Title: Vice President

 

Principal Amount of Third Lien Notes:     $                     

 

Principal Amount of Unsecured Notes:  $                     

 

Principal Amount of Convertible Note:  $                 

 

Number of Shares of Preferred Stock:                      

 

Notice Address :

ARES MANAGEMENT LLC

2000 Avenue of the Stars

12th Floor

Los Angeles, California, 90067

 

Phone: (310) 201-4169

Attention: Darryl Schall

Email: Dschall@aresmgmt.com

 

SIGNATURE PAGE TO RESTRUCTURING SUPPORT AGREEMENT

 



 

CONSENTING CREDITOR

 

ARES STRATEGIC INVESTMENT PARTNERS LTD.

 

By:

ARES STRATEGIC INVESTMENT MANAGEMENT LLC, AS

 

INVESTMENT MANAGER

 

 

 

 

 

By:

/s/ Darryl Schall

 

 

 

Name: Darryl Schall

 

 

Title: Vice President

 

Principal Amount of Third Lien Notes:     $                 

 

Principal Amount of Unsecured Notes:  $                  

 

Principal Amount of Convertible Note:  $              

 

Number of Shares of Preferred Stock:            

 

Notice Address :

ARES MANAGEMENT LLC

2000 Avenue of the Stars

12th Floor

Los Angeles, California, 90067

 

Phone: (310) 201-4169

Attention: Darryl Schall

Email: Dschall@aresmgmt.com

 

SIGNATURE PAGE TO RESTRUCTURING SUPPORT AGREEMENT

 



 

CONSENTING CREDITOR

 

FUTURE FUND BOARD OF GUARDIANS

 

By:

ARES ENHANCED LOAN INVESTMENT STRATEGY ADVISOR IV, L.P., ITS

 

INVESTMENT MANAGER (ON BEHALF OF THE ASIP II SUB-ACCOUNT)

 

 

By:

ARES ENHANCED LOAN INVESTMENT STRATEGY ADVISOR IV GP, LLC,

 

ITS GENERAL PARTNER

 

 

 

 

 

By:

/s/ Darryl Schall

 

 

 

Name: Darryl Schall

 

 

Title: Vice President

 

Principal Amount of Third Lien Notes:     $                     

 

Principal Amount of Unsecured Notes:  $                

 

Principal Amount of Convertible Note:  $              

 

Number of Shares of Preferred Stock:            

 

Notice Address :

ARES MANAGEMENT LLC

2000 Avenue of the Stars

12th Floor

Los Angeles, California, 90067

 

Phone: (310) 201-4169

Attention: Darryl Schall

Email: Dschall@aresmgmt.com

 

SIGNATURE PAGE TO RESTRUCTURING SUPPORT AGREEMENT

 



 

CONSENTING CREDITOR

 

ASIP (HOLDCO) IV S.À.R.L.

 

By:

ASIP OPERATING MANAGER IV LLC, ITS INVESTMENT MANAGER

 

 

 

 

 

By:

/s/ Darryl Schall

 

 

 

Name: Darryl Schall

 

 

Title: Vice President

 

Principal Amount of Third Lien Notes:     $              

 

Principal Amount of Unsecured Notes:  $            

 

Principal Amount of Convertible Note:  $          

 

Number of Shares of Preferred Stock:           

 

Notice Address :

ARES MANAGEMENT LLC

2000 Avenue of the Stars

12th Floor

Los Angeles, California, 90067

 

Phone: (310) 201-4169

Attention: Darryl Schall

Email: Dschall@aresmgmt.com

 

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CONSENTING CREDITOR

 

ARES MULTI-STRATEGY CREDIT FUND V (H), L.P.

 

By:

ARES MSCF V (H) MANAGEMENT LLC, ITS MANAGER

 

 

 

 

 

By:

/s/ Darryl Schall

 

 

 

Name: Darryl Schall

 

 

Title: Vice President

 

Principal Amount of Third Lien Notes:     $               

 

Principal Amount of Unsecured Notes:  $                

 

Principal Amount of Convertible Note:  $              

 

Number of Shares of Preferred Stock:                 

 

Notice Address :

ARES MANAGEMENT LLC

2000 Avenue of the Stars

12th Floor

Los Angeles, California, 90067

 

Phone: (310) 201-4169

Attention: Darryl Schall

Email: Dschall@aresmgmt.com

 

SIGNATURE PAGE TO RESTRUCTURING SUPPORT AGREEMENT

 



 

CONSENTING CREDITOR

 

TRANSATLANTIC REINSURANCE COMPANY

 

By:

ARES ASIP VII MANAGEMENT, L.P., ITS PORTFOLIO MANAGER

 

 

By:

ARES ASIP VII GP, LLC, ITS GENERAL PARTNER

 

 

 

 

 

By:

/s/ Darryl Schall

 

 

 

Name: Darryl Schall

 

 

Title: Vice President

 

Principal Amount of Third Lien Notes:     $         

 

Principal Amount of Unsecured Notes:  $              

 

Principal Amount of Convertible Note:  $             

 

Number of Shares of Preferred Stock:                 

 

Notice Address :

ARES MANAGEMENT LLC

2000 Avenue of the Stars

12th Floor

Los Angeles, California, 90067

 

Phone: (310) 201-4169

Attention: Darryl Schall

Email: Dschall@aresmgmt.com

 

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CONSENTING CREDITOR

 

RSUI INDEMNITY COMPANY

 

By:

ARES ASIP VII MANAGEMENT, L.P., ITS PORTFOLIO MANAGER

 

 

By:

ARES ASIP VII GP, LLC, ITS GENERAL PARTNER

 

 

 

 

 

By:

/s/ Darryl Schall

 

 

 

Name: Darryl Schall

 

 

Title: Vice President

 

Principal Amount of Third Lien Notes:     $                

 

Principal Amount of Unsecured Notes:  $             

 

Principal Amount of Convertible Note:  $          

 

Number of Shares of Preferred Stock:              

 

Notice Address :

ARES MANAGEMENT LLC

2000 Avenue of the Stars

12th Floor

Los Angeles, California, 90067

 

Phone: (310) 201-4169

Attention: Darryl Schall

Email: Dschall@aresmgmt.com

 

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CONSENTING CREDITOR

 

ARES SPECIAL SITUATIONS FUND III, L.P.

 

By:

ASSF OPERATING MANAGER III, LLC, ITS MANAGER

 

 

 

 

 

By:

/s/ Darryl Schall

 

 

 

Name: Darryl Schall

 

 

Title: Vice President

 

Principal Amount of Third Lien Notes:     $                 

 

Principal Amount of Unsecured Notes:  $         

 

Principal Amount of Convertible Note:  $               

 

Number of Shares of Preferred Stock:                

 

Notice Address :

ARES MANAGEMENT LLC

2000 Avenue of the Stars

12th Floor

Los Angeles, California, 90067

 

Phone: (310) 201-4169

Attention: Darryl Schall

Email: Dschall@aresmgmt.com

 

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CONSENTING CREDITOR

 

ARES SPECIAL SITUATIONS FUND IV, L.P.

 

By:

ASSF OPERATING MANAGER IV, L.P., ITS MANAGER

 

 

 

 

 

By:

/s/ Darryl Schall

 

 

 

Name: Darryl Schall

 

 

Title: Vice President

 

Principal Amount of Third Lien Notes:     $               

 

Principal Amount of Unsecured Notes:  $             

 

Principal Amount of Convertible Note:  $                

 

Number of Shares of Preferred Stock:                

 

Notice Address :

ARES MANAGEMENT LLC

2000 Avenue of the Stars

12th Floor

Los Angeles, California, 90067

 

Phone: (310) 201-4169

Attention: Darryl Schall

Email: Dschall@aresmgmt.com

 

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CONSENTING CREDITOR

 

AF IV US BD Holdings, L.P.

 

By:

/s/ Daniel Nguyen

 

Name: Daniel Nguyen

Title: Chief Financial Officer

 

Principal Amount of Third Lien Notes:     $                

 

Principal Amount of Unsecured Notes:  $               

 

Principal Amount of Convertible Note:  $                 

 

Number of Shares of Preferred Stock:             

 

Notice Address :

ARES MANAGEMENT LLC

2000 Avenue of the Stars

12th Floor

Los Angeles, California, 90067

 

Phone: 310 201-4204

Attention: Daniel Nguyen

Email: Nguyen@aresmgmt.com

 

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CONSENTING CREDITOR

 

FRANKLIN ADVISERS, INC. as investment manager on behalf of certain funds and accounts

 

By:

/s/ Glenn Voyles

 

Name: Glenn Voyles

Title: VP

 

Principal Amount of Third Lien Notes:     $           

 

Principal Amount of Unsecured Notes:  $            

 

Principal Amount of Convertible Note:  $             

 

Number of Shares of Preferred Stock:         

 

Notice Address :

One Franklin Pkwy

San Mateo, CA 94403

 

Fax: 650-312-2070

Attention: Bryant Dieffenbacher; Christopher Chen

Email: bryant.dieffenbacher@franklintempleton.com; chris.chen@franklintempleton.com

 

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CONSENTING CREDITOR

 

TYRUS CAPITAL EVENT MASTER FUND LIMITED
by its agent, Tyrus Capital S.A.M.

 

By:

/s/ Mark Madden

 

Name: Mark Madden

 

Title: Director

 

 

Principal Amount of Third Lien Notes:     $          

 

Principal Amount of Unsecured Notes:  $              

 

Principal Amount of Convertible Note:  $           

 

Number of Shares of Preferred Stock:            

 

Notice Address :

c/o Tyrus Capital S.A.M.

4 Avenue de Roqueville

98000 Monaco

 

Fax: +377 9999 5090

Attention: Head of Legal

Email: opsteam@tyruscap.mc; legal@tyruscap.mc

 

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CONSENTING CREDITOR

 

EACH ENTITY LISTED ON EXHIBIT A HERETO

 

By:

Putnam Investment Management, LLC, as investment manager

 

 

 

By:

/s/ Norman P. Boucher

 

Name: Norman P. Boucher

 

Title: Portfolio Manager

 

 

Principal Amount of Third Lien Notes:     $           

 

Principal Amount of Unsecured Notes:  $            

 

Principal Amount of Convertible Note:  $              

 

Number of Shares of Preferred Stock:               

 

Notice Address :

c/o Putnam Investments

One Post Office Square

Boston, MA 02109

Attention: Office of the General Counsel

 

Fax: (617) 760-1625

Attention: Stephen M. Gianelli

Email: stephen_gianelli@putnam.com

 

A copy of the Agreement and Declaration of Trust of each Consenting Creditor listed on Exhibit A hereto is on file with the Secretary of the Commonwealth of Massachusetts and notice is hereby given that this instrument is executed on behalf of the Trustees of each such Consenting Creditor as Trustees and not individually and that the obligations of this instrument are not binding on any of the Trustees or officers or shareholders individually, but are binding only on the assets or property of each such Consenting Creditor with respect to its obligations hereunder. Furthermore, notice is given that the assets and liabilities of each series of each such Consenting Creditor that is a series company are separate and distinct and that the obligations of or arising out of this instrument are several and not joint and are binding only on the assets or property of each series with respect to its obligations hereunder.

 

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Exhibit A

 

Putnam Investment Management, LLC

 

Consenting Creditor

 

Putnam High Yield Trust

 

Putnam High Income Securities Fund

 

Putnam Variable Trust — Putnam VT High Yield Fund

 

Putnam Variable Trust — Putnam VT Global Asset Allocation Fund

 

Putnam Premier Income Trust

 

Putnam Master Intermediate Income Trust

 

Putnam Asset Allocation Funds — Putnam Dynamic Asset Allocation Growth Fund

 

Putnam Asset Allocation Funds — Putnam Dynamic Asset Allocation Balanced Fund

 

Putnam Asset Allocation Funds — Putnam Dynamic Asset Allocation Conservative Fund

 

Putnam Variable Trust — Putnam VT Diversified Income Fund

 

Putnam Funds Trust — Putnam Dynamic Risk Allocation Fund

 

Putnam Funds Trust — Putnam Absolute Return 700 Fund

 

Great-West Funds, Inc. — Great-West Putnam High Yield Bond Fund

 

 



 

CONSENTING CREDITOR

 

EACH ENTITY LISTED ON EXHIBIT A HERETO

 

By:

The Putnam Advisory Company, LLC, as investment manager

 

 

By:

/s/ Norman P. Boucher

 

Name: Norman P. Boucher

 

Title: Portfolio Manager

 

 

Principal Amount of Third Lien Notes:     $               

 

Principal Amount of Unsecured Notes:  $                  

 

Principal Amount of Convertible Note:  $               

 

Number of Shares of Preferred Stock:                      

 

Notice Address :

c/o Putnam Investments

One Post Office Square

Boston, MA 02109

Attention: Office of the General Counsel

 

Fax: (617) 760-1625

Attention: Stephen M. Gianelli

Email: stephen_gianelli@putnam.com

 



 

Exhibit A

 

The Putnam Advisory Company, LLC

 

Consenting Creditor

 

Putnam High Yield Fixed Income Fund, LLC

 

Putnam World Trust — Putnam Global High Yield Bond Fund

 

LGT Multi Manager Bond High Yield (USD)

 

Putnam Total Return Fund, LLC

 

IG Putnam U.S. High Yield Income Fund

 

Mackenzie Corporate Bond Fund

 

Mackenzie North American Corporate Bond Fund

 

Investors Canadian High Yield Income Fund

 

Counsel Portfolio Services Inc — Counsel Fixed Income

 

The International Investment Fund — Putnam Global Alpha Fund

 

Counsel North American High Yield Bond Fund

 

 



 

CONSENTING CREDITOR

 

EACH ENTITY LISTED ON EXHIBIT A HERETO

 

By:

Putnam Fiduciary Trust Company, as investment manager

 

 

By:

/s/ Norman P. Boucher

 

Name: Normal P. Boucher

 

Title: Portfolio Manager

 

 

Principal Amount of Third Lien Notes:     $               

 

Principal Amount of Unsecured Notes:  $                 

 

Principal Amount of Convertible Note:  $            

 

Number of Shares of Preferred Stock:            

 

Notice Address :

c/o Putnam Investments

One Post Office Square

Boston, MA 02109

Attention: Office of the General Counsel

 

Fax: (617) 760-1625

Attention: Stephen M. Gianelli

Email: stephen_gianelli@putnam.com

 

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Exhibit A

 

Putnam Fiduciary Trust Company

 

Consenting Creditor

Putnam Total Return Trust

Putnam Retirement Advantage GAA Balanced Portfolio

Putnam Retirement Advantage GAA Conservative Portfolio

Putnam Retirement Advantage GAA Growth Portfolio

Putnam Retirement Advantage GAA Income Strategies Portfolio

 

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CONSENTING CREDITOR

 

Loomis, Sayles & Company, L.P., as investment manager,

on behalf of one or more discretionary accounts holding the Notes

(each such account, separately and not jointly, a “Noteholder”)

By: Loomis, Sayles & Company, Incorporated

Its General Partner

 

By:

/s/ Mari Shimokawa

 

Name: Mari Shimokawa

 

Title: V.P. & Deputy Chief Compliance Officer

 

 

Principal Amount of Third Lien Notes:     $            

 

Principal Amount of Unsecured Notes:  $          

 

Principal Amount of Convertible Note:  $               

 

Number of Shares of Preferred Stock:          

 

Notice Address :

One Financial Center

27th Floor

Boston, MA 02111

 

Fax: [ · ]

Attention: Peter S. Sheehan

Email: psheehan@loomissayles.com

 

SIGNATURE PAGE TO RESTRUCTURING SUPPORT AGREEMENT

 



 

CONSENTING CREDITOR

 

MANULIFE ASSET MANAGEMENT as investment adviser on behalf of:

John Hancock Focused High Yield Fund

John Hancock Funds III - Core High Yield Fund

Manulife High Yield Bond Fund

John Hancock Global Short Duration Credit Fund

Manulife Global Tactical Credit Fund

Manulife US Fixed Income Trust

Manulife US Tactical Credit Fund

Manulife Global - US Special Opportunities Fund

 

By:

/s/ Diane Landers

 

Name: Diane Landers

Title: Chief Operating Officers

 

Principal Amount of Third Lien Notes:     $              

 

Principal Amount of Unsecured Notes:  $             

 

Principal Amount of Convertible Note:  $             

 

Number of Shares of Preferred Stock:             

 

Notice Address :

Manulife Asset Management (US) LLC

197 Clarendon Street, Boston, MA 02116

 

Fax: 617.375.1666

Attention: Diane Landers

Email: dlanders@manulifeam.com

 

SIGNATURE PAGE TO RESTRUCTURING SUPPORT AGREEMENT

 



 

CONSENTING CREDITOR

 

HALRES LLC

 

By:

/s/ Floyd C. Wilson

 

Name:

Floyd C. Wilson

Title:

President

 

Principal Amount of Third Lien Notes:     $              

 

Principal Amount of Unsecured Notes:  $             

 

Principal Amount of Convertible Note:  $             

 

Number of Shares of Preferred Stock:                   

 

Notice Address :

3811 Turtle Creek Blvd., Suite 1000

Dallas, Texas 75219

 

Fax: 214.599.0200

Attention: Mark A. Welsh IV

Email: mwelsh@encapinvestments.com

 

SIGNATURE PAGE TO RESTRUCTURING SUPPORT AGREEMENT

 



 

CONSENTING CREDITOR

 

Pioneer Diversified High Income Trust

By:

Pioneer Investment Management, Inc., its adviser

 

 

By:

/s/ William Taylor

 

Name: William Taylor

Title: Vice President

 

Principal Amount of Third Lien Notes:     $                  

 

Principal Amount of Unsecured Notes:  $                

 

Principal Amount of Convertible Note:  $                

 

Number of Shares of Preferred Stock:              

 

Notice Address :

Pioneer Investment Management, Inc.

60 State Street

Boston, MA 02109

 

Fax: 617-528-6845

Attention: Will Taylor

Email: William.taylor@pioneerinvestments.com

 

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CONSENTING CREDITOR

 

Pioneer Funds — U.S. High Yield

By:

Pioneer Investment Management, Inc., its adviser

 

 

By:

/s/ William Taylor

 

Name: William Taylor

Title: Vice President

 

Principal Amount of Third Lien Notes:     $                

 

Principal Amount of Unsecured Notes:  $              

 

Principal Amount of Convertible Note:  $              

 

Number of Shares of Preferred Stock:         

 

Notice Address :

Pioneer Investment Management, Inc.

60 State Street

Boston, MA 02109

 

Fax: 617-528-6845

Attention: Will Taylor

Email: William.taylor@pioneerinvestments.com

 

SIGNATURE PAGE TO RESTRUCTURING SUPPORT AGREEMENT

 



 

CONSENTING CREDITOR

 

Pioneer High Income Trust

By:

Pioneer Investment Management, Inc., its adviser

 

 

By:

/s/ William Taylor

 

Name: William Taylor

Title: Vice President

 

Principal Amount of Third Lien Notes:     $                 

 

Principal Amount of Unsecured Notes:  $             

 

Principal Amount of Convertible Note:  $             

 

Number of Shares of Preferred Stock:            

 

Notice Address :

Pioneer Investment Management, Inc.

60 State Street

Boston, MA 02109

 

Fax: 617-528-6845

Attention: Will Taylor

Email: William.taylor@pioneerinvestments.com

 

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CONSENTING CREDITOR

 

Pioneer High Yield Fund

By:

Pioneer Investment Management, Inc., its adviser

 

 

By:

/s/ William Taylor

 

Name: William Taylor

Title: Vice President

 

Principal Amount of Third Lien Notes:     $              

 

Principal Amount of Unsecured Notes:  $               

 

Principal Amount of Convertible Note:  $             

 

Number of Shares of Preferred Stock:             

 

Notice Address :

Pioneer Investment Management, Inc.

60 State Street

Boston, MA 02109

 

Fax: 617-528-6845

Attention: Will Taylor

Email: William.taylor@pioneerinvestments.com

 

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CONSENTING CREDITOR

 

ING Partners, Inc. — VY Pioneer High Yield Portfolio

By:

Pioneer Investment Management, Inc., its adviser

 

 

By:

/s/ William Taylor

 

Name: William Taylor

Title: Vice President

 

Principal Amount of Third Lien Notes:     $            

 

Principal Amount of Unsecured Notes:  $            

 

Principal Amount of Convertible Note:  $               

 

Number of Shares of Preferred Stock:             

 

Notice Address :

Pioneer Investment Management, Inc.

60 State Street

Boston, MA 02109

 

Fax: 617-528-6845

Attention: Will Taylor

Email: William.taylor@pioneerinvestments.com

 

SIGNATURE PAGE TO RESTRUCTURING SUPPORT AGREEMENT

 



 

CONSENTING CREDITOR

 

Pioneer Funds — Global High Yield

By:

Pioneer Investment Management, Inc., its adviser

 

 

By:

/s/ William Taylor

 

Name: William Taylor

Title: Vice President

 

Principal Amount of Third Lien Notes:     $               

 

Principal Amount of Unsecured Notes:  $             

 

Principal Amount of Convertible Note:  $            

 

Number of Shares of Preferred Stock:             

 

Notice Address :

Pioneer Investment Management, Inc.

60 State Street

Boston, MA 02109

 

Fax: 617-528-6845

Attention: Will Taylor

Email: William.taylor@pioneerinvestments.com

 

SIGNATURE PAGE TO RESTRUCTURING SUPPORT AGREEMENT

 



 

CONSENTING CREDITOR

 

Pioneer Multi-Asset Income Fund

By:

Pioneer Investment Management, Inc., its adviser

 

 

By:

/s/ William Taylor

 

Name: William Taylor

Title: Vice President

 

Principal Amount of Third Lien Notes:     $                 

 

Principal Amount of Unsecured Notes:  $                

 

Principal Amount of Convertible Note:  $               

 

Number of Shares of Preferred Stock:             

 

Notice Address :

Pioneer Investment Management, Inc.

60 State Street

Boston, MA 02109

 

Fax: 617-528-6845

Attention: Will Taylor

Email: William.taylor@pioneerinvestments.com

 

SIGNATURE PAGE TO RESTRUCTURING SUPPORT AGREEMENT

 



 

CONSENTING CREDITOR

 

Credit Suisse Securities USA, LLC

 

 

By:

/s/ Kevin Lowe

 

Name: Kevin Lowe

Title: Managing Director

 

Principal Amount of Third Lien Notes:     $               

 

Principal Amount of Unsecured Notes:  $               

 

Principal Amount of Convertible Note:  $               

 

Number of Shares of Preferred Stock:             

 

Notice Address :

11 Madison Ave

New York, NY 10010

 

Fax: (212) 322-9355

Attention: Charles O’Reilly

Email: Charles.O’Reilly@csg.com

 

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CONSENTING CREDITOR

 

Equitec Specialists, LLC

 

By:

/s/ Christopher Kuehner

 

Name: Christopher Kuehner

Title: Compliance Officer

 

Principal Amount of Third Lien Notes:     $            

 

Principal Amount of Unsecured Notes:  $            

 

Principal Amount of Convertible Note:  $            

 

Number of Shares of Preferred Stock:             

 

Notice Address :

Equitec Specialist, LLC

8 Spruce Street #50C

New York, NY 10038

 

Fax: 212-747-1114

Attention: Dan Katzner

Email: dkatzner@eqtc.com

 

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CONSENTING CREDITOR

 

CANADA PENSION PLAN INVESTMENT BOARD

 

By:

/s/ Scott Lawrence

 

Name:

Scott Lawrence

 

Title:

Managing Director, Head of Relationship Investments

 

 

Principal Amount of Third Lien Notes:     $                    

 

Principal Amount of Unsecured Notes:  $              

 

Principal Amount of Convertible Note:  $

 

Number of Shares of Preferred Stock:                 

 

Notice Address :

One Queen Street East, Suite 2500

Toronto, Ontario M5C 2W5

 

Fax:

Attention:

Email:

 

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CONSENTING CREDITOR

 

Thornburg Investment Income Builder Fund

 

By:

/s/ Jason Brady

 

Name:

Jason Brady

 

Title:

Portfolio Manager, President & CEO

 

 

Principal Amount of Third Lien Notes:     $                    

 

Principal Amount of Unsecured Notes:  $              

 

Principal Amount of Convertible Note:  $


Number of Shares of Preferred Stock:                 

 

Notice Address :

2300 North Ridgetop RD

Santa Fe, NM 87506

 

Fax: 505.467.7175

Attention: Leon Sandersfeld

Email: lsandersfeld@thornburg.com

 

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CONSENTING CREDITOR

 

Thornburg Strategic Income Fund

 

By:

/s/ Jason Brady

 

Name:

Jason Brady

 

Title:

Portfolio Manager, President & CEO

 

 

Principal Amount of Third Lien Notes:     $                    

 

Principal Amount of Unsecured Notes:  $              

 

Principal Amount of Convertible Note:  $


Number of Shares of Preferred Stock:                 

 

Notice Address :

2300 North Ridgetop RD

Santa Fe, NM 87506

 

Fax: 505.467.7175

Attention: Leon Sandersfeld

Email: lsandersfeld@thornburg.com

 

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CONSENTING CREDITOR

 

Delaware Public Employees’ Retirement System

 

By:

/s/ Jason Brady

 

Name:

Jason Brady

 

Title:

Portfolio Manager, President & CEO

 

 

Principal Amount of Third Lien Notes:     $                    

 

Principal Amount of Unsecured Notes:  $              

 

Principal Amount of Convertible Note:  $


Number of Shares of Preferred Stock:                 

 

Notice Address :

2300 North Ridgetop RD

Santa Fe, NM 87506

 

Fax: 505.467.7175

Attention: Leon Sandersfeld

Email: lsandersfeld@thornburg.com

 

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CONSENTING CREDITOR

 

Arlington County Employees’ Retirement System

 

By:

/s/ Jason Brady

 

Name:

Jason Brady

 

Title:

Portfolio Manager, President & CEO

 

 

Principal Amount of Third Lien Notes:     $                    

 

Principal Amount of Unsecured Notes:  $              

 

Principal Amount of Convertible Note:  $


Number of Shares of Preferred Stock:                 

 

Notice Address :

2300 North Ridgetop RD

Santa Fe, NM 87506

 

Fax: 505.467.7175

Attention: Leon Sandersfeld

Email: lsandersfeld@thornburg.com

 

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CONSENTING CREDITOR

 

/s/ Floyd C. Wilson

 

Floyd C. Wilson

 

 

Principal Amount of Third Lien Notes:     $                    

 

Principal Amount of Unsecured Notes:  $              

 

Principal Amount of Convertible Note:  $


Number of Shares of Preferred Stock:                 

 

Notice Address :

c/o Halcón Resources Corporation

1000 Louisiana Street, Suite 6700

Houston, Texas 77002

Fax: 713.589.8020

Attention: Floyd C. Wilson

Email: fwilson@halconresources.com

 

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CONSENTING CREDITOR

 

/s/ James W. Christmas

 

James W. Christmas

 

 

Principal Amount of Third Lien Notes:     $                    

 

Principal Amount of Unsecured Notes:  $              

 

Principal Amount of Convertible Note:  $


Number of Shares of Preferred Stock:                 

 

Notice Address :

1089 Oceanfront

Long Beach, New York 11561

 

Fax:

Attention:

Email: jchristmas@halconresources.com

 

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CONSENTING CREDITOR

 

Delaware Investment Advisers, a series of Delaware Management Business Trust, on behalf of each of the accounts on Appendix A for which it is designated as investment adviser, severally and not jointly

 

By:

/s/ Wayne A. Anglace

 

Name:

Wayne A. Anglace

 

Title:

Vice President/Portfolio Manager

 

 

Delaware Investments Fund Advisers, a series of Delaware Management Business Trust, on behalf of each of the accounts on Appendix A for which it is designated as investment adviser, severally and not jointly

 

By:

/s/ Wayne A. Anglace

 

Name:

Wayne A. Anglace

 

Title:

Vice President/Portfolio Manager

 

 

Delaware Management Company, a series of Delaware Management Business Trust, on behalf of each of the accounts on Appendix A for which it is designated as investment adviser, severally and not jointly

 

By:

/s/ Wayne A. Anglace

 

Name:

Wayne A. Anglace

 

Title:

Vice President/Portfolio Manager

 

 

Notice Address :

c/o Delaware Investments

2005 Market Street

Philadelphia, PA 19103

Attn:  Wayne Anglace, with a copy to General Counsel

Fax:  215-255-1640

Email: wayne.anglace@delinvest.com

 

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Appendix A

 

Account

 

Investment Adviser

Delaware Investments Dividend and Income Fund, Inc.

 

Delaware Management Company, a series of Delaware Management Business Trust (“DMC”)

Delaware VIP Diversified Income Series, a series of Delaware VIP Trust

 

DMC

Delaware Divided Income Fund, a series of Delaware Group Equity Funds V

 

DMC

Delaware Enhanced Global Dividend and Income Fund

 

DMC

Delaware Diversified Income Fund, a series of Delaware Group Adviser Funds

 

DMC

Delaware Foundation Conservative Allocation Fund, a series of Delaware Group Foundation Funds

 

DMC

Delaware Foundation Moderate Allocation Fund, a series of Delaware Group Foundation Funds

 

DMC

Delaware Foundation Growth Allocation Fund, a series of Delaware Group Foundation Funds

 

DMC

Optimum Fixed Income Fund, a series of Optimum Fund Trust

 

DMC

LVIP Delaware Foundation Conservative Allocation Fund, a series of Lincoln Variable Insurance Products Trust

 

Delaware Investments Fund Advisers, a series of Delaware Management Business Trust (“DIFA”)

LVIP Delaware Foundation Moderate Allocation Fund, a series of Lincoln Variable Insurance Products Trust

 

DIFA

LVIP Delaware Foundation Aggressive Allocation Fund, a series of Lincoln Variable Insurance Products Trust

 

DIFA

Munson Healthcare Operating Fund — Convertibles

 

Delaware Investment Advisers, a series of Delaware Management Business Trust (“DIA”)

Munson Healthcare Pension Plan - Convertibles

 

DIA

Munson Healthcare Foundation - Convertibles

 

DIA

Presbyterian Villages of Michigan Foundation

 

DIA

Midland First United Methodist Church Foundation

 

DIA

Hurley Hospital Post Retirement

 

DIA

Bronson Healthcare Group Self Funded Liability Account

 

DIA

Bronson Healthcare Group Post Retirement Medical

 

DIA

Bronson Healthcare Group Long Term Reserve

 

DIA

Bronson Healthcare Group Pension Plan

 

DIA

Delaware Diversified Income Trust, a separate fund established under the Delaware Investments Collective Investment Trust

 

DIA

Bronson Battle Creek Retirement Plan

 

DIA

 



 

 

SCHEDULE 1

 

Restructuring Subsidiaries

 

Halcón Holdings, Inc.

HK Resources, LLC

The 7711 Corporation

Halcón Gulf States, LLC

Halcón Louisiana Operating, L.P.

Halcón Field Services, LLC

Halcón Energy Properties, Inc.

Halcón Operating Co., Inc.

Halcón Williston I, LLC

Halcón Williston II, LLC

Halcón Operating Inc.

HRC Energy Louisiana, LLC

HRC Energy Resources (WV), Inc.

HRC Production Company

Halcón Energy Holdings, LLC

HRC Energy, LLC

HK Energy, LLC

HK Louisiana Operating, LLC

HK Oil & Gas, LLC

HK Energy Operating, LLC

HRC Operating, LLC

 



 

EXHIBIT A

 

TERM SHEET

 



 

HALCÓN RESOURCES CORPORATION

TERM SHEET

 

JUNE 9, 2016

 

This Term Sheet(1) sets forth the principal terms of the Restructuring of the Company to be implemented pursuant to a joint prepackaged plan of reorganization, consistent with the terms set forth herein, to be filed in cases commenced by the Company under chapter 11 of the Bankruptcy Code.  As reflected in the restructuring support agreement dated June 9, 2016, by and among the Company and the Consenting Creditors (the “ Restructuring Support Agreement ”), to which this Term Sheet is an exhibit, the Restructuring is supported by the Company, the Consenting Third Lien Noteholders, the Consenting Unsecured Noteholders, the Convertible Noteholder, and the Consenting Preferred Holders.

 

THIS TERM SHEET DOES NOT CONSTITUTE (NOR SHALL IT BE CONSTRUED AS) AN OFFER WITH RESPECT TO ANY SECURITIES OR A SOLICITATION OF ACCEPTANCES OR REJECTIONS AS TO ANY PLAN OF REORGANIZATION, IT BEING UNDERSTOOD THAT SUCH A SOLICITATION, IF ANY, ONLY WILL BE MADE IN COMPLIANCE WITH APPLICABLE PROVISIONS OF SECURITIES, BANKRUPTCY AND/OR OTHER APPLICABLE LAWS. THIS TERM SHEET AND THE INFORMATION CONTAINED HEREIN IS STRICTLY CONFIDENTIAL AND SHALL NOT BE SHARED WITH ANY OTHER PARTY ABSENT THE PRIOR WRITTEN CONSENT OF THE COMPANY AND THE REQUISITE CREDITORS, EXCEPT AS REQUIRED BY LAW AND AS CONTEMPLATED BY THE RESTRUCTURING SUPPORT AGREEMENT.

 

Transaction Overview

 

The Company:

 

Holdings, together with certain of its subsidiaries that are parties to the Restructuring Support Agreement, namely: Halcón Holdings, Inc., HK Resources, LLC, The 7711 Corporation, Halcón Gulf States, LLC, Halcón Louisiana Operating, L.P., Halcón Field Services, LLC, Halcón Energy Properties, Inc., Halcón Operating Co., Inc., Halcón Williston I, LLC, Halcón Williston II, LLC, Halcón Resources Operating Inc., HRC Energy Louisiana, LLC, HRC Energy Resources (WV), Inc., HRC Production Company, Halcón Energy Holdings, LLC, HRC Energy, LLC, HK Energy, LLC, HK Louisiana Operating, LLC, HK Oil & Gas, LLC, HK Energy Operating, LLC, and HRC Operating, LLC. For purposes of this Term Sheet and the Restructuring, the Company does not include HK TMS, LLC (“ TMS ”) and SBE Partners, LP (“ SBE ”) and any of the Company’s and Consenting Creditors’ respective claims against, and/or interests in, TMS and SBE will not be affected, impaired or otherwise impacted in any way or manner by the Restructuring.

 

 

 

Claims and Interests to be Restructured:

 

Revolving Credit Agreement Claims : consisting of, as of the date hereof, approximately $120.0 million in aggregate unpaid principal amount, which includes undrawn letters of credit, plus interest, fees and other expenses, arising under or in connection with that certain Senior Revolving Credit Agreement, dated as of February 8, 2012, by and among Holdings, as borrower, each of the guarantors named therein, JP Morgan Chase Bank, N.A., as administrative agent, Wells Fargo Bank, N.A., as syndication agent, and the lenders party thereto (as rolled into a debtor-in-possession financing facility or amended, modified or otherwise supplemented from time to time, the “ Revolving Credit Facility ” or the “ Revolving Credit Agreement ”) (the “ Revolving Credit Agreement Claims ”).

 

Second Lien Note Claims : consisting of approximately $812.8 million in aggregate

 


(1)  Capitalized terms used but not otherwise herein defined have the meanings ascribed to them in either Annex A attached hereto or the Restructuring Support Agreement (as defined below).  To the extent of any direct conflict between this Term Sheet and the Restructuring Support Agreement, the Restructuring Support Agreement will govern and control.

 



 

 

 

unpaid principal, plus interest, fees and other expenses, of (a) the 8.625% Senior Secured Notes (the “ 8.625% Second Lien Notes ”) under that certain indenture, dated as of May 1, 2015, by and among Holdings, as issuer, each of the guarantors named therein, and U.S. Bank National Association, as trustee (as amended, modified, or otherwise supplemented from time to time, the “ 8.625% Second Lien Note Indenture ”) and (b) the 12.0% Senior Secured Notes (the “ 12.0% Second Lien Notes ” and, together with the 8.625% Second Lien Notes, the “ Second Lien Notes ”) under that certain indenture, dated as of December 21, 2015, by and among Holdings, as issuer, each of the guarantors named therein, and U.S. Bank National Association, as trustee (as amended, modified or otherwise supplemented from time to time, the “ 12.0% Second Lien Note Indenture ” and, together with the 8.625% Second Lien Note Indenture, the “ Second Lien Note Indentures ”) (the “ Second Lien Note Claims ”).

 

Third Lien Note Claims : consisting of approximately $1.02 billion in aggregate unpaid principal, plus interest, fees and other expenses, of the Third Lien Notes under the Third Lien Note Indenture (the “ Third Lien Note Claims ”).

 

Unsecured Note Claims : consisting of approximately $650.0 million in aggregate unpaid principal, plus interest, fees and other expenses, of: (a) the 8.875% Senior Unsecured Notes under the 8.875% Senior Unsecured Note Indenture; (b) the 9.25% Senior Unsecured Notes under the 9.25% Senior Unsecured Note Indenture; and (c) the 9.75% Senior Unsecured Notes under the 9.75% Senior Unsecured Note Indenture (the “ Unsecured Note Claims ”).

 

Convertible Note Claims : consisting of approximately $290.0 million in aggregate unpaid principal, plus interest, fees and other expenses of the Convertible Note issued on February 8, 2012, pursuant to that certain Securities Purchase Agreement, effective December 21, 2011, by and between HALRES LLC (formerly Halcón Resources LLC) and RAM Energy Resources, Inc. (“ Securities Purchase Agreement ”) (the “ Convertible Note Claims ”).

 

General Unsecured Claims : consisting of any Claim against the Company (other than the Unsecured Note Claims, the Convertible Note Claims or any Intercompany Claims) that is neither secured nor entitled to priority under the Bankruptcy Code or any order of the Bankruptcy Court (the “ General Unsecured Claims ”).

 

Preferred Stock Interests : consisting of $222.5 million, including undeclared dividends, in the Preferred Stock issued by Holdings pursuant to that certain Certificate of Designations, Preferences, Rights and Limitations of 5.75% Series A Convertible Perpetual Preferred Stock, dated June 17, 2013 (the “ Preferred Stock Interests ”).

 

Existing Equity Interests : consisting of any Interests in Holdings (other than the Preferred Stock), including common stock, and any options, warrants or rights to acquire any Interests in Holdings issued pursuant to the Holdings Certificate of Incorporation (the “ Existing Equity Interests ”).

 



 

Transaction Overview

 

Restructuring Summary:

 

Creditors and interests holders will receive the following treatments under the Plan:

 

i.                   The Revolving Credit Agreement Claims : On the Effective Date, the Company will obtain a credit facility pursuant to an amendment or an amendment and restatement of the Revolving Credit Agreement (or any replacement financing) in the aggregate principal amount of approximately $700,000,000, or such lower amount as determined by the Company based on prevailing market conditions, but in no event less than $600,000,000 (the “ Amended Revolving Credit Agreement ). The Amended Revolving Credit Agreement shall be in form and substance (a) reasonably satisfactory to the Requisite Unsecured Noteholders, and (b) satisfactory to the Requisite Third Lien Noteholders. The proceeds from the Amended Revolving Credit Agreement, plus cash on hand, will be used by the Company to (1) provide additional liquidity for working capital and general corporate purposes; (2) pay all reasonable and documented Restructuring Expenses; (3) fund Plan distributions; and (4) fund the administration of the Chapter 11 Cases.

 

ii.                Second Lien Note Claims . The legal, equitable, and contractual rights of the Second Lien Notes will be unaltered by the Restructuring or the Plan. On the Effective Date, the Second Lien Notes will be reinstated and unimpaired.

 

iii.             Third Lien Note Claims . On the Effective Date, Third Lien Noteholders will receive their pro rata share (based on the total amount of Allowed Third Lien Note Claims) of: (a) New Common Shares, which New Common Shares will represent, after giving effect to the Restructuring, in the aggregate, 76.5% of the total outstanding shares of Reorganized Holdings (subject to dilution by the Management Incentive Plan and, to the extent applicable, the exercise of the New Warrants) (the “ Third Lien New Common Shares ”) and (b) Cash in the amount of $33.8 million (the “ Third Lien Cash Distribution ”).

 

iv.            Unsecured Note Claims . On the Effective Date, Unsecured Noteholders will receive their pro rata share (based on the total amount of Allowed Unsecured Note Claims) of: (a) New Common Shares, representing, after giving effect to the Restructuring, in the aggregate, 15.5% of the total outstanding shares of Reorganized Holdings (subject to dilution by the Management Incentive Plan and, to the extent applicable, the exercise of the New Warrants) (the “ Unsecured Noteholder New Common Shares ”); (b) Cash in the amount of $37.6 million (the “ Unsecured Noteholder Cash Distribution ”); and (c) the Unsecured Noteholder New Warrants to purchase, after giving effect to the Restructuring, 4.0% of the total outstanding shares of Reorganized Holdings as of the Effective Date, subject to dilution by the Management Incentive Plan, exercisable for a four (4) year period commencing on the Effective Date at an exercise price based on a $1.33 billion equity value.

 

v.               Convertible Note Claims . Subject to the limitations sets forth below, on the Effective Date, the Convertible Noteholder will receive: (a) New Common Shares, representing, after giving effect to the Restructuring, in the aggregate, 4.0% of the total outstanding shares of Reorganized Holdings (subject to dilution by the Management Incentive Plan and, to the extent applicable, the exercise of the New Warrants) (the “ Convertible Noteholder New Common Shares ”); (b) Cash in the amount of $15.0 million (the “ Convertible Noteholder Cash Distribution ”); and (c) the Convertible Noteholder New Warrants to purchase 1.0% of the total outstanding shares of Reorganized

 



 

 

 

Holdings as of the Effective Date, subject to dilution by the Management Incentive Plan, exercisable for a four (4) year period commencing on the Effective Date at an exercise price based on a $1.33 billion equity value.

 

vi.            General Unsecured Claims . Subject to the limitations set forth below, as a part of the Restructuring, except to the extent that a holder of a General Unsecured Claim agrees to different treatment, the Company or Reorganized Company, as applicable, will continue to pay or dispute each General Unsecured Claim in the ordinary course of business as if the Chapter 11 Cases had never been commenced.

 

vii.         Preferred Stock Interests . Subject to the limitations set forth below, on the Effective Date, Preferred Holders will receive their pro rata share (based on the total amount of Allowed Preferred Stock Interests) of Cash in the amount of $11.1 million representing a recovery of 5.0% of the liquidation preference per share of the Preferred Stock (the “ Preferred Stock Cash Distribution ”).

 

viii.      Existing Equity Interests . Subject to the limitations set forth below, on the Effective Date, Existing Equity Interests will be cancelled and the holders of Existing Equity Interests will receive their pro rata share of New Common Shares representing in the aggregate 4.0% of the total outstanding shares of Reorganized Holdings (subject to dilution by the Management Incentive Plan and, to the extent applicable, the exercise of the New Warrants).

 

The Plan will provide that, in the event the classes of Unsecured Note Claims, Convertible Note Claims or Preferred Stock Interests vote to reject the Plan (any such class, a “ Rejecting Class ”) then: (i) any class of claims or interests junior in priority to such Rejecting Class will not receive or retain any value under the Plan; (ii) any New Warrants that were to be distributed to such junior classes of creditors will be cancelled and will not be issued under the Plan; (iii) the New Common Shares that were to be distributed to such junior classes of creditors or interest holders will be reallocated and distributed as set forth in this Term Sheet, and (iv) the Cash that was to be distributed to such junior classes of creditor or interest holders will remain property of the Company and will vest in the Reorganized Company on the Effective Date. In the event the Unsecured Note Claims is a Rejecting Class: (a) no Convertible Noteholder New Warrants will be issued under the Plan; (b) the New Common Shares that were to be distributed to the Convertible Noteholder and Existing Equity Interests shall be reallocated and distributed pro rata to the Third Lien Noteholders; and (c) if the Company elects not to terminate the Restructuring Support Agreement, then the distributions to be received by the General Unsecured Claims shall be modified so as to comply with section 1129(b) of the Bankruptcy Code, subject to the Consenting Third Lien Noteholders’ rights under Section 9 of the Restructuring Support Agreement.(2)  In the event the Preferred Stock Interests is a Rejecting Class, the Preferred Holders will not receive or retain any distributions on account of their Preferred Stock Interests.

 

The solicitation of votes on the Plan from Third Lien Noteholders, Unsecured Noteholders and the Convertible Noteholder will be made pursuant to Section 4(a)(2) and Regulation D of the Securities Act and, with respect to Third Lien Note Claims and Unsecured Note Claims, the Company will only solicit votes on the Plan from

 


(2)  In the event the Unsecured Note Claims is a Rejecting Class, and it is determined by the Company in consultation with the Requisite Third Lien Noteholders that the votes of the holders of General Unsecured Claims must be solicited to comply with the requirements of section 1125 of the Bankruptcy Code, then the relevant milestones set forth in the Restructuring Support Agreement with respect to the approval of the Disclosure Statement, confirmation of the Plan and the Effective Date shall be extended by 60 calendar days.

 



 

 

 

 

Eligible Third Lien Noteholders or Eligible Unsecured Noteholders.

 

At least five (5) business days prior to the Commencement Date, and on the same date, the Company will pay cash interest with respect to the (i) Third Lien Noteholders through the later of May 15, 2016 and the date on which interest and/or dividends are paid on the Unsecured Notes, the Convertible Note or the Preferred Stock and (ii) Unsecured Noteholders through the later of May 15, 2016 and the date on which interest and/or dividends are paid on the Third Lien Notes, the Convertible Note or the Preferred Stock. The Unsecured Noteholder Cash Distribution (i) accounts for the cash interest paid to holders of the 8.875% Senior Unsecured Notes on May 16, 2016, and (ii) assumes that additional cash interest shall be paid to the holders of the 9.25% Senior Unsecured Notes and 9.75% Senior Unsecured Notes prior to the Commencement Date in the amount of $11.1 million, of which $4.2 million is attributable to the period from and after April 1, 2016 through May 15, 2016 (the “ Unsecured Interest Payment ”). The Third Lien Noteholder Cash Distribution assumes that additional cash interest shall be paid to the Third Lien Noteholders prior to the Commencement Date in the amount of $33.1 million, of which $16.2 million is attributable to the period from and after April 1, 2016 through May 15, 2016 (the “ Third Lien Interest Payment ”). From and after the Support Effective Date, the Company shall not make any interest or dividend payments on account of the Convertible Note, Preferred Stock or otherwise, except as provided above. The Convertible Noteholder agrees that, from and after the Support Effective Date, so long as the Restructuring Support Agreement remains in effect as to it (i) no further interest payments shall be made on the Convertible Note and (ii) the Convertible Noteholder waives any default that may arise under the Convertible Note on account of the Company failing to pay interest on any other debt or obligation. The Company shall accrue interest through the Commencement Date on the Third Lien Notes, Unsecured Notes, Convertible Note and Preferred Stock in accordance with the terms thereof, and all such interest, to the extent not paid as set forth above, shall be deemed part of the Third Lien Note Claims, Unsecured Note Claims, Convertible Note Claims, and Preferred Stock Interests, as applicable.

 

 

 

Implementation:

 

The Company will commence the Chapter 11 Cases and implement the Restructuring pursuant to the Plan as provided in the Restructuring Support Agreement.

 

 

 

Use of Cash Collateral/
DIP Financing:

 

The Company will seek authority promptly upon commencement of the Chapter 11 Cases to use cash collateral to fund the administration of the Chapter 11 Cases.  In connection with the Company’s use of cash collateral and DIP Financing (if applicable), subject to Bankruptcy Court approval, the Company will provide “adequate protection” (as such term is defined in sections 361 and 363 of the Bankruptcy Code) to the Revolving Credit Agreement Lenders, the Second Lien Noteholders and the Third Lien Noteholders on the terms reasonably satisfactory to the Company and the Requisite Creditors, including, without limitation, customary stipulations as to amount, validity and priority of claims, adequate protection liens, superpriority claims, postpetition reimbursement of fees, 506(c), 552(b) “equities of the case” and marshaling waivers, and reimbursement of reasonable fees and expenses of counsel in accordance with existing fee letters; provided that any adequate protection to the Third Lien Noteholders shall not be cash pay (other than ordinary course expense reimbursements, including, without limitation, the reasonable fees and expenses of counsel).(3)

 


(3)  The Company may elect to seek funding for the Chapter 11 Cases by means of DIP Financing, which DIP Financing may include a “roll-up” of some or all of the Revolving Lender Credit Facility, but, for the avoidance of doubt, no “roll-up” of any Second Lien Note Claims or Third Lien Note Claims.  The terms of any DIP Financing shall be (a) in form and substance reasonably satisfactory to the Requisite Unsecured Noteholders, and (b) in form and substance satisfactory to the Company and the Requisite Third Lien Noteholders.

 



 

 

 

Any order approving the use of cash collateral and/or DIP Financing will be reasonably satisfactory to the Company and the Requisite Creditors.

 

Classification and Treatment of Claims and Interests

 

Administrative, Priority Tax, and Other Priority Claims:

 

On or as soon as practicable after the Effective Date, each holder of an administrative, priority tax or other priority claim will be paid in full in Cash or otherwise receive treatment consistent with the provisions of section 1129(a)(9) of the Bankruptcy Code.

 

Unimpaired — Presumed to Accept

 

 

 

Other Secured Claims:

 

On the Effective Date, to the extent any Other Secured Claims exist, all such Other Secured Claims of the Company allowed as of the Effective Date will be satisfied by either (a) payment in full in Cash, (b) reinstatement pursuant to section 1124 of the Bankruptcy Code or (c) such other recovery necessary to satisfy section 1129 of the Bankruptcy Code.

 

Unimpaired — Presumed to Accept

 

 

 

Revolving Credit Agreement Claims:

 

On the Effective Date, each holder of Allowed Revolving Credit Agreement Claims will receive, in full and final satisfaction of such Allowed Revolving Credit Agreement Claims, its pro rata share of the commitments and/or loans made pursuant to the Amended Revolving Credit Agreement and will receive its benefits and be bound by the obligations therein.

 

Unimpaired — Presumed to Accept

 

 

 

Second Lien Note Claims:

 

The legal, equitable, and contractual rights of the holders of Allowed Second Lien Notes Claims are unaltered by the Plan. On the Effective Date, or as soon as practicable thereafter, the holders of Allowed Second Lien Notes Claims will have their Allowed Claims reinstated.

 

Unimpaired — Presumed to Accept

 

 

 

Third Lien Note Claims:

 

On the Effective Date, each holder of an Allowed Third Lien Note Claim will be entitled to receive, in full and final satisfaction of such Allowed Third Lien Note Claim, its pro rata share (based on the total amount of Allowed Third Lien Note Claims) of: (i) the Third Lien Note New Common Shares and (ii) the Third Lien Cash Distribution.

 

Impaired — Entitled to Vote

 

 

 

Unsecured Note Claims:

 

On the Effective Date, each holder of an Allowed Unsecured Note Claim will be entitled to receive, in full and final satisfaction of such Allowed Unsecured Note Claim, its pro rata share (based on the total amount of Allowed Unsecured Note Claims) of: (i) the Unsecured Noteholder Cash Distribution; (ii) the Unsecured Noteholder New Common Shares; and (iii) the Unsecured Noteholder New Warrants; provided , however , that if the Unsecured Note Claims is a Rejecting Class, then: (a) no Convertible Noteholder New Warrants will be issued under the Plan; (b) the New

 



 

 

 

Common Shares that were to be distributed to the Convertible Noteholder and Existing Equity Interests shall be reallocated and distributed pro rata to the Third Lien Noteholders; and (c) if the Company elects not to terminate the Restructuring Support Agreement, then the distributions to be received by the General Unsecured Claims shall be modified so as to comply with section 1129(b) of the Bankruptcy Code, subject to the Consenting Third Lien Noteholders’ rights under Section 9 of the Restructuring Support Agreement.

 

Impaired — Entitled to Vote

 

 

 

Convertible Note Claims:

 

On the Effective Date, the Convertible Noteholder will be entitled to receive, in full and final satisfaction of such Allowed Convertible Note Claims: (i) the Convertible Noteholder Cash Distribution; (ii) the Convertible Noteholder New Common Shares; and (iii) the Convertible Noteholder New Warrants; provided , however , that if the Unsecured Note Claims is a Rejecting Class then: (a) the Convertible Noteholder New Warrants will not be issued under the Plan; (b) the New Common Shares that would have been distributed to the Convertible Noteholder under the Plan will be reallocated and distributed to the Third Lien Noteholders; and (c) the Cash that was to be distributed to the Convertible Noteholder pursuant to the Convertible Noteholder Cash Distribution will remain property of the Company and will vest in the Reorganized Company on the Effective Date; provided , further , however , that if the Unsecured Note Claims is not a Rejecting Class and the Convertible Noteholder Claims is a Rejecting Class, then: (x) the Convertible Noteholder Warrants will not be issued under the Plan; (y) the New Common Shares that would have been distributed to the Convertible Noteholder under the Plan will be reallocated and distributed to the Third Lien Noteholders and the Unsecured Noteholders pro rata based on their respective holdings of New Common Shares; and (z) the Cash that was to be distributed to the Convertible Noteholder pursuant to the Convertible Noteholder Cash Distribution will remain property of the Company and will

vest in the Reorganized Company on the Effective Date.

 

Impaired — Entitled to Vote

 

 

 

General Unsecured Claims:

 

On the Effective Date, except to the extent that a holder of a General Unsecured Claim agrees to different treatment, the Company or Reorganized Company, as applicable, will continue to pay or dispute each General Unsecured Claim in the ordinary course of business as if the Chapter 11 Cases had never been commenced; provided , however , that if the Unsecured Note Claims is a Rejecting Class then the distributions to be received by the General Unsecured Claims shall be modified so as to comply with section 1129(b) of the Bankruptcy Code, subject to the Consenting Third Lien Noteholders’ rights under Section 9 of the Restructuring Support Agreement.

 

Unimpaired — Presumed to Accept (subject to the proviso above and in Footnote 2 relating to the Unsecured Note Claims being a Rejected Class)

 

 

 

Intercompany Claims:

 

All Intercompany Claims will be paid, adjusted, reinstated or discharged as determined by the Company, subject to the consent of the Requisite Third Lien Noteholders and Requisite Unsecured Noteholders, which consent shall not be unreasonably withheld.

 

Unimpaired — Presumed to Accept

 

 

 

Intercompany Interests:

 

On the Effective Date, or as soon as practicable thereafter, all Intercompany Interests

 



 

 

 

will be reinstated.

 

Unimpaired — Presumed to Accept

 

 

 

Preferred Interests:

 

On the Effective Date, each holder of an Allowed Preferred Stock Interest will be entitled to receive, in full and final satisfaction of such Allowed Preferred Stock Interest, its pro rata share (based on the total amount of Allowed Preferred Stock Interests) of the Preferred Stock Cash Distribution; provided , however , that if the Unsecured Note Claims, the Convertible Note Claims or the Preferred Stock Interests is a Rejecting Class, then the Preferred Holders will not receive or retain any value under the Plan and the Cash to be distributed pursuant to the Preferred Stock Cash Distribution will remain property of the Company and will vest in the Reorganized Company on the Effective Date.

 

Impaired — Entitled to Vote

 

 

 

Existing Equity Interests:

 

On the Effective Date, (a) all Existing Equity Interests will be cancelled, and (b) the holders of Existing Equity Interests will receive New Common Shares representing, in the aggregate, 4.0% of the total outstanding shares of Reorganized Holdings (subject to dilution by the Management Incentive Plan and, to the extent applicable, the exercise of the New Warrants); provided , however , that if: (i) the Unsecured Note Claims is a Rejecting Class, then Existing Equity Interests will not receive or retain any value under the Plan and the New Common Shares that would have been distributed to Existing Equity Interests under the Plan will be reallocated and distributed pro rata to the Third Lien Noteholders; (ii) the Unsecured Note Claims is not a Rejecting Class and the Convertible Noteholder Claims is a Rejecting Class, then Existing Equity Interests will not receive or retain any value under the Plan and the New Common Shares that would have been distributed to Existing Equity Interests under the Plan will be reallocated and distributed pro rata to the Third Lien Noteholders and the Unsecured Noteholders based on their respective holdings of New Common Shares; and (iii) the Unsecured Note Claims and the Convertible Note Claims are not Rejecting Classes and the Preferred Stock Interests is a Rejecting Class, then Existing Equity Interests will not receive or retain any value under the Plan and the New Common Shares that would have been distributed to Existing Equity Interests under the Plan will be reallocated and distributed pro rata to the Third Lien Noteholders, the Unsecured Noteholders and the Convertible Noteholder based on their respective holdings of New Common Shares.

 

The Plan will provide that the holders of Existing Warrants will have until the Warrant Record Date to exercise their respective rights under the Existing Warrants to purchase common stock of the Company and to have such common stock interests treated as Existing Equity Interests under the Plan. To the extent a holder of Existing Warrants does not exercise its Existing Warrants prior to the Warrant Record Date, such Existing Warrants will be cancelled and the holders of such Existing Warrants will not receive or retain any value under the Plan on account of such no-exercised Existing Warrants.

 

Impaired — Deemed to Reject

 

Section 510(b) Claims:

 

Any holder of a claim against the Company that is described in section 510(b) of the Bankruptcy Code will not receive a distribution under the Plan and such section 510(b) claims will be extinguished.

 

Impaired — Deemed to Reject

 



 

General Provisions

 

 

 

New Common Shares and New Warrants

 

The Boards of Directors of the Company and the Reorganized Company and Reorganized Holdings shall each use their reasonable best efforts to have the New Common Shares and New Warrants listed on a nationally recognized exchange, as soon as practicable subject to meeting applicable listing requirements following the Effective Date.

 

 

 

Executory Contracts and Unexpired Leases:

 

The Company reserves the right to reject certain executory contracts and unexpired leases subject to the reasonable consent of the Requisite Third Lien Noteholders. All executory contracts and unexpired leases not expressly rejected will be deemed assumed pursuant to the Plan.

 

 

 

Management Incentive Plan:

 

A post-Restructuring management incentive plan (“ Management Incentive Plan ”) under which 10% of the New Common Shares will be reserved for issuance as awards under the Management Incentive Plan, as described below. All awards issued under the Management Incentive Plan will be dilutive of all other New Common Shares issued pursuant to the Plan.

 

·                   Participants: All employees of the Company and its subsidiaries.

 

·                   Pool: 10% of the total share capital of the Company (subject to dilution by the New Warrants to the same extent other New Common Shares are diluted):

·                   7.5% of the pool (“ Exit Awards ”) to be granted on the Effective Date with such awards to be allocated to employees as determined by the Chief Executive Officer.

·                   2.5% of the pool to be allocated, in such form and with such terms and conditions as determined by the Compensation Committee of the New Board following the Effective Date.

 

·                   Exit Awards:

·                   Options

·                   5% of the pool will be in the form of stock options (“ Options ”) granted on the Effective Date.

·                   The exercise price per share of the Options will be equal to the greater of (1) the per share value based on a Reorganized Company equity value of $650 million or (2) the weighted average trading prices of the New Common Shares for the seven (7) trading dates commencing on the first trading day immediately following the Effective Date (assuming the shares are then publicly traded).

·                   The Options will vest subject to continued employment over 3 years in equal annual installments.

·                   Restricted Stock and Restricted Stock Units

·                   2.5% of the pool will be granted in the form of Restricted Stock or Restricted Stock Units (collectively, the “ RSUs ”) on the Effective Date.

·                   50% of the RSUs (i.e., 1.25% of the pool) will be vested in full at grant.

·                   50% of the RSUs (i.e., 1.25% of the pool) will vest on the first anniversary of the Effective Date, subject to continued employment.

 



 

 

 

·                   Accelerated Vesting:

·                   Notwithstanding the foregoing, if, prior to the vesting dates set forth above, any one of the following shall occur then any Options and/or RSUs (as applicable) granted to an employee as set forth above shall immediately vest in full: (i) with respect to management employees who are party to employment agreements with the Company as of June 1, 2016, upon (a) termination of the employee by the Company without Cause, (b) resignation by the employee for Good Reason, and (c) the death or disability of the employee; and (ii) with respect to all other employees, upon the death or disability of the employee. If, prior to the vesting dates set forth above, an employee is terminated with Cause, or resigns without Good Reason, the employee will forfeit any remaining and unvested Options and/or RSUs.

·                   For purposes hereof, (a) “ Cause ” shall be defined in a manner that is consistent with its definition under existing management employment agreements, and (b) “ Good Reason ” shall be defined in a manner consistent with its definition under existing management employment agreements, excluding any component of such definition relating to reductions in the budget over which the employee has authority.

 

 

 

Board of Directors:

 

The initial Board of Directors of Reorganized Holdings (the “ New Board ”) will be a 9 member board comprised of (i) the Chief Executive Officer, (ii) 3 directors designated by Ares (provided that one such board selection shall be subject to the written consent of Franklin, which consent shall not be unreasonably withheld), (iii) 3 directors designated by Franklin, in the cases of clauses (ii) and (iii) for so long as Ares and Franklin, respectively, is included in the definition of “Requisite Third Lien Noteholders,” and, if Ares or Franklin is not so included, then its three (3) directors shall be designated by Requisite Third Lien Noteholders (and if Franklin is not so included, it shall also lose its consent right to one of Ares’ board selections set forth above), (iv) 1 director designated by the Requisite Unsecured Noteholders (the “ Unsecured Director ”), and (v) 1 existing director designated by the Chief Executive Officer, which shall be reasonably acceptable to the Requisite Unsecured Noteholders and Requisite Third Lien Noteholders. The New Board will have a three-tiered structure classified into staggered 3-year terms, with two directors initially serving a one-year term, four directors (including the Unsecured Director) initially serving a two-year term, and three directors initially serving a three-year term. The members of the New Board will be identified no later than at the Confirmation Hearing or otherwise in accordance with section 1129(a)(5) of the Bankruptcy Code. On the Effective Date, the terms of the current members of the boards of directors of Holdings will expire.

 

 

 

Charter; Bylaws:

 

The charter, bylaws, limited liability company agreements and other organizational documents of each Reorganized Company’s corporate entity will be amended or amended and restated by the Reorganized Company in a manner reasonably satisfactory to the Requisite Third Lien Noteholders, the Requisite Unsecured Noteholders and the Convertible Noteholder and consistent with section 1123(a)(6) of the Bankruptcy Code, if applicable.

 

 

 

Cancellation of Notes, Interests, Instruments, Certificates and other

 

Except as provided herein and in connection with the Amended Revolving Credit Agreement and the Second Lien Notes, on the Effective Date, all notes, instruments, certificates evidencing debt to, or equity interests in, the Company, including, without

 



 

Documents:

 

limitation, the Third Lien Notes, the Unsecured Notes, the Convertible Note, the Preferred Stock, the Existing Equity Interests and the Existing Warrants, will be cancelled and obligations of the Company thereunder will be discharged. In addition, on the Effective Date, any registration rights or similar agreements with respect to Existing Equity Interests will also be cancelled and any obligations of the Company thereunder will be discharged.

 

 

 

Vesting of Assets:

 

On the Effective Date, and if applicable, pursuant to sections 1141(b) and (c) of the Bankruptcy Code, all assets of the Company’s Estates will vest in the Reorganized Company free and clear of all claims, liens, encumbrances, charges and other interests, except as otherwise provided in the Plan.

 

 

 

Compromise and Settlement:

 

The Plan will contain customary provisions for the compromise and settlement of claims stating that, notwithstanding anything in the Plan to the contrary, the allowance, classification and treatment of allowed claims and equity interests and their respective distributions take into account and conform to the relative priority and rights of such claims and interests in connection with any contractual, legal and equitable subordination rights relating thereto, whether arising under general principles of equitable subordination, section 510 of the Bankruptcy Code or otherwise.

 

 

 

Compensation and Benefit Plans:

 

All material employee compensation and benefit plans of the Company in effect as of June 1, 2016, will be deemed to be assumed under the Plan.(4)

 

 

 

Survival of Indemnification Obligations and D&O Insurance:

 

Any obligations of the Company pursuant to its corporate charters, bylaws, limited liability company agreements or other organizational documents to indemnify current and former officers, directors, agents, and/or employees with respect to all present and future actions, suits, and proceedings against the Company or such directors, officers, agents, and/or employees, based upon any act or omission for or on behalf of the Company will not be discharged or impaired by confirmation of the Plan. All such obligations will be deemed and treated as executory contracts to be assumed by the Company under the Plan and will continue as obligations of the Reorganized Company. In addition, after the Effective Date, the Reorganized Company will not terminate or otherwise reduce the coverage under any directors’ and officers’ insurance policies (including any “tail policy”) in effect as of June 1, 2016, and all members, managers, directors and officers of the Company who served in such capacity at any time prior to the Effective Date will be entitled to the full benefits of any such policy for the full term of such policy regardless of whether such members, managers, directors, and/or officers remain in such positions after the Effective Date.

 

 

 

Director and Officer Liability Policy:

 

To the extent the Company plans to extend existing insurance coverage or purchase new insurance coverage covering its current and former officers and directors from claims and causes of action of any third party (including without limitation any holder of a claim) that remain unreleased as of the Effective Date, such extended or newly purchased insurance will be in such amounts, for such terms or periods of time, and placed with such insurers as are determined by the Company with the reasonable consent of the Requisite Creditors.

 


(4)  All senior management employment agreements to be modified, if necessary, to provide for one time waiver to ensure that restructuring transactions under the Plan do not trigger a change of control thereunder. There will be no material changes to the terms of the Company’s benefit plans prior to the Effective Date not otherwise contemplated by this Term Sheet.

 



 

Conditions to Effectiveness:

 

The Plan will be subject to usual and customary conditions to confirmation and effectiveness (as applicable), as well as such other conditions that are reasonably satisfactory to the Company and the Requisite Creditors, including the following:

 

1.               the Definitive Documents (except as provided in number 5 below) will contain terms and conditions consistent in all respects with this Term Sheet and the Restructuring Support Agreement and will otherwise be reasonably satisfactory in form and substance to the Requisite Creditors;

 

2.               the Bankruptcy Court will have entered the Confirmation Order, and such Confirmation Order will not have been reversed, stayed or modified;

 

3.               the Restructuring Support Agreement will not have been terminated, and will be in full force and effect;

 

4.               all Restructuring Expenses will have been paid in full in Cash;

 

5.               the Amended Revolving Credit Agreement, including all documentation related thereto, will each be in form and substance (a) reasonably satisfactory to the Requisite Unsecured Noteholders, and (b) satisfactory to the Company and the Requisite Third Lien Noteholders, and will have been consummated; and

 

6.               all governmental and third party approvals and consents, including Bankruptcy Court approval, necessary in connection with the transactions contemplated by this Term Sheet will have been obtained, not be subject to unfulfilled conditions and be in full force and effect, and all applicable waiting periods will have expired without any action being taken or threatened by any competent authority that would restrain, prevent or otherwise impose materially adverse conditions on such transactions.

 

The conditions to effectiveness may be waived in writing by the Company together with the Requisite Creditors.

 

 

 

Releases:

 

The Plan will provide for standard releases (including from the holders of Claims, Interests and from the Company) with language substantially to the effect of the following:

 

 

 

 

 

Releases by the Company . As of the Effective Date, except for the rights that remain in effect from and after the Effective Date to enforce this Plan and the Definitive Documents, for good and valuable consideration, the adequacy of which is hereby confirmed, including, without limitation, the service of the Released Parties to facilitate the reorganization of the Company and the implementation of the Restructuring, and except as otherwise provided in the Plan or in the Confirmation Order, the Released Parties are deemed forever released and discharged, to the maximum extent permitted by law, by the Company, the Reorganized Company, and the Estates from any and all Claims, obligations, suits, judgments, damages, demands, debts, rights, Causes of Action, remedies, losses, and liabilities whatsoever, including any derivative claims, asserted or assertable on behalf of the Company, the Reorganized Company, or their Estates, whether liquidated or unliquidated, fixed or contingent, matured or unmatured, known or unknown, foreseen or unforeseen, existing or hereinafter arising, in law, equity, or otherwise, that the Company, the Reorganized Company, or their Estates would have been legally entitled to assert in their own right (whether individually or collectively) or on behalf of the holder of any Claim or Interest or other person, based on or relating to, or in any manner arising from, in whole or in part, the Company, the Chapter 11 Cases, the purchase, sale, or rescission of the purchase or sale of any security of the Company or the Reorganized

 



 

 

 

Company, the subject matter of, or the transactions or events giving rise to, any Claim or Interest that is treated in the Plan, the business or contractual arrangements between the Company and any Released Party, the Restructuring, the restructuring of any Claim or Interest before or during the Chapter 11 Cases, the Disclosure Statement, the Restructuring Support Agreement, and the Plan and related agreements, instruments, and other documents (including the Definitive Documents), and the negotiation, formulation, or preparation thereof, the solicitation of votes with respect to the Plan, or any other act or omission, other than Claims or Causes of Action arising out of or related to any act or omission of a Released Party that is a criminal act or constitutes fraud, gross negligence or willful misconduct.

 

 

 

 

 

Releases by Holders of Claims and Interests . As of the Effective Date, except for the rights that remain in effect from and after the Effective Date to enforce this Plan and the Definitive Documents, for good and valuable consideration, the adequacy of which is hereby confirmed, including, without limitation, the service of the Released Parties to facilitate the reorganization of the Company and the implementation of the Restructuring, and except as otherwise provided in this Plan or in the Confirmation Order, the Released Parties are deemed forever released and discharged, to the maximum extent permitted by law, by (i) the holders of all Claims or Interests who vote to accept the Plan, (ii) the holders of Claims or Interests that are unimpaired under the Plan, (iii) the holders of Claims or Interests whose vote to accept or reject the Plan is solicited but who do not vote either to accept or to reject the Plan, and (iv) the holders of Claims or Interests who vote to reject the Plan but do not opt out of granting the releases set forth herein, from any and all Claims, obligations, rights, suits, judgments, damages, demands, debts, rights, Causes of Action, remedies, losses, and liabilities whatsoever, including any derivative claims, asserted or assertable on behalf of the Company, whether liquidated or unliquidated, fixed or contingent, matured or unmatured, known or unknown, foreseen or unforeseen, existing or hereinafter arising, in law, equity, or otherwise, that such holders or their affiliates would have been legally entitled to assert in their own right (whether individually or collectively) or on behalf of the holder of any Claim or Interest or other person, based on or relating to, or in any manner arising from, in whole or in part, the Company, the Chapter 11 Cases, the purchase, sale, or rescission of the purchase or sale of any security of the Company or the Reorganized Company, the subject matter of, or the transactions or events giving rise to, any Claim or Interest that is treated in the Plan, the business or contractual arrangements between the Company and any Released Party, the Restructuring, the restructuring of any Claim or Interest before or during the Chapter 11 Cases, the Disclosure Statement, the Restructuring Support Agreement, and the Plan and related agreements, instruments, and other documents (including the Definitive Documents), and the negotiation, formulation, or preparation thereof, the solicitation of votes with respect to the Plan, or any other act or omission, other than Claims or Causes of Action arising out of or related to any act or omission of a Released Party that constitutes fraud, gross negligence or willful misconduct.

 

 

 

Exculpation:

 

The Plan will contain standard exculpation provisions with language substantially to the effect of the following:

 

Exculpation . To the maximum extent permitted by applicable law, no Exculpated Party shall have or incur, and each Exculpated Party is hereby released and exculpated from, any claim, obligation, suit, judgment, damage, demand, debt, right, Cause of Action, loss, and liability for any claim in connection with or arising out of the administration of the Chapter 11 Cases; the negotiation and pursuit of the Disclosure Statement, the Restructuring Support Agreement, the Restructuring

 



 

 

 

Transactions, this Plan, or the solicitation of votes for, or confirmation of, this Plan; the funding of this Plan; the occurrence of the Effective Date; the administration of this Plan or the property to be distributed under this Plan; the issuance of securities under or in connection with this Plan; or the transactions in furtherance of any of the foregoing; except for fraud, gross negligence or willful misconduct. This exculpation shall be in addition to, and not in limitation of, all other releases, indemnities, exculpations and any other applicable law or rules protecting such Exculpated Parties from liability.

 

 

 

Discharge of the Company:

 

The Plan will contain standard discharge provisions with language substantially to the effect of the following:

 

Effective as of the Effective Date: (a) the rights afforded in the Plan and the treatment of all claims and interests will be in exchange for and in complete satisfaction, discharge, and release of all claims and interests of any nature whatsoever, including any interest accrued on such claims from and after the Commencement Date, against the Company or any of its assets, property, or Estates; (b) the Plan will bind all holders of claims and interests, notwithstanding whether any such holders failed to vote to accept or reject the Plan or voted to reject the Plan; (c) all claims and interests will be satisfied, discharged, and released in full, and the Company’s liability with respect thereto will be extinguished completely, including any liability of the kind specified under section 502(g) of the Bankruptcy Code; and (d) all entities will be precluded from asserting against the Company, the Company’s Estates, the Reorganized Company, its successors and assigns, and its assets and properties any other claims or interests based upon any documents, instruments, or any act or omission, transaction, or other activity of any kind or nature that occurred prior to the Effective Date.

 

 

 

Injunction:

 

The Plan will contain standard injunction provisions with language substantially to the effect of the following:

 

From and after the Effective Date, all entities are permanently enjoined from commencing or continuing in any manner, any suit, action, or other proceeding, on account of or respecting any claim, demand, liability, obligation, debt, right, cause of action, interest, or remedy released or to be released pursuant to the Plan or the Confirmation Order.

 

 

 

Definitive Documents and Due Diligence:

 

This Term Sheet is indicative, and any final agreement will be subject to the Definitive Documents. The Definitive Documents will contain terms, conditions, representations, warranties, and covenants, each customary for the transactions described herein consistent with the terms of this Term Sheet.

 

 

 

Securities Exemptions:

 

Notwithstanding the foregoing, the issuance and distribution under the Plan of (i) the New Common Shares to the Third Lien Noteholders, Unsecured Noteholders, the Convertible Noteholder and holders of Existing Equity Interests, and (ii) the New Warrants to the Unsecured Noteholders and the Convertible Noteholder and the New Common Shares issuable upon exercise thereof will be exempt from registration under the Securities Act or applicable securities laws without further act or action by any Person pursuant to section 1145(a) of the Bankruptcy Code and/or any other applicable exemptions.

 



 

Tax Structure:

 

To the extent possible, the Restructuring contemplated by this Term Sheet will be structured so as to obtain the most beneficial structure for the Company and their equity holders post-transaction as determined by the Company with the written consent of the Requisite Third Lien Noteholders (with such consent not to be unreasonably withheld).

 

 

 

Avoidance Actions:

 

The Reorganized Company will retain all rights to commence and pursue any causes of action that are expressly preserved and not released under the Plan, it being understood that the Reorganized Company will not retain any claims or causes of action against the Released Parties, subject to the carveout for any act or omission of a Released Party that is a criminal act or constitutes fraud, gross negligence or willful misconduct.

 

 

 

Restructuring Expenses:

 

The Company agrees to pay the reasonable out-of-pocket fees, costs and expenses incurred by each of the Revolving Credit Agreement Agent and each of the Consenting Creditors, and expenses of their respective legal and financial advisors (but no more than one legal counsel, one local counsel in each appropriate jurisdiction and one financial advisor for each of the Revolving Credit Agreement Agent and the Consenting Third Lien Noteholders, and the Consenting Unsecured Noteholders, the Convertible Noteholder, and the Consenting Preferred Holders) (collectively, the “ Restructuring Expenses ”). All such Restructuring Expenses incurred and invoiced up to the Commencement Date shall be paid in full in cash prior to the Commencement Date.

 

 

 

Retention of Jurisdiction:

 

The Plan will provide for a broad retention of jurisdiction by the Bankruptcy Court for (a) resolution of claims, (b) allowance of compensation and expenses for pre-Effective Date services, (c) resolution of motions, adversary proceedings or other contested matters, (d) entering such orders as necessary to implement or consummate the Plan and any related documents or agreements and (e) other purposes.

 

 

 

Resolution of Disputed Claims:

 

The Plan will provide customary procedures for the resolution of disputed Claims, including the ability (but not requirement) to establish a claims bar date pursuant to an order of the Bankruptcy Court. Once resolved, the claimants will receive distributions, if any, in accordance with the provisions of the Plan and the classification of their Allowed Claim.

 



 

ANNEX A

 

Certain Defined Terms

 



 

Defined Terms

 

Accredited Investor

 

An Accredited Investor as defined in Rule 501 of Regulation D under the Securities Act.

 

 

 

Administrative Expense Claim

 

A Claim for costs and expenses of administration during the Chapter 11 Cases pursuant to sections 328, 330, 363, 364(c)(1), 365, 503(b) or 507(a)(2) of the Bankruptcy Code, including, (a) the actual and necessary costs and expenses incurred from and after the Commencement Date and through the Effective Date of preserving the Estates and operating the businesses of the Company (such as wages, salaries or commissions for services, and payments for goods and other services and leased premises); (b) Fee Claims; (c) the Restructuring Expenses; and (d) all fees and charges assessed against the Estates pursuant to sections 1911 through 1930 of chapter 123 of the title 28 of the United States Code, 28 U.S.C. §§1-1401.

 

 

 

Allowed

 

With reference to any Claim or Interest, (a) any Claim or Interest arising on or before the Effective Date (i) as to which no objection to allowance has been interposed within the time period set forth in the Plan, or (ii) as to which any objection has been determined by a final order of the Bankruptcy Court to the extent such objection is determined in favor of the respective holder, (b) any Claim or Interest as to which the liability of the Company and the amount thereof are determined by a final order of a court of competent jurisdiction other than the Bankruptcy Court, or (c) any Claim or Interest expressly allowed under the Plan; provided , however , that notwithstanding the foregoing, the Reorganized Company will retain all claims and defenses with respect to Allowed Claims that are reinstated or otherwise unimpaired pursuant to the Plan.

 

 

 

Ares

 

Ares Management LLC together with any funds or managed accounts affiliated with, or managed by, Ares Management LLC or an affiliate.

 

 

 

Cash

 

Legal tender of the United States of America.

 

 

 

Cause of Action

 

Any action, claim, cause of action, controversy, demand, right, lien, indemnity, guaranty, suit, obligation, liability, damage, judgment, account, defense, offset, power, privilege, license and franchise of any kind or character whatsoever, known, unknown, contingent or non-contingent, matured or unmatured, suspected or unsuspected, liquidated or unliquidated, disputed or undisputed, secured or unsecured, assertable directly or derivatively, whether arising before, on, or after the Commencement Date, in contract or in tort, in law or in equity, or pursuant to any other theory of law. Cause of Action also includes: (a) any right of setoff, counterclaim or recoupment and any claim for breach of contract or for breach of duties imposed by law or in equity; (b) the right to object to Claims or Interests; (c) any claim pursuant to sections 362 or chapter 5 of the Bankruptcy Code; (d) any claim or defense including fraud, mistake, duress and usury and any other defenses set forth in section 558 of the Bankruptcy Code; and (e) any state law fraudulent transfer claim.

 

 

 

Claim

 

A “claim,” as defined in section 101(5) of the Bankruptcy Code.

 

 

 

Class

 

Any group of Claims or Interests classified by the Plan pursuant to section 1122(a)(1) 

 



 

Defined Terms

 

 

 

of the Bankruptcy Code.

 

 

 

Confirmation Hearing

 

A hearing at which the Bankruptcy Court will confirm the Plan, as applicable.

 

 

 

Disputed or Disallowed Claim or Interest

 

Any Claim or Interest that is not yet Allowed.

 

 

 

Eligible Third Lien Noteholder

 

A Third Lien Noteholder that, as of a certain date set forth in the Disclosure Statement, is an Accredited Investor and certifies to that effect, or the Company reasonably believes is an Accredited Investor.

 

 

 

Eligible Unsecured Noteholder

 

An Unsecured Noteholder that, as of a certain date set forth in the Disclosure Statement, is an Accredited Investor and certifies to that effect, or the Company reasonably believes is an Accredited Investor.

 

 

 

Estate(s)

 

Individually or collectively, the estate or estates of the Company created under section 541 of the Bankruptcy Code.

 

 

 

Exculpated Parties

 

Collectively: (a) the Company; (b) the Revolving Credit Agreement Agent; (c) the Revolving Credit Agreement Lenders; (d) the other Secured Parties under and as defined in the Revolving Credit Agreement; (e) the Consenting Third Lien Noteholders; (f) the Consenting Unsecured Noteholders; (g) the Convertible Noteholder; (h) the Consenting Preferred Holders; (i) the Third Lien Note Trustee; (j) the Unsecured Note Trustee; and (k) with respect to each of the foregoing entities in clauses (a) through (j), such entities’ predecessors, successors and assigns, subsidiaries, affiliates, managed accounts or funds, current and former officers, directors, principals, shareholders, members, partners, employees, agents, advisory board members, financial advisors, attorneys, accountants, investment bankers, consultants, representatives, management companies, fund advisors and other professionals, and such persons’ respective heirs, executors, estates, servants and nominees .

 

 

 

Existing Warrants

 

Any warrants or other options to purchase common stock or units or any other Interests in any of the Company, including, without limitation, those certain five year warrants to purchase 7.3 million shares of Holdings’ common stock issued pursuant to HALRES LLC pursuant to the Securities Purchase Agreement.

 

 

 

Fee Claim

 

A Claim for professional services rendered or costs incurred on or after the Commencement Date and on or prior to the Effective Date by professional persons retained by the Company or any statutory committee appointed in the Chapter 11 Cases pursuant to sections 327, 328, 329, 330, 331, 503(b), or 1103 of the Bankruptcy Code in the Chapter 11 Cases.

 

 

 

Franklin

 

Franklin Advisers, Inc., as investment manager on behalf of certain funds and accounts.

 

 

 

Holdings Certificate of Incorporation

 

The Amended and Restated Certificate of Incorporation of Holdings dated May 6, 2015, as amended, modified or otherwise supplemented from time to time.

 



 

Defined Terms

 

Interest

 

Any ownership interest in the Company, including all common stock or units, preferred stock or units or other instruments evidencing an ownership interest in the Company, whether or not transferable, and any option, warrant or right, contractual or otherwise, to acquire any such interests in any of the Company’s corporate entities that existed immediately before the Effective Date.

 

 

 

Intercompany Claim

 

Any Claim against any of the Company’s entities held by another of the Company’s entities.

 

 

 

Intercompany Interest

 

An Interest in any of the Company’s entities held by another of the Company’s entities or an Interest in the Company held by an affiliate of the Company (other than any Preferred Stock or Existing Equity Interest in Holdings).

 

 

 

Other Secured Claim

 

A secured Claim, other than an Administrative Expense Claim, a Priority Tax Claim, a Revolving Credit Agreement Claim, a Second Lien Note Claim or a Third Lien Note Claim.

 

 

 

Priority Non-Tax Claim

 

Any Claim other than an Administrative Expense Claim or a Priority Tax Claim that is entitled to priority in payment as specified in section 507(a) of the Bankruptcy Code.

 

 

 

Priority Tax Claim

 

Any secured or unsecured Claim of a governmental unit of the kind entitled to priority in payment as specified in sections 502(i) and 507(a)(8) of the Bankruptcy Code.

 

 

 

Released Parties

 

Collectively: (a) the Company; (b) the Revolving Credit Agreement Agent; (c) the Revolving Credit Agreement Lenders; (d) the other Secured Parties under and as defined in the Revolving Credit Agreement; (e) the Consenting Third Lien Noteholders; (f) the Consenting Unsecured Noteholders; (g) the Convertible Noteholder; (h) the Consenting Preferred Holders; (i) the Third Lien Note Trustee; (j) the Unsecured Note Trustee; and (k) with respect to each of the foregoing entities in clauses (a) through (j), such entities’ predecessors, successors and assigns, subsidiaries, affiliates, managed accounts or funds, current and former officers, directors, principals, shareholders, members, partners, employees, agents, advisory board members, financial advisors, attorneys, accountants, investment bankers, consultants, representatives, management companies, fund advisors and other professionals, and such persons’ respective heirs, executors, estates, servants and nominees .

 

 

 

Reorganized Company

 

The Company as reorganized under the Plan, if applicable.

 

 

 

Revolving Credit Agreement Agent

 

JP Morgan Chase Bank, N.A., in its capacity as administrative agent under the Revolving Credit Agreement.

 

 

 

Revolving Credit Agreement Lenders

 

The lenders from time to time party to the Revolving Credit Agreement as lenders thereunder, including former lenders and any applicable assignees and participants thereof.

 



 

Defined Terms

 

“Third Lien Note Trustee”

 

U.S. Bank National Association in its capacity as trustee under the Third Lien Indenture, and its successors and assigns, and collateral trustee under the Third Lien Security Agreement.

 

 

 

“Third Lien Security Agreement”

 

The Third Lien Security Agreement, dated as of September 10, 2015, between and among Holdings, each of the guarantors named therein, and U.S. Bank, National Association, as collateral trustee.

 

 

 

“Unsecured Note Trustee”

 

U.S. Bank, National Association, as indenture trustee under each of the Unsecured Indentures, and its successors and assigns.

 

 

 

Warrant Record Date

 

The deadline under the Plan for holders of Existing Warrants to exercise their respective rights to purchase common stock in Holdings and receive the treatment afforded to Existing Equity Interests under the Plan, which shall be set by the Company.

 



 

EXHIBIT B

 

FORM OF JOINDER AGREEMENT FOR CONSENTING CREDITORS

 

This Joinder Agreement to the Restructuring Support Agreement, dated as of [ · ], 2016 (as amended, supplemented or otherwise modified from time to time, the “ Agreement ”), by and among Halcón Resources Corporation and its subsidiaries party thereto, and the holders of the principal amounts outstanding under the [Third Lien Notes / Unsecured Notes / Convertible Note / Preferred Stock] (together with their respective successors and permitted assigns, the “ Consenting Creditors ” and each, a “ Consenting Creditor ”) is executed and delivered by                                  (the “ Joining Party ”) as of               , 2016.  Each capitalized term used herein but not otherwise defined shall have the meaning set forth in the Agreement.

 

1.     Agreement to be Bound .  The Joining Party hereby agrees to be bound by all of the terms of the Agreement, a copy of which is attached to this Joinder Agreement as Annex I (as the same has been or may be hereafter amended, restated or otherwise modified from time to time in accordance with the provisions hereof).  The Joining Party shall hereafter be deemed to be a “Consenting Creditor” and a “Party” for all purposes under the Agreement and with respect to any and all Note Claims and/or Preferred Stock held by such Joining Party.

 

2.     Representations and Warranties .  With respect to [the aggregate principal amount of Third Lien Notes / Unsecured Notes / Convertible Note] [the number of shares of Preferred Stock], in each case, set forth below its name on the signature page hereto, the Joining Party hereby makes the representations and warranties of the Consenting Creditors set forth in Section 7 of the Agreement to each other Party to the Agreement.

 

3.     Governing Law .  This Joinder Agreement shall be governed by and construed in accordance with the internal laws of the State of New York, without regard to any conflict of laws provisions which would require the application of the law of any other jurisdiction.

 

[Signature Page Follows]

 



 

IN WITNESS WHEREOF, the Joining Party has caused this Joinder to be executed as of the date first written above.

 

[CONSENTING CREDITOR]

 

By:

 

 

Name:

 

Title:

 

 

Principal Amount of the Third Lien Notes:  $               

 

Principal Amount of the Unsecured Notes:  $              

 

Principal Amount of the Convertible Note: $                

 

Number of Shares of Preferred Stock:                

 

Notice Address:

 

 

 

 

 

 

 

 

 

 

 

Fax:

 

 

Attention:

 

 

Email:

 

 

 

 

Acknowledged:

 

 

 

HALĆON RESOURCES CORPORATION

 

 

 

By:

 

 

Name:

 

Title:

 

SIGNATURE PAGE TO JOINDER

 



 

Exhibit B

 

Schedule of Executory Contracts to be Rejected

 



 

Exhibit B

 

Schedule of Executory Contracts to be Rejected

 

Property

 

Non-Debtor Counterparty

 

Debtor Counterparty

 

Lease or
Sublease

 

Lease
Commencement
Date

 

Description

600 Cranberry Woods Dr., Suite
300, Cranberry, PA

 

McKnight Property Management, LLC
310 Grant Street, Suite 2400
Pittsburgh, PA 15219

 

Halcόn Resources Corp.

 

Lease

 

August 1, 2013

 

Office space

600 Cranberry Woods Dr., Suite
300, Cranberry, PA

 

Prodigo Solutions, Inc.
600 Cranberry Woods Drive, Suite 300
Cranberry Township, PA 16066

 

Halcόn Resources Corp.

 

Sublease

 

August 1, 2015

 

Office space

5100 E Skelly Drive, Suite 600,
Tulsa, OK

 

KBS Meridian Tower, LLC
620 Newport Center Drive, Suite 1300
Newport Beach, CA 92660

 

Halcόn Resources Corp.

 

Lease

 

November 1, 2013

 

Office space

5100 E Skelly Drive, Suite 600,
Tulsa, OK

 

RAM Energy, LLC
5100 E. Skelly Drive, Suite 650
Tulsa, Oklahoma 74135

 

Halcόn Resources Corp.

 

Sublease

 

June 16, 2014

 

Office space

 



 

EXECUTION VERSION

 

CONSENT AND AMENDMENT
TO RESTRUCTURING SUPPORT AGREEMENT

 

THIS CONSENT AND AMENDMENT dated as of July 22, 2016 (this “ Amendment ”) is entered into by and among (i) Halcón Resources Corporation (“ Holdings ” and, together with certain of its subsidiaries that are parties hereto and listed on Schedule 1 hereto, the “ Company ”) and (ii) the undersigned Consenting Creditors comprising the Requisite Creditors. Capitalized terms not otherwise defined herein shall have the meanings ascribed thereto in the RSA (as defined below).

 

WHEREAS, the Parties entered into a certain Restructuring Support Agreement dated as of June 9, 2016 (the “ RSA ”).

 

AND WHEREAS, the Parties wish to amend certain provisions of the RSA and consent to certain matters with respect to the Second Lien Notes.

 

AND WHEREAS, the Parties wish to take such actions necessary to give effect to the foregoing.

 

NOW, THEREFORE, in consideration of the premises and the covenants and agreements contained herein and in the RSA, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and intending to be legally bound hereby, the Parties agree as follows:

 

Section 1.                                            Amendment to Term Sheet .  With respect to the Term Sheet, the first sentence of the last paragraph under the heading “Restructuring Summary” is hereby amended and restated in its entirety as follows:

 

“No later than two (2) business days prior to the Commencement Date, the Company will pay via wire transfer cash interest with respect to the (i) Third Lien Noteholders through the later of May 15, 2016 and the date on which interest and/or dividends are paid on the Unsecured Notes, the Convertible Note or the Preferred Stock and (ii) Unsecured Noteholders through the later of May 15, 2016 and the date on which interest and/or dividends are paid on the Third Lien Notes, the Convertible Note or the Preferred Stock, and on the date of such interest payments, the Company will notify the respective advisors to the Requisite Third Lien Noteholders and the Requisite Unsecured Noteholders of the making of such payments.”

 

Section 2.                                            Amendment to RSA .  Section 4 of the RSA is hereby amended by adding the following paragraph at the end of such section:

 

“(c)  The Plan shall not specify how distributions will be allocated between principal and interest, and the Company shall amend the Plan dated as of June 20, 2016 to remove any references to distributions being allocated to principal or

 



 

interest, including by removing Section 6.11, no later than three (3) business days before the Confirmation Hearing.”

 

Section 3.                                            Consent . The Company and the undersigned Consenting Creditors hereby agree to the treatment of the Second Lien Notes, including without limitation, the related amendment to the Second Lien Notes and Second Lien Indentures, as set forth on the term sheet attached hereto as Exhibit A .

 

Section 4.                                            Miscellaneous .

 

4.1                                This Amendment shall become effective and binding upon each Party upon the execution and delivery by such Party of an executed signature page hereto and shall become effective and binding on all Parties upon receipt by the Company of executed signature pages from each of (i) the Requisite Third Lien Noteholders, (ii) the Requisite Unsecured Noteholders, (iii) the Convertible Noteholder and (iv) the Requisite Preferred Holders.

 

4.2                                Except as specifically set forth herein, the terms of the RSA shall remain in full force and effect and are hereby ratified and confirmed.

 

4.3                                This Amendment may be executed in several counterparts, each of which shall be deemed to be an original, and all of which together shall be deemed to be one and the same agreement.  Execution copies of this Amendment delivered by facsimile or PDF shall be deemed to be an original for the purposes of this paragraph.

 

[Signature Page Follows]

 

2



 

EXECUTION VERSION

 

IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed and delivered by their respective duly authorized officers, solely in their respective capacity as officers of the undersigned and not in any other capacity, as of the date first set forth above.

 

 

HALĆON PARTIES

 

 

 

HALĆON RESOURCES CORPORATION

 

 

 

By:

/s/ Floyd C. Wilson

 

 

Name:

Floyd Wilson

 

 

Title:

Chairman of the Board and Chief Executive Officer

 

SIGNATURE PAGE TO RESTRUCTURING SUPPORT AGREEMENT

 



 

 

HALCÓN HOLDINGS, INC.

 

 

 

 

 

 

 

By:

/s/ Floyd C. Wilson

 

 

Name:

Floyd Wilson

 

 

Title:

Chief Executive Officer

 

SIGNATURE PAGE TO CONSENT AND AMENDMENT TO RESTRUCTURING SUPPORT AGREEMENT

 



 

 

HK RESOURCES, LLC

 

 

 

 

 

 

 

By:

/s/ Floyd C. Wilson

 

 

Name:

Floyd Wilson

 

 

Title:

Chief Executive Officer

 

SIGNATURE PAGE TO CONSENT AND AMENDMENT TO RESTRUCTURING SUPPORT AGREEMENT

 



 

 

THE 7711 CORPORATION

 

 

 

 

 

 

 

By:

/s/ Floyd C. Wilson

 

 

Name:

Floyd Wilson

 

 

Title:

Chief Executive Officer

 

SIGNATURE PAGE TO CONSENT AND AMENDMENT TO RESTRUCTURING SUPPORT AGREEMENT

 



 

 

HALCÓN GULF STATES, LLC

 

 

 

 

 

 

 

By:

/s/ Floyd C. Wilson

 

 

Name:

Floyd Wilson

 

 

Title:

Chief Executive Officer

 

SIGNATURE PAGE TO CONSENT AND AMENDMENT TO RESTRUCTURING SUPPORT AGREEMENT

 



 

 

HALCÓN LOUISIANA OPERATING, L.P.

 

 

 

 

 

 

 

By:

Halcón Gulf States, LLC,

 

 

its general partner

 

 

 

 

 

 

 

By:

/s/ Floyd C. Wilson

 

 

Name:

Floyd Wilson

 

 

Title:

Chief Executive Officer

 

SIGNATURE PAGE TO CONSENT AND AMENDMENT TO RESTRUCTURING SUPPORT AGREEMENT

 



 

 

HALCÓN FIELD SERVICES, LLC

 

 

 

 

 

 

 

By:

/s/ Floyd C. Wilson

 

 

Name:

Floyd Wilson

 

 

Title:

President and Chief Executive Officer

 

SIGNATURE PAGE TO CONSENT AND AMENDMENT TO RESTRUCTURING SUPPORT AGREEMENT

 



 

 

HALCÓN ENERGY PROPERTIES, INC.

 

 

 

 

 

 

 

By:

/s/ Floyd C. Wilson

 

 

Name:

Floyd Wilson

 

 

Title:

Chief Executive Officer

 

SIGNATURE PAGE TO CONSENT AND AMENDMENT TO RESTRUCTURING SUPPORT AGREEMENT

 



 

 

HALCÓN OPERATING CO., INC.

 

 

 

 

 

 

 

By:

/s/ Floyd C. Wilson

 

 

Name:

Floyd Wilson

 

 

Title:

Chief Executive Officer

 

SIGNATURE PAGE TO CONSENT AND AMENDMENT TO RESTRUCTURING SUPPORT AGREEMENT

 



 

 

HALCÓN WILLISTON I, LLC

 

 

 

 

 

 

 

By:

/s/ Floyd C. Wilson

 

 

Name:

Floyd Wilson

 

 

Title:

Chief Executive Officer

 

SIGNATURE PAGE TO CONSENT AND AMENDMENT TO RESTRUCTURING SUPPORT AGREEMENT

 



 

 

HALCÓN WILLISTON II, LLC

 

 

 

 

 

 

 

By:

/s/ Floyd C. Wilson

 

 

Name:

Floyd Wilson

 

 

Title:

Chief Executive Officer

 

SIGNATURE PAGE TO CONSENT AND AMENDMENT TO RESTRUCTURING SUPPORT AGREEMENT

 



 

 

HALCÓN RESOURCES OPERATING, INC.

 

 

 

 

 

 

 

By:

/s/ Floyd C. Wilson

 

 

Name:

Floyd Wilson

 

 

Title:

Chief Executive Officer

 

SIGNATURE PAGE TO CONSENT AND AMENDMENT TO RESTRUCTURING SUPPORT AGREEMENT

 



 

 

HRC ENERGY LOUISIANA, LLC

 

 

 

 

 

 

 

By:

/s/ Floyd C. Wilson

 

 

Name:

Floyd Wilson

 

 

Title:

Chief Executive Officer

 

SIGNATURE PAGE TO CONSENT AND AMENDMENT TO RESTRUCTURING SUPPORT AGREEMENT

 



 

 

HRC ENERGY RESOURCES (WV), INC.

 

 

 

 

 

 

 

By:

/s/ Floyd C. Wilson

 

 

Name:

Floyd Wilson

 

 

Title:

Chief Executive Officer

 

SIGNATURE PAGE TO CONSENT AND AMENDMENT TO RESTRUCTURING SUPPORT AGREEMENT

 



 

 

HRC PRODUCTION COMPANY

 

 

 

 

 

 

 

By:

/s/ Floyd C. Wilson

 

 

Name:

Floyd Wilson

 

 

Title:

Chief Executive Officer

 

SIGNATURE PAGE TO CONSENT AND AMENDMENT TO RESTRUCTURING SUPPORT AGREEMENT

 



 

 

HALCÓN ENERGY HOLDINGS, LLC

 

 

 

 

 

 

 

By:

/s/ Floyd C. Wilson

 

 

Name:

Floyd Wilson

 

 

Title:

Chief Executive Officer

 

SIGNATURE PAGE TO CONSENT AND AMENDMENT TO RESTRUCTURING SUPPORT AGREEMENT

 



 

 

HRC ENERGY, LLC

 

 

 

 

 

 

 

By:

/s/ Floyd C. Wilson

 

 

Name:

Floyd Wilson

 

 

Title:

Chief Executive Officer

 

SIGNATURE PAGE TO CONSENT AND AMENDMENT TO RESTRUCTURING SUPPORT AGREEMENT

 



 

 

HK ENERGY, LLC

 

 

 

 

 

 

 

By:

/s/ Floyd C. Wilson

 

 

Name:

Floyd Wilson

 

 

Title:

Chief Executive Officer

 

SIGNATURE PAGE TO CONSENT AND AMENDMENT TO RESTRUCTURING SUPPORT AGREEMENT

 



 

 

HK LOUISIANA OPERATING, LLC

 

 

 

 

 

 

 

By:

/s/ Floyd C. Wilson

 

 

Name:

Floyd Wilson

 

 

Title:

Chief Executive Officer

 

SIGNATURE PAGE TO CONSENT AND AMENDMENT TO RESTRUCTURING SUPPORT AGREEMENT

 



 

 

HK OIL & GAS, LLC

 

 

 

 

 

 

 

By:

/s/ Floyd C. Wilson

 

 

Name:

Floyd Wilson

 

 

Title:

Chief Executive Officer

 

SIGNATURE PAGE TO CONSENT AND AMENDMENT TO RESTRUCTURING SUPPORT AGREEMENT

 



 

 

HK ENERGY OPERATING, LLC

 

 

 

 

 

 

 

By:

/s/ Floyd C. Wilson

 

 

Name:

Floyd Wilson

 

 

Title:

Chief Executive Officer

 

SIGNATURE PAGE TO CONSENT AND AMENDMENT TO RESTRUCTURING SUPPORT AGREEMENT

 



 

 

HRC OPERATING, LLC

 

 

 

 

 

 

 

By:

/s/ Floyd C. Wilson

 

 

Name:

Floyd Wilson

 

 

Title:

Chief Executive Officer

 

SIGNATURE PAGE TO CONSENT AND AMENDMENT TO RESTRUCTURING SUPPORT AGREEMENT

 



 

CONSENTING CREDITOR

 

 

 

ARES DYNAMIC CREDIT ALLOCATION FUND, INC.

 

 

 

 

By:

Ares Capital Management II LLC, its Adviser

 

 

 

 

 

 

By:

/s/ Darryl Schall

 

 

 

Name: Darryl Schall

 

 

 

Title: Vice President

 

 

 

 

Principal Amount of Third Lien Notes: $

 

 

 

Principal Amount of Unsecured Notes: $

 

 

 

Principal Amount of Convertible Note: $

 

Number of Shares of Preferred Stock:

 

 

Notice Address :

 

ARES MANAGEMENT LLC

2000 Avenue of the Stars

12th Floor

Los Angeles, California, 90067

 

 

 

Phone: (310) 201-4169

 

Attention: Darryl Schall

 

Email: Dschall@aresmgmt.com

 

 

SIGNATURE PAGE TO CONSENT AND AMENDMENT TO RESTRUCTURING SUPPORT AGREEMENT

 



 

CONSENTING CREDITOR

 

 

 

ARES STRATEGIC INVESTMENT PARTNERS LTD.

 

 

 

 

By:

ARES STRATEGIC INVESTMENT MANAGEMENT LLC, AS

 

INVESTMENT MANAGER

 

 

 

 

 

 

By:

/s/ Darryl Schall

 

 

 

Name: Darryl Schall

 

 

 

Title: Vice President

 

 

 

 

Principal Amount of Third Lien Notes: $

 

 

 

Principal Amount of Unsecured Notes: $

 

 

 

Principal Amount of Convertible Note: $

 

 

 

Number of Shares of Preferred Stock:

 

 

 

Notice Address :

 

ARES MANAGEMENT LLC

 

2000 Avenue of the Stars

 

12th Floor

 

Los Angeles, California, 90067

 

 

 

Phone: (310) 201-4169

 

Attention: Darryl Schall

 

Email: Dschall@aresmgmt.com

 

 

SIGNATURE PAGE TO CONSENT AND AMENDMENT TO RESTRUCTURING SUPPORT AGREEMENT

 



 

CONSENTING CREDITOR

 

FUTURE FUND BOARD OF GUARDIANS

 

 

 

By:

ARES ENHANCED LOAN INVESTMENT STRATEGY ADVISOR IV, L.P., ITS

INVESTMENT MANAGER (ON BEHALF OF THE ASIP II SUB-ACCOUNT)

 

 

 

By:

ARES ENHANCED LOAN INVESTMENT STRATEGY ADVISOR IV GP, LLC,

ITS GENERAL PARTNER

 

 

 

By:

/s/ Darryl Schall

 

 

 

Name: Darryl Schall

 

 

 

Title: Vice President

 

 

 

 

 

Principal Amount of Third Lien Notes: $

 

 

 

Principal Amount of Unsecured Notes: $

 

 

 

Principal Amount of Convertible Note: $ 

 

 

 

Number of Shares of Preferred Stock:

 

 

 

Notice Address :

 

ARES MANAGEMENT LLC

2000 Avenue of the Stars

12th Floor

Los Angeles, California, 90067

 

 

 

Phone: (310) 201-4169

 

Attention: Darryl Schall

 

Email: Dschall@aresmgmt.com

 

 

SIGNATURE PAGE TO CONSENT AND AMENDMENT TO RESTRUCTURING SUPPORT AGREEMENT

 



 

CONSENTING CREDITOR

 

 

 

ASIP (HOLDCO) IV S.À.R.L.

 

 

 

By:

ASIP OPERATING MANAGER IV LLC, ITS INVESTMENT MANAGER

 

 

 

By:

/s/ Darryl Schall

 

 

 

Name: Darryl Schall

 

 

 

Title: Vice President

 

 

 

Principal Amount of Third Lien Notes: $

 

 

 

Principal Amount of Unsecured Notes: $

 

 

 

Principal Amount of Convertible Note: $

 

 

 

Number of Shares of Preferred Stock:

 

 

 

Notice Address :

 

ARES MANAGEMENT LLC

 

2000 Avenue of the Stars

 

12th Floor

 

Los Angeles, California, 90067

 

 

 

Phone: (310) 201-4169

 

Attention: Darryl Schall

 

Email: Dschall@aresmgmt.com

 

 

SIGNATURE PAGE TO CONSENT AND AMENDMENT TO RESTRUCTURING SUPPORT AGREEMENT

 



 

CONSENTING CREDITOR

 

 

 

ARES MULTI-STRATEGY CREDIT FUND V (H), L.P.

 

 

 

 

By:

ARES MSCF V (H) MANAGEMENT LLC, ITS MANAGER

 

 

 

 

By:

/s/ Darryl Schall

 

 

 

Name: Darryl Schall

 

 

 

Title: Vice President

 

 

 

Principal Amount of Third Lien Notes: $

 

 

 

Principal Amount of Unsecured Notes: $

 

 

 

Principal Amount of Convertible Note: $

 

 

 

Number of Shares of Preferred Stock:

 

 

 

Notice Address :

 

ARES MANAGEMENT LLC

 

2000 Avenue of the Stars

 

12th Floor

 

Los Angeles, California, 90067

 

 

 

Phone: (310) 201-4169

 

Attention: Darryl Schall

 

Email: Dschall@aresmgmt.com

 

 

SIGNATURE PAGE TO CONSENT AND AMENDMENT TO RESTRUCTURING SUPPORT AGREEMENT

 



 

CONSENTING CREDITOR

 

 

 

TRANSATLANTIC REINSURANCE COMPANY

 

 

 

 

By:

ARES ASIP VII MANAGEMENT, L.P., ITS PORTFOLIO MANAGER

 

 

 

By:

ARES ASIP VII GP, LLC, ITS GENERAL PARTNER

 

 

 

 

 

 

By:

/s/ Darryl Schall

 

 

 

Name: Darryl Schall

 

 

 

Title: Vice President

 

 

 

 

 

Principal Amount of Third Lien Notes: $

 

 

 

Principal Amount of Unsecured Notes: $

 

 

 

Principal Amount of Convertible Note: $

 

 

 

Number of Shares of Preferred Stock:

 

 

 

Notice Address :

 

ARES MANAGEMENT LLC

 

2000 Avenue of the Stars

 

12th Floor

 

Los Angeles, California, 90067

 

 

 

Phone: (310) 201-4169

 

Attention: Darryl Schall

 

Email: Dschall@aresmgmt.com

 

 

SIGNATURE PAGE TO CONSENT AND AMENDMENT TO RESTRUCTURING SUPPORT AGREEMENT

 



 

CONSENTING CREDITOR

 

 

 

RSUI INDEMNITY COMPANY

 

 

 

 

By:

ARES ASIP VII MANAGEMENT, L.P., ITS PORTFOLIO MANAGER

 

 

 

By:

ARES ASIP VII GP, LLC, ITS GENERAL PARTNER

 

 

 

 

 

 

By:

/s/ Darryl Schall

 

 

 

Name: Darryl Schall

 

 

 

Title: Vice President

 

 

 

 

Principal Amount of Third Lien Notes: $

 

 

 

Principal Amount of Unsecured Notes: $

 

 

 

Principal Amount of Convertible Note: $

 

 

 

Number of Shares of Preferred Stock:

 

 

 

Notice Address :

 

ARES MANAGEMENT LLC

 

2000 Avenue of the Stars

 

12th Floor

 

Los Angeles, California, 90067

 

 

 

Phone: (310) 201-4169

 

Attention: Darryl Schall

 

Email: Dschall@aresmgmt.com

 

 

SIGNATURE PAGE TO CONSENT AND AMENDMENT TO RESTRUCTURING SUPPORT AGREEMENT

 



 

CONSENTING CREDITOR

 

 

 

ARES SPECIAL SITUATIONS FUND III, L.P.

 

 

 

 

By:

ASSF OPERATING MANAGER III, LLC, ITS MANAGER

 

 

 

 

 

By:

/s/ Darryl Schall

 

 

 

Name: Darryl Schall

 

 

 

Title: Vice President

 

 

 

 

Principal Amount of Third Lien Notes: $

 

 

 

Principal Amount of Unsecured Notes: $

 

 

 

Principal Amount of Convertible Note: $

 

 

 

Number of Shares of Preferred Stock:

 

 

 

Notice Address :

 

ARES MANAGEMENT LLC

 

2000 Avenue of the Stars

 

12th Floor

 

Los Angeles, California, 90067

 

 

 

Phone: (310) 201-4169

 

Attention: Darryl Schall

 

Email: Dschall@aresmgmt.com

 

 

SIGNATURE PAGE TO CONSENT AND AMENDMENT TO RESTRUCTURING SUPPORT AGREEMENT

 



 

CONSENTING CREDITOR

 

 

 

ARES SPECIAL SITUATIONS FUND IV, L.P.

 

 

 

 

By:

ASSF OPERATING MANAGER IV, L.P., ITS MANAGER

 

 

 

 

 

 

By:

/s/ Darryl Schall

 

 

 

Name: Darryl Schall

 

 

 

Title: Vice President

 

 

 

Principal Amount of Third Lien Notes: $

 

 

 

Principal Amount of Unsecured Notes: $

 

 

 

Principal Amount of Convertible Note: $

 

 

 

Number of Shares of Preferred Stock:

 

 

 

Notice Address :

 

ARES MANAGEMENT LLC

 

2000 Avenue of the Stars

 

12th Floor

 

Los Angeles, California, 90067

 

 

 

Phone: (310) 201-4169

 

Attention: Darryl Schall

 

Email: Dschall@aresmgmt.com

 

 

SIGNATURE PAGE TO CONSENT AND AMENDMENT TO RESTRUCTURING SUPPORT AGREEMENT

 



 

CONSENTING CREDITOR

 

 

 

AF IV US BD Holdings, L.P.

 

 

 

 

By:

/s/ Daniel Nguyen

 

 

 

 

Name:

Daniel Nguyen

 

 

 

 

Title:

Chief Financial Officer

 

 

 

Principal Amount of Third Lien Notes: $

 

 

 

Principal Amount of Unsecured Notes: $

 

 

 

Principal Amount of Convertible Note: $

 

 

 

Number of Shares of Preferred Stock:

 

 

 

Notice Address :

 

ARES MANAGEMENT LLC

 

2000 Avenue of the Stars

 

12th Floor

 

Los Angeles, California, 90067

 

 

 

Phone: 310 201-4204

 

Attention: Daniel Nguyen

 

Email: Nguyen@aresmgmt.com

 

 

SIGNATURE PAGE TO CONSENT AND AMENDMENT TO RESTRUCTURING SUPPORT AGREEMENT

 



 

CONSENTING CREDITOR

 

 

 

FRANKLIN ADVISERS, INC. as investment manager on behalf of certain funds and accounts

 

 

 

By:

/s/ Glenn Voyles

 

 

 

 

Name:

Glenn Voyles

 

 

 

 

Title:

VP

 

 

 

 

Principal Amount of Third Lien Notes: $

 

 

 

Principal Amount of Unsecured Notes: $

 

 

 

Principal Amount of Convertible Note: $

 

 

 

Number of Shares of Preferred Stock:

 

 

 

Notice Address :

 

One Franklin Pkwy

 

San Mateo, CA 94403

 

 

 

Fax: 650-312-2070

 

Attention: Bryant Dieffenbacher; Christopher Chen

 

Email:

bryant.dieffenbacher@franklintempleton.com;
chris.chen@franklintempleton.com

 

 

SIGNATURE PAGE TO CONSENT AND AMENDMENT TO RESTRUCTURING SUPPORT AGREEMENT

 



 

CONSENTING CREDITOR

 

 

 

TYRUS CAPITAL EVENT MASTER FUND LIMITED

 

by its agent, Tyrus Capital S.A.M.

 

 

 

 

By:

/s/ Mark Madden

 

 

 

 

Name:

Mark Madden

 

 

 

 

Title:

Director

 

 

 

Principal Amount of Third Lien Notes: $

 

 

 

Principal Amount of Unsecured Notes: $

 

 

 

Principal Amount of Convertible Note: $

 

 

 

Number of Shares of Preferred Stock:

 

 

 

Notice Address :

 

c/o Tyrus Capital S.A.M.

 

4 Avenue de Roqueville

 

98000 Monaco

 

 

 

Fax: +377 9999 5090

 

Attention: Head of Legal

 

Email: opsteam@tyruscap.mc; legal@tyruscap.mc

 

 

SIGNATURE PAGE TO CONSENT AND AMENDMENT TO RESTRUCTURING SUPPORT AGREEMENT

 



 

CONSENTING CREDITOR

 

 

 

EACH ENTITY LISTED ON EXHIBIT A HERETO

 

 

 

 

By:

Putnam Investment Management, LLC, as investment manager

 

 

 

By:

/s/ Norman P. Boucher

 

 

 

 

Name:

Norman P. Boucher

 

 

 

 

Title:

Portfolio Manager

 

 

 

 

Principal Amount of Third Lien Notes: $

 

 

 

Principal Amount of Unsecured Notes: $

 

 

 

Principal Amount of Convertible Note: $

 

 

 

Number of Shares of Preferred Stock:

 

 

 

Notice Address :

 

c/o Putnam Investments

 

One Post Office Square

 

Boston, MA 02109

 

Attention: Office of the General Counsel

 

 

 

Fax: (617) 760-1625

 

Attention: Stephen M. Gianelli

 

Email: stephen_gianelli@putnam.com

 

 

A copy of the Agreement and Declaration of Trust of each Consenting Creditor listed on Exhibit A hereto is on file with the Secretary of the Commonwealth of Massachusetts and notice is hereby given that this instrument is executed on behalf of the Trustees of each such Consenting Creditor as Trustees and not individually and that the obligations of this instrument are not binding on any of the Trustees or officers or shareholders individually, but are binding only on the assets or property of each such Consenting Creditor with respect to its obligations hereunder. Furthermore, notice is given that the assets and liabilities of each series of each such Consenting Creditor that is a series company are separate and distinct and that the obligations of or arising out of this instrument are several and not joint and are binding only on the assets or property of each series with respect to its obligations hereunder.

 

SIGNATURE PAGE TO CONSENT AND AMENDMENT TO RESTRUCTURING SUPPORT AGREEMENT

 



 

Exhibit A

 

Putnam Investment Management, LLC

 

Consenting Creditor

 

Putnam High Yield Trust

Putnam High Income Securities Fund

Putnam Variable Trust — Putnam VT High Yield Fund

Putnam Variable Trust — Putnam VT Global Asset Allocation Fund

Putnam Premier Income Trust

Putnam Master Intermediate Income Trust

Putnam Asset Allocation Funds — Putnam Dynamic Asset Allocation Growth Fund

Putnam Asset Allocation Funds — Putnam Dynamic Asset Allocation Balanced Fund

Putnam Asset Allocation Funds — Putnam Dynamic Asset Allocation Conservative Fund

Putnam Variable Trust — Putnam VT Diversified Income Fund

Putnam Funds Trust — Putnam Dynamic Risk Allocation Fund

Putnam Funds Trust — Putnam Absolute Return 700 Fund

Great-West Funds, Inc. — Great-West Putnam High Yield Bond Fund

 



 

CONSENTING CREDITOR

 

EACH ENTITY LISTED ON EXHIBIT A HERETO

 

By: The Putnam Advisory Company, LLC, as investment manager

 

 

By:

/s/ Norman P. Boucher

 

 

 

Name: Norman P. Boucher

 

 

 

Title: Portfolio Manager

 

 

Principal Amount of Third Lien Notes:     $                    

 

Principal Amount of Unsecured Notes:  $              

 

Principal Amount of Convertible Note:  $

 

Number of Shares of Preferred Stock:                 

 

Notice Address :

c/o Putnam Investments

One Post Office Square

Boston, MA 02109

Attention: Office of the General Counsel

 

Fax: (617) 760-1625

Attention: Stephen M. Gianelli

Email: stephen_gianelli@putnam.com

 

SIGNATURE PAGE TO CONSENT AND AMENDMENT TO RESTRUCTURING SUPPORT AGREEMENT

 



 

Exhibit A

 

The Putnam Advisory Company, LLC

 

Consenting Creditor

 

Putnam High Yield Fixed Income Fund, LLC

Putnam World Trust — Putnam Global High Yield Bond Fund

LGT Multi Manager Bond High Yield (USD)

Putnam Total Return Fund, LLC

IG Putnam U.S. High Yield Income Fund

Mackenzie Corporate Bond Fund

Mackenzie North American Corporate Bond Fund

Investors Canadian High Yield Income Fund

Counsel Portfolio Services Inc — Counsel Fixed Income

The International Investment Fund — Putnam Global Alpha Fund

Counsel North American High Yield Bond Fund

 



 

CONSENTING CREDITOR

 

EACH ENTITY LISTED ON EXHIBIT A HERETO

 

By: Putnam Fiduciary Trust Company, as investment manager

 

By:

/s/ Norman P. Boucher

 

 

 

Name: Normal P. Boucher

 

 

 

Title: Portfolio Manager

 

 

Principal Amount of Third Lien Notes:     $                    

 

Principal Amount of Unsecured Notes:  $              

 

Principal Amount of Convertible Note:  $

 

Number of Shares of Preferred Stock:                 

 

Notice Address :

c/o Putnam Investments

One Post Office Square

Boston, MA 02109

Attention: Office of the General Counsel

 

Fax: (617) 760-1625

Attention: Stephen M. Gianelli

Email: stephen_gianelli@putnam.com

 

SIGNATURE PAGE TO CONSENT AND AMENDMENT TO RESTRUCTURING SUPPORT AGREEMENT

 



 

Exhibit A

 

Putnam Fiduciary Trust Company

 

Consenting Creditor

 

Putnam Total Return Trust

Putnam Retirement Advantage GAA Balanced Portfolio

Putnam Retirement Advantage GAA Conservative Portfolio

Putnam Retirement Advantage GAA Growth Portfolio

Putnam Retirement Advantage GAA Income Strategies Portfolio

 



 

CONSENTING CREDITOR

 

Loomis, Sayles & Company, L.P., as investment manager,

 

on behalf of one or more discretionary accounts holding the Notes

 

(each such account, separately and not jointly, a “Noteholder”)

 

By: Loomis, Sayles & Company, Incorporated

 

Its General Partner

 

 

 

By:

/s/ Mari Shimokawa

 

 

 

Name: Mari Shimokawa

 

 

 

Title: V.P. & Deputy Chief Compliance Officer

 

 

Principal Amount of Third Lien Notes:     $                    

 

Principal Amount of Unsecured Notes:  $              

 

Principal Amount of Convertible Note:  $

 

Number of Shares of Preferred Stock:                 

 

Notice Address :

One Financial Center

27th Floor

Boston, MA 02111

 

Fax: [ · ]

Attention: Peter S. Sheehan

Email: psheehan@loomissayles.com

 

SIGNATURE PAGE TO CONSENT AND AMENDMENT TO RESTRUCTURING SUPPORT AGREEMENT

 



 

CONSENTING CREDITOR

 

MANULIFE ASSET MANAGEMENT as investment adviser on behalf of:

John Hancock Focused High Yield Fund

John Hancock Funds III - Core High Yield Fund

Manulife High Yield Bond Fund

John Hancock Global Short Duration Credit Fund

Manulife Global Tactical Credit Fund

Manulife US Fixed Income Trust

Manulife US Tactical Credit Fund

Manulife Global - US Special Opportunities Fund

 

By:

/s/ Diane Landers

 

 

 

Name: Diane Landers

 

 

 

Title: Chief Operating Officers

 

 

Principal Amount of Third Lien Notes:     $                    

 

Principal Amount of Unsecured Notes:  $              

 

Principal Amount of Convertible Note:  $

 

Number of Shares of Preferred Stock:                 

 

Notice Address :

Manulife Asset Management (US) LLC

197 Clarendon Street, Boston, MA 02116

 

Fax: 617.375.1666

Attention: Diane Landers

Email: dlanders@manulifeam.com

 

SIGNATURE PAGE TO CONSENT AND AMENDMENT TO RESTRUCTURING SUPPORT AGREEMENT

 



 

CONSENTING CREDITOR

 

HALRES LLC

 

By:

/s/ Floyd C. Wilson

 

Name:

Floyd C. Wilson

 

Title:

President

 

 

Principal Amount of Third Lien Notes:     $                    

 

Principal Amount of Unsecured Notes:  $              

 

Principal Amount of Convertible Note:  $

 

Number of Shares of Preferred Stock:                 

 

Notice Address :

3811 Turtle Creek Blvd., Suite 1000

Dallas, Texas 75219

 

Fax: 214.599.0200

Attention: Mark A. Welsh IV

Email: mwelsh@encapinvestments.com

 

SIGNATURE PAGE TO CONSENT AND AMENDMENT TO RESTRUCTURING SUPPORT AGREEMENT

 



 

 

CONSENTING CREDITOR

 

Pioneer Diversified High Income Trust

By:  Pioneer Investment Management, Inc., its adviser

 

By:

/s/ William Taylor

 

 

 

Name: William Taylor

 

 

 

Title: Vice President

 

 

Principal Amount of Third Lien Notes:     $                    

 

Principal Amount of Unsecured Notes:  $              

 

Principal Amount of Convertible Note:  $

 

Number of Shares of Preferred Stock:                 

 

Notice Address :

Pioneer Investment Management, Inc.

60 State Street

Boston, MA 02109

 

Fax: 617-528-6845

Attention: Will Taylor

Email: William.taylor@pioneerinvestments.com

 

SIGNATURE PAGE TO CONSENT AND AMENDMENT TO RESTRUCTURING SUPPORT AGREEMENT

 



 

CONSENTING CREDITOR

 

Pioneer Funds — U.S. High Yield

By:  Pioneer Investment Management, Inc., its adviser

 

By:

/s/ William Taylor

 

 

 

Name: William Taylor

 

 

 

Title: Vice President

 

 

Principal Amount of Third Lien Notes:     $                    

 

Principal Amount of Unsecured Notes:  $              

 

Principal Amount of Convertible Note:  $

 

Number of Shares of Preferred Stock:                 

 

Notice Address :

Pioneer Investment Management, Inc.

60 State Street

Boston, MA 02109

 

Fax: 617-528-6845

Attention: Will Taylor

Email: William.taylor@pioneerinvestments.com

 

SIGNATURE PAGE TO CONSENT AND AMENDMENT TO RESTRUCTURING SUPPORT AGREEMENT

 



 

CONSENTING CREDITOR

 

Pioneer High Income Trust

By:  Pioneer Investment Management, Inc., its adviser

 

By:

/s/ William Taylor

 

 

 

Name: William Taylor

 

 

 

Title: Vice President

 

 

Principal Amount of Third Lien Notes:     $                    

 

Principal Amount of Unsecured Notes:  $              

 

Principal Amount of Convertible Note:  $

 

Number of Shares of Preferred Stock:                 

 

Notice Address :

Pioneer Investment Management, Inc.

60 State Street

Boston, MA 02109

 

Fax: 617-528-6845

Attention: Will Taylor

Email: William.taylor@pioneerinvestments.com

 

SIGNATURE PAGE TO CONSENT AND AMENDMENT TO RESTRUCTURING SUPPORT AGREEMENT

 



 

CONSENTING CREDITOR

 

Pioneer High Yield Fund

By:  Pioneer Investment Management, Inc., its adviser

 

By:

/s/ William Taylor

 

 

 

Name: William Taylor

 

 

 

Title: Vice President

 

 

Principal Amount of Third Lien Notes:     $                    

 

Principal Amount of Unsecured Notes:  $              

 

Principal Amount of Convertible Note:  $

 

Number of Shares of Preferred Stock:                 

 

Notice Address :

Pioneer Investment Management, Inc.

60 State Street

Boston, MA 02109

 

Fax: 617-528-6845

Attention: Will Taylor

Email: William.taylor@pioneerinvestments.com

 

SIGNATURE PAGE TO CONSENT AND AMENDMENT TO RESTRUCTURING SUPPORT AGREEMENT

 



 

CONSENTING CREDITOR

 

ING Partners, Inc. — VY Pioneer High Yield Portfolio

By:  Pioneer Investment Management, Inc., its adviser

 

By:

/s/ William Taylor

 

 

 

Name: William Taylor

 

 

 

Title: Vice President

 

 

Principal Amount of Third Lien Notes:     $                    

 

Principal Amount of Unsecured Notes:  $              

 

Principal Amount of Convertible Note:  $

 

Number of Shares of Preferred Stock:                 

 

Notice Address :

Pioneer Investment Management, Inc.

60 State Street

Boston, MA 02109

 

Fax: 617-528-6845

Attention: Will Taylor

Email: William.taylor@pioneerinvestments.com

 

SIGNATURE PAGE TO CONSENT AND AMENDMENT TO RESTRUCTURING SUPPORT AGREEMENT

 



 

CONSENTING CREDITOR

 

Pioneer Funds — Global High Yield

By:  Pioneer Investment Management, Inc., its adviser

 

By:

/s/ William Taylor

 

 

 

Name: William Taylor

 

 

 

Title: Vice President

 

 

Principal Amount of Third Lien Notes:     $                    

 

Principal Amount of Unsecured Notes:  $              

 

Principal Amount of Convertible Note:  $

 

Number of Shares of Preferred Stock:                 

 

Notice Address :

Pioneer Investment Management, Inc.

60 State Street

Boston, MA 02109

 

Fax: 617-528-6845

Attention: Will Taylor

Email: William.taylor@pioneerinvestments.com

 

SIGNATURE PAGE TO CONSENT AND AMENDMENT TO RESTRUCTURING SUPPORT AGREEMENT

 



 

CONSENTING CREDITOR

 

Pioneer Multi-Asset Income Fund

By:  Pioneer Investment Management, Inc., its adviser

 

By:

/s/ William Taylor

 

 

 

Name: William Taylor

 

 

 

Title: Vice President

 

 

Principal Amount of Third Lien Notes:     $                    

 

Principal Amount of Unsecured Notes:  $              

 

Principal Amount of Convertible Note:  $

 

Number of Shares of Preferred Stock:                 

 

Notice Address :

Pioneer Investment Management, Inc.

60 State Street

Boston, MA 02109

 

Fax: 617-528-6845

Attention: Will Taylor

Email: William.taylor@pioneerinvestments.com

 

SIGNATURE PAGE TO CONSENT AND AMENDMENT TO RESTRUCTURING SUPPORT AGREEMENT

 



 

CONSENTING CREDITOR

 

Credit Suisse Securities USA, LLC

 

By:

/s/ Kevin Lowe

 

 

 

Name: Kevin Lowe

 

 

 

Title: Managing Director

 

 

Principal Amount of Third Lien Notes:     $                    

 

Principal Amount of Unsecured Notes:  $              

 

Principal Amount of Convertible Note:  $

 

Number of Shares of Preferred Stock:                 

 

Notice Address :

11 Madison Ave

 

New York, NY 10010

 

Fax: (212) 322-9355

Attention: Charles O’Reilly

Email: Charles.O’Reilly@csg.com

 

SIGNATURE PAGE TO CONSENT AND AMENDMENT TO RESTRUCTURING SUPPORT AGREEMENT

 



 

CONSENTING CREDITOR

 

Equitec Specialists, LLC

 

By:

/s/ Christopher Kuehner

 

 

 

Name: Christopher Kuehner

 

 

 

Title: Compliance Officer

 

 

Principal Amount of Third Lien Notes:     $                    

 

Principal Amount of Unsecured Notes:  $              

 

Principal Amount of Convertible Note:  $

 

Number of Shares of Preferred Stock:                 

 

Notice Address :

Equitec Specialist, LLC

8 Spruce Street #50C

New York, NY 10038

 

Fax: 212-747-1114

Attention: Dan Katzner

Email: dkatzner@eqtc.com

 

SIGNATURE PAGE TO CONSENT AND AMENDMENT TO RESTRUCTURING SUPPORT AGREEMENT

 



 

CONSENTING CREDITOR

 

 

 

CANADA PENSION PLAN INVESTMENT BOARD

 

 

 

By:

/s/ Scott Lawrence

 

Name: Scott Lawrence

 

Title:    Managing Director, Head of Relationship Investments

 

 

 

Principal Amount of Third Lien Notes: $

 

 

 

Principal Amount of Unsecured Notes: $

 

 

 

Principal Amount of Convertible Note: $

 

 

 

Number of Shares of Preferred Stock:

 

 

 

Notice Address :

 

One Queen Street East, Suite 2500

 

Toronto, Ontario M5C 2W5

 

 

 

Fax:

 

Attention:

 

Email:

 

 

SIGNATURE PAGE TO CONSENT AND AMENDMENT TO RESTRUCTURING SUPPORT AGREEMENT

 



 

CONSENTING CREDITOR

 

 

 

Thornburg Investment Income Builder Fund

 

 

 

By:

/s/ Jason Brady

 

 

 

Name: Jason Brady

 

 

 

Title: Portfolio Manager, President & CEO

 

 

 

Principal Amount of Third Lien Notes: $                    

 

 

 

Principal Amount of Unsecured Notes: $              

 

 

 

Principal Amount of Convertible Note: $

 

 

 

Number of Shares of Preferred Stock:                 

 

 

 

Notice Address :

 

2300 North Ridgetop RD

 

Santa Fe, NM 87506

 

 

 

Fax: 505.467.7175

 

Attention: Leon Sandersfeld

 

Email: lsandersfeld@thornburg.com

 

 

SIGNATURE PAGE TO CONSENT AND AMENDMENT TO RESTRUCTURING SUPPORT AGREEMENT

 



 

CONSENTING CREDITOR

 

 

 

Thornburg Strategic Income Fund

 

 

 

By:

/s/ Jason Brady

 

 

 

Name: Jason Brady

 

 

 

Title: Portfolio Manager, President & CEO

 

 

 

Principal Amount of Third Lien Notes: $                    

 

 

 

Principal Amount of Unsecured Notes: $              

 

 

 

Principal Amount of Convertible Note: $

 

 

 

Number of Shares of Preferred Stock:                 

 

 

 

Notice Address :

 

2300 North Ridgetop RD

 

Santa Fe, NM 87506

 

 

 

Fax: 505.467.7175

 

Attention: Leon Sandersfeld

 

Email: lsandersfeld@thornburg.com

 

 

SIGNATURE PAGE TO CONSENT AND AMENDMENT TO RESTRUCTURING SUPPORT AGREEMENT

 



 

CONSENTING CREDITOR

 

 

 

Delaware Public Employees’ Retirement System

 

 

 

By:

/s/ Jason Brady

 

 

 

Name: Jason Brady

 

 

 

Title: Portfolio Manager, President & CEO

 

 

 

Principal Amount of Third Lien Notes: $                    

 

 

 

Principal Amount of Unsecured Notes: $              

 

 

 

Principal Amount of Convertible Note: $

 

 

 

Number of Shares of Preferred Stock:                 

 

 

 

Notice Address :

 

2300 North Ridgetop RD

 

Santa Fe, NM 87506

 

 

 

Fax: 505.467.7175

 

Attention: Leon Sandersfeld

 

Email: lsandersfeld@thornburg.com

 

 

SIGNATURE PAGE TO CONSENT AND AMENDMENT TO RESTRUCTURING SUPPORT AGREEMENT

 



 

CONSENTING CREDITOR

 

 

 

Arlington County Employees’ Retirement System

 

 

 

By:

/s/ Jason Brady

 

 

 

Name: Jason Brady

 

 

 

Title: Portfolio Manager, President & CEO

 

 

 

Principal Amount of Third Lien Notes: $                    

 

 

 

Principal Amount of Unsecured Notes: $              

 

 

 

Principal Amount of Convertible Note: $

 

 

 

Number of Shares of Preferred Stock:                 

 

 

 

Notice Address :

 

2300 North Ridgetop RD

 

Santa Fe, NM 87506

 

 

 

Fax: 505.467.7175

 

Attention: Leon Sandersfeld

 

Email: lsandersfeld@thornburg.com

 

 

SIGNATURE PAGE TO CONSENT AND AMENDMENT TO RESTRUCTURING SUPPORT AGREEMENT

 



 

CONSENTING CREDITOR

 

 

 

 

 

/s/ Floyd C. Wilson

 

Floyd C. Wilson

 

 

 

 

 

Principal Amount of Third Lien Notes: $                    

 

 

 

Principal Amount of Unsecured Notes: $              

 

 

 

Principal Amount of Convertible Note: $

 

 

 

Number of Shares of Preferred Stock:                          

 

 

 

Notice Address :

 

 

 

c/o Halcón Resources Corporation

 

1000 Louisiana Street, Suite 6700

 

Houston, Texas 77002

 

Fax: 713.589.8020

 

Attention: Floyd C. Wilson

 

Email: fwilson@halconresources.com

 

 

SIGNATURE PAGE TO CONSENT AND AMENDMENT TO RESTRUCTURING SUPPORT AGREEMENT

 



 

CONSENTING CREDITOR

 

 

 

 

 

/s/ James W. Christmas

 

James W. Christmas

 

 

 

 

 

Principal Amount of Third Lien Notes: $                    

 

 

 

Principal Amount of Unsecured Notes: $              

 

 

 

Principal Amount of Convertible Note: $

 

 

 

Number of Shares of Preferred Stock:

 

 

 

Notice Address :

 

 

 

1089 Oceanfront

 

Long Beach, New York 11561

 

 

 

Fax:

 

Attention:

 

Email: jchristmas@halconresources.com

 

 

SIGNATURE PAGE TO CONSENT AND AMENDMENT TO RESTRUCTURING SUPPORT AGREEMENT

 



 

CONSENTING CREDITOR

 

Delaware Investment Advisers, a series of Delaware Management Business Trust, on behalf of each of the accounts on Appendix A for which it is designated as investment adviser, severally and not jointly

 

By:

/s/ Wayne A. Anglace

 

Name: Wayne A. Anglace

 

Title:    Vice President/Portfolio Manager

 

 

 

 

 

Delaware Investments Fund Advisers, a series of Delaware Management Business Trust, on behalf of each of the accounts on Appendix A for which it is designated as investment adviser, severally and not jointly

 

 

By:

/s/ Wayne A. Anglace

 

Name: Wayne A. Anglace

 

Title:    Vice President/Portfolio Manager

 

 

 

 

 

Delaware Management Company, a series of Delaware Management Business Trust, on behalf of each of the accounts on Appendix A for which it is designated as investment adviser, severally and not jointly

 

 

By:

/s/ Wayne A. Anglace

 

Name: Wayne A. Anglace

 

Title:    Vice President/Portfolio Manager

 

 

 

 

 

Notice Address :

 

c/o Delaware Investments

 

2005 Market Street

 

Philadelphia, PA 19103

 

Attn: Wayne Anglace, with a copy to General Counsel

 

Fax: 215-255-1640

 

Email: wayne.anglace@delinvest.com

 

 

SIGNATURE PAGE TO CONSENT AND AMENDMENT TO RESTRUCTURING SUPPORT AGREEMENT

 



 

Appendix A

 

Account

 

Investment Adviser

Delaware Investments Dividend and Income Fund, Inc.

 

Delaware Management Company, a series of Delaware Management Business Trust (“DMC”)

Delaware VIP Diversified Income Series, a series of Delaware VIP Trust

 

DMC

Delaware Divided Income Fund, a series of Delaware Group Equity Funds V

 

DMC

Delaware Enhanced Global Dividend and Income Fund

 

DMC

Delaware Diversified Income Fund, a series of Delaware Group Adviser Funds

 

DMC

Delaware Foundation Conservative Allocation Fund, a series of Delaware Group Foundation Funds

 

DMC

Delaware Foundation Moderate Allocation Fund, a series of Delaware Group Foundation Funds

 

DMC

Delaware Foundation Growth Allocation Fund, a series of Delaware Group Foundation Funds

 

DMC

Optimum Fixed Income Fund, a series of Optimum Fund Trust

 

DMC

LVIP Delaware Foundation Conservative Allocation Fund, a series of Lincoln Variable Insurance Products Trust

 

Delaware Investments Fund Advisers, a series of Delaware Management Business Trust (“DIFA”)

LVIP Delaware Foundation Moderate Allocation Fund, a series of Lincoln Variable Insurance Products Trust

 

DIFA

LVIP Delaware Foundation Aggressive Allocation Fund, a series of Lincoln Variable Insurance Products Trust

 

DIFA

Munson Healthcare Operating Fund — Convertibles

 

Delaware Investment Advisers, a series of Delaware Management Business Trust (“DIA”)

Munson Healthcare Pension Plan - Convertibles

 

DIA

Munson Healthcare Foundation - Convertibles

 

DIA

Presbyterian Villages of Michigan Foundation

 

DIA

Midland First United Methodist Church Foundation

 

DIA

Hurley Hospital Post Retirement

 

DIA

Bronson Healthcare Group Self Funded Liability Account

 

DIA

Bronson Healthcare Group Post Retirement Medical

 

DIA

Bronson Healthcare Group Long Term Reserve

 

DIA

Bronson Healthcare Group Pension Plan

 

DIA

Delaware Diversified Income Trust, a separate fund established under the Delaware Investments Collective Investment Trust

 

DIA

Bronson Battle Creek Retirement Plan

 

DIA

 

SIGNATURE PAGE TO CONSENT AND AMENDMENT TO RESTRUCTURING SUPPORT AGREEMENT

 



 

SCHEDULE 1

 

Restructuring Subsidiaries

 

Halcón Holdings, Inc.

HK Resources, LLC

The 7711 Corporation

Halcón Gulf States, LLC

Halcón Louisiana Operating, L.P.

Halcón Field Services, LLC

Halcón Energy Properties, Inc.

Halcón Operating Co., Inc.

Halcón Williston I, LLC

Halcón Williston II, LLC

Halcón Operating Inc.

HRC Energy Louisiana, LLC

HRC Energy Resources (WV), Inc.

HRC Production Company

Halcón Energy Holdings, LLC

HRC Energy, LLC

HK Energy, LLC

HK Louisiana Operating, LLC

HK Oil & Gas, LLC

HK Energy Operating, LLC

HRC Operating, LLC

 



 

EXHIBIT A

 

Second Lien Note Amendment Term Sheet

 



 

HALCÓN RESOURCES CORPORATION

TERM SHEET

 

JULY 22, 2016

 

This term sheet sets forth the principal terms of a proposed amendment (“ Amendment ”) to the Second Lien Note Indentures (as defined below) to be implemented pursuant to a consent solicitation, consistent with the terms set forth herein.  Reference is hereby made to that certain restructuring support agreement dated June 9, 2016, by and among the Company and the Consenting Creditors (the “ Restructuring Support Agreement ”). (1)

 

THIS TERM SHEET DOES NOT CONSTITUTE (NOR SHALL IT BE CONSTRUED AS) AN OFFER WITH RESPECT TO ANY SECURITIES OR A SOLICITATION OF ACCEPTANCES OR REJECTIONS AS TO ANY PLAN OF REORGANIZATION, IT BEING UNDERSTOOD THAT SUCH A SOLICITATION, IF ANY, ONLY WILL BE MADE IN COMPLIANCE WITH APPLICABLE PROVISIONS OF SECURITIES, BANKRUPTCY AND/OR OTHER APPLICABLE LAWS.  THIS TERM SHEET HAS BEEN PRODUCED FOR DISCUSSION AND SETTLEMENT PURPOSES ONLY AND IS SUBJECT TO THE PROVISIONS OF RULE 408 OF THE FEDERAL RULES OF EVIDENCE AND OTHER SIMILAR APPLICABLE STATE AND FEDERAL RULES. THIS TERM SHEET AND THE INFORMATION CONTAINED HEREIN IS STRICTLY CONFIDENTIAL AND SHALL NOT BE SHARED WITH ANY OTHER PARTY ABSENT THE PRIOR WRITTEN CONSENT OF THE COMPANY.

 

THE TERMS SET FORTH HEREIN ARE FOR DISCUSSION PURPOSES ONLY AND REMAIN SUBJECT TO APPROVAL BY THE LENDERS UNDER THE REVOLVING CREDIT AGREEMENT, THE REQUISITE CREDITORS UNDER THE RESTRUCTURING SUPPORT AGREEMENT, AND THE BOARD OF DIRECTORS OF THE COMPANY.

 

Transaction Overview

 

Notes and Indentures to be Amended:

 

The Company is prepared to enter into the Amendment, consistent with the terms set forth herein, to: (a) the 8.625% Senior Secured Notes (the “ 8.625% Second Lien Notes ”) issued under that certain indenture, dated as of May 1, 2015, by and among Holdings, as issuer, each of the guarantors named therein, and U.S. Bank National Association, as trustee (as amended, modified, or otherwise supplemented from time to time, the “ 8.625% Second Lien Note Indenture ”) and (b) the 12.0% Senior Secured Notes (the “ 12.0% Second Lien Notes ” and, together with the 8.625% Second Lien Notes, the “ Second Lien Notes ” and the holders of such Second Lien Notes, the “ Second Lien Noteholders ”) issued under that certain indenture, dated as of December 21, 2015, by and among Holdings, as issuer, each of the guarantors named therein, and U.S. Bank National Association, as trustee (as amended, modified or otherwise supplemented from time to time, the “ 12.0% Second Lien Note Indenture ” and, together with the 8.625% Second Lien Note Indenture, the “ Second Lien Note Indentures ”).

 

 

 

Proposed Amendments:

 

On or as soon as reasonably practicable following the Effective Date of the Plan, the Second Lien Note Indentures and any the other applicable Note Documents (as defined in the Second Lien Note Indenture) will be amended as follows:

 

Incurrence of Indebtedness/Lien Covenants

 

·                   Section 4.3(b)(1): Section 4.3(b)(1)(a)(i) to be amended and restated as $900.0 million. The remaining provisions of Section 4.3(b)(1) shall remain unchanged.

 


(1)  Capitalized terms used but not otherwise herein defined have the meanings ascribed to them in the Restructuring Support Agreement or the Second Lien Note Indentures, as applicable.

 



 

 

 

·                   Section 4.3(b)(3): $150 million Parity Lien Debt basket to be deleted.

 

·                   Section 4.5: Subsection (14) of the definition of Permitted Liens to be amended to delete any references to other Parity Lien Debt.

 

Restricted Payments Covenant

 

·                   Section 4.4(b)(3): Amend Section 4.4(b)(3) to adjust the start date for measuring the Consolidated Net Income builder basket period from April 1, 2015, to the beginning of the fiscal quarter after the Effective Date of the Plan.

 

·                   Subsection 4.4: Amend the definition of Restricted Payment to include any prepayments of Junior Lien Debt or unsecured Indebtedness incurred under Credit Facilities.

 

·                   Section 4.4(c)(14): $250 million basket for prepayments of unsecured notes to be deleted.

 

 

 

Noteholder Professionals:

 

Prior to the Petition Date, but subject to the occurrence of the Support Effective Date, the Company agrees to pay the reasonable fees and expenses incurred through and including the Support Effective Date of each of Centerview Partners LLC, as financial advisor to the ad hoc group of Second Lien Noteholders (the “ Ad Hoc Group ”), and O’Melveny & Myers LLP, as counsel to the Ad Hoc Group (collectively, the “ Noteholder Advisors ”); provided , however , that the reasonable fees and expenses of the Noteholder Advisors shall not exceed $500,000.00 in the aggregate.

 

 

 

Consent Fee:

 

In addition to the Amendment, in consideration for the Consenting Noteholder Obligations set forth below, the Company agrees to pay:

 

(a)          to each holder of 8.625% Second Lien Notes that agrees to the Amendment and is either party to the Lock-up Agreement (as defined below) or does not object or take any action in contravention to the Plan, a fee equal to 1.25% of the aggregate principal amount of such holder’s outstanding 8.625% Second Lien Notes, subject to the occurrence of the Effective Date of the Plan and the effectiveness of the Amendment (the “ 8.625% Note Consent Fee ”); and

 

(b)          to each holder of 12.0% Second Lien Notes that agrees to the Amendment and is either party to the Lock-up Agreement or does not object or take any action in contravention to the Plan, a fee equal to 1.25% of the aggregate principal amount of such holder’s outstanding 12.0% Second Lien Notes, subject to the occurrence of the Effective Date of the Plan (the “ 12.0% Note Consent Fee ” and, together with the 8.625% Note Consent Fee, the “ Consent Fees ”);

 

provided , however , that the Consent Fees shall only be paid if the Effective Date occurs within the milestones set forth in the Restructuring Support Agreement as in effect on the date hereof and without regard to any amendments of such milestones although the balance of this Term Sheet shall remain in effect.

 

 

 

Agreements of the Consenting Second Lien Noteholders:

 

Subject to the occurrence of the Support Effective Date (as herein defined), each holder of Second Lien Notes that agrees to the Amendment agrees to:

 

·                   timely submit its consent to the Amendment;

 

·                   support and take such commercially reasonable actions necessary or reasonably requested by the Company to obtain approval of the Disclosure Statement, and confirmation and consummation of the Plan and the Restructuring, including any debtor-in-possession financing for the Company that includes a “roll up” of the Revolving Credit Agreement Claims and any other transactions contemplated by the Plan;

 

·                   not directly or indirectly, seek, solicit, propose, support, assist, engage in negotiations

 



 

 

 

in connection with or participate in the formulation, preparation, filing or prosecution of any Alternative Restructuring or take any other action that is inconsistent with or that would reasonably be expected to prevent, interfere with, delay or impede the Solicitation, approval of the Disclosure Statement, and the confirmation and consummation of the Plan and the Restructuring, including any debtor-in-possession financing that includes a “roll up” of the Revolving Credit Agreement Claims and any other transactions contemplated by the Plan; and

 

·                   not transfer any of its Second Lien Note Claims unless such transferee agrees to be bound by the terms set forth herein and notifies the Company within two (2) business days of such transfer (collectively, the “ Consenting Noteholder Obligations ”).

 

 

 

Support Effective Date:

 

The date by which the Company and holders of not less than 51% of the outstanding principal amount of the Second Lien Notes execute the Lock-up Agreement (the “ Support Effective Date ”). For purposes of this Term Sheet, “Lock-up Agreement” means a lock-up or similar agreement consistent with the terms set forth herein.

 

 

 

Implementation:

 

To be implemented through a consent solicitation to be commenced by the Company on or as soon as reasonably practicable following the Effective Date of the Plan but in no event later than thirty (30) days following the Effective Date.

 

 

 

Disclosure:

 

The terms of the Amendment, including the Company’s obligation to solicit consents for the Amendment from holders of the Second Lien Notes on or as soon as reasonably practicable following the Effective Date, shall be described in the solicitation procedures motion filed in the Chapter 11 Cases.

 



 

Exhibit B

 

Notice of Entry of the Order

 



 

UNITED STATES BANKRUPTCY COURT

DISTRICT OF DELAWARE

 

 

x

 

 

:

 

In re

:

Chapter 11

 

:

 

HALCÓN RESOURCES CORPORATION, et al. ,

:

Case No. 16-11724 (BLS)

 

:

 

 

:

Jointly Administered

Debtors.(1)

:

 

 

x

 

 

NOTICE OF (A) ENTRY OF ORDER (I) APPROVING THE DEBTORS’ (a)
DISCLOSURE STATEMENT PURSUANT TO SECTIONS 1125 AND 1126(b) OF
THE BANKRUPTCY CODE, (b) SOLICITATION OF VOTES AND VOTING
PROCEDURES, AND (c) FORMS OF BALLOTS, AND (II) CONFIRMING
THE AMENDED JOINT PREPACKAGED CHAPTER 11 PLAN OF HALCÓN
RESOURCES CORPORATION, ET AL . UNDER CHAPTER 11 OF THE
BANKRUPTCY CODE, AND (B) OCCURRENCE OF EFFECTIVE DATE

 

TO CREDITORS, INTEREST HOLDERS, AND OTHER PARTIES IN INTEREST:

 

PLEASE TAKE NOTICE that an order (the “ Order ”) approving the disclosure statement, solicitation of votes and voting procedures, and forms of ballots, and confirming the Amended Joint Prepackaged Plan of Halcón Resources Corporation, Et Al. Under Chapter 11 of the Bankruptcy Code , dated as of September 2, 2016 (as amended, modified or supplemented, the “ Plan ”), for the above-captioned debtors, as debtors and debtors in possession (collectively, the “ Debtors ”), was entered by the Honorable Brendan L. Shannon, Chief United States Bankruptcy Judge for the District of Delaware (the “ Bankruptcy Court ”) on September [  ], 2016.  Unless otherwise defined in this notice, capitalized terms used herein shall have the meanings ascribed to them in the Plan and the Order.

 

PLEASE TAKE FURTHER NOTICE that the Order is available for inspection during regular business hours in the office of the Clerk of the Bankruptcy Court, 824 Market S treet, 3rd Floor, Wilmington, Delaware 19801.  The Order is also available on the website maintained by the Debtors’ noticing agent, Epiq Bankruptcy Solutions, LLP at

 


(1)  The Debtors in these chapter 11 cases, along with the last four digits of each Debtor’s federal tax identification number, as applicable, are: Halcón Resources Corporation (0684); Halcón Holdings, Inc. (5102); HK Resources, LLC (9194); The 7711 Corporation (4003); Halcón Gulf States, LLC (2976); Halcón Louisiana Operating, L.P. (9727); Halcón Field Services, LLC (0280); Halcón Energy Properties, Inc. (5292); Halcón Operating Co., Inc. (3588); Halcón Williston I, LLC (9550); Halcón Williston II, LLC (9676); Halcón Resources Operating, Inc. (4856); HRC Energy Louisiana, LLC (1433); HRC Energy Resources (WV), Inc. (2713); HRC Production Company (3501); Halcón Energy Holdings, LLC (0538); HRC Energy, LLC (5010); HK Energy, LLC (8956); HK Louisiana Operating, LLC (4549); HK Oil & Gas, LLC (0502); HK Energy Operating, LLC (8107); HRC Operating, LLC (5129).  The Debtors’ mailing address is 1000 Louisiana Street, Suite 6700, Houston, Texas 77002.

 



 

http://dm.epiq11.com/Halcon or by accessing the Bankruptcy Court’s website www.deb.uscourts.gov.  Please note that a PACER password and login are required to access documents on the Bankruptcy Court’s website.

 

PLEASE TAKE FURTHER NOTICE that the Effective Date of the Plan occurred on September [  ], 2016.

 

PLEASE TAKE FURTHER NOTICE that, in accordance with section 8.3 of the Plan and the Order, any proof of Claim for damages arising out of the rejection of any executory contract or unexpired lease pursuant to Section 8.1 of the Plan must be filed with (a)  if by hand delivery or overnight courier, to Epiq Bankruptcy Solutions, LLC, Attn: Halcón Claims Processing, 10300 SW Allen Blvd., Beaverton, OR 97005, (b) if by first-class mail, to Epiq Bankruptcy Solutions, LLC, Attn: Halcón Claims Processing, P.O. Box 4421, Beaverton, OR 97076-4421, or (c) if by hand delivery, United States Bankruptcy Court, Dist. Del., 824 Market Street, 3rd Floor, Wilmington, Delaware 19801, no later than thirty (30) days after the later of (1) the Confirmation Date or (2) the effective date of rejection of such executory contract or unexpired lease, or shall be forever barred from assertion against the Reorganization Plan Debtors and their Estates .

 

PLEASE TAKE FURTHER NOTICE that, in accordance with Section 2.2 of the Plan, all professional Persons seeking an award by the Bankruptcy Court of compensation for services rendered or reimbursement of expenses incurred through and including the Effective Date under sections 327, 328, 330, 331, 503(b), or 1103 of the Bankruptcy Code shall file first and final applications for allowance of compensation for services provided, and reimbursement of expenses incurred by no later than October [  ], 2016 at 4:00 p.m. (Prevailing Eastern Time) .  The hearing on first and final fee applications shall be held before the Bankruptcy Court on November [  ], 2016 at 10:00 a.m. (Prevailing Eastern Time) or as soon thereafter as counsel may be heard.

 

PLEASE TAKE FURTHER NOTICE t hat, the Debtors are authorized to release any and all funds deposited into any segregated accounts maintained for the benefit of any utility companies pursuant to the Final Order Pursuant to 11 U.S.C. §§ 366 and 105(a) (i) Approving Debtors’ Proposed Form of Adequate Assurance of Payment to Utilities, (ii) Establishing Procedures for Resolving Objections by Utility Companies, and (iii) Prohibiting Utilities from Altering, Refusing, or Discontinuing Service (ECF No. 135).  All utilities, including any Person who received a deposit or other form of adequate assurance of performance pursuant to section 366 of the Bankruptcy Code during the Chapter 11 Cases (collectively, the “ Deposits ”), including, without limitation, gas, electric, telephone, trash and sewer services, shall return such Deposits to the Debtors and/or the Reorganized Debtors, as applicable, either by setoff against postpetition indebtedness or by cash refund, by no later than ten (10) days following the Effective Date, and, as of the Effective Date, such utilities are not entitled to make requests for or receive Deposits.

 

2



 

PLEASE TAKE FURTHER NOTICE that the Plan and the provisions thereof are binding on the Debtors, the Reorganized Debtors, any holder of a Claim against, or Interest in, the Debtors and such holder’s respective successors and assigns, whether or not the Claim or Interest of such holder is impaired under the Plan and whether or not such holder or entity voted to accept the Plan.

 

Dated:            Wilmington, Delaware

September  , 2016

 

 

YOUNG CONAWAY STARGATT & TAYLOR, LLP

 

Robert S. Brady (No. 2847)

 

Michael R. Nestor (No. 3526)

 

Jaime Luton Chapman (No. 4936)

 

Patrick A. Jackson (No. 4976)

 

Rodney Square

 

1000 North King Street

 

Wilmington, Delaware 19801

 

Telephone: (302) 571-6600

 

Facsimile: (302) 571-1253

 

 

 

-and-

 

 

 

WEIL, GOTSHAL & MANGES LLP

 

Gary T. Holtzer

 

Joseph H. Smolinsky

 

767 Fifth Avenue

 

New York, New York 10153

 

Telephone: (212) 310-8000

 

Facsimile: (212) 310-8007

 

 

 

Attorneys for the Debtors

 

and Debtors in Possession

 

3


Exhibit 10.1

 

EXECUTION VERSION

 

 

SENIOR SECURED REVOLVING CREDIT AGREEMENT

 

DATED AS OF
SEPTEMBER 9, 2016

 

AMONG

 

HALCÓN RESOURCES CORPORATION,
AS BORROWER,

 

JPMORGAN CHASE BANK, N.A.,
AS ADMINISTRATIVE AGENT,

 

AND

 

THE LENDERS PARTY HERETO

 


 

JPMORGAN CHASE BANK, N.A., WELLS FARGO SECURITIES, LLC, BARCLAYS BANK PLC AND BMO CAPITAL MARKETS

AS JOINT LEAD ARRANGERS AND JOINT BOOKRUNNERS

 

 



 

ARTICLE I

DEFINITIONS AND ACCOUNTING MATTERS

 

Section 1.01

Terms Defined Above

2

Section 1.02

Certain Defined Terms

2

Section 1.03

Types of Loans and Borrowings

32

Section 1.04

Terms Generally; Rules of Construction

32

Section 1.05

Accounting Terms and Determinations; GAAP

32

 

 

 

ARTICLE II

THE CREDITS

 

Section 2.01

Commitments

33

Section 2.02

Loans and Borrowings

33

Section 2.03

Requests for Borrowings

34

Section 2.04

Interest Elections

35

Section 2.05

Funding of Borrowings

36

Section 2.06

Termination and Reduction of Aggregate Maximum Credit Amounts

37

Section 2.07

Borrowing Base

37

Section 2.08

Borrowing Base Adjustment Provisions

39

Section 2.09

Letters of Credit

40

 

 

 

ARTICLE III

PAYMENTS OF PRINCIPAL AND INTEREST; PREPAYMENTS; FEES

 

Section 3.01

Repayment of Loans

44

Section 3.02

Interest

44

Section 3.03

Alternate Rate of Interest

45

Section 3.04

Prepayments

45

Section 3.05

Fees

47

 

 

 

ARTICLE IV

PAYMENTS; PRO RATA TREATMENT; SHARING OF SET-OFFS

 

Section 4.01

Payments Generally; Pro Rata Treatment; Sharing of Set-offs

48

Section 4.02

Presumption of Payment by the Borrower

49

Section 4.03

Certain Deductions by the Administrative Agent

49

Section 4.04

Disposition of Proceeds

50

Section 4.05

Payments and Deductions to a Defaulting Lender

50

 

 

 

ARTICLE V

INCREASED COSTS; BREAK FUNDING PAYMENTS; TAXES

 

Section 5.01

Increased Costs

52

Section 5.02

Break Funding Payments

53

Section 5.03

Taxes

53

Section 5.04

Mitigation Obligations; Replacement of Lenders

56

 

 

 

ARTICLE VI

CONDITIONS PRECEDENT

 

Section 6.01

Closing Date

57

Section 6.02

Each Credit Event

60

 

 

 

ARTICLE VII

REPRESENTATIONS AND WARRANTIES

 

Section 7.01

Organization; Powers

61

Section 7.02

Authority; Enforceability

61

 

i



 

Section 7.03

Approvals; No Conflicts

62

Section 7.04

Financial Condition; No Material Adverse Effect

62

Section 7.05

Litigation

62

Section 7.06

Environmental Matters

63

Section 7.07

Compliance with the Laws and Agreements; No Defaults

64

Section 7.08

Investment Company Act

64

Section 7.09

Taxes

64

Section 7.10

ERISA

64

Section 7.11

Disclosure; No Material Misstatements

65

Section 7.12

Insurance

65

Section 7.13

Restriction on Liens

65

Section 7.14

Subsidiaries

66

Section 7.15

Location of Business and Offices

66

Section 7.16

Properties; Titles, Etc.

66

Section 7.17

Maintenance of Properties

67

Section 7.18

Gas Imbalances, Prepayments

67

Section 7.19

Marketing of Production

67

Section 7.20

Swap Agreements

68

Section 7.21

Use of Loans and Letters of Credit

68

Section 7.22

Solvency

68

Section 7.23

Money Laundering

68

Section 7.24

Foreign Corrupt Practices

69

Section 7.25

Anti-Corruption Laws; Sanctions; OFAC

69

Section 7.26

EEA Financial Institutions

69

 

 

 

ARTICLE VIII

AFFIRMATIVE COVENANTS

 

 

 

Section 8.01

Financial Statements; Other Information

69

Section 8.02

Notices of Material Events

73

Section 8.03

Existence; Conduct of Business

73

Section 8.04

Payment of Obligations

73

Section 8.05

Performance of Obligations under Loan Documents

74

Section 8.06

Operation and Maintenance of Properties

74

Section 8.07

Insurance

74

Section 8.08

Books and Records; Inspection Rights

75

Section 8.09

Compliance with Laws

75

Section 8.10

Environmental Matters

75

Section 8.11

Further Assurances

76

Section 8.12

Reserve Reports

76

Section 8.13

Title Information

77

Section 8.14

Additional Collateral; Additional Guarantors

78

Section 8.15

ERISA Compliance

79

Section 8.16

Account Control Agreements; Location of Proceeds of Loans

79

Section 8.17

Unrestricted Subsidiaries

80

Section 8.18

Marketing Activities

80

Section 8.19

Keepwell

80

 

 

 

ARTICLE IX

NEGATIVE COVENANTS

 

 

 

Section 9.01

Financial Covenants

81

Section 9.02

Indebtedness

82

 

ii



 

Section 9.03

Liens

83

Section 9.04

Restricted Payments; Repayment of Second Lien Notes; Restrictions on Amendments of Permitted Unsecured Indebtedness and Permitted Junior indebtedness

83

Section 9.05

Investments, Loans and Advances

84

Section 9.06

Designation and Conversion of Restricted and Unrestricted Subsidiaries; Indebtedness of Unrestricted Subsidiaries

86

Section 9.07

Nature of Business; International Operations

86

Section 9.08

Reserved

87

Section 9.09

Proceeds of Loans

87

Section 9.10

ERISA Compliance

87

Section 9.11

Sale or Discount of Receivables

88

Section 9.12

Merger, Etc.

88

Section 9.13

Sale of Properties

88

Section 9.14

Environmental Matters

89

Section 9.15

Transactions with Affiliates

89

Section 9.16

Subsidiaries

89

Section 9.17

Negative Pledge Agreements; Dividend Restrictions

89

Section 9.18

Gas Imbalances, Take-or-Pay or Other Prepayments

90

Section 9.19

Swap Agreements

90

 

 

 

ARTICLE X

EVENTS OF DEFAULT; REMEDIES

 

 

 

Section 10.01

Events of Default

92

Section 10.02

Remedies

94

 

 

 

ARTICLE XI

THE AGENTS

 

 

 

Section 11.01

Appointment; Powers

95

Section 11.02

Duties and Obligations of Administrative Agent

95

Section 11.03

Action by Administrative Agent

96

Section 11.04

Reliance by Administrative Agent

96

Section 11.05

Subagents

97

Section 11.06

Resignation of Agents

97

Section 11.07

Agents as Lenders

97

Section 11.08

No Reliance

97

Section 11.09

Administrative Agent May File Proofs of Claim

98

Section 11.10

Authority of Administrative Agent to Release Collateral and Liens

98

Section 11.11

The Arrangers, the Syndication Agent and the Documentation Agent

99

Section 11.12

Credit Bidding

99

 

 

 

ARTICLE XII

MISCELLANEOUS

 

 

 

Section 12.01

Notices

100

Section 12.02

Waivers; Amendments

100

Section 12.03

Expenses, Indemnity; Damage Waiver

102

Section 12.04

Successors and Assigns

105

Section 12.05

Survival; Revival; Reinstatement

108

Section 12.06

Counterparts; Integration; Effectiveness

108

Section 12.07

Severability

108

Section 12.08

Right of Setoff

108

 

iii



 

Section 12.09

GOVERNING LAW; JURISDICTION; CONSENT TO SERVICE OF PROCESS; WAIVER OF JURY TRIAL

109

Section 12.10

Headings

110

Section 12.11

Confidentiality

110

Section 12.12

Interest Rate Limitation

111

Section 12.13

EXCULPATION PROVISIONS

112

Section 12.14

Collateral Matters; Swap Agreements

112

Section 12.15

No Third Party Beneficiaries

112

Section 12.16

USA Patriot Act Notice

113

Section 12.17

Flood Insurance Provisions

113

Section 12.18

No Fiduciary Duty

113

Section 12.19

Releases

113

Section 12.20

Acknowledgement and Consent to Bail-In of EEA Financial Institutions

114

 

iv



 

ANNEXES, EXHIBITS AND SCHEDULES

 

Annex I

 

List of Maximum Credit Amounts and Closing Date 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

 

Security Instruments

Exhibit F

 

Form of Assignment and Assumption

Exhibit G-1

 

Form of U.S. Tax Compliance Certificate

 

 

(Foreign Lenders; not partnerships)

Exhibit G-2

 

Form of U.S. Tax Compliance Certificate

 

 

(Foreign Participants; not partnerships)

Exhibit G-3

 

Form of U.S. Tax Compliance Certificate

 

 

(Foreign Participants; partnerships)

Exhibit G-4

 

Form of U.S. Tax Compliance Certificate

 

 

(Foreign Lenders; partnerships)

Exhibit H

 

Form of Solvency Certificate

Exhibit I

 

Form of Perfection Certificate

Exhibit J

 

Form of Reserve Report Certificate

Exhibit K

 

Form of Guaranty and Collateral Agreement

 

 

 

Schedule 1.02(a)

 

Existing Letters of Credit

Schedule 1.02(b)

 

Existing Secured Swap Agreements

Schedule 7.05

 

Litigation

Schedule 7.14

 

Subsidiaries and Partnerships; Unrestricted Subsidiaries

Schedule 7.18

 

Gas Imbalances

Schedule 7.19

 

Marketing Contracts

Schedule 7.20

 

Swap Agreements

Schedule 9.02

 

Existing Indebtedness

Schedule 9.03

 

Existing Liens

Schedule 9.05

 

Investments

 

v



 

THIS SENIOR SECURED REVOLVING CREDIT AGREEMENT (this “ Agreement’ ) dated as of September 9, 2016 is among Halcón Resources Corporation, a corporation duly formed and existing under the laws of the State of Delaware and as reorganized pursuant to the Plan of Reorganization referred to below (the “ Borrower ”); each of the Lenders and other parties from time to time party hereto; and JPMorgan Chase Bank, N.A. (in its individual capacity, “ JPMorgan ”), 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.                                     Reference is made to that certain (a) Senior Revolving Credit Agreement, dated as of February 8, 2012 (as amended, supplemented, restated or otherwise modified prior to the date hereof, the “ Pre-Petition Credit Agreement ”), among the Borrower, the lenders and other parties from time to time party thereto and JPMorgan, as administrative agent and (b) Restructuring Support Agreement, dated as of June 9, 2016, among the Borrower, certain subsidiaries of the Borrower and certain of the holders of the Third Lien Notes, the Unsecured Notes, the Convertible Notes and the Preferred Equity (in each case, as defined in the DIP Credit Agreement referenced below) (as amended, supplemented or otherwise modified in a manner satisfactory to the Majority Lenders, the “ Restructuring Support Agreement ”).  Pursuant to the Restructuring Support Agreement, the Borrower and the other parties thereto agreed to a restructuring of the Borrower and its Subsidiaries.

 

B.                                     In furtherance of the Restructuring Support Agreement, (a) on July 27, 2016 (the “ Petition Date ”), the Borrower and certain of its Subsidiaries (collectively, the “ Debtors ”) filed voluntary petitions to commence cases (the “ Chapter 11 Cases ”) under title 11 of the United States Code (the “ Bankruptcy Code ”) in the United States Bankruptcy Court for the District of Delaware (the “ Bankruptcy Court ”) and continued in the possession of their assets and in the management of their businesses pursuant to Sections 1107 and 1108 of the Bankruptcy Code and (b) on August 1, 2016, the Borrower entered into a debtor in possession credit agreement (as amended, supplemented or otherwise modified prior to the date hereof, the “ DIP Credit Agreement ”) with JPMorgan, as administrative agent, and the lenders and other parties party thereto, pursuant to which the lenders party thereto (the “ DIP Lenders ”) agreed to make available a $600.0 million debtor-in-possession revolving credit facility (the “ DIP Facility ”), subject to the terms and conditions therein.

 

C.                                     Pursuant to the orders of the Bankruptcy Court approving the DIP Facility (the “ DIP Orders ”), all of the obligations under the Pre-Petition Credit Agreement, together with certain outstanding swap agreements with lenders thereunder and affiliates thereof were accorded superpriority administrative claim status in the Chapter 11 Cases and were secured by Liens on the DIP Collateral under, and as defined in, the DIP Orders, in each case as more fully set forth in the DIP Orders.

 

D.                                     In furtherance of the Restructuring Support Agreement, the Debtors filed the Approved Plan (as defined in the DIP Credit Agreement and as used herein, the “ Plan of Reorganization ”) with the Bankruptcy Court on July 27, 2016, and the Disclosure Statement (as defined in the DIP Credit Agreement and as used herein, the “ Disclosure Statement ”) with the Bankruptcy Court on July 27, 2016.

 

E.                                      On September 8, 2016, the Bankruptcy Court entered the Confirmation Order (as defined in the DIP Credit Agreement and as used herein, the “ Confirmation Order ”) confirming the Plan of Reorganization, which Confirmation Order inter alia authorized and approved the refinancing, refunding and Debtors’ entry into and performance under this Agreement.

 

F.                                       Pursuant to the DIP Credit Agreement, the DIP Facility and all obligations outstanding thereunder shall be refunded, refinanced and repaid in full by a conversion or roll-over

 

1



 

thereof into the credit facility under this Agreement with the Loans and Letters of Credit deemed made hereunder, subject to satisfaction (or waiver) of the conditions precedent set forth in Section 2.12 of the DIP Credit Agreement and Article VI hereof, including without limitation, the consummation of the Plan of Reorganization.

 

G.                                     In consideration of the foregoing and the mutual covenants and agreements herein contained and of the loans, extensions of credit and commitments hereinafter referred to, the parties hereto 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:

 

2020 Second Lien Notes ” means, the Borrower’s 8.625% Senior Secured Notes due 2020 pursuant to the 2020 Second Lien Notes Indenture.

 

2020 Second Lien Notes Indenture ” means, the Indenture, dated as of May 1, 2015, among the Borrower, the Restricted Subsidiaries party thereto and U.S. Bank National Association, as trustee, as amended, supplemented, restated or otherwise modified as of the Closing Date, and thereafter as may be further amended, supplemented, restated or otherwise modified in accordance with the terms hereof.

 

2022 Second Lien Notes ” means the Borrower’s 12.0% Second Lien Senior Secured Notes due 2022 pursuant to the 2022 Second Lien Notes Indenture.

 

2022 Second Lien Notes Indenture ” means, the Indenture, dated as of December 21, 2015, among the Borrower, the Restricted Subsidiaries party thereto and U.S. Bank National Association, as trustee, as amended, supplemented, restated or otherwise modified as of the Closing Date, and thereafter as may be further amended, supplemented, restated or otherwise modified in accordance with the terms hereof.

 

ABR ” means, when used in reference to any Loan or Borrowing, whether such Loan, or the Loans comprising such Borrowing, are bearing interest at a rate determined by reference to the Alternate Base Rate.

 

Accounting Change ” has the meaning assigned to such term in Section 1.05 .

 

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 hereto.

 

Administrative Questionnaire ” means an Administrative Questionnaire in a form supplied by the Administrative Agent.

 

2



 

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.

 

Agents ” means, collectively, the Administrative Agent, the Syndication Agent and the Documentation Agent; and “Agent” shall mean either the Administrative Agent, the Syndication Agent or any Documentation Agent, as the context requires.

 

Aggregate Maximum Credit Amounts ” at any time shall equal the sum of the Maximum Credit Amounts of all Lenders, as the same may be reduced or terminated pursuant to Section 2.06 . The Aggregate Maximum Credit Amounts on the Closing Date is $1,500,000,000.

 

Agreement ” means this Senior Secured Revolving Credit Agreement, including the Schedules and Exhibits hereto, as the same may be amended, supplemented or modified from time to time.

 

Alternate Base Rate ” means, for any day, a rate per annum (rounded upwards, if necessary, to the next 1/16 of 1%) equal to the greatest of (a) the Prime Rate in effect on such day, (b) the Federal Funds Effective Rate in effect on such day plus ½ of 1.0% and (c) the Adjusted LIBO Rate for an Interest Period of one month on such day (or if such day is not a Business Day, the immediately preceding Business Day) plus 1.0%.  Any change in the Alternate Base Rate due to a change in the Prime Rate, 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, the Federal Funds Effective Rate or the Adjusted LIBO Rate, respectively.  In no event shall the Alternate Base Rate be negative.

 

Anti-Corruption Laws ” means all laws, rules, and regulations of any jurisdiction applicable to the Borrower or any of its Subsidiaries from time to time concerning or relating to bribery or corruption.

 

Applicable Margin ” means, for any day, with respect to any ABR Loan or Eurodollar Loan or the Commitment Fee Rate, as the case may be, the rate per annum set forth in the Borrowing Base Utilization Percentage grid below based upon the Borrowing Base Utilization Percentage then in effect:

 

Level

 

Borrowing Base 
Utilization Percentage

 

Eurodollar Loans

 

ABR Loans

 

Commitment Fee 
Rate

 

1

 

> 90%

 

3.75

%

2.75

%

0.50

%

2

 

> 75% < 90%

 

3.50

%

2.50

%

0.50

%

3

 

> 50% < 75%

 

3.25

%

2.25

%

0.50

%

4

 

> 25% < 50%

 

3.00

%

2.00

%

0.50

%

5

 

< 25%

 

2.75

%

1.75

%

0.50

%

 

Each change in the Applicable Margin or Commitment Fee Rate shall apply during the period commencing on the effective date of such change and ending on the date immediately preceding the effective date of the next such change; provided , however , that if at any time the Borrower fails to

 

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deliver a Reserve Report pursuant to Section 8.12(a) , then the “ Applicable Margin ” and “ Commitment Fee Rate mean the rate per annum set forth on the grid when the Borrowing Base Utilization Percentage is at its highest level.

 

Applicable Percentage ” means, with respect to any Lender, the percentage of the Aggregate Maximum Credit Amounts represented by such Lender’s Maximum Credit Amount as such percentage as of the Closing Date is set forth on Annex I .

 

Approved Counterparty ” means (a) any Lender or any Affiliate of a Lender or (b) any other Person whose long term senior unsecured debt rating is A-/A3 by S&P or Moody’s (or their equivalent) or higher.

 

Approved Fund ” means any Person (other than a natural person) that is engaged in making, purchasing, holding or investing in bank loans and similar extensions of credit in the ordinary course of its business and 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 Netherland, Sewell & Associates, Inc. and any other independent petroleum engineers reasonably acceptable to the Administrative Agent.

 

Arrangers ” means, collectively, JPMorgan, Wells Fargo Securities, LLC, Barclays Bank PLC and BMO Capital Markets, in their capacities as joint lead arrangers and joint bookrunners.

 

Assignment and Assumption ” means an assignment and assumption entered into by a Lender and an assignee (with the consent of any party whose consent is required by Section 12.04(b) ), and accepted by the Administrative Agent, in the form of Exhibit F 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 EEA Resolution Authority in respect of any liability of an EEA Financial Institution.

 

Bail-In Legislation ” means, 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 for such EEA Member Country from time to time which is described in the EU Bail-In Legislation Schedule.

 

Bank Products ” means treasury management services (including, without limitation, controlled disbursement, automated clearinghouse transactions, return items, overdrafts and interstate depository network services).

 

Bank Products Provider ” means any Lender or Affiliate of a Lender that provides Bank Products to the Borrower or any Restricted Subsidiary.

 

Bankruptcy Code ” has the meaning assigned to such term in the recitals hereto.

 

Bankruptcy Court ” has the meaning assigned to such term in the recitals hereto.

 

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Bankruptcy Event ” means, with respect to any Person, such Person becomes the subject of a bankruptcy or insolvency proceeding, or has had a receiver, conservator, trustee, administrator, custodian, assignee for the benefit of creditors or similar Person charged with the reorganization or liquidation of its business appointed for it, or, in the good faith determination of the Administrative Agent, has taken any action in furtherance of, or indicating its consent to, approval of, or acquiescence in, any such proceeding or appointment, provided that a Bankruptcy Event shall not result solely by virtue of any ownership interest, or the acquisition of any ownership interest, in such Person by a Governmental Authority or instrumentality thereof, provided , further , that such ownership interest does not result in or provide such Person 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 Person (or such Governmental Authority or instrumentality) to reject, repudiate, disavow or disaffirm any contracts or agreements made by such Person.

 

Board ” means the Board of Governors of the Federal Reserve System of the United States of America or any successor Governmental Authority.

 

Borrower ” has the meaning assigned to such term in the preamble hereto.

 

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 ” means at any time an amount equal to the amount determined in accordance with Section 2.07 , as the same may be redetermined or adjusted from time to time pursuant to the Borrowing Base Adjustment Provisions.

 

Borrowing Base Adjustment Provisions ” means Section 2.08(a) , Section 2.08(b) , Section 2.08(c)  and any other provision hereunder which adjusts (as opposed to redetermines) the amount of the Borrowing Base.

 

Borrowing Base Cap ” means an amount equal to 65% of the discounted future net revenue before state or federal income taxes from Proved Reserves of the Borrower and its Restricted Subsidiaries calculated using Modified ACNTA Prices (after giving effect to commodity derivatives contracts in effect as of the date of determination) but otherwise calculated in accordance with SEC guidelines, as estimated in the most recent Reserve Report after giving effect to exploration and production activities, acquisitions, dispositions and production since the date of such Reserve Report in the same manner as would be given in calculating Modified ACNTA.

 

Borrowing Base Deficiency ” occurs if, at any time, the total Revolving Credit Exposures exceeds the total Commitments then in effect; provided , that, for purposes of determining the existence and amount of any Borrowing Base Deficiency, obligations under any Letter of Credit will not be deemed to be outstanding to the extent such obligations are cash collateralized in the manner set forth in Section 2.09(j) .

 

Borrowing Base Properties ” means the Oil and Gas Properties that (a) are included in the Initial Reserve Report and thereafter in the most recently delivered Reserve Report delivered pursuant to Section 8.12 and (b) are given Borrowing Base credit.

 

Borrowing Base Utilization Percentage ” means, as of any day, the fraction expressed as a percentage, the numerator of which is the sum of the Revolving Credit Exposures of the Lenders on such day, and the denominator of which is the Borrowing Base in effect on such day.

 

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Borrowing Base Value ” means, with respect to any Oil and Gas Property or any Swap Agreement, the value attributed to such asset in connection with the most recent determination of the Borrowing Base as reasonably determined by the Administrative Agent.

 

Borrowing Request ” means a request by the Borrower, substantially in the form of Exhibit B , for a Borrowing in accordance with Section 2.03 .

 

Building ” has the meaning assigned to such term in Section 12.17 .

 

Business Day ” means any day that is not a Saturday, Sunday or other day on which commercial banks in New York City or Houston, 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 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.

 

Cash Equivalent ” means cash held in US dollars and all Investments of the type identified in Section 9.05(c)  through Section 9.05(f) .

 

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 Restricted Subsidiaries.

 

Change in Control ” means (a) the acquisition of ownership, directly or indirectly, beneficially or of record, by any Person (other than a Permitted Holder) or group (within the meaning of the Securities Exchange Act of 1934 and the rules of the SEC (other than a group of Permitted Holders) thereunder as in effect on the Closing Date) of Equity Interests representing more than 50% of the aggregate ordinary voting power represented by the issued and outstanding Equity Interests of the Borrower, (b) occupation of a majority of the seats (other than vacant seats) on the board of directors of the Borrower by Persons who were not (i) directors of the Borrower on the Closing Date, (ii) nominated or appointed by the board of directors of the Borrower nor (iii) approved by the board of directors of the Borrower as director candidates prior to their election or (c) a Specified Change of Control shall have occurred.

 

Change in Law ” means (a) the adoption of any law, rule or regulation after the date of this Agreement, (b) any change in any law, rule or regulation or in the interpretation or application thereof by any Governmental Authority after the date of this Agreement or (c) compliance by any Lender or the Issuing Bank (or, for purposes of Section 5.01(b) ), by any lending office of such Lender or by such Lender’s or the Issuing Bank’s holding company, if any) with any request, guideline or directive (whether or not having the force of law) of any Governmental Authority made or issued after the date of this Agreement; 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 promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United States of America or foreign regulatory authorities, in each case pursuant

 

6



 

to Basel III (but not Basel II), shall in each case be deemed to be a “Change in Law”, regardless of the date enacted, issued, adopted, promulgated or implemented.

 

Chapter 11 Cases ” has the meaning assigned to such term in the recitals hereto.

 

Closing Date ” means September 9, 2016 which, is the date on which the conditions specified in Section 6.01 are satisfied (or waived in accordance with Section 12.02 ).

 

Code ” means the Internal Revenue Code of 1986, as amended from time to time, and any successor statute.

 

Collateral ” means all Property of the Loan Parties, now owned or hereafter acquired, upon which a Lien is purported to be created by any Security Instrument.

 

Commitment ” means, with respect to each Lender, the commitment of such Lender to make or continue Loans and to acquire participations in Letters of Credit hereunder, expressed as an amount representing the maximum aggregate amount of such Lender’s Revolving Credit Exposure hereunder, as such commitment may be (a) modified from time to time pursuant to Section 2.06 and (b) modified from time to time pursuant to assignments by or to such Lender pursuant to Section 12.04(b) .  The amount representing each Lender’s Commitment shall, at any time, be the lesser of such Lender’s Maximum Credit Amount and such Lender’s Applicable Percentage of the then effective Borrowing Base.

 

Commitment Fee Rate ” has the meaning assigned to such term in the definition of “Applicable Margin”.

 

Commodities Account ” has the meaning assigned to such term in the UCC.

 

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.

 

Compliance Certificate ” means the Compliance Certificate, signed by a Financial Officer, substantially in the form of Exhibit D .

 

Confirmation Order ” has the meaning assigned to such term in the recitals hereto.

 

Consolidated Cash Balance ” means, at any time, (a) the aggregate amount of cash and cash equivalents, marketable securities, treasury bonds and bills, certificates of deposit, investments in money market funds, commercial paper and Cash Equivalents, in each case, held or owned by (either directly or indirectly), credited to the account of or would otherwise be required to be reflected as an asset on the balance sheet of the Borrower and its Restricted Subsidiaries less (b) the sum of (i) any restricted cash or Cash Equivalents to pay royalty obligations, working interest obligations, suspense payments, severance taxes, payroll, payroll taxes, other taxes, employee wage and benefit payments and trust and fiduciary obligations or other obligations of the Borrower or any Restricted Subsidiary to third parties and for which the Borrower or such Restricted Subsidiary has issued checks or has initiated wires or ACH transfers (or will issue checks or initiate wires or ACH transfers within fifteen (15) days in order to make such payments), (ii) other amounts for which the Borrower or such Restricted Subsidiary has issued checks or has initiated wires or ACH transfers but which have not yet been subtracted from the balance in the relevant account of the Borrower or such Restricted Subsidiary and (iii) while and to the extent refundable, any cash or Cash Equivalents of the Borrower or any Restricted Subsidiary constituting

 

7



 

purchase price deposits held in escrow pursuant to a binding and enforceable purchase and sale agreement with a third party containing customary provisions regarding the payment and refunding of such deposits.

 

Consolidated Cash Balance Threshold ” means $100.0 million.

 

Consolidated Net Income ” means, with respect to the Borrower and its Consolidated Restricted Subsidiaries for any period, the aggregate of the net income (or loss) of such Person and its Restricted Subsidiaries for such period, on a consolidated basis, determined in accordance with GAAP; provided that there shall be excluded therefrom:

 

(a)                                  the net income (or loss) of any Person that is not a Restricted Subsidiary or that is accounted for by the equity method of accounting, except to the extent of the amount of dividends or distributions actually paid in cash during such period by such other Person to the Borrower or to a Consolidated Restricted Subsidiary;

 

(b)                                  the net income of any Restricted Subsidiary to the extent that the declaration or payment of dividends or similar distributions by that Restricted Subsidiary of that net income is not at the date of determination permitted without any prior governmental approval (that has not been obtained) or, directly or indirectly, by operation of the terms of its charter or any agreement, instrument or Governmental Requirement applicable to that Restricted Subsidiary or its stockholders;

 

(c)                                   any gains or losses attributable to any write-ups or write-downs of assets, including ceiling test write-downs;

 

(d)                                  any unrealized non-cash gains or losses or charges in respect of hedge or non-hedge derivatives resulting from the application of ASC 815;

 

(e)                                   any gain (or loss), together with any related provision for Taxes on such gain (or loss), realized in connection with: (a) any Disposition which is not made in the ordinary course of business or (b) the disposition of any securities by such Person or any of its Restricted Subsidiaries or the extinguishment of any Indebtedness of such Person or any of its Restricted Subsidiaries;

 

(f)                                    any extraordinary or non-recurring gain (or loss), together with any related provision for Taxes on such extraordinary or non-recurring gain (or loss);

 

(g)                                   any income attributable to cancellation or early extinguishment of any Indebtedness of the Borrower or any Consolidated Restricted Subsidiaries; and

 

(h)                                  any non-cash compensation charge arising from any grant of stock, stock options or other equity-based awards.

 

Consolidated Restricted Subsidiaries ” means any Restricted Subsidiaries that are Consolidated Subsidiaries.

 

Consolidated Subsidiaries ” means, as to any Person, each Subsidiary of such Person (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 such Person in accordance with GAAP.

 

8



 

Consolidated Total Net Debt ” means as of any date of determination, the aggregate principal amount of all Indebtedness of the Borrower and its Restricted Subsidiaries, without duplication, outstanding on such date, in an amount that would be reflected on a consolidated balance sheet (excluding the notes thereto) prepared as of such date on a consolidated basis in accordance with GAAP but only to the extent such Indebtedness comprises Indebtedness for borrowed money, obligations in respect of Capital Leases and debt obligations evidenced by bonds, notes, debentures, promissory notes or similar instruments (including, for the avoidance of doubt, deferred purchase price obligations that would be reflected as debt on a consolidated balance sheet (excluding the notes thereto) prepared as of such date on a consolidated basis in accordance with GAAP, to the extent such deferred purchase price obligations are then due and payable), and any obligations in respect of drawn letters of credit minus the aggregate amount of all Unrestricted Cash that would be listed on the consolidated balance sheet of the Borrower and its Restricted Subsidiaries at such date; provided that Consolidated Total Net Debt shall not include Indebtedness in respect of obligations under Swap Agreements, other than to the extent such obligations are due and payable and not paid on such date, or, undrawn (or if drawn, to the extent cash collateralized in the manner set forth in Section 2.09(j) ) letters of credit, bank guarantees and performance or similar bonds.

 

Consolidated Unrestricted Subsidiaries ” means any Unrestricted Subsidiaries that are Consolidated Subsidiaries.

 

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 other governing body of a Person (other than as a limited partner of such other Person) will be deemed to “control” such other Person.  “ Controlling ” and “ Controlled ” have meanings correlative thereto.

 

Control Agreement ” means a deposit account control agreement or securities account control agreement (or similar agreement), as applicable, in form and substance reasonably satisfactory to the Administrative Agent, executed by the applicable Loan Party, the Administrative Agent and the relevant financial institution party thereto. Such agreement shall provide a first priority perfected Lien (subject to Excepted Liens set forth in clause (e) of the definition thereof) in favor of the Administrative Agent, for the benefit of the Secured Parties, in the applicable Loan Party’s Deposit Account and/or Securities Account.

 

Controlled Account ” means (a) a Deposit Account, Securities Account or Commodities Account that is subject to a Control Agreement or (b) in the sole discretion of the Administrative Agent, a Deposit Account, Securities Account or Commodities Account maintained with the Administrative Agent or on which the Administrative Agent has a perfected first priority Lien (subject to Excepted Liens set forth in clause (e) of the definition thereof).

 

Current Assets ” means, as of any date of determination, without duplication, the sum of all amounts that would, in accordance with GAAP, be set forth opposite the caption “total current assets” (or any like caption) on a consolidated balance sheet of the Borrower and its Subsidiaries at such date, plus the unused Commitments, but excluding all non-cash assets under FASB ASC Topic 815 and any deferred income tax.

 

Current Liabilities ” means, as of any date of determination, without duplication, the sum of all amounts that would, in accordance with GAAP, be set forth opposite the caption “total current liabilities” (or any like caption) on a consolidated balance sheet of the Borrower and its Subsidiaries on

 

9



 

such date, but excluding (a) all non-cash obligations under FASB ASC Topic 815, (b) the current portion of the then outstanding aggregate principal amount of the Loans under this Agreement, (c) any deferred tax liabilities and (d) any current maturities of long-term Indebtedness.

 

Current Ratio ” means, for any date of determination, the ratio of (a) Current Assets as of the last day of the most recently ended fiscal quarter (which may be such date of determination) to (b) Current Liabilities on such day.

 

Debtors ” has the meaning assigned to such term in the recitals hereto.

 

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 any Lender, as reasonably determined by the Administrative Agent, that has (a) failed to fund any portion of its Loans or participations in Letters of Credit within three (3) Business Days of the date required to be funded by it hereunder, unless with respect to the Loans, the subject of a good faith dispute, (b) notified the Borrower, the Administrative Agent, the Issuing Bank or any Lender in writing that it does not intend to comply with any of its funding obligations under this Agreement or has made a public statement to the effect that it does not intend to comply with its funding obligations under this Agreement, unless the reason such Lender is not complying with such obligations is due to a good faith dispute with regard to such obligations, (c) otherwise failed to pay over to the Administrative Agent or any other Lender any other amount required to be paid by it hereunder within three (3) Business Days of the date when due, unless the subject of a good faith dispute, (d) become the subject of a bankruptcy or insolvency proceeding, or has had a receiver, conservator, trustee or custodian appointed for it, or has taken any action in furtherance of, or indicating its consent to, approval of or acquiescence in any such proceeding or appointment or has a parent company that has become the subject of a bankruptcy or insolvency proceeding, or has had a receiver, conservator, trustee or custodian appointed for it, or has taken any action in furtherance of, or indicating its consent to, approval of or acquiescence in any such proceeding or appointment, provided that a Lender shall not be a Defaulting Lender solely by virtue of (i) the ownership or acquisition of any Equity Interest in such Lender or parent company thereof by a Governmental Authority or agency thereof or (ii) due to the appointment of an administrator, provisional liquidator, conservator, receiver, trustee, custodian or other similar official by a supervisory authority or regulator with respect to a Lender or its parent company under the Dutch Financial Supervision Act 2007 (as amended from time to time and including any successor legislation), or (e) has, or has a direct or indirect parent company that has, become the subject of a Bankruptcy Event or Bail-In Action.

 

Deficiency Date ” has the meaning assigned to such term in Section 3.04(c)(ii) .

 

Deposit Account ” has the meaning assigned to such term in the UCC.

 

DIP Credit Agreement ” has the meaning assigned to such term in the recitals hereto.

 

DIP Facility ” has the meaning assigned to such term in the recitals hereto.

 

DIP Lenders ” has the meaning assigned to such term in the recitals hereto.

 

Disclosure Statement ” has the meaning assigned to such term in the recitals hereto.

 

10



 

Disposition ” means, with respect to any property, any sale, lease, sale and leaseback, assignment, conveyance, transfer, condemnation or other disposition thereof.  The terms “ Dispose ” and “ Disposed of ” shall have correlative meanings.

 

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 Indebtedness 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, on or prior to the date that is one year after the Maturity Date.

 

dollars ” or “ $ ” refers to lawful money of the United States of America.

 

Domestic Subsidiary ” means any Restricted Subsidiary that is organized under the laws of the United States of America or any state thereof or the District of Columbia.

 

EBITDA ” means, for any period, an amount determined for the Borrower and its Consolidated Restricted Subsidiaries equal to the sum of Consolidated Net Income for such period plus the following expenses or charges to the extent deducted from Consolidated Net Income in such period: (a) interest, (b) income taxes, (c) depreciation, (d) depletion, (e) amortization, (f) all other non-cash charges, (g) the amount of non-recurring expenses and charges in an amount not to exceed 10% of EBITDA (prior to giving effect to such addbacks) for such period in the aggregate during such time and (h) any fees, expenses and other transaction costs which are incurred through June 30, 2017, in connection with the Transactions, the “Transactions” (as defined in the DIP Credit Agreement), the Chapter 11 Cases and the other transactions contemplated hereby or thereby, minus all non-cash income (including cancellation of indebtedness income) to the extent included in Consolidated Net Income.

 

ECP ” means any Person who qualifies as an “eligible contract participant” under Section 2(e) of the Commodity Exchange Act.

 

EEA Financial Institution ” means (a) any institution 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 institution established in an EEA Member Country which is a subsidiary of an institution described in clauses (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.

 

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, in effect in any and all jurisdictions in which the Borrower or any Restricted Subsidiary is conducting or at any time has conducted business, or where any Property of the Borrower or any Restricted Subsidiary is located, including without limitation, the Oil Pollution Act of 1990 (“ OPA ”), as amended, the Clean Air Act, as

 

11



 

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.  For the purpose of this definition, (i) the term “oil” shall have the meaning specified in OPA, (ii) the terms “hazardous substance” and “release” (or “threatened release”) have the meanings specified in CERCLA, (iii) the terms “solid waste” and “disposal” (or “disposed”) have the meanings specified in RCRA and (iv) 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, 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 Restricted 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 subsections (b), (c), (m) or (o) of section 414 of the Code.

 

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 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 maintained in accordance with GAAP; (c) 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 incident to the exploration, development, operation and maintenance of Oil and Gas Properties each of which is in respect of obligations that are not more than sixty (60) days delinquent or which are being contested in good faith by appropriate action and for which adequate reserves have been maintained in accordance with GAAP; (d) contractual Liens which arise in the ordinary course of

 

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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 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 more than sixty (60) days delinquent or which are being contested in good faith by appropriate action and for which adequate reserves have been 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 Restricted 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 Borrower or any of its Restricted 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 Restricted 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 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 Restricted Subsidiary or materially impair the value of such Property subject thereto; (g) 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; (h) 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; (i) Liens arising from UCC financing statement filings regarding operating leases entered into in the ordinary course of business covering only the Property under any such operating lease; (j) Liens listed on the exhibits to the Security Instruments with respect to the Oil and Gas Properties of Borrower and each of its Restricted Subsidiaries, so long as such Liens (1) do not reduce the Net Revenues Interest (or “ NRI ” or terms of similar effect) attributable to any well, unit or lease included in the Oil and Gas Properties of Borrower and its Restricted Subsidiaries, materially below that shown on such exhibits to the Security Instruments or (2) increase the Working Interest (or “ WI ” or terms of similar effect) attributable to any well, unit or lease included in the Oil and Gas Properties of Borrower and its Restricted Subsidiaries, materially above that shown on such exhibits to the Security Instruments; and (k) Liens pursuant to merger agreements, stock purchase agreements, asset sale agreements and similar agreements (1) limiting the transfer of properties and assets pending the consummation of the subject transaction, or (2) in respect of earnest money deposits, good faith deposits, purchase price adjustment and indemnity escrows and similar deposit or escrow arrangements made or established thereunder; 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 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.

 

Excluded Accounts means (a) Deposit Accounts the balance of which consists exclusively of (i) withheld income Taxes and federal, state or local employment Taxes required to be paid

 

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to the Internal Revenue Service or state or local Governmental Authorities with respect to employees of the Borrower or any Restricted Subsidiary, (ii) amounts required to be paid over to an employee benefit plan on behalf of or for the benefit of employees of the Borrower or any Restricted Subsidiary, (iii) amounts set aside for payroll and the payment of accrued employee benefits, medical, dental and employee benefits claims to employees of the Borrower or any Restricted Subsidiary, (iv) amounts constituting purchase price deposits held in escrow pursuant to a purchase and sale agreement with a third party containing customary provisions regarding the payment and refunding of such deposits, (v) amounts held in escrow or in trust pending litigation or other settlement claims, and (vi) amounts held in trust or as fiduciaries for third parties in respect of such third party’s ratable share of the revenues of Oil and Gas Properties and (b) other accounts so long as the aggregate balance for all such bank accounts excluded pursuant to this clause (b)  on any day shall not exceed $7.5 million.

 

Excluded Swap Obligation ” means (as such definition may be modified from time to time as agreed by the Borrower and the Administrative Agent), with respect to any Guarantor, any Swap Obligation, if, and to the extent that, all or a portion of the guarantee of such Guarantor of, or the grant by such Guarantor of a security interest to secure, as applicable, such Swap Obligation (or any Guarantee thereof) is or becomes illegal under the Commodity Exchange Act or any rule, regulation or order thereunder (or the application or official interpretation of any thereof) by virtue of such Guarantor’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 (or grant of such security interest by, as applicable) such Guarantor becomes or would become effective with respect to such Swap Obligation. If a Swap Obligation arises under a master agreement governing more than one Swap Agreement, such exclusion shall apply only to the portion of such Swap Obligation that is attributable to Swap Agreements for which such guarantee or security interest is or becomes illegal.

 

Excluded Taxes ” means, with respect to the Administrative Agent, any Lender, the Issuing Bank or any other recipient of any payment to be made by or on account of any obligation of the Borrower or any Guarantor hereunder or under any other Loan Document, (a) income, branch profits or franchise taxes imposed on (or measured by) its net income by any jurisdiction under the laws of which such recipient is organized or in which its principal office is located or, in the case of any Lender, in which its applicable lending office is located, (b) in the case of a Lender (other than an assignee pursuant to a request by the Borrower under Section 5.04(b) ), any United States federal withholding Tax that is imposed on amounts payable to such Lender at the time such Lender becomes a party to this Agreement (or designates a new lending office), except to the extent that such Lender (or its assignor, if any) was entitled, at the time of designation of a new lending office (or assignment), to receive additional amounts with respect to such federal withholding Tax pursuant to Section 5.03 , (c) Taxes attributable to such Lender’s failure to comply with Section 5.03(e) and (d) any United States federal withholding Tax that is imposed under FATCA.

 

Existing Intercreditor Agreement ” means that certain Intercreditor Agreement, dated as of May 1, 2015, among the Administrative Agent, U.S. Bank National Association, as trustee, and the Borrower, as amended, supplemented or otherwise modified as of the date hereof and reinstated pursuant to the Plan of Reorganization and the Confirmation Order, and as hereafter amended, supplemented or otherwise modified from time to time.

 

Existing Letters of Credit ” means the letters of credit described on Schedule 1.02(a)  that are outstanding under the DIP Credit Agreement immediately prior to giving effect to the Closing Date and which, on the Closing Date, shall be refunded, refinanced or replaced and deemed issued under this Agreement.

 

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Existing Loans ” means the Loans under, and as defined in, the DIP Credit Agreement that are outstanding immediately prior to giving effect to the Closing Date and, which, on the Closing Date, shall be deemed made under this Agreement.

 

Existing Secured Swap Agreements ” means the Swap Agreements described on Schedule 1.02(b), which shall be secured with the Secured Obligations pursuant to this Agreement and the other Loan Documents.

 

Exit Facility ” means the revolving credit facility provided under 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), any current or future regulations or official interpretations thereof, any agreements entered into pursuant to Section 1471(b)(1) of the Code, and any intergovernmental agreement between the United States and any other such jurisdiction that facilitates the implementation of the foregoing.

 

Federal Funds Effective Rate ” means, for any day, the weighted average 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 of the quotations for the day of 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.

 

Financial Officer ” means, for any Person, 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) .

 

Foreign Lender ” means any Lender that is not a U.S. Person.

 

Foreign Subsidiary ” means any Restricted Subsidiary that is not a Domestic Subsidiary.

 

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 .

 

Gas Balancing Obligations ” means those obligations set forth on Schedule 7.18 .

 

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 over the Borrower, any Restricted Subsidiary, any of their Properties, any Agent, the Issuing Bank or any Lender.

 

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

 

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limitation, Environmental Laws, energy regulations and occupational, safety and health standards or controls, of any Governmental Authority.

 

Guarantors ” means, collectively:

 

(a)                                  as of the Closing Date, each of the Restricted Subsidiaries set forth on Schedule 7.14 hereto; and

 

(b)                                  following the Closing Date, each other Material Domestic Subsidiary or other Domestic Subsidiary that guarantees the Secured Obligations pursuant to Section 8.14(b) .

 

Guaranty Agreement ” means a Guaranty and Collateral Agreement substantially in the form of Exhibit K and executed by the Guarantors.

 

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 Loans or on other Secured 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, 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.

 

Hydrocarbons ” means oil, gas, casinghead gas, drip gasoline, natural gasoline, condensate, distillate, liquid hydrocarbons, gaseous hydrocarbons and all products refined or separated therefrom.

 

Impacted Interest Period ” has the meaning assigned to such term in the definition of “LIBO Rate”.

 

Indebtedness ” 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 Indebtedness (as defined in the other clauses of this definition) of others secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) a Lien on any Property of such Person, whether or not such Indebtedness is assumed by such Person; (g) all Indebtedness (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 Indebtedness (howsoever such assurance shall be made) to the extent of the lesser of the amount of such Indebtedness 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 Indebtedness or Property of others; (i) obligations to deliver commodities, goods or services, including, without limitation, Hydrocarbons, in consideration of one or more advance payments for periods in excess of 120 days prior to the day of delivery, other than gas balancing arrangements in the ordinary course of business; (j) obligations to pay for goods or services whether or

 

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not such goods or services are actually received or utilized by such Person; (k) any Indebtedness 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 Indebtedness 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; provided , however , the contingent obligations of Borrower or any Subsidiary of Borrower pursuant to any purchase and sale agreement, stock purchase agreement, merger agreement or similar agreement shall not constitute “Indebtedness” within this definition so long as none of the same contains an obligation to pay money over time.

 

Indemnified Taxes ” means Taxes other than Excluded 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 the report with respect to certain Oil and Gas Properties of the Borrower and its Restricted Subsidiaries as of July 1, 2016.

 

Interest Election Request ” means a request by the Borrower substantially in the form of Exhibit C 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 (or, if an Event of Default is in existence, the last day of each calendar month) 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 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.

 

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 (or, with the consent of each Lender, twelve months) thereafter, as the Borrower may elect in its Borrowing Request or Interest Election Request, as applicable, given with respect thereto; 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, (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 and (c) no Interest Period may have a term which would extend beyond the Maturity Date.  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) .

 

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Interpolated Rate ” means, at any time, for any Interest Period, the rate per annum (rounded to the same number of decimal places as the LIBO Screen Rate) determined by the Administrative Agent (which determination shall be conclusive and binding absent manifest error) to be equal to the rate that results from interpolating on a linear basis between (a) the LIBO Screen Rate for the longest period (for which the LIBO Screen Rate is available) that is shorter than the Impacted Interest Period and (b) the LIBO Screen Rate for the shortest period (for which the LIBO Screen Rate is available) that exceeds the Impacted Interest Period, in each case, at such time.

 

Investment ” means, for any Person: (a) the acquisition (whether for cash, Property, services or securities or otherwise) of Equity Interests of any other Person (including 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); (b) the making of any deposit with, or advance, loan or capital contribution to, assumption of Indebtedness of, purchase or other acquisition of any other Indebtedness of, 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, goods, supplies or services sold by such Person in the ordinary course of business); or (c) the entering into of any guarantee of, or other contingent obligation (including the deposit of any Equity Interests to be sold) with respect to, Indebtedness or other liability of any other Person and (without duplication) any amount committed to be advanced, lent or extended to such Person.

 

Issuing Bank ” means JPMorgan, in its capacity as the issuer of Letters of Credit hereunder, and its successors in such capacity as provided in Section 2.09(i) .  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.

 

JPMorgan ” has the meaning assigned to such term in the preamble hereto.

 

LC Availability Requirements ” has the meaning assigned to such term in Section 2.09(a) .

 

LC Commitment ” means, at any time, an amount equal to 10% of the Borrowing Base in effect at such time.  For the avoidance of doubt, the LC Commitment is part of, and not in addition to, the aggregate Commitments.

 

LC Disbursement ” means a payment made by the Issuing Bank pursuant to a Letter of Credit.

 

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 Applicable Percentage of the total LC Exposure at such time.

 

Lender Parent ” means, with respect to any Lender, any Person as to which such Lender is, directly or indirectly, a subsidiary.

 

Lenders ” means the Persons listed on Annex I and any 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.

 

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Letter of Credit ” means any letter of credit issued or deemed issued pursuant to this Agreement, including, for the avoidance of doubt, 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, with the Issuing Bank relating to any Letter of Credit.

 

LIBO Rate ” means, with respect to any Eurodollar Borrowing for any applicable Interest Period (and with respect to clause (c)  of the definition of “Alternate Base Rate”, for an Interest Period of one month), the London interbank offered rate as administered by ICE Benchmark Administration (or any other Person that takes over the administration of such rate for dollars) for a period equal in length to such Interest Period as displayed on pages LIBOR01 or LIBOR02 of the Reuters screen that displays such rate (or, in the event such rate does not appear on a Reuters page or screen, on any successor or substitute page on such screen that displays such rate, or on the appropriate page of such other information service that publishes such rate from time to time as shall be selected by the Administrative Agent in its reasonable discretion), in each case (the “ LIBO Screen Rate ”) as of the Specified Time on the Quotation Day for such Interest Period; provided that, (a) if the LIBO Screen Rate shall be less than zero, such rate shall be deemed to be zero for the purposes of this Agreement and (b) if the LIBO Screen Rate shall not be available at such time for a period equal in length to such Interest Period (an “ Impacted Interest Period ”), then the LIBO Rate shall be the Interpolated Rate at such time; provided further , that, if any Interpolated Rate shall be less than zero, such rate shall be deemed to be zero for purposes of this Agreement.  Notwithstanding the foregoing, to the extent that “LIBO Rate” or “Adjusted LIBO Rate” is used in connection with an ABR Borrowing, such rate shall be determined as modified by the definition of Alternate Base Rate.

 

LIBO Screen Rate ” has the meaning assigned to such term in the definition of “LIBO 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 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 Restricted Subsidiaries shall be deemed to be the owner of any Property which it has acquired or holds 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.

 

Liquidity ” means, as of any date of determination, the sum of (without duplication) (a) the unused Commitments then available to be drawn in accordance with this Agreement and (b) the aggregate amount of unrestricted cash and Cash Equivalents of the Borrower and the other Loan Parties at such time (it being understood that unrestricted cash shall (i) exclude any cash and Cash Equivalents which are subject to a Lien in favor of any Person unless such Liens are subordinated to a Lien in favor of the Administrative Agent pursuant to the Existing Intercreditor Agreement or otherwise in a manner satisfactory to the Administrative Agent and (ii) include all cash and Cash Equivalents held in a Controlled Account).

 

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Loan Documents ” means this Agreement, the Notes, if any, the Letter of Credit Agreements, the Letters of Credit, the Existing Intercreditor Agreement, any other intercreditor agreement entered into pursuant to the terms of this Agreement and the Security Instruments.

 

Loan Party ” means, collectively, the Borrower and each Guarantor.

 

Loans ” means the loans made by the Lenders to the Borrower pursuant to this Agreement.

 

Lock Up Agreement ” means that certain Lock Up Agreement, dated as of July 22, 2016, as in effect on the date hereof, by and among, inter alios , the Borrower, the other loan parties party thereto and certain holders of the Second Lien Notes party thereto.

 

Lock Up Agreement Term Sheet ” means, the Term Sheet as defined in the Lock Up Agreement and attached thereto as Exhibit A.

 

Majority Lenders ” means (a) at any time while no Loans or LC Exposure is outstanding, Lenders having more than fifty percent (50%) of the Aggregate Maximum Credit Amounts or (b) at any time while any Loans or LC Exposure are outstanding, Lenders holding more than fifty percent (50%) of the outstanding aggregate principal amount of the Loans or participation interests in Letters of Credit (without regard to any sale by a Lender of a participation in any Loan under Section 12.04(c) ).

 

Material Adverse Effect ” means, after giving effect to the entry of the Confirmation Order in each case, excluding any event occurring on or prior to the entry of the Confirmation Order, a material adverse effect on (a) the business, financial condition, operations, performance, properties of the Borrower, the Guarantors and their respective Restricted Subsidiaries, taken as a whole, (b) the ability of the Loan Parties to perform their respective material obligations under the Loan Documents, or (c) the ability of the Administrative Agent, the Issuing Bank and the Lenders to enforce the Loan Documents.

 

Material Domestic Subsidiary ” means, as of any date, any Domestic Subsidiary that (a) is a Wholly-Owned Subsidiary and (b) together with its Restricted Subsidiaries, owns Property having a fair market value of $1.0 million or more.

 

Material Indebtedness ” means Indebtedness (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 Restricted Subsidiaries in an aggregate outstanding principal amount exceeding $10.0 million.  For purposes of determining Material Indebtedness, the “principal amount” of the obligations of the Borrower or any Restricted Subsidiary in respect of any Swap Agreement at any time shall be the maximum aggregate amount (giving effect to any netting agreements) that the Borrower or such Subsidiary would be required to pay if such Swap Agreement were terminated at such time.

 

Maturity Date ” means the earlier of (i) the day that is the fifth (5 th ) anniversary of the Petition Date, which is July 27, 2021 and (ii) the 120th day prior to the stated maturity date of the 2020 Second Lien Notes if such notes have not been refinanced, redeemed or repaid in full on or prior to such 120th day; provided that, in either case of clauses (i) or (ii), if such day is not a Business Day, then the Maturity Date shall be the immediately preceding Business Day.

 

Maximum Credit Amount ” means, as to each Lender, the amount set forth opposite such Lender’s name on Annex I under the caption “Maximum 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

 

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Maximum Credit Amounts pursuant to Section 2.06(a)  or (b) modified from time to time pursuant to any assignment permitted by Section 12.04(b) .

 

Modified ACNTA ” has the meaning assigned such term in the Second Lien Indenture as in effect on the date hereof, and any component definition used therein has the meaning set forth in the Second Lien Indenture as of the date hereof.

 

Modified ACNTA Prices ” has the meaning assigned such term in the Second Lien Indenture as in effect on the date hereof, and any component definition used therein has the meaning set forth in the Second Lien Indenture as of the date hereof

 

Money Laundering Laws ” has the meaning assigned such term in Section 7.23 .

 

Moody’s ” means Moody’s Investors Service, Inc. and any successor thereto that is a nationally recognized rating agency.

 

Mortgage ” means each of the mortgages or deeds of trust executed by any one or more Loan Parties for the benefit of the Secured Parties as security for the Secured Obligations, together with any supplements, modifications or amendments thereto and assumptions or assignments of the obligations thereunder by any Loan Party.  “ Mortgages ” shall mean all of such Mortgages collectively.

 

Mortgaged Property ” means any Property owned by any Loan Party which is subject to the Liens existing and to exist under the terms of the Security Instruments.

 

Multiemployer Plan ” means a Plan which is a multiemployer plan as defined in section 3(37) or 4001 (a)(3) of ERISA.

 

Net Cash Proceeds ” means in connection with any issuance or sale of Equity Interests, debt securities or instruments, the incurrence or issuance of Indebtedness, any Disposition of Property, any Unwind of Swap Agreements, or Casualty Event, the aggregate cash proceeds received from such issuance, sale, incurrence, Disposition, Unwind or Casualty Event, as applicable, net of, unless the Loans have been declared or become due and payable as a result of an Event of Default described in Section 10.01(h)  or Section 10.01(i)  (or after the occurrence and during the continuation of an Event of Default described in Section 10.01(h)  or Section 10.01(i) ), attorneys’ fees, investment banking fees, accountants’ fees, underwriting discounts and commissions and other customary fees and expenses actually incurred in connection therewith.

 

New Borrowing Base Notice ” has the meaning assigned to such term in Section 2.07(d) .

 

New Indebtedness ” has the meaning assigned to such term in the definition of Permitted Refinancing Indebtedness.

 

Non-Defaulting Lender ” means, at any time, each Lender that is not a Defaulting Lender at such time.

 

Non-Recourse Indebtedness ” means any Indebtedness of any Unrestricted Subsidiary, in each case in respect of which: (a) the holder or holders thereof (i) shall have recourse only to, and shall have the right to require the obligations of such Unrestricted Subsidiary to be performed, satisfied, and paid only out of, the Property of such Unrestricted Subsidiary and/or one or more of its Subsidiaries (but only to the extent that such Subsidiaries are Unrestricted Subsidiaries) and/or any other Person (other than Borrower and/or any Restricted Subsidiary) and (ii) shall have no direct or indirect recourse (including by

 

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way of guaranty, support or indemnity) to the Borrower or any Restricted Subsidiary or to any of the Property of Borrower or any Restricted Subsidiary (other than Equity Interests of such Unrestricted Subsidiary), whether for principal, interest, fees, expenses or otherwise; and (b) the terms and conditions relating to the non-recourse nature of such Indebtedness are in form and substance reasonably acceptable to the Administrative Agent.

 

Notes ” means the promissory notes of the Borrower as requested by a Lender and 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.

 

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 hereinafter 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, 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.

 

Other Taxes ” means any and all present or future stamp or documentary taxes or any other excise or Property taxes, charges or similar levies arising from any payment made hereunder or from the execution, delivery or enforcement of, or otherwise with respect to, this Agreement and any other Loan Document.

 

Participant ” has the meaning set forth in Section 12.04(c)(i)

 

Participant Register ” has the meaning set forth in Section 12.04(c)(i) .

 

Patriot Act ” has the meaning assigned to such term in Section 7.23 .

 

Payment in Full ” means (a) the Commitments have expired or been terminated, (b) 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 indefeasibly paid in full in cash (other than contingent indemnification obligations), (c) all Letters of Credit shall have expired or terminated (or are cash collateralized or otherwise secured to the satisfaction of the Issuing Bank) and all LC Disbursements shall have been reimbursed and (d) all amounts due under Secured Swap Agreements shall have been

 

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indefeasibly paid in full in cash (or such Secured Swap Agreements are cash collateralized or otherwise secured to the satisfaction of the Secured Swap Provider).

 

Perfection Certificate ” means a perfection certificate substantially in the form of Exhibit I .

 

Permitted Holders ” means Ares Management L.P., Franklin Templeton Investments and each of their respective Affiliates (but excluding any operating portfolio companies of the foregoing persons).

 

Permitted Junior Indebtedness ” means any Indebtedness secured by a Lien ranking junior to the Lien securing the Secured Obligations that is issued or incurred by the Borrower or any Restricted Subsidiary in an aggregate outstanding principal amount not to exceed $50.0 million and any guarantees thereof by the Guarantors (including any Persons becoming Guarantors simultaneously with the incurrence of such Indebtedness):

 

(a)                                  the terms of which do not provide for any scheduled repayment, mandatory redemption or sinking fund obligation prior to the 180 th  day after the Maturity Date (other than customary offers to purchase upon a change of control, and customary acceleration rights after an event of default) and, by its terms, do not restrict the prepayment or repayment of the Secured Obligations,

 

(b)                                  the covenants, events of default and guarantees which (other than “market” interest rate, fees, funding discounts and redemption or prepayment premiums as determined at the time of issuance or incurrence of any such Indebtedness), are not more restrictive on the Borrower and each of its Restricted Subsidiaries than the terms of this Agreement (as in effect at the time of such issuance or incurrence),

 

(c)                                   if such Indebtedness is subordinated Indebtedness in right of payment, the terms of such Indebtedness provide for customary subordination of such Indebtedness to the Secured Obligations,

 

(d)                                  the holders of the obligations secured thereby (or a representative or trustee on their behalf) shall have entered into an intercreditor agreement (which, for avoidance of doubt, shall provide that the Liens securing such obligations shall rank junior to the Liens securing the Secured Obligations and shall only be secured by the same or a subset of the collateral that secures the Secured Obligations),

 

(e)                                   no Subsidiary of the Borrower (other than a Guarantor or a Person who becomes a Guarantor in connection therewith) is an obligor under such Indebtedness;

 

provided that:

 

(i)                                                         at the time of, and after giving effect to, the incurrence of such Indebtedness (i) no Default or Event of Default has occurred and is continuing,

 

(ii)                                                      after giving pro forma effect to such issuance or incurrence, the Borrower would be in compliance with the Total Net Indebtedness Leverage Ratio as of the last day of the four fiscal quarter period for which financial statements have been delivered pursuant to Section 8.01(a)  and Section 8.01(b)  (it being understood that for purposes of calculating the Total Net Indebtedness Leverage Ratio, Consolidated Total Net Debt shall give pro forma effect to the

 

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incurrence of such Indebtedness and any other Indebtedness incurred through such date of determination) in effect at the time of such issuance or incurrence minus 0.25x, and

 

(iii)                                                   at such time, the Borrowing Base is adjusted as contemplated by Section 2.08(c)  and the Borrower makes any prepayment required under Section 3.04(c)(iii) .

 

Permitted Refinancing Indebtedness ” means Indebtedness (for purposes of this definition, “New Indebtedness”) incurred in exchange for, or proceeds of which are used to refinance, all of any other Indebtedness (the “ Refinanced Indebtedness ”); provided that:

 

(a)                                  such New Indebtedness is in an aggregate principal amount not in excess of the sum of (i) the aggregate principal amount then outstanding of the Refinanced Indebtedness (or, if the Refinanced Indebtedness is exchanged or acquired for an amount less than the principal amount thereof to be due and payable upon a declaration of acceleration thereof, such lesser amount) and (ii) an amount necessary to pay any fees and expenses, including premiums, related to such exchange or refinancing,

 

(b)                                  such New Indebtedness has a stated maturity no earlier than the stated maturity of the Refinanced Indebtedness and an average life no shorter than the average life of the Refinanced Indebtedness and does not, by its terms, restrict the prepayment or repayment of the Secured Obligations,

 

(c)                                   such New Indebtedness contains covenants, events of default and guarantees which (other than “market” interest rate, fees, funding discounts and redemption or prepayment premiums as determined at the time of issuance or incurrence of any such Indebtedness) are not more restrictive on the Borrower and each of its Restricted Subsidiaries than the terms of this Agreement (as in effect at the time of such issuance or incurrence),

 

(d)                                  no Subsidiary of the Borrower (other than a Guarantor or a Person who becomes a Guarantor in connection therewith) is an obligor under such New Indebtedness,

 

(e)                                   to the extent such New Indebtedness is secured and the applicable Refinanced Debt is subject to an intercreditor agreement, the holders of such New Indebtedness (or a representative or trustee on their behalf) shall have entered into an intercreditor agreement which, for avoidance of doubt, shall provide that the Liens securing such obligations shall rank junior to the Liens securing the Secured Obligations (if applicable, to at least the same extent as the Refinanced Indebtedness) and shall only be secured by the same or a subset of the collateral that secures the Secured Obligations, and

 

(f)                                    such New Indebtedness (and any guarantees thereof) is subordinated in right of payment to the Secured Obligations (or, if applicable, the Guaranty Agreement) to at least the same extent as the Refinanced Indebtedness and otherwise on terms satisfactory to the Administrative Agent.

 

Permitted Unsecured Indebtedness ” means unsecured senior, senior subordinated or subordinated Indebtedness issued or incurred by the Borrower and any guarantees thereof by the Guarantors (including any Persons becoming Guarantors simultaneously with the incurrence of such Indebtedness):

 

(a)                                  that does not restrict, by its terms, the prepayment or repayment of the Secured Obligations,

 

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(b)                                  that has terms which do not provide for the maturity of such Indebtedness to be or any scheduled repayment, mandatory redemption or sinking fund obligation to occur prior to 180 days after the Maturity Date (other than customary offers to purchase upon a change of control and customary acceleration rights after an event of default),

 

(c)                                   where the covenants, events of default and guarantees which (other than “market” interest rate, fees, funding discounts and redemption or prepayment premiums as determined at the time of issuance or incurrence of any such Indebtedness) are not more restrictive on the Borrower and each of its Restricted Subsidiaries than the terms of this Agreement (as in effect at the time of such issuance or incurrence),

 

(d)                                  where, if such Indebtedness is subordinated Indebtedness in right of payment, the terms of such Indebtedness provide for customary subordination of such Indebtedness to the Secured Obligations,

 

(e)                                   where no Subsidiary of the Borrower (other than a Guarantor or a Person who becomes a Guarantor in connection therewith) is an obligor under such Indebtedness;

 

provided that:

 

(i)                                             at the time of, and after giving effect to, the incurrence of such Indebtedness (i) no Default or Event of Default has occurred and is continuing,

 

(ii)                                          after giving pro forma effect to such incurrence, the Borrower would be in compliance with the Total Net Indebtedness Leverage Ratio as of the last day of the four fiscal quarter period for which financial statements have been delivered pursuant to Section 8.01(a)  and Section 8.01(b)  (it being understood that for purposes of calculating the Total Net Indebtedness Leverage Ratio, Consolidated Total Net Debt shall give pro forma effect to the incurrence of such Indebtedness and any other Indebtedness incurred through such date of determination) in effect at the time of such incurrence minus 0.25x, and

 

(iii)                                       at the time of the issuance or incurrence of such Indebtedness, the Borrowing Base is adjusted as contemplated by Section 2.08(c)  and the Borrower makes any prepayment required under Section 3.04(c)(iii) .

 

Person ” means any natural person, corporation, limited liability company, trust, joint venture, association, company, partnership, Governmental Authority or other entity.

 

Petition Date ” has the meaning assigned to such term in the recitals hereto.

 

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 hereto.

 

Pre-Petition Credit Agreement ” has the meaning assigned to such term in the recitals hereto.

 

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Prime Rate ” means the rate of interest per annum publicly announced from time to time by the Administrative Agent as its prime rate in effect at its principal office in New York City; 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 the Administrative Agent as a general reference rate of interest, taking into account such factors as the Administrative Agent may deem appropriate; it being understood that many of the 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 the Administrative Agent may make various commercial or other loans at rates of interest having no relationship to such rate.

 

Projected Production ” means, as of any date of determination, the internally forecasted production of each of crude oil, natural gas liquids and natural gas, calculated on a barrel of oil equivalent basis, of the Borrower and its Restricted Subsidiaries, or in the case of a Proposed Acquisition, from the Oil and Gas Properties subject of such Proposed Acquisition, for each month for the period of the next 24 months commencing on the first day of the calendar month immediately following such date of determination.

 

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.

 

Proposed Acquisition ” has the meaning assigned to such term in Section 9.19(a)(iii) .

 

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 Reserves ” means oil and gas reserves that, in accordance with Petroleum Industry Standards, are classified as both “Proved Reserves” and one of the following: (a) “Developed Producing Reserves”, (b) “Developed Non-Producing Reserves” or (c) “Undeveloped Reserves.”

 

Public-Sider ” means a Lender whose representatives may trade in securities of the Borrower or any of their respective Subsidiaries while in possession of the financial statements provided by the Borrower under the terms of this Agreement, and has notified the Administrative Agent in writing that such Lender wishes to receive only information consisting exclusively of information with respect to the Borrower and its Affiliates that is either publicly available or not material with respect to the Borrower and its Affiliates, any of their respective securities for purposes of United States federal and state securities laws.

 

PV-9 ” means, on any date of determination, with respect to any Proved Reserves expected to be produced from any Borrowing Base Properties, the net present value, discounted at 9% per annum, of the future net revenues expected to accrue to the Borrower’s and the other Restricted Subsidiaries’ collective interests in such Proved Reserves during the remaining expected economic lives of such reserves, calculated in accordance with the most recent bank price deck provided to the Borrower by the Administrative Agent.

 

Qualified ECP Guarantor ” means, in respect of any Swap Obligation, each of the Borrower, any Restricted Subsidiary and any Guarantor that has total assets exceeding $10.0 million at the time such Swap Obligation is incurred or such other person as constitutes an ECP under the Commodity Exchange Act or any regulations promulgated thereunder.

 

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Quotation Day ” means, with respect to any Eurodollar Loan for any Interest Period, two (2) Business Days prior to the commencement of such Impacted Interest Period.

 

Redemption ” means with respect to any Indebtedness, the repurchase, redemption, prepayment, repayment, defeasance, purchase or any other acquisition or retirement for value (or the segregation of funds with respect to any of the foregoing) of such Indebtedness; provided , however , the term “Redemption” shall not include early termination of a Swap Agreement due to an ISDA “Termination Event” to the extent the amount due at such termination exceeds $10.0 million.  “ 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(b)(iv) .

 

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 directors, officers, employees, agents and advisors (including attorneys, accountants and experts) of such Person and such Person’s Affiliates.

 

Remedial Work ” has the meaning assigned to such term in Section 8.10(a) .

 

Required Lenders ” means (a) at any time while no Loans or LC Exposure are outstanding, Lenders having at least sixty-six and two thirds percent (66-2/3%) of the Aggregate Maximum Credit Amounts; and (b) at any time while any Loans or LC Exposure are outstanding, Lenders holding at least sixty-six and two thirds percent (66-2/3%) of the outstanding aggregate principal amount of such Loans or participation interests in Letters of Credit (without regard to any sale by a Lender of a participation in any Loan under Section 12.04(c) ).

 

Reserve Report ” means the Initial Reserve Report and any other subsequent report, in form and substance reasonably satisfactory to the Administrative Agent, setting forth, as of each December 31st or June 30th (or such other date in the event of an Interim Redetermination) the oil and gas reserves attributable to the Oil and Gas Properties of the Borrower and the Restricted 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 pricing assumptions consistent with SEC reporting requirements at the time.

 

Reserve Report Certificate ” has the meaning assigned to such term in Section 8.12(c) .

 

Responsible Officer ” means, as to any Person, the Chief Executive Officer, the President, the Chief Operating Officer, any Financial Officer, Chief Legal Officer or Executive Vice President-Finance and Administration 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 any Person, or any payment (whether in cash, securities or other Property), including any sinking fund or similar deposit, on account of the

 

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purchase, redemption, retirement, acquisition, cancellation or termination of (a) any such Equity Interests or (b) any option, warrant or other right to acquire any such Equity Interests.

 

Restricted Subsidiary ” means any Subsidiary of the Borrower that is not an Unrestricted Subsidiary.

 

Restructuring Support Agreement ” has the meaning assigned to such term in the recitals hereto.

 

Revolving Credit Exposure ” means, with respect to any Lender at any time, the sum of the outstanding principal amount of such Lender’s Loans, its LC Exposure and all other reimbursement obligations under the Exit Facility at such time.

 

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, region or territory which is itself the subject or target of any Sanctions (as of the Closing Date, Crimea, Cuba, Iran, North Korea, Sudan and Syria).

 

Sanctioned Person ” means, at any time, (a) any Person listed in any Sanctions-related list of designated Persons maintained by the Office of Foreign Assets Control of the U.S. Department of the Treasury, the U.S. Department of State or by the United Nations Security Council, the European Union or any European Union member state, (b) any Person operating, organized or resident in a Sanctioned Country or (c) any Person owned or controlled by any such Person or Persons described in the foregoing clauses (a)  or (b) .

 

Sanctions ” means all economic or financial sanctions or trade embargoes imposed, administered or enforced from time to time by (a) the U.S. government, including those administered by the Office of Foreign Assets Control of the U.S. Department of the Treasury or the U.S. Department of State, or (b) the United Nations Security Council, the European Union, any European Union member state or Her Majesty’s Treasury of the United Kingdom.

 

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.

 

Second Lien Indenture ” means, collectively, (a) the 2020 Second Lien Notes Indenture and (b) the 2022 Second Lien Notes Indenture.

 

Second Lien Modifications ” means the amendments, changes and other modifications set forth in the Lock Up Agreement Term Sheet under the title “Proposed Amendments”, in each case, on substantially similar terms in all material respects set forth therein.

 

Second Lien Notes ” means, collectively (a) the 2020 Second Lien Notes and (b) the 2022 Second Lien Notes.

 

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Secured Obligations ” means any and all amounts owing or to be owing by the Borrower, any Restricted Subsidiary or any Guarantor (whether direct or indirect (including those acquired by assumption), absolute or contingent, due or to become due, now existing or hereafter arising (including interest and fees accruing after the maturity of the Loans and LC Disbursements or the termination of the Secured Swap Agreements and interest accruing after the filing of any petition for bankruptcy, or the commencement of any insolvency, reorganization or like proceeding, relating to the Borrower, whether or not a claim for post-filing or post-petition interest is allowed in such proceeding); provided that solely with respect to any Loan Party that is not an “eligible contract participant” under the Commodity Exchange Act, Excluded Swap Obligations of such Loan Party shall in any event be excluded from “Secured Obligations” owing by such Loan Party): (a) to the Administrative Agent, the Issuing Bank or any Lender under any Loan Document, (b) to any Secured Swap Provider, (c) to any Bank Products Provider and (d) all renewals, extensions and/or rearrangements of any of the foregoing.

 

Secured Parties ” means, collectively, the Administrative Agent, the Issuing Bank, the Lenders, each Bank Products Provider, each Secured Swap Provider and any other Person owed Secured Obligations. “ Secured Party ” means any of the foregoing individually.

 

Secured Swap Agreement ” means a Swap Agreement between (a) any Loan Party and (b) a Secured Swap Provider, which shall include, for the avoidance of doubt, the Existing Secured Swap Agreements.

 

Secured Swap Provider ” means, with respect to any Swap Agreement, (a) a Lender or an Affiliate of a Lender who is the counterparty to such Swap Agreement with a Loan Party and (b) any Person who was a Lender or an Affiliate of a Lender at the time when such Person entered into such Swap Agreement who is a counterparty to any such Swap Agreement with a Loan Party; provided that any such Secured Swap Provider that ceases to be a Lender or an Affiliate of a Lender shall continue to be a “Secured Swap Provider” for purposes of the Loan Documents to the extent that such Secured Swap Provider entered into a Secured Swap Agreement with the Borrower or any of its Subsidiaries prior to the date hereof or at the time such Secured Swap Provider was a Lender (or Affiliate of a Lender) hereunder and such Secured Swap Agreement remains in effect and there are remaining obligations under such Secured Swap Agreement (but excluding any transactions, confirms, or trades entered into after such Person ceases to be a Lender or an Affiliate of a Lender) (it being understood that if such Swap Agreement is novated or otherwise transferred by such Person to a third party that is not a Lender or an Affiliate of a Lender, such third party shall not constitute a Secured Swap Provider).

 

Securities Account ” has the meaning assigned to such term in the UCC.

 

Security Instruments ” means (a) the Guaranty Agreement, (b) Mortgages, (c) any Perfection Certificate, (d) any Control Agreement, (e) the other agreements, instruments or certificates described or referred to in Exhibit E and (f) any and all other agreements, instruments or certificates now or hereafter executed and delivered by the Borrower or any other Person (other than Swap Agreements with the Lenders or any Affiliate of a Lender or participation or similar agreements between any Lender and any other lender or creditor with respect to any Secured Obligations pursuant to this Agreement), in each case in connection with, or as security for the payment or performance of the Secured Obligations, the Loans, the Notes, if any, this Agreement, or reimbursement obligations under the Letters of Credit, as such agreements may be amended, modified, supplemented or restated from time to time.

 

Solvency Certificate ” means a solvency certificate signed by a Financial Officer in substantially the form of Exhibit H hereto.

 

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Specified Change of Control ” means a “Change of Control” (or any other defined term having a similar purpose or meaning) as defined in the Second Lien Notes, any Permitted Unsecured Indebtedness or Permitted Junior Indebtedness or any Permitted Refinancing Indebtedness of any of the foregoing, in each case, solely to the extent that the aggregate outstanding principal amount of such Second Lien Notes, Permitted Unsecured Indebtedness or Permitted Junior Indebtedness, or such Permitted Refinancing Indebtedness in respect of the foregoing exceeds $10.0 million.

 

Specified Indebtedness ” has the meaning assigned to such term in Section 9.04(b) .

 

Specified Time ” means 11:00 A.M., London time.

 

Statutory Reserve Rate ” means a fraction (expressed as a decimal) not to exceed the number one, 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 basis, marginal, special, emergency or supplemental reserves) expressed as a decimal established by any Governmental Authority of the Board or any other Governmental Authority having jurisdiction 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.

 

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, manager 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 Restricted Subsidiaries is a general partner.  Unless otherwise indicated herein, each reference to the term “ Subsidiary ” shall mean a Subsidiary of the Borrower.

 

Swap Agreement ” means any agreement with respect to any swap, forward, future or derivative transaction, collar or option or similar agreement, whether exchange traded, “over-the-counter” or otherwise, involving, or settled by reference to, one or more interest rates, currencies, commodities, equity or debt instruments or securities, or economic, financial or pricing indices or measures of economic, financial or pricing risk or value or any similar transaction or any combination of these transactions; provided that no phantom stock or similar plan providing for payments only on account of services provided by current or former directors, officers, employees or consultants of the Borrower or the Subsidiaries shall be a Swap Agreement.

 

Swap Obligation ” means, with respect to any Guarantor, 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.

 

Synthetic Leases ” means, in respect of any Person, all leases which shall have been, or should have been, in accordance with GAAP, treated as operating leases on the financial statements of the Person liable (whether contingently or otherwise) for the payment of rent thereunder and which were properly treated as indebtedness for borrowed money for purposes of U.S. federal income taxes, if the lessee in respect thereof is obligated to either purchase for an amount in excess of, or pay upon early

 

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termination an amount in excess of, 80% of the residual value of the Property subject to such operating lease upon expiration or early termination of such lease.

 

Taxes ” means any and all present or future taxes, levies, imposts, duties, deductions, charges or withholdings imposed by any Governmental Authority.

 

Termination Date ” means the earlier of the Maturity Date and the date of termination of the Commitments.

 

Total Net Indebtedness Leverage Ratio ” means the financial covenant of the Borrower set forth in Section 9.01(a) .

 

Transactions ” means, with respect to (a) the Borrower, the execution, delivery and performance by the Borrower of its obligations under this Agreement, 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 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 Secured 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 thereunder, and the grant of Liens by such Guarantor on Mortgaged Properties and other Properties pursuant to the Security Instruments.

 

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.

 

UCC ” means the Uniform Commercial Code of the State of New York or of any other state the laws of which are required to be applied in connection with the perfection of security interests in any collateral.

 

Unrestricted Cash ” means cash and Cash Equivalents of the Borrower or any of its Restricted Subsidiaries that would not appear as “restricted” (or would appear as “restricted” in favor of the Administrative Agent or any Lender) on a consolidated balance sheet of the Borrower or any of its Restricted Subsidiaries.

 

Unrestricted Subsidiary ” means any Subsidiary of the Borrower designated as such on Schedule 7.14 or which the Borrower has designated in writing to the Administrative Agent to be an Unrestricted Subsidiary pursuant to Section 9.06 .

 

Unwind ” means, with respect to any transaction under a Swap Agreement, the early termination, unwind, or cancelation of any transaction under such Swap Agreement. “ Unwound ” shall have a meaning correlative to the foregoing.

 

U.S. Person ” has the meaning given in Section 7701(a)(30) of the Code.

 

Wholly-Owned Subsidiary ” means any Restricted Subsidiary of which all of the outstanding Equity Interests (other than any directors’ qualifying shares mandated by applicable law), on a fully-diluted basis, are owned by the Borrower or one or more of the Wholly-Owned Subsidiaries or by the Borrower and one or more of the Wholly-Owned Subsidiaries.

 

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Write-Down and Conversion Powers ” means, 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.

 

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, restated or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth herein), (b) any reference herein to any law shall be construed as referring to such law as amended, modified, codified 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 herein), (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) with respect to the determination of any time period, the word “from” means “from and including” and the word “to” means “to and including” and (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.  The use of the phrase “subject to” as used in connection with Excepted Liens or otherwise and the permitted existence of any Excepted Liens or any other Liens shall not be interpreted to expressly or impliedly subordinate any Liens granted in favor of the Administrative Agent and the other Secured Parties as there is no intention to subordinate the Liens granted in favor of the Administrative Agent and the other Secured Parties.  No provision of this Agreement or any other Loan Document shall be interpreted or construed against any Person solely because such Person or its legal representative drafted such provision.

 

Section 1.05                            Accounting Terms and Determinations; GAAP .  Unless otherwise specified herein, all accounting terms used herein shall be interpreted, all determinations with respect to accounting matters hereunder shall be made, and all financial statements and certificates and reports as to financial matters required to be furnished to the Administrative Agent or the Lenders hereunder shall be prepared, in accordance with GAAP (subject to the impact of “fresh start” accounting), applied on a basis consistent with the Financial Statements, except for Accounting Changes (as defined below) with which the Borrower’s independent certified public accountants concur and which are disclosed to the Administrative Agent on the next date on which financial statements are required to be delivered to the Lenders pursuant to Section 8.01(a) .  In the event that any “Accounting Change” shall occur and such change results in a change in the method of calculation of financial covenants, standards or terms in this Agreement, then the Borrower and the Administrative Agent agree to enter into negotiations in good faith in order to amend such provisions of this Agreement so as to reflect equitably such Accounting Changes with the desired result that the criteria for evaluating the Borrower’s financial condition shall be the same after such Accounting Changes as if such Accounting Changes had not been made.  Until such time as such an amendment shall have been executed and delivered by the Borrower, the Administrative Agent and the Majority Lenders, all financial covenants, standards and terms in this Agreement shall continue to be calculated or construed as if such Accounting Changes had not occurred.  “ Accounting Changes ” refers to changes in accounting principles required by the promulgation of any rule, regulation,

 

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pronouncement or opinion by the Financial Accounting Standards Board of the American Institute of Certified Public Accountants or, if applicable, the SEC.

 

ARTICLE II
THE CREDITS

 

Section 2.01                            Commitments .  Subject to the terms and conditions set forth herein, (a) the Existing Loans shall be refunded, refinanced, replaced and deemed made hereunder and, on and after the Closing Date, shall constitute Loans for all purposes hereunder and under the Loan Documents and (b) on and after the Closing Date, each Lender agrees to make Loans to the Borrower from time to time on any Business Day 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 Commitment or (ii) the total Revolving Credit Exposures exceeding the total Commitments.  Within the foregoing limits and subject to the terms and conditions set forth herein, the Borrower may borrow, repay and reborrow the Loans.

 

Section 2.02                            Loans and Borrowings .

 

(a)                                  Borrowings; Several Obligations .  Each Loan shall be made as part of a Borrowing consisting of Loans made by the Lenders ratably in accordance with their respective Commitments.  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 the terms of this Agreement, 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 $1.0 million and not less than $1.0 million.  At the time that each ABR Borrowing is made, such Borrowing shall be in an aggregate amount that is an integral multiple of $1.0 million and not less than $1.0 million; 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 2.09(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 eight (8) 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)                                  Notes .  Each Lender shall maintain in accordance with its usual practice an account or accounts evidencing the indebtedness of the Borrower to such Lender resulting from each Loan made by such Lender, including the amounts of principal and interest payable and paid to such Lender from time to time hereunder.  The Administrative Agent shall maintain accounts in which it shall record (i) the amount of each Loan made hereunder, the Type thereof and the Interest Period applicable thereto, (ii) the amount of any principal or interest due and payable or to become due and payable from the Borrower to each Lender hereunder and (iii) the amount of any sum received by the Administrative Agent hereunder for the account of the Lenders and each Lender’s share thereof.  The entries made in the accounts maintained pursuant to this Section 2.02(d)  shall be prima facie evidence of the existence and

 

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amounts of the obligations recorded therein; provided that the failure of any Lender or the Administrative Agent to maintain such accounts or any error therein shall not in any manner affect the obligation of the Borrower to repay the Loans in accordance with the terms of this Agreement.  Any Lender may request that Loans made by it be evidenced by a Note.  In such event, the Borrower shall prepare, execute and deliver to such Lender a Note payable to such Lender and substantially in the form of Exhibit A dated, in the case of (i) any Lender party hereto as of the date of this Agreement, as of the date of this Agreement or (ii) any Lender that becomes a party hereto pursuant to an Assignment and Assumption, as of the effective date of the Assignment and Assumption, payable to such Lender in a principal amount equal to its Maximum Credit Amount as in effect on such date, and otherwise duly completed.  Thereafter, the Loans evidenced by such Note and interest thereon shall at all times (including after assignment pursuant to Section 12.04 ) be represented by one or more Notes in such form payable to the payee named therein (or, if such Note is a registered note, to such payee and its registered assigns).  In the event that any Lender’s Maximum Credit Amount increases or decreases for any reason (whether pursuant to Section 2.06 , Section 12.04(b)  or otherwise), the Borrower shall deliver or cause to be delivered on the effective date of such increase or decrease, a new Note payable to such Lender in a principal amount equal to its Maximum Credit Amount after giving effect to such increase or decrease, and otherwise duly completed.  The date, amount, Type, interest rate and, if applicable, Interest Period of each Loan made by each Lender, and all payments made on account of the principal thereof, shall be recorded by such Lender on its books for its Note, and, prior to any transfer, may be endorsed by such Lender on a schedule attached to such Note or any continuation thereof or on any separate record maintained by such Lender.  Failure to make any such notation or to attach a schedule shall not affect any Lender’s or the Borrower’s rights or obligations in respect of such Loans or affect the validity of such transfer by any Lender of its Note.

 

Section 2.03                            Requests for Borrowings .  To request a Borrowing, the Borrower shall notify the Administrative Agent of such request by telephone, fax (or transmit by electronic communication, if arrangements for doing so have been approved by the Administrative Agent) (a) in the case of a Eurodollar Borrowing, not later than 12:00 noon, New York City time, three (3) Business Days before the date of the proposed Borrowing or (b) in the case of an ABR Borrowing, not later than 12:00 noon, New York City time, 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 2.09(e) .  Each such telephonic (or electronic communication) Borrowing Request shall be irrevocable and shall be confirmed promptly by hand delivery or telecopy to the Administrative Agent of a written Borrowing Request in substantially the form of Exhibit B and signed by the Borrower.  Each such telephonic, electronic communication, 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 amount of the Consolidated Cash Balance (without regard to the requested Borrowing), the pro forma amount of the Consolidated Cash Balance (giving effect to the requested Borrowing), the current total Revolving Credit Exposures (without regard to the requested Borrowing) and the pro forma total Revolving Credit Exposures (giving effect to the requested Borrowing); and

 

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(vi)                               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 month’s duration.  Each Borrowing Request shall constitute a representation that the amount of the requested Borrowing shall not cause the total Revolving Credit Exposures to exceed (i) the total Commitments and (ii) the “Priority Lien Cap” (as defined in the Existing Intercreditor Agreement).

 

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 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, fax (or transmit by electronic communication, if arrangements for doing so have been approved by the Issuing Bank) 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 (or electronic communication) Interest Election Request shall be irrevocable and shall be confirmed promptly by hand delivery or telecopy 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, electronic communication 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 Section 2.04(c)(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

 

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(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.

 

(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 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 has occurred and is continuing:  (i) no outstanding Borrowing may be converted to or continued as a Eurodollar 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 1:00 p.m., New York City time, 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 a Controlled Account 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 2.09(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 prior to 10:00 A.M. New York City time on 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 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 or (ii) in the case of the Borrower, the interest rate applicable to the requested Borrowing.  If such Lender pays such amount to the Administrative Agent, then such amount shall constitute such Lender’s Loan included in such Borrowing.

 

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Section 2.06                            Termination and Reduction of Aggregate Maximum Credit Amounts .

 

(a)                                  Scheduled Termination of Commitments .  Unless previously terminated, the Commitments shall terminate on the Maturity Date.  If at any time the Aggregate Maximum Credit Amounts are terminated or reduced to zero, then the Commitments shall terminate on the effective date of such termination or reduction.

 

(b)                                  Optional Termination and Reduction of Aggregate Credit Amounts .

 

(i)                                      The Borrower may at any time terminate, or from time to time reduce, the Aggregate Maximum Credit Amounts; provided that (A) each reduction of the Aggregate Maximum Credit Amounts shall be in an amount that is an integral multiple of $5.0 million and not less than $10.0 million and (B) the Borrower shall not terminate or reduce the Aggregate Maximum 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 Commitments.

 

(ii)                                   The Borrower shall notify the Administrative Agent of any election to terminate or reduce the Aggregate Maximum Credit Amounts under Section 2.06(b)(i)  at least three (3) Business Days prior to the effective date of such termination or reduction or such shorter time as the Administrative Agent may agree in writing, 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; provided that a notice of termination of the Aggregate Maximum Credit Amounts delivered by the Borrower may state that such notice is conditioned upon the effectiveness of other credit or debt facilities, in which case such notice may be revoked by the Borrower (by notice to the Administrative Agent on or prior to the specified effective date) if such condition is not satisfied.  Any termination or reduction of the Aggregate Maximum Credit Amounts shall be permanent and may not be reinstated.  Each reduction of the Aggregate Maximum Credit Amounts shall be made ratably among the Lenders in accordance with each Lender’s Applicable Percentage.

 

Section 2.07                            Borrowing Base .

 

(a)                                  Initial Borrowing Base .  For the period from and including the Closing Date to but excluding the first Redetermination Date, the amount of the Borrowing Base shall be $600.0 million.  Notwithstanding the foregoing, the Borrowing Base may be subject to further adjustments from time to time pursuant to the Borrowing Base Adjustment Provisions.

 

(b)                                  Scheduled and Interim Redeterminations .  The Borrowing Base shall be first redetermined on May 1, 2017 and semi-annually thereafter in accordance with this Section 2.07(b)  (each such redetermination, a “ Scheduled Redetermination ”).  Subject to Section 2.07(d) , such redetermined Borrowing Base shall become effective and applicable to the Borrower, the Administrative Agent, the Issuing Bank and the Lenders on May 1st and November 1st of each year, commencing May 1, 2017.  In addition, the Borrower may, by notifying the Administrative Agent thereof, and the Administrative Agent may, at the direction of the Required Lenders, by notifying the Borrower thereof, in each case, one time during each period between any two consecutive Scheduled Redeterminations, each elect to cause the Borrowing Base to be redetermined (an “ Interim Redetermination ”) in accordance with this Section 2.07 ; provided that neither the Borrower, nor the Administrative Agent and the Required Lenders, shall have a right to request an Interim Redetermination prior to the first Scheduled Redetermination.

 

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(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 for such redetermination and the related Reserve Report Certificate (unless waived by the Administrative Agent in the case of an Interim Redetermination) and (B) such other reports, data and supplemental information, including, 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 Reserve Report 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 good faith, 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 Indebtedness) as the Administrative Agent deems appropriate 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 at such time exceed the Aggregate Maximum Credit Amounts.

 

(ii)                                   The Administrative Agent shall thereafter notify the Borrower and the Lenders of the Proposed Borrowing Base (the “ Proposed Borrowing Base Notice ”):

 

(A)                                in the case of a Scheduled Redetermination (I) if the Administrative Agent shall have received the Engineering Reports required to be delivered by the Borrower pursuant to Sections 8.12(a)  and Section 8.12(c) , in a timely and complete manner, then on or before April 15th or October 15 th , as the case may be, of such year following the date of delivery or (II) if the Administrative Agent shall not have received the Engineering Reports required to be delivered by the Borrower pursuant to Sections 8.12(a)  and Section 8.12(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) ; 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 (or such later date to which the Borrower and the Administrative Agent may agree in its sole discretion).

 

(iii)                                Any Proposed Borrowing Base that would (A) increase the Borrowing Base then in effect must be approved by all Lenders as provided in this Section 2.07(c)(iii)  and (B) decrease or maintain the Borrowing Base then in effect must be approved by the Required Lenders as provided in this 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.  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, 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 Required Lenders, as applicable, have not approved, as aforesaid, then the Administrative Agent shall poll the Lenders to ascertain the highest Borrowing Base then acceptable to the Required Lenders for purposes of this Section 2.07(c)  and, so long as such amount does not increase the Borrowing Base then in effect, such amount shall become the new Borrowing Base, effective on the date specified in Section 2.07(d)  ( provided that, if the Administrative Agent shall have polled the Lenders and ascertained that the highest Borrowing Base then acceptable to all of the Lenders increases the Borrowing Base then in effect, such amount shall become the new Borrowing Base, effective on the date specified in Section 2.07(d) ).

 

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(d)                                  Effectiveness of a Redetermined Borrowing Base .  After a redetermined Borrowing Base is 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:

 

(i)                                      in the case of a Scheduled Redetermination, (1) if the Administrative Agent shall have received the Engineering Reports required to be delivered by the Borrower pursuant to Section 8.12(a)  and Section 8.12(c) , in a timely and complete manner, then on May 1st or November 1st of each year, as applicable, following such notice (or as soon as possible thereafter, pursuant to the procedures set forth in Section 2.07(c)(iii) ), or (2) 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 Section 8.12(c) , in a timely and complete manner, then on the Business Day next succeeding delivery of such New Borrowing Base Notice; and

 

(ii)                                   in the case of an Interim Redetermination, on the Business Day next succeeding delivery of such New Borrowing Base 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 pursuant to the Borrowing Base Adjustment Provisions, 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.

 

Section 2.08                            Borrowing Base Adjustment Provisions.

 

(a)                                  Reduction of Borrowing Base Upon Asset Dispositions and Termination of Swap Positions .  If the Borrower or a Restricted Subsidiary Disposes of (or any Casualty Event occurs in respect of) Oil and Gas Properties (but excluding any Disposition to a Loan Party or from a non-Loan Party to a non-Loan Party, in each case, subject to prior written notice to the extent required by Section 8.01(k)) or any Equity Interests in any Person owning Oil and Gas Properties (but excluding any Disposition to a Loan Party or from a non-Loan Party to a non-Loan Party, in each case, subject to prior written notice to the extent required by Section 8.01(k)), or Unwinds Swap Agreements and (i) the Borrowing Base Value attributable to such Oil and Gas Property Disposed of or subject to such Casualty Event (or the Oil and Gas Properties owned by Borrower or a Restricted Subsidiary whose Equity Interests were sold) plus (ii) the Borrowing Base Value attributable to such Unwound Swap Agreements, since the later of (x) the last Redetermination Date and (y) the last adjustment of the Borrowing Base pursuant to this Section 2.08(a)  is in excess of ten percent (10%) of the Borrowing Base as then in effect, individually or in the aggregate, then the Required Lenders shall have the right to adjust the Borrowing Base by an amount equal to the Borrowing Base Value attributable to such Oil and Gas Properties (or such Oil and Gas Properties owned by any Subsidiary whose Equity Interests were sold) or such Unwound Swap Agreement in the current Borrowing Base and (if the Required Lenders in fact elect to make such adjustment) the Administrative Agent shall promptly inform the Borrower of the amount of the adjusted Borrowing Base. For the purposes of this Section 2.08(a) , a Disposition of Oil and Gas Properties shall be deemed to include the designation of a Restricted Subsidiary owning Oil and Gas Properties as an Unrestricted Subsidiary and the Disposition of Oil and Gas Properties, or Equity Interests in any Person owning Oil and Gas Properties, to an Unrestricted Subsidiary.

 

(b)                                  Reduction of Borrowing Base Related to Title .  If the Administrative Agent or Required Lenders have adjusted the Borrowing Base in accordance with Section 8.13(c) , so that, after

 

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giving effect to such reduction, the Borrower will satisfy the requirements of Section 8.13(c) , the Administrative Agent shall promptly notify the Borrower in writing and, upon receipt of such notice, the new Borrowing Base will simultaneously become effective.

 

(c)                                   Reduction of Borrowing Base Upon Incurrence of Permitted Junior Indebtedness and/or Permitted Unsecured Indebtedness .  Upon the issuance or incurrence of any Permitted Junior Indebtedness or any Permitted Unsecured Indebtedness (in each case, other than Junior Indebtedness or Permitted Unsecured Indebtedness constituting Permitted Refinancing Indebtedness incurred to refinance such Indebtedness), the Borrowing Base then in effect shall be automatically reduced by an amount equal to the product of 0.25 multiplied by the stated principal amount of such Permitted Unsecured Indebtedness or Permitted Junior Indebtedness, as applicable, without regard to any original issue discount, and the Borrowing Base as so reduced shall become the new Borrowing Base on the Business Day of such issuance or incurrence.

 

Section 2.09                            Letters of Credit .

 

(a)                                  General .  Subject to the terms and conditions set forth herein, (i) the Existing Letters of Credit shall be refunded, refinanced, replaced and deemed issued hereunder and, on and after the Closing Date, shall constitute Letters of Credit for all purposes hereunder and under the Loan Documents and (ii) on and after the Closing Date, the Borrower may request the issuance of dollar denominated Letters of Credit for its own account or for the account of any of its Restricted Subsidiaries, in a form reasonably acceptable to the Administrative Agent and the Issuing Bank, at any time and from time to time during the period from the Closing Date until the day which is five (5) Business Days prior to the end of the Availability Period; provided that, in addition to the conditions set forth in Section 6.02 , the Borrower may not request the issuance, amendment, renewal or extension of Letters of Credit hereunder if (x) the LC Exposure would exceed the LC Commitment or (y) the Revolving Credit Exposure of any Lender would exceed the Commitment of such Lender (collectively, the “ LC Availability Requirements ”).  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 telecopy (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 three (3) Business Days in advance of the requested date of issuance, amendment, renewal or extension unless otherwise consented to by the Issuing Bank) a notice:

 

(i)                                      requesting the issuance of a Letter of Credit or identifying the Letter of Credit to be amended, renewed or extended;

 

(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 2.09(c) );

 

(iv)                               specifying the amount of such Letter of Credit;

 

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(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 that, after giving effect to the requested issuance, amendment, renewal or extension, as applicable, the LC Availability Requirements will be satisfied on the date of such issuance, amendment, renewal or extension.

 

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 one year after the date of the issuance of such Letter of Credit (or, in the case of any renewal or extension thereof, one year after such renewal or extension) and (ii) the date that is five (5) Business Days prior to the Maturity Date.

 

(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 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 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 2.09(e) , or of any 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 2.09(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 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, New York City time, 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., New York City time, 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, New York City time, on (i) the Business Day that the Borrower receives such notice, if such notice is received prior to 10:00 a.m., New York City time, 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 equal to or greater than $1.0 million, 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 LC Disbursement be financed with an ABR Borrowing in an equivalent amount and, to the extent so financed, the Borrower’s obligation to

 

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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 Applicable Percentage thereof.  Promptly following receipt of such notice, each Lender shall pay to the Administrative Agent its Applicable Percentage of the payment then due from the Borrower, in the same manner as provided in Section 2.05 with respect to 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 2.09(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 2.09(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 2.09(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 2.09(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 any other Loan Document, 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 substantially 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 2.09(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 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 reasonable discretion, either accept and make payment upon such documents without responsibility for further investigation, 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

 

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(confirmed by telecopy) 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 2.09(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 2.09(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 2.09(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 replaced 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 also 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 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.  Subject to the appointment and acceptance of a successor Issuing Bank which is reasonably acceptable to the Borrower, any Issuing Bank may resign as an Issuing Bank at any time upon thirty (30) days’ prior written notice to the Administrative Agent, the Borrower and the Lenders, in which case, such Issuing Bank shall be replaced in accordance with this Section 2.09(i) .

 

(j)                                     Cash Collateralization .  If (i) any Event of Default shall occur and be continuing and the Borrower receives notice from the Administrative Agent or the Majority Lenders demanding the deposit of cash collateral pursuant to this Section 2.09(j) , (ii) the LC Exposure exceeds the LC Commitment at any time, (iii) 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)  or (iv) the Borrower is required to cash collateralize a Defaulting Lender’s LC Exposure pursuant to Section 4.05 , then the Borrower shall deposit, in an account with the Administrative Agent, in the name of the Administrative Agent and for the benefit of the Lenders, an amount in cash equal to 105% of (A) in the case of an Event of Default, the LC Exposure (net of any cash collateral already held at the applicable time by the Administrative Agent with respect to such LC Exposure), (B) in the case of the LC Exposure exceeding the LC Commitment, the amount of such excess, (C) 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 and (D) in the case that the Borrower is required to cash collateralize a Defaulting Lender’s LC Exposure, the amount required by Section 4.05; 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 Restricted 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

 

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Lien on such account and all cash, checks, drafts, certificates and instruments, if any, from time to time deposited or held in such 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 2.09(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 Guarantor’s 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 such account.  Interest or profits, if any, on such deposit shall accumulate in such account.  Moneys in such 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 pay to the Administrative Agent 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.

 

ARTICLE III
PAYMENTS OF PRINCIPAL AND INTEREST; PREPAYMENTS; FEES

 

Section 3.01                            Repayment of Loans .  The Borrower hereby unconditionally promises to pay to the Administrative Agent for the account of each Lender the then unpaid principal amount of each Loan on the Termination Date.

 

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, if an Event of Default has occurred and is continuing, then all Loans and other amounts outstanding, shall bear interest, after as well as before judgment, at a rate per annum equal to two percent (2%) plus the applicable interest rate (or, in the event there is no applicable rate, two percent (2%) plus the Applicable Margin then in effect applicable to ABR Loans as provided in Section 3.02(a) ), but in no event to exceed the Highest Lawful Rate.

 

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(d)                                  Interest Payment Dates .  Accrued interest on each Loan shall be payable in arrears on each Interest Payment Date for such Loan and on the Termination 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 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.

 

Section 3.03                            Alternate Rate of Interest .  If prior to the commencement of any Interest Period for a Eurodollar Borrowing:

 

(a)                                  the Administrative Agent determines (which determination shall be conclusive and binding absent manifest error) that adequate and reasonable means (including, without limitation, by means of an Interpolated Rate) do not exist for ascertaining the Adjusted LIBO Rate or the LIBO Rate, as applicable, for such Interest Period; or

 

(b)                                  the Administrative Agent shall have received notice from the Majority Lenders that the Adjusted LIBO Rate or LIBO Rate, as applicable, determined or to be determined for such Interest Period will not adequately and fairly reflect the cost to such Lenders (as conclusively certified by such Lenders) of making or maintaining their affected 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 or telecopy 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 such Borrowing shall be automatically converted into ABR Loans on the last day of the applicable Interest Period), and (ii) if any Borrowing Request requests a Eurodollar Borrowing, such Borrowing shall be made either (x) as an ABR Borrowing or (y) subject to the prior written consent of the Borrower, at an alternate rate of interest determined by the Majority Lenders as their cost of funds.

 

Section 3.04                            Prepayments.

 

(a)                                  Optional Prepayments .  The Borrower shall have the right at any time and from time to time to prepay, without premium or penalty (except with respect to any amounts due under Section 5.02 ) any Borrowing in whole or in part, subject to prior notice in accordance with Section 3.04(b) .

 

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(b)                                  Notice and Terms of Optional Prepayment .  The Borrower shall notify the Administrative Agent by telephone and/or fax (confirmed by telecopy) of any prepayment hereunder (i) in the case of prepayment of a Eurodollar Borrowing, not later than 12:00 noon, New York City time, three (3) Business Days before the date of prepayment, or (ii) in the case of prepayment of an ABR Borrowing, not later than 12:00 noon, New York City time, 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 shall be applied ratably to the Loans included in the prepaid Borrowing.  Prepayments shall be accompanied by accrued interest to the extent required by Section 3.02 and any amounts due under Section 5.02 .

 

(c)                                   Mandatory Prepayments .

 

(i)                                      Upon Optional Termination and Reduction .  If, after giving effect to any termination or reduction of the Aggregate Maximum Credit Amounts pursuant to Section 2.06(b) , there is a Borrowing Base Deficiency, then the Borrower shall (A) prepay the Borrowings on the date of such termination or reduction in an aggregate principal amount equal to such Borrowing Base Deficiency, and (B) if any Borrowing Base Deficiency remains after prepaying all such Borrowings as a result of an LC Exposure, pay to the Administrative Agent on behalf of the Lenders an amount equal to such remaining Borrowing Base Deficiency to be held as cash collateral as provided in Section 2.09(j) .

 

(ii)                                   Upon Redeterminations and Title Related Borrowing Base Adjustment . If there is a Borrowing Base Deficiency (A) on any Redetermination Date as a result of any redetermination of the Borrowing Base in accordance with Section 2.07 or (B) as a result of a Borrowing Base adjustment pursuant to Section 2.08(b) , then upon such Redetermination Date or the occurrence of such Borrowing Base adjustment (such date, the “ Deficiency Date ”), the Borrower shall, within five (5) Business Days of the Deficiency Date, inform the Administrative Agent that it intends to do one or more of the following ( provided that, if the Borrower fails to elect any of the following actions within such five (5) Business Day period, it shall be deemed to have elected option (A) hereof):

 

(A)                                within forty-five (45) days following such Deficiency Date (1) prepay the Borrowings in an aggregate principal amount equal to such Borrowing Base Deficiency and (2) if any Borrowing Base Deficiency remains after prepaying all of the Borrowings as a result of any LC Exposure, cash collateralize as provided in Section 2.09(j) ,

 

(B)                                commencing on the 30th day after such Deficiency Date and continuing on the same day of each month for the next three months thereafter (or if any such day is not a Business Day, the immediately preceding Business Day), prepay the Borrowings in an amount equal to one-fourth (1/4th) of such Borrowing Base Deficiency so that the Borrowing Base Deficiency is reduced to zero within 120 days of the Deficiency Date, or

 

(C)                                within forty-five (45) days following such Deficiency Date, submit and pledge as Collateral additional Oil and Gas Properties or other collateral reasonably acceptable to the Administrative Agent, owned by the Borrower or any of the other Loan Parties in connection with the determination of the Borrowing Base, which the Administrative Agent and the Required Lenders deem reasonably satisfactory, in their sole discretion, to eliminate such Borrowing Base Deficiency;

 

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provided that, notwithstanding the options set forth above, in all cases, the Borrowing Base Deficiency must be eliminated on or prior to the Termination Date.  If, because of LC Exposure, a Borrowing Base Deficiency remains after prepaying all of the Loans, the Borrower shall cash collateralize Letters of Credit in an amount equal to such remaining Borrowing Base Deficiency as provided in Section 2.09(j) .

 

(iii)                                Upon Certain Adjustments . If there is a Borrowing Base Deficiency, as a result of Borrowing Base adjustment pursuant to the Borrowing Base Adjustment Provisions (other than Section 2.08(b) ), then upon the occurrence of such Borrowing Base adjustment the Borrower shall (A) prepay the Borrowings 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 as a result of an LC Exposure, pay to the Administrative Agent on behalf of the Lenders an amount equal to such remaining Borrowing Base Deficiency to be held as cash collateral as provided in Section 2.09(j) .

 

(iv)                               Application of Prepayments to Types of Borrowings . 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.

 

(v)                                  Application in Connection with Consolidated Cash Balance .  If, at any time, (i) the Borrower has outstanding Borrowings or Letters of Credit or reimbursement obligations in respect of Letters of Credit that are outstanding and (ii) the Consolidated Cash Balance exceeds the Consolidated Cash Balance Threshold as of the close of business on the most recently ended Business Day, then the Borrower shall, within two Business Days, (A) prepay the Borrowings in an aggregate principal amount equal to such excess and (B) if any excess remains after prepaying all of the Borrowings as a result of outstanding LC Exposure, pay to the Administrative Agent an amount equal to such excess to be held as cash collateral as provided in Section 2.09(j) .

 

(vi)                               Interest to be Paid with Prepayments . 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 .

 

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 the applicable Commitment Fee Rate on the average daily unused amount of the Commitment of such Lender during the period from and including the date of this Agreement 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 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 interest 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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(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 same Applicable Margin used to determine the interest rate applicable to Eurodollar Loans 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 date of this Agreement to but excluding the later of the date on which such Lender’s 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 0.15% per annum on the average daily amount of the LC Exposure (excluding any portion thereof attributable to unreimbursed LC Disbursements) during the period from and including the date of this Agreement to but excluding the later of the date of termination of the Commitments and the date on which there ceases to be any LC Exposure, provided that in no event shall such fee be less than $125 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 date of this Agreement; 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 interest 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).

 

(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 in writing between the Borrower and the Administrative Agent.

 

ARTICLE IV
PAYMENTS; PRO RATA TREATMENT; SHARING OF SET-OFFS

 

Section 4.01                            Payments Generally; Pro Rata Treatment; Sharing of Set-offs .

 

(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 12:00 noon, New York City time, 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, but shall be considered received on the date paid for purposes of Section 10.01 .  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.

 

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(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 resulting in such Lender receiving payment of a greater proportion of the aggregate amount of its Loans and participations in LC Disbursements and accrued interest thereon than the proportion received by any other Lender, then the Lender receiving such greater proportion shall purchase (for cash at face value) participations in the Loans and participations in LC Disbursements of other Lenders to the extent necessary 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; 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 any payment made by the Borrower pursuant to and in accordance with the express terms of this Agreement or 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 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 rights of set-off and counterclaim with respect to such participation as fully as if such Lender were a direct creditor of the Borrower 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 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                            Certain Deductions by the Administrative Agent .  If any Lender shall fail to make any payment required to be made by it pursuant to Section 2.05(b) , Section 2.09(d) , Section 2.09(e)  or Section 4.02 then the Administrative Agent may, in its discretion (notwithstanding any contrary provision hereof), apply any amounts thereafter received by the Administrative Agent for the account of such Lender to satisfy such Lender’s obligations under such Sections until all such unsatisfied obligations are fully paid.

 

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Section 4.04                            Disposition of Proceeds .  The Security Instruments contain an assignment by the Borrower and/or the Guarantors to 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 Secured Obligations and other obligations described therein and secured thereby. Notwithstanding the assignment contained in such Security Instruments, unless and until 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 Restricted Subsidiaries and (b) the Lenders hereby authorize the Administrative Agent to take such actions as may be necessary or advisable to cause such proceeds to be paid to the Borrower and/or such Restricted Subsidiaries.

 

Section 4.05                            Payments and Deductions to a Defaulting Lender.

 

(a)                                  If any Lender shall fail to make any payment required to be made by it pursuant to Section 2.05(b) , Section 2.09(d) , Section 2.09(e)  or Section 4.02 then the Administrative Agent may, in its discretion (notwithstanding any contrary provision hereof), apply any amounts thereafter received by the Administrative Agent for the account of such Lender to satisfy such Lender’s obligations under such Sections until all such unsatisfied obligations are fully paid in cash.

 

(b)                                  If a Defaulting Lender as a result of the exercise of a set-off shall have received a payment in respect of its Revolving Credit Exposure which results in its Revolving Credit Exposure being less than its Applicable Percentage of the aggregate Revolving Credit Exposures, then no payments will be made to such Defaulting Lender until such time as all amounts due and owing to the Lenders have been equalized in accordance with each Lender’s respective pro rata share of the aggregate Revolving Credit Exposures.  Further, if at any time prior to the acceleration or maturity of the Loans, the Administrative Agent shall receive any payment in respect of principal of a Loan or a reimbursement of an LC Disbursement while one or more Defaulting Lenders shall be party to this Agreement, the Administrative Agent shall apply such payment first to the Borrowing(s) for which such Defaulting Lender(s) shall have failed to fund its pro rata share until such time as such Borrowing(s) are paid in full or each Lender (including each Defaulting Lender) is owed its Applicable Percentage of all Loans then outstanding.  After acceleration or maturity of the Loans, subject to the first sentence of this Section 4.05(b) , all principal will be paid ratably as provided in Section 10.02(c).

 

(c)                                   Notwithstanding any provision of this Agreement to the contrary, if any Lender becomes a Defaulting Lender, then the following provisions shall apply for so long as such Lender is a Defaulting Lender:

 

(i)                                      Fees shall cease to accrue on the unfunded portion of the Commitment of such Defaulting Lender pursuant to Section 3.05 .

 

(ii)                                   The Commitment, the Maximum Credit Amount, the outstanding principal balance of the Loans and participation interests in Letters of Credit of such Defaulting Lender shall not be included in determining whether all Lenders or the Majority Lenders have taken or may take any action hereunder (including any consent to any amendment or waiver pursuant to Section 12.02 ), provided that any waiver, amendment or modification requiring the consent of each affected Lender and which affects such Defaulting Lender, shall require the consent of such Defaulting Lender; and provided further that any redetermination or affirmation of the Borrowing Base shall occur without participation of a

 

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Defaulting Lender, but the Commitments ( i.e. , the Applicable Percentage of the Borrowing Base of a Defaulting Lender) may not be increased without the consent of such Defaulting Lender.

 

(iii)                                If any LC Exposure exists at the time a Lender becomes a Defaulting Lender then:

 

(A)                                all or any part of such LC Exposure shall be reallocated among the Non-Defaulting Lenders in accordance with their respective Applicable Percentages but only to the extent (1) the sum of all Non-Defaulting Lenders’ Revolving Credit Exposures plus such Defaulting Lender’s LC Exposure does not exceed the total of all Non-Defaulting Lenders’ Commitments, (2) the sum of each Non-Defaulting Lender’s Revolving Credit Exposure plus its reallocated share of such Defaulting Lender’s LC Exposure does not exceed such Non-Defaulting Lender’s Commitment, and (3) the conditions set forth in Section 6.02 are satisfied at such time;

 

(B)                                if the reallocation described in clause (A)  above cannot, or can only partially, be effected, then the Borrower shall, within one (1) Business Day following notice by the Administrative Agent, cash collateralize such Defaulting Lender’s LC Exposure (after giving effect to any partial reallocation pursuant to clause (A)  above) in accordance with the procedures set forth in Section 2.09(e) for so long as such LC Exposure is outstanding;

 

(C)                                if the Borrower cash collateralizes any portion of such Defaulting Lender’s LC Exposure pursuant to this Section 4.05 then the Borrower shall not be required to pay any fees to such Defaulting Lender pursuant to Section 3.05(b)  with respect to such Defaulting Lender’s LC Exposure during the period such Defaulting Lender’s LC Exposure is cash collateralized;

 

(D)                                if the LC Exposure of the Non-Defaulting Lenders is reallocated pursuant to Section 4.05 , then the fees payable to the Lenders pursuant to Section 3.05(a)  and Section 3.05(b)  shall be adjusted in accordance with such Non-Defaulting Lenders’ Applicable Percentages; or

 

(E)                                 if any Defaulting Lender’s LC Exposure is neither cash collateralized nor reallocated pursuant to Section 4.05(c)(iii) , then, without prejudice to any rights or remedies of the Issuing Bank or any Lender hereunder, all commitment fees that otherwise would have been payable to such Defaulting Lender (solely with respect to the portion of such Defaulting Lender’s Commitment that was utilized by such LC Exposure) and letter of credit fees payable under Section 3.05(b)  with respect to such Defaulting Lender’s LC Exposure shall be payable to the Issuing Bank until such LC Exposure is cash collateralized and/or reallocated.

 

(d)                                  So long as any Lender is a Defaulting Lender, the Issuing Bank shall not be required to issue, amend or increase any Letter of Credit, unless it is satisfied that the related exposure will be 100% covered by the Commitments of the Non-Defaulting Lenders and/or cash collateral will be provided by the Borrower in accordance with Section 4.05 , and participating interests in any such newly issued or increased Letter of Credit shall be allocated among Non-Defaulting Lenders in a manner consistent with Section 2.09(d)  (and Defaulting Lenders shall not participate therein).

 

(e)                                   If (i) a Bankruptcy Event or a Bail-In Action with respect to a Lender Parent of any Lender shall occur following the date hereof and for so long as such event shall continue or (ii) the Issuing Bank has a good faith belief that any Lender has defaulted in fulfilling its obligations under one or more other agreements in which such Lender commits to extend credit, the Issuing Bank shall not be required to issue, extend, renew or increase any Letter of Credit, unless the Issuing Bank shall have entered into arrangements with the Borrower or such Lender, satisfactory to the Issuing Bank to defease any risk to it in respect of such Lender hereunder.

 

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(f)                                    In the event that the Administrative Agent, the Borrower and the Issuing Bank each agrees that a Defaulting Lender has adequately remedied all matters that caused such Lender to be a Defaulting Lender, then the LC Exposure of the Lenders shall be readjusted to reflect the inclusion of such Lender’s Commitment and on such date such Lender shall purchase at par such of the Loans or participations in Letters of Credit of the other Lenders as the Administrative Agent shall determine may be necessary in order for such Lender to hold such Loans in accordance with its Applicable Percentage.

 

ARTICLE V
INCREASED COSTS; BREAK FUNDING PAYMENTS; TAXES

 

Section 5.01                            Increased Costs .

 

(a)                                  Eurodollar Changes in Law .  If any Change in Law shall:

 

(i)                                      impose, modify or deem applicable any reserve, special deposit or similar requirement against assets of, deposits with or for the account of, or credit extended by, any Lender (except any such reserve requirement reflected in the Adjusted LIBO Rate);

 

(ii)                                   shall subject any Lender or Issuing Bank to any Taxes (other than (A) Indemnified Taxes or Other Taxes indemnified under Section 5.03 and (B) Excluded 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 London interbank market any other condition affecting this Agreement or Eurodollar Loans made by such Lender;

 

and the result of any of the foregoing shall be to increase the cost to such Lender or Issuing Bank of making, converting into, continuing or maintaining any Eurodollar Loan (or of maintaining its obligation to make any such Loan) or to reduce the amount of any sum received or receivable by such Lender or Issuing Bank (whether of principal, interest or otherwise), then the Borrower will pay to such Lender or Issuing Bank such additional amount or amounts as will compensate such Lender or Issuing Bank for such additional costs incurred or reduction suffered.

 

(b)                                  Capital and Liquidity Requirements .  If any Lender or the Issuing Bank determines that any Change in Law regarding capital requirements 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 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 or liquidity), 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 .  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 thirty (30) days after receipt thereof.

 

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(d)                                  Effect of Failure or Delay in Requesting Compensation .  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 or reductions incurred more than 180 days prior to the date that such Lender or 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; provided further that, if the Change in Law giving rise to such increased costs or reductions is retroactive, then the 180-day 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, or (c) the failure to borrow, convert, continue or prepay any Eurodollar Loan on the date specified in any notice delivered pursuant hereto, or (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) , 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 ten (10) days after receipt thereof.

 

Section 5.03                            Taxes .

 

(a)                                  Payments Free of Taxes .  Any and all payments by or on account of any obligation of the Borrower or any Guarantor under any Loan Document shall be made free and clear of and without deduction for any Taxes, except as required by applicable law. If a withholding agent shall be required under applicable law (as determined in the good faith discretion by the applicable withholding agent) to deduct any Taxes from such payments, then (i) the applicable withholding agent shall make such deductions, (ii) the applicable withholding agent shall pay the full amount deducted to the relevant Governmental Authority in accordance with applicable law and (iii) if such Tax is an Indemnified Tax or Other Tax, the sum payable shall be increased as necessary so that after making all required deductions (including deductions applicable to additional sums payable under this Section 5.03), the Administrative Agent or Lender (as the case may be) receives an amount equal to the sum it would have received had no such deductions been made.

 

(b)                                  Payment of Other Taxes by the Borrower .  The Borrower shall pay any Other Taxes to the relevant Governmental Authority in accordance with applicable law, or at the option of the Administrative Agent timely reimburse it for such Other Taxes.

 

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(c)                                   Indemnification by the Borrower .  The Borrower and Guarantors shall jointly and severally indemnify the Administrative Agent and each Lender, within ten (10) days after written demand therefor, for the full amount of any Indemnified Taxes or Other Taxes paid by the Administrative Agent, such Lender, on or with respect to any payment by or on account of any obligation of the Borrower hereunder (including Indemnified Taxes or Other Taxes imposed or asserted on or attributable to amounts payable under this Section 5.03 ) and any penalties, interest and reasonable expenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes or Other Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority.  A certificate of the Administrative Agent, a Lender as to the amount of such payment or liability under this Section 5.03 shall be delivered to the Borrower and shall be conclusive absent manifest error.

 

(d)                                  Evidence of Payments .  As soon as practicable after any payment of Taxes by the Borrower or a Guarantor to a Governmental Authority pursuant to this Section 5.03 , the Borrower 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.

 

(e)                                   Foreign Lenders .  (i) Any Lender that is entitled to an exemption from or reduction of withholding tax with respect to payments under this Agreement or any other Loan Document shall deliver to the Borrower (with a copy to the Administrative Agent), at the time or times reasonably requested by the Borrower, such properly completed and executed documentation reasonably requested by the Borrower 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 a Borrower or the Administrative Agent, shall deliver such other documentation prescribed by applicable law or reasonably requested by such Borrower or the Administrative Agent as will enable such 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, execution and submission of such documentation (other than such documentation set forth in Section 5.03(e)(i)(A) , (i)(B)  and (i)(D)  below) shall not be required if in the Lender’s 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.

 

(i)                                      Without limiting the generality of the foregoing:

 

(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 originals 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:

 

(1)                                  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 originals of IRS Form W-8BEN or W-8BEN-E 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 or W-8BEN-E

 

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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;

 

(2)                                  executed originals of IRS Form W-8ECI;

 

(3)                                  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 G-1 to the effect that (A) 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 and (B) the interest payments in question are not effectively connected with a U.S. trade or business conducted by such Foreign Lender or are effectively connected but are not includible in the Foreign Lender’s gross income for U.S. federal income tax purposes under an income tax treaty (a “ U.S. Tax Compliance Certificate ”) and (y) executed originals of IRS Form W-8BEN or W-8BEN-E; or

 

(4)                                  to the extent a Foreign Lender is not the beneficial owner (for example, where the Foreign Lender is a partnership), executed originals of IRS Form W-8IMY, accompanied by a Form W-8ECI, W-8BEN, W-8BEN-E, U.S. Tax Compliance Certificate substantially in the form of Exhibit G-2 or Exhibit G-3 , Form W-9, and/or other certification documents from each beneficial owner, as applicable; provided that if the Foreign Lender is a partnership (and not a participating Lender) and one or more beneficial owners 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 G-4 on behalf of each such beneficial owner;

 

(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 originals 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.

 

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(f)                                    Each Lender shall severally indemnify the Administrative Agent, within ten (10) days after demand therefor, for (i) any Taxes attributable to such Lender (but only to the extent that the Borrower or Guarantors have not already indemnified the Administrative Agent for such Taxes and without limiting the obligation of the Borrower and Guarantors to do so) and (ii) any Taxes attributable to such Lender’s failure to comply with the provisions of Section 12.04(c)  relating to the maintenance of a Participant Register, in either 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(f) .

 

(g)                                   Tax Refunds .  If the Administrative Agent or a Lender determines, in its sole discretion, that it has received a refund of any Taxes or Other Taxes as to which it has been indemnified by the Borrower or with respect to which the Borrower has paid additional amounts pursuant to this Section 5.03 , it shall pay over such refund to the Borrower (but only to the extent of indemnity payments made, or additional amounts paid, by the Borrower under this Section 5.03 with respect to the Taxes or Other Taxes giving rise to such refund), net of all out-of-pocket expenses of the Administrative Agent or such Lender and without interest (other than any interest paid by the relevant Governmental Authority with respect to such refund); provided , that the Borrower, upon the request of the Administrative Agent or such Lender, agrees to repay the amount paid over to the Borrower (plus any penalties, interest or other charges imposed by the relevant Governmental Authority) to the Administrative Agent or such Lender in the event the Administrative Agent or such Lender is required to repay such refund to such Governmental Authority.  This Section 5.03 shall not be construed to require the Administrative Agent or any Lender to make available its tax returns (or any other information relating to its taxes which it deems confidential) to the Borrower or any other Person.

 

(h)                                  For purposes of this Section 5.03 , the term Lender shall include the Issuing Bank.

 

Section 5.04                            Mitigation Obligations; Replacement of Lenders .

 

(a)                                  Designation of Different Lending Office .  If any Lender requests compensation under Section 5.01 , or if the Borrower is required to pay any additional amount to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 5.03 , then such Lender shall 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 in connection with any such designation or assignment.

 

(b)                                  Replacement of Lenders .  If (i) any Lender requests compensation under Section 5.01 , (ii) the Borrower is required to pay any additional amount to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 5.03 , (iii) any Lender becomes a Defaulting Lender or (iv) any Lender has failed to consent to a proposed amendment, waiver, discharge or termination that requires the consent of all the Lenders (or the affected Lenders and such Lender is an affected Lender) pursuant to Section 12.02 and with respect to which the Lenders holding at least eighty-five percent (85%) of the outstanding aggregate principal amount of the Loans or participation interests in

 

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Letters of Credit have consented, then the Borrower may, at its sole expense, 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 Section 12.04(b) ), all its interests, rights and obligations under this Agreement to an assignee that shall assume such obligations (which assignee may be another Lender, if a Lender accepts such assignment); provided that (1) the Borrower shall have received the prior written consent of the Administrative Agent, which consent shall not unreasonably be withheld, (2) 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, 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) and (3) 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.  A Lender shall not be required to make any such assignment and 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.

 

(c)                                   Replacement for Borrowing Base Increase .  If a Lender does not approve a proposed Borrowing Base increase which has been approved by the Lenders holding at least eighty-five percent (85%) of the outstanding aggregate principal amount of the Loans or participation interests in Letters of Credit, then the Borrower may, at its sole expense, within three (3) Business Days after the Borrower receives the New Borrowing Base Notice with respect to such increase, at the discretion of such existing Lender either:

 

(A)                                cause such existing Lender to assign and delegate, without recourse, all its interests, rights and obligations under this Agreement to one or more assignees proposed by the Borrower that shall assume such obligations (which assignees may be another Lender, if a Lender accepts such assignment), provided that such existing 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, from the assignee(s) (to the extent of such outstanding principal and accrued interest and fees) or the Borrower (in the case of all other amounts), or

 

(B)                                cause such existing Lender to reduce its Maximum Credit Amount based upon a new Applicable Percentage for such existing Lender that is calculated by dividing such existing Lender’s then outstanding Revolving Credit Exposure by the Borrowing Base determined after the increase of the Borrowing Base and assigning the balance of its Maximum Credit Amount to an assignee or assignees proposed by the Borrower that shall assume such amount of the assigning Lender’s Maximum Credit Amount (which assignee may be another Lender, if a Lender accepts such assignment).

 

Any such replacement of an existing Lender or partial assignment of an existing Lender’s Maximum Credit Amount shall be in accordance with and subject to the restrictions contained in Section 12.04(b) .

 

ARTICLE VI
CONDITIONS PRECEDENT

 

Section 6.01                                        Closing Date .  The effectiveness of the conversion or rolling over of the aggregate amount of the Existing Loans and the aggregate amount of commitments under the DIP Facility into Loans and commitments under the Exit Facility and the obligation of the Lenders to make (or to be deemed to have made) Loans and of the Issuing Bank to issue (or to be deemed to have issued) Letters of Credit on the Closing Date shall not become effective until the date on which each of the following conditions is satisfied (or waived in accordance with Section 12.02 ):

 

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(a)                                  Credit Agreement . The Loan Documents shall be in form and substance reasonably satisfactory to the Borrower and the Administrative Agent and in connection therewith 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 signed on behalf of such party.

 

(b)                                  Loan Documents .

 

(i)                                      Execution of Security Instruments .  The Administrative Agent shall have received from each party thereto counterparts (in such number as may be requested by the Administrative Agent) of the Security Instruments, including the Guaranty Agreement and Perfection Certificate, described on Exhibit E that have been executed and delivered by a Responsible Officer of each party thereto.  (A) The Administrative Agent shall be reasonably satisfied that, upon recording the Mortgages, the reaffirmation agreements or other documents reasonably satisfactory to the Administrative Agent, if any, in each case, in the appropriate filing offices, it shall have a first priority Lien on at least 95% of the PV-9 of the Borrowing Base Properties and (B) the Borrower shall have executed and delivered Control Agreements in connection with its Deposit Accounts or Securities Accounts (other than any Excluded Accounts), as applicable.

 

(ii)                                   Filings, Registrations and Recordings .  Each Security Instrument and any other document (including any UCC financing statement) required by any Security Instrument or under law or reasonably requested by the Administrative Agent to be filed, registered or recorded in order to create in favor of the Administrative Agent, for the benefit of the Secured Parties, a perfected Lien on the Collateral, prior and superior in right to any other Person shall be in proper form for filing, registration or recordation.

 

(iii)                                Pledged Stock; Stock Powers; Pledged Notes . The Administrative Agent shall have received (A) the certificates (if any) representing the shares of Equity Interests required to be pledged pursuant to the Guaranty Agreement, together with an undated stock power for each such certificate executed in blank by a duly authorized officer of the pledgor thereof and (B) each promissory note (if any) required to be pledged to the Administrative Agent pursuant to the Guaranty Agreement endorsed (without recourse) in blank (or accompanied by an executed transfer form in blank) by the pledgor thereof.

 

(c)                                   Fees .  All fees required to be paid to the Administrative Agent and the Lenders on or before the Closing Date shall have been paid. All reasonable and documented out-of-pocket fees and expenses (including reasonable and documented fees and expenses of outside counsel) required to be paid to the Administrative Agent and the Lenders on or before the Closing Date shall have been paid.

 

(d)                                  Bankruptcy Court Documentation .  The Bankruptcy Court shall have entered the Confirmation Order and the Confirmation Order shall not be subject to a stay and not have been reversed, vacated, amended, supplemented or otherwise modified in any manner that would reasonably be expected to adversely affect the interests of the Secured Parties and the Confirmation Order shall have inter alia authorized and approved the Borrower and its Restricted Subsidiaries to execute, deliver and perform under the Loan Documents and included a customary release for the DIP Lenders to the extent such release is not included in the Plan of Reorganization. The Plan of Reorganization and all transactions contemplated therein or in the Confirmation Order to occur on the effective date of the Plan of Reorganization shall have been (or concurrently with the occurrence of the Closing Date, shall be) substantially consummated in accordance with the terms thereof and in compliance with applicable law and the Bankruptcy Court and regulatory approvals. The respective Indebtedness or obligations of the Loan Parties and any Liens securing such Indebtedness or obligations that are outstanding immediately

 

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after the consummation of the Plan of Reorganization shall not exceed the amount contemplated by the Plan of Reorganization.

 

(e)                                   Solvency Certificate .  The Administrative Agent shall have received the Solvency Certificate (after giving effect to the Plan of Reorganization) from a Financial Officer.

 

(f)                                    Secretary’s Certificates .  The Administrative Agent shall have received a certificate of a Responsible Officer of each Loan Party setting forth (i) resolutions of its board of directors or other appropriate governing body with respect to the authorization of such Loan Party to execute and deliver the Loan Documents to which it is a party and to enter into the transactions contemplated in those documents, (ii) the officers of such Loan Party (A) who are authorized to sign the Loan Documents to which such Loan Party is a party and (B) 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 by-laws or other applicable organizational documents of such Loan Party, certified by such Responsible Officer 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 such Loan Party to the contrary.

 

(g)                                   Legal Opinions .  The Administrative Agent shall have received an opinion of (i) Weil, Gotshal & Manges LLP, counsel for the Loan Parties, (ii) Conner & Winters, LLP, special Oklahoma counsel for the Loan Parties, (iii)  Davis Graham & Stubbs LLP, special Colorado counsel for the Loan Parties and (iv) local counsel in any jurisdictions where Security Instruments will be recorded to perfect first priority Liens on any Borrowing Base Properties, in each case in form and of substance reasonably acceptable to the Administrative Agent.

 

(h)                                  Exit Facility Conversion Date .  The Closing Date shall occur not later than the Maturity Date (as defined in the DIP Credit Agreement).

 

(i)                                      Financial Statements .  (i) To the extent not otherwise included in the Disclosure Statement, the Administrative Agent shall have received a pro forma consolidated balance sheet of the Borrower and its Restricted Subsidiaries as of the most recent fiscal quarter ended prior to the Closing Date and (ii) the Administrative Agent shall have received any pro forma consolidated balance sheet of the Borrower and its Restricted Subsidiaries that are included in the disclosure statement relating to the Plan of Reorganization (it being understood and agreed that the condition set forth in this clause (ii)  has been satisfied prior to the Closing Date); provided that, in each case, for purposes of such financial statements, working capital expenditures will not be required to be included in such financial statements.

 

(j)                                     Approvals and Consents . The Administrative Agent shall have received a certificate of a Responsible Officer of the Borrower in form and substance reasonably satisfactory to the Administrative Agent certifying that, after giving effect to the Confirmation Order and the Plan of Reorganization, all necessary governmental and third party consents and approvals necessary in connection with the Exit Facility and the transactions contemplated thereby shall have been obtained (without the imposition of any materially adverse conditions that are not reasonably acceptable to the Administrative Agent) and shall remain in effect; and no material applicable law or regulation shall prevent the Loan Parties’ performance of their obligations under the Exit Facility or the transactions contemplated thereby.

 

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(k)                                  Insurance . 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 .

 

(l)                                      No Default Under the DIP Facility .  No “Default” or “Event of Default” shall have occurred and be continuing under the DIP Facility.

 

(m)                              DIP Facility Obligations .  All Secured Obligations under and as defined in the DIP Credit Agreement shall have been (or concurrently with the Closing Date shall be) refunded, refinanced, rolled over, entitled to be secured with the Secured Obligations pursuant to this Agreement and the other Loan Documents or repaid in full in cash with Loans made or deemed made, and Letters of Credit issued or deemed issued, as applicable, under this Agreement.

 

(n)                                  Lien Searches .  The Administrative Agent shall have received appropriate UCC searches reflecting no prior Liens encumbering the Properties of the Borrower and the Loan Parties other than those being released on or prior to the Closing Date and those permitted by Section 9.03 .

 

(o)                                  Minimum Liquidity .  The Administrative Agent shall have received a certificate of a Responsible Officer of the Borrower in form and substance reasonably satisfactory to the Administrative Agent certifying that after giving effect to any Borrowings as of the Closing Date, the Borrower has Liquidity of not less than $225.0 million on the Closing Date.

 

(p)                                  Patriot Act .  Each Lender who has requested in writing the same at least ten (10) Business Days prior to the Closing Date shall have received, at least three (3) Business Days prior to the Closing Date, “know your customer” and similar information.

 

(q)                                  Title Information .  The Administrative Agent shall have received title information as the Administrative Agent may reasonably require, reasonably satisfactory to the Administrative Agent, setting forth the status of title to at least 85% of the PV-9 of the Borrowing Base Properties.

 

(r)                                     Initial Reserve Report .  The Administrative Agent shall have received the Initial Reserve Report accompanied by a certificate covering the matters described in Section 8.12(c)(i) , Section 8.12(c)(ii) , Section 8.12(c)(iii) , Section 8.12(c)(v) and Section 8.12(c)(vi) .

 

(s)                                    Corporate Status; Good Standing Certificates .  The Administrative Agent shall have received certificates of the appropriate State agencies with respect to the existence, qualification and good standing of each Loan Party in each jurisdiction where any such Loan Party is organized or owns Borrowing Base Properties.

 

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 ) at or prior to 5:00 p.m., New York City time, on September 9, 2016 (and, in the event such conditions are not so satisfied or waived, the Commitments shall terminate at such time).

 

Section 6.02                                        Each Credit Event .  The obligation of each Lender to make a Loan on the occasion of any Borrowing (including the 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:

 

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(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 or Event of Default shall have occurred and be continuing.

 

(b)                                  All representations and warranties of the Loan Parties in each applicable Loan Document shall be true and correct in all material respects 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, with the same effect as though made on and as of such date, except in the case of any representation and warranty which (A) expressly relates to a given date, such representation and warranty shall be true and correct in all material respects as of the respective date and (B) is qualified by a materiality or Material Adverse Effect standard in which case such representation and warranty shall be true and correct in all respects.

 

(c)                                   (i) the Consolidated Cash Balance immediately prior to such Borrowing and (ii) the pro forma Consolidated Cash Balance, immediately after giving effect to such Borrowing, shall not exceed the Consolidated Cash Balance Threshold.

 

(d)                                  The receipt by the Administrative Agent of a Borrowing Request in accordance with Section 2.03 or a request for a Letter of Credit (or an amendment, extension or renewal of a Letter of Credit) in accordance with Section 2.09(b) , as applicable.

 

Each request for such Borrowing or 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 Section 6.02(c) .

 

ARTICLE VII
REPRESENTATIONS AND WARRANTIES

 

The Borrower represents and warrants to the Lenders that:

 

Section 7.01                                        Organization; Powers .  Each of the Borrower and the Restricted 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 .  After giving effect to the Confirmation Order and the Plan of Reorganization, the Transactions are within the Borrower’s and each Guarantor’s constituent powers and have been duly authorized by all necessary corporate, limited liability company or partnership, and, if required, stockholder action (including, without limitation, any action required to be taken by any class of directors of the Borrower, whether interested or disinterested, in order to ensure the due authorization of the Transactions).  Each Loan Document to which a Loan Party 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 applicable bankruptcy, insolvency, reorganization, moratorium 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.

 

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Section 7.03                                        Approvals; No Conflicts .  After giving effect to the Confirmation Order and the Plan of Reorganization, 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, nor is any such consent, approval, registration, filing or other action necessary for the validity or enforceability of any Loan Document or the consummation of the Transactions, 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 and (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, (b) will not violate any applicable law or regulation or the charter, by-laws or other organizational documents of the Borrower or any Restricted 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 Restricted Subsidiary or its Properties, or give rise to a right thereunder to require any payment to be made by the Borrower or such Restricted Subsidiary and (d) will not result in the creation or imposition of any Lien on any Property of the Borrower or any Restricted Subsidiary (other than the Liens created by the Loan Documents).

 

Section 7.04                                        Financial Condition; No Material Adverse Effect .

 

(a)                                  The Borrower has heretofore furnished to the Lenders its consolidated balance sheet and statements of income, stockholders equity and cash flows (i) as of and for the fiscal year ended December 31, 2015, reported on by Deloitte & Touche LLP, independent public accountants, and (ii) as of and for the fiscal quarter and the portion of the fiscal year ended June 30, 2016.  Such financial statements present fairly, in all material respects, the financial position 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 June 30, 2016, (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 Restricted Subsidiaries has been conducted only in the ordinary course consistent with past business practices.

 

(c)                                   Neither the Borrower nor any Restricted Subsidiary has on the date hereof any material Indebtedness (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 (other than the Gas Balancing Obligations and the Swap Agreements listed on Schedule 7.20 ) which are not referred to or reflected or provided for in the Financial Statements.

 

(d)                                  The Borrower has heretofore furnished to the Lenders its pro forma consolidated balance sheet as of the Closing Date after giving pro forma effect to the transactions contemplated by this Agreement, including the repayment of the DIP Credit Agreement.  Such pro forma balance sheet presents fairly, in all material respects, the pro forma balance sheet of the Borrower and its Consolidated Subsidiaries as of such date in accordance with GAAP.

 

Section 7.05                                        Litigation.

 

(a)                                  After giving effect to the Confirmation Order and the Plan of Reorganization and 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,

 

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threatened against or affecting the Borrower or any Restricted 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.

 

Section 7.06                                        Environmental Matters .  Except as could not be reasonably expected to have a Material Adverse Effect (or with respect to (b), (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 Restricted 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 Restricted Subsidiary nor the operations currently conducted thereon or, to the knowledge of the Borrower, by any prior owner or operator of such Property or operation, 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 Restricted 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 Restricted Subsidiary are in compliance with the terms and conditions of all such notices, permits, licenses and similar authorizations.

 

(d)                                  all hazardous substances, solid waste and oil and gas waste, if any, generated at any and all Property of the Borrower or any Restricted Subsidiary have in the past been transported, treated and disposed of in accordance with Environmental Laws and so as not to pose an imminent and substantial endangerment to public health or welfare or the environment, and, to the knowledge of the Borrower, all such transport carriers and treatment and disposal facilities have been and are operating in compliance with Environmental Laws and so as not to pose an imminent and substantial endangerment to public health or welfare or the environment, and are not the subject of any existing, pending or threatened action, investigation or inquiry by any Governmental Authority in connection with any 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 Restricted Subsidiary except in compliance with Environmental Laws and so as not to pose an imminent and substantial endangerment to public health or welfare or the environment.

 

(f)                                    to the extent applicable, all Property of the Borrower and each Restricted Subsidiary currently satisfies all design, operation, and equipment requirements imposed by the OPA, and

 

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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 Restricted 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.

 

Section 7.07                                        Compliance with the Laws and Agreements; No Defaults .

 

(a)                                  After giving effect to the Confirmation Order and the Plan of Reorganization, each of the Borrower and each Restricted 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.

 

(b)                                  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 the 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)                                  Except as could not reasonably be expected to result in a Material Adverse Effect, the Borrower, the Subsidiaries and each ERISA Affiliate have complied in all respects with ERISA and, where applicable, the Code regarding each Plan.

 

(b)                                  Except as could not reasonably be expected to result in a Material Adverse Effect, each Plan is, and has been, established and maintained in substantial compliance with its terms, ERISA and, where applicable, the Code.

 

(c)                                   Except as could not reasonably be expected to result in a Material Adverse Effect, 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), (l) or (m) 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.

 

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(d)                                  Except as could not reasonably be expected to result in a Material Adverse Effect, 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.

 

(e)                                   Neither the Borrower, nor any of the Subsidiaries 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, or a Subsidiary in its sole discretion at any time without any material liability other than the payment of accrued benefits under such plan.

 

(f)                                    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 employee pension benefit plan, as defined in section 3(2) of ERISA, that is subject to Title IV of ERISA, section 302 of ERISA or section 412 of the Code.

 

Section 7.11                                        Disclosure; No Material Misstatements .  None of the reports, financial statements, certificates or other information furnished by or on behalf of the Borrower or any Restricted 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 (it being understood that actual results may vary from the projected financial information).  There is no fact peculiar to the Borrower or any Restricted 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 Restricted Subsidiary on the date hereof in connection with the transactions contemplated hereby.  No statements or conclusions exist in any Reserve Report which are based upon or include misleading information or which fail to take into account material information regarding the matters reported therein to the extent such misstatement, misleading information or failure could reasonably be expected to have a Material Adverse Effect.

 

Section 7.12                                        Insurance .  The Borrower has, and has caused all its Restricted 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 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 Restricted Subsidiaries.  The Administrative Agent and the Lenders have been named as additional insureds in respect of such liability insurance policies and the Administrative Agent has been named as loss payee with respect to Property loss insurance.

 

Section 7.13                                        Restriction on Liens .  After giving effect to the Confirmation Order and the Plan of Reorganization, neither the Borrower nor any of the Restricted Subsidiaries is a party to any material agreement or arrangement (other than 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 Secured Obligations and the Loan Documents.

 

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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.  Schedule 7.14 , as may be supplemented from time to time, identifies each Subsidiary as either Restricted or Unrestricted, and each Restricted Subsidiary on such schedule is a Wholly-Owned Subsidiary.

 

Section 7.15                                        Location of Business and Offices .  After giving effect to the Confirmation Order and the Plan of Reorganization, 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 Halcón Resources Corporation; and the organizational identification number of the Borrower in its jurisdiction of organization is 3761452 (or, in each case, as set forth in a notice delivered to the Administrative Agent pursuant to Section 8.01(m)  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(m)  and Section 12.01(c) ).  Each Restricted 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(m) ).

 

Section 7.16                                        Properties; Titles, Etc .  After giving effect to the Confirmation Order and the Plan of Reorganization:

 

(a)                                  Each of the Borrower and the Restricted Subsidiaries has good and defensible title to the Oil and Gas Properties evaluated in the most recently delivered Reserve Report and good title to all its other 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 Restricted 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 Restricted 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 Restricted 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 Restricted 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.

 

(c)                                   The rights and Properties presently owned, leased or licensed by the Borrower and the Restricted Subsidiaries including, without limitation, all easements and rights of way, include all rights and Properties necessary to permit the Borrower and the Restricted 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 Restricted Subsidiaries which are reasonably necessary for the operation of their businesses are in good working condition and are maintained in accordance with prudent business standards, except for any such failure to maintain such

 

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Properties, individually or in the aggregate, that could not reasonably be expected to result in a Material Adverse Effect.

 

(e)                                   The Borrower and each Restricted 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 Restricted 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 Restricted 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 .  After giving effect to the filing of the Chapter 11 Cases, except for such acts or failures to act as could not be reasonably expected to have a Material Adverse Effect, the Oil and Gas Properties (and Properties unitized therewith) of the Borrower and its Restricted 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 Restricted 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 Restricted 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 Restricted Subsidiary is deviated from the vertical more than the maximum permitted by Governmental Requirements, 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 Restricted 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 Restricted 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 Restricted Subsidiaries, in a manner consistent with the Borrower’s or its Restricted 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).

 

Section 7.18                                        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 gas imbalances, take or pay or other prepayments which would require the Borrower or any of its Restricted Subsidiaries to deliver Hydrocarbons produced from the Oil and Gas Properties at some future time without then or thereafter receiving full payment therefor exceeding a volume equal to 2% of the total proved reserves (on an mcf equivalent basis) set forth in the most recently delivered Reserve Report in the aggregate.

 

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 Restricted Subsidiaries are receiving a price for all production sold

 

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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 Restricted 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 report required to be delivered by the Borrower pursuant to Section 8.01(e) , sets forth, a true and complete list of all Swap Agreements of the Borrower and each Restricted Subsidiary, the material terms thereof (including the type, term, effective date, termination date and notional amounts or volumes), 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 (a) to refund, refinance and replace the Existing Loans and Existing Letters of Credit outstanding on the Closing Date, (b) to fund the Loan Parties’ emergence from the Chapter 11 Cases, (c) to provide for working capital and other general corporate purposes, including to fund any interest payments under the Second Lien Notes as and to the extent set forth in the Confirmation Order and for lease acquisitions, exploration and production operations, development (including the drilling and completion of producing wells) and acquisitions of Oil and Gas Properties permitted hereunder, (d) for payments contemplated by the Plan of Reorganization (consistent with the Restructuring Support Agreement) and (e) for fees and expenses related to the Transactions.  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.

 

Section 7.22                                        Solvency .  After giving effect to the consummation of the Plan of Reorganization, the Transactions and the other transactions contemplated hereby and thereby (including at the time of and immediately after giving effect to any Borrowing or the issuance, amendment, renewal or extension of any Letter of Credit, as applicable), (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 and liabilities (including subordinated liabilities) of the Borrower and the Guarantors on a consolidated basis, as the debt and liabilities (including subordinated liabilities) become absolute and mature, (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 and liabilities (including subordinated liabilities) beyond its ability to pay such debt and liabilities (including subordinated liabilities) (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 and liabilities (including subordinated liabilities) become absolute and mature 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                                        Money Laundering .  The operations of the Borrower and its Subsidiaries are and have been conducted at all times in material compliance with applicable financial recordkeeping and reporting requirements including those of the Bank Secrecy Act, as amended by the

 

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USA Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)) (the “ Patriot Act ”), and the applicable anti-money laundering statutes of jurisdictions where the Borrower and its Subsidiaries conduct business, the rules and regulations thereunder and any related or similar rules, regulations or guidelines, issued, administered or enforced by any governmental agency (collectively, the “ Money Laundering Laws ”), and no material action, suit or proceeding by or before any court or governmental agency, authority or body or any arbitrator involving the Borrower or any of its Subsidiaries with respect to the Money Laundering Laws is pending or, to the best knowledge of the Borrower, threatened.

 

Section 7.24                                        Foreign Corrupt Practices .  Neither the Borrower nor any of its Subsidiaries, nor any director, officer, agent or employee of the Borrower or any of its Subsidiaries is aware of or has taken any action, directly or indirectly, that would result in a material violation by such Persons of the FCPA, including without limitation, making use of the mails or any means or instrumentality of interstate commerce corruptly in furtherance of an offer, payment, promise to pay or authorization of the payment of any money, or other property, gift, promise to give, or authorization of the giving of anything of value to any “foreign official” (as such term is defined in the FCPA) or any foreign political party or official thereof or any candidate for foreign political office, in contravention of the FCPA; and, the Borrower and its Subsidiaries have conducted their business in material compliance with the FCPA and have instituted and maintain policies and procedures designed to ensure, and which are reasonably expected to continue to ensure, continued compliance therewith.

 

Section 7.25                                        Anti-Corruption Laws; Sanctions; OFAC .

 

(a)                                  The Borrower has implemented and maintains in effect policies and procedures designed to ensure compliance by the Borrower, its Subsidiaries and their respective directors, officers, employees and agents with applicable Anti-Corruption Laws and applicable Sanctions.

 

(b)                                  The Borrower, its Subsidiaries, their respective officers and employees and, to the knowledge of the Borrower, its directors and agents are in compliance with Anti-Corruption Laws and applicable Sanctions in all material respects and are not knowingly engaged in any activity that would reasonably be expected to result in any Loan Party being designated as a Sanctioned Person.

 

(c)                                   None of (i) the Borrower, any Subsidiary or any of their respective directors, officers or employees, or (ii) to the knowledge of the Borrower, any agent of the Borrower that will act in any capacity in connection with or benefit from the credit facility established hereby, is a Sanctioned Person.  The Borrower will not directly or, to its knowledge, indirectly use the proceeds from the Loans or lend, contribute or otherwise make available such proceeds to any Subsidiary, joint venture partner or other Person, for the purpose of financing the activities of any Person currently subject to any applicable Sanctions.

 

Section 7.26                                        EEA Financial Institutions .  Neither the Borrower nor any of its Restricted Subsidiaries is an EEA Financial Institution.

 

ARTICLE VIII
AFFIRMATIVE COVENANTS

 

Until Payment in Full, 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:

 

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(a)                                  Annual Financial Statements .  As soon as available, but in any event in accordance with then applicable law and not later than ninety (90) days after the end of each fiscal year of the Borrower, commencing with the fiscal year ending December 31, 2016, 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 (other than after the implementation of “fresh start” accounting) in comparative form the figures for the previous fiscal year, all reported on by 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, except for any such qualification or exception resulting solely from the impending maturity date of the Loans) 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 forty-five (45) days after the end of each of the first three fiscal quarters of each fiscal year of the Borrower, its consolidated balance sheet and related 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 (other than after the implementation of “fresh start” accounting) 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.

 

The Borrower represents and warrants that the Borrower and each of its Subsidiaries file the financial statements provided under Section 8.01(a)  and Section 8.01(b)  with the SEC and/or make such financial statements available to potential holders of their 144A securities, and, accordingly, unless the Borrower has marked such financial statements as “PRIVATE”, the Borrower hereby (1) authorizes the Administrative Agent to make the financial statements to be provided under Section 8.01(a)  and Section 8.01(b) , along with the Loan Documents, available to Public-Siders and (2) agrees that at the time such financial statements are provided hereunder, they shall already have been made available to holders of its securities.  The Borrower will not request that any other material be posted to Public-Siders without expressly representing and warranting to the Administrative Agent in writing that (1) such materials do not constitute material non-public information within the meaning of the federal securities laws or (2) make such materials that do constitute material non-public information within the meaning of the federal securities laws publicly available by press release or public filing with the SEC.

 

(c)                                   Certificate of Financial Officer — Compliance .  Concurrently with any delivery of financial statements under Section 8.01(a)  or Section 8.01(b) , a Compliance Certificate (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) certifying that the Borrower has been in compliance with Section 9.01 at such times during the period covered by such financial statements as required therein and in connection therewith, setting forth reasonably detailed calculations demonstrating compliance with Section 8.13(b)  and 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 and, if any such change has occurred, specifying the effect of such change on the financial statements accompanying such certificate.

 

(d)                                  Certificate of Financial Officer — Consolidating Information .  If, at any time, all of the Consolidated Subsidiaries of the Borrower are not Consolidated Restricted Subsidiaries, then

 

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concurrently with any delivery of financial statements under Section 8.01(a)  or Section 8.01(b) , a certificate of a Financial Officer setting forth consolidating spreadsheets that show all Consolidated Unrestricted Subsidiaries and the eliminating entries, in such form as would be presentable to the auditors of the Borrower.

 

(e)                                   Certificate of Financial Officer — Swap Agreements .  Concurrently with any delivery of any Reserve Report or at such other times as may be reasonably requested by the Administrative Agent, a certificate of a Financial Officer, in form and substance satisfactory to the Administrative Agent, setting forth as of the last Business Day of the calendar month preceding the delivery of such Reserve Report, a true and complete list of all Swap Agreements of the Borrower and each Restricted Subsidiary, the material terms thereof (including the type, term, effective date, termination date and notional amounts or volumes), 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.

 

(f)                                    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.

 

(g)                                   Other Accounting Reports .  Promptly upon receipt thereof, a copy of each other material report or opinion 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 of the Borrower or any such Subsidiary, to such material report or opinion.

 

(h)                                  SEC and Other Filings; Reports to Shareholders .  Promptly after the same become publicly available, and upon the request of the Lenders, copies of all periodic and other reports, proxy statements and other materials filed by the Borrower or any Subsidiary with the SEC, or with any national securities exchange and distributed by the Borrower to its shareholders.  Documents required to be delivered pursuant to Sections 8.01(a) , Section 8.01(b)  and this Section 8.01(h)  may be delivered electronically and if so delivered, shall be deemed to have been delivered on the date on which the Administrative Agent receives notice from the Borrower, electronically or in writing, that such documents have been posted to EDGAR and/or on its home page on the worldwide web (or such other free, publicly-accessible internet database that may be established and maintained by the SEC as a substitute for, or successor to, EDGAR).

 

(i)                                      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 .

 

(j)                                     Lists of Purchasers .  Concurrently with the delivery of the annual financial statements in accordance with Section 8.01(a) , a list of Persons who purchased at least 70% of the aggregate production of Hydrocarbons from the Borrower and its Restricted Subsidiaries during the year presented in such annual financial statements.

 

(k)                                  Notice of Sales of Oil and Gas Properties and Unwinds of Swap Agreements .  In the event the Borrower or any Restricted Subsidiary intends to sell, transfer, assign or otherwise Dispose of at least the greater of $10.0 million or 5% of the then effective Borrowing Base worth of any Oil and

 

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Gas Properties, Swap Agreements or any Equity Interests in any Restricted Subsidiary in accordance with Section 9.13 which are included in the then current Borrowing Base, prior written notice of such Disposition or Unwind, the price thereof and the anticipated date of closing.

 

(l)                                      Notice of Casualty Events .  Prompt written notice, and in any event within three (3) Business Days after the Borrower obtains knowledge 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 having a fair market value in excess of $10.0 million.

 

(m)                              Information Regarding Borrower and Guarantors .  Prompt written notice (and in any event within ten (10) days after the occurrence) of any change (i) in a Loan Party’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 Loan Party’s chief executive office or principal place of business, (iii) in the Loan Party’s identity or corporate structure or in the jurisdiction in which such Person is incorporated or formed, (iv) in the Loan Party’s jurisdiction of organization, and (v) in the Loan Party’s federal taxpayer identification number.

 

(n)                                  Production Report and Lease Operating Statements .  Within sixty (60) days after the end of each fiscal quarter, a report setting forth, for each calendar month during the then current fiscal year to the end of such fiscal quarter on a production date basis, the volume of production and sales attributable to production for which cash activity has been recorded (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, and setting forth the related ad valorem, severance and production taxes and lease operating expenses attributable thereto and incurred for each such calendar month.

 

(o)                                  Notices of Certain Changes .  Promptly, but in any event within thirty (30) days after the execution thereof, copies of any amendment, modification or supplement to the certificate or articles of incorporation, by-laws, any preferred stock designation or any other organic document of the Borrower or any Restricted Subsidiary.

 

(p)                                  Swap Agreement Projections .  No later than forty-five (45) days after the end of each fiscal quarter, the Borrower shall either (i) certify, represent and warrant that the internally forecasted production from the Oil and Gas Properties of the Borrower and the Restricted Subsidiaries for all months in which the Borrower or one of its Restricted Subsidiaries has Swap Agreements equals or exceeds their prior month’s production of each of crude oil and natural gas, calculated separately, or (ii) deliver an additional detailed forecasted production of each of crude oil and natural gas, calculated separately, for the next 48 months or if any Swap Agreements have a tenor in excess of 48 months, for a period corresponding to the tenor of such Swap Agreements.

 

(q)                                  Issuance and Incurrences of Indebtedness .  Five (5) Business Days prior written notice of the incurrence by the Borrower or any Restricted Subsidiary of any Permitted Unsecured Indebtedness, Permitted Junior Indebtedness, Permitted Refinancing Debt or, if in excess of $10.0 million, any other Indebtedness as well as the amount thereof, the anticipated closing date and definitive documentation for the foregoing and any other related information reasonably requested.

 

(r)                                     Calculation of Modified ACNTA .  The Borrower shall provide a certificate of a Responsible Officer to the Administrative Agent with the delivery of each Reserve Report certifying as to the Modified ACNTA and containing a copy of the calculation for such and certifying that the Borrower has not granted Liens to secure Debt in excess of the amount permitted under each Second Lien Indenture or in excess of the Priority Lien Cap (as such term is defined in each Second Lien Indenture).

 

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(s)                                    Amount of Borrowing Base Cap, Second Lien Notes and Parity Lien Debt .  The Borrower shall deliver a certificate of a Responsible Officer with the delivery of each Reserve Report pursuant to Section 8.12(a)  and Section 8.12(b)  certifying as to the Borrowing Base Cap as of such date, including a copy of the calculation for such and setting forth as of such date the outstanding principal amount of Second Lien Notes.

 

(t)                                     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 (including, without limitation, any Plan and any reports or other information required to be filed by the Borrower or any of the Subsidiaries under ERISA in respect of any Plan), or compliance with the terms of this Agreement or any other Loan Document, as the Administrative Agent or any Lender may reasonably request.

 

(u)                                  Delivery of Information Electronically .  Notices to the Administrative Agent and the Lenders under this Section 8.01 may be delivered or furnished by electronic communications pursuant to procedures approved by the Administrative Agent, including broadcast email to the Lenders that the available information has been made available to the Lenders on either the Borrower’s IntraLinks page or the Borrower’s website as notified by the Borrower from time to time.

 

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)                                  Defaults . The occurrence of any Default or Event of Default;

 

(b)                                  Governmental Matters . 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 previously disclosed to the Lenders that could reasonably be expected to be adversely determined and result in liability in excess of the greater of $10.0 million or 5% of the then effective Borrowing Base not fully covered by insurance, subject to normal deductibles; and

 

(c)                                   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.

 

Section 8.03                                        Existence; Conduct of Business .  The Borrower will, and will cause each Restricted 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 9.12 .

 

Section 8.04                                        Payment of Obligations .  After giving effect to the Confirmation Order and the Plan of Reorganization, the Borrower will, and will cause each Restricted Subsidiary to, pay its obligations, including Tax liabilities of the Borrower and all of its Subsidiaries before the same

 

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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 Restricted 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 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 reading, tenor and effect thereof, and the Borrower will, and will cause each Restricted 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 .  Except for matters that could not reasonably be expected to result in a Material Adverse Effect, the Borrower, at its own expense, will, and will cause each Restricted Subsidiary to:

 

(a)                                  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 Oil and Gas Properties and the production and sale of Hydrocarbons and other minerals therefrom.

 

(b)                                  keep and maintain all Property material to the conduct of its business in good working order and condition, ordinary wear and tear excepted preserve, maintain and keep in good repair, working order and efficiency (ordinary wear and tear excepted) all of its Oil and Gas Properties and other Properties, including, without limitation, all equipment, machinery and facilities.

 

(c)                                   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.

 

(d)                                  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 and other material Properties.

 

(e)                                   to the extent the Borrower is not the operator of any Property, the Borrower shall use reasonable efforts to cause the operator to comply with this Section 8.06 .

 

Section 8.07                                        Insurance .  The Borrower will, and will cause each Restricted 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 and the Lenders as “additional insureds” and provide that the insurer will use

 

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commercially reasonable efforts to give at least thirty (30) days prior notice of any cancellation to the Administrative Agent, but in any event not less than ten (10) days prior notice of such cancellation.

 

Section 8.08                                        Books and Records; Inspection Rights .  The Borrower will, and will cause each Restricted 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.  The Borrower will, and will cause each Restricted 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 during normal business hours and as often as reasonably requested.

 

Section 8.09                                        Compliance with Laws .

 

(a)                                  The Borrower will, and will cause each Restricted Subsidiary to, 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.

 

(b)                                  The Borrower will maintain in effect and enforce policies and procedures regarding compliance by the Borrower, its Subsidiaries and their respective directors, officers, employees and agents 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; and (v) establish and implement, and shall cause each Subsidiary to establish and implement, such procedures as may be 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.

 

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(b)                                  The Borrower will promptly, but in no event later than five (5) days after 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 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 $25.0 million, 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 the Lenders 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 acquisitions of Oil and Gas Properties or other Properties.

 

Section 8.11                                        Further Assurances .

 

(a)                                  The Borrower at its expense will, and will cause each Restricted Subsidiary to, promptly execute and deliver to the Administrative Agent all such other documents, agreements and instruments reasonably requested by the Administrative Agent to comply with, cure any defects or accomplish the conditions precedent, covenants and agreements of the Borrower or any Restricted Subsidiary, as the case may be, in the Loan Documents, including the Notes, if requested, or to further evidence and more fully describe the collateral intended as security for the Secured 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 reasonably necessary or appropriate, in the reasonable discretion of the Administrative Agent, to ensure that the Administrative Agent, on behalf of the Secured Parties, has a perfected security interest in all assets of the Loan Parties.  In addition, at the Administrative Agent’s reasonable written request, the Borrower, at its sole expense, shall enter into any Security Instruments to evidence the Liens on the Collateral and provide any information requested to identify any Collateral, including an updated Perfection Certificate, exhibits to Mortgages in form and substance reasonably satisfactory to the Administrative Agent (which such exhibits shall be in recordable form for the applicable jurisdiction) or any other information reasonably requested in connection with the identification of any Collateral.

 

(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 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 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, 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 December 31st and June 30 th , as applicable.  The Reserve Report as of December 31 st  of each year shall be prepared by one or more Approved Petroleum Engineers, and the June 30 th  Reserve Report of each year shall be prepared by or

 

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under the supervision of the chief engineer of the Borrower who shall certify such Reserve Report to be true and accurate in all material respects and to have been prepared in accordance with the procedures used in the immediately preceding December 31 st  Reserve Report.

 

(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 in all material respects and to have been prepared in accordance with the procedures used in the immediately preceding December 31 st  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 Reserve Report Certificate substantially in the form of Exhibit J from a Responsible Officer certifying that in all material respects: (i) the information contained in the Reserve Report and any other information delivered in connection therewith is true and correct in all material respects, (ii) the Borrower or its Restricted Subsidiaries owns 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 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 Restricted 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 as set forth on an exhibit to the certificate, which exhibit shall list all of its Oil and Gas Properties sold other than Hydrocarbons sold in the ordinary course of business 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 and (vi) attached thereto is a schedule of the Oil and Gas Properties evaluated by such Reserve Report that are Mortgaged Properties and demonstrating that the Borrower is in compliance with Section 8.14 (the certificate described herein, the “ Reserve Report Certificate ”).

 

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) , to the extent requested by the Administrative Agent, the Borrower shall deliver title information in form and substance acceptable to the Administrative Agent covering enough of the Borrowing Base 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, reasonably satisfactory title information on at least 85% of the PV-9 of the Borrowing Base Properties.

 

(b)                                  If the Borrower has provided title information for additional Properties under Section 8.13(a) , the Borrower shall, within ninety (90) days (or such longer period of time as may be acceptable to the Administrative Agent in its sole discretion) of written 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 or (iii) deliver title information in form and

 

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substance acceptable to the Administrative Agent so that the Administrative Agent shall have received, together with title information previously delivered to the Administrative Agent, reasonably satisfactory title information on at least 85% of the PV-9 of the Borrowing Base Properties.

 

(c)                                   If the Borrower is unable to cure any title defect requested by the Administrative Agent or the Lenders to be cured within the period of time required by clause (b) above or the Borrower does not comply with the requirements to provide acceptable title information covering at least 85% of the PV-9 of the Borrowing Base Properties, such default shall not be a Default, but instead the Administrative Agent and/or the Required Lenders shall have the right to exercise the following remedy in their 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 Required Lenders.  To the extent that the Administrative Agent or the Required Lenders are not satisfied with title to any Mortgaged Property after such period of time has elapsed, such unacceptable Mortgaged Property shall not count towards the 85% requirement, and the Administrative Agent may send a written notice to the Borrower and the Lenders that the then outstanding Borrowing Base shall be reduced by an amount as determined by the Required Lenders to cause the Borrower to be in compliance with the requirement to provide acceptable title information covering at least 85% of the PV-9 of the Borrowing Base Properties evaluated by such Reserve Report.  This new Borrowing Base shall become effective in accordance with Section 2.08(b).

 

Section 8.14                                        Additional Collateral; Additional Guarantors .

 

(a)                                  In connection with each redetermination of the Borrowing Base (including, for the avoidance of doubt, any Interim Redetermination), the Borrower shall review the Reserve Report and the list of current Mortgaged Properties (as described in Section 8.12(c)(vi) ) to ascertain whether the Mortgaged Properties represent at least 95% of the PV-9 of the Borrowing Base Properties after giving effect to exploration and production activities, acquisitions, dispositions and production.  In the event that the Mortgaged Properties do not represent at least 95% of the PV-9 of the Borrowing Base Properties, then the Borrower shall, and shall cause its Restricted Subsidiaries to, grant, within thirty (30) days of delivery of the Reserve Report Certificate required under Section 8.12(c) , to the Administrative Agent as security for the Secured Obligations a first-priority Lien interest (subject only to Excepted Liens of the type described in clauses (a)  to (d)  and (f)  of the definition thereof, 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 at least 95% of the PV-9 of the Borrowing Base Properties.  All such Liens will be created and perfected by and in accordance with the provisions of 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 Restricted Subsidiary places a Lien on its Oil and Gas Properties and such Restricted Subsidiary is not a Guarantor, then it shall become a Guarantor and comply with Section 8.14(b) .

 

(b)                                  In the event that (i) the Borrower determines that any Restricted Subsidiary is a Material Domestic Subsidiary or (ii) any Domestic Subsidiary incurs or guarantees any Material Indebtedness, the Borrower shall promptly cause such Restricted Subsidiary to guarantee and secure the Secured Obligations pursuant to the Guaranty Agreement.  In connection with any such guaranty and security interest grant, the Borrower shall, or shall cause (A) such Subsidiary to, execute and deliver a supplement to the Guaranty Agreement executed by such Subsidiary, (B) the owners of the Equity Interests of such Subsidiary who are Loan Parties to pledge all of the Equity Interests of such new Subsidiary (including, without limitation, delivery of original stock certificates evidencing the Equity Interests of such Subsidiary, together with an appropriate undated stock powers for each certificate duly

 

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executed in blank by the registered owner thereof) and (C) execute and deliver such other additional closing documents, certificates and legal opinions as shall reasonably be requested by the Administrative Agent.

 

(c)                                   In the event that the Borrower or any Domestic Subsidiary becomes the owner of a Foreign Subsidiary which has total assets in excess of $10.0 million, then the Borrower shall promptly, or shall cause such Domestic Subsidiary to promptly, guarantee the Secured 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 voting Equity Interests of such Foreign Subsidiary and 100% of the nonvoting 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.

 

(d)                                  The Borrower will not, and will not permit any Restricted Subsidiary to, grant a Lien on any Property to secure the Second Lien Notes which is not already granted to secure the Secured Obligations under the Security Instruments without first (i) giving at least ten (10) days’(or such earlier time as may be agreed by the Administrative Agent in its sole discretion) prior written notice to the Administrative Agent thereof and (ii) granting to the Administrative Agent to secure the Secured Obligations a first-priority, perfected Lien on the same Property pursuant to Security Instruments in form and substance reasonably satisfactory to the Administrative Agent; provided that Excepted Liens may exist.  In connection therewith, the Borrower shall, or shall cause its Restricted Subsidiaries to, execute and deliver such other additional closing documents, certificates and legal opinions of the type customarily given with regard to such matters as shall reasonably be requested by the Administrative Agent.

 

Section 8.15                                        ERISA Compliance .  The Borrower will promptly furnish and will cause the Subsidiaries to promptly furnish to the Administrative Agent (i) promptly after the filing thereof with the United States Secretary of Labor or the Internal Revenue Service, copies of each annual and other report with respect to each Plan, other than a Multiemployer Plan, or any trust created thereunder, and (ii) promptly upon becoming aware of the occurrence of any “prohibited transaction,” as described in section 406 of ERISA or in section 4975 of the Code, in connection with any Plan, other than a Multiemployer Plan, or any trust created thereunder, a written notice signed by the President or the principal Financial Officer or the Subsidiary, as the case may be, specifying the nature thereof, what action the Borrower or the Subsidiary is taking or proposes to take with respect thereto, and, when known, any action taken or proposed by the Internal Revenue Service or the Department of Labor with respect thereto if such action could reasonably be expected to result in liability to the Borrower, the Guarantors or their respective Subsidiaries (whether individually of in the aggregate) in excess of the greater of $10.0 million or 5% of the then effective Borrowing Base.

 

Section 8.16                                        Account Control Agreements; Location of Proceeds of Loans .

 

(a)                                  The Borrower will, and will cause each other Loan Party to, in connection with any Deposit Account and/or any Securities Account (other than Excluded Accounts for so long as it is an Excluded Account) established, held or maintained on or after the Closing Date promptly, but in any event within twenty (20) Business Days (or such later date as the Administrative Agent may agree in its sole discretion) of the establishment of such account, cause such account to be a Controlled Account.

 

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(b)                                  The Borrower will, and will cause each Loan Party to, until the proceeds of any Loans are transferred to a third party in accordance with the Loan Documents, hold the proceeds of any Loans made under this Agreement in a Controlled Account.

 

Section 8.17                                        Unrestricted Subsidiaries .  The Borrower:

 

(a)                                  will cause the management, business and affairs of each of the Borrower and its Restricted Subsidiaries to be conducted in such a manner (including, without limitation, by keeping separate books of account, furnishing separate financial statements of Unrestricted Subsidiaries to creditors and potential creditors thereof and by not permitting Properties of the Borrower and its respective Restricted Subsidiaries to be commingled) so that each Unrestricted Subsidiary that is a corporation will be treated as a corporate entity separate and distinct from Borrower and the Restricted Subsidiaries.

 

(b)                                  will not, and will not permit any of the Restricted Subsidiaries to, incur, assume, guarantee or be or become liable for any Indebtedness of any of the Unrestricted Subsidiaries.

 

(c)                                   will not permit any Unrestricted Subsidiary to hold any Equity Interest in, or any Indebtedness of, the Borrower or any Restricted Subsidiary.

 

Section 8.18                                        Marketing Activities .  The Borrower will not, and will not permit any of its Restricted 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 Restricted Subsidiaries that the Borrower or one of its Restricted 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 8.19                                        Keepwell .  The Borrower will, and will cause each Guarantor to, provide such funds or other support as may be needed from time to time by the Borrower or any Guarantor, as applicable, to honor all of its obligations under this Agreement and any other Loan Document in respect of Swap Obligations ( provided , however , that each Qualified ECP Guarantor shall only be liable under this Section 8.19 for the maximum amount of such liability that can be hereby incurred without rendering its obligations under this Section 8.19 , or otherwise under this Agreement or any other Loan Document, as it relates to the Borrower, any Restricted Subsidiary or any Guarantor, as applicable, voidable under applicable law relating to fraudulent conveyance or fraudulent transfer, and not for any greater amount).  The obligations of each Loan Party under this Section shall remain in full force and effect until Payment in Full.  The Borrower intends that this Section 8.19 constitute, and this Section 8.19 shall be deemed to constitute, a “keepwell, support, or other agreement” for the benefit the Borrower and any Guarantor, as applicable, for all purposes of Section 1a(18)(A)(v)(II) of the Commodity Exchange Act.

 

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ARTICLE IX
NEGATIVE COVENANTS

 

Until Payment in Full, the Borrower covenants and agrees with the Lenders that:

 

Section 9.01                                        Financial Covenants .

 

(a)                                  Total Net Indebtedness Leverage Ratio .  The Borrower will not, as of the last day of each fiscal quarter set forth below, permit the ratio of Consolidated Total Net Debt as of such last day to EBITDA for the period of four fiscal quarters ending on such last day to exceed the ratio set forth below opposite such fiscal quarter:

 

Fiscal Quarter Ending

 

Ratio

September 30, 2016

 

4.75 to 1.00

December 31, 2016

 

4.75 to 1.00

March 31, 2017

 

4.75 to 1.00

June 30, 2017

 

4.75 to 1.00

September 30, 2017

 

4.50 to 1.00

December 31, 2017

 

4.50 to 1.00

March 31, 2018

 

4.50 to 1.00

June 30, 2018

 

4.50 to 1.00

September 30, 2018

 

4.50 to 1.00

December 31, 2018

 

4.50 to 1.00

March 31, 2019 and at the last day of each Fiscal Quarter thereafter until the Maturity Date

 

4.00 to 1.00

 

(b)                                  Current Ratio .  Beginning with the fiscal quarter ending December 31, 2016, the Borrower will not, as of the last day of any fiscal quarter, permit its Current Ratio as of such last day to be less than 1.00 to 1.00.

 

(c)                                   Equity Cure . In the event that the Borrower fails to comply with Section 9.01(a) for any four fiscal quarter period , then until the expiration of the fifteenth (15th) Business Day following delivery of financial statements with respect to the applicable fiscal quarter or fiscal year ending on the last day of such period, the Borrower shall be permitted to cure such failure to comply by requesting that such financial covenant be recalculated by increasing EBITDA of the fiscal quarter most recently ended by an amount equal to cash equity contributions (which shall be in the form of common equity or, if on terms and conditions reasonably acceptable to the Administrative Agent, preferred equity) received by Borrower from its equity holders needed to bring the Borrower in compliance with Section 9.01(a) . If, after giving effect to the foregoing recalculations, the Borrower shall then be in compliance with the requirements of the financial covenant set forth in Section 9.01(a) , the Borrower shall be deemed to have satisfied the requirements of such applicable financial covenant as of the relevant earlier required date of determination with the same effect as though there had been no failure to comply therewith at such date, and the applicable breach or default of any such covenant that had occurred shall be deemed cured for purposes of this Agreement and the other Loan Documents. The Borrower may not exercise the equity

 

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cure right described in this Section 9.01(c)  more than (i) twice in any period of four (4) consecutive fiscal quarters or (ii) more than four (4) times in the aggregate during the term of this Agreement. The proceeds of such equity issuance or capital contributions shall be counted as EBITDA solely for the purpose of compliance with the financial covenant set forth in Section 9.01(a)  and shall not be included for any other purpose hereunder.

 

Section 9.02                                        Indebtedness .  The Borrower will not, and will not permit any Restricted Subsidiary to, incur, create, assume or suffer to exist any Indebtedness, except:

 

(a)                                  the Loans, any Notes or other Secured Obligations arising under the Loan Documents or any Secured Swap Agreement any guaranty of or suretyship arrangement for the Loans, any Notes or other Secured Obligations arising under the Loan Documents, and any deferred put premiums associated with Swap Agreements entered into with an Approved Counterparty;

 

(b)                                  any Indebtedness of the Borrower and its Restricted Subsidiaries existing on the date hereof and that is set forth on Schedule 9.02 ;

 

(c)                                   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 sixty (60) 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;

 

(d)                                  Indebtedness (including guarantees) under Capital Leases, provided that the aggregate amount of such Indebtedness and Indebtedness incurred pursuant to Section 9.02(i)  and Section 9.02(l)  does not exceed the greater of $30.0 million or 10% of the then effective Borrowing Base at any one time outstanding;

 

(e)                                   Indebtedness associated with worker’s compensation claims, performance, bid, surety or similar bonds or surety obligations required by Governmental Requirements or third parties in connection with the operation of the Oil and Gas Properties;

 

(f)                                    intercompany Indebtedness between the Borrower and any Restricted Subsidiary or between Restricted Subsidiaries to the extent permitted by Section 9.05(g) ; provided that such Indebtedness is not held, assigned, transferred, negotiated or pledged to any Person other than a Loan Party, and, provided further , that any such Indebtedness owed by either the Borrower or a Guarantor shall be subordinated to the Secured Obligations on terms set forth in the Guaranty Agreement;

 

(g)                                   endorsements of negotiable instruments for collection in the ordinary course of business;

 

(h)                                  Indebtedness incurred to finance insurance premiums;

 

(i)                                      Indebtedness incurred solely for the purpose of financing the acquisition, construction or improvement of any fixed or capital assets, including Indebtedness assumed in connection with the acquisition of such assets; provided that (i) the principal amount of such Indebtedness does not exceed the cost of acquiring, constructing or improving such fixed or capital assets and (ii) the aggregate amount of such Indebtedness and Indebtedness incurred pursuant to Section 9.02(d)  and Section 9.02(l) does not exceed the greater of $30.0 million or 10% of the then effective Borrowing Base at any one time outstanding;

 

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(j)                                     Indebtedness in respect of the Second Lien Notes not to exceed $850.0 million in the aggregate at any one time outstanding and any Permitted Refinancing Indebtedness of such Indebtedness;

 

(k)                                  Indebtedness of the Borrower in respect of Permitted Unsecured Indebtedness and Permitted Junior Indebtedness and, in each case, any Permitted Refinancing Indebtedness of such Indebtedness; and

 

(l)                                      other Indebtedness, provided that the aggregate amount of such Indebtedness and other Indebtedness incurred pursuant to Section 9.02(d)  and Section 9.02(i)  does not exceed the greater of $30.0 million or 10% of the then effective Borrowing Base at any one time outstanding.

 

Section 9.03                                        Liens .  The Borrower will not, and will not permit any Restricted 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 Secured Obligations;

 

(b)                                  (i) Liens existing on the Closing Date and set forth on Schedule 9.03 and (ii) Excepted Liens;

 

(c)                                   Liens securing (i) Capital Leases permitted by Section 9.02(d)  but only on the Property under lease and (ii) Indebtedness for any fixed or capital assets pursuant to Section 9.02(i)  but only on the fixed or capital assets financed by such Indebtedness;

 

(d)                                  Liens securing Indebtedness permitted by Section 9.02(h)  or other obligations related to the payment of insurance premiums; provided that such Liens do not extend to any Property of the Borrower or its Restricted Subsidiaries other than Property of the type customarily subject to such Liens (including rights under the insurance policies purchased by such premiums);

 

(e)                                   Liens on (i) cash and securities and (ii) other Property not constituting Collateral for the Secured Obligations or Properties used in determining the Borrowing Base and not otherwise permitted by the foregoing clauses of this Section 9.03 ; provided that the aggregate principal or face amount of all Indebtedness secured under this Section 9.03(e)  shall not exceed the greater of $15.0 million or 5% of the then effective Borrowing Base at any time;

 

(f)                                    Liens securing Second Lien Notes permitted by Section 9.02(j)  (or any Permitted Refinancing Indebtedness in respect thereof); and

 

(g)                                   Liens securing Permitted Junior Indebtedness (or any Permitted Refinancing Indebtedness in respect thereof) permitted by Section 9.02(k) .

 

Section 9.04                              Restricted Payments; Repayment of Second Lien Notes; Restrictions on Amendments of Permitted Unsecured Indebtedness and Permitted Junior indebtedness .

 

(a)                                  Restricted Payments .  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 or make any distribution of its Property to its Equity Interest holders, except (i) the Borrower may declare and pay dividends with respect to its Equity Interests payable solely in additional shares of its Equity Interests (other than Disqualified Capital Stock), (ii) Subsidiaries may

 

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declare and pay dividends or any other distributions to the Borrower or any Guarantor with respect to their Equity Interests, (iii) [reserved], (iv) Restricted Payments in connection with stock option plans or other benefit plans for management or employees of the Borrower and its Subsidiaries, (v) the Borrower may make Restricted Payments in connection with the termination of its directors’ or employees’ option agreements or restricted stock agreements under any of Borrower’s incentive stock plans provided , however , that the aggregate amounts paid in respect thereof do not exceed $5.0 million, and (vi) the Borrower may (a) declare and pay in respect of preferred Equity Interests (which are not Disqualified Capital Stock) regularly scheduled dividends in additional Equity Interests (which are not Disqualified Capital Stock) as and when the same accrue and are payable at the stated dividend rate, (b) issue Equity Interests (which are not Disqualified Capital Stock) in connection with a conversion of such preferred Equity Interests into other Equity Interests, and (c) make cash payments in lieu of fractional shares in connection with any such conversion of preferred Equity Interests.

 

(b)                                  Redemptions .  The Borrower will not, and will not permit any Restricted Subsidiary to, prior to the date that is ninety-one (91) days after the Maturity Date, call, make or offer to make any optional or voluntary Redemption of or otherwise optionally or voluntarily Redeem (whether in whole or in part), (i) the Second Lien Notes, (ii) any Permitted Unsecured Indebtedness, (iii) any Permitted Junior indebtedness and (iv) any Permitted Refinancing Indebtedness in respect of the foregoing (such Indebtedness, collectively, the “ Specified Indebtedness ”); provided that the Borrower may Redeem such Specified Indebtedness with the proceeds of any Permitted Refinancing Indebtedness in respect thereof or with the Net Cash Proceeds of any sale of Equity Interests (other than Disqualified Capital Stock) of the Borrower so long as no Default, Event of Default or Borrowing Base Deficiency has occurred and is continuing or would occur as a result of such Redemption.  Notwithstanding anything herein or in any other Loan Document to the contrary, the Borrower shall be permitted to pay the Consent Fees (as defined in the Lock Up Agreement Term Sheet).

 

(c)                                   Amendments . The Borrower will not, and will not permit any of its Restricted Subsidiaries to amend, modify, waive or otherwise change, consent or agree to any amendment, modification, waiver or other change to any Specified Indebtedness if doing so would (i) increase the rate of interest thereon or (ii) (A) cause such Specified Indebtedness to not meet the requirements set forth in the definition of Permitted Refinancing Indebtedness and Permitted Junior Indebtedness or Permitted Unsecured Indebtedness, as applicable (tested as if such Specified Indebtedness were being issued or incurred at such time) and (B) with respect to any other Specified Indebtedness, shorten the average maturity or average life of such Specified Indebtedness; provided that the foregoing shall not prohibit the execution of supplemental indentures to add guarantors if required by the terms of the Second Lien Indenture provided such Person complies with Section 8.14(d) .  Notwithstanding anything herein or in any other Loan Document to the contrary, the Second Lien Modifications shall be permitted.

 

Section 9.05                                        Investments, Loans and Advances .  The Borrower will not, and will not permit any Restricted 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 on the Closing Date and set forth on 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 one of the two highest grades 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 $100.0 million (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 in excess of $500.0 million (or its equivalent in another currency);

 

(f)                                    deposits in money market funds investing primarily 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, (ii) made by any Restricted Subsidiary in or to the Borrower or any Guarantor and (iii) made by the Borrower or any Restricted Subsidiary in or to all other Domestic Subsidiaries which are not Guarantors in an aggregate amount at any one time outstanding not to exceed, when added to the aggregate amount of Investments outstanding under the immediately following clause, $25.0 million, (iv) made by the Borrower or any Restricted Subsidiary in or to any Foreign Subsidiary in an aggregate amount at any one time outstanding not to exceed, when added to the aggregate amount of Investments outstanding under the immediately preceding clause, $25.0 million and (v) made by a Foreign Subsidiary to any other Foreign Subsidiary;

 

(h)                                  subject to the limits in Section 9.07 , 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 Restricted 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 the greater of $15.0 million or 5% of the then effective Borrowing Base;

 

(i)                                      subject to the limits in Section 9.07 , Investments 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, joint venture 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 and Canada;

 

(j)                                     loans or advances to employees, officers or directors in the ordinary course of business of the Borrower or any of its Restricted Subsidiaries, in each case only as permitted by applicable law, including Section 402 of the Sarbanes Oxley Act of 2002, but in any event not to exceed $2.5 million in the aggregate at any time;

 

(k)                                  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 Restricted 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 Restricted 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 $5.0 million;

 

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(l)                                      Investments in the form of loans to third parties for the sole purpose of purchasing Oil and Gas Properties pursuant to a like kind or reverse like kind exchange in accordance with Rule 1031 of the Code provided that (i) such loans shall not exceed $100.0 million of principal outstanding at any one time; (ii) at all times during which such loans are outstanding the amount of unused total Commitments shall not be less than 25% of the then effective Borrowing Base; and (iii) the Oil and Gas Properties acquired with such loans shall not be included in the determination of the Borrowing Base until the Borrower or a Restricted Subsidiary takes title to such Oil and Gas Property upon consummation of the exchange; and

 

(m)                              Other Investments (including investments in Unrestricted Subsidiaries) not to exceed the greater of $30.0 million or 5% of the then effective Borrowing Base.

 

Section 9.06                              Designation and Conversion of Restricted and Unrestricted Subsidiaries; Indebtedness of Unrestricted Subsidiaries .

 

(a)                                  Unless designated as an Unrestricted Subsidiary on Schedule 7.14 as of the date hereof or thereafter, assuming compliance with Section 9.06(b) , any Person that becomes a Subsidiary of the Borrower or any of its Restricted Subsidiaries shall be classified as a Restricted Subsidiary.

 

(b)                                  The Borrower may designate by written notification thereof to the Administrative Agent, any Restricted Subsidiary, including a newly formed or newly acquired Subsidiary, as an Unrestricted Subsidiary if (i) prior, and after giving effect, to such designation, neither a Default, Event of Default nor a Borrowing Base Deficiency would exist, (ii) the representations and warranties of the Borrower and its Restricted Subsidiaries contained in each of the Loan Documents are true and correct in all material respects on and as of such date as if made on and as of the date of such designation (or, if stated to have been made expressly as of an earlier date, were true and correct as of such date), (iii) the designation of any Restricted Subsidiary as an Unrestricted Subsidiary and any Disposition of Property to an Unrestricted Subsidiary is (A) deemed to be an Investment in an Unrestricted Subsidiary in an amount equal to the fair market value as of the date of such designation or Disposition of the Borrower’s direct and indirect ownership interest in such Subsidiary and such Investment would be permitted to be made at the time of such designation under Section 9.05(g)  and Section 9.05(l)  and (B) deemed to be a Disposition as of the date of designation or Disposition and (iv) prior, and after giving effect, to such designation, the Borrower is in pro forma compliance with Section 9.01(a) and Section 9.01(b) .  Except as provided in this Section 9.06(b) , no Restricted Subsidiary may be redesignated as an Unrestricted Subsidiary.

 

(c)                                   The Borrower may designate any Unrestricted Subsidiary to be a Restricted Subsidiary if after giving effect to such designation, (i) the representations and warranties of the Borrower and its Restricted Subsidiaries contained in each of the Loan Documents are true and correct on and as of such date as if made on and as of the date of such redesignation (or, if stated to have been made expressly as of an earlier date, were true and correct as of such date), (ii) no Default would exist and (iii) the Borrower complies with the requirements of Section 8.14 , Section 8.17 and Section 9.16 .  Any such designation shall be treated as a cash dividend in an amount equal to the lesser of the fair market value of the Borrower’s direct and indirect ownership interest in such Subsidiary or the amount of the Borrower’s cash investment previously made for purposes of the limitation on Investments under Section 9.05(l) .

 

(d)                                  The Borrower shall not permit the aggregate principal amount of all Non-Recourse Indebtedness outstanding at any one time to exceed 10% of the then effective Borrowing Base.

 

Section 9.07                                        Nature of Business; International Operations .  Neither the Borrower nor any Restricted Subsidiary will allow any material change to be made in the character of its business (a) as an independent oil and gas exploration, development and production company, and (b)

 

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activities incidental to the foregoing.  From and after the date hereof, the Borrower and its Domestic 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 Canada.

 

Section 9.08                                        Reserved .

 

Section 9.09                                        Proceeds of Loans .

 

(a)                                  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 Regulations 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.

 

(b)                                  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 (A) 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, (B) for the purpose of funding, financing or facilitating any activities, business or transaction of or with any Sanctioned Person, or in any Sanctioned Country to the extent such activities, businesses or transaction would be prohibited by Sanctions if conducted by a corporation incorporated in the United States, or (C) in any manner that would result in the violation of any Sanctions applicable to any party hereto.

 

Section 9.10                                        ERISA Compliance . The Borrower will not, and will not permit any Subsidiary to, at any time:

 

(a)                                  engage, 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 subsections (c), (i), (l) or (m) of section 502 of ERISA or a tax imposed by Chapter 43 of Subtitle D of the Code, if either of which would have a Material Adverse Effect.

 

(b)                                  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 such Plan, agreement relating thereto or applicable law, the Borrower, a Subsidiary or any ERISA Affiliate is required to pay as contributions thereto, if such failure could reasonably be expected to have a Material Adverse Effect.

 

(c)                                   contribute to or assume an obligation to contribute to, or permit any ERISA Affiliate to contribute to or assume an obligation to contribute to (i) 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 other than the payment of accrued benefits under such plan, or (ii) any employee pension benefit plan, as defined in section 3(2) of ERISA, that is subject to Title IV of ERISA, section 302 of ERISA or section 412 of the Code.

 

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Section 9.11                                        Sale or Discount of Receivables .  Except for (a) receivables obtained by the Borrower or any Restricted Subsidiary out of the ordinary course of business or (b) 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 connection with the compromise or collection thereof and not in connection with any financing transaction, neither the Borrower nor any Restricted Subsidiary will discount or sell (with or without recourse) any of its notes receivable or accounts receivable.

 

Section 9.12                                        Merger, Etc .  The Borrower will not, and will not permit any Restricted Subsidiary to, merge into or consolidate with any other Person, or permit any other Person to merge into or consolidate with it, 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 (except as permitted by Section 9.13 ) to any other Person (whether now owned or hereafter acquired) (any such transaction, a “ consolidation ”), or liquidate or dissolve; provided that the Borrower or any Restricted Subsidiary may participate in a consolidation with any other Person; provided that:

 

(a)                                  any Restricted Subsidiary (including a Foreign Subsidiary) may participate in a consolidation with the Borrower ( provided that the Borrower shall be the continuing or surviving corporation) or any other Restricted Subsidiary that is a Domestic Subsidiary ( provided that if one of such parties to the consolidation is a Foreign Subsidiary, such Domestic Subsidiary shall be the continuing or surviving Person) and if one of such Restricted Subsidiaries is a Wholly-Owned Subsidiary, then the surviving Person shall be a Wholly-Owned Subsidiary; and

 

(b)                                  any Foreign Subsidiary of the Borrower may participate in a consolidation with any one or more Foreign Subsidiaries; provided that if one of such Foreign Subsidiaries is a Wholly-Owned Subsidiary, the survivor shall be a Wholly-Owned Subsidiary.

 

Section 9.13                                        Sale of Properties .  The Borrower will not, and will not permit any Restricted Subsidiary to, sell, assign, farm-out, convey or otherwise transfer any Property except for:

 

(a)                                  the sale of Hydrocarbons and geological and seismic data in the ordinary course of business;

 

(b)                                  farmouts of undeveloped acreage and assignments in connection with such farmouts;

 

(c)                                   the sale or transfer of Property that is no longer necessary for the business of the Borrower or such Restricted Subsidiary or is replaced by Property of at least comparable value and use;

 

(d)                                  the sale, transfer or other disposition of Equity Interests in Unrestricted Subsidiaries;

 

(e)                                   the sale or other Disposition (including Casualty Events) of any Oil and Gas Property or any interest therein or any Restricted Subsidiary owning Oil and Gas Properties included in the Borrowing Base or the Unwind of Swap Agreements; provided that (i) 75% of the consideration received in respect of any such sale or other Disposition with a purchase price exceeding $5.0 million shall be cash or other Oil and Gas Properties ( provided that if a Borrowing Base Deficiency exists at such time then 100% of the cash consideration received in respect of any such sale or other Disposition shall be applied as a prepayment to reduce the Borrowing Base Deficiency), (ii) the consideration received in respect of any such sale or other Disposition shall be equal to or greater than the fair market value of the asset subject of such sale or other Disposition, and if such fair market value is greater than $10.0 million,

 

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the Borrower shall deliver a certificate of a Responsible Officer of the Borrower certifying to the fair market value and that the board of directors of the Borrower has reasonably determined such and (iii) if any such sale or other Disposition is of a Restricted Subsidiary owning Oil and Gas Properties, such sale or other Disposition shall include all the Equity Interests owned by the Borrower and its Restricted Subsidiaries of such Restricted Subsidiary;

 

(f)                                    sales and other transfers of Properties between the Borrower and any Restricted Subsidiary or between any Restricted Subsidiary and any other Restricted Subsidiary; and

 

(g)                                   if no Default, Event of Default or Borrowing Base Deficiency then exists, sales and other dispositions of Properties not otherwise permitted above having a fair market value not to exceed the greater of $30.0 million or 5% of the then effective Borrowing Base during any 12-month period.

 

Section 9.14                                        Environmental Matters .  The Borrower will not, and will not permit any Restricted 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 9.15                                        Transactions with Affiliates .  The Borrower will not, and will not permit any Restricted 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) 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.

 

Section 9.16                                        Subsidiaries .  The Borrower will not, and will not permit any Restricted Subsidiary to, create or acquire any additional Restricted Subsidiary or redesignate an Unrestricted Subsidiary as a Restricted 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 Restricted Subsidiary to, sell, assign or otherwise Dispose of any Equity Interests in any Restricted Subsidiary except (i) in connection with the issuance of director qualifying shares, (ii) in connection with any transactions permitted under Section 9.12 , Section 9.13(e)  or Section 9.13(f) , and (iii) other sales, assignments or other dispositions of any Equity Interests in Restricted Subsidiaries having an aggregate fair market value not to exceed $5.0 million during any fiscal year.

 

Section 9.17                                        Negative Pledge Agreements; Dividend Restrictions .  The Borrower will not, and will not permit any Restricted Subsidiary to, create, incur, assume or suffer to exist any contract, agreement or understanding which in any way prohibits or restricts the granting, conveying, creation or imposition of any Lien on any of its Property in favor of the Administrative Agent and the Lenders or restricts any Restricted Subsidiary from paying dividends or making distributions to the Borrower or any Guarantor, or which requires the consent of or notice to other Persons in connection therewith; provided , however , the preceding restrictions will not apply to encumbrances or restrictions arising under or by reason of (a) this Agreement or the Security Instruments, (b) any leases, licenses or similar contracts as they affect any Property or Lien subject to a lease or license, (c) any contract, agreement or understanding creating Liens on Capital Leases permitted by Section 9.03(c)  (but only to the extent related to the Property on which such Liens were created) and (d) any restriction with respect to a Subsidiary imposed pursuant to an agreement entered into for the direct or indirect sale or disposition of

 

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all or substantially all of the equity or Property of such Subsidiary (or the Property that is subject to such restriction) pending the closing of such sale or disposition to the extent such sale is permitted under this Agreement, (e) customary provisions with respect to the distribution of Property in joint venture agreements, (f) prohibitions, encumbrances or other restrictions imposed by Governmental Requirements, (g) in the case of any Subsidiary that is a Wholly-Owned Subsidiary of the Borrower, prohibitions, encumbrances or restrictions imposed by its organizational documents or any related joint venture or similar agreement, provided that such prohibitions, encumbrances or restrictions apply only to such Subsidiary and to any Equity Interests in such Subsidiary but only with respect to granting, conveying, creation or imposition of any Lien and (h) prohibitions, encumbrances or other restrictions imposed by any agreement relating to secured Indebtedness permitted by Section 9.02(i) , provided that such prohibitions, encumbrances or other restrictions apply only to the assets securing such Indebtedness or Second Lien Notes permitted by Section 9.02(j)  or Permitted Junior Indebtedness permitted by S ection 9.02(k) .

 

Section 9.18                                        Gas Imbalances, Take-or-Pay or Other Prepayments .  The Borrower will not allow gas imbalances, take-or-pay or other prepayments with respect to the Oil and Gas Properties of the Borrower or any Restricted Subsidiary that would require the Borrower or such Restricted Subsidiary to deliver Hydrocarbons at some future time without then or thereafter receiving full payment therefor to exceed a volume equal to 2% of the total proved reserves (on an mcf equivalent basis) set forth in the most recently delivered Reserve Report in the aggregate.

 

Section 9.19                                        Swap Agreements .

 

(a)                                  The Borrower will not, and will not permit any Restricted Subsidiary to, enter into any Swap Agreements with any Person other than:

 

(i)                                      Swap Agreements in respect of commodities entered into not for speculative purposes (i) with an Approved Counterparty and (ii) the notional volumes for which (when aggregated with other commodity Swap Agreements then in effect, other than puts, floors and basis differential swaps on volumes already hedged pursuant to other Swap Agreements) do not exceed, as of the date such Swap Agreement is executed, (A) 85% of the Projected Production for each month during the period during which such Swap Agreement is in effect for crude oil, natural gas liquids and natural gas, for the period of 24 months following the date such Swap Agreement is executed and (B) 85% of the reasonably anticipated Hydrocarbon production from the total Proved Reserves of the Borrower and its Restricted Subsidiaries (as forecast based upon the most recently delivered Reserve Report), each month during the period during which such Swap Agreement is in effect for crude oil, natural gas liquids and natural gas, calculated on a barrel of oil equivalent basis, for the period of 25 to 66 months following the date such Swap Agreement is executed;

 

(ii)                                   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 and netted with all other Swap Agreements of the Borrower and its Restricted 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 Indebtedness 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 and netted with all other Swap Agreements of the Borrower and its Restricted 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 Indebtedness for borrowed money which bears interest at a floating rate and

 

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(iii)                                In addition to Swap Agreements under Section 9.19(a)(i)  and without further limitation, in connection with a proposed acquisition of Oil and Gas Properties or Equity Interests of a Person owning Oil and Gas Properties (a “ Proposed Acquisition ”), the Borrower or any Restricted Subsidiary may also enter into incremental Swap Agreements with respect to the reasonably anticipated projected production from the Oil and Gas Properties subject of the Proposed Acquisition so long as (i) the Borrower or a Restricted Subsidiary has signed a definitive acquisition agreement in connection with a Proposed Acquisition and (ii) the aggregate notional volumes associated with such incremental Swap Agreements do not exceed (A) 85% of the Projected Production associated with the Oil and Gas Properties subject of such Proposed Acquisition for each month during the period during which each such Swap Agreement is in effect, for each of crude oil, natural gas liquids and natural gas, calculated on a barrel of oil equivalent basis, for the period of 24 months following the date such incremental Swap Agreement is executed and (B) 85% of the reasonably anticipated Hydrocarbon production from the total Proved Reserves associated with the Oil and Gas Properties subject of such Proposed Acquisition (as forecast based upon the reserve report for the Oil and Gas Properties subject of such Proposed Acquisition which has been delivered to the Lenders) for each month during the period during which each such Swap Agreement is in effect, for each of crude oil, natural gas liquids and natural gas, calculated on a barrel of oil equivalent basis, for the period of 25 to 48 months following the date such incremental Swap Agreement is executed.  The Borrower may permit such incremental Swap Agreements to remain in place so long as none of the following has occurred: (1) undrawn availability during the period prior to the completion or termination of such acquisition has been reduced to less than 10% of the then effective Borrowing Base, (2) the thirtieth (30 th ) day after such acquisition has terminated has passed or (3) the 120 th  day after such definitive acquisition agreement was executed has passed and the acquisition has not been consummated.  If such incremental Swap Agreements are not permitted to remain in place pursuant to the preceding sentence, the Borrower shall promptly terminate or Unwind such Swap Agreements.

 

(b)                                  In no event shall any Swap Agreement contain any requirement, agreement or covenant for the Borrower or any Restricted Subsidiary to post collateral or margin to secure their obligations under such Swap Agreement or to cover market exposures except to the extent permitted by Section 9.03(e) .

 

(c)                                   No Swap Agreement in respect of commodities shall be terminated, Unwound, cancelled or otherwise Disposed of by the Borrower or any Restricted Subsidiary except (i) to the extent permitted by Section 9.13 and (ii) subject to Section 2.08(a) , the Borrower or any Restricted Subsidiary may terminate, transfer or create any offsetting positions in respect of any commodity swap positions (whether evidenced by a floor, put or Swap Agreement) from time to time; provided that the Borrower shall provide reasonable prior notice to the Administrative Agent with respect to any such termination, transfer or creation of off-setting positions for any Swap Agreements upon which the Lenders relied in determining the Borrowing Base.

 

(d)                                  If, after the end of any fiscal quarter of the Borrower, the aggregate volume of all Swap Agreements in respect of commodities for which settlement payments were calculated in such fiscal quarter (other than basis differential swaps on volumes hedged by other Swap Agreements) exceeded, or will exceed, 100% of actual production of crude oil, natural gas and natural gas liquids, calculated separately, in such fiscal quarter, then the Borrower shall within twenty (20) Business Days following the last day of such fiscal quarter (or such later time to which the Administrative Agent may agree in its sole discretion) terminate, create off-setting positions, allocate volumes to other production the Borrower or any Subsidiary is marketing, or otherwise Unwind existing Swap Agreements such that, at such time, future hedging volumes will not exceed 100% of reasonably anticipated projected production from proved, developed producing Oil and Gas Properties for each of crude oil, natural gas and natural gas liquids, calculated separately, for the then-current and any succeeding fiscal quarter.

 

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ARTICLE X
EVENTS OF DEFAULT; REMEDIES

 

Section 10.01                                 Events of Default .  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, whether at the due date thereof or at a date fixed for prepayment thereof, 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 Restricted 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.

 

(d)                                  the Borrower or any Restricted Subsidiary shall fail to observe or perform any covenant, condition or agreement contained in Section 8.02(a) , Section 8.03 (with respect to Borrower’s or any Restricted Subsidiary’s existence only), Section 8.16 or in Article IX .

 

(e)                                   the Borrower or any Restricted 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 Restricted Subsidiary otherwise becoming aware of such default.

 

(f)                                    the Borrower or any Restricted Subsidiary shall fail to make any payment (whether of principal or interest and regardless of amount) in respect of any Material Indebtedness prior to the longer of (i) three (3) Business Days after the same shall become due and payable or (ii) the expiration of any applicable grace or notice period, if any, specified in the relevant document for such Material Indebtedness.

 

(g)                                   any other event or condition occurs that results in any Material Indebtedness becoming due prior to its scheduled maturity or that enables or permits (after giving effect to any applicable notice periods, if any, and any applicable grace periods) 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 Restricted 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 Restricted Subsidiary or its debts, or of a substantial part of its assets, under any federal, state or foreign bankruptcy,

 

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insolvency, receivership 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 Restricted Subsidiary or for a substantial part of its assets, and, in any such case, such proceeding or petition shall continue undismissed for thirty (30) days or an order or decree approving or ordering any of the foregoing shall be entered.

 

(i)                                      the Borrower or any Restricted Subsidiary shall (i) voluntarily commence any proceeding or file any petition seeking liquidation, reorganization or other relief under any federal, state or foreign bankruptcy, insolvency, receivership 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 Restricted 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 Restricted Subsidiary shall become unable, admit in writing its inability or fail generally to pay its debts as they become due.

 

(k)                                  one or more judgments for the payment of money in an aggregate amount in excess of the greater of $10.0 million or 5% of the then effective Borrowing Base (to the extent not covered by independent third party insurance provided by reputable insurers as to which the insurer does not dispute coverage and is not subject to an insolvency proceeding) shall be rendered against the Borrower, any Restricted 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 Restricted 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 Restricted Subsidiary or any of their Affiliates shall so state in writing.

 

(m)                              Other than as contemplated by the Plan of Reorganization on the effective date thereof, a Change in Control shall occur.

 

(n)                                  the Existing Intercreditor Agreement or any other intercreditor agreement entered into pursuant to the terms of this Agreement 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 its terms against Borrower or any party thereto or any holder of any Second Lien Notes or Permitted Junior Indebtedness, as applicable, or shall be repudiated in writing by any of them, or cause the Liens of the Second Lien Notes or any Permitted Junior Indebtedness to be senior or pari passu in right to the Liens securing the Secured Obligation, or any payment by Borrower or any Guarantor in violation of the terms of the Existing Intercreditor Agreement or such other intercreditor agreement.

 

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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, at the direction of the Majority 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/or the LC Commitments, and thereupon the Commitments and/or the LC Commitments shall terminate immediately, and (ii) declare the Notes, if any, 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 of the Borrower and the Guarantors accrued hereunder and under the Loans, the Notes, if any, and the other Loan Documents (including, without limitation, the payment of cash collateral to secure the LC Exposure as provided in Section 2.09(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 each Loan Party; 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, if any, and the principal of the Loans then outstanding, together with accrued interest thereon and all fees and the other obligations of the Borrower and the Guarantors accrued hereunder and under the Loans, the Notes, if any, and the other Loan Documents (including, without limitation, the payment of cash collateral to secure the LC Exposure as provided in Section 2.09(j) ), shall automatically become due and payable, without presentment, demand, protest or other notice of any kind, all of which are hereby waived by each Loan Party.

 

(b)                                  In the case of the occurrence and continuation of an Event of Default, the Administrative Agent and the Lenders will have all other rights and remedies available at law and equity.

 

(c)                                   All proceeds realized from the liquidation or other Disposition of collateral or otherwise received after maturity of the Loans, whether from the Borrower, another Loan Party, by acceleration or otherwise, shall be applied:

 

(i)                                      first , to payment or reimbursement of expenses and indemnities provided for in this Agreement and the Security Instruments;

 

(ii)                                   second , to accrued interest on the Loans;

 

(iii)                                third , pro rata to principal outstanding on the Loans and Secured Obligations referred to in clauses (b) and (c)  of the definition of “Secured Obligations”;

 

(iv)                               fourth , to any other Secured Obligations;

 

(v)                                  fifth , to serve as cash collateral to be held by the Administrative Agent to secure the LC Exposure; and any excess shall be paid to the Borrower or as otherwise required by any Governmental Requirement.

 

(d)                                  In the case of the occurrence of an Event of Default which results in the Commitments terminating then the Borrowing Base shall automatically and concurrently be reduced to $0.

 

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ARTICLE XI
THE AGENTS

 

Section 11.01                                 Appointment; Powers .  Each of the Lenders and the Issuing Bank hereby irrevocably appoints the Administrative Agent as its agent 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 and the other Loan Documents, together with such actions and powers as are reasonably incidental thereto.  Each Lender (and each Person that becomes a Lender hereunder pursuant to Section 12.04 ) hereby authorizes and directs the Administrative Agent to enter into the Loan Documents, including without limitation, the Security Instruments, on behalf of such Lender, in each case, as needed to effectuate the transactions permitted by this Agreement and agrees that the Administrative Agent may take such actions on its behalf as is contemplated by the terms of such applicable Security Instrument. Without limiting the provisions of Section 11.02 and Section 12.03 , each Lender hereby consents to the Administrative Agent and any successor serving in such capacity and agrees not to assert any claim (including as a result of any conflict of interest) against the Administrative Agent, or any such successor, arising from the role of the Administrative Agent or such successor under the Loan Documents so long as it is either acting in accordance with the terms of such documents and otherwise has not engaged in gross negligence or willful misconduct.

 

Section 11.02                                 Duties and Obligations of Administrative Agent .  The Administrative Agent shall not have any duties or obligations except those expressly set forth in the Loan Documents.  Without limiting the generality of the foregoing, (a) the Administrative Agent shall not be subject to any fiduciary or other implied duties, regardless of whether a Default or Event of Default has occurred and is continuing (the use of the term “agent” herein and in the other Loan Documents 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; rather, such term is used merely as a matter of market custom, and is intended to create or reflect only an administrative relationship between independent contracting parties), (b) the Administrative Agent shall not have any duty to take any discretionary action or exercise any discretionary powers, except as provided in Section 11.03 , and (c) except as expressly set forth herein, the Administrative Agent shall not 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 Subsidiaries that is communicated to or obtained by the bank serving as Administrative Agent or any of its Affiliates in any capacity.  The Administrative Agent shall be deemed not to have knowledge of any Default unless and until written notice thereof is given to the Administrative Agent by the Borrower or a Lender, and 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 under any other Loan Document 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 in any other Loan Document, (iv) the validity, enforceability, effectiveness or genuineness of this Agreement, any other Loan Document or any other agreement, instrument or document, (v) 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 or as to those conditions precedent expressly required to be to the Administrative Agent’s satisfaction, (vi) the existence, value, perfection or priority of any collateral security or the financial or other condition of the Borrower and its Subsidiaries or any other obligor or guarantor, or (vii) any failure by the Borrower or any other Person (other than itself) to perform any of its obligations hereunder or under any other Loan Document or the performance or observance of any covenants, agreements or other terms or conditions set forth herein or therein.  For purposes of determining compliance with the conditions specified in Article VI , each Lender 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

 

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shall have received written notice from such Lender prior to the proposed closing date specifying its objection thereto.

 

Section 11.03                                 Action by Administrative Agent .  The Administrative Agent shall not have any duty to take any discretionary action or exercise any discretionary powers, except discretionary rights and powers expressly contemplated hereby that the Administrative Agent is required to exercise in writing as directed by the Majority Lenders (or such other number or percentage of the Lenders as shall be necessary under the circumstances as provided in Section 2.07(b) , Section 5.04(b) , Section 8.13(c) or Section 12.02 ) and in all cases the Administrative Agent shall be fully justified in failing or refusing to act hereunder or under any other Loan Documents unless it shall (a) receive written instructions from the Majority Lenders or the Lenders, as applicable, (or such other number or percentage of the Lenders as shall be necessary under the circumstances as provided in Section 2.07(b) , Section 5.04(b) , Section 8.13(c)  or Section 12.02 ) specifying the action to be taken and (b) be indemnified to its satisfaction by the Lenders against any and all liability and expenses which may be incurred by it by reason of taking or continuing to take any such action, provided that no indemnity shall be provided for any liabilities or losses determined by a court of competent jurisdiction by final and non-appealable judgment to have resulted from the gross negligence or willful misconduct of the Administrative Agent.  The instructions as aforesaid and any action taken or failure to act pursuant thereto by the Administrative Agent shall be binding on all of the Lenders.  If a Default or Event of Default has occurred and is continuing, then the Administrative Agent shall take such action with respect to such Default or Event of Default as shall be directed by the requisite Lenders in the written instructions (with indemnities) described in this Section 11.03 , provided that, unless and until the Administrative Agent shall have received such directions, the Administrative Agent may (but shall not be obligated to) take such action, or refrain from taking such action, with respect to such Default or Event of Default as it shall deem advisable in the best interests of the Lenders.  In no event, however, shall the Administrative Agent be required to take any action which exposes the Administrative Agent to personal liability or which is contrary to this Agreement, the Loan Documents or applicable law.  If a Default has occurred and is continuing, neither the Syndication Agent nor any Documentation Agent shall have any obligation to perform any act in respect thereof.  No Agent shall be liable for any action taken or not taken by it with the consent or at the request of the Majority Lenders or the Lenders (or such other number or percentage of the Lenders as shall be necessary under the circumstances as provided in Section 2.07(b) , Section 5.04(b) , Section 8.13(c)  or Section 12.02 ), and otherwise no Agent shall be liable for any action taken or not taken by it hereunder or under any other Loan Document or under any other document or instrument referred to or provided for herein or therein or in connection herewith or therewith INCLUDING ITS OWN ORDINARY NEGLIGENCE, except for its own gross negligence or willful misconduct as determined by a court of competent jurisdiction by final and non-appealable judgment.

 

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 believed by it to be genuine and to have been signed or sent 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 be made by the proper Person, and shall not incur any liability for relying thereon and each of the Borrower, the Lenders and the Issuing Bank hereby waives the right to dispute the Administrative Agent’s record of such statement, except in the case of gross negligence or willful misconduct by the Administrative Agent.  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.  The Agents may deem and treat the payee of the Note, if any, as the holder thereof for all purposes hereof unless and until a written notice of the assignment or transfer thereof permitted hereunder shall have been filed with the Administrative Agent.

 

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Section 11.05                                 Subagents .  The Administrative Agent may perform any and all its duties and exercise its rights and powers 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 its duties and exercise its rights and powers through their respective Related Parties.  The exculpatory provisions of the preceding Sections of this Article XI 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 credit facilities provided for herein as well as activities as Administrative Agent.

 

Section 11.06                                 Resignation of Agents .  Subject to the appointment and acceptance of a successor Agent as provided in this Section 11.06 , any Agent may resign at any time by notifying the Lenders, the Issuing Bank and the Borrower.  Upon any such resignation, the Majority Lenders shall have the right, with the consent of the Borrower, which consent shall not be unreasonably withheld or delayed ( provided that no such consent of the Borrower shall be required upon the occurrence and during the continuance of an Event of Default under Section 10.01(a) , Section 10.01(b) , Section 10.01(h)  or Section 10.01(i) ), to appoint a successor from among the Lenders.  If no successor shall have been so appointed and shall have accepted such appointment within thirty (30) days after the retiring Agent gives notice of its resignation, then the retiring Agent may, on behalf of the Lenders and the Issuing Bank, appoint a successor Agent from among the Lenders, or an Affiliate of any such bank.  Upon the acceptance of its appointment as Agent hereunder by a successor, such successor shall succeed to and become vested with all the rights, powers, privileges and duties of the retiring Agent, and the retiring Agent shall be discharged from its duties and obligations hereunder.  The fees payable by the Borrower to a successor Agent shall be the same as those payable to its predecessor unless otherwise agreed between the Borrower and such successor.  After the Agent’s resignation hereunder, the provisions of this Article XI and Section 12.03 shall continue in effect for the benefit of such retiring 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 it was acting as Agent.

 

Section 11.07                                 Agents as Lenders .  Each bank serving as an 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 an Agent, and such bank and its Affiliates may accept deposits from, lend money to and generally engage in any kind of business with the Borrower or any Subsidiary or other Affiliate thereof as if it were not an Agent hereunder.

 

Section 11.08                                 No Reliance .  Each Lender acknowledges that it has, independently and without reliance upon the Administrative Agent, any other Agent or any other Lender and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement and each other Loan Document to which it is a party.  Each Lender also acknowledges that it will, independently and without reliance upon the Administrative Agent, any other Agent or any other Lender 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, any related agreement or any document furnished hereunder or thereunder.  The Agents shall not be required to keep themselves informed as to the performance or observance by the Borrower or any of its Subsidiaries of this Agreement, the Loan Documents or any other document referred to or provided for herein or to inspect the Properties or books of the Borrower or its Subsidiaries.  Except for notices, reports and other documents and information expressly required to be furnished to the Lenders by the Administrative Agent hereunder, no Agent or the Arrangers shall have any duty or responsibility to provide any Lender with any credit or other information concerning the affairs, financial condition or business of the Borrower (or any of its Affiliates) which may come into the possession of such Agent or any of its Affiliates.  In this regard, each Lender acknowledges that Simpson, Thacher & Bartlett LLP is acting in this transaction as special counsel to the Administrative

 

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Agent only, except to the extent otherwise expressly stated in any legal opinion or any Loan Document.  Each other party hereto will consult with its own legal counsel to the extent that it deems necessary in connection with the Loan Documents and the matters contemplated therein.

 

Section 11.09                                 Administrative Agent May File Proofs of Claim .  In case of the pendency of any receivership, insolvency, liquidation, bankruptcy, reorganization, arrangement, adjustment, composition or other judicial proceeding relative to the Borrower or any of its Subsidiaries, the Administrative Agent irrespective of whether the principal of any Loan or LC Disbursement 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, 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 Disbursements and all other Secured 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 and the Administrative Agent and their respective agents and counsel and all other amounts due the Lenders and the Administrative Agent under Section 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 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, 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 .

 

Except as specifically contemplated herein, nothing contained herein shall be deemed to authorize the Administrative Agent to authorize or consent to or accept or adopt on behalf of any Lender or other Secured Party any plan of reorganization, arrangement, adjustment or composition affecting the Secured Obligations or the rights of any Lender or other Secured Party or to authorize the Administrative Agent to vote in respect of the claim of any Lender or other Secured Party in any such proceeding.

 

Section 11.10                                 Authority of Administrative Agent to Release Collateral and Liens .  Each Lender, the Issuing Bank and each other Secured Party hereby authorizes the Administrative Agent to release any collateral that is permitted to be sold or released pursuant to the terms of the Loan Documents (including irrevocably authorizing the Administrative Agent to comply with the provisions of Section 12.19 (without requirement of notice to or consent of any Person except as expressly required by Section 12.02(b) ).  Each Lender and the Issuing Bank hereby authorizes the Administrative Agent to execute and deliver to the Borrower, at the Borrower’s sole cost and expense, any and all (a) releases of Liens, termination statements, assignments or other documents reasonably requested by the Borrower in connection with any sale or other disposition of Property to the extent such sale or other disposition is permitted by the terms of Section 9.13 or is otherwise authorized by the terms of the Loan Documents, (b) releases from the Guaranty Agreement of any Subsidiary that is sold or otherwise disposed of as permitted by the terms of Section 9.13 or as otherwise specifically authorized by the terms of the Loan Documents and (c) other releases of collateral that may be specifically authorized by the terms of the Loan Documents.

 

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Upon request by the Administrative Agent at any time, the Majority 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 Section 11.10 or Section 12.19 .

 

Section 11.11                                 The Arrangers, the Syndication Agent and the Documentation Agent .  The Arrangers, the Syndication Agent and the Documentation Agent shall have no duties, responsibilities or liabilities under this Agreement and the other Loan Documents other than their duties, responsibilities and liabilities in their capacity as Lenders hereunder.

 

Section 11.12                                 Credit Bidding .  The Secured Parties hereby irrevocably authorize the Administrative Agent, at the direction of the Majority Lenders, to credit bid all or any portion of the Secured Obligations (including by accepting some or all of the Collateral in satisfaction of some or all of the Secured Obligations pursuant to a deed in lieu of foreclosure or otherwise) and in such manner purchase (either directly or through one or more acquisition vehicles) all or any portion of the Collateral (a) at any sale thereof conducted under the provisions of the Bankruptcy Code, including under Sections 363, 1123 or 1129 of the Bankruptcy Code, or any similar laws in any other jurisdictions to which a Secured Party is subject, or (b) at any other sale, foreclosure or acceptance of collateral in lieu of debt conducted by (or with the consent or at the direction of) the Administrative Agent (whether by judicial action or otherwise) in accordance with any applicable law.  In connection with any such credit bid and purchase, the Secured Obligations owed to the Secured Parties shall be entitled to be credit bid by the Administrative Agent at the direction of the Majority Lenders on a ratable basis (with Secured Obligations with respect to contingent or unliquidated claims receiving contingent interests in the acquired assets on a ratable basis that shall vest upon the liquidation of such claims in an amount proportional to the liquidated portion of the contingent claim amount used in allocating the contingent interests) for the asset or assets so purchased (or for the equity interests or debt instruments of the acquisition vehicle or vehicles that are issued in connection with such purchase).  In connection with any such bid (i) the Administrative Agent shall be authorized to form one or more acquisition vehicles and to assign any successful credit bid to such acquisition vehicle or vehicles, (ii) each of the Secured Parties’ ratable interests in the Secured Obligations which were credit bid shall be deemed without any further action under this Agreement to be assigned to such vehicle or vehicles for the purpose of closing such sale, (iii) the Administrative Agent shall be authorized to adopt documents providing for the governance of the acquisition vehicle or vehicles ( provided that any actions by the Administrative Agent with respect to such acquisition vehicle or vehicles, including any Disposition of the assets or equity interests thereof, shall be governed, directly or indirectly, by, and the governing documents shall provide for, control by the vote of the Majority Lenders or their permitted assignees under the terms of this Agreement or the governing documents of the applicable acquisition vehicle or vehicles, as the case may be, irrespective of the termination of this Agreement and without giving effect to the limitations on actions by the Majority Lenders contained in Section 12.02 of this Agreement), (iv) the Administrative Agent on behalf of such acquisition vehicle or vehicles shall be authorized to issue to each of the Secured Parties, ratably on account of the relevant Secured Obligations which were credit bid, interests, whether as equity, partnership, limited partnership interests or membership interests, in any such acquisition vehicle and/or debt instruments issued by such acquisition vehicle, all without the need for any Secured Party or acquisition vehicle to take any further action, and (v) to the extent that Secured Obligations that are assigned to an acquisition vehicle are not used to acquire Collateral for any reason, such Secured Obligations shall automatically be reassigned to the Secured Parties pro rata and the equity interests and/or debt instruments issued by any acquisition vehicle on account of such Secured Obligations shall automatically be cancelled, without the need for any Secured Party or any acquisition vehicle to take any further action.  Notwithstanding that the ratable portion of the Secured Obligations of each Secured Party are deemed assigned to the acquisition vehicle or vehicles as set forth in clause (ii)  above, each Secured Party shall execute such documents and provide such information regarding the Secured Party (and/or any

 

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designee of the Secured Party which will receive interests in or debt instruments issued by such acquisition vehicle) as the Administrative Agent may reasonably request in connection with the formation of any acquisition vehicle, the formulation or submission of any credit bid or the consummation of the transactions contemplated by such credit bid.  For the avoidance of doubt, Secured Obligations under a Secured Swap Agreement shall not be subject to a credit bid without the prior written consent of the relevant Secured Swap Provider.

 

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 (i) delivered by hand or overnight courier service, mailed by certified or registered mail, (ii) sent by telecopy or (iii) sent by email, as follows:

 

(A)                                if to the Borrower, to it at 1000 Louisiana St., Suite 6700, Houston, TX 77002, Attention: Mark J. Mize, Phone No. (832) 538-0303, Fax No. (832) 538-0220; and

 

(B)                                if to the Administrative Agent, to it at 1 Chase Tower, 10 South Dearborn, IL1-0010, Chicago, Illinois 60603 Attention:  Leonida Mischke, Phone No. (312) 385-7055, Fax No. (312) 385-7096, and for all other correspondence other than borrowings, continuation, conversion and Letter of Credit requests 712 Main, 12th Floor, Houston, Texas 77002, Attention of Ronald Dierker (Fax No. (713) 216-7794); and

 

(C)                                if to any other Lender, to it at its address (or telecopy number) set forth in its Administrative Questionnaire.

 

(b)                                  Notices and other communications to the Lenders hereunder may be delivered or furnished by electronic communications pursuant to procedures approved by the Administrative Agent; provided that the foregoing shall not apply to notices pursuant to Article II , Article III , Article IV and Article V unless otherwise agreed by the Administrative Agent and the applicable Lender.  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.

 

(c)                                   Any party hereto may change its address or telecopy number for notices and other communications hereunder by notice to the other parties hereto.  All notices and other communications given to any party hereto in accordance with the provisions of this Agreement shall be deemed to have been given on the date of receipt.

 

Section 12.02                                 Waivers; Amendments .

 

(a)                                  No failure on the part of the Administrative 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, the Issuing Bank and the Lenders hereunder and under the other Loan Documents

 

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are cumulative and are not exclusive of any rights or remedies that they would otherwise have.  No waiver of any provision of this Agreement or any other Loan Document 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 Lender or the Issuing Bank may have had notice or knowledge of such Default at the time.

 

(b)                                  Subject to Section 4.05 , neither this Agreement nor any provision hereof nor any Security Instrument nor 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 Maximum Credit Amount or Commitment of any Lender without the written consent of such Lender affected thereby,

 

(ii)                                   increase the Borrowing Base without the written consent of each of the Lenders, decrease or maintain the Borrowing Base without the consent of the Required Lenders; provided that a Scheduled Redetermination and the delivery of a Reserve Report may be postponed by the Required Lenders; provided further that it is understood that any waiver (or amendment or modification that would have the effect of a waiver) of the right of the Required Lenders to adjust (through a reduction of) the Borrowing Base or the amount of such adjustment in the form of a reduction to the Borrowing Base pursuant to the Borrowing Base Adjustment Provisions in connection with the occurrence of a relevant event giving rise to such right shall require the consent of the Required Lenders,

 

(iii)                                reduce the principal amount of the Loan or LC Disbursement or reduce the rate of interest thereon, or reduce any fees payable hereunder, or reduce any other Secured Obligations hereunder or under any other Loan Document, without the written consent of each Lender or Secured Swap Provider directly and adversely affected thereby (except in connection with any amendment or waiver of the applicability of any post-default increase in interest rates, which shall be effective with the written consent of the Majority Lenders),

 

(iv)                               postpone the scheduled date of payment or prepayment of the principal amount of the Loan or LC Disbursement, or any interest thereon, or any fees payable hereunder, or any other Secured Obligations hereunder or under any other Loan Document, reduce the amount of, waive or excuse any such payment, or postpone or extend the Termination Date, or extend the expiry date of any Letter of Credit beyond the then current Maturity Date without the written consent of each Lender directly and adversely affected thereby,

 

(v)                                  change Section 4.01(b)  or Section 4.01(c)  in a manner that would alter the pro rata sharing of payments required thereby, without the written consent of each Lender directly and adversely affected thereby,

 

(vi)                               waive or amend Section 3.04(c)  or Section 6.01 or change the definition of “Applicable Percentage”, without the written consent of each Lender directly and adversely affected thereby,

 

(vii)                            release any Guarantor (except as set forth in the Guaranty Agreement or pursuant to a transaction permitted hereby) or release a substantial portion of the collateral (other than as provided

 

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in Section 11.10 ), in each case, without the written consent of each directly and adversely affected Lender (other than any Defaulting Lender) or Secured Swap Provider,

 

(viii)                         modify the terms of Section 10.02(c), Section 12.14 or Section 12.19 without the written consent of (A) each Lender directly and adversely affected thereby and the consent of each Person that is directly and adversely affected hereby and (B) a party to a Swap Agreement secured by the Security Instruments which is not a Lender (or an Affiliate of a Lender) at the time of, or after giving effect to, such agreement; provided that any waiver, amendment or modification to any Security Instrument that results in the Secured Swap Obligations secured by such Security Instrument no longer being secured thereby on an equal and ratable basis with the principal of the Loans, or any amendment, modification or change to the definition of the terms “Existing Secured Swap Agreement,” “Payment in Full,” “Secured Swap Agreement” or “Secured Swap Provider,” shall also require the written consent of each Secured Swap Party directly and adversely affected thereby, or

 

(ix)                               change (A) any of the provisions of this Section 12.02(b)  without the written consent of each Lender or other Secured Swap Provider directly and adversely affected thereby, (B) the definitions of “Majority Lenders,” “Required Lenders” or reduce the voting rights of any Lender, without the written consent of each directly and adversely affected Lender (other than any Defaulting Lender), (C) 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 directly and adversely affected thereby; provided that no such agreement shall amend, modify or otherwise affect the rights or duties of the Administrative Agent or the Issuing Bank hereunder or under any other Loan Document without the prior written consent of the Administrative Agent or the Issuing Bank, as the case may be.

 

Notwithstanding the foregoing, any supplement to Schedule 7.14 (Subsidiaries) shall be effective simply by delivering to the Administrative Agent a supplemental schedule clearly marked as such and, upon receipt, the Administrative Agent will promptly deliver a copy thereof to the Lenders.

 

(c)                                   Notwithstanding anything to the contrary contained in the Loan Documents, the Administrative Agent and the Borrower, may amend, modify or supplement any Loan Document without the consent of any Lender in order to (i) correct, amend, cure or resolve any minor ambiguity, omission, defect, typographical error, inconsistency or other manifest error therein, (ii) add a guarantor or collateral or otherwise enhance the rights and benefits of the Lenders, (iii) make minor administrative or operational changes not adverse to any Lender or (iv) adhere to any local Governmental Requirement on advice of local counsel.

 

(d)                                  Notwithstanding anything to the contrary contained in any Loan Documents, the Commitment of any Defaulting Lender may not be increased without its consent (it being understood, for avoidance of doubt, that no Defaulting Lender shall have any right to approve or disapprove any increase, decrease or reaffirmation of the Borrowing Base) and the Administrative Agent may with the consent of the Borrower amend, modify or supplement the Loan Documents to effectuate an increase to the Borrowing Base where such Defaulting Lender does not consent to an increase to its Commitment, including not increasing the Borrowing Base by the portion thereof applicable to the Defaulting Lender.

 

Section 12.03                                 Expenses, Indemnity; Damage Waiver .

 

(a)                                  The Borrower shall pay (i) all reasonable and documented out-of-pocket expenses incurred by the Administrative Agent and its Affiliates, including the reasonable fees, charges and disbursements of counsel and other outside consultants for the Administrative Agent ( provided that

 

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counsel shall be limited to (x) one (1) counsel to such Persons, taken as a whole, one (1) local counsel in each relevant jurisdiction and one (1) regulatory counsel to all such Persons with respect to a relevant regulatory matter, taken as a whole and (y), solely in the event of a conflict of interest, one (1) additional counsel (and, if necessary, one (1) regulatory counsel and one (1) local counsel in each relevant jurisdiction or for each matter) to each group of similarly situated affected indemnified persons), the reasonable travel, photocopy, mailing, courier, telephone and other similar expenses, including all IntraLinks expenses, and the cost of environmental assessments and audits and surveys and appraisals, in connection with the syndication of this Agreement, 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 the Administrative 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 or conducting of title reviews, mortgage matches and collateral reviews, (iii) all reasonable and documented 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, (iv) all reasonable out-of-pocket expenses incurred by the Administrative Agent, the Issuing Bank or any Lender, including the fees, charges and disbursements of any counsel for the Administrative 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 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 EACH AGENT, THE ISSUING BANK, THE ARRANGERS AND EACH LENDER, 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 AND RELATED EXPENSES, INCLUDING THE REASONABLE FEES, CHARGES AND DISBURSEMENTS OF ANY COUNSEL FOR ANY INDEMNITEE ( PROVIDED THAT COUNSEL SHALL BE LIMITED TO (X) ONE (1) COUNSEL TO SUCH INDEMNITEES, TAKEN AS A WHOLE, ONE (1) LOCAL COUNSEL IN EACH RELEVANT JURISDICTION AND ONE (1) REGULATORY COUNSEL TO ALL SUCH INDEMNITEES WITH RESPECT TO A RELEVANT REGULATORY MATTER, TAKEN AS A WHOLE AND (Y), SOLELY IN THE EVENT OF A CONFLICT OF INTEREST, ONE (1) ADDITIONAL COUNSEL (AND, IF NECESSARY, ONE (1) REGULATORY COUNSEL AND ONE (1) LOCAL COUNSEL IN EACH RELEVANT JURISDICTION OR FOR EACH MATTER) TO EACH GROUP OF SIMILARLY SITUATED AFFECTED INDEMNITEES), INCURRED BY OR ASSERTED AGAINST ANY INDEMNITEE ARISING OUT OF, IN CONNECTION WITH, OR AS A RESULT OF (i) THE EXECUTION OR DELIVERY OF THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR ANY AGREEMENT OR INSTRUMENT CONTEMPLATED HEREBY OR THEREBY, THE PERFORMANCE BY THE PARTIES HERETO OR THE PARTIES TO ANY OTHER LOAN DOCUMENT OF THEIR RESPECTIVE OBLIGATIONS HEREUNDER OR THEREUNDER OR THE CONSUMMATION OF THE TRANSACTIONS CONTEMPLATED HEREBY OR BY ANY OTHER LOAN DOCUMENT, (ii) THE FAILURE OF THE BORROWER OR ANY RESTRICTED SUBSIDIARY TO COMPLY WITH THE TERMS OF ANY LOAN DOCUMENT, INCLUDING THIS AGREEMENT, OR WITH ANY GOVERNMENTAL REQUIREMENT, (iii) ANY INACCURACY OF ANY REPRESENTATION OR ANY BREACH OF ANY WARRANTY OR COVENANT OF THE BORROWER OR ANY GUARANTOR SET FORTH IN ANY OF THE LOAN DOCUMENTS OR

 

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ANY INSTRUMENTS, DOCUMENTS OR CERTIFICATIONS DELIVERED IN CONNECTION THEREWITH, (iv) ANY LOAN OR LETTER OF CREDIT OR THE USE OF THE PROCEEDS THEREFROM, INCLUDING, WITHOUT LIMITATION, (A) 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, OR (B) THE PAYMENT OF A DRAWING UNDER ANY LETTER OF CREDIT NOTWITHSTANDING THE NON-COMPLIANCE, NON-DELIVERY OR OTHER IMPROPER PRESENTATION OF THE DOCUMENTS PRESENTED IN CONNECTION THEREWITH, (v) ANY OTHER ASPECT OF THE LOAN DOCUMENTS, (vi) THE OPERATIONS OF THE BUSINESS OF THE BORROWER AND ITS SUBSIDIARIES BY THE BORROWER AND ITS SUBSIDIARIES, (vii) ANY ASSERTION THAT THE LENDERS WERE NOT ENTITLED TO RECEIVE THE PROCEEDS RECEIVED PURSUANT TO THE SECURITY INSTRUMENTS, (viii) ANY ENVIRONMENTAL LAW APPLICABLE TO THE BORROWER OR ANY SUBSIDIARY OR ANY OF THEIR PROPERTIES, INCLUDING WITHOUT LIMITATION, THE PRESENCE, GENERATION, STORAGE, RELEASE, THREATENED RELEASE, USE, TRANSPORT, DISPOSAL, ARRANGEMENT OF DISPOSAL OR TREATMENT OF OIL, OIL AND GAS WASTES, SOLID WASTES OR HAZARDOUS SUBSTANCES ON ANY OF THEIR PROPERTIES, (ix) THE BREACH OR NON-COMPLIANCE BY THE BORROWER OR ANY SUBSIDIARY WITH ANY ENVIRONMENTAL LAW APPLICABLE TO THE BORROWER OR ANY SUBSIDIARY, (x) THE PAST OWNERSHIP BY THE BORROWER OR ANY SUBSIDIARY OF ANY OF THEIR PROPERTIES OR PAST ACTIVITY ON ANY OF THEIR PROPERTIES WHICH, THOUGH LAWFUL AND FULLY PERMISSIBLE AT THE TIME, COULD RESULT IN PRESENT LIABILITY, (xi) THE PRESENCE, USE, RELEASE, STORAGE, TREATMENT, DISPOSAL, GENERATION, THREATENED RELEASE, TRANSPORT, ARRANGEMENT FOR TRANSPORT OR ARRANGEMENT FOR DISPOSAL OF OIL, OIL AND GAS WASTES, SOLID WASTES OR HAZARDOUS SUBSTANCES ON OR AT ANY OF THE PROPERTIES OWNED OR OPERATED BY THE BORROWER OR ANY SUBSIDIARY OR 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, (xii) ANY ENVIRONMENTAL LIABILITY RELATED IN ANY WAY TO THE BORROWER OR ANY OF ITS SUBSIDIARIES, OR (xiii) ANY OTHER ENVIRONMENTAL, HEALTH OR SAFETY CONDITION IN CONNECTION WITH THE LOAN DOCUMENTS, OR (xiv) ANY ACTUAL OR PROSPECTIVE CLAIM, LITIGATION, INVESTIGATION OR PROCEEDING RELATING TO ANY OF THE FOREGOING THAT MAY BE BROUGHT BY THE BORROWER, ANY GUARANTOR, ANY OF THEIR RESPECTIVE AFFILIATES OR ANY OTHER PERSON OR ENTITY, WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY AND REGARDLESS OF WHETHER ANY INDEMNITEE IS A PARTY THERETO, AND SUCH INDEMNITY SHALL EXTEND TO EACH INDEMNITEE NOTWITHSTANDING THE SOLE OR CONCURRENT NEGLIGENCE OF EVERY KIND OR CHARACTER WHATSOEVER, WHETHER ACTIVE OR PASSIVE, WHETHER AN AFFIRMATIVE ACT OR AN OMISSION, INCLUDING WITHOUT LIMITATION, ALL TYPES OF NEGLIGENT CONDUCT IDENTIFIED IN THE RESTATEMENT (SECOND) OF TORTS OF ONE OR MORE OF THE INDEMNITEES OR BY REASON OF STRICT LIABILITY IMPOSED WITHOUT FAULT ON ANY ONE OR MORE OF THE INDEMNITEES; PROVIDED THAT SUCH INDEMNITY SHALL NOT, AS TO ANY INDEMNITEE, BE AVAILABLE TO THE EXTENT THAT SUCH LOSSES, CLAIMS, DAMAGES, LIABILITIES OR RELATED EXPENSES ARE DETERMINED BY A COURT OF COMPETENT JURISDICTION BY FINAL AND NONAPPEALABLE JUDGMENT TO HAVE RESULTED FROM THE GROSS NEGLIGENCE, BAD FAITH OR WILLFUL MISCONDUCT OF SUCH INDEMNITEE.

 

(c)                                   To the extent that the Borrower fails to pay any amount required to be paid by it to any Agent or the Issuing Bank under Section 12.03(a)  or Section 12.03(b) , each Lender severally

 

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agrees to pay to such Agent or the Issuing Bank, as the case may be, such Lender’s Applicable Percentage (determined as of the time that the applicable unreimbursed expense or indemnity payment is sought) of such unpaid amount; provided that the unreimbursed expense or indemnified loss, claim, damage, liability or related expense, as the case may be, was incurred by or asserted against such Agent or the Issuing Bank in its capacity as such.

 

(d)                                  All amounts due under this Section 12.03 shall be payable not later than five (5) days after written demand therefor.

 

Section 12.04                                 Successors and Assigns .

 

(a)                                  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 (including any Affiliate of the Issuing Bank that issues any Letter of Credit), except that (i) the Borrower may not assign or otherwise transfer any of its rights or obligations hereunder without the prior written consent of each Lender (and any attempted assignment or transfer by the Borrower without such consent shall be null and void) and (ii) no Lender may assign or otherwise transfer its rights or obligations hereunder except in accordance with this Section 12.04 .  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 (including any Affiliate of the Issuing Bank that issues any Letter of Credit), Participants (to the extent provided in Section 12.04(c) ) and, to the extent expressly contemplated hereby, the Related Parties of each of the Administrative Agent, the Issuing Bank and the Lenders) any legal or equitable right, remedy or claim under or by reason of this Agreement.

 

(b)                                  (i)  Subject to the conditions set forth in Section 12.04(b)(ii) , any Lender may 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) with the prior written consent (such consent not to be unreasonably withheld) of:

 

(A)                                the Borrower, provided that no consent of the Borrower shall be required for an assignment to a Lender, an Affiliate of a Lender, an Approved Fund or, if an Event of Default has occurred and is continuing, any other assignee, and 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

 

(B)                                the Administrative Agent, provided that no consent of the Administrative Agent shall be required for an assignment to an assignee that is a Lender or an Affiliate of a Lender immediately prior to giving effect to such assignment.

 

(ii)                                   Assignments shall be subject to the following additional conditions:

 

(A)                                except in the case of an assignment to a Lender or an assignment of the entire remaining amount of the assigning Lender’s Commitment or Loans, the amount of the Commitment or 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) shall not be less than $5.0 million unless each of the Borrower and the Administrative Agent otherwise consent, provided that no such consent of the Borrower shall be required if an Event of Default has occurred and is continuing;

 

(B)                                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;

 

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(C)                                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;

 

(D)                                the assignee, if it shall not be a Lender, shall deliver to the Administrative Agent an Administrative Questionnaire; and

 

(E)                                 the assignee must not be a natural Person (or a holding company, investment vehicle or trust for, or owned and operated for the primary benefit of, a natural Person), a Defaulting Lender or an Affiliate or a Subsidiary of the Borrower or any other Loan Party.

 

(iii)                                Subject to Section 12.04(b)(iv) , and the acceptance and recording thereof, from and after the effective date specified in each Assignment and Assumption the assignee thereunder shall be a party hereto 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 Section 5.01 , Section 5.02 , Section 5.03 and Section 12.03 ).  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(c) .

 

(iv)                               The Administrative Agent, acting solely for this purpose as a non-fiduciary agent of the Borrower, shall maintain at one of its offices 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 Maximum Credit Amount of, and principal amount of (and stated interest on) the Loans and LC Disbursements 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, the Issuing Bank(s) 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, notwithstanding notice to the contrary.  The Register shall be available for inspection by the Borrower, any Issuing Bank and any Lender, at any reasonable time and from time to time upon reasonable prior notice.  In connection with any changes to the Register, if necessary, the Administrative Agent will reflect the revisions on Annex I and, at its election, forward a copy of such revised Annex I to the Borrower, the Issuing Bank and each Lender.

 

(v)                                  Upon its receipt of a duly completed Assignment and Assumption executed by an assigning Lender and an assignee, the assignee’s completed Administrative Questionnaire (unless the assignee shall already be a Lender hereunder), the processing and recordation fee referred to in Section 12.04(b)  and any written consent to such assignment required by Section 12.04(b) , the Administrative Agent shall accept such Assignment and Assumption and record the information contained therein in the Register.  No assignment shall be effective for purposes of this Agreement unless it has been recorded in the Register as provided in this Section 12.04(b) .

 

(c)                                   (i)  Any Lender may, without the consent of the Borrower, the Administrative Agent or the Issuing Bank, sell participations to one or more banks or other entities (a “ Participant ”) in all or a portion of such Lender’s rights and obligations under this Agreement (including all or a portion of its Commitment and the Loans owing to it); provided that (A) such Lender’s obligations under this Agreement shall remain unchanged, (B) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations and (C) the Borrower, the Administrative Agent, the

 

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Issuing Bank and the other Lenders shall continue to deal solely and directly with such Lender in connection with such Lender’s rights and obligations under this Agreement.  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 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 clauses (i) , (iii) , (iv) , (v) , (vi)  and (vii)  of the proviso to Section 12.02(b)  that affects such Participant and for which such Lender would have consent rights.  In addition such agreement must provide that the Participant be bound by the provisions of Section 12.03 .  Subject to Section 12.04(c) (ii), the Borrower agrees that each Participant shall be entitled to the benefits of Section 5.01 , Section 5.02 and Section 5.03 (subject to the requirements and limitations therein, including the requirements under Section 5.03(e)  (it being understood that the documentation required under Section 5.03(e)  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) .  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 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 to any Person (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) 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.  Unless otherwise required by the Internal Revenue Service, any disclosure required by the foregoing sentence shall be made by the relevant Lender directly and solely to the Internal Revenue Service.  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.

 

(ii)           A Participant shall not be entitled to receive any greater payment under Section 5.01 or Section 5.03 than the applicable Lender would have been entitled to receive with respect to the participation sold to such Participant, 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.

 

(d)           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, without limitation, any pledge or assignment to secure obligations to a Federal Reserve Bank or any other central bank having jurisdiction over such Lender, and this Section 12.04 shall not apply to any such pledge or assignment of a security interest; provided that no such pledge or assignment of a security interest shall release a Lender from any of its obligations hereunder or substitute any such pledgee or assignee for such Lender as a party hereto.

 

(e)           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 Guarantors to file a registration statement with the SEC or to qualify the Loans under the “Blue Sky” laws of any state.

 

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Section 12.05        Survival; Revival; Reinstatement .

 

(a)           All covenants, agreements, representations and warranties made by the Borrower 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 investigation made by any such other party or on its behalf and notwithstanding that the Administrative 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 until Payment in Full.  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 Secured 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 Secured 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 Secured Parties’ 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 and other Secured Parties to effect such reinstatement.

 

Section 12.06        Counterparts; Integration; Effectiveness .

 

(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 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 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 telecopy shall be effective as delivery of a manually executed counterpart of this Agreement.

 

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 and each of its Affiliates is hereby authorized at any time and from time to time, to the fullest extent permitted by law, to set off and apply any and all deposits (general or special, time or

 

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demand, provisional or final) at any time held and other obligations (of whatsoever kind, including, without limitations obligations under Swap Agreements) at any time owing by such Lender or Affiliate to or for the credit or the account of the Borrower or any Restricted Subsidiary against any of and all the obligations of the Borrower or any Restricted Subsidiary owed to such Lender now or hereafter existing under this Agreement or any other Loan Document, irrespective of whether or not such Lender shall have made any demand under this Agreement or any other Loan Document and although such obligations may be unmatured; provided that to the extent prohibited by applicable law as described in the definition of “Excluded Swap Obligation,” no amounts received from, or set off with respect to, any Guarantor shall be applied to any Excluded Swap Obligations of such Guarantor.  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; 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 10.02(c) 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, Issuing Bank(s) and the Lenders, and (y) the Defaulting Lender shall provide promptly to the Administrative Agent a statement describing in reasonable detail the Secured Obligations owing to such Defaulting Lender as to which it exercised such right of setoff. The rights of each Lender, Issuing Bank(s) and their respective Affiliates under this Section 12.08 are in addition to other rights and remedies (including other rights of setoff) that such Lender, Issuing Bank(s) or their respective Affiliates may have. Each Lender and 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)           THIS AGREEMENT, THE NOTES (IF ANY) AND ANY LOAN DOCUMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

 

(b)           ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THE LOAN DOCUMENTS SHALL BE BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT JURISDICTION IN THE STATE, COUNTY, AND CITY OF NEW YORK, BOROUGH OF MANHATTAN, AND, BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH PARTY HEREBY ACCEPTS FOR ITSELF AND (TO THE EXTENT PERMITTED BY LAW) IN RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE EXCLUSIVE JURISDICTION OF THE AFORESAID COURTS; PROVIDED , THAT NOTHING CONTAINED HEREIN OR IN ANY OTHER LOAN DOCUMENT WILL PREVENT ANY PARTY FROM BRINGING ANY ACTION TO ENFORCE ANY AWARD OR JUDGMENT OR EXERCISE ANY RIGHT UNDER THE LOAN DOCUMENTS IN ANY OTHER FORUM IN WHICH JURISDICTION CAN BE ESTABLISHED.  EACH OF THE PARTIES HERETO AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION 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.  EACH PARTY HEREBY IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING, WITHOUT LIMITATION, ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS , WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY SUCH ACTION OR PROCEEDING IN SUCH RESPECTIVE JURISDICTIONS.

 

(c)           EACH PARTY IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH ACTION OR

 

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PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO IT AT THE ADDRESS SPECIFIED IN SECTION 12.01 OR SUCH OTHER ADDRESS AS IS SPECIFIED PURSUANT TO SECTION 12.01 (OR ITS ASSIGNMENT AND ASSUMPTION), SUCH SERVICE TO BECOME EFFECTIVE THIRTY (30) DAYS AFTER SUCH MAILING.  NOTHING HEREIN SHALL AFFECT THE RIGHT OF A PARTY OR ANY HOLDER OF ANY NOTE TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST ANOTHER PARTY IN ANY OTHER JURISDICTION.

 

(d)           EACH PARTY HEREBY (i) IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN; (ii) IRREVOCABLY WAIVES, TO THE MAXIMUM EXTENT NOT PROHIBITED BY LAW, ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN ANY SUCH LITIGATION ANY SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES, OR DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL DAMAGES ( PROVIDED , THAT THIS WAIVER SHALL NOT LIMIT RECOVERY BY AN INDEMNITEE PURSUANT TO SECTION 12.03 FOR INDEMNIFICATION OF EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES PAID TO, OR ASSERTED BY, A THIRD PARTY); (iii) CERTIFIES THAT NO PARTY HERETO NOR ANY REPRESENTATIVE OR AGENT OF COUNSEL FOR ANY PARTY HERETO HAS REPRESENTED, EXPRESSLY OR OTHERWISE, OR IMPLIED THAT SUCH PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVERS, AND (iv) ACKNOWLEDGES THAT IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT, THE LOAN DOCUMENTS AND THE TRANSACTIONS CONTEMPLATED HEREBY AND THEREBY BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS CONTAINED IN THIS SECTION 12.09 .

 

Section 12.10        Headings .  Article and Section headings and the Table of Contents used herein 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.

 

Section 12.11        Confidentiality .  Each of the Administrative Agent, the Issuing Bank and the Lenders agrees to maintain the confidentiality of the Information (as defined below), except that Information may be disclosed (a) to its and its Affiliates’ directors, officers, employees and agents, including accountants, legal counsel and other advisors (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 requested by any regulatory authority, (c) to the extent required by applicable laws or regulations or by any subpoena or similar legal process, (d) to any other party to this Agreement or any other Loan Document, (e) in connection with the exercise of any remedies hereunder or under any other Loan Document or any suit, 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 12.11 , to (i) any assignee of or Participant in, or any prospective assignee of or Participant in, any of its rights or obligations under this Agreement or (ii) any actual or prospective counterparty (or its advisors) to any Swap Agreement or any credit insurance provider, in each case relating to the Borrower and its obligations, (g) with the consent of the Borrower, (h) to the National Association of Insurance Commissioners or any similar organization or any nationally recognized rating agency that requires access to information about a Lender’s investment portfolio in connection with ratings issued with respect to such Lender or (i) to the extent such Information (i) becomes publicly available other than as a result of a breach of this Section 12.11 or (ii) becomes available to the Administrative Agent, the Issuing Bank or any Lender on a nonconfidential basis from a source other than the Borrower.  For the purposes of this

 

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Section 12.11 , “ Information ” means all information received from the Borrower or any Restricted Subsidiary relating to the Borrower or any Restricted Subsidiary and their businesses, other than any such information that is available to the Administrative Agent, the Issuing Bank or any Lender on a nonconfidential basis prior to disclosure by the Borrower or a Restricted Subsidiary; provided that, in the case of information received from the Borrower or any Restricted Subsidiary 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 12.11 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 Lender acknowledges that information furnished to it pursuant to this Agreement or the other Loan Documents may include material non-public information concerning the Borrower and its Affiliates and their related parties or their respective securities, and confirms that it has developed compliance procedures regarding the use of material non-public information and that it will handle such material non-public information in accordance with those procedures and applicable law, including Federal and state securities laws.

 

All information, including requests for waivers and amendments, furnished by the Borrower or the Administrative Agent pursuant to, or in the course of administering, this Agreement or the other Loan Documents will be syndicate-level information, which may contain material non-public information about the Borrower and its Affiliates and their related parties or their respective securities.  Accordingly, each Lender represents to the Borrower and the Administrative Agent that it has identified in its Administrative Questionnaire a credit contact who may receive information that may contain material non-public information in accordance with its compliance procedures and applicable law, including 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 Texas 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 Loans, 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 Loans 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 the principal amount of the Secured Obligations (or, to the extent that the principal amount of the Secured 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 Loans 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 Secured Obligations (or, to the extent that the principal amount of the Secured 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, until payment in full so that the rate or amount of interest on account of any

 

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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 .  To the extent that Chapter 303 of the Texas Finance Code is relevant for the purpose of determining the Highest Lawful Rate applicable to a Lender, such Lender elects to determine the applicable rate ceiling under such Chapter by the weekly ceiling from time to time in effect.  Chapter 346 of the Texas Finance Code does not apply to the Borrower’s obligations hereunder.

 

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 .  The benefit of the Security Instruments and of the provisions of this Agreement relating to any collateral securing the Secured Obligations shall also extend to and be available on a pro rata basis to any Person under any Swap Agreement between the Borrower or any Restricted Subsidiary and such Person if either (a) at the time such Swap Agreement was entered into, such Person was a Lender or Affiliate of a Lender hereunder or (b) such Swap Agreement was in effect on the Closing Date and such Person or its Affiliate was a Lender on the Closing Date, in each case, after giving effect to all netting arrangements relating to such Swap Agreements.  Except as set forth in this Agreement , no Person 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.

 

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 materialsman) 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.

 

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Section 12.16        USA Patriot Act Notice .  Each Lender hereby notifies the Borrower that pursuant to the requirements of the Patriot Act, it is required to obtain, verify and record information that identifies the Borrower and other Loan Parties, which information includes the name and address of the Borrower and other Loan Parties and other information that will allow such Lender to identify the Borrower and other Loan Parties in accordance with the Patriot Act.

 

Section 12.17        Flood Insurance Provisions .  Notwithstanding any provision in this Agreement or any other Loan Document to the contrary, in no event is or will any enclosed structure (having two walls and a roof) or manufactured mobile home (each, a “ Building ”) be included as Collateral nor included in the definition of “Mortgaged Property”, and no Building is hereby nor shall be encumbered by a Mortgage, this Agreement or any other Loan Document.

 

Section 12.18        No Fiduciary Duty .  Each Lender and their Affiliates (collectively, solely for purposes of this Section 12.18 , the “ Lenders ”), may have economic interests that conflict with those of the Borrower and its Subsidiaries and their stockholders and/or their affiliates.  The Borrower, for itself and on behalf of its Subsidiaries, agrees that nothing in this Agreement or the Loan Documents or otherwise will be deemed to create an advisory, fiduciary or agency relationship or fiduciary or other implied duty between any Lender, on the one hand, and the Borrower or its Subsidiaries, their stockholders or their affiliates, on the other.  The Borrower, for itself and on behalf of its Subsidiaries, acknowledges and agrees that (i) the transactions contemplated by the Loan Documents (including the exercise of rights and remedies hereunder and thereunder) are arm’s-length commercial transactions between the Lenders, on the one hand, and the Borrower and its Subsidiaries, on the other, and (ii) in connection therewith and with the process leading thereto, (x) no Lender has assumed an advisory or fiduciary responsibility in favor of the Borrower or its Subsidiaries, their stockholders or their affiliates with respect to the transactions contemplated hereby (or the exercise of rights or remedies with respect thereto) or the process leading thereto (irrespective of whether any Lender has advised, is currently advising or will advise Borrower or its Subsidiaries, their stockholders or their affiliates on other matters) or any other obligation to the Borrower or any of its Subsidiaries except the obligations expressly set forth in the Loan Documents and (y) each Lender is acting solely as principal and not as the agent or fiduciary of the Borrower or any of its Subsidiaries, their management, stockholders, creditors or any other Person.  The Borrower, for itself and its Subsidiaries, acknowledges and agrees that it has consulted its own legal and financial advisors to the extent it deemed appropriate and that it is responsible for making its own independent judgment with respect to such transactions and the process leading thereto.  The Borrower, for itself and its Subsidiaries, agrees that it will not claim that any Lender has rendered advisory services of any nature or respect, or owes a fiduciary or similar duty to such Borrower or Subsidiary, in connection with such transaction or the process leading thereto.

 

Section 12.19        Releases

 

(a)           Release Upon Payment in Full .  Upon Payment in Full, the Administrative Agent, at the written request and expense of the Borrower, will promptly release, reassign and transfer the Collateral to the Loan Parties.

 

(a)           Further Assurances .  If any of the Collateral shall be sold, transferred or otherwise Disposed of by the Borrower or any Restricted Subsidiary in a transaction permitted by the Loan Documents and such Collateral shall no longer constitute or be required to be Collateral under the Loan Documents, then the Administrative Agent, at the request and sole expense of the Borrower and the applicable Restricted Subsidiary, shall promptly execute and deliver all releases or other documents reasonably necessary or desirable for the release of the Liens created by the applicable Security Instrument on such Collateral.  At the request and sole expense of the Borrower, a Loan Party shall be released from its obligations under the Loan Documents in the event that all the capital stock or other

 

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Equity Interests of such Loan Party shall be sold, transferred or otherwise disposed of in a transaction permitted by the Loan Documents and such Equity Interests shall no longer constitute or be required to be Collateral under the Loan Documents.

 

Section 12.20        Acknowledgement and Consent to Bail-In of EEA 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 EEA Financial Institution arising under any Loan Document may be subject to the write-down and conversion powers of an EEA 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 an EEA Resolution Authority to any such liabilities arising hereunder which may be payable to it by any party hereto that is an EEA 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;

 

(ii)           a conversion of all, or a portion of, such liability into shares or other instruments of ownership in such EEA Financial Institution, its parent entity, 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 any EEA Resolution Authority.

 

[SIGNATURES BEGIN NEXT PAGE]

 

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The parties hereto have caused this Agreement to be duly executed as of the day and year first above written.

 

BORROWER:

HALCÓN RESOURCES CORPORATION

 

 

 

 

By:

/s/ Mark J. Mize

 

 

Name: Mark J. Mize

 

 

Title: Executive Vice President, Chief Financial Officer and Treasurer

 

Signature Page to Credit Agreement

 



 

ADMINISTRATIVE AGENT, ISSUING BANK AND LENDER:

JPMORGAN CHASE BANK, N.A.,
as Administrative Agent, Issuing Bank and Lender

 

 

 

 

By:

/s/ Darren Vanek

 

 

Name: Darren Vanek

 

 

Title: Executive Director

 

Signature Page to Credit Agreement

 



 

 

WELLS FARGO BANK, N.A. ,

as a Lender

 

 

 

 

By:

/s/ Michael Thomas

 

 

Name: Michael Thomas

 

 

Title: Senior Vice President

 

Signature Page to Credit Agreement

 



 

 

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

 

 

 

 

By:

/s/ Tyler D. Levings

 

 

Name: Tyler D. Levings

 

 

Title: Director

 

Signature Page to Credit Agreement

 



 

 

BMO HARRIS FINANCING, INC.,
as a Lender

 

 

 

 

By:

/s/ James V. Ducote

 

 

Name: James V. Ducote

 

 

Title: Managing Director

 

Signature Page to Credit Agreement

 



 

 

BARCLAYS BANK PLC,
as a Lender

 

 

 

 

By:

/s/ Vanessa Kurbatskiy

 

 

Name: Vanessa Kurbatskiy

 

 

Title: Vice President

 

Signature Page to Credit Agreement

 



 

 

BNP PARIBAS
as a Lender

 

 

 

 

By:

/s/ Sriram Chandrasekara

 

 

Name: Sriram Chandrasekara

 

 

Title: Director

 

 

 

 

By:

/s/ Vincent Trapet

 

 

Name:  Vincent Trapet

 

 

Title: Director

 

Signature Page to Credit Agreement

 



 

 

CAPITAL ONE, NATIONAL ASSOCIATION,
as a Lender

 

 

 

 

By:

/s/ David Denbina

 

 

Name: David Denbina, P.E.

 

 

Title: Senior Vice President

 

Signature Page to Credit Agreement

 



 

 

COMERICA BANK,
as a Lender

 

 

 

 

By:

/s/ Chad Stephenson

 

 

Name: Chad Stephenson

 

 

Title: Vice President

 

Signature Page to Credit Agreement

 



 

 

CREDIT SUISSE AG, CAYMAN ISLANDS BRANCH,
as a Lender

 

 

 

 

By:

/s/ Bryan J. Matthews

 

 

Name: Bryan J. Matthews

 

 

Title: Authorized Signatory

 

 

 

 

By:

/s/ Jeremy Roberts Stern

 

 

Name: Jeremy Roberts Stern

 

 

Title: Authorized Signatory

 

Signature Page to Credit Agreement

 



 

 

GOLDMAN SACHS LENDING PARTNERS LLC,
as a Lender

 

 

 

 

By:

/s/ Josh Rosenthal

 

 

Name: Josh Rosenthal

 

 

Title: Authorized Signatory

 

Signature Page to Credit Agreement

 



 

 

ING CAPITAL LLC,
as a Lender

 

 

 

 

By:

/s/ Josh Strong

 

 

Name: Josh Strong

 

 

Title: Director

 

 

 

 

By:

/s/ Charles Hall

 

 

Name: Charles Hall

 

 

Title: Managing Director

 

Signature Page to Credit Agreement

 



 

 

NATIXIS, New York Branch
as a Lender

 

 

 

 

By:

/s/ Carlos Quinteros

 

 

Name: Carlos Quinteros

 

 

Title: Managing Director

 

 

 

 

By:

/s/ Vikram Nath

 

 

Name: Vikram Nath

 

 

Title: Vice President

 

Signature Page to Credit Agreement

 



 

 

ROYAL BANK OF CANADA,
as a Lender

 

 

 

 

By:

/s/  Leslie P. Vowell

 

 

Name:  Leslie P. Vowell

 

 

Title: Attorney-in-Fact

 

Signature Page to Credit Agreement

 



 

 

SUNTRUST BANK,
as a Lender

 

 

 

 

By:

/s/ William S. Krueger

 

 

Name: William S. Krueger

 

 

Title: First Vice President

 

Signature Page to Credit Agreement

 



 

ANNEX I
LIST OF MAXIMUM CREDIT AMOUNTS AND CLOSING DATE COMMITMENTS

 

Aggregate Maximum Credit Amounts

 

Name of Lender

 

Applicable Percentage

 

Closing Date
Commitment

 

Maximum Credit
Amount

 

JPMorgan Chase Bank, N.A.

 

10.4772

%

$

62,863,471.35

 

$

157,158,678.38

 

Wells Fargo Bank, N.A.

 

10.4772

%

$

62,863,471.35

 

$

157,158,678.38

 

Barclays Bank plc

 

9.8263

%

$

58,957,879.78

 

$

147,394,699.45

 

BMO Harris Financing, Inc.

 

9.8263

%

$

58,957,879.78

 

$

147,394,699.45

 

Bank of America, N.A.

 

6.7357

%

$

40,413,943.33

 

$

101,034,858.32

 

Capital One, National Association

 

6.7357

%

$

40,413,943.33

 

$

101,034,858.32

 

Natixis

 

6.7357

%

$

40,413,943.33

 

$

101,034,858.32

 

Royal Bank of Canada

 

6.7357

%

$

40,413,943.33

 

$

101,034,858.32

 

SunTrust Bank

 

6.7357

%

$

40,413,943.33

 

$

101,034,858.32

 

BNP Paribas

 

5.7734

%

$

34,640,522.67

 

$

86,601,306.68

 

ING Capital LLC

 

5.7734

%

$

34,640,522.67

 

$

86,601,306.68

 

Goldman Sachs Lending Partners LLC

 

5.6376

%

$

33,825,708.00

 

$

84,564,270.00

 

Credit Suisse AG, Cayman Islands Branch

 

5.0886

%

$

30,531,590.43

 

$

76,328,976.08

 

Comerica Bank

 

3.4415

%

$

20,649,237.32

 

$

51,623,093.30

 

TOTAL

 

100.0000

%

$

600,000,000.00

 

1,500,000,000.00

 

 


 


 

Execution Version

 

GUARANTEE AND COLLATERAL AGREEMENT

 

 

made by

 

HALCÓN RESOURCES CORPORATION

 

and each of the other Grantors (as defined herein)

 

in favor of

 

 

JPMORGAN CHASE BANK, N.A.,

 

as Administrative Agent

 

 

Dated as of September 9, 2016

 



 

TABLE OF CONTENTS

 

 

 

Page

 

 

 

ARTICLE I Definitions

2

 

 

 

Section 1.01

Definitions

2

Section 1.02

Other Definitional Provisions; References

3

 

 

 

ARTICLE II Guarantee

3

 

 

 

Section 2.01

Guarantee

3

Section 2.02

Payments

4

 

 

 

ARTICLE III Grant of Security Interest

4

 

 

 

Section 3.01

Grant of Security Interest

4

Section 3.02

Transfer of Pledged Securities

5

Section 3.03

Grantors Remain Liable under Accounts, Chattel Paper and Payment Intangibles

5

 

 

 

ARTICLE IV Acknowledgments, Waivers and Consents

6

 

 

 

Section 4.01

Acknowledgments, Waivers and Consents

6

Section 4.02

No Subrogation, Contribution or Reimbursement

8

 

 

 

ARTICLE V Representations and Warranties

9

 

 

 

Section 5.01

Representations in Credit Agreement

9

Section 5.02

Benefit to the Guarantor

9

Section 5.03

[Reserved]

9

Section 5.04

Title; No Other Liens

9

Section 5.05

Perfected First Priority Liens

10

Section 5.06

Legal Name, Organizational Status, Chief Executive Office

10

Section 5.07

Prior Names and Prior Addresses

10

Section 5.08

Pledged Securities

10

Section 5.09

Goods

10

Section 5.10

Instruments and Chattel Paper

10

Section 5.11

Truth of Information; Accounts

11

Section 5.12

Governmental Obligors

11

 

 

 

ARTICLE VI Covenants

11

 

 

 

Section 6.01

Covenants in Credit Agreement

11

Section 6.02

Maintenance of Perfected Security Interest; Further Documentation

11

Section 6.03

Maintenance of Records

12

Section 6.04

Right of Inspection

12

 

i



 

Section 6.05

Further Identification of Collateral

13

Section 6.06

Changes in Locations, Name, etc.

13

Section 6.07

Compliance with Contractual Obligations

13

Section 6.08

Limitations on Dispositions of Collateral

13

Section 6.09

Pledged Securities

14

Section 6.10

Limitations on Modifications, Waivers, Extensions of Agreements Giving Rise to Accounts

15

Section 6.11

Analysis of Accounts, Etc.

15

Section 6.12

Instruments and Tangible Chattel Paper

15

Section 6.13

Maintenance of Equipment

16

Section 6.14

Commercial Tort Claims

16

 

 

 

ARTICLE VII Remedial Provisions

16

 

 

 

Section 7.01

Pledged Securities

16

Section 7.02

Collections on Accounts, Etc.

17

Section 7.03

Proceeds

18

Section 7.04

New York UCC and Other Remedies

18

Section 7.05

Private Sales of Pledged Securities

19

Section 7.06

Waiver; Deficiency

20

Section 7.07

Non-Judicial Enforcement

20

 

 

 

ARTICLE VIII The Administrative Agent

20

 

 

 

Section 8.01

Administrative Agent’s Appointment as Attorney-in-Fact, Etc.

20

Section 8.02

Duty of Administrative Agent

22

Section 8.03

Execution of Financing Statements

22

Section 8.04

Authority of Administrative Agent

23

 

 

 

ARTICLE IX Subordination of Indebtedness

23

 

 

 

Section 9.01

Subordination of All Guarantor Claims

23

Section 9.02

Claims in Bankruptcy

23

Section 9.03

Payments Held in Trust

24

Section 9.04

Liens Subordinate

24

Section 9.05

Notation of Records

24

 

 

 

ARTICLE X Miscellaneous

24

 

 

 

Section 10.01

Waiver

24

Section 10.02

Notices

24

Section 10.03

Payment of Expenses, Indemnities, Etc.

25

Section 10.04

Amendments in Writing

25

Section 10.05

Successors and Assigns

25

Section 10.06

Invalidity

26

Section 10.07

Counterparts

26

Section 10.08

Survival

26

Section 10.09

Captions

26

 

ii



 

Section 10.10

No Oral Agreements

26

Section 10.11

Governing Law; Submission to Jurisdiction

26

Section 10.12

Acknowledgments

27

Section 10.13

Additional Grantors

27

Section 10.14

Set-Off

27

Section 10.15

Releases

28

Section 10.16

Reinstatement

29

Section 10.17

Acceptance

29

 

SCHEDULES:

 

1.               Notice Addresses of Grantors

2.               Description of Pledged Securities

3.               Filings and Other Actions Required to Perfect Security Interests

4.               Correct Legal Name, Location of Jurisdiction of Organization, Organizational Identification Number, Taxpayor Identification Number and Chief Executive Office

5.               Prior Names and Prior Chief Executive Office

 

ANNEX:

 

I.                 Form of Assumption Agreement

II.            Form of Acknowledgment and Consent

 

iii



 

This GUARANTEE AND COLLATERAL AGREEMENT, dated as of September 9, 2016, is made by Halcón Resources Corporation, a corporation duly formed and existing under the laws of the State of Delaware (the “ Borrower ”), and each of the other signatories hereto other than the Administrative Agent (the Borrower and each of the other signatories hereto other than the Administrative Agent, together with any other Subsidiary of the Borrower that becomes a party hereto from time to time after the date hereof, the “ Grantors ”), in favor of JPMorgan Chase Bank, N.A., as administrative agent (in such capacity, together with its successors in such capacity, the “ Administrative Agent ”), for the banks and other financial institutions (the “ Lenders ”) from time to time parties to the Senior Secured Revolving Credit Agreement, dated as of even date herewith (as amended, supplemented or otherwise modified from time to time, the “ Credit Agreement ”), among the Borrower, the Lenders, the Administrative Agent, and the other Agents party thereto.

 

WHEREAS, pursuant to the Credit Agreement, the Lenders have severally agreed to make extensions of credit to the Borrower upon the terms and subject to the conditions set forth therein;

 

WHEREAS, the Loan Parties have made, and may make additional extensions of credit to the Borrower;

 

WHEREAS, the Secured Swap Providers have entered, or may enter, into Secured Swap Agreements;

 

WHEREAS, the Bank Products Providers have entered, or may enter, into agreements to provide Bank Products;

 

WHEREAS, the Borrower and the other Grantors are engaged in related businesses, and each Grantor will derive substantial direct and indirect benefit from the making of the extensions of credit under the Credit Agreement and from the agreements to provide Bank Products and Secured Swap Agreements; and

 

WHEREAS, it is a condition precedent to the obligation of the Lenders to make their respective extensions of credit to the Borrower under the Credit Agreement that the Grantors shall have executed and delivered this Agreement to the Administrative Agent for the benefit of the Secured Parties.

 

NOW, THEREFORE, in consideration of the premises and to induce the Administrative Agent and the Lenders to enter into the Credit Agreement and to induce the Lenders and other Secured Parties to make their respective extensions of credit to the Borrower thereunder, to enter into Secured Swap Agreements and to provide Bank Products, each Grantor hereby agrees with the Administrative Agent, for the ratable benefit of the Secured Parties, as follows:

 

1



 

ARTICLE I
DEFINITIONS

 

Section 1.01          Definitions .

 

(a)           As used in this Agreement, each term defined above shall have the meaning indicated above.  Unless otherwise defined herein, terms defined in the Credit Agreement and used herein shall have the meanings given to them in the Credit Agreement, and the following terms as well as all uncapitalized terms which are defined in the New York UCC on the date hereof are used herein as so defined:  Accounts, As-Extracted Collateral, Chattel Paper, Commercial Tort Claims, Deposit Accounts, Documents, Electronic Chattel Paper, Equipment, Fixtures, General Intangibles, Goods, Instruments, Inventory, Investment Property, Letter-of-Credit Rights, Payment Intangibles, Proceeds, Supporting Obligations, and Tangible Chattel Paper.

 

(b)           The following terms shall have the following meanings:

 

Account Debtor ” means a Person (other than any Grantor) obligated on an Account, Chattel Paper, or General Intangible.

 

Agreement ” means this Guarantee and Collateral Agreement, as the same may be amended, supplemented or otherwise modified from time to time.

 

Collateral ” shall have the meaning assigned such term in Section 3.01.

 

Credit Agreement ” shall have the meaning assigned such term in the preamble.

 

Grantors ” shall have the meaning assigned such term in the preamble.

 

Guarantors ” means, collectively, each Grantor other than the Borrower.

 

Issuers ” means, collectively, each issuer of a Pledged Security.

 

New York UCC ” means the Uniform Commercial Code, as it may be amended, from time to time in effect in the State of New York.

 

Pledged Securities ” means: (i) the Equity Interests described or referred to in Schedule 2; and (ii) (a) the certificates or instruments, if any, representing such Equity Interests, (b) all dividends (cash, stock or otherwise), cash, instruments, rights to subscribe, purchase or sell and all other rights and property from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all of such Equity Interests, (c) all replacements, additions to and substitutions for any of the property referred to in this definition, including, without limitation, claims against third parties, (d) the proceeds, interest, profits and other income of or on any of the property referred to in this definition and (e) all books and records relating to any of the property referred to in this definition.

 

Post-Default Rate ” means the per annum rate of interest provided for in Section 3.02(c) of the Credit Agreement.

 

Secured Parties ” means, collectively, the Administrative Agent, the Issuing Bank, the Lenders , each Secured Swap Provider, each Bank Products Provider and any other Person owed Secured Obligations.

 

2



 

Securities Act ” means the Securities Act of 1933, as amended.

 

Section 1.02          Other Definitional Provisions; References .  The meanings given to terms defined herein shall be equally applicable to both the singular and plural forms of such terms.  The gender of all words shall include the masculine, feminine, and neuter, as appropriate.  The words “herein,” “hereof,” “hereunder” and other words of similar import when used in this Agreement refer to this Agreement as a whole, and not to any particular article, section or subsection.  Any reference herein to a Section shall be deemed to refer to the applicable Section of this Agreement unless otherwise stated herein.  Any reference herein to an exhibit, schedule or annex shall be deemed to refer to the applicable exhibit, schedule or annex attached hereto unless otherwise stated herein.  Where the context requires, terms relating to the Collateral or any part thereof, when used in relation to a Grantor, shall refer to such Grantor’s Collateral or the relevant part thereof.

 

ARTICLE II
GUARANTEE

 

Section 2.01          Guarantee .

 

(a)           Each of the Guarantors hereby, jointly and severally, unconditionally and irrevocably, guarantees to the Administrative Agent, for the ratable benefit of the Secured Parties and each of their respective successors, endorsees, transferees and assigns, the prompt and complete payment and performance by the Borrower and the Guarantors when due (whether at the stated maturity, by acceleration or otherwise) of the Secured Obligations (other than, with respect to any Guarantor, any Excluded Swap Obligations of such Guarantor).  This is a guarantee of payment and not collection and the liability of each Guarantor is primary and not secondary.

 

(b)           Anything herein or in any other Loan Document to the contrary notwithstanding, the maximum liability of each Guarantor hereunder and under the other Loan Documents shall in no event exceed the amount which can be guaranteed by such Guarantor under applicable federal and state laws relating to the insolvency of debtors.

 

(c)           Each Guarantor agrees that the Secured Obligations may at any time and from time to time exceed the amount of the liability of such Guarantor hereunder without impairing the guarantee contained in this Article II or affecting the rights and remedies of the Administrative Agent or any Secured Party hereunder.

 

(d)           Each Guarantor agrees that if the maturity of any of the Secured Obligations is accelerated by bankruptcy or otherwise, such maturity shall also be deemed accelerated for the purpose of this guarantee without demand or notice to such Guarantor.  The guarantee contained in this Article II shall remain in full force and effect until all the Secured Obligations shall have been satisfied by payment in full, no Letter of Credit shall be outstanding and all Secured Swap Agreements secured hereby and the Credit Agreement and the Commitments shall be terminated, notwithstanding that from time to time during the term of the Credit Agreement, no Secured Obligations may be outstanding.

 

3



 

(e)           No payment made by the Borrower, any of the Guarantors, any other guarantor or any other Person or received or collected by the Administrative Agent or any other Secured Party from the Borrower, any of the Guarantors, any other guarantor or any other Person by virtue of any action or proceeding or any set-off or appropriation or application at any time or from time to time in reduction of or in payment of the Secured Obligations shall be deemed to modify, reduce, release or otherwise affect the liability of any Guarantor hereunder which shall, notwithstanding any such payment (other than any payment made by such Guarantor in respect of the Secured Obligations or any payment received or collected from such Guarantor in respect of the Secured Obligations), remain liable for the Secured Obligations up to the maximum liability of such Guarantor hereunder until the Secured Obligations are paid in full, no Letter of Credit shall be outstanding, and all Secured Swap Agreements secured hereby and the Credit Agreement and the Commitments are terminated.

 

Section 2.02          Payments .  Each Guarantor hereby agrees and guarantees that payments hereunder will be paid to the Administrative Agent without set-off or counterclaim in Dollars at the Principal Office of the Administrative Agent specified pursuant to the Credit Agreement.

 

ARTICLE III
GRANT OF SECURITY INTEREST

 

Section 3.01          Grant of Security Interest .  Each Grantor hereby pledges, assigns and transfers to the Administrative Agent, and grants to the Administrative Agent, for the ratable benefit of the Secured Parties, a security interest in all of the following property now owned or at any time hereafter acquired by such Grantor or in which such Grantor now has or at any time in the future may acquire any right, title or interest and whether now existing or hereafter coming into existence (collectively, the “ Collateral ”), as collateral security for the prompt and complete payment and performance when due (whether at the stated maturity, by acceleration or otherwise) of the Secured Obligations:

 

(1)           all Accounts;

 

(2)           all Chattel Paper (whether Tangible Chattel Paper or Electronic Chattel Paper);

 

(3)           all Commercial Tort Claims;

 

(4)           all Deposit Accounts other than payroll, withholding tax and other fiduciary Deposit Accounts;

 

(5)           all Documents;

 

(6)           all General Intangibles (including, without limitation, rights in and under any Swap Agreements);

 

(7)           all Goods (including, without limitation, all Inventory and all Equipment, but excluding all Fixtures);

 

(8)           all Instruments;

 

4



 

(9)           all Investment Property;

 

(10)         all Letter-of-Credit Rights (whether or not the letter of credit is evidenced by a writing);

 

(11)         all Pledged Securities;

 

(12)         all Supporting Obligations;

 

(13)         all books and records pertaining to the Collateral;

 

(14)         to the extent not otherwise included, any other property insofar as it consists of personal property of any kind or character defined in and subject to the New York UCC; and

 

(15)         to the extent not otherwise included, all Proceeds and products of any and all of the foregoing and all collateral security, income, royalties and other payments now or hereafter due and payable with respect to, and guarantees and supporting obligations relating to, any and all of the Collateral and, to the extent not otherwise included, all payments of insurance (whether or not the Administrative Agent is the loss payee thereof), or any indemnity, warranty or guaranty, payable by reason of loss or damage to or otherwise with respect to any of the foregoing Collateral, all other claims, including all cash, guarantees and other Supporting Obligations given with respect to any of the foregoing.

 

Section 3.02          Transfer of Pledged Securities .  All certificates and instruments, if any, representing or evidencing the Pledged Securities shall be delivered to and held pursuant hereto by the Administrative Agent or a Person designated by the Administrative Agent and, in the case of an instrument or certificate in registered form, shall be duly indorsed to the Administrative Agent or in blank by an effective endorsement (whether on the certificate or instrument or on a separate writing), and accompanied by any required transfer tax stamps to effect the pledge of the Pledged Securities to the Administrative Agent.  Notwithstanding the preceding sentence, all Pledged Securities must be delivered or transferred in such manner, and each Grantor shall take all such further action as may be requested by the Administrative Agent, as to permit the Administrative Agent to be a “protected purchaser” to the extent of its security interest as provided in Section 8-303 of the New York UCC (if the Administrative Agent otherwise qualifies as a protected purchaser).

 

Section 3.03          Grantors Remain Liable under Accounts, Chattel Paper and Payment Intangibles .  Anything herein to the contrary notwithstanding, each Grantor shall remain liable under each of the Accounts, Chattel Paper and Payment Intangibles to observe and perform all the conditions and obligations to be observed and performed by it thereunder, all in accordance with the terms of any agreement giving rise to each such Account, Chattel Paper or Payment Intangible.  Neither the Administrative Agent nor any other Secured Party shall have any obligation or liability under any Account, Chattel Paper or Payment Intangible (or any agreement giving rise thereto) by reason of or arising out of this Agreement or the receipt by the Administrative Agent or any such other Secured Party of any payment relating to such Account, Chattel Paper or Payment Intangible, pursuant hereto, nor shall the Administrative Agent or any

 

5



 

other Secured Party be obligated in any manner to perform any of the obligations of any Grantor under or pursuant to any Account, Chattel Paper or Payment Intangible (or any agreement giving rise thereto), to make any payment, to make any inquiry as to the nature or the sufficiency of any payment received by it or as to the sufficiency of any performance by any party under any Account, Chattel Paper or Payment Intangible (or any agreement giving rise thereto), to present or file any claim, to take any action to enforce any performance or to collect the payment of any amounts which may have been assigned to it or to which it may be entitled at any time or times.

 

ARTICLE IV
ACKNOWLEDGMENTS, WAIVERS AND CONSENTS

 

Section 4.01          Acknowledgments, Waivers and Consents .

 

(a)           Each Guarantor acknowledges and agrees that the obligations undertaken by it under this Agreement involve the guarantee and the provision of collateral security for the Secured Obligations, which obligations consist, in part, of the obligations of Persons other than such Guarantor and that such Guarantor’s guarantee and provision of collateral security for the Secured Obligations are absolute, irrevocable and unconditional under any and all circumstances.  In full recognition and furtherance of the foregoing, each Guarantor understands and agrees, to the fullest extent permitted under applicable law and except as may otherwise be expressly and specifically provided in the Loan Documents, that each Guarantor shall remain obligated hereunder (including, without limitation, with respect to the guarantee made by such Guarantor hereby and the collateral security provided by such Guarantor herein) and the enforceability and effectiveness of this Agreement and the liability of such Guarantor, and the rights, remedies, powers and privileges of the Administrative Agent and the other Secured Parties under this Agreement and the other Loan Documents shall not be affected, limited, reduced, discharged or terminated in any way:

 

(i)            notwithstanding that, without any reservation of rights against any Guarantor and without notice to or further assent by any Guarantor, (A) any demand for payment of any of the Secured Obligations made by the Administrative Agent or any other Secured Party may be rescinded by the Administrative Agent or such other Secured Party and any of the Secured Obligations continued; (B) the Secured Obligations, the liability of any other Person upon or for any part thereof or any collateral security or guarantee therefore or right of offset with respect thereto, may, from time to time, in whole or in part, be renewed, extended, amended, modified, accelerated, compromised, waived, surrendered or released by, or any indulgence or forbearance in respect thereof granted by, the Administrative Agent or any other Secured Party; (C) the Credit Agreement, the other Loan Documents, any Secured Swap Agreement and any other documents executed and delivered in connection therewith may be amended, modified, supplemented or terminated, in whole or in part, as the Administrative Agent (or the Secured Swap Providers, Required Lenders or all Lenders, as the case may be) may deem advisable from time to time; (D) the Borrower, any Guarantor or any other Person may from time to time accept or enter into new or additional agreements, security documents, guarantees or other instruments in addition to, in exchange for or relative to, any Loan Document or Secured Swap Agreement, all or any part of the Secured Obligations or any Collateral now or in the future serving as security for the Secured Obligations; (E) any collateral security, guarantee or right of offset at any time held by the Administrative Agent or any other Secured

 

6



 

Party for the payment of the Secured Obligations may be sold, exchanged, waived, surrendered or released; and (F) any other event shall occur which constitutes a defense or release of sureties generally; and

 

(ii)           without regard to, and each Guarantor hereby expressly waives to the fullest extent permitted by law any defense now or in the future arising by reason of, (A) the illegality, invalidity or unenforceability of the Credit Agreement, any other Loan Document, any Secured Swap Agreement, any of the Secured Obligations or any other collateral security therefore or guarantee or right of offset with respect thereto at any time or from time to time held by the Administrative Agent or any other Secured Party; (B) any defense, set-off or counterclaim (other than a defense of payment or performance) which may at any time be available to or be asserted by any Guarantor or any other Person against the Administrative Agent or any other Secured Party; (C) the insolvency, bankruptcy arrangement, reorganization, adjustment, composition, liquidation, disability, dissolution or lack of power of any Guarantor or any other Person at any time liable for the payment of all or part of the Secured Obligations or the failure of the Administrative Agent or any other Secured Party to file or enforce a claim in bankruptcy or other proceeding with respect to any Person; or any sale, lease or transfer of any or all of the assets of the any Guarantor, or any changes in the partners of any Guarantor; (D) the fact that any Collateral or Lien contemplated or intended to be given, created or granted as security for the repayment of the Secured Obligations shall not be properly perfected or created, or shall prove to be unenforceable or subordinate to any other Lien, it being recognized and agreed by each of the Guarantors that it is not entering into this Agreement in reliance on, or in contemplation of the benefits of, the validity, enforceability, collectability or value of any of the Collateral for the Secured Obligations; (E) any failure of the Administrative Agent or any other Secured Party to marshal assets in favor of any Guarantor or any other Person, to exhaust any collateral for all or any part of the Secured Obligations, to pursue or exhaust any right, remedy, power or privilege it may have against any Guarantor or any other Person or to take any action whatsoever to mitigate or reduce any Guarantor’s liability under this Agreement or any other Loan Document; (F) any law which provides that the obligation of a surety or guarantor must neither be larger in amount nor in other respects more burdensome than that of the principal or which reduces a surety’s or guarantor’s obligation in proportion to the principal obligation; (G) the possibility that the Secured Obligations may at any time and from time to time exceed the aggregate liability of such Guarantor under this Agreement; or (H) any other circumstance or act whatsoever, including any action or omission of the type described in Section 4.01(a)(i) (with or without notice to or knowledge of any Guarantor), which constitutes, or might be construed to constitute, an equitable or legal discharge or defense of the Borrower for the Secured Obligations, or of such Guarantor under the guarantee contained in Article II or with respect to the collateral security provided by such Guarantor herein, or which might be available to a surety or guarantor, in bankruptcy or in any other instance.

 

(b)           Each Guarantor hereby waives to the extent permitted by law:  (i) except as expressly provided otherwise in any Loan Document, all notices to such Guarantor, or to any other Person, including but not limited to, notices of the acceptance of this Agreement, the guarantee contained in Article II or the provision of collateral security provided herein, or the creation, renewal, extension, modification, accrual of any Secured Obligations, or notice of or proof of reliance by the Administrative Agent or any other Secured Party upon the guarantee contained in Article II or upon the collateral security provided herein, or of default in the

 

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payment or performance of any of the Secured Obligations owed to the Administrative Agent or any other Secured Party and enforcement of any right or remedy with respect thereto; or notice of any other matters relating thereto; the Secured Obligations, and any of them, shall conclusively be deemed to have been created, contracted or incurred, or renewed, extended, amended or waived, in reliance upon the guarantee contained in Article II and the collateral security provided herein and no notice of creation of the Secured Obligations or any extension of credit already or hereafter contracted by or extended to the Borrower need be given to any Guarantor; and all dealings between the Borrower and any of the Guarantors, on the one hand, and the Administrative Agent and the other Secured Parties, on the other hand, likewise shall be conclusively presumed to have been had or consummated in reliance upon the guarantee contained in Article II and on the collateral security provided herein; (ii) diligence and demand of payment, presentment, protest, dishonor and notice of dishonor; (iii) any statute of limitations affecting any Guarantor’s liability hereunder or the enforcement thereof; (iv) all rights of revocation with respect to the Secured Obligations, the guarantee contained in Article II and the provision of collateral security herein; and (v) all principles or provisions of law which conflict with the terms of this Agreement and which can, as a matter of law, be waived.

 

(c)           When making any demand hereunder or otherwise pursuing its rights and remedies hereunder against any Guarantor, the Administrative Agent or any other Secured Party may, but shall be under no obligation to, join or make a similar demand on or otherwise pursue or exhaust such rights and remedies as it may have against the Borrower, any other Guarantor or any other Person or against any collateral security or guarantee for the Secured Obligations or any right of offset with respect thereto, and any failure by the Administrative Agent or any other Secured Party to make any such demand, to pursue such other rights or remedies or to collect any payments from the Borrower, any other Guarantor or any other Person or to realize upon any such collateral security or guarantee or to exercise any such right of offset, or any release of the Borrower, any Guarantor or any other Person or any such collateral security, guarantee or right of offset, shall not relieve any Guarantor of any obligation or liability hereunder, and shall not impair or affect the rights and remedies, whether express, implied or available as a matter of law, of the Administrative Agent or any other Secured Party against any Guarantor.  For the purposes hereof “demand” shall include the commencement and continuance of any legal proceedings.  Neither the Administrative Agent nor any other Secured Party shall have any obligation to protect, secure, perfect or insure any Lien at any time held by it as security for the Secured Obligations or for the guarantee contained in Article II or any property subject thereto.

 

Section 4.02          No Subrogation, Contribution or Reimbursement .  Notwithstanding any payment made by any Guarantor hereunder or any set-off or application of funds of any Guarantor by the Administrative Agent or any other Secured Party, no Guarantor shall be entitled to be subrogated to any of the rights of the Administrative Agent or any other Secured Party against the Borrower or any other Guarantor or any collateral security or guarantee or right of offset held by the Administrative Agent or any other Secured Party for the payment of the Secured Obligations, nor shall any Guarantor seek or be entitled to seek any indemnity, exoneration, participation, contribution or reimbursement from the Borrower or any other Guarantor in respect of payments made by such Guarantor hereunder, and each Guarantor hereby expressly waives, releases, and agrees not to exercise any all such rights of subrogation, reimbursement, indemnity and contribution.  Each Guarantor further agrees that to the extent that such waiver and release set forth herein is found by a court of competent jurisdiction to be void

 

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or voidable for any reason, any rights of subrogation, reimbursement, indemnity and contribution such Guarantor may have against the Borrower, any other Guarantor or against any collateral or security or guarantee or right of offset held by the Administrative Agent or any other Secured Party shall be junior and subordinate to any rights the Administrative Agent and the other Secured Parties may have against the Borrower and such Guarantor and to all right, title and interest the Administrative Agent and the other Secured Parties may have in any collateral or security or guarantee or right of offset.  The Administrative Agent, for the benefit of the Secured Parties, may use, sell or dispose of any item of Collateral or security as it sees fit without regard to any subrogation rights any Guarantor may have, and upon any disposition or sale, any rights of subrogation any Guarantor may have shall terminate.

 

ARTICLE V
REPRESENTATIONS AND WARRANTIES

 

To induce the Administrative Agent and the Lenders to enter into the Credit Agreement and to induce the Lenders to make their respective extensions of credit to the Borrower thereunder and to induce the Lenders and the other Secured Parties to enter into Secured Swap Agreements and to provide Bank Products, each Grantor hereby represents and warrants to the Administrative Agent and each other Secured Party that:

 

Section 5.01          Representations in Credit Agreement .  In the case of each Guarantor, the representations and warranties set forth in Article VII of the Credit Agreement as they relate to such Guarantor (in its capacity as a Subsidiary of the Borrower) or to the Loan Documents to which such Guarantor is a party are true and correct in all material respects (unless already qualified by materiality in which case such applicable representation and warranty that by its terms refers to a specified earlier date, in which case shall be true and correct), except to the extent any such representations and warranties are expressly limited to an earlier date, in which case, such representations and warranties shall continue to be true and correct in all material  respects (unless already qualified by materiality in which case such applicable representation and warranty shall be true and correct in all material respects) as of such specified earlier date; provided that each reference in each such representation and warranty to the Borrower’s knowledge shall, for the purposes of this Section 5.01, be deemed to be a reference to such Guarantor’s knowledge.

 

Section 5.02          Benefit to the Guarantor .  The Borrower is a member of an affiliated group of companies that includes each Guarantor, and the Borrower and the Guarantors are engaged in related businesses.  Each Guarantor is a Subsidiary of the Borrower and its guaranty and surety obligations pursuant to this Agreement reasonably may be expected to benefit, directly or indirectly, it; and it has determined that this Agreement is necessary and convenient to the conduct, promotion and attainment of the business of such Guarantor and the Borrower.

 

Section 5.03          [Reserved] .

 

Section 5.04          Title; No Other Liens .  Except for the security interest granted to the Administrative Agent for the ratable benefit of the Secured Parties pursuant to this Agreement and Liens permitted under Section 9.03 of the Credit Agreement, such Grantor is the legal and beneficial owner of its respective items of the Collateral free and clear of any and all Liens.  No

 

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financing statement or other public notice with respect to all or any part of the Collateral is on file or of record in any public office, except such as have been filed in favor of the Administrative Agent, for the ratable benefit of the Secured Parties, pursuant to this Agreement, the Security Instruments or as are filed to secure Liens permitted by Section 9.03 of the Credit Agreement.

 

Section 5.05          Perfected First Priority Liens .  The security interests granted pursuant to this Agreement (a) upon completion of the filings and other actions specified on Schedule 3 (which, in the case of all filings and other documents referred to on said Schedule, have been delivered to the Administrative Agent in completed and duly executed form) will constitute valid perfected security interests in all of the Collateral in favor of the Administrative Agent, for the ratable benefit of the Secured Parties, as collateral security for such Grantor’s obligations, enforceable in accordance with the terms hereof against all creditors of such Grantor and any Persons purporting to purchase any Collateral from such Grantor and (b) are prior to all other Liens on the Collateral in existence on the date hereof except for Excepted Liens which have priority over the Liens on the Collateral by operation of law.

 

Section 5.06          Legal Name, Organizational Status, Chief Executive Office .  On the date hereof, the correct legal name of such Grantor, such Grantor’s jurisdiction of organization, organizational number, taxpayor identification number and the location of such Grantor’s chief executive office or sole place of business are specified on Schedule 4.

 

Section 5.07          Prior Names and Prior Chief Executive Office .  Schedule 5 correctly sets forth (a) all names and trade names that such Grantor has used in the last five years and (b) the chief executive offices of such Grantor over the last five years (if different from that which is set forth in Section 5.06 above).

 

Section 5.08          Pledged Securities .  The shares (or such other interests) of Pledged Securities pledged by such Grantor hereunder constitute all the issued and outstanding shares (or such other interests) of all classes of the capital stock or other Equity Interests of each Issuer owned by such Grantor.  All the shares (or such other interests) of the Pledged Securities have been duly and validly issued and, in the case of shares of stock of a corporation, are fully paid and nonassessable; and such Grantor is the record and beneficial owner of, and has good title to, the Pledged Securities pledged by it hereunder, free of any and all Liens except Excepted Liens or options, warrants, puts, calls or other rights of any other Person, and restrictions or options in favor of, or claims of, any other Person, except the security interest created by this Agreement.  The pledged LLC interests and the pledged partnership interests do not, by their terms, provide that they are securities to be governed by Article 8 of the Code — Investment Securities. For the avoidance of doubt, notwithstanding anything herein to the contrary, in no event shall the Equity Interests of any Unrestricted Subsidiary be required to be pledged.

 

Section 5.09          Goods .  No portion of the Collateral constituting Goods is in the possession of a bailee that has issued a negotiable or non-negotiable document covering such Collateral.

 

Section 5.10          Instruments and Chattel Paper .  Such Grantor has delivered to the Administrative Agent all Collateral constituting Instruments and Chattel Paper having in value in

 

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excess of $1,000,000.  No Collateral constituting Chattel Paper or Instruments contains any statement therein to the effect that such Collateral has been assigned to an identified party other than the Administrative Agent, and the grant of a security interest in such Collateral in favor of the Administrative Agent hereunder does not violate the rights of any other Person as a secured party.

 

Section 5.11          Truth of Information; Accounts .  All information with respect to the Collateral set forth in any schedule, certificate or other writing at any time heretofore or hereafter furnished by such Grantor to the Administrative Agent or any other Secured Party, and all other written information heretofore or hereafter furnished by such Grantor to the Administrative Agent or any other Secured Party is and will be true and correct in all material respects as of the date furnished.  The amount represented by such Grantor to the Administrative Agent and the Lenders from time to time as owing by each Account Debtor or by all Account Debtors in respect of the Accounts, Chattel Paper and Payment Intangibles will at such time be the correct amount actually owing by such Account Debtor or Account Debtors thereunder.  The place where each Grantor keeps its records concerning the Accounts, Chattel Paper and Payment Intangibles is 1000 Louisiana St., Suite 6700, Houston, TX 77002.

 

Section 5.12          Governmental Obligors .  None of the Account Debtors on such Grantor’s Accounts, Chattel Paper or Payment Intangibles is a Governmental Authority.

 

ARTICLE VI
COVENANTS

 

Each Grantor covenants and agrees with the Administrative Agent and the other Secured Parties that, from and after the date of this Agreement until the Secured Obligations shall have been paid in full, no Letter of Credit shall be outstanding and the Commitments shall have terminated:

 

Section 6.01          Covenants in Credit Agreement .  In the case of each Guarantor, such Guarantor shall take, or shall refrain from taking, as the case may be, each action that is necessary to be taken or not taken, as the case may be, so that no Default or Event of Default is caused by the failure to take such action or to refrain from taking such action by such Guarantor or any of its Subsidiaries.

 

Section 6.02          Maintenance of Perfected Security Interest; Further Documentation .

 

(a)           Such Grantor shall maintain the security interest created by this Agreement as a perfected security interest having at least the priority described in Section 5.05 and shall defend such security interest against the claims and demands of all Persons whomsoever except for Excepted Liens.

 

(b)           At any time and from time to time, upon the request of the Administrative Agent or any other Secured Party, and at the sole expense of such Grantor, such Grantor will promptly and duly give, execute, deliver, indorse, file or record any and all financing statements, continuation statements, amendments, notices (including, without limitation, notifications to financial institutions and any other Person), contracts, agreements, assignments, certificates, stock powers or other instruments, obtain any and all governmental approvals and consents and

 

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take or cause to be taken any and all steps or acts that may be necessary or advisable or as the Administrative Agent may reasonably request to create, perfect, establish the priority of, or to preserve the validity, perfection or priority of, the Liens granted by this Agreement or to enable the Administrative Agent or any other Secured Party to enforce its rights, remedies, powers and privileges under this Agreement with respect to such Liens or to otherwise obtain or preserve the full benefits of this Agreement and the rights, powers and privileges herein granted.

 

(c)           Without limiting the obligations of the Grantors under Section 6.02(b):  (i)upon the request of the Administrative Agent or any other Secured Party, such Grantor shall take or cause to be taken all actions (other than any actions required to be taken by the Administrative Agent or any Lender) requested by the Administrative Agent to cause the Administrative Agent to (A) have “control” (within the meaning of Sections 9-104, 9-105, 9-106, and 9-107 of the New York UCC) over any Collateral constituting Deposit Accounts, Electronic Chattel Paper, Investment Property (including the Pledged Securities), or Letter-of-Credit Rights, including, without limitation, executing and delivering any agreements, in form and substance satisfactory to the Administrative Agent, with securities intermediaries, Issuers or other Persons in order to establish “control”, and each Grantor shall promptly notify the Administrative Agent and the other Secured Parties of such Grantor’s acquisition of any such Collateral, and (B) be a “protected purchaser” (as defined in Section 8-303 of the New York UCC); (ii) with respect to Collateral other than certificated securities and goods covered by a document in the possession of a Person other than such Grantor or the Administrative Agent, such Grantor shall obtain written acknowledgment that such Person holds possession for the Administrative Agent’s benefit; and (iii) with respect to any Collateral constituting Goods that are in the possession of a bailee, such Grantor shall provide prompt notice to the Administrative Agent and the other Secured Parties of any such Collateral then in the possession of such bailee, and such Grantor shall take or cause to be taken all actions (other than any actions required to be taken by the Administrative Agent or any other Secured Party) necessary or requested by the Administrative Agent to cause the Administrative Agent to have a perfected security interest in such Collateral under applicable law.

 

(d)           This Section 6.02 and the obligations imposed on each Grantor by this Section 6.02 shall be interpreted as broadly as possible in favor of the Administrative Agent and the other Secured Parties in order to effectuate the purpose and intent of this Agreement.

 

Section 6.03          Maintenance of Records .  Such Grantor will keep and maintain at its own cost and expense satisfactory and complete records of the Collateral, including, without limitation, a record of all payments received and all credits granted with respect to the Accounts.  For the Administrative Agent’s and the other Secured Parties’ further security, the Administrative Agent, for the ratable benefit of the Secured Parties, shall have a security interest in all of such Grantor’s books and records pertaining to the Collateral, and such Grantor shall turn over any such books and records to the Administrative Agent or to its representatives during normal business hours at the request of the Administrative Agent and shall provide such clerical and other assistance as may be reasonably requested with regard thereto.

 

Section 6.04          Right of Inspection .  The Administrative Agent and the other Secured Parties and their respective representatives shall at all times have full and free access during normal business hours to all the books, correspondence and records of such Grantor, and the

 

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Administrative Agent and the other Secured Parties and their respective representatives may examine the same, take extracts therefrom and make photocopies thereof and shall at all times also have the right to enter into and upon any premises where any of the Collateral (including, without limitation, Inventory or Equipment) is located for the purpose of inspecting the same, observing its use or otherwise protecting its interests therein, and such Grantor agrees to render to the Administrative Agent and the other Secured Parties and their respective representatives, at such Grantor’s sole cost and expense, such clerical and other assistance as may be reasonably requested with regard to any of the foregoing.  The Administrative Agent and the other Secured Parties and their respective representatives shall use reasonable efforts to give Grantors prior written notice of such entry and to use reasonable efforts to not disturb Grantors’ ordinary course of business

 

Section 6.05          Further Identification of Collateral .  Such Grantor will furnish to the Administrative Agent and the Lenders from time to time, at such Grantor’s sole cost and expense, statements and schedules further identifying and describing the Collateral and such other reports in connection with the Collateral as the Administrative Agent may reasonably request, all in reasonable detail.

 

Section 6.06          Changes in Locations, Name, etc .  Such Grantor recognizes that financing statements pertaining to the Collateral have been or may be filed where such Grantor maintains any Collateral or is organized.  Without limitation of any other covenant herein, such Grantor will not cause or permit (i) any change to be made in its name, identity or corporate structure or (ii) any change to (A) the identity of any warehouseman, common carrier, other third-party transporter, bailee or any agent or processor in possession or control of any Collateral or (iii) such Grantor’s jurisdiction of organization or (iv) the location of any Collateral, unless such Grantor shall have first (1) notified the Administrative Agent and the other Secured Parties of such change at least ten (10) days prior to the effective date of such change, and (2) taken all action reasonably requested by the Administrative Agent or any other Secured Party for the purpose of maintaining the perfection and priority of the Administrative Agent’s security interests under this Agreement.  In any notice furnished pursuant to this Section 6.06, such Grantor will expressly state in a conspicuous manner that the notice is required by this Agreement and contains facts that may require additional filings of financing statements or other notices for the purposes of continuing perfection of the Administrative Agent’s security interest in the Collateral.

 

Section 6.07          Compliance with Contractual Obligations .  Such Grantor will perform and comply in all material respects with all its contractual obligations relating to the Collateral (including, without limitation, with respect to the goods or services, the sale or lease or rendition of which gave rise or will give rise to each Account).

 

Section 6.08          Limitations on Dispositions of Collateral .  The Administrative Agent and the other Secured Parties do not authorize, and such Grantor agrees not to sell, transfer, lease or otherwise dispose of any of the Collateral, or attempt, offer or contract to do so except to the extent expressly permitted by the Credit Agreement.

 

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Section 6.09          Pledged Securities .

 

(a)           If such Grantor shall become entitled to receive or shall receive any stock certificate or other instrument (including, without limitation, any certificate or instrument representing a dividend or a distribution in connection with any reclassification, increase or reduction of capital or any certificate or instrument issued in connection with any reorganization), option or rights in respect of the capital stock or other Equity Interests of any Issuer, whether in addition to, in substitution of, as a conversion of, or in exchange for, any shares (or such other interests) of the Pledged Securities, or otherwise in respect thereof, such Grantor shall accept the same as the agent of the Administrative Agent and the other Secured Parties, hold the same in trust for the Administrative Agent and the other Secured Parties and deliver the same forthwith to the Administrative Agent in the exact form received, duly indorsed by such Grantor to the Administrative Agent, if required, together with an undated stock power or other equivalent instrument of transfer, if applicable, acceptable to the Administrative Agent covering such certificate or instrument duly executed in blank by such Grantor and with, if the Administrative Agent so requests, signature guaranteed, to be held by the Administrative Agent, subject to the terms hereof, as additional collateral security for the Secured Obligations.

 

(b)           Without the prior written consent of the Administrative Agent, such Grantor will not (i) unless otherwise permitted hereby, vote to enable, or take any other action to permit, any Issuer to issue any stock or other Equity Interests of any nature or to issue any other securities or interests convertible into or granting the right to purchase or exchange for any stock or other Equity Interests of any nature of any Issuer, (ii) sell, assign, transfer, exchange or otherwise dispose of, or grant any option with respect to, the Pledged Securities or Proceeds thereof (except pursuant to a transaction expressly permitted by the Credit Agreement), (iii) create, incur or permit to exist any Lien other than Liens permitted under Section 9.03 of the Credit Agreement or option in favor of, or any claim of any Person with respect to, any of the Pledged Securities or Proceeds thereof, or any interest therein, except for the security interests created by this Agreement or (iv) enter into any agreement or undertaking restricting the right or ability of such Grantor or the Administrative Agent to sell, assign or transfer any of the Pledged Securities or Proceeds thereof.

 

(c)           In the case of each Grantor which is an Issuer, such Issuer agrees that (i) it will be bound by the terms of this Agreement relating to the Pledged Securities issued by it and will comply with such terms insofar as such terms are applicable to it, (ii) it will notify the Administrative Agent promptly in writing of the occurrence of any of the events described in Section 6.09(a) with respect to the Pledged Securities issued by it and (iii) the terms of Section 7.01(c) and Section 7.05 shall apply to it, mutatis mutandis , with respect to all actions that may be required of it pursuant to Section 7.01(c) or Section 7.05 with respect to the Pledged Securities issued by it.

 

(d)           Such Grantor shall furnish to the Administrative Agent such stock powers and other equivalent instruments of transfer, if applicable, as may be required by the Administrative Agent to assure the transferability of and the perfection of the security interest in the Pledged Securities when and as often as may be reasonably requested by the Administrative Agent.

 

(e)           The Pledged Securities will at all times constitute not less than 100% of the capital stock or other Equity Interests of the Issuer thereof owned by any Grantor.  Each

 

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Grantor will not permit any Issuer of any of the Pledged Securities to issue any new shares (or other interests) of any class of capital stock or other Equity Interests of such Issuer without the prior written consent of the Administrative Agent.

 

(f)            Each Grantor shall not agree to any amendment of a partnership agreement, LLC agreement or other organic document relating to any Pledged Security that in any way adversely affects the perfection of the security interest of the Administrative Agent in the Pledged Securities, including any amendment electing to treat the membership interest or partnership interest of such Grantor as a security under Section 8-103 of the New York UCC.  In the event of a foreclosure or a taking of Pledged Securities consisting of partnership interests or LLC interests in lieu of foreclosure pursuant to any Security Instrument executed in connection with the Credit Agreement, the Administrative Agent or its assignee or transferee, at any of their option, will, without any further action or consent, become a member or partner upon the exercise of such option by the Administrative Agent, its assignee or transferee, having all of the rights, powers and privileges of a member or partner with respect to such Equity Interest, including, without limitation, the right to participate in the management of the business, to vote such Equity Interest and to receive distributions hereunder.

 

Section 6.10          Limitations on Modifications, Waivers, Extensions of Agreements Giving Rise to Accounts .  Such Grantor will not (i) amend, modify, terminate or waive any provision of any Chattel Paper, Instrument or any agreement giving rise to an Account or Payment Intangible in any manner which could reasonably be expected to materially adversely affect the value of such Chattel Paper, Instrument, Payment Intangible or Account as Collateral, or (ii) fail to exercise promptly and diligently each and every material right which it may have under any Chattel Paper, Instrument and each agreement giving rise to an Account or Payment Intangible (other than any right of termination).  Such Grantor shall deliver to the Administrative Agent a copy of each material demand, notice or document received by it relating in any way to any Chattel Paper, Instrument or any agreement giving rise to an Account or Payment Intangible.

 

Section 6.11          Analysis of Accounts, Etc .  The Administrative Agent shall have the right from time to time to make test verifications of the Accounts, Chattel Paper and Payment Intangibles in any manner and through any medium that it reasonably considers advisable, and each Grantor, at such Grantor’s sole cost and expense, shall furnish all such assistance and information as the Administrative Agent may reasonably require in connection therewith.  At any time and from time to time, upon the Administrative Agent’s request and at the expense of each Grantor, such Grantor shall furnish to the Administrative Agent reports showing reconciliations, aging and test verifications of, and trial balances for, the Accounts, Chattel Paper and Payment Intangibles, and all original and other documents evidencing, and relating to, the agreements and transactions which gave rise to the Accounts, Chattel Paper and Payment Intangibles, including, without limitation, all original orders, invoices and shipping receipts.

 

Section 6.12          Instruments and Tangible Chattel Paper .  If any amount payable under or in connection with any of the Collateral shall be or become evidenced by any Instrument or Tangible Chattel Paper, such Instrument or Tangible Chattel Paper shall be immediately delivered to the Administrative Agent, duly endorsed in a manner satisfactory to the Administrative Agent, to be held as Collateral pursuant to this Agreement.

 

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Section 6.13          Maintenance of Equipment .  Such Grantor will maintain each item of Equipment in good operating condition, ordinary wear and tear and immaterial impairments of value and damage by the elements excepted, and will provide all maintenance, service and repairs necessary for such purpose.

 

Section 6.14          Commercial Tort Claims .  If such Grantor shall at any time hold or acquire a Commercial Tort Claim that satisfies the requirements of the following sentence, such Grantor shall, within thirty (30) days after such Commercial Tort Claim satisfies such requirements, notify the Administrative Agent and the other Secured Parties in a writing signed by such Grantor containing a brief description thereof, and granting to the Administrative Agent in such writing (for the benefit of the Secured Parties) a security interest therein and in the Proceeds thereof, all upon the terms of this Agreement, with such writing to be in form and substance satisfactory to the Administrative Agent and the other Secured Parties.  The provisions of the preceding sentence shall apply only to a Commercial Tort Claim that satisfies the following requirements:  (i) the monetary value claimed by or payable to the relevant Grantor in connection with such Commercial Tort Claim shall exceed $1,000,000, and either (ii) (A) such Grantor shall have filed a law suit or counterclaim or otherwise commenced legal proceedings (including, without limitation, arbitration proceedings) against the Person against whom such Commercial Tort Claim is made, or (B) such Grantor and the Person against whom such Commercial Tort Claim is asserted shall have entered into a settlement agreement with respect to such Commercial Tort Claim.  In addition, to the extent that the existence of any Commercial Tort Claim held or acquired by any Grantor is disclosed by such Grantor in any public filing with the Securities Exchange Commission or any successor thereto or analogous Governmental Authority, or to the extent that the existence of any such Commercial Tort Claim is disclosed in any press release issued by any Grantor, then, upon the request of the Administrative Agent, the relevant Grantor shall, within thirty (30) days after such request is made, transmit to the Administrative Agent and the other Secured Parties a writing signed by such Grantor containing a brief description of such Commercial Tort Claim and granting to the Administrative Agent in such writing (for the benefit of the Secured Parties) a security interest therein and in the Proceeds thereof, all upon the terms of this Agreement, with such writing to be in form and substance satisfactory to the Administrative Agent and the other Secured Parties.

 

ARTICLE VII
REMEDIAL PROVISIONS

 

Section 7.01          Pledged Securities .

 

(a)           Unless an Event of Default shall have occurred and be continuing and the Administrative Agent shall have given notice to the relevant Grantor of the Administrative Agent’s intent to exercise its corresponding rights pursuant to Section 7.01(b), each Grantor shall be permitted to receive all cash dividends paid in respect of the Pledged Securities paid in the normal course of business of the relevant Issuer, to the extent permitted in the Credit Agreement, and to exercise all voting and corporate rights with respect to the Pledged Securities.

 

(b)           If an Event of Default shall occur and be continuing, then at any time in the Administrative Agent’s discretion without notice, (i) the Administrative Agent shall have the right to receive any and all cash dividends, payments or other Proceeds paid in respect of the

 

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Pledged Securities and make application thereof to the Secured Obligations in accordance with Section 10.02(c) of the Credit Agreement, and (ii) any or all of the Pledged Securities shall be registered in the name of the Administrative Agent or its nominee, and the Administrative Agent or its nominee may thereafter exercise (x) all voting, corporate and other rights pertaining to such Pledged Securities at any meeting of shareholders (or other equivalent body) of the relevant Issuer or Issuers or otherwise and (y) any and all rights of conversion, exchange and subscription and any other rights, privileges or options pertaining to such Pledged Securities as if it were the absolute owner thereof (including, without limitation, the right to exchange at its discretion any and all of the Pledged Securities upon the merger, consolidation, reorganization, recapitalization or other fundamental change in the organizational structure of any Issuer, or upon the exercise by any Grantor or the Administrative Agent of any right, privilege or option pertaining to such Pledged Securities, and in connection therewith, the right to deposit and deliver any and all of the Pledged Securities with any committee, depositary, transfer agent, registrar or other designated agency upon such terms and conditions as the Administrative Agent may determine), all without liability except to account for property actually received by it, but the Administrative Agent shall have no duty to any Grantor to exercise any such right, privilege or option and shall not be responsible for any failure to do so or delay in so doing.

 

(c)           Each Grantor hereby authorizes and instructs each Issuer of any Pledged Securities pledged by such Grantor hereunder (and each Issuer party hereto hereby agrees) to (i) comply with any instruction received by it from the Administrative Agent in writing that (x) states that an Event of Default has occurred and is continuing and (y) is otherwise in accordance with the terms of this Agreement, without any other or further instructions from such Grantor, and each Grantor agrees that each Issuer shall be fully protected in so complying, and (ii) unless otherwise expressly permitted hereby, pay any dividends or other payments with respect to the Pledged Securities directly to the Administrative Agent.

 

(d)           After the occurrence and during the continuation of an Event of Default, if the Issuer of any Pledged Securities is the subject of bankruptcy, insolvency, receivership, custodianship or other proceedings under the supervision of any Governmental Authority, then all rights of the Grantor in respect thereof to exercise the voting and other consensual rights which such Grantor would otherwise be entitled to exercise with respect to the Pledged Securities issued by such Issuer shall cease, and all such rights shall thereupon become vested in the Administrative Agent who shall thereupon have the sole right to exercise such voting and other consensual rights, but the Administrative Agent shall have no duty to exercise any such voting or other consensual rights and shall not be responsible for any failure to do so or delay in so doing.

 

Section 7.02          Collections on Accounts, Etc .  The Administrative Agent hereby authorizes each Grantor to collect upon the Accounts, Instruments, Chattel Paper and Payment Intangibles subject to the Administrative Agent’s direction and control, and the Administrative Agent may curtail or terminate said authority at any time after the occurrence and during the continuance of an Event of Default.  Upon the request of the Administrative Agent at any time after the occurrence and during the continuance of an Event of Default, each Grantor shall notify the Account Debtors that the applicable Accounts, Chattel Paper and Payment Intangibles have been assigned to the Administrative Agent for the ratable benefit of the Secured Parties and that payments in respect thereof shall be made directly to the Administrative Agent.  The

 

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Administrative Agent may in its own name or in the name of others communicate with the Account Debtors to verify with them to its satisfaction the existence, amount and terms of any Accounts, Chattel Paper or Payment Intangibles.

 

Section 7.03          Proceeds .  If required by the Administrative Agent at any time after the occurrence and during the continuance of an Event of Default, any payments of Accounts, Instruments, Chattel Paper and Payment Intangibles, when collected or received by each Grantor, and any other cash or non-cash Proceeds received by each Grantor upon the sale or other disposition of any Collateral, shall be forthwith (and, in any event, within two Business Days) deposited by such Grantor in the exact form received, duly indorsed by such Grantor to the Administrative Agent if required, in a special collateral account maintained by the Administrative Agent, subject to withdrawal by the Administrative Agent for the ratable benefit of the Secured Parties only, as hereinafter provided, and, until so turned over, shall be held by such Grantor in trust for the Administrative Agent for the ratable benefit of the Secured Parties, segregated from other funds of any such Grantor.  Each deposit of any such Proceeds shall be accompanied by a report identifying in reasonable detail the nature and source of the payments included in the deposit.  All Proceeds (including, without limitation, Proceeds constituting collections of Accounts, Chattel Paper, Instruments) while held by the Administrative Agent (or by any Grantor in trust for the Administrative Agent for the ratable benefit of the Secured Parties) shall continue to be collateral security for all of the Secured Obligations and shall not constitute payment thereof until applied as hereinafter provided.  At such intervals as may be agreed upon by each Grantor and the Administrative Agent, or, if an Event of Default shall have occurred and be continuing, at any time at the Administrative Agent’s election, the Administrative Agent shall apply all or any part of the funds on deposit in said special collateral account on account of the Secured Obligations in such order as the Administrative Agent may elect, and any part of such funds which the Administrative Agent elects not so to apply and deems not required as collateral security for the Secured Obligations shall be paid over from time to time by the Administrative Agent to each Grantor or to whomsoever may be lawfully entitled to receive the same.  Notwithstanding the foregoing, no amounts received from any Guarantor shall be applied to any Excluded Swap Obligations of such Guarantor.

 

Section 7.04          New York UCC and Other Remedies .

 

(a)           If an Event of Default shall occur and be continuing, the Administrative Agent, on behalf of the Secured Parties, may exercise in its discretion, in addition to all other rights, remedies, powers and privileges granted to them in this Agreement, the other Loan Documents, any Secured Swap Agreement and in any other instrument or agreement securing, evidencing or relating to the Secured Obligations, all rights, remedies, powers and privileges of a secured party under the New York UCC (whether the New York UCC is in effect in the jurisdiction where such rights, remedies, powers or privileges are asserted) or any other applicable law or otherwise available at law or equity.  Without limiting the generality of the foregoing, the Administrative Agent, without demand of performance or other demand, presentment, protest, advertisement or notice of any kind (except any notice required by law referred to below) to or upon any Grantor or any other Person (all and each of which demands, defenses, advertisements and notices are hereby waived), may in such circumstances forthwith collect, receive, appropriate and realize upon the Collateral, or any part thereof, and/or may forthwith sell, lease, assign, give option or options to purchase, or otherwise dispose of and

 

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deliver the Collateral or any part thereof (or contract to do any of the foregoing), in one or more parcels at public or private sale or sales, at any exchange, broker’s board or office of the Administrative Agent or any other Secured Party or elsewhere upon such terms and conditions as it may deem advisable and at such prices as it may deem best, for cash or on credit or for future delivery without assumption of any credit risk.  The Administrative Agent or any other Secured Party shall have the right upon any such public sale or sales, and, to the extent permitted by law, upon any such private sale or sales, to purchase the whole or any part of the Collateral so sold, free of any right or equity of redemption in any Grantor, which right or equity is hereby waived and released.  If an Event of Default shall occur and be continuing, each Grantor further agrees, at the Administrative Agent’s request, to assemble the Collateral and make it available to the Administrative Agent at places which the Administrative Agent shall reasonably select, whether at such Grantor’s premises or elsewhere.  Any such sale or transfer by the Administrative Agent either to itself or to any other Person shall be absolutely free from any claim of right by Grantor, including any equity or right of redemption, stay or appraisal which Grantor has or may have under any rule of law, regulation or statute now existing or hereafter adopted.  Upon any such sale or transfer, the Administrative Agent shall have the right to deliver, assign and transfer to the purchaser or transferee thereof the Collateral so sold or transferred.  The Administrative Agent shall apply the net proceeds of any action taken by it pursuant to this Section 7.04, after deducting all reasonable costs and expenses of every kind incurred in connection therewith or incidental to the care or safekeeping of any of the Collateral or in any way relating to the Collateral or the rights of the Administrative Agent and the other Secured Parties hereunder, including, without limitation, reasonable attorneys’ fees and disbursements, to the payment in whole or in part of the Secured Obligations, in accordance with Section 10.02(c) of the Credit Agreement, and only after such application and after the payment by the Administrative Agent of any other amount required by any provision of law, including, without limitation, Section 9-615 of the New York UCC, need the Administrative Agent account for the surplus, if any, to any Grantor.  To the extent permitted by applicable law, each Grantor waives all claims, damages and demands it may acquire against the Administrative Agent or any other Secured Party arising out of the exercise by them of any rights hereunder.  If any notice of a proposed sale or other disposition of Collateral shall be required by law, such notice shall be deemed reasonable and proper if given at least 10 days before such sale or other disposition.

 

(b)           In the event that the Administrative Agent elects not to sell the Collateral, the Administrative Agent retains its rights to dispose of or utilize the Collateral or any part or parts thereof in any manner authorized or permitted by law or in equity, and to apply the proceeds of the same towards payment of the Secured Obligations.  Each and every method of disposition of the Collateral described in this Agreement shall constitute disposition in a commercially reasonable manner.  The Administrative Agent may appoint any Person as agent to perform any act or acts necessary or incident to any sale or transfer of the Collateral.

 

Section 7.05          Private Sales of Pledged Securities .  Each Grantor recognizes that the Administrative Agent may be unable to effect a public sale of any or all the Pledged Securities, by reason of certain prohibitions contained in the Securities Act and applicable state securities laws or otherwise, and may be compelled to resort to one or more private sales thereof to a restricted group of purchasers which will be obliged to agree, among other things, to acquire such securities for their own account for investment and not with a view to the distribution or resale thereof.  Each Grantor acknowledges and agrees that any such private sale may result in

 

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prices and other terms less favorable than if such sale were a public sale and, notwithstanding such circumstances, agrees that any such private sale shall be deemed to have been made in a commercially reasonable manner.  The Administrative Agent shall be under no obligation to delay a sale of any of the Pledged Securities for the period of time necessary to permit the Issuer thereof to register such securities for public sale under the Securities Act, or under applicable state securities laws, even if such Issuer would agree to do so.  Each Grantor agrees to use its best efforts to do or cause to be done all such other acts as may reasonably be necessary to make such sale or sales of all or any portion of the Pledged Securities pursuant to this Section 7.05 valid and binding and in compliance with any and all other applicable Governmental Requirements.  Each Grantor further agrees that a breach of any of the covenants contained in this Section 7.05 will cause irreparable injury to the Administrative Agent and the other Secured Parties, that the Administrative Agent and the other Secured Parties have no adequate remedy at law in respect of such breach and, as a consequence, that each and every covenant contained in this Section 7.05 shall be specifically enforceable against such Grantor, and such Grantor hereby waives and agrees not to assert any defenses against an action for specific performance of such covenants.

 

Section 7.06          Waiver; Deficiency .  Each Grantor waives and agrees not to assert any rights or privileges which it may acquire under the New York UCC or any other applicable law.  Each Grantor shall remain liable for any deficiency if the proceeds of any sale or other disposition of the Collateral are insufficient to pay its Secured Obligations and the fees and disbursements of any attorneys employed by the Administrative Agent or any other Secured Party to collect such deficiency.

 

Section 7.07          Non-Judicial Enforcement .  The Administrative Agent may enforce its rights hereunder without prior judicial process or judicial hearing, and to the extent permitted by law, each Grantor expressly waives any and all legal rights which might otherwise require the Administrative Agent to enforce its rights by judicial process.

 

ARTICLE VIII
THE ADMINISTRATIVE AGENT

 

Section 8.01          Administrative Agent’s Appointment as Attorney-in-Fact, Etc .

 

(a)           Each Grantor hereby irrevocably constitutes and appoints the Administrative Agent and any officer or agent thereof, with full power of substitution, as its true and lawful attorney-in-fact with full irrevocable power and authority in the place and stead of such Grantor and in the name of such Grantor or in its own name, for the purpose of carrying out the terms of this Agreement, to take any and all reasonably appropriate action and to execute any and all documents and instruments which may be reasonably necessary or desirable to accomplish the purposes of this Agreement, and, without limiting the generality of the foregoing, each Grantor hereby gives the Administrative Agent the power and right, on behalf of such Grantor, without notice to or assent by such Grantor, to do any or all of the following:

 

(i)            pay or discharge taxes and Liens levied or placed on or threatened against the Collateral, effect any repairs or any insurance called for by the terms of this Agreement and pay all or any part of the premiums therefore and the costs thereof;

 

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(ii)           execute, in connection with any sale provided for in Section 7.04 or Section 7.05, any endorsements, assignments or other instruments of conveyance or transfer with respect to the Collateral; and

 

(iii)          (A) direct any party liable for any payment under any of the Collateral to make payment of any and all moneys due or to become due thereunder directly to the Administrative Agent or as the Administrative Agent shall direct; (B) take possession of and indorse and collect any checks, drafts, notes, acceptances or other instruments for the payment of moneys due under any Account, Instrument, General Intangible, Chattel Paper or Payment Intangible or with respect to any other Collateral, and to file any claim or to take any other action or proceeding in any court of law or equity or otherwise deemed appropriate by the Administrative Agent for the purpose of collecting any and all such moneys due under any Account, Instrument or  General Intangible or with respect to any other Collateral whenever payable; (C) ask or demand for, collect, and receive payment of and receipt for, any and all moneys, claims and other amounts due or to become due at any time in respect of or arising out of any Collateral; (D) sign and indorse any invoices, freight or express bills, bills of lading, storage or warehouse receipts, drafts against debtors, assignments, verifications, notices and other documents in connection with any of the Collateral; (E) receive, change the address for delivery, open and dispose of mail addressed to any Grantor, and to execute, assign and indorse negotiable and other instruments for the payment of money, documents of title or other evidences of payment, shipment or storage for any form of Collateral on behalf of and in the name of any Grantor; (F) commence and prosecute any suits, actions or proceedings at law or in equity in any court of competent jurisdiction to collect the Collateral or any portion thereof and to enforce any other right in respect of any Collateral; (G) defend any suit, action or proceeding brought against such Grantor with respect to any Collateral; (H) settle, compromise or adjust any such suit, action or proceeding and, in connection therewith, give such discharges or releases as the Administrative Agent may deem appropriate; and (I) generally, sell, transfer, pledge and make any agreement with respect to or otherwise deal with any of the Collateral as fully and completely as though the Administrative Agent were the absolute owner thereof for all purposes, and do, at the Administrative Agent’s option and such Grantor’s expense, at any time, or from time to time, all acts and things which the Administrative Agent deems necessary to protect, preserve or realize upon the Collateral and the Administrative Agent’s and the other Secured Parties’ security interests therein and to effect the intent of this Agreement, all as fully and effectively as such Grantor might do.

 

Anything in this Section 8.01(a) to the contrary notwithstanding, the Administrative Agent agrees that it will not exercise any rights under the power of attorney provided for in this Section 8.01(a) unless an Event of Default shall have occurred and be continuing.

 

(b)           If any Grantor fails to perform or comply with any of its agreements contained herein within the applicable grace periods, the Administrative Agent, at its option, but without any obligation so to do, may perform or comply, or otherwise cause performance or compliance, with such agreement.

 

(c)           The expenses of the Administrative Agent incurred in connection with actions undertaken as provided in this Section 8.01, together with interest thereon at the Post-

 

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Default Rate from the date of payment by the Administrative Agent to the date reimbursed by the relevant Grantor, shall be payable by such Grantor to the Administrative Agent on demand.

 

(d)           Each Grantor hereby ratifies all that said attorneys shall lawfully do or cause to be done by virtue and in compliance hereof.  All powers, authorizations and agencies contained in this Agreement are coupled with an interest and are irrevocable until this Agreement is terminated and the security interests created hereby are released.

 

Section 8.02          Duty of Administrative Agent .  The Administrative Agent’s sole duty with respect to the custody, safekeeping and physical preservation of the Collateral in its possession, under Section 9-207 of the New York UCC or otherwise, shall be to deal with it in the same manner as the Administrative Agent deals with similar property for its own account and shall be deemed to have exercised reasonable care in the custody and preservation of the Collateral in its possession if the Collateral is accorded treatment substantially equal to that which comparable secured parties accord comparable collateral.  Neither the Administrative Agent, any other Secured Party nor any of their respective officers, directors, employees or agents shall be liable for failure to demand, collect or realize upon any of the Collateral or for any delay in doing so or shall be under any obligation to sell or otherwise dispose of any Collateral upon the request of any Grantor or any other Person or to take any other action whatsoever with regard to the Collateral or any part thereof.  The powers conferred on the Administrative Agent and the other Secured Parties hereunder are solely to protect the Administrative Agent’s and the other Secured Parties’ interests in the Collateral and shall not impose any duty upon the Administrative Agent or any other Secured Party to exercise any such powers.  The Administrative Agent and the other Secured Parties shall be accountable only for amounts that they actually receive as a result of the exercise of such powers, and neither they nor any of their officers, directors, employees or agents shall be responsible to any Grantor for any act or failure to act hereunder, except for their own gross negligence or willful misconduct.  To the fullest extent permitted by applicable law, the Administrative Agent shall be under no duty whatsoever to make or give any presentment, notice of dishonor, protest, demand for performance, notice of non-performance, notice of intent to accelerate, notice of acceleration, or other notice or demand in connection with any Collateral or the Secured Obligations, or to take any steps necessary to preserve any rights against any Grantor or other Person or ascertaining or taking action with respect to calls, conversions, exchanges, maturities, tenders or other matters relative to any Collateral, whether or not it has or is deemed to have knowledge of such matters.  Each Grantor, to the extent permitted by applicable law, waives any right of marshaling in respect of any and all Collateral, and waives any right to require the Administrative Agent or any other Secured Party to proceed against any Grantor or other Person, exhaust any Collateral or enforce any other remedy which the Administrative Agent or any other Secured Party now has or may hereafter have against each Guarantor, any Grantor or other Person.

 

Section 8.03          Execution of Financing Statements .  Pursuant to the New York UCC and any other applicable law, each Grantor authorizes the Administrative Agent, its counsel or its representative, at any time and from time to time, to file or record financing statements, continuation statements, amendments thereto and other filing or recording documents or instruments with respect to the Collateral without the signature of such Grantor in such form and in such offices as the Administrative Agent reasonably determines appropriate to perfect the security interests of the Administrative Agent under this Agreement.  Additionally, each Grantor

 

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authorizes the Administrative Agent, its counsel or its representative, at any time and from time to time, to file or record such financing statements that describe the collateral covered thereby as “all assets of the Grantor”, “all personal property of the Grantor” or words of similar effect.  A photographic or other reproduction of this Agreement shall be sufficient as a financing statement or other filing or recording document or instrument for filing or recording in any jurisdiction.

 

Section 8.04          Authority of Administrative Agent .  Each Grantor acknowledges that the rights and responsibilities of the Administrative Agent under this Agreement with respect to any action taken by the Administrative Agent or the exercise or non-exercise by the Administrative Agent of any option, voting right, request, judgment or other right or remedy provided for herein or resulting or arising out of this Agreement shall, as between the Administrative Agent and the other Secured Parties, be governed by the Credit Agreement and by such other agreements with respect thereto as may exist from time to time among them, but, as between the Administrative Agent and the Grantors, the Administrative Agent shall be conclusively presumed to be acting as agent for the Secured Parties with full and valid authority so to act or refrain from acting, and no Grantor shall be under any obligation, or entitlement, to make any inquiry respecting such authority.

 

ARTICLE IX
SUBORDINATION OF INDEBTEDNESS

 

Section 9.01          Subordination of All Guarantor Claims .  As used herein, the term “Guarantor Claims” means all debts and obligations of the Borrower or any other Grantor to any Grantor, whether such debts and obligations now exist or are hereafter incurred or arise, or whether the obligation of the debtor thereon be direct, contingent, primary, secondary, several, joint and several, or otherwise, and irrespective of whether such debts or obligations be evidenced by note, contract, open account, or otherwise, and irrespective of the Person or Persons in whose favor such debts or obligations may, at their inception, have been, or may hereafter be created, or the manner in which they have been or may hereafter be acquired by. After and during the continuation of an Event of Default, no Grantor shall receive or collect, directly or indirectly, from any obligor in respect thereof any amount upon the Guarantor Claims.

 

Section 9.02          Claims in Bankruptcy .  In the event of receivership, bankruptcy, reorganization, arrangement, debtor’s relief or other insolvency proceedings involving any Grantor, the Administrative Agent on behalf of the Secured Parties shall have the right to prove their claim in any proceeding, so as to establish their rights hereunder and receive directly from the receiver, trustee or other court custodian, dividends and payments which would otherwise be payable upon Guarantor Claims.  Each Grantor hereby assigns such dividends and payments to the Administrative Agent for the benefit of the Secured Parties for application against the Secured Obligations as provided under Section 10.02(c) of the Credit Agreement.  Should any Agent or Secured Party receive, for application upon the Secured Obligations, any such dividend or payment which is otherwise payable to any Grantor, and which, as between such Grantor, shall constitute a credit upon the Guarantor Claims, then upon payment in full of the Secured Obligations, the intended recipient shall become subrogated to the rights of the Administrative Agent and the other Secured Parties to the extent that such payments to the Administrative Agent and the other Secured Parties on the Guarantor Claims have contributed toward the liquidation of the Secured Obligations, and such subrogation shall be with respect to that proportion of the

 

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Secured Obligations which would have been unpaid if the Administrative Agent and the other Secured Parties had not received dividends or payments upon the Guarantor Claims.

 

Section 9.03          Payments Held in Trust .  In the event that notwithstanding Section 9.01 and Section 9.02, any Grantor should receive any funds, payments, claims or distributions which is prohibited by such Sections, then it agrees: (a) to hold in trust for the Administrative Agent and the other Secured Parties an amount equal to the amount of all funds, payments, claims or distributions so received, and (b) that it shall have absolutely no dominion over the amount of such funds, payments, claims or distributions except to pay them promptly to the Administrative Agent, for the benefit of the Secured Parties; and each Grantor covenants promptly to pay the same to the Administrative Agent.

 

Section 9.04          Liens Subordinate .  Each Grantor agrees that, until the Secured Obligations are paid in full and the Commitments terminated, any Liens securing payment of the Guarantor Claims shall be and remain inferior and subordinate to any Liens securing payment of the Secured Obligations, regardless of whether such encumbrances in favor of such Grantor, the Administrative Agent or any other Secured Party presently exist or are hereafter created or attach.  Without the prior written consent of the Administrative Agent, no Grantor, during the period in which any of the Secured Obligations are outstanding or the Commitments are in effect, shall (a) exercise or enforce any creditor’s right it may have against any debtor in respect of the Guarantor Claims, or (b) foreclose, repossess, sequester or otherwise take steps or institute any action or proceeding (judicial or otherwise, including without limitation the commencement of or joinder in any liquidation, bankruptcy, rearrangement, debtor’s relief or insolvency proceeding) to enforce any Lien held by it.

 

Section 9.05          Notation of Records .  Upon the request of the Administrative Agent, all promissory notes and all accounts receivable ledgers or other evidence of the Guarantor Claims accepted by or held by any Grantor shall contain a specific written notice thereon that the indebtedness evidenced thereby is subordinated under the terms of this Agreement.

 

ARTICLE X
MISCELLANEOUS

 

Section 10.01       Waiver .  No failure on the part of the Administrative Agent or any other Secured Party to exercise and no delay in exercising, and no course of dealing with respect to, any right, remedy, 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, remedy, power or privilege.  The rights, remedies, powers and privileges provided herein are cumulative and not exclusive of any rights, remedies, powers and privileges provided by law.  The exercise by the Administrative Agent of any one or more of the rights, powers and remedies herein shall not be construed as a waiver of any other rights, powers and remedies, including, without limitation, any rights of set-off.

 

Section 10.02       Notices .  All notices and other communications provided for herein shall be given in the manner and subject to the terms of Section 12.01 of the Credit Agreement;

 

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provided that any such notice, request or demand to or upon any Guarantor shall be addressed to such Guarantor at its notice address set forth on Schedule 1.

 

Section 10.03       Payment of Expenses, Indemnities, Etc .

 

(a)           Each Grantor agrees to pay or promptly reimburse the Administrative Agent and each other Secured Party for all advances, charges, costs and expenses (including, without limitation, all costs and expenses of holding, preparing for sale and selling, collecting or otherwise realizing upon the Collateral and all attorneys’ fees, legal expenses and court costs) incurred by any Secured Party in connection with the exercise of its respective rights and remedies hereunder, including, without limitation, any advances, charges, costs and expenses that may be incurred in any effort to enforce any of the provisions of this Agreement or any obligation of any Grantor in respect of the Collateral or in connection with (i) the preservation of the Lien of, or the rights of the Administrative Agent or any other Secured Party under this Agreement, (ii) any actual or attempted sale, lease, disposition, exchange, collection, compromise, settlement or other realization in respect of, or care of, the Collateral, including all such costs and expenses incurred in any bankruptcy, reorganization, workout or other similar proceeding, or (iii) collecting against such Grantor under the guarantee contained in Article II or otherwise enforcing or preserving any rights under this Agreement and the other Loan Documents to which such Grantor is a party.

 

(b)           Each Grantor agrees to pay, and to save the Administrative Agent and the other Secured Parties harmless from, any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever (including, without limitation, court costs and attorneys’ fees, any and all liabilities with respect to, or resulting from any delay in paying, any and all stamp, excise, sales or other taxes which may be payable or determined to be payable with respect to any of the Collateral or in connection with any of the transactions contemplated by this Agreement) incurred because of, incident to, or with respect to, the Collateral (including, without limitation, any exercise of rights or remedies in connection therewith) or the execution, delivery, enforcement, performance and administration of this Agreement, to the extent the Borrower would be required to do so pursuant to Section 12.03 of the Credit Agreement.  All amounts for which any Grantor is liable pursuant to this Section 10.03 shall be due and payable by such Grantor to the Secured Parties upon demand.

 

Section 10.04       Amendments in Writing .  None of the terms or provisions of this Agreement may be waived, amended, supplemented or otherwise modified except in accordance with Section 12.02 of the Credit Agreement.

 

Section 10.05       Successors and Assigns .  This Agreement shall be binding upon the successors and assigns of each Grantor and shall inure to the benefit of the Administrative Agent and the other Secured Parties and their successors and assigns; provided that except as set forth in Section 8.14 or Section 9.13 of the Credit Agreement, no Grantor may assign, transfer or delegate any of its rights or obligations under this Agreement without the prior written consent of the Administrative Agent and the Lenders.

 

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Section 10.06       Invalidity .  In the event that any one or more of the provisions contained in this Agreement or in any of the Loan Documents to which a Grantor is a party shall, for any reason, be held invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provision of this Agreement or such other Loan Document.

 

Section 10.07       Counterparts .  This Agreement may be executed in any number of counterparts, all of which taken together shall constitute one and the same instrument and any of the parties hereto may execute this Agreement by signing any such counterpart.

 

Section 10.08       Survival .  The obligations of the parties under Section 10.03 shall survive the repayment of the Loans and the termination of the Letters of Credit, Secured Swap Agreements, Credit Agreement and Commitments.  To the extent that any payments on the Secured 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 Secured 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 other Secured Parties’ Liens, security interests, rights, powers and remedies under this Agreement and each Security Instrument shall continue in full force and effect.  In such event, each Security Instrument shall be automatically reinstated and each Grantor shall take such action as may be reasonably requested by the Administrative Agent and the other Secured Parties to effect such reinstatement.

 

Section 10.09       Captions .  Captions and section headings appearing herein are included solely for convenience of reference and are not intended to affect the interpretation of any provision of this Agreement.

 

Section 10.10       No Oral Agreements .  The Loan Documents (other than the Letters of Credit) embody the entire agreement and understanding between the parties and supersede all other agreements and understandings between such parties relating to the subject matter hereof and thereof.  The Loan Documents represent the final agreement between 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 between the parties.  In the event of a conflict between the terms and conditions of this Agreement and the terms and conditions of the Credit Agreement, the terms and conditions of the Credit Agreement shall control.

 

Section 10.11       Governing Law; Submission to Jurisdiction .

 

(a)           THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

 

(b)           SECTIONS 12.09(b)-(d) OF THE CREDIT AGREEMENT (GOVERNING LAW; JURISDICTION; CONSENT TO SERVICE OF PROCESS) ARE HEREBY INCORPORATED HEREIN BY REFERENCE AND SHALL APPLY TO THIS AGREEMENT MUTATIS MUTANDIS.

 

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Section 10.12       Acknowledgments .  Each Grantor hereby acknowledges that:

 

(a)           it has been advised by counsel in the negotiation, execution and delivery of this Agreement and the other Loan Documents to which it is a party;

 

(b)           neither the Administrative Agent nor any other Secured Party has any fiduciary relationship with or duty to any Grantor arising out of or in connection with this Agreement or any of the other Loan Documents, and the relationship between the Grantors, on the one hand, and the Administrative Agent and the other Secured Parties, on the other hand, in connection herewith or therewith is solely that of debtor and creditor; and

 

(c)           no joint venture is created hereby or by the other Loan Documents or otherwise exists by virtue of the transactions contemplated hereby among the Secured Parties or among the Grantors and the Lenders.

 

(d)           each of the parties hereto specifically agrees that it has a duty to read this Agreement and the Security Instruments and agrees that it is charged with notice and knowledge of the terms of this Agreement and the Security Instruments; 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 Security Instruments; and has received the advice of its attorney in entering into this Agreement and the Security Instruments; and that it recognizes that certain of the terms of this Agreement and the Security Instruments 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 Security Instruments on the basis that the party had no notice or knowledge of such provision or that the provision is not “conspicuous.”

 

(e)           each Grantor warrants and agrees that each of the waivers and consents set forth in this Agreement are made voluntarily and unconditionally after consultation with outside legal counsel and with full knowledge of their significance and consequences, with the understanding that events giving rise to any defense or right waived may diminish, destroy or otherwise adversely affect rights which such Grantor otherwise may have against the Borrower, any other Grantor, the Secured Parties or any other Person or against any collateral.  If, notwithstanding the intent of the parties that the terms of this Agreement shall control in any and all circumstances, any such waivers or consents are determined to be unenforceable under applicable law, such waivers and consents shall be effective to the maximum extent permitted by law.

 

Section 10.13       Additional Grantors .  Each Subsidiary of the Borrower that is required to become a party to this Agreement pursuant to Section 8.11 of the Credit Agreement and is not a signatory hereto shall become a Grantor for all purposes of this Agreement upon execution and delivery by such Subsidiary of an Assumption Agreement in the form of Annex I hereto.

 

Section 10.14       Set-Off .  Each Grantor agrees that, in addition to (and without limitation of) any right of set-off, bankers’ lien or counterclaim a Secured Party may otherwise have, each

 

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Secured Party shall have the right and be entitled (after consultation with the Administrative Agent), at its option, to offset (i) balances held by it or by any of its Affiliates for account of any Grantor or any Subsidiary at any of its offices, in Dollars or in any other currency, and (ii) amounts due and payable to such Lender (or any Affiliate of such Lender) under any Secured Swap Agreement, against any principal of or interest on any of such Secured Party’s Loans, or any other amount due and payable to such Secured Party hereunder, which is not paid when due (regardless of whether such balances are then due to such Person), in which case it shall promptly notify the Borrower and the Administrative Agent thereof, provided that such Secured Party’s failure to give such notice shall not affect the validity thereof.

 

Section 10.15       Releases .

 

(a)           Release upon Payment in Full .  The grant of a security interest hereunder and all of rights, powers and remedies in connection herewith shall remain in full force and effect until the Administrative Agent has (i) retransferred and delivered all Collateral in its possession to the Grantors, and (ii) executed a written release or termination statement and reassigned to the Grantors without recourse or warranty any remaining Collateral and all rights conveyed hereby.  Upon the complete payment of the Secured Obligations, the termination of the Letters of Credit, Secured Swap Agreements secured hereby, Credit Agreement and the Commitments and the compliance by the Grantors with all covenants and agreements hereof, the Administrative Agent, at the written request and expense of the Borrower, will promptly release, reassign and transfer the Collateral to the Grantors and declare this Agreement to be of no further force or effect.

 

(b)           Further Assurances .  If any of the Collateral shall be sold, transferred or otherwise disposed of by any Grantor in a transaction permitted by the Credit Agreement, then the Administrative Agent, at the request and sole expense of such Grantor, shall promptly execute and deliver to such Grantor all releases or other documents reasonably necessary or desirable for the release of the Liens created hereby on such Collateral and the capital stock of such Grantor.  At the request and sole expense of the Borrower, a Grantor shall be released from its obligations hereunder in the event that all the capital stock of such Grantor shall be sold, transferred or otherwise disposed of in a transaction permitted by the Credit Agreement; provided that the Borrower shall have delivered to the Administrative Agent, at least ten (10) Business Days prior to the date of the proposed release, a written request for release identifying the relevant Grantor and the terms of the sale or other disposition in reasonable detail, including the price thereof and any expenses in connection therewith, together with a certification by the Borrower stating that such transaction is in compliance with the Credit Agreement and the other Loan Documents.

 

(c)           Retention in Satisfaction .  Except as may be expressly applicable pursuant to Section 9-620 of the New York UCC, no action taken or omission to act by the Administrative Agent or the other Secured Parties hereunder, including, without limitation, any exercise of voting or consensual rights or any other action taken or inaction, shall be deemed to constitute a retention of the Collateral in satisfaction of the Secured Obligations or otherwise to be in full satisfaction of the Secured Obligations, and the Secured Obligations shall remain in full force and effect, until the Administrative Agent and the other Secured Parties shall have applied payments (including, without limitation, collections from Collateral) towards the Secured

 

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Obligations in the full amount then outstanding or until such subsequent time as is provided in Section 10.15(a).

 

Section 10.16       Reinstatement .  The obligations of each Grantor under this Agreement (including, without limitation, with respect to the guarantee contained in ARTICLE II and the provision of collateral herein) shall continue to be effective, or be reinstated, as the case may be, if at any time payment, or any part thereof, of any of the Secured Obligations is rescinded or must otherwise be restored or returned by the Administrative Agent or any other Secured Party upon the insolvency, bankruptcy, dissolution, liquidation or reorganization of the Borrower or any Grantor, or upon or as a result of the appointment of a receiver, intervenor or conservator of, or trustee or similar officer for, the Borrower or any Grantor or any substantial part of its property, or otherwise, all as though such payments had not been made.

 

Section 10.17       Acceptance .  Each Grantor hereby expressly waives notice of acceptance of this Agreement, acceptance on the part of the Administrative Agent and the other Secured Parties being conclusively presumed by their request for this Agreement and delivery of the same to the Administrative Agent.

 

[SIGNATURE PAGES FOLLOW]

 

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IN WITNESS WHEREOF, each of the undersigned has caused this Guarantee and Collateral Agreement to be duly executed and delivered as of the date first above written.

 

BORROWER:

HALCÓN RESOURCES CORPORATION

 

 

 

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

SIGNATURE PAGE
GUARANTEE AND COLLATERAL AGREEMEN

 



 

GUARANTORS:

HALCÓN HOLDINGS, INC.

HALCÓN RESOURCES OPERATING, INC.

HALCÓN ENERGY PROPERTIES, INC.

HALCÓN ENERGY HOLDINGS, LLC

HALCÓN GULF STATES, LLC

HALCÓN OPERATING CO., INC.

HRC ENERGY RESOURCES (WV), INC.

HRC ENERGY LOUISIANA, LLC

HRC PRODUCTION COMPANY

HALCÓN FIELD SERVICES, LLC

HALCÓN LOUISIANA OPERATING, L.P.

HRC ENERGY, LLC

HRC OPERATING, LLC

HK ENERGY, LLC

HK ENERGY OPERATING, LLC

HK LOUISIANA OPERATING, LLC

HK OIL & GAS, LLC

HALCÓN WILLISTON I, LLC

HALCÓN WILLISTON II, LLC

HK RESOURCES, LLC

THE 7711 CORPORATION

 

 

 

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

SIGNATURE PAGE
GUARANTEE AND COLLATERAL AGREEMEN

 



 

 

Acknowledged and Agreed to as of the date hereof by:

 

 

 

 

ADMINISTRATIVE AGENT:

JPMORGAN CHASE BANK, N.A.

 

 

 

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

Annex I - 1


 

Exhibit 10.2

 

EXECUTION VERSION

 

HALCÓN RESOURCES CORPORATION

 

REGISTRATION RIGHTS AGREEMENT

 

September 9, 2016

 

THIS REGISTRATION RIGHTS AGREEMENT (this “ Agreement ”) dated as of September 9, 2016, is made by and among Halcón Resources Corporation, a Delaware corporation (the “ Company ”), and each of the Persons identified as a “ Holder ” on Schedule I attached hereto and their successors and assigns as provided for in Section 9(g) hereto (collectively, the “ Holders ”).

 

In connection with and pursuant to the Debtors’ Amended Joint Prepackaged Plan of Reorganization, dated September 2, 2016 (the “ Plan ”), under chapter 11 of title 11 of the United States Code, 11 U.S.C. §§101 et. seq. for the Company and certain of its subsidiaries who are debtors and debtors-in-possession in the chapter 11 case captioned In re Halcón Resources Corporation, et al. , Case No. 16-11724 (BLS) pending and jointly administered in the Bankruptcy Court for the District of Delaware (the “ Bankruptcy Court ”), the Company has issued shares (such shares, the “ New Shares ”) of common stock of the reorganized or restructured Halcón Resources Corporation (the “ New Common Stock ”) to the Holders.

 

Registrable Securities ” means the New Shares, as held by any Holder and including any additional shares of New Common Stock acquired by any Holder after the date hereof and in each case, if the shares of New Common Stock would, in the hands of such Holder, not be freely transferable in accordance with the intended method of disposition under Rule 144 under the Securities Act of 1933, as amended (the “ Securities Act ”), without regard to any volume or manner of sale requirements. As to any particular Registrable Securities, once issued, such securities shall cease to be Registrable Securities when (i) the Resale Shelf Registration Statement (as defined below) shall have become effective under the Securities Act and such securities shall have been disposed of in accordance therewith or (ii) such Registrable Securities shall have ceased to be outstanding.

 

In consideration of the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties to this Agreement hereby agree as follows:

 

1.             Resale Shelf Registration Statement .

 

(a)           The Company shall file, as promptly as practicable, but in any event within 30 days, following the earlier to occur of (i) the Company filing its 2016 Annual Report on Form 10-K with the Securities and Exchange Commission (the “ Commission ”) and (ii) the Company meeting the eligibility requirements to file a registration statement on Form S-3, a shelf registration statement (the “ Resale Shelf Registration Statement ”) providing for the registration of, and the sale on a continuous or delayed basis by the Electing Holders (as defined below in Section 3(a)(iii)) of all Registrable Securities, pursuant to Rule 415 of the Securities Act or any similar rule that may be adopted by the Commission. The Company agrees to use

 



 

commercially reasonable efforts to cause the Resale Shelf Registration Statement to become effective as promptly as practicable following such filing (the date of such effectiveness, the “ Effective Time ”).

 

(b)           Subject to the Company’s right to suspend the Resale Shelf Registration Statement pursuant to Section 1(d) below, the Company agrees to use commercially reasonable efforts to keep the Resale Shelf Registration Statement continuously effective under the Securities Act in order to permit the Prospectus to be usable by the Electing Holders until such time as there are no longer any Registrable Securities (such period, the “ Effective Period ”).

 

(c)           After the Effective Time, within 10 Business Days after receipt of a duly completed and signed Notice and Questionnaire (as defined below) from any Holder that is not then an Electing Holder, together with any other information as may be reasonably requested in writing by the Company from such Holder, the Company shall file such amendments to the Resale Shelf Registration Statement or supplements to the Prospectus as are reasonably necessary to permit such Holder to deliver the Prospectus to purchasers of Registrable Securities (subject to the Company’s right to suspend the use of the Resale Shelf Registration Statement or the Prospectus as set forth in Section 1(d)); provided , that in no event shall the Company be required to file more than one such amendment or supplement in any 90-day period.

 

(d)           The Company may delay or suspend the use of the Resale Shelf Registration Statement or the use of the Prospectus used in connection therewith if the Board of Directors of the Company shall have determined in good faith that because of valid business reasons, including the acquisition or divestiture of assets, pending corporate developments, public filings with the Commission and similar events, it is in the best interests of the Company to delay or suspend such use, and prior to delaying or suspending such use the Company provides the Holders with written notice of such delay or suspension, which notice need not specify the nature of the event giving rise to such delay or suspension; provided that the aggregate duration for any periods during which use of the Resale Shelf Registration Statement or the Prospectus is delayed or suspended (each such period, a “ Suspension Period ”) shall not exceed 60 consecutive calendar days, and shall not exceed 90 calendar days in the aggregate in any consecutive twelve-month period.

 

(e)           The Electing Holders holding a majority of the Registrable Securities (the “ Required Holders ”) shall be entitled to request underwritten offerings of the Registrable Securities pursuant to the Resale Shelf Registration Statement; provided , that the Company shall not be obligated to complete (i) more than two underwritten offerings during the Effective Period and (ii) more than one underwritten offering in any 180-day period. Upon receipt of such a request from the Required Holders, the Company shall provide all Holders of Registrable Securities written notice of the request, which notice shall inform such Holders that they have the opportunity to participate in the underwritten offering.  The Required Holders shall have the right to select the managing underwriter(s) to administer any underwritten offering, subject to the prior approval of the Company, which approval shall not be unreasonably withheld.  Except as provided in this Section 1(f), there shall otherwise be no limitation on the number of sales or takedowns off of the Resale Shelf Registration Statement.

 

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2.             Holdback Agreement .

 

(a)           In connection with any underwritten offering, the Company and the Electing Holders participating in such underwritten offering (i) agree not to directly or indirectly offer, sell, pledge, contract to sell (including any short sale), grant any option to purchase or otherwise dispose of any equity securities or securities convertible into equity securities of the Company or enter into any hedging transaction relating to any such securities (each a “ Prohibited Sale ”) during the seven days prior to and during the 60-day period beginning on the closing date of such underwritten offering (except as part of such underwritten offering or, with respect to the Company, pursuant to registrations on Form S-4 or S-8 or any successor form), unless the underwriters managing the underwritten offering otherwise agree (such period, the “ Holdback Period ”), and (ii)  except as otherwise permitted by the Required Holders, the Company shall use commercially reasonable efforts to cause each of its directors and officers that is a holder of such equity securities or securities convertible into equity securities purchased from the Company at any time after the date of this Agreement (other than in a registered public offering) to agree not to effect any Prohibited Sale (including sales pursuant to Rule 144) of any such securities during such Holdback Period except as part of such underwritten offering, if otherwise permitted, unless the underwriters managing the underwritten offering otherwise agree. If (x) the Company issues an earnings release or other material news or a material event relating to the Company and its subsidiaries occurs during the last 17 days of the Holdback Period or (y) prior to the expiration of the Holdback Period, the Company announces that it will release earnings results during the 16-day period beginning upon the expiration of the Holdback Period, then to the extent necessary for a managing or co-managing underwriter of an underwritten offering required hereunder to comply with FINRA Rule 2711(f)(4), the Holdback Period shall be extended until 18 days after the earnings release or the occurrence of the material news or event, as the case may be (such period referred to herein as the “ Holdback Extension ”).  The Company may impose stop-transfer instructions with respect to its securities that are subject to the foregoing restriction until the end of such period, including any period of Holdback Extension.

 

(b)           Notwithstanding any other provision contained in this Agreement, the Company shall not include in any underwritten offering any portion of New Common Stock held by any officers, directors or employees of the Company or any of its subsidiaries the inclusion of which the underwriter of such underwritten offering, as the case may be, determines is likely to adversely affect such offering.

 

3.             Registration Procedures .  The Company shall effect the registration and sale of the Registrable Securities in accordance with the intended method of disposition set forth in, and pursuant to, the Resale Shelf Registration Statement and the following provisions shall apply in connection therewith:

 

(a)           (i)            Within 10 Business Days of the filing of the Resale Shelf Registration Statement, the Company shall mail the Notice and Questionnaire to the Holders of Registrable Securities.  No Holder shall be entitled to be named as a selling securityholder in the Resale Shelf Registration Statement as of the Effective Time, and no Holder shall be entitled to use the Prospectus for resales of Registrable Securities at any time, unless such Holder has returned a duly completed and signed Notice and Questionnaire to the Company by the deadline

 

3



 

for response set forth therein and provided any other information reasonably requested in writing by the Company.

 

(ii)           After the Effective Time of the Resale Shelf Registration Statement, the Company shall, upon the request of any Holder of Registrable Securities that is not then an Electing Holder, promptly send a Notice and Questionnaire to such Holder. The Company shall not be required to take any action to name such Holder as a selling securityholder in the Resale Shelf Registration Statement or to enable such Holder to use the Prospectus for resales of Registrable Securities until such Holder has returned a duly completed and signed Notice and Questionnaire to the Company, in which case the Company’s obligations shall be as set forth in Section 1(d) above.

 

(iii)          The term “ Electing Holder ” shall mean any Holder of Registrable Securities that has returned a duly completed and signed Notice and Questionnaire to the Company in accordance with Section 3(a)(i) or 3(a)(ii) hereof.

 

(iv)          Each Electing Holder agrees to furnish promptly to the Company all information required to be disclosed in order to make information previously furnished to the Company by such holder not materially misleading and any other information regarding such holder and the distribution of such holder’s Registrable Securities as the Company may from time to time reasonably request in writing.

 

The Company will as expeditiously as possible:

 

(b)           upon request by a Holder, before filing the Resale Shelf Registration Statement or Prospectus or any amendments or supplements thereto, furnish to such Holder all such documents proposed to be filed requested by such Holder, which documents shall be subject to the review of such Holder and its counsel.  The Company shall use commercially reasonable efforts to reflect the comments that such Holder or its counsel may reasonably propose;

 

(c)           notify in writing each Holder of Registrable Securities of the effectiveness of the Resale Shelf Registration Statement and prepare and file with the Commission such amendments and supplements to such Resale Shelf Registration Statement and Prospectus 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 Resale Shelf Registration Statement until such time as there are no longer any Registrable Securities;

 

(d)           furnish to each seller of Registrable Securities thereunder such number of copies of the Resale Shelf Registration Statement, each amendment and supplement thereto, the Prospectus and such other documents as such seller may reasonably request in order to facilitate the disposition of the Registrable Securities owned by such seller;

 

(e)           use commercially reasonable efforts to register or qualify such Registrable Securities under such other securities or blue sky laws of such jurisdictions as any seller reasonably requests and do any and all other acts and things which may be reasonably necessary or advisable to enable such seller to consummate the disposition in such jurisdictions of the

 

4



 

Registrable Securities owned by such seller ( provided that the Company shall not be required to (i) qualify generally to do business in any jurisdiction where it would not otherwise be required to qualify but for this Section 3(e), (ii) subject itself to taxation in any such jurisdiction or (iii) consent to general service of process in any such jurisdiction);

 

(f)            notify in writing each seller of such Registrable Securities (i) promptly after it receives notice thereof, of the date and time when the Resale Shelf Registration Statement and each post-effective amendment thereto has become effective or a Prospectus has been filed and when any registration or qualification has become effective under a state securities or blue sky law or any exemption thereunder has been obtained, (ii) promptly after receipt thereof, of any request by the Commission for the amendment or supplementing of the Resale Shelf Registration Statement or Prospectus or for additional information, and (iii) at any time when a Prospectus relating thereto is required to be delivered under the Securities Act, of any event as a result of which, the Prospectus (x) contains an untrue statement of a material fact or omits any fact necessary to make the statements therein not misleading in light of the circumstances under which they were made or (y) is otherwise not legally available to support sales of Registrable Securities;

 

(g)           prepare and file promptly with the Commission, and notify the Electing Holders of Registrable Securities prior to the filing of, such amendments or supplements to such Resale Shelf Registration Statement or Prospectus as may be necessary to correct any statements or omissions if, at the time when a Prospectus is required to be delivered under the Securities Act, any event has occurred as the result of which the Prospectus would include an untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading, and, in case any of such holders or any underwriter for any such holders is required to deliver a Prospectus at a time when the Prospectus then in circulation is not in compliance with the Securities Act or the rules and regulations promulgated thereunder, the Company shall use commercially reasonable efforts to prepare promptly upon request of any such holder or underwriter such amendments or supplements to such Resale Shelf Registration Statement and Prospectus as may be necessary in order for the Prospectus to comply with the requirements of the Securities Act and such rules and regulations; provided , that the Company shall not be required to take such action during any Suspension Period.  If the Company notifies the Electing Holders of the occurrence of any event or the existence of any state of facts contemplated by Section 1(d) or Section 3(f) above, each such Holder shall suspend the use of the such Resale Shelf Registration Statement and the Prospectus until the requisite changes to the Prospectus have been made and shall keep confidential any such communication received by it from the Company;

 

(h)           provide a transfer agent and registrar for all such Registrable Securities not later than the Effective Time;

 

(i)            enter into and perform such customary agreements (including underwriting agreements in customary form) and take all such other actions as the Electing Holders holding a majority of the applicable Registrable Securities or the underwriters, if any, reasonably request in order to expedite or facilitate the disposition of such Registrable Securities (including participation in “road shows”, investor presentations and marketing events);

 

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(j)            make available for inspection by any underwriter participating in an underwritten offering, and any attorney, accountant, or other agent retained by any such underwriter, all reasonably requested financial and other records, pertinent corporate documents and properties of the Company, and cause the Company’s officers, directors, employees, and independent accountants to supply all information reasonably requested by any such underwriter, attorney, accountant, or agent in connection with such underwritten offering and assist and, at the request of any participating underwriter, use commercially reasonable efforts to cause such officers or directors to participate in presentations to prospective purchasers; provided , that such Persons shall first agree in writing with the Company that (x) all records, information and documents that are designated in writing by the Company, in good faith, as confidential shall be kept confidential by such Persons, unless such disclosure is required to be made in connection with a court proceeding or required by law, or such records, information or documents become available to the public generally or through a third party without an accompanying obligation of confidentiality and (y) they shall use such records, information and documents solely for the purposes of exercising rights under this Agreement and they shall not engage in trading any securities of the Company until the Company makes such material non-public information publicly available;

 

(k)           take all reasonable actions to ensure that any Free-Writing Prospectus utilized in connection with any underwritten offering hereunder complies in all material respects with the Securities Act, is filed in accordance with the Securities Act to the extent required thereby, is retained in accordance with the Securities Act to the extent required thereby and, when taken together with the related prospectus, will not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading;

 

(l)            otherwise use commercially reasonable efforts to comply with all applicable rules and regulations of the Commission, and make available to its securityholders, as soon as reasonably practicable, an earnings statement covering the period of at least 12 months beginning with the first day of the Company’s first full calendar quarter after the Effective Time, which earnings statement shall satisfy the provisions of Section 11(a) of the Securities Act and Rule 158 thereunder;

 

(m)          use commercially reasonable efforts to prevent the issuance of any stop order suspending the effectiveness of such Resale Shelf Registration Statement, or of any order suspending or preventing the use of the Prospectus or suspending the qualification of any securities included in the Resale Shelf Registration Statement for sale in any jurisdiction, and in the event of the issuance of any such stop order or other such order the Company shall advise the Electing Holders of such stop order or other such order promptly after it shall receive notice or obtain knowledge thereof and shall use commercially reasonable efforts promptly to obtain the withdrawal of such order;

 

(n)           in connection with an underwritten offering, obtain comfort letters, dated the pricing and closing dates under the underwriting agreement and addressed to the underwriters, from the Company’s independent public accountants in customary form and covering such matters of the type customarily covered by comfort letters; and

 

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(o)           if such registration is an underwritten offering, provide a legal opinion of the Company’s counsel, dated the closing date under the underwriting agreement, with respect to the Resale Shelf Registration Statement, each amendment and supplement thereto, the Prospectus (including the preliminary prospectus) and such other documents relating thereto in customary form and covering such matters of the type customarily covered by such opinions, which opinions shall be addressed to the underwriters.  The Company may require each seller of Registrable Securities participating in such underwritten offering to furnish the Company such information regarding such seller and the distribution of such securities as the Company may from time to time reasonably request in writing.

 

4.             Registration Expenses .

 

(a)           Except as otherwise provided herein, all expenses incident to the Company’s performance of or compliance with Sections 1, 3 and 6 of this Agreement, including all registration and filing fees, fees and expenses of compliance with securities or blue sky laws, printing expenses, travel expenses, filing expenses, messenger and delivery expenses, fees and disbursements of custodians, and fees and disbursements of counsel for the Company and of all independent certified public accountants, underwriters including, if necessary, a “qualified independent underwriter” within the meaning of the rules of the Financial Industry Regulatory Authority, Inc. (in each case, excluding discounts and commissions), and other Persons retained by the Company or by the Electing Holders or their affiliates on behalf of the Company (all such expenses being herein called “ Registration Expenses ”), shall be borne by the Company, including that the Company shall pay its internal expenses (including all salaries and expenses of its officers and employees performing legal or accounting duties), the expense of any annual audit or quarterly review, the expense of any liability insurance and the expenses and fees for listing the securities to be registered on each securities exchange on which similar securities issued by the Company are then listed.  Each Electing Holder that sells securities pursuant to an underwritten offering shall bear and pay all underwriting discounts and commissions applicable to the securities sold for such Holder’s account.

 

(b)           In connection with the Resale Shelf Registration Statement, the Company shall reimburse the Electing Holders for the reasonable fees and disbursements of one counsel chosen by the Electing Holders holding a majority of the Registrable Securities.

 

5.             Indemnification .

 

(a)           The Company agrees to indemnify and hold harmless, to the fullest extent permitted by law, each Holder, its officers, directors, managers, agents, and employees and each Person who controls such Holder (within the meaning of the Securities Act) (each an “ Indemnitee ” and, collectively, the “ Indemnitees ”) against any losses, claims, damages, liabilities, joint or several, together with reasonable costs and expenses (including reasonable attorneys’ fees), to which such Indemnitee may become subject under the Securities Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions or proceedings, whether commenced or threatened, in respect thereof) arise out of, are based upon, are caused by or result from (i) any untrue or alleged untrue statement of material fact contained (A) in the Resale Shelf Registration Statement, Prospectus or preliminary prospectus or any amendment thereof or supplement thereto or (B) in any application or other document or communication (in

 

7



 

this Section 5 collectively called an “ application ”) executed by or on behalf of the Company or based upon written information furnished by or on behalf of the Company filed in any jurisdiction in order to qualify any securities covered by the Resale Shelf Registration Statement under the “blue sky” or securities laws thereof, or (ii) any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein not misleading, and the Company will reimburse each such Indemnitee for any reasonable legal or any other reasonable expenses incurred by him, her or it in connection with investigating or defending any such loss, claim, damage, expense, liability, action or proceeding; provided, however, that the Company shall not be liable in any such case to any such Person to the extent that any such loss, claim, damage, liability (or action or proceeding in respect thereof) or expense arises out of, is based upon, is caused by or results from an untrue statement or alleged untrue statement, or omission or alleged omission, made in the Resale Shelf Registration Statement, the Prospectus or preliminary prospectus or any amendment or supplement thereto, or in any application, in reliance upon, and in conformity with, written information prepared and furnished to the Company by such Holder expressly for use therein.  In connection with an underwritten offering, the Company shall provide a customary indemnity to indemnify the underwriters, their officers and directors and each Person who controls such underwriters (within the meaning of the Securities Act) to the same extent as provided above with respect to the indemnification of the Holders.

 

(b)           In connection with the Resale Shelf Registration Statement, each Holder shall furnish to the Company in writing such information and affidavits as the Company reasonably requests for use in connection with the Resale Shelf Registration Statement or Prospectus and, to the fullest extent permitted by law, shall indemnify and hold harmless the other Holders and the Company, and their respective directors, officers, agents and employees and each other Person who controls the Company (within the meaning of the Securities Act) against any losses, claims, damages, liabilities, joint or several, together with reasonable costs and expenses (including reasonable attorney’s fees), to which such indemnified party may become subject under the Securities Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions or proceedings, whether commenced or threatened, in respect thereof) arise out of, are based upon, are caused by or result from (i) any untrue or alleged untrue statement of material fact contained in the Resale Shelf Registration Statement, Prospectus or preliminary prospectus or any amendment thereof or supplement thereto or in any application or (ii) any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein not misleading, but in each case only to the extent that such untrue statement or omission is made in the Resale Shelf Registration Statement, the Prospectus or preliminary prospectus or any amendment or supplement thereto, or in any application, in each case, in reliance upon and in conformity with written information prepared and furnished to the Company by such Holder expressly for use therein; provided, however, that the obligation to indemnify will be several and not joint, as to each Holder and will be limited to the net amount of proceeds received by such holder from the sale of Registrable Securities pursuant to the Resale Shelf Registration Statement.

 

(c)           Any Person entitled to indemnification hereunder will (i) give prompt written notice to the indemnifying party of any claim with respect to which it seeks indemnification (provided that the failure to give prompt notice shall not impair any Person’s right to indemnification hereunder to the extent such failure has not prejudiced the indemnifying

 

8



 

party) and (ii) unless in such indemnified party’s reasonable judgment a conflict of interest between such indemnified and indemnifying parties may exist with respect to such claim, permit such indemnifying party to assume the defense of such claim with counsel reasonably satisfactory to the indemnified party.  The indemnifying party will not be subject to any liability for any settlement made by the indemnified party without its consent (but such consent will not be unreasonably withheld, conditioned or delayed).  An indemnifying party who is not entitled to, or elects not to, assume the defense of a claim will not be obligated to pay the fees and expenses of more than one counsel for all parties indemnified by such indemnifying party with respect to such claim, unless in the reasonable judgment of any indemnified party a conflict of interest may exist between such indemnified party and any other of such indemnified parties with respect to such claim.

 

(d)           The indemnifying party shall not, except with the approval of each indemnified party, consent to entry of any judgment or enter into any settlement which does not include as an unconditional term thereof the giving by the claimant or plaintiff to each indemnified party of a release from all liability in respect to such claim or litigation without any payment or consideration provided by such indemnified party.

 

(e)           If the indemnification provided for in this Section 5 is unavailable to or is insufficient to hold harmless an indemnified party under the provisions above in respect to any losses, claims, damages or liabilities referred to therein, then each indemnifying party shall contribute to the amount paid or payable by such indemnified party as a result of such losses, claims, damages or liabilities (i) in such proportion as is appropriate to reflect the relative fault of the Company on the one hand and the sellers of Registrable Securities and any other sellers participating in the Resale Shelf Registration Statement on the other hand or (ii) if the allocation provided by clause (i) above is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative faults referred to in clause (i) above but also the relative benefit of the Company on the one hand and of the sellers of Registrable Securities and any other sellers participating in the Resale Shelf Registration Statement on the other in connection with the Resale Shelf Registration Statement or omissions which resulted in such losses, claims, damages or liabilities, as well as any other relevant equitable considerations.  The relative benefits received by the Company on the one hand and the sellers of Registrable Securities and any other sellers participating in the Resale Shelf Registration Statement on the other shall be deemed to be in the same proportion as the total net proceeds from the offering (before deducting expenses) to the Company bear to the total net proceeds from the offering (before deducting expenses) to the sellers of Registrable Securities and any other sellers participating in the Resale Shelf Registration Statement.  The relative fault of the Company on the one hand and of the sellers of Registrable Securities and any other sellers participating in the Resale Shelf Registration Statement on the other shall be determined by reference to, among other things, whether the untrue statement or alleged omission to state a material fact relates to information supplied by the Company or by the sellers of Registrable Securities or other sellers participating in the Resale Shelf Registration Statement and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission.

 

The Company and the sellers of Registrable Securities agree that it would not be just and equitable if contribution pursuant to this Section 5 were determined by pro rata

 

9



 

allocation (even if the sellers of Registrable Securities were treated as one entity for such purpose) or by any other method of allocation which does not take account of the equitable considerations referred to in the immediately preceding paragraph.  The amount paid or payable by an indemnified party as a result of the losses, claims, damages and liabilities referred to in the immediately preceding paragraph shall be deemed to include, subject to the limitations set forth above, any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any such action or claim.  Notwithstanding the provisions of this Section 5, no seller of Registrable Securities shall be required to contribute any amount in excess of the net proceeds received by such seller from the sale of Registrable Securities covered by the the Resale Shelf Registration Statement filed pursuant hereto.  No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation.

 

(f)            The indemnification and contribution by any such party provided for under this Agreement shall be in addition to any other rights to indemnification or contribution which any indemnified party may have pursuant to law or contract and will remain in full force and effect regardless of any investigation made or omitted by or on behalf of the indemnified party or any officer, director or controlling Person of such indemnified party and will survive the transfer of securities.

 

6.             Participation in Underwritten Registrations .

 

(a)           No Electing Holder may participate in any underwritten offering unless such Holder (i) agrees to sell such Holder’s Registrable Securities on the basis provided in any underwriting arrangements approved by the Electing Holder or Electing Holders entitled hereunder to approve such arrangements (including pursuant to the terms of any over-allotment or “green shoe” option requested by the managing underwriter(s), provided that no Electing Holder will be required to sell more than the amount of Registrable Securities that such holder has requested the Company to include in any underwritten offering) and (ii) completes and executes all questionnaires, powers of attorney, indemnities, underwriting agreements and other documents reasonably required under the terms of such underwriting arrangements.

 

(b)           Each Electing Holder that is participating in any underwritten offering hereunder agrees that, upon receipt of any notice from the Company of the happening of any event of the kind described in Section 3(f), such Person will forthwith discontinue the disposition of its Registrable Securities pursuant to the Resale Shelf Registration Statement until such holder’s receipt of the copies of a supplemented or amended Prospectus as contemplated by Section 3(f).

 

7.             Current Public Information .  At all times after the Company has filed the Resale Shelf Registration Statement, the Company shall, except as otherwise agreed to in writing by the Required Holders, file all reports required to be filed by it under the Securities Act and the Exchange Act and the rules and regulations adopted by the Commission thereunder, and will take such further action as any Holder or Holders of Registrable Securities may reasonably request, all to the extent required to enable such Holders to sell Registrable Securities pursuant to Rule 144 adopted by the Commission under the Securities Act (as such rule may be amended from time to time) or any similar rule or regulation hereafter adopted by the Commission.

 

10



 

8.             Definitions .

 

Agreement ” has the meaning set forth in the preamble.

 

application ” has the meaning set forth in Section 5.

 

Bankruptcy Court ” has the meaning set forth in the preamble.

 

Commission ” has the meaning set forth in Section 1(a).

 

Commitment Agreement ” has the meaning set forth in the preamble.

 

Company ” has the meaning set forth the preamble.

 

Effective Period ” has the meaning set forth in Section 1(b).

 

Effective Time ” has the meaning set forth in Section 1(a).

 

Electing Holder ” has the meaning set forth in Section 3(a)(iii).

 

Exchange Act ” has the meaning set forth in Section 4(a).

 

Free Writing Prospectus ” means a free-writing prospectus, as defined in Rule 405 of the Securities Act.

 

Holdback Extension ” has the meaning set forth in Section 2(a).

 

Holdback Period ” has the meaning set forth in Section 2(a).

 

Holder(s) ” has the meaning set forth in the preamble.

 

Indemnittee ” and “ Indemnitees ” have the meanings set forth in Section 5(a).

 

New Common Stock ” has the meaning set forth in the preamble.

 

New Shares ” has the meaning set forth in the preamble.

 

Notice and Questionnaire means a Notice and Questionnaire substantially in the form of Appendix A hereto.

 

Person ” means an individual, a partnership, a joint venture, an association, a joint stock company, a corporation, a limited liability company, a trust, an unincorporated organization, an investment fund, any other business entity or a governmental entity or any department, agency or political subdivision thereof.

 

Plan ” has the meaning set forth in the preamble.

 

Prohibited Sale ” has the meaning set forth in Section 2(a).

 

11



 

Prospectus ” means the prospectus (including, without limitation, any preliminary prospectus, any final prospectus and any prospectus that discloses information previously omitted from a prospectus filed as part of an effective registration statement in reliance upon Rule 430A, 430B or 430C under the Securities Act) included in the Resale Shelf Registration Statement, as amended or supplemented by any prospectus supplement with respect to the terms of the offering of any portion of the Registrable Securities covered by the Resale Shelf Registration Statement and by all other amendments and supplements to such prospectus, including all material incorporated by reference in such prospectus and all documents filed after the date of such prospectus by the Company under the Exchange Act and incorporated by reference therein.

 

Registration Expenses ” has the meaning set forth in Section 4(a).

 

Registrable Securities ” has the meaning set forth in the preamble.

 

Required Holders ” has the meaning set forth in Section 1(e).

 

Resale Shelf Registration Statement”   has the meaning set forth in Section 1(a).

 

Securities Act ” has the meaning set forth in the preamble.

 

Suspension Period ” has the meaning set forth in Section 1(d).

 

underwritten offering ” means an offering in which Registrable Securities are sold to one or more underwriters (as defined in Section 2(a)(11) of the Securities Act) for resale to the public.

 

9.             Miscellaneous .

 

(a)           Notices .  All notices, demands or other communications to be given or delivered under or by reason of the provisions of this Agreement shall be in writing and shall be deemed to have been given or made when (a) delivered personally to the recipient, (b) sent by electronic mail or facsimile to the recipient (with hard copy sent to the recipient by reputable overnight courier service (charges prepaid) that same day) if sent by before 5:00 p.m. local time of the recipient on a business day, and otherwise on the next business day, or (c) one business day after being sent to the recipient by reputable overnight courier service (charges prepaid).  Such notices, demands and other communications shall be sent to the Company at the address set forth below and to any other recipient at the address indicated on the Schedule I attached hereto or to such other address or to the attention of such other Person as the recipient party has specified by prior written notice to the sending party.  The Company’s address is as follows:

 

Halcón Resources Corporation

1000 Louisiana Street

Suite 6700

Houston, Texas 77002

Attention: David S. Elkouri

Facsimile:  (713) 589-8019

Email: delkouri@halconresources.com

 

12



 

A copy of each notice hereunder (which shall not constitute notice) to a Holder shall be sent to :

 

Latham & Watkins LLP

330 N. Wabash Ave.

Suite 2800

Chicago, IL  60611

Attention: Richard Levy, Esq.

Facsimile:  (312) 993-9767

 

(b)           No Inconsistent Agreements .  The Company will not hereafter enter into any agreement with respect to its securities which is inconsistent with or violates the rights granted to the Holders of Registrable Securities in this Agreement.

 

(c)           Calculation of Percentage; Securities Held by the Company .  Whenever the consent or approval of Holders of a specified percentage of Registrable Securities is required hereunder, Registrable Securities held by the Company or its affiliates (other than Holders of Registrable Securities if such Holders are deemed to be affiliates solely by reason of their holdings of such Registrable Securities) shall not be counted in determining whether such consent or approval was given by the Holders of such required percentage.

 

(d)           Adjustments Affecting Registrable Securities .  The Company will not take any action, or permit any change to occur, with respect to its securities which would materially and adversely affect the ability of the Holders of Registrable Securities to include such Registrable Securities in the Resale Shelf Registration Statement undertaken pursuant to this Agreement or which would materially and adversely affect the marketability of such Registrable Securities in such registration (including effecting a stock split, combination of shares or other recapitalization).

 

(e)           Remedies .  Any Person having rights under any provision of this Agreement shall be entitled to enforce such rights specifically to recover damages caused by reason of any breach of any provision of this Agreement and to exercise all other rights granted by law.  The parties hereto agree and acknowledge that money damages may not be an adequate remedy for any breach of the provisions of this Agreement and that any party may in its sole discretion apply to any court of law or equity of competent jurisdiction (without posting any bond or other security) for specific performance and for other injunctive relief in order to enforce or prevent violation of the provisions of this Agreement.

 

(f)            Amendments and Waivers .  Except as otherwise provided herein, no modification, amendment or waiver of any provision of this Agreement shall be effective against the Company or the Holders unless such modification, amendment or waiver is approved in writing by the Company and the Required Holders.  No failure by any party to insist upon the strict performance of any covenant, duty, agreement, or condition of this Agreement or to exercise any right or remedy consequent upon a breach thereof shall constitute a waiver of any such breach or any other covenant, duty, agreement, or condition, and shall not affect the right of such party thereafter to enforce each and every provision in accordance with its terms.  An

 

13



 

amendment or modification of this Agreement to add a party hereto and to grant such party registration rights will be effective against the Company and all Holders of Registrable Securities if such modification, amendment or waiver is approved in writing by the Company and the Required Holders.

 

(g)           Successors and Assigns .  This Agreement shall be binding upon and inure to the benefit of and be enforceable by the parties hereto (and the Persons specifically identified in Section 5) and their respective successors and assigns.  In addition, and whether or not any express assignment shall have been made, the provisions of this Agreement which are for the benefit of the Holders of Registrable Securities (or any portion thereof) as such shall be for the benefit of and enforceable by any subsequent holder of any Registrable Securities (or of such portion thereof); provided , that such subsequent holder of Registrable Securities shall be required to execute a joinder to this Agreement agreeing to be bound by its terms.

 

(h)           Severability .  Whenever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under any applicable law or rule in any jurisdiction, such invalidity, illegality or unenforceability shall not affect any other provision or the effectiveness or validity of any provision in any other jurisdiction, and this Agreement shall be reformed, construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provision had never been contained herein.

 

(i)            Entire Agreement .  Except as otherwise expressly set forth herein, this document embodies the complete agreement and understanding among the parties hereto with respect to the subject matter hereof and supersedes and preempts any prior understandings, agreements or representations by or among the parties, written or oral, which may have related to the subject matter hereof in any way.

 

(j)            Counterparts; Facsimile Signature .  This Agreement may be executed simultaneously in two or more counterparts, any one of which need not contain the signatures of more than one party, but all such counterparts taken together will constitute one and the same Agreement.  This Agreement may be executed by facsimile signature or by .pdf or similar attachment to electronic mail.

 

(k)           Descriptive Headings .  The descriptive headings of this Agreement are inserted for convenience only and do not constitute a part of this Agreement.

 

(l)            Governing Law .  All issues and questions concerning the relative rights and obligations of the Company and the Holders under this Agreement and the construction, validity, interpretation and enforceability of this Agreement shall be governed by, and construed in accordance with, the laws of the State of New York, without giving effect to any choice of law or conflict of law rules or provisions (whether of the State of New York or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of New York.

 

(m)          Mutual Waiver of Jury Trial .  BECAUSE DISPUTES ARISING IN CONNECTION WITH COMPLEX TRANSACTIONS ARE MOST QUICKLY AND ECONOMICALLY RESOLVED BY AN EXPERIENCED AND EXPERT PERSON AND

 

14



 

THE PARTIES WISH APPLICABLE STATE AND FEDERAL LAWS TO APPLY (RATHER THAN ARBITRATION RULES), THE PARTIES DESIRE THAT THEIR DISPUTES BE RESOLVED BY A JUDGE APPLYING SUCH APPLICABLE LAWS.  THEREFORE, TO ACHIEVE THE BEST COMBINATION OF THE BENEFITS OF THE JUDICIAL SYSTEM AND OF ARBITRATION, EACH PARTY TO THIS AGREEMENT HEREBY WAIVES ALL RIGHTS TO TRIAL BY JURY IN ANY ACTION, SUIT OR PROCEEDING BROUGHT TO RESOLVE ANY DISPUTE BETWEEN OR AMONG ANY OF THE PARTIES HERETO, WHETHER ARISING IN CONTRACT, TORT OR OTHERWISE, ARISING OUT OF, CONNECTED WITH, RELATED OR INCIDENTAL TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.

 

(n)           Business Days .  If any time period for giving notice or taking action hereunder expires on a day which is a Saturday, Sunday or legal holiday in the state in which the Company’s chief-executive office is located, the time period shall automatically be extended to the business day immediately following such Saturday, Sunday or legal holiday.

 

* * * * *

 

15



 

IN WITNESS WHEREOF, the parties hereto have executed this Registration Rights Agreement as of the date first set forth above.

 

 

 

HALCÓN RESOURCES CORPORATION

 

 

 

 

 

 

By:

/s/ Floyd C. Wilson

 

 

Name: Floyd C. Wilson

 

 

Title: Chairman and Chief Executive Officer

 

[Signature Page to Registration Rights Agreement]

 



 

The foregoing Registration

 

Rights Agreement is hereby confirmed

 

and accepted as of the date first

 

set forth above.

 

 

 

HOLDERS

 

 

 

 

Name:

Franklin Advisers, Inc., as investment manager on behalf of certain funds and accounts

 

 

 

 

 

By:

/s/ Glenn Voyles

 

 

 

 

 

 

 

Name:

Glenn Voyles

 

 

 

 

 

 

 

 

Title:

VP

 

 

 

 

 

 

Address:

One Franklin Parkway
San Mateo, CA 94403

 

 

[Signature Page to Registration Rights Agreement]

 



 

The foregoing Registration

 

Rights Agreement is hereby confirmed

 

and accepted as of the date first

 

set forth above.

 

 

 

HOLDERS

 

 

 

 

Name:

Ares Management LLC, as investment manager of certain accounts as beneficial owners

 

 

 

 

 

By:

/s/ Jeff Moore

 

 

 

 

 

 

 

Name:

Jeff Moore

 

 

 

 

 

 

 

 

Title:

Vice President

 

 

 

 

 

 

Address:

Ares Management LLC
2000 Avenue of the Stars
12
th  Floor
Los Angeles, California 90067
Phone: (310) 201-4137
Attention: Jeff Moore
Email: moore@aresmgmt.com

 

 

[Signature Page to Registration Rights Agreement]

 



 

Schedule I
Holders

 

Name and Address of Holder

 

Number of New Shares

 

 

 

Ares Management LLC, as investment manager of certain accounts as beneficial owners
c/o Ares Management LLC
2000 Avenue of the Stars
12th Floor
Los Angeles, California 90067

 

17,981,878

 

 

 

Franklin Advisers, Inc., as investment manager on behalf of certain funds and accounts
c/o Franklin Advisers, Inc.
One Franklin Pkwy.
San Mateo, CA 94403

 

33,822,361

 



 

Appendix A

 

Notice and Questionnaire

 

The undersigned beneficial holder of common stock, par value $0.0001 per share, of Halcón Resources Corporation (the “Company”), which are Registrable Securities, understands that the Company has filed with the Securities and Exchange Commission (the “Commission”) a registration statement (the “Resale Shelf Registration Statement”) for the registration and resale under Rule 415 of the Securities Act of 1933, as amended (the “Securities Act”), of the Registrable Securities, in accordance with the terms of the registration rights agreement, dated as of September 9, 2016 (the “Registration Rights Agreement”), among the Company and the Holders named therein. A copy of the Registration Rights Agreement is available from the Company upon request at the address set forth below. All capitalized terms not otherwise defined herein shall have the meaning ascribed thereto in the Registration Rights Agreement.

 

Each Holder is entitled to the benefits of the Registration Rights Agreement in accordance with Section 9(g) of the Registration Rights Agreement. In order to sell, or otherwise dispose of, any Registrable Securities pursuant to the Resale Shelf Registration Statement, a Holder of Registrable Securities generally will be required to be named as a selling securityholder in the related prospectus, deliver a prospectus to purchasers of Registrable Securities and be bound by those provisions of the Registration Rights Agreement applicable to such Holder (including certain indemnification provisions as described below). Holders that do not complete this Notice and Questionnaire and deliver it to the Company as provided below will not be named as selling securityholders in the prospectus and, therefore, will not be permitted to sell any Registrable Securities pursuant to the Resale Shelf Registration Statement.

 

Certain legal consequences arise from being named as a selling securityholder in the Resale Shelf Registration Statement and the related prospectus. Accordingly, holders and beneficial owners of Registrable Securities are advised to consult their own securities law counsel regarding the consequences of being named or not being named as a selling securityholder in the Resale Shelf Registration Statement and the related prospectus.

 

NOTICE

 

The undersigned Holder (the “Selling Securityholder”) of Registrable Securities hereby gives notice to the Company of its intention to sell or otherwise dispose of Registrable Securities beneficially owned by it and listed below in Item 3 (unless otherwise specified under such Item 3) pursuant to the Resale Shelf Registration Statement. The undersigned, by signing and returning this Notice and Questionnaire, understands that it will be bound by the terms and conditions of this Notice and Questionnaire and the Registration Rights Agreement.

 

Pursuant to the Registration Rights Agreement, the undersigned has agreed to indemnify and hold harmless the Company’s directors and officers and each person, if any, who controls the Company within the meaning of either Section 15 of the Securities Act or Section 20 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), from and against certain losses insofar as such losses arise in connection with statements concerning the undersigned that are made in the Resale Shelf Registration Statement or the related prospectus in reliance upon the information provided in this Notice and Questionnaire.

 

A- 1



 

If the Selling Securityholder transfers all or any portion of the Registrable Securities listed in Item 3 below after the date on which such information is provided to the Company, the Selling Securityholder agrees to notify the transferee(s) at the time of the transfer of its rights and obligations under this Notice and Questionnaire and the Registration Rights Agreement.

 

QUESTIONNAIRE

 

Please respond to every item, even if your response is “none.” If you need more space for any response, please attach additional sheets of paper. Please be sure to indicate your name and the number of the item being responded to on each such additional sheet of paper, and to sign each such additional sheet of paper before attaching it to this Questionnaire. Please note that you may be asked to answer additional questions depending on your responses to the following questions.

 

If you have any questions about the contents of this Questionnaire or as to who should complete this Questionnaire, please contact David S. Elkouri of the Company at telephone number: ( 832) 538-0514.

 

The undersigned hereby provides the following information to the Company and represents and warrants that such information is accurate and complete:

 

1.              Your Identity and Background as the Beneficial Owner of the Registrable Securities.

 

(a)            Your full legal name:

 

 

(b)            Your business address (including street address) (or residence if no business address), telephone number and facsimile number:

 

Address:

 

 

Telephone No.:

 

Fax No.:

 

(c)            Are you a broker-dealer registered pursuant to Section 15 of the Exchange Act?

 

o Yes.

 

o No.

 

A- 2



 

(d)            If your response to Item 1(c) above is no, are you an “affiliate” of a broker-dealer registered pursuant to Section 15 of the Exchange Act?

 

o Yes.

 

o No.

 

For the purposes of this Item 1(d), an “affiliate” of a registered broker-dealer includes any person that directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, such broker-dealer, and does not include any individuals employed by such broker-dealer or its affiliates.

 

(e)            Full legal name of person through which you hold the Registrable Securities (i.e., name of your broker or the DTC participant, if applicable, through which your Registrable Securities are held):

 

Name of Broker:

 

DTC No.:

 

Contact person:

 

Telephone No.:

 

2.              Your Relationship with the Company.

 

(a)            Have you or any of your affiliates, officers, directors or principal equity holders (owners of 5% or more of the equity securities of the undersigned) held any position or office or have you had any other material relationship with the Company (or its predecessors or affiliates) within the past three years?

 

o Yes.

 

o No.

 

(b)            If your response to Item 2(a) above is yes, please state the nature and duration of your relationship with the Company:

 

 

 

3.              Your Interest in the Registrable Securities.

 

(a)            State the type and amount of Registrable Securities beneficially owned by you:

 

A- 3



 

State the CUSIP No(s). of such Registrable Securities beneficially owned by you:

 

 

(b)            State the type and amount of Registrable Securities beneficially owned by you to be sold or otherwise disposed of pursuant to the Resale Shelf Registration Statement (if an amount other than all of the Registrable Securities set forth in    your response to Item 3(a) above):

 

 

State the CUSIP No(s). of such Registrable Securities beneficially owned by you:

 

 

(c)            Other than as set forth in your response to Item 3(a) above, do you beneficially own any other securities of the Company?

 

o Yes.

 

o No.

 

(d)            If your answer to Item 3(b) above is yes, state the type, the aggregate amount and CUSIP No. of such other securities of the Company beneficially owned by you:

 

Type:

 

Aggregate amount:

 

CUSIP No.:

 

(e)            Did you acquire the securities listed in Item 3(a) above in the ordinary course of business?

 

o Yes.

 

o No.

 

(f)             At the time of your purchase of the securities listed in Item 3(a) above, did you have any agreements or understandings, direct or indirect, with any person to distribute the securities?

 

o Yes.

 

o No.

 

A- 4



 

(g)            If your response to Item 3(f) above is yes, please describe such agreements or understandings:

 

 

 

4.              Nature of your Beneficial Ownership.

 

(a)            Check if the beneficial owner set forth in your response to Item 1(a) is any of the below:

 

(i)             A reporting company under the Exchange Act. o

 

(ii)            A majority-owned subsidiary of a reporting company under the Exchange Act. o

 

(iii)           A registered investment fund under the 1940 Act. o

 

(b)            If the beneficial owner of the Registrable Securities set forth in your response to Item I (a) above is a limited partnership, state the names of the general partner(s) of such limited partnership:

 

 

 

(i)             With respect to each general partner listed in Item 4(b) above who is not a natural person and is not publicly-held, name each shareholder (or holder of partnership interests, if applicable) of such general partner. If any of these named shareholders are not natural persons or publicly-held entities, please provide the same information. This process should be repeated until you reach natural persons or a publicly-held entity.

 

A- 5



 

(c)            Name your controlling shareholder(s) (the “Controlling Entity”). If the Controlling Entity is not a natural person and is not a publicly-held entity, name each shareholder of such Controlling Entity. If any of these named shareholders are not natural persons or publicly-held entities, please provide the same information. This process should be repeated until you reach natural persons or a publicly-held entity.

 

(i)             (A) Full legal name of Controlling Entity(ies) or natural person(s) who has/have sole or shared voting or dispositive power over the Registrable Securities:

 

 

 

(B) Business address (including street address) (or residence if no business address), telephone number and facsimile number of such person(s):

 

Address:

 

 

Telephone No.:

 

 

Fax No.:

 

 

(C) Name of shareholders:

 

 

(ii)            (A) Full legal name of Controlling Entity(ies):

 

A- 6



 

(B) Business address (including street address) (or residence if no business address), telephone number and facsimile number of such person(s):

 

Address:

 

 

 

Telephone No.:

 

 

 

Fax No.:

 

 

 

(iii)           Name of shareholders:

 

 

 

5.              Plan of Distribution.

 

Except as set forth below, the undersigned (including its donees or pledgees) intends to distribute the Registrable Securities listed above in Item 3 pursuant to the Resale Shelf Registration Statement only as follows (if at all): Such Registrable Securities may be sold from time to time directly by the undersigned or, alternatively, through underwriters, broker-dealers or agents. If the Registrable Securities are sold through underwriters, broker-dealers or agents, the Selling Securityholder will be responsible for underwriting discounts or commissions or agents’ commissions. Such Registrable Securities may be sold in one or more transactions at fixed prices, at prevailing market prices at the time of sale, at varying prices determined at the time of sale or at negotiated prices. Such sales may be effected in transactions (which may involve block transactions) (i) on any national securities exchange or quotation service on which the Registrable Securities may be listed or quoted at the time of sale, (ii) in the over-the-counter market, or (iii) in transactions otherwise than on such exchanges or services or in the over-the-counter market. The Selling Securityholder may pledge or grant a security interest in some or all of the Registrable Securities owned by it and, if it defaults in the performance of its secured obligations, the pledgees or secured parties may offer and sell the Registrable Securities from time to time pursuant to the prospectus. The Selling Securityholder also may transfer and donate the Registrable Securities in other circumstances in which case the transferees, donees, pledgees or other successors in interest will be the selling securityholder for purposes of the prospectus.

 

A- 7



 

State any exceptions here:

 

 

Note: In no event will such method(s) of distribution take the form of an underwritten offering of the Registrable Securities without the prior written agreement of the Company.

 

The undersigned acknowledges its obligation to comply with the provisions of the Exchange Act and the rules thereunder relating to stock manipulation, particularly Regulation M thereunder (or any successor rules or regulations), in connection with any offering of Registrable Securities pursuant to the Registration Rights Agreement. The undersigned agrees that neither it nor any person acting on its behalf will engage in any transaction in violation of such provisions.

 

The undersigned beneficial owner and selling securityholder hereby acknowledges its obligations under the Registration Rights Agreement to indemnify and hold harmless certain persons as set forth therein. Pursuant to the Registration Rights Agreement, the Company has agreed under certain circumstances to indemnify the undersigned beneficial owner and selling securityholder against certain liabilities.

 

In accordance with the undersigned’s obligation under the Registration Rights Agreement to provide such information as may be required by law for inclusion in the Resale Shelf Registration Statement, the undersigned agrees to promptly notify the Company of any inaccuracies or changes in the information provided herein that may occur subsequent to the date hereof at any time while the Resale Shelf Registration Statement remains effective.

 

All notices to the beneficial owner hereunder and pursuant to the Registration Rights Agreement shall be made in writing to the undersigned at the address set forth in Item 1(b) of this Notice and Questionnaire.

 

By signing below, the undersigned acknowledges that it is the beneficial owner of the Registrable Securities set forth herein, represents that the information provided herein is accurate, consents to the disclosure of the information contained in this Notice and Questionnaire and the inclusion of such information in the Resale Shelf Registration Statement and the related prospectus. The undersigned understands that such information will be relied upon by the Company in connection with the preparation or amendment of the Resale Shelf Registration Statement and the related prospectus.

 

Once this Notice and Questionnaire is executed by the undersigned beneficial owner and received by the Company, the terms of this Notice and Questionnaire, and the representations and warranties contained herein, shall be binding on, shall inure to the benefit of and shall be enforceable by the respective successors, heirs, personal representatives and assigns of the Company and the undersigned beneficial owner. This Notice and Questionnaire shall be governed in all respects by the laws of the State of New York, without giving effect to rules governing the conflict of laws.

 

A- 8



 

IN WITNESS WHEREOF , the undersigned, by authority duly given, has caused this Notice and Questionnaire to be executed and delivered either in person or by its duly authorized agent.

 

 

NAME OF BENEFICIAL OWNER:

 

 

 

 

 

(Please Print)

 

 

 

Signature:

 

 

 

 

Date:

 

 

PLEASE RETURN THE COMPLETED AND EXECUTED NOTICE AND
QUESTIONNAIRE TO THE COMPANY AS FOLLOWS:

 

 

Halcón Resources Corporation

 

1000 Louisiana Street

 

Suite 6700

 

Houston, Texas 77002

 

Attention: David S. Elkouri

 

Facsimile: (713) 589-8019

 

Email: delkouri@halconresources.com

 

A- 9


Exhibit 10.3

 

EXECUTION VERSION

 

 

 

WARRANT AGREEMENT

 

between

 

HALCÓN RESOURCES CORPORATION,

 

AS ISSUER

 

and

 

U.S. BANK NATIONAL ASSOCIATION,

 

AS WARRANT AGENT

 

September 9, 2016

 

 

 



 

TABLE OF CONTENTS

 

 

 

Page

 

 

 

SECTION 1.

CERTAIN DEFINED TERMS

1

 

 

 

SECTION 2.

APPOINTMENT OF WARRANT AGENT

3

 

 

 

SECTION 3.

ISSUANCE OF WARRANTS; FORM, EXECUTION AND DELIVERY

3

 

 

 

SECTION 4.

TRANSFER OR EXCHANGE

5

 

 

 

SECTION 5.

DURATION AND EXERCISE OF WARRANTS

8

 

 

 

SECTION 6.

ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF SHARES PURCHASABLE OR NUMBER OF WARRANTS

12

 

 

 

SECTION 7.

CANCELLATION OF WARRANTS

14

 

 

 

SECTION 8.

MUTILATED OR MISSING WARRANT CERTIFICATES

15

 

 

 

SECTION 9.

MERGER, CONSOLIDATION, ETC.

15

 

 

 

SECTION 10.

RESERVATION OF SHARES; CERTAIN ACTIONS

15

 

 

 

SECTION 11.

NOTIFICATION OF CERTAIN EVENTS; CORPORATE ACTION

16

 

 

 

SECTION 12.

WARRANT AGENT

17

 

 

 

SECTION 13.

SEVERABILITY

21

 

 

 

SECTION 14.

WARRANTHOLDER NOT DEEMED A STOCKHOLDER

22

 

 

 

SECTION 15.

NOTICES TO COMPANY AND WARRANT AGENT

22

 

 

 

SECTION 16.

SUPPLEMENTS AND AMENDMENTS

23

 

 

 

SECTION 17.

TERMINATION

23

 

 

 

SECTION 18.

GOVERNING LAW AND CONSENT TO FORUM

23

 

 

 

SECTION 19.

WAIVER OF JURY TRIAL

23

 

 

 

SECTION 20.

BENEFITS OF THIS AGREEMENT

23

 

 

 

SECTION 21.

COUNTERPARTS

24

 

 

 

SECTION 22.

HEADINGS

24

 

 

 

EXHIBIT A

FORM OF WARRANT CERTIFICATE

 

EXHIBIT B

FORM OF ASSIGNMENT

 

 

i



 

This WARRANT AGREEMENT (this “ Agreement ”) is dated as of September 9, 2016, between Halcón Resources Corporation, a Delaware corporation, as issuer (the “ Company ”), and U.S. Bank National Association, as warrant agent (the “ Warrant Agent ”).

 

W I T N E S S E T H

 

WHEREAS, in connection with the financial restructuring of the Company and certain of its subsidiaries (collectively, the “ Debtors ”) pursuant to the Debtors’ Joint Prepackaged Plan of Reorganization (the “ Plan ”) under chapter 11 of title 11 of the United States Code, 11 U.S.C. §§101 et. seq. , the Company has agreed to issue warrants (the “ Warrants ”) which, in the aggregate, are exercisable to purchase up to 4,736,842 shares (“ Shares ”) of the Company’s common stock, par value $0.0001 per share, subject to adjustment as provided herein (the “ Common Stock ”);

 

WHEREAS, the Company desires the Warrant Agent to act on behalf of the Company, and the Warrant Agent is willing to so act, in connection with the issuance, registration, transfer, exchange, replacement, exercise and cancellation of the Warrants;

 

WHEREAS, the Warrant Agent, at the request of the Company, has agreed to act as the agent of the Company in connection with the issuance, registration, transfer, exchange, replacement, exercise, and cancellation of the Warrants as provided herein;

 

WHEREAS, the Company desires to enter into this Agreement to set forth the terms and conditions of the Warrants and the rights of the holders thereof.

 

NOW, THEREFORE, in consideration of the premises and mutual agreements herein set forth, the parties hereto agree as follows:

 

SECTION 1.             Certain Defined Terms .  Whenever used in this Agreement, the following words and phrases, unless the context otherwise requires, shall have the meanings specified in this Section.

 

Agreement ” has the meaning specified in the preamble hereof.

 

Appropriate Officers ” has the meaning specified in Section 3(c) hereof.

 

Business Day ” means any date other than a Saturday or a Sunday or a day on which commercial banking institutions in New York City, New York are authorized or required by law to be closed; provided that, in determining the period within which certificates or Warrants are to be issued and delivered at a time when shares of Common Stock (or Other Securities) are listed or admitted to trading on any national securities exchange or in the over-the-counter market and in determining Market Price of any securities listed or admitted to trading on any national securities exchange or in the over-the-counter market, “Business Day” shall mean any day when the principal exchange on which such securities are then listed or admitted to trading is open for trading or, if such securities are traded in the over-the counter market in the United States, such market is open for trading.

 

Cashless Exercise ” has the meaning specified in Section 5(c)(ii) hereof.

 



 

Common Stock ” has the meaning specified in the recitals hereof.

 

Depository ” has the meaning specified in Section 3(b) hereof.

 

Effective Date ” has the meaning specified in the Plan.

 

Exercise Price ” means the initial Exercise Price for the Warrants as set forth in Section 5(b) hereof, as it may be adjusted from time to time as provided herein.

 

Expiration Date ” has the meaning specified in Section 5(a) hereof.

 

Ex-Date ” means, when used with respect to any issuance of or distribution in respect of the Common Stock or any Other Securities, the first date on which the Common Stock or such Other Securities trade without the right to receive such issuance or distribution.

 

Global Warrant Certificate ” has the meaning specified in Section 3(b) hereof.

 

Holder ” means the beneficial holder or beneficial holders of Warrant Certificates.

 

Individual Warrant Certificate ” has the meaning specified in Section 3(b) hereof.

 

Market Price ” means with respect to Common Stock or any Other Security the arithmetic average of the VWAP of a share or single unit of such securities for the last five trading days on which such security traded (or such lesser number of trading days as such security has been listed, quoted or traded) immediately preceding the date of measurement, or, if the security is not listed or quoted on the New York Stock Exchange, NASDAQ Stock Market or a U.S. national or regional securities exchange, the average of the reported closing bid and asked prices of such security on such dates in the over-the-counter market or a comparable system as shown by a system of automated dissemination of quotations of securities prices then in common use comparable to the National Association of Securities Dealers, Inc. Automated Quotations System; provided , however , that if there is otherwise no established trading market for such security, then “Market Price” means the value of such Common Stock or Other Security as determined reasonably and in good faith by the Board of Directors of the Company.

 

Other Securities ” or “ Other Security ” means any stock (other than Common Stock) and other securities of the Company or any other Person that the Holders of the Warrants at any time shall be entitled to receive or shall have received, upon the exercise of the Warrants, in lieu of or in addition to Common Stock, or that at any time shall be issuable or shall have been issued in exchange for or in replacement of Common Stock or Other Securities.

 

Person ” means any individual, corporation, limited liability company, partnership, firm, joint venture, association, joint-stock company, trust or other entity.

 

Plan ” has the meaning specified in the recitals hereof.

 

Settlement Date ” means the date that is three Business Days after a Warrant Exercise Notice is delivered.

 

2



 

Shares ” has the meaning specified in the recitals hereof.

 

VWAP ” means for any trading day, the price for securities (including Common Stock) determined by the daily volume weighted average price per unit of securities for such trading day on the New York Stock Exchange or NASDAQ Stock Market, as the case may be, in each case, for the regular trading session (including any extensions thereof, without regard to pre-open or after hours trading outside of such regular trading session), or if such securities are not listed or quoted on the New York Stock Exchange or NASDAQ Stock Market, as reported by the principal U.S. national or regional securities exchange on which such securities are then listed or quoted, whichever is applicable, as published by Bloomberg at 4:15 P.M., New York City time (or 15 minutes following the end of any extension of the regular trading session), on such trading day.

 

Warrant Agent ” has the meaning specified in the preamble hereof and shall include any successor Warrant Agent hereunder.

 

Warrant Agent Office ” has the meaning specified in Section 4(g)(iv) hereof.

 

Warrant Certificate ” has the meaning specified in Section 3(b) hereof.

 

Warrant Exercise Notice ” has the meaning specified Section 5(c)(i) hereof.

 

Warrant Register ” has the meaning specified in Section 3(d) hereof.

 

Warrants ” has the meaning specified in the recitals hereof.

 

Warrant Shares ” has the meaning specified in Section 3(a) hereof.

 

SECTION 2.             Appointment of Warrant Agent The Company hereby appoints the Warrant Agent to act as agent for the Company in accordance with the instructions set forth in this Agreement, and the Warrant Agent hereby accepts such appointment, upon the terms and conditions hereinafter set forth.

 

SECTION 3.             Issuance of Warrants; Form, Execution and Delivery .

 

(a)           Issuance of Warrants .  On the Effective Date or a date that is as soon as reasonably practicable after the Effective Date, the Warrants will be issued by the Company in the amounts and to the recipients specified in the Plan.  Such Warrants shall be, upon issuance, duly authorized and validly issued. In accordance with Section 4 hereof and the Plan, the Company will cause to be issued to the Depository, one or more Global Warrant Certificates evidencing the Warrants not evidenced by Individual Warrant Certificates.  In accordance with Section 4 hereof and the Plan, the Company will cause to be issued to the applicable registered Holders, one or more Individual Warrant Certificates evidencing such Warrants.  Each Warrant evidenced by a Global Warrant Certificate or Individual Warrant Certificate entitles the Holder, upon proper exercise and payment of the Exercise Price, to receive from the Company, as adjusted as provided herein, one share of Common Stock at the Exercise Price per share specified therein.  The shares of Common Stock (as provided pursuant to Section 6 hereof) or Other Securities deliverable upon proper exercise of the Warrants are referred to herein as the

 

3



 

Warrant Shares ”.  The maximum number of Warrant Shares shall be 4,736,842 shares, as such amount may be adjusted from time to time pursuant to this Agreement.  The Company shall promptly notify the Warrant Agent in writing upon the occurrence of the Effective Date and, if such notification is given orally, the Company shall confirm the same in writing on or prior to the Business Day next following.  Until such notice is received by the Warrant Agent, the Warrant Agent may presume conclusively for all purposes that the Effective Date has not occurred.

 

(b)           Form of Warrant .  Subject to Section 4 of this Agreement, the Warrants shall be issued (i) in the form of one or more global certificates (the “ Global Warrant Certificates ”)in substantially the form of Exhibit A-1 attached hereto with the form of assignment to be printed on the reverse thereof, in substantially the form set forth in Exhibit B-1 attached hereto and/or (ii) in certificated form in the form of one or more individual certificates (the “Individual Warrant Certificates”) in substantially the form of Exhibit A-2 attached hereto with the form of assignment to be printed on the reverse thereof, in substantially the form set forth in Exhibit B-2 attached hereto, respectively.  The Global Warrant Certificates and Individual Warrant Certificates (collectively, the “ Warrant Certificates ”) may bear such appropriate insertions, omissions, substitutions and other variations as are required or permitted by this Agreement, and may have such letters, numbers or other marks of identification and such legends or endorsements placed thereon as may be required to comply with the rules and regulations of The Depository Trust Company (the “ Depository ”) in the case of the Global Warrant Certificates, any law or with any rules made pursuant thereto or with any rules of any securities exchange or as may be determined, consistently herewith, by the Appropriate Officers executing such Warrant Certificates, as evidenced by their execution of the Warrant Certificates, which shall be reasonably acceptable to the Warrant Agent.  The Global Warrant Certificates shall be deposited on or after the date hereof with or on behalf of the Depository and registered in the name of Cede & Co., as the Depository’s nominee and their respective successors.  Each Warrant Certificate shall represent such number of the outstanding Warrants as specified therein, and each shall provide that it shall represent the aggregate amount of outstanding Warrants from time to time endorsed thereon and that the aggregate amount of outstanding Warrants represented thereby may from time to time be reduced or increased, as appropriate, in accordance with the terms of this Agreement.

 

(c)           Execution of Warrants .  Warrant Certificates shall be signed on behalf of the Company by its Chairman of the Board, its Chief Executive Officer, Chief Financial Officer, Treasurer or any Executive Vice President (each, an “ Appropriate Officer ”), and by the Secretary or any Assistant Secretary.  Each such signature upon the Warrant Certificates may be in the form of a facsimile or electronic signature of any such Appropriate Officer, Secretary or Assistant Secretary and may be imprinted or otherwise reproduced on the Warrant Certificates and for that purpose the Company may adopt and use the facsimile or electronic signature of any Appropriate Officer, the Secretary or any Assistant Secretary who shall have been an Appropriate Officer, the Secretary, or an Assistant Secretary at the time of entering into this Agreement or issuing such Warrant Certificate.  If any Appropriate Officer, the Secretary or any Assistant Secretary who shall have signed any of the Warrant Certificates shall cease to be such Appropriate Officer, the Secretary or an Assistant Secretary before the Warrant Certificates so signed shall have been countersigned by the Warrant Agent or disposed of by the Company, such Warrant Certificates nevertheless may be countersigned and delivered or disposed of as though

 

4



 

such Appropriate Officer, Secretary or Assistant Secretary had not ceased to be such Appropriate Officer, Secretary or Assistant Secretary of the Company, and any Warrant Certificate may be signed on behalf of the Company by any person who, at the actual date of the execution of such Warrant Certificate, shall be a proper Appropriate Officer, Secretary or Assistant Secretary of the Company, although at the date of the execution of this Agreement any such person was not such Appropriate Officer, Secretary or Assistant Secretary.  Warrant Certificates shall be dated the date of countersignature by the Warrant Agent and shall represent one or more whole Warrants.

 

(d)           Countersignature .  Upon receipt of a written order of the Company and Warrant Certificates duly executed on behalf of the Company, the Warrant Agent, on behalf of the Company, shall countersign one or more Warrant Certificates evidencing the Warrants and shall deliver such Warrant Certificates to or upon the written order of the Company.  Such written order of the Company shall specifically state the number of Warrants that are to be issued as a Warrant Certificate.  Each Warrant shall be, and shall remain, subject to the provisions of this Agreement until such time as all of the Warrants evidenced thereby shall have been duly exercised or shall have expired or been canceled in accordance with the terms hereof.  Each Holder of Warrants shall be bound by all of the terms and provisions of this Agreement (a copy of which is available on request to the Secretary of the Company) and any amendments thereto as fully and effectively as if such Holder had signed the same.  No Warrant Certificate shall be valid for any purpose, and no Warrant evidenced thereby shall be exercisable, until such Warrant Certificate has been countersigned by the manual, facsimile or electronic signature of the Warrant Agent.  Such signature by the Warrant Agent upon any Warrant Certificate executed by the Company shall be conclusive evidence that such Warrant Certificate so countersigned has been duly issued hereunder.  The Warrant Agent shall keep, at an office designated for such purpose, books (the “ Warrant Register ”) in which, subject to such reasonable regulations as it may prescribe, it shall register any Warrant Certificates and exchanges and transfers of outstanding Warrants in accordance with the procedures set forth in Section 4 of this Agreement, all in form satisfactory to the Company and the Warrant Agent.  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 Holder of the Warrant 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. Prior to due presentment for registration of transfer or exchange of any Warrant in accordance with the procedures set forth in this Agreement, the Warrant Agent and the Company may deem and treat the person in whose name any Warrant is registered as the absolute owner of such Warrant (notwithstanding any notation of ownership or other writing made in a Warrant Certificate by anyone), for the purpose of any exercise thereof, any distribution to the Holder of the Warrant thereof and for all other purposes, and neither the Warrant Agent nor the Company shall be affected by notice to the contrary.

 

SECTION 4.             Transfer or Exchange .

 

(a)           Transfer and Exchange of Global Warrant Certificates or Beneficial Interests Therein .  The transfer and exchange of Global Warrant Certificates or beneficial interests therein shall be effected through the Depository, in accordance with this Agreement and the procedures of the Depository therefor.

 

5



 

(b)           Exchange of a Beneficial Interest in a Global Warrant Certificate for an Individual Warrant Certificate .

 

(i)            Any Holder of a beneficial interest in any whole number of Warrants represented by a Global Warrant Certificate may, upon request, exchange such beneficial interest for a Warrant represented by an Individual Warrant Certificate. Upon receipt by the Warrant Agent from the Depositary or its nominee of written instructions or such other form of instructions as is customary for the Depositary on behalf of any Person having a beneficial interest in a Global Warrant Certificate, and all other necessary information, the Warrant Agent shall 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 reduced by the number of Warrants to be represented by an Individual Warrant Certificate to be issued in exchange for the beneficial interest of such Person in the Global Warrant Certificate and, following such reduction, (x) the Company shall issue and the Warrant Agent shall either manually or by facsimile countersign an Individual Warrant Certificate representing the appropriate number of Warrants and (y) the Warrant Agent shall deliver such Individual Warrant Certificate to the registered Holder thereof.

 

(ii)           Warrants represented by an Individual Warrant Certificate issued in exchange for a beneficial interest in a Global Warrant Certificate pursuant to this Section 4(b) shall be issued in such names as the Depositary, pursuant to instructions from its direct or indirect participants or otherwise, shall instruct the Warrant Agent; provided, that such name shall not be that of a Person to whom the Holder would not have been permitted to sell or otherwise transfer Warrants pursuant to Section 4(g) if such exchange was a transfer of Warrants. The Warrant Agent shall deliver Individual Warrant Certificates evidencing such issuance to the Persons in whose names such Individual Warrant Certificates are so issued.

 

(c)           Transfer and Exchange of Individual Warrant Certificates .  When the registered Holder of an Individual Warrant Certificate has presented to the Warrant Agent a written request:

 

(i)            to register the transfer of any Individual Warrant Certificate; or

 

(ii)           to exchange any Individual Warrant Certificate for an Individual Warrant Certificate representing an equal number of Warrants of other authorized denominations,

 

the Warrant Agent shall register the transfer or make the exchange as requested if (x) its customary requirements for such transactions are met and (y) such transfer or exchange otherwise satisfies the provisions of this Agreement (including, without limitation, Section 4(g)); provided, however, that the Warrant Agent has received a written instruction of transfer or exchange, as applicable, in form satisfactory to the Warrant Agent, properly completed and duly executed by the Holder thereof or by his attorney, duly authorized in writing. A party requesting transfer of Warrants must provide any evidence of authority that may be required by the Warrant Agent, including but not limited to, a signature guarantee from an eligible guarantor institution participating in a signature guarantee program approved by the Securities Transfer Association.

 

6



 

(d)           Restrictions on Transfer and Exchange of Individual Warrant Certificates for a Beneficial Interest in a Global Warrant Certificate .  An Individual Warrant Certificate may not be exchanged for a beneficial interest in a Global Warrant Certificate except upon satisfaction of the requirements set forth below. Upon receipt by the Warrant Agent of appropriate instruments of transfer with respect to an Individual 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 Individual Warrant Certificate, and all other necessary information, then the Warrant Agent shall cancel such Individual Warrant Certificate on the Warrant Register 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 Certificates are then outstanding, the Company shall issue and the Warrant Agent shall either manually or by facsimile countersign a new Global Warrant Certificate representing the appropriate number of Warrants.

 

(e)           Restrictions on Transfer and Exchange of Global Warrant Certificates .  Notwithstanding any other provisions of this Agreement (other than the provision set forth in Section 4(f)), a Global Warrant Certificate may not be transferred as a whole except by the Depository to a nominee of the Depository or by a nominee of the Depository to the Depository or another nominee of the Depository or by the Depository or any such nominee to a successor Depository or a nominee of such successor Depository.

 

(f)            Cancellation of Warrant Certificate .  At such time as all beneficial interests in Warrant Certificates have been exchanged for Common Stock in accordance herewith, redeemed, repurchased or cancelled, all Warrant Certificates shall be returned to, or cancelled and retained pursuant to applicable law by, the Warrant Agent, upon written instructions from the Company reasonably satisfactory to the Warrant Agent.

 

(g)           Obligations with Respect to Transfers and Exchanges of Warrants .

 

(i)            To permit registrations of transfers and exchanges, the Company shall execute and the Warrant Agent is hereby authorized to countersign, in accordance with the provisions of this Section 4, Warrant Certificates, as required pursuant to the provisions of this Section 4 and for the purpose of any distribution of additional Warrant Certificates contemplated by Section 6 hereof.

 

(ii)           All Warrant Certificates issued upon any registration of transfer or exchange shall be the valid obligations of the Company, entitled to the same benefits under this Agreement as the Warrant Certificates surrendered upon such registration of transfer or exchange.

 

(iii)          So long as the Depository, or its nominee, is the registered owner of a Global Warrant Certificate, the Depository or such nominee, as the case may be, will be considered the sole owner or Holder of the Warrants represented by such Global Warrant Certificate for all purposes under this Agreement, including, without limitation, for the purposes

 

7



 

of (a) giving notices with respect to such Warrants and (b) registering transfers with respect to such Warrants. Neither the Company nor the Warrant Agent, in its capacity as registrar for such Warrants, will have any responsibility or liability for any aspect of the records relating to beneficial interests in a Global Warrant Certificate or for maintaining, supervising or reviewing any records relating to such beneficial interests.

 

(iv)          The Warrant Agent shall, upon receipt of all information required to be delivered hereunder, from time to time register the transfer of any outstanding Warrants in the Warrant Register, upon surrender of Warrant Certificates, representing such Warrants at the Warrant Agent Office referred to in Section 14 hereof (the “ Warrant Agent Office ”), duly endorsed, and accompanied by a completed form of assignment substantially in the form attached as Exhibit B-1 or B-2 , as applicable, hereto duly signed by the Holder thereof or by the duly appointed legal representative thereof or by his attorney, duly authorized in writing, such signature to be guaranteed by a participant in a Medallion Signature Guarantee Program at a guarantee level acceptable to the Warrant Agent.  Upon any such registration of transfer, a new Warrant Certificate shall be issued to the transferee.

 

(v)           The Warrant Agent shall not undertake the duties and obligations of a stock transfer agent under this Agreement, or otherwise, including, without limitation, the duty to receive, issue or transfer Shares of the Company’s Common Stock.

 

SECTION 5.             Duration and Exercise of Warrants .

 

(a)           Expiration Dat e.  The Warrants shall expire on September 9, 2020, at 5:00 p.m., New York City time, which is the fourth (4th) anniversary of the Effective Date of the Plan (the “ Expiration Date ”).  After 5:00 p.m. New York City time on the Expiration Date, the Warrants will become void and of no value, and all rights thereunder and all rights in respect thereof under this Agreement shall cease as of such time.

 

(b)           Exercise Price .  On the Effective Date, the Exercise Price for the Warrants shall be $14.04 per Share (subject to adjustment pursuant to Section 6 hereof).

 

(c)           Manner of Exercise .

 

(i)            Cash Payment . Subject to the provisions of this Agreement, including the adjustments contained in Section 6, each Warrant evidenced by the Warrant Certificate shall entitle the Holder thereof to purchase from the Company (and the Company shall issue and sell to such Holder) one fully paid and nonassessable Share at a price equal to the Exercise Price.  All or any of the Warrants represented by a Warrant Certificate may be exercised by the registered Holder thereof during normal business hours on any Business Day, by delivering (A) written notice of such election (“ Warrant Exercise Notice ”) to exercise the Warrants to the Company and the Warrant Agent at the addresses set forth in Section 14 hereof no later than 5:00 p.m., New York City time, on the Expiration Date, which Warrant Exercise Notice shall be substantially in the form set forth in Exhibit A-1 in the case of Warrants represented by a Global Warrant Certificate and Exhibit A-2 in the case of Warrants represented by Individual Warrant Certificates; and (B) by no later than 5:00 p.m., New York City time, on the Business Day immediately prior to the Settlement Date, such Warrants to the Warrant Agent (by book-entry

 

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transfer through the facilities of the Depository, if such Warrants are represented by a Global Warrant Certificate). Such Warrant Certificate and the documents referred to in clauses (A) and (B) of the immediately preceding sentence shall be accompanied by payment in full in respect of each Warrant that is exercised, which shall be made by certified or official bank or bank cashier’s check payable to the order of the Company, or by wire transfer to the Warrant Agent of the Exercise Amount in immediately available funds.  Such payment shall be in an amount equal to the product of the number of shares of Common Stock designated in such Warrant Exercise Notice multiplied by the Exercise Price for the Warrants being exercised, in each case as adjusted herein.  Upon such surrender and payment, such Holder shall thereupon be entitled to receive the number of duly authorized, validly issued, fully paid and nonassessable Shares (or Other Securities) determined as provided in Section 3, and as and if adjusted pursuant to Section 6.

 

(ii)           Cashless Exercise .  Provided the Common Stock is then listed or admitted for trading on a national securities exchange or an over-the-counter market or comparable system, and subject to the provisions of this Agreement, the holder shall have the right, in lieu of paying the Exercise Price in cash, to instruct the Company to reduce the number of shares of Common Stock issuable pursuant to the exercise of the Warrants (the “ Cashless Exercise ”) in accordance with the following formula:

 

N =  P  ÷ M

 

where:

 

N   =    the number of shares of Common Stock to be subtracted from the aggregate number of shares of Common Stock issuable upon exercise of the Warrants;

 

P   =   the aggregate Exercise Price which would otherwise be payable in cash for all of the shares of Common Stock for which the Warrants are being exercised; and

 

M   =    the Market Price of a share of Common Stock determined as of the Business Day immediately preceding the day the Warrant Exercise Notice is delivered to the Warrant Agent.

 

If the Exercise Price exceeds the Market Price at the time of exercise, then no shares of Common Stock will be issuable via the Cashless Exercise.

 

(d)           The number of shares of Common Stock to be issued on such exercise will be determined by the Company (with written notice thereof to the Warrant Agent) using the formula set forth in Section 5(c).  The Warrant Agent shall have no duty or obligation to investigate or confirm whether the Company’s determination of the number of shares of Common Stock to be issued on such exercise is accurate or correct, nor shall the Warrant Agent have any duty or obligation to take any action with regard to such warrant exercise prior to being notified by the Company of the relevant number of shares of Common Stock to be issued.

 

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(e)           Each Warrant not exercised pursuant to this Agreement on or prior to the Expiration Date shall become void and all rights thereunder and all rights in respect thereof under this Agreement shall cease as of 5:00 p.m., New York City time, on the Expiration Date.

 

(f)            Any exercise of a Warrant pursuant to the terms of this Agreement shall be irrevocable and shall constitute a binding agreement between the Holder and the Company, enforceable in accordance with its terms.

 

(g)           The Warrant Agent shall:

 

(i)            examine all Warrant Exercise Notices and all other documents delivered to it by or on behalf of Holders as contemplated hereunder to ascertain whether, on their face, such Warrant Exercise Notices and any such other documents have been executed and completed in accordance with their terms;

 

(ii)           endeavor to inform the Company of and cooperate with and assist the Company in resolving any reconciliation problems between the Warrant Exercise Notices received and delivery of Warrants to the Warrant Agent’s account;

 

(iii)          advise the Company, no later than five Business Days after receipt of a Warrant Exercise Notice, of (x) the receipt of such Warrant Exercise Notice and the number of Warrants exercised in accordance with the terms and conditions of this Agreement, (y) the instructions with respect to delivery of the Shares deliverable upon such exercise, subject to the timely receipt from the Depository of the necessary information, and (z) such other information as the Company shall reasonably require;

 

(iv)          if requested by the Company and provided with the Common Stock and all other necessary information by or on behalf of the Company for delivery to the Depository, liaise with the Depository and effect such delivery to the relevant accounts at the Depository in accordance with its requirements; and

 

(v)           as soon as practicable, pay to the Company all funds received by the Warrant Agent in payment of the aggregate Exercise Price.

 

(h)           All questions as to the validity, form and sufficiency (including time of receipt) of a Warrant exercise shall be determined by the Company in its sole discretion in good faith, which determination shall be final and binding.  The Warrant Agent shall incur no liability for or in respect of and, except to the extent such liability arises from the Warrant Agent’s gross negligence, willful misconduct or bad faith (each as determined by a final, non-appealable judgment of a court of competent jurisdiction), shall be indemnified and held harmless by the Company for acting or refraining from acting upon, or as a result of such determination by, the Company.  The Company reserves the right to reject any and all Warrant Exercise Notices not in proper form or for which any corresponding agreement by the Company to exchange would, in the opinion of the Company, be unlawful as determined in good faith.  Such determination by the Company shall be final and binding on the Holders absent manifest error.  Moreover, the Company reserves the absolute right to waive any of the conditions to the exercise of Warrants or defects in Warrant Exercise Notices with regard to any particular exercise of Warrants.  Neither the Company nor the Warrant Agent shall be under any duty to give notice to the

 

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Holders of any irregularities in any exercise of Warrants, nor shall they incur any liability for the failure to give such notice.

 

(i)            As soon as reasonably practicable after the exercise of any Warrant (and in any event not later than 10 Business Days thereafter), the Company shall issue, or otherwise deliver, in authorized denominations to or upon the order of the Holder, either: (A) if such Holder holds the Warrants being exercised through the Depository’s book-entry transfer facilities, by same-day or next-day credit to the Depository for the account of such Holder or for the account of a participant in the Depository the number of Shares to which such Holder is entitled, in each case registered in such name and delivered to such account as directed in the Warrant Exercise Notice by such Holder or by the direct participant in the Depository through which such Holder is acting; or (B) if such holder holds the Warrants being exercised in the form of Individual Warrant Certificates, a book-entry interest in the Warrant Shares on the books of the Company’s transfer agent or, at the Company’s option, by delivery to the address designated by such Holder in its Warrant Exercise Notice of a physical certificate or certificates representing the number of Warrant Shares to which such Holder is entitled, in fully registered form, registered in such name or names as may be directed by such holder. Such Warrant Shares shall be deemed to have been issued and any person so designated to be named therein shall be deemed to have become a Holder of record of such Warrant Shares as of the close of business on the date of the delivery thereof.

 

If fewer than all of the Warrants evidenced by a Global Warrant Certificate surrendered upon the exercise of Warrants are exercised at any time prior to the Expiration Date, the Warrant Agent shall cause a notation to be made to the records maintained by the Depository.  The Person in whose name any certificate or certificates for the Warrant Shares are to be issued (or such Warrant Shares are to be registered, in the case of a book-entry transfer) upon exercise of a Warrant shall be deemed to have become the holder of record of such Warrant Shares on the date such Warrant Exercise Notice is delivered.

 

(j)            Notwithstanding any adjustment pursuant to Section 6 in the number of Shares or Other Securities purchasable upon the exercise of a Warrant, the Company shall not be required to issue Warrants to purchase fractions of Shares or Other Securities, or to issue fractions of Shares or Other Securities upon exercise of the Warrants, or to distribute certificates which evidence fractional Shares.  In the event of an adjustment that results in a Warrant becoming exercisable for fractional Shares, the number of Shares or other securities subject to such Warrant shall be adjusted upward or downward to the nearest whole number of Shares or Other Securities (with one half rounded up). All Warrants held by a holder shall be aggregated for purposes of determining any such adjustment.

 

(k)           If all of the Warrants evidenced by a Warrant Certificate have been exercised, such Warrant Certificate shall be cancelled by the Warrant Agent.  Such cancelled Warrant Certificate shall then be disposed of by or at the direction of the Company in accordance with applicable law.  The Warrant Agent shall (x) advise an authorized representative of the Company as directed by the Company by the end of each day or on the next Business Day following each day on which Warrants were exercised, of (i) the number of Shares issued upon exercise of a Warrant, (ii) the notation to the records of the Depository reflecting the balance, if any, of the Shares issuable after such exercise of the Warrant and (iii) such other information as

 

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the Company shall reasonably require and (y) concurrently pay to the Company all funds received by the Warrant Agent in payment of the aggregate Exercise Price.  The Warrant Agent shall confirm such information to the Company in writing as promptly as practicable.

 

(l)            The Company shall pay all expenses in connection with, and all taxes and other governmental charges that may be imposed with respect to, the issuance or delivery of Warrant Shares upon exercise of Warrants; provided, that the Company shall not be required to pay any tax or governmental charge that may be imposed with respect to any applicable withholding or the issuance or delivery of the Warrant Shares to any Person other than the Holder of the Warrants underlying such Warrant Shares, and no such issuance or delivery shall be made unless and until the Person requesting such issuance has paid to the Company the amount of any such tax, or has established to the satisfaction of the Company that such tax has been paid.

 

(m)          The Warrant Agent shall keep copies of this Agreement and any notices given or received hereunder for a period no longer than seven (7) years from the Effective Date.

 

SECTION 6.             Adjustment of Exercise Price and Number of Shares Purchasable or Number of Warrants .

 

(a)           Stock Dividends, Subdivisions and Combinations of Shares .  If after the date hereof the number of outstanding shares of Common Stock is increased by a dividend or share distribution to all holders of Common Stock, in each case payable in shares of Common Stock, or by a subdivision, combination or other reclassification of shares of Common Stock, then, in the case of such events, the amount of Common Stock issuable for each Warrant and the Exercise Price will be adjusted as follows:  on the day following the date fixed for the determination of holders of shares of Common Stock entitled to receive such dividend or share distribution, and in the cases of subdivisions, combinations and other reclassifications, on the day following the effective date thereof:  (a) the Exercise Price in effect immediately prior to such action shall be adjusted to a new Exercise Price that bears the same relationship to the Exercise Price in effect immediately prior to such event as the total number of shares of Common Stock outstanding immediately prior to such action bears to the total number of shares of Common Stock outstanding immediately after such event, and (b) the number of Shares of Common Stock purchasable upon the exercise of any Warrant after such event shall be the number of Shares of Common Stock obtained by multiplying the number of Shares of Common Stock purchasable immediately prior to such adjustment upon the exercise of such Warrant by the Exercise Price in effect immediately prior to such adjustment and dividing the product so obtained by the Exercise Price in effect after such adjustment. A distribution to holders of the Common Stock of rights expiring less than thirty (30) days after the issuance thereof entitling holders to purchase shares of Common Stock at a price per share less than the Market Price shall be deemed a dividend of a number of shares of Common Stock equal to the product of (i) the number of shares of Common Stock actually issued in such distribution (or actually issued under any issued rights that are convertible into or exercisable for the Common Stock) multiplied by (ii) one (1) minus the quotient of (x) the price per share of Common Stock paid to exercise such rights divided by (y) the Market Price, and the amount of Common Stock issuable for each Warrant and the Exercise Price will be adjusted in accordance with the foregoing sentence.  For purposes of this Section 6(a), if the rights constitute securities convertible into or exercisable for Common Stock, in

 

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determining the price payable for Common Stock, there shall be taken into account any consideration received for such rights, as well as any additional amount payable upon exercise or conversion.

 

(b)           Distributions .  If after the date hereof the Company shall distribute to all holders of its shares of Common Stock evidences of its indebtedness or assets (excluding cash distributions made as a dividend payable out of earnings or out of surplus legally available for dividends under the laws of the jurisdiction of incorporation of the Company) or rights to subscribe for shares of Common Stock expiring at least thirty (30) days after the issuance thereof, then in each such case (i) the Exercise Price in effect on the trading day immediately following the close of business on the record date for such distribution shall be decreased to an amount determined by multiplying such Exercise Price by a fraction, the numerator of which is the Market Price of a share of the Common Stock on the trading day immediately prior to the Ex-Date less the Market Price of the assets or evidences of indebtedness so distributed or of such subscription rights per share of Common Stock outstanding on the trading day immediately prior to the Ex-Date (determined for such purpose on the basis of the aggregate assets, evidences of indebtedness and/or rights distributed with respect to one share of Common Stock as if, for purposes of the definition of “Market Price”, such assets, evidences of indebtedness and/or rights were an “Other Security”) (as determined by the Board of Directors of the Company, whose determination shall be conclusive, and described in a statement filed with the Warrant Agent) and the denominator of which is the Market Price of a share of Common Stock on the trading day immediately prior to the Ex-Date and (ii) the number of Shares of Common Stock purchasable upon the exercise of any Warrant after such event shall be the number of Shares of Common Stock obtained by multiplying the number of Shares of Common Stock purchasable immediately prior to such adjustment upon the exercise of such Warrant by the Exercise Price in effect immediately prior to such adjustment and dividing the product so obtained by the Exercise Price in effect after such adjustment.  Such adjustments shall be made whenever any such distribution is made, and shall become effective retroactively on the date immediately after the record date for the determination of stockholders entitled to receive such distribution.

 

(c)           Adjustments for Mergers and Consolidations .  In case the Company, after the date hereof, shall merge, consolidate or otherwise engage in a recapitalization, reclassification, reorganization or business combination with another Person, then, in the case of any such transaction, proper provision shall be made so that, upon the basis and terms and in the manner provided in this Agreement, the Holders of the Warrants, upon the exercise thereof at any time after the consummation of such transaction (subject to the Expiration Date), shall be entitled to receive (at the aggregate Exercise Price in effect at the time of the transaction for all Common Stock or Other Securities issuable upon such exercise immediately prior to such consummation), in lieu of the Common Stock or Other Securities issuable upon such exercise prior to such consummation, the greatest amount of securities, cash or other property to which such Holder would have been entitled as a holder of Common Stock (or Other Securities) upon such consummation if such Holder had exercised the rights represented by the Warrants held by such Holder immediately prior thereto, subject to adjustments (subsequent to such consummation) as nearly equivalent as possible to the adjustments provided for in Sections 6(a) and 6(b) above; provided, however, that each Holder, at the election of the Company, may be required at the consummation of any such transaction to receive solely cash in an amount determined reasonably and in good faith by the board of directors of the Company to equal the

 

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excess of (i) the product of (A) the value of the per share consideration to be received by the holders of the Common Stock (or Other Securities) in such transaction multiplied by (B) the number of Shares subject to the Warrants held by such Holder, over (ii) the aggregate Exercise Price payable by such Holder upon exercise in full of such Warrants, and upon consummation of such transaction the Holders shall surrender all Warrant Certificates to the Warrant Agent for cancellation.

 

(d)           Notice of Adjustment in Exercise Price .  Whenever the Exercise Price and securities issuable shall be adjusted as provided in this Section 6, the Company shall forthwith file with the Warrant Agent a statement, signed by an Appropriate Officer, stating in detail the facts requiring such adjustment, the Exercise Price that will be effective after such adjustment and the impact of such adjustment on the number and kind of securities issuable upon exercise of the Warrants.  The Company shall also cause a notice setting forth any such adjustments to be sent by mail, first class, postage prepaid, to each registered Holder at its address appearing on the Warrant Register.  The Warrant Agent shall have no duty with respect to any statement filed with it except to keep the same on file and available for inspection by registered Holders of Warrants during reasonable business hours.  The Warrant Agent shall not at any time be under any duty or responsibility to any Holder of a Warrant to determine whether any facts exist which may require any adjustment to the Exercise Price or securities issuable, or with respect to the nature or extent of any adjustment of the Exercise Price or securities issuable when made or with respect to the method employed in making such adjustment.

 

(e)           Other Notices .  In case the Company after the date hereof shall propose to take any action of the type described in subsections (a), (b) or (c) of this Section 6, the Company shall give notice to the Warrant Agent and to each registered Holder in the manner set forth in subsection (d) of this Section 6, which notice shall specify, in the case of action of the type specified in subsection (a) or (b), the date on which a record shall be taken with respect to any such action.  Such notice shall be given, in the case of any action of the type specified in subsection (a) or (b), at least ten (10) days prior to the record date with respect thereto.  Failure to give such notice, or any defect therein, shall not affect the legality or validity of any such action.  Where appropriate, such notice may be given in advance and may be included as part of a notice required to be mailed under the provisions of subsection (d) of this Section 6.

 

(f)            No Change in Warrant Terms on Adjustment .  Irrespective of any adjustments in the Exercise Price or the number of Shares (or any inclusion of Other Securities) issuable upon exercise, Warrants theretofore or thereafter issued may continue to express the same prices and number of shares as are stated in the similar Warrants issuable initially, or at some subsequent time, pursuant to this Agreement, and the Exercise Price and such number of shares issuable upon exercise specified thereon shall be deemed to have been so adjusted.

 

(g)           Treasury Shares .  Shares of Common Stock at any time owned by the Company shall not be deemed to be outstanding for the purposes of any computation under this Section 6.

 

SECTION 7.             Cancellation of Warrants .  The Warrant Agent shall cancel all Warrant Certificates surrendered for exchange, substitution, transfer or exercise in whole or in

 

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part.  Such cancelled Warrant Certificates shall thereafter be disposed of by the Warrant Agent upon written instructions from the Company satisfactory to the Warrant Agent.

 

SECTION 8.             Mutilated or Missing Warrant Certificates .  Upon receipt by the Company and the Warrant Agent from any Holder of evidence reasonably satisfactory to them of the ownership of and the loss, theft, destruction or mutilation of such Holder’s Warrant Certificate and a surety bond or indemnity reasonably satisfactory to them, and in case of mutilation upon surrender and cancellation thereof, the Company will execute and the Warrant Agent will countersign and deliver in lieu thereof a new Warrant Certificate of like tenor and representing an equal number of Warrants to such Holder; provided in the case of mutilation, no bond or indemnity shall be required if such Warrant Certificate in identifiable form is surrendered to the Company or the Warrant Agent for cancellation.  Upon the issuance of any new Warrant Certificate under this Section 8, the Company may require the payment of a sum sufficient to cover any stamp tax or other governmental charge that may be imposed in relation thereto and any other expenses (including the reasonable fees and expenses of the Warrant Agent) in connection therewith.  Every new Warrant Certificate executed and delivered pursuant to this Section 8 in lieu of any lost, stolen or destroyed Warrant Certificate shall be entitled to the same benefits of this Agreement equally and proportionately with any and all other Warrant Certificates, whether or not the allegedly lost, stolen or destroyed Warrant Certificate shall be at any time enforceable by anyone.  The provisions of this Section 8 are exclusive and shall preclude (to the extent lawful) all other rights or remedies with respect to the replacement of mutilated, lost, stolen or destroyed Warrant Certificates.

 

SECTION 9.             Merger, Consolidation, Etc .   Notwithstanding anything contained herein to the contrary, the Company will not effect a merger or consolidation unless, prior to the consummation of such transaction, each Person (other than the Company) that may be required to deliver any Common Stock, Other Securities, securities, cash or property upon the exercise of any Warrant as provided herein shall assume, by written instrument delivered to the Warrant Agent, the obligations of the Company under this Agreement and under each of the Warrants, including, without limitation, the obligation to deliver such shares of Common Stock, Other Securities, cash or property as may be required pursuant to Section 6 hereof or the certificate or articles of incorporation or other constituent document, and shall provide for adjustments equivalent to the adjustments provided for in Section 6 hereof.

 

SECTION 10.           Reservation of Shares; Certain Actions .

 

(a)           Reservation of Shares .  The Company shall at all times reserve and keep available, free from preemptive rights, out of its authorized but unissued Common Stock (or out of authorized Other Securities), solely for issuance and delivery upon exercise of Warrants, the full number of Shares (and Other Securities) from time to time issuable upon the exercise of all Warrants and any other outstanding warrants, options or similar rights, from time to time outstanding.  All Shares (and Other Securities) shall be duly authorized and, when issued upon such exercise, shall be duly and validly issued, and (in the case of Shares) fully paid and nonassessable, free from all taxes, liens, charges, security interests, encumbrances and other restrictions created by or through the Company and issued without violation (i) of any preemptive or similar rights of any stockholder of the Company and (ii) by the Company of any applicable law or governmental regulation or any requirements of any domestic securities

 

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exchange upon which the shares of Common Stock or Other Securities constituting Warrant Shares may be listed at the time of such exercise.

 

(b)           Certain Actions .  Before taking any action that would cause an adjustment pursuant to Section 6 reducing any Exercise Price below the then par value (if any) of the Shares issuable upon exercise of the Warrants, the Company will take any reasonable corporate action that may, in the opinion of its counsel, be necessary in order that the Company may validly and legally issue fully paid and nonassessable Shares at such Exercise Price as so adjusted.

 

SECTION 11.           Notification of Certain Events; Corporate Action .  In the event of:

 

(a)           any taking by the Company of a record of the holders of any class of securities for the purpose of determining the holders thereof who are entitled to receive any dividend (excluding cash distributions made as a dividend payable out of earnings or out of surplus legally available for dividends under the laws of the jurisdiction of incorporation of the Company) or other distribution of any kind, or any right to subscribe for, purchase or otherwise acquire any shares of stock of any class or any other securities or property, or to receive any other right or interest of any kind; or

 

(b)           (A) any capital reorganization of the Company, (B) any reclassification of the capital shares of the Company (other than a change in par value or from par value to no par value or from no par value to par value or as a result of a subdivision or combination), (C) the consolidation or merger of the Company with or into any other corporation (other than a consolidation or merger in which the Company is the continuing corporation and which does not result in any change in the shares of Common Stock), (D) the sale or transfer of the properties and assets of the Company as, or substantially as, an entirety to another Person, or (E) an exchange offer for Common Stock (or Other Securities); or

 

(c)           the voluntary or involuntary dissolution, liquidation, or winding up of the Company,

 

the Company shall cause to be filed with the Warrant Agent and mailed to each Holder a notice specifying (x) the date or expected date on which any such record is to be taken for the purpose of such dividend, distribution or right, and the amount and character of any such dividend, distribution or right, or if a record is not to be taken, the date as of which the holders of Common Stock of record to be entitled to such dividend, distribution, or right are to be determined, and the amount and character of such dividend, distribution or right, or (y) the date or expected date on which any such reorganization, reclassification, consolidation, merger, sale, transfer, exchange offer, dissolution, liquidation or winding up is expected to become effective, and the time, if any such time is to be fixed, as of which holders of record of Common Stock (or Other Securities) shall be entitled to exchange their shares of Common Stock (or Other Securities) for the securities or other property deliverable upon such reorganization, reclassification, consolidation, merger, sale, transfer, exchange offer, dissolution, liquidation or winding up. Such notice shall be delivered not less than twenty (20) days prior to such date therein specified, in the case of any such date referred to in clause (x) of the preceding sentence, and not less than thirty (30) days prior to such date therein specified, in the case of any such date referred to in clause (y) of the

 

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preceding sentence.  Failure to give such notice within the time provided or any defect therein shall not affect the legality or validity of any such action.

 

SECTION 12.           Warrant Agent .  The Warrant Agent undertakes the duties and obligations imposed by this Agreement upon the terms and conditions set forth in this Section 12.

 

(a)           Limitation on Liability .  The Warrant Agent shall not by countersigning Warrant Certificates or by any other act hereunder be accountable with respect to or be deemed to make any representations as to the validity or authorization of the Warrants or the Warrant Certificates (except as to its countersignature thereon), as to the validity, authorization or value (or kind or amount) of any Common Stock or of any Other Securities or other property delivered or deliverable upon exercise of any Warrant, or as to the purchase price of such Common Stock, securities or other property.  The Warrant Agent shall not (i) be liable for any recital or statement of fact contained herein or in the Warrant Certificates or for any action taken, suffered or omitted by the Warrant Agent in good faith in the belief that any Warrant Certificate or any other document or any signature is genuine or properly authorized, (ii) be responsible for determining whether any facts exist that may require any adjustment of the purchase price and the number of Shares purchasable upon exercise of Warrants, or with respect to the nature or extent of any such adjustments when made, or with respect to the method of adjustment employed, (iii) be responsible for any failure on the part of the Company to issue, transfer or deliver any Common Stock or Other Securities or property upon the surrender of any Warrant for the purpose of exercise or to comply with any other of the Company’s covenants and obligations contained in this Agreement or in the Warrant Certificates or (iv) be liable for any action taken, suffered or omitted to be taken in connection with this Agreement, except for its own bad faith, gross negligence or willful misconduct.  Notwithstanding anything in this Agreement to the contrary, in no event shall the Warrant Agent be liable for special, indirect, punitive, incidental or consequential loss or damage of any kind whatsoever (including but not limited to lost profits), even if the Warrant Agent has been advised of the likelihood of the loss or damage and regardless of the form of the action.  Any liability of the Warrant Agent under this Agreement shall be limited to the amount of annual fees paid by the Company to the Warrant Agent.

 

(b)           Instructions .  The Warrant Agent is hereby authorized to accept advice or instructions with respect to the performance of its duties hereunder from an Appropriate Officer and to apply to any such officer for advice or instructions.  The Warrant Agent shall be fully protected and authorized in relying upon the most recent advice or instructions received by any such officer.  The Warrant Agent shall not be liable for any action taken, suffered or omitted by it in accordance with the advice or instructions of any such officer, except to the extent that such action or omission resulted directly from the Warrant Agent’s gross negligence, bad faith or willful misconduct.

 

(c)           Agents .  The Warrant Agent may execute and exercise any of the rights and powers hereby vested in it or perform any duty hereunder either itself or by or through its attorneys, agents or employees, provided reasonable care has been exercised in the selection and in the continued employment of such attorney, agent or employee.  The Warrant Agent shall not be under any obligation or duty to institute, appear in, or defend any action, suit or legal proceeding in respect hereof, but this provision shall not affect the power of the Warrant Agent

 

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to take such action as the Warrant Agent may consider necessary.  The Warrant Agent shall promptly notify the Company in writing of any claim made or action, suit or proceeding instituted against the Warrant Agent arising out of or in connection with this Agreement.

 

(d)           Cooperation .  The Company will perform, execute, acknowledge and deliver or cause to be performed, executed, acknowledged and delivered all such further acts, instruments and assurances as may reasonably be required by the Warrant Agent in order to enable the Warrant Agent to carry out or perform its duties under this Agreement.

 

(e)           Agent Only .  The Warrant Agent shall act solely as agent for the Company in accordance with the terms and conditions hereof and does not assume any obligation or relationship of agency or trust with any of the owners or holders of the Warrants.  The Warrant Agent shall not be liable except for the performance of such duties as are specifically set forth herein, and no implied covenants or obligations shall be read into this Agreement against the Warrant Agent, whose duties and obligations shall be determined solely by the express provisions hereof.

 

(f)            Right to 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 Warrant Holder for any action taken, suffered or omitted by the Warrant Agent in good faith in accordance with the opinion or advice of such counsel.

 

(g)           Compensation .  The Company agrees to pay the Warrant Agent reasonable compensation for all services rendered by it hereunder and to reimburse the Warrant Agent for its reasonable expenses hereunder (including reasonable counsel fees and expenses), and further agrees to indemnify the Warrant Agent and hold it harmless against any and all liabilities, including, but not limited to, any judgments, costs and reasonable counsel fees, for any action taken, suffered or omitted by the Warrant Agent in connection with the acceptance, administration, exercise and performance of its duties under this Agreement and the Warrants, except for any such liabilities that arise as a result of the Warrant Agent’s bad faith, gross negligence or willful misconduct.

 

(h)           Accounting .  The Warrant Agent shall account promptly to the Company with respect to Warrants exercised and concurrently pay to the Company all moneys received by the Warrant Agent on behalf of the Company on the purchase of shares of Common Stock (or Other Securities) through the exercise of Warrants.  The Warrant Agent shall advise the Company by telephone at the end of each day on which a payment for the exercise of Warrants is received of the amount so deposited to such account.  The Warrant Agent shall as soon as practicable confirm such telephone advice to the Company in writing.

 

(i)            No Conflict .  Subject to applicable law, the Warrant Agent and any stockholder, affiliate, 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 Agreement.  Subject to applicable law, nothing herein shall preclude the Warrant Agent from

 

18



 

acting in any other capacity for the Company or for any other Person.  Nothing in this Agreement shall be deemed to prevent the Warrant Agent from acting as trustee under an indenture.

 

(j)            Resignation; Termination .  The Warrant Agent may resign its duties and be discharged from all further duties and liabilities hereunder (except liabilities arising as a result of the Warrant Agent’s bad faith, gross negligence or willful misconduct) after giving thirty (30) days’ prior written notice to the Company.  The Company may remove the Warrant Agent upon thirty (30) calendar days’ written notice, and the Warrant Agent shall thereupon in like manner be discharged from all further duties and liabilities hereunder, except as have been caused by the Warrant Agent’s bad faith, gross negligence or willful misconduct.  The Company shall cause to be mailed promptly (by first class mail, postage prepaid) to each registered Holder of a Warrant at such Holder’s last address as shown on the register of the Company, at the Company’s expense, a copy of such notice of resignation or notice of removal, as the case may be.  Upon such resignation or removal the Company shall promptly appoint in writing a new warrant agent.  If the Company shall fail to make such appointment within a period of thirty (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 Warrant may apply to any court of competent jurisdiction for the appointment of a new warrant agent.  Pending appointment of a successor to the Warrant Agent, either by the Company or by such a court, the duties of the Warrant Agent shall be carried out by the Company.  Any successor warrant agent, whether appointed by the Company or by such a court, shall be (i) a Person, incorporated under the laws of the United States or of any state thereof and authorized under such laws to conduct a shareholder services business, be subject to supervision and examination by Federal or state authority, and have a combined capital and surplus of not less than $100,000,000 as set forth in its most recent published annual report of condition; or (ii) an affiliate of such a Person described above.  After acceptance in writing of such appointment by the new warrant agent it 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 necessary or expedient to execute and deliver any further assurance, conveyance, act or deed, the same shall be done at the 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 and shall forthwith cause a copy of such notice to be mailed (by first class, postage prepaid) to each registered Holder of a Warrant at such Holder’s last address as shown on the register of the Company.  Failure to give any notice provided for in this Section 12(j), or any defect in any such notice, 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.

 

(k)           Merger, Consolidation or Change of Name of Warrant Agent .  Any corporation into which the Warrant Agent may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which the Warrant Agent shall be a party, or any corporation succeeding to the all or substantially all of the agency business of the Warrant Agent or any new warrant agent shall be the successor to the Warrant Agent hereunder without the execution or filing of any document or any further act on the part of any of the parties hereto, provided that such corporation would be eligible for appointment as a successor Warrant Agent under the provisions of Section 12(j).  If at the time such successor to the Warrant Agent shall succeed under this Agreement, any of the Warrant

 

19



 

Certificates shall have been countersigned but not delivered, any such successor to the Warrant Agent may adopt the countersignature of the original Warrant Agent; and if at that time any of the Warrant Certificates shall not have been countersigned, any successor to the Warrant Agent may countersign such Warrant Certificates either in the name of the predecessor Warrant Agent or in the name of the successor Warrant Agent; and in all such cases such Warrant Certificates shall have the full force provided in the Warrant Certificates and in this Agreement.  If at any time the name of the Warrant Agent shall be changed and at such time any of the Warrants shall have been countersigned but not delivered, the Warrant Agent whose name has changed may adopt the countersignature under its prior name; and if at that time any of the Warrants shall not have been countersigned, the Warrant Agent may countersign such Warrants either in its prior name or in its changed name; and in all such cases such Warrants shall have the full force provided in the Warrants and in this Agreement.

 

(l)            Indemnity .  The Warrant Agent shall be liable hereunder only for its own gross negligence, willful misconduct or bad faith (which gross negligence, willful misconduct or bad faith must be determined by a final, non-appealable order, judgment, decree or ruling of a court of competent jurisdiction).  The Company agrees to indemnify the Warrant Agent for, and to hold it harmless against, any loss, liability, suit, action, proceeding, judgment, claim, settlement, cost or expense (including reasonable counsel fees and expenses), incurred without gross negligence, willful misconduct or bad faith on the part of the Warrant Agent (which gross negligence, willful misconduct or bad faith must be determined by a final, non-appealable order, judgment, decree or ruling of a court of competent jurisdiction), for any action taken, suffered or omitted by the Warrant Agent in connection with the preparation, delivery, acceptance, administration, execution and amendment of this Agreement and the exercise and performance of its duties hereunder, including the costs and expenses of defending against any claim of liability arising therefrom, directly or indirectly.  The Warrant Agent shall not be obligated to expend or risk its own funds to take any action which it believes would expose it to expense or liability or to a risk of incurring expense of liability, unless it has been furnished with assurance of repayment or indemnity satisfactory to it.  No provision in this Agreement shall be construed to relieve the Warrant Agent from liability for its own gross negligence, willful misconduct or bad faith (which gross negligence, willful misconduct or bad faith must be determined by a final, non-appealable order, judgment, decree or ruling of a court of competent jurisdiction).

 

(m)          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 (except its countersignature thereof); nor shall it be responsible for any breach by the Company of any covenant or condition contained in this Agreement or in any Warrant; nor shall it be responsible or have any duty to make any calculation or adjustment, or to determine when any calculation or adjustment required under the provisions hereof should be made, how it should be made or what it should be, or have any responsibility or liability for the manner, method or amount of any such calculation or adjustment or the ascertaining of the existence of facts that would require any such calculation or adjustment; nor shall it by any act hereunder be deemed to make any representation or warranty as to the authorization or reservation of any Warrant to be issued pursuant to this Agreement or as to whether any Warrant will, when issued, be valid and fully paid and nonassessable.

 

20



 

(n)           No Liability for Interest .  The Warrant Agent shall not be under any liability for interest on any monies at any time received by it pursuant to any of the provisions of this Agreement.

 

(o)           No Liability for Invalidity .  The Warrant Agent shall not be under any responsibility with respect to the validity or sufficiency of this Agreement or the execution and delivery hereof (except the due execution and delivery hereof by the Warrant Agent) or with respect to the validity or execution of the Warrant Certificates (except its countersignature thereon).

 

(p)           No Responsibilities for Recitals .  The recitals contained herein and in the Warrant Certificates (except as to the Warrant Agent’s countersignature thereon) shall be taken as the statements of the Company, and the Warrant Agent assumes no responsibility hereby for the correctness of the same.

 

(q)           No Implied Obligations .  The Warrant Agent shall be obligated to perform such duties as are explicitly set forth herein and no implied duties or obligations shall be read into this Agreement against the Warrant Agent.  The Warrant Agent shall not be under any obligation to take any action hereunder that may involve it in any expense or liability, the payment of which within a reasonable time is not, in its opinion, assured to it.  The Warrant Agent shall not be accountable or under any duty or responsibility for the use by the Company of any Warrant Certificate authenticated by the Warrant Agent and delivered by it to the Company pursuant to this Agreement or for the application by the Company of the proceeds of the issuance and sale, or exercise, of the Warrants.  The Warrant Agent shall have no duty or responsibility in case of any default by the Company in the performance of its covenants or agreements contained herein or in any Warrant Certificate or in the case of the receipt of any written demand from a Holder with respect to such default, 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.

 

(r)            Force Majeure .  In no event shall the Warrant Agent be responsible or liable for any failure or delay in the performance of its obligations under this Agreement arising out of or caused by, directly or indirectly, forces beyond its reasonable control, including, without limitation, strikes, work stoppages, accidents, acts of war or terrorism, civil or military disturbances, nuclear or natural catastrophes or acts of God, and interruptions, loss or malfunctions of utilities, communications or computer (software or hardware) services.

 

SECTION 13.           Severability .  In the event that any one or more of the provisions contained herein or in the Warrants, or the application thereof in any circumstances, is held invalid, illegal or unenforceable, the validity, legality and enforceability of any such provisions in every other respect and of the remaining provisions contained herein and therein shall not be affected or impaired thereby; provided, that if any such excluded term, provision, covenant or restriction shall materially adversely affect the rights, immunities, duties or obligations of the Warrant Agent, the Warrant Agent shall be entitled to resign immediately.  Furthermore, subject to the preceding sentence, in lieu of any such invalid, illegal or unenforceable provision, the parties hereto intend that there shall be added as a part of this Agreement a provision as similar

 

21



 

in terms and commercial effect to such invalid, illegal or unenforceable provision as may be possible and be valid and enforceable.

 

SECTION 14.           Warrantholder Not Deemed a Stockholder .  Prior to the exercise of the Warrants represented thereby no Holder of a Warrant Certificate, as such, shall be entitled to any rights of a stockholder of the Company, including, but not limited to, the right to vote, to receive dividends or other distributions, to exercise any preemptive right or, except as otherwise provided herein, to receive notice as stockholders in respect of the meetings of stockholders or for the election of directors of the Company or any other matter.

 

SECTION 15.           Notices to Company and Warrant Agent .  All notices, requests or demands authorized by this Agreement to be given or made by the Warrant Agent or by any registered Holder of any Warrant to or on the Company or the Warrant Agent to be effective shall be in writing (including by telecopy), and shall be deemed to have been duly given or made when delivered by hand, or two Business Days after being delivered to a recognized courier (whose stated terms of delivery are two business days or less to the destination such notice), or five days after being deposited in the mail, or, in the case of facsimile or email notice, when received, addressed (until another address is filed in writing by the Company with the Warrant Agent) as follows:

 

Halcón Resources Corporation

1000 Louisiana Street
Suite 6700

Houston, Texas 77002

Fax:  (713) 589-8019

Attn: David S. Elkouri

Email: delkouri@halconresources.com

 

If the Company shall fail to maintain such office or agency or shall fail to give such notice of any change in the location thereof, presentation may be made and notices and demands may be served at the principal office of the Warrant Agent.

 

Any notice pursuant to this Agreement to be given by the Company or by any registered Holder of any Warrant to the Warrant Agent shall be sufficiently given if sent by first-class mail, postage prepaid, or by facsimile or email notice, addressed (until another address is filed in writing by the Warrant Agent with the Company), as follows:

 

U.S. Bank National Association

5555 San Felipe

Suite 1150

Houston, Texas 77056

Fax:  713.235.9213

Attn:  Steven A. Finklea

Email:  steven.finklea@usbank.com

 

The Warrant Agent maintains the Warrant Agent’s Principal Office at the above address.

 

22



 

SECTION 16.           Supplements and Amendments .  The Company and the Warrant Agent may from time to time supplement or amend this Agreement (a) without the approval of any Holders of Warrants in order to cure any ambiguity, manifest error or other mistake in this Agreement, or to correct or supplement any provision contained herein that may be defective or inconsistent with any other provision herein, or to make any other provisions in regard to matters or questions arising hereunder that the Company and the Warrant Agent may deem necessary or desirable and that shall not adversely affect, alter or change the interests of the Holders of the Warrants in any material respect or (b) with the prior written consent of Holders of the Warrants exercisable for a majority of the Shares then issuable upon exercise of the Warrants then outstanding; provided that each amendment or supplement that decreases the Warrant Agent’s rights or increases its duties and responsibilities hereunder shall also require the prior written consent of the Warrant Agent.  Notwithstanding the foregoing, the consent of each Holder of a Warrant affected shall be required for any amendment pursuant to which the Exercise Price would be increased or the number of Shares (or Other Securities) purchasable upon exercise of Warrants would be decreased (other than pursuant to adjustments provided herein) or the Expiration Date would be shortened.  Upon execution and delivery of any amendment pursuant to this Section 16, such amendment shall be considered a part of this Agreement for all purposes and every Holder of a Warrant Certificate theretofore or thereafter countersigned and delivered hereunder shall be bound thereby.

 

SECTION 17.           Termination .  This Agreement shall terminate on the Expiration Date.  Notwithstanding the foregoing, this Agreement will terminate on any earlier date when all Warrants have been exercised.  The provisions of Section 12 shall survive such termination.

 

SECTION 18.           Governing Law and Consent to Forum .  This Agreement shall be governed by and construed in accordance with the laws of the State of New York applicable to contracts made and to be performed within the State of New York. Each of the Company and the Warrant Agent hereby irrevocably submits to the jurisdiction of any New York State court sitting in the City of New York or any Federal Court sitting in the City of New York with respect to any suit, action or proceeding arising out of or relating to this Agreement, and each irrevocably accepts for itself and in respect of its property, generally and unconditionally, the jurisdiction of the aforesaid courts. Nothing herein shall affect the right of any Person to serve process in any manner permitted by law or to commence legal proceedings or otherwise proceed against the Company in any other jurisdiction.

 

SECTION 19.           Waiver of Jury Trial .  The parties hereto waive all right to trial by jury in any action or proceeding to enforce or defend any rights hereunder.

 

SECTION 20.           Benefits of this Agreement .  Nothing in this Agreement shall be construed to give to any Person or corporation other than the Company, the Warrant Agent and the registered Holders of the Warrants (who are express third party beneficiaries of this Agreement) any legal or equitable right, remedy or claim under this Agreement, and this Agreement shall be for the sole and exclusive benefit of the Company, the Warrant Agent and the registered Holders of the Warrants.

 

23



 

SECTION 21.           Counterparts .  This Agreement may be executed in any number of counterparts and each of such counterparts shall for all purposes be deemed to be an original, and such counterparts shall together constitute but one and the same instrument.

 

SECTION 22.           Headings .  The headings of sections of this Agreement have been inserted for convenience of reference only, are not to be considered a part hereof and in no way modify or restrict any of the terms or provisions hereof.

 

[signature page follows]

 

24



 

IN WITNESS WHEREOF , the parties hereto have caused this Agreement to be executed and delivered as of the day and year first above written.

 

 

 

HALCÓN RESOURCES CORPORATION

 

 

 

 

 

 

 

By

/s/ David S. Elkouri

 

 

Name:

David S. Elkouri

 

 

Title:

Executive Vice President, Corporate Strategy and Chief Legal Officer

 

[Signature Page to Warrant Agreement]

 



 

 

U.S. BANK NATIONAL ASSOCIATION

 

 

 

 

 

 

 

By

/s/ Steven A. Finklea

 

 

Name:

Steven A. Finklea, CCTS

 

 

Title:

Vice President

 

[Signature Page to Warrant Agreement]

 



 

EXHIBIT A-1

 

FORM OF FACE OF GLOBAL WARRANT CERTIFICATE

 

This Global Warrant Certificate is deposited with or on behalf of The Depository Trust Company (the “Depository”) or its nominee in custody for the benefit of the beneficial owners hereof, and is not transferable to any person under any circumstances except that (i) this Global Warrant Certificate may be delivered to the Warrant Agent for cancellation pursuant to Section 4(f) of the Warrant Agreement and (ii) this Global Warrant Certificate may be transferred pursuant to Section 4(e) of the Warrant Agreement and as set forth below.

 

Unless this Global Warrant Certificate is presented by an authorized representative of the Depository to the Company or the Warrant Agent for registration of transfer, exchange or payment and any certificate issued is registered in the name of Cede & Co. or such other entity as is requested by an authorized representative of the Depository (and any payment hereon is made to Cede & Co. or to such other entity as is requested by an authorized representative of the Depository), any transfer, pledge or other use hereof for value or otherwise by or to any person is wrongful because the registered owner hereof, Cede & Co., has an interest herein.

 

Transfers of this Global Warrant Certificate shall be limited to transfers in whole, but not in part, to nominees of the Depository or to a successor thereof or such successor’s nominee or as otherwise permitted in Section 4(e) of the Warrant Agreement, and transfers of portions of this Global Warrant Certificate shall be limited to transfers made in accordance with the restrictions set forth in Section 4 of the Warrant Agreement.

 

No registration or transfer of the securities issuable pursuant to the exercise of the Warrant will be recorded on the books of the Company until such provisions have been complied with.

 

To the extent that any provision hereof conflicts with any provision of the Warrant Agreement, the provision in the Warrant Agreement shall control.

 

A-1- 1



 

CUSIP No.              

 

ISIN No.              

 

WARRANTS TO PURCHASE

 

SHARES OF COMMON STOCK

 

HALCÓN RESOURCES CORPORATION

 

GLOBAL WARRANT TO PURCHASE COMMON STOCK

 

VOID AFTER 5:00 P.M., New York City Time, September 9, 2020

 

This Global Warrant Certificate (“Warrant Certificate”) certifies that Cede & Co., or its registered assigns is the registered holder of Warrants (the “Warrants”) of Halcón Resources Corporation, a Delaware corporation (the “Company”), to purchase the number of shares (the “Shares”) of common stock, par value $0.0001 per share (the “Common Stock”), of the Company set forth above.  The Warrants expire at 5:00 p.m., New York City time, on the date that is the four year anniversary of the Effective Date (such date, the “Expiration Date”), and each Warrant entitles the holder to purchase from the Company one fully paid and non-assessable Share at the exercise price (the “Exercise Price”), payable to the Company either by certified or official bank or bank cashier’s check payable to the order of the Company, or by wire transfer in immediately available funds of the aggregate Exercise Price to an account of the Warrant Agent specified in writing by the Warrant Agent for such purpose, no later than 5:00 p.m., New York City time, on the business day immediately prior to the settlement date, which settlement date is three Business Days after a Warrant Exercise Notice is delivered (the “Settlement Date”).  The initial Exercise Price shall be $14.04.

 

In lieu of paying the Exercise Price as set forth in the preceding paragraph, subject to the provisions of the Warrant Agreement (as defined on the reverse hereof), the Warrants shall entitle the holder thereof, at the election of such holder, to exercise the Warrants by authorizing the Company to withhold from issuance a number of Shares issuable upon exercise of the Warrants which when multiplied by the Market Price of the Common Stock is equal to the aggregate Exercise Price for the number of Shares for which the Warrants are being exercised (assuming the Exercise Price for all such Shares was being paid in cash), and such withheld Shares shall no longer be issuable under the Warrants.

 

The Exercise Price and the number of Shares purchasable upon exercise of the Warrants are subject to adjustment upon the occurrence of certain events as set forth in the Warrant Agreement.

 

To the extent that any provision hereof conflicts with any provision of the Warrant Agreement, the provision in the Warrant Agreement shall control.

 

No Warrant may be exercised prior to the date of the Warrant Agreement or after the Expiration Date.

 

After 5:00 p.m., New York City time, on the Expiration Date, the Warrants will become wholly void and of no value.

 

REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS OF THIS WARRANT CERTIFICATE SET FORTH ON THE REVERSE HEREOF.  SUCH FURTHER PROVISIONS SHALL FOR ALL PURPOSES HAVE THE SAME EFFECT AS THOUGH FULLY SET FORTH AT THIS PLACE.

 

A-1- 2



 

This Warrant Certificate shall not be valid unless countersigned by the Warrant Agent.

 

IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to be executed by its duly authorized officer.

 

Dated:

 

 

 

 

 

 

HALCÓN RESOURCES CORPORATION

 

 

 

By:

 

 

Name:

 

Title:

 

 

 

 

 

By:

 

 

Name:

 

Title:

 

 

 

 

 

U.S. Bank National Association

 

as Warrant Agent

 

 

 

By:

 

 

Name:

 

Title:

 

 

A-1- 3



 

FORM OF REVERSE OF GLOBAL WARRANT CERTIFICATE
HALCÓN RESOURCES CORPORATION

 

The Warrants evidenced by this Warrant Certificate is a part of a duly authorized issue of Warrants to purchase shares of Common Stock issued pursuant to that certain Warrant Agreement, dated as of the Effective Date of the Plan (the “Warrant Agreement”), duly executed and delivered by the Company and U.S. Bank National Association, as Warrant Agent (the “Warrant Agent”).  The Warrant Agreement hereby is incorporated by reference in and made a part of this instrument and is hereby referred to for a description of the rights, limitation of rights, obligations, duties and immunities thereunder of the Warrant Agent, the Company and the holders (the words “holders” or “holder” meaning the registered holders or registered holder) of the Warrants.  A copy of the Warrant Agreement may be inspected at the Warrant Agent’s office and is available upon written request addressed to the Company.  All capitalized terms used on the face of this Warrant Certificate but not defined herein and are defined in the Warrant Agreement shall have the meanings assigned to them therein.

 

Warrants may be exercised to purchase Warrant Shares from the Company from the date of the Warrant Agreement through 5:00 p.m., New York City time, on the Expiration Date, at the Exercise Price set forth on the face hereof, subject to adjustment as described in the Warrant Agreement.  Subject to the terms and conditions set forth herein and in the Warrant Agreement, the holder of the Warrants evidenced by this Warrant Certificate may exercise such Warrants by:

 

(i) providing written notice of such election (“Warrant Exercise Notice”) to exercise the Warrants to the Company and the Warrant Agent at the addresses set forth in the Warrant Agreement, by hand or by facsimile, no later than 5:00 p.m., New York City time, on the Expiration Date, which Warrant Exercise Notice shall substantially be in the form of an election to purchase shares of Common Stock set forth herein, properly completed and executed by the holder; (ii) delivering no later than 5:00 p.m., New York City time, on the Business Day immediately prior to the Settlement Date, the Warrant Certificate evidencing such Warrants to the Warrant Agent; and (iii) paying the Exercise Price, together with any applicable taxes and governmental charges.

 

In lieu of paying the Exercise Price as set forth in the preceding paragraph, subject to the provisions of the Warrant Agreement, the Warrants shall entitle the holder thereof, at the election of such holder, to exercise the Warrants by authorizing the Company to withhold from issuance a number of shares of Common Stock issuable upon exercise of the Warrants which when multiplied by the Market Price of the Common Stock is equal to the aggregate Exercise Price for the number of Shares for which the Warrants are being exercised (assuming the Exercise Price for all such Shares was being paid in cash), and such withheld shares shall no longer be issuable under the Warrants.

 

In the event that upon any exercise of the Warrants evidenced hereby the number of shares of Common Stock actually purchased shall be less than the total number of shares of Common Stock purchasable upon exercise of the Warrants evidenced hereby, there shall be issued to the holder hereof, or such holder’s assignee, a new Warrant Certificate evidencing Warrants to purchase the shares of Common Stock not so purchased.  No adjustment shall be made for any cash dividends on any shares of Common Stock issuable upon exercise of Warrants.  After 5:00 p.m., New York City time on the Expiration Date, unexercised Warrants shall become wholly void and of no value.

 

The Company shall not be required to issue fractional shares of Common Stock or any certificates that evidence fractional Shares.

 

Warrant Certificates, when surrendered by book-entry delivery through the facilities of the Depository, may be exchanged, in the manner and subject to the limitations provided in the Warrant Agreement, but

 

A-1- 4



 

without payment of any service charge, for another Warrant Certificate or Warrant Certificates of like tenor evidencing Warrants to purchase in the aggregate a like number of shares of Common Stock.

 

No Warrants may be sold, exchanged or otherwise transferred in violation of the Securities Act or state securities laws.

 

The Company and Warrant Agent may deem and treat the registered holder hereof as the absolute owner of this Warrant Certificate (notwithstanding any notation of ownership or other writing hereon made by anyone) for the purpose of any exercise hereof and for all other purposes, and neither the Company nor the Warrant Agent shall be affected by any notice to the contrary.

 

[Balance of page intentionally remains blank]

 

A-1- 5



 

[TO BE ATTACHED TO GLOBAL WARRANT CERTIFICATE]

 

SCHEDULE OF INCREASES OR DECREASES IN GLOBAL WARRANT CERTIFICATE

 

The following increases or decreases in this Global Warrant have been made:

 

Date

 

Amount of
decrease in the
number of shares
issuable upon
exercise of the
Warrants
represented by this
Global Warrant

 

Amount of
increase in number
of shares issuable
upon exercise of
the Warrants
represented by this
Global Warrant

 

Number of shares
issuable upon
exercise of the
Warrants
represented by this
Global Security
following such
decrease or
increase

 

Signature of
authorized officer
of the Depositary

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

A-1- 6



 

FORM OF ELECTION TO EXERCISE WARRANT FOR
WARRANT HOLDERS HOLDING WARRANTS
THROUGH THE DEPOSITORY TRUST COMPANY

 

TO BE COMPLETED BY DIRECT PARTICIPANT
IN THE DEPOSITORY TRUST COMPANY

 

HALCÓN RESOURCES CORPORATION

 

Warrants to Purchase                          Shares of Common Stock

 

(TO BE EXECUTED UPON EXERCISE OF THE WARRANT)

 

The undersigned hereby irrevocably elects to exercise the right, represented by Warrants to purchase shares of Common Stock of Halcón Resources Corporation (the “Company”) held for its benefit through the book-entry facilities of The Depository Trust Company (the “Depository”), to purchase                    newly issued shares of Common Stock of the Company at the Exercise Price of $                     per share.

 

The undersigned represents, warrants and promises that it has the full power and authority to exercise and deliver the Warrants exercised hereby.  The undersigned represents, warrants and promises that it has delivered or will deliver in payment for such shares $                       by certified or official bank or bank cashier’s check payable to the order of the Company, or by wire transfer in immediately available funds of the aggregate Exercise Price to an account of the Warrant Agent specified in writing by the Warrant Agent for such purpose or through a cashless exercise (as described below), no later than 5:00 p.m., New York City time, on the Business Day immediately prior to the Settlement Date.

 

Please check if the undersigned, in lieu of paying the Exercise Price as set forth in the preceding paragraph, elects to exercise Warrants by authorizing the Company to withhold from issuance a number of shares of Common Stock issuable upon exercise of the Warrants which when multiplied by the Market Price of the Common Stock is equal to the aggregate Exercise Price for the number of Shares for which the Warrants are being exercised (assuming the Exercise Price for all such Shares was being paid in cash), and such withheld shares of Common Stock shall no longer be issuable under the Warrants.

 

The undersigned requests that the shares of Common Stock purchased hereby be in registered form in the authorized denominations, registered in such names and delivered, all as specified in accordance with the instructions set forth below, provided that if the shares of Common Stock are evidenced by global securities, the shares of Common Stock shall be registered in the name of the Depository or its nominee.

 

Dated:

 

NOTE: THIS EXERCISE NOTICE MUST BE DELIVERED TO THE WARRANT AGENT, PRIOR TO 5:00 P.M., NEW YORK CITY TIME, ON THE EXPIRATION DATE.  THE WARRANT AGENT SHALL NOTIFY YOU (THROUGH THE CLEARING SYSTEM) OF (1) THE WARRANT AGENT’S ACCOUNT AT THE DEPOSITORY TO WHICH YOU MUST DELIVER YOUR WARRANTS ON THE EXERCISE DATE AND (2) THE ADDRESS, PHONE NUMBER AND FACSIMILE NUMBER WHERE YOU CAN CONTACT THE WARRANT AGENT AND TO WHICH WARRANT EXERCISE NOTICES ARE TO BE SUBMITTED.

 

NAME OF DIRECT PARTICIPANT IN THE DEPOSITORY:

 

 

 

(PLEASE PRINT)

 

A-1- 7



 

ADDRESS:

 

CONTACT NAME:

 

ADDRESS:

 

TELEPHONE (INCLUDING INTERNATIONAL CODE):

 

FAX (INCLUDING INTERNATIONAL CODE):

 

SOCIAL SECURITY OR OTHER TAXPAYER IDENTIFICATION NUMBER (IF APPLICABLE):

 

ACCOUNT FROM WHICH WARRANTS ARE BEING DELIVERED:

 

DEPOSITORY ACCOUNT NO.”

 

WARRANT EXERCISE NOTICES WILL ONLY BE VALID IF DELIVERED IN ACCORDANCE WITH THE INSTRUCTIONS SET FORTH IN THIS NOTIFICATION (OR AS OTHERWISE DIRECTED), MARKED TO THE ATTENTION OF “WARRANT EXERCISE”.  WARRANT HOLDER DELIVERING WARRANTS, IF OTHER THAN THE DIRECT DTC PARTICIPANT DELIVERING THIS WARRANT EXERCISE NOTICE:

 

NAME:

 

(PLEASE PRINT)

 

CONTACT NAME:

 

TELEPHONE (INCLUDING INTERNATIONAL CODE):

 

FAX (INCLUDING INTERNATIONAL CODE):

 

SOCIAL SECURITY OR OTHER TAXPAYER IDENTIFICATION NUMBER (IF APPLICABLE):

 

ACCOUNT TO WHICH THE SHARES OF COMMON STOCK ARE TO BE CREDITED:

 

DEPOSITORY ACCOUNT

 

NO.:

 

FILL IN FOR DELIVERY OF THE COMMON STOCK, IF OTHER THAN TO THE PERSON DELIVERING THIS WARRANT EXERCISE NOTICE:

 

NAME:

 

(PLEASE PRINT)

 

ADDRESS:

 

CONTACT

 

A-1- 8



 

NAME:

 

TELEPHONE (INCLUDING INTERNATIONAL CODE):

 

FAX (INCLUDING INTERNATIONAL CODE):

 

SOCIAL SECURITY OR OTHER TAXPAYER IDENTIFICATION NUMBER (IF APPLICABLE):

 

 

NUMBER OF SHARES OF COMMON STOCK FOR WHICH WARRANT IS BEING EXERCISED

 

(ONLY ONE EXERCISE PER WARRANT EXERCISE NOTICE):

 

Signature:

 

 

 

 

Name:

 

 

 

 

Capacity in which

 

 

 

Signing:

 

 

 

 

 

 

Signature Guaranteed

 

 

 

BY:

 

 

 

Signatures must be guaranteed by a participant in a Medallion Signature Guarantee Program at a guarantee level acceptable to the Company’s transfer agent.

 

A-1- 9



 

EXHIBIT A-2

 

FORM OF FACE OF INDIVIDUAL WARRANT CERTIFICATE

 

VOID AFTER 5:00 P.M., New York City Time, September 9, 2020

 

This Individual Warrant Certificate may not be sold, exchanged or otherwise transferred in violation of the Securities Act or state securities laws, or otherwise in a manner that is prohibited by Section 6 of the Warrant Agreement.

 

To the extent that any provision hereof conflicts with any provision of the Warrant Agreement, the provision in the Warrant Agreement shall control.

 

A-2- 1



 

WARRANTS TO PURCHASE

 

SHARES OF COMMON STOCK

 

HALCÓN RESOURCES CORPORATION

 

INDIVIDUAL WARRANT TO PURCHASE COMMON STOCK

 

VOID AFTER 5:00 P.M., New York City Time, September 9, 2020

 

This Individual Warrant Certificate (“Warrant Certificate”) certifies that                         , or its registered assigns is the registered holder of Warrants (the “Warrants”) of Halcón Resources Corporation, a Delaware corporation (the “Company”), to purchase the number of shares (the “Shares”) of common stock, par value $0.0001 per share (the “Common Stock”), of the Company set forth above.  The Warrants expire at 5:00 p.m., New York City time, on the date that is the four year anniversary of the Effective Date (such date, the “Expiration Date”), and each Warrant entitles the holder to purchase from the Company one fully paid and non-assessable Share at the exercise price (the “Exercise Price”), payable to the Company either by certified or official bank or bank cashier’s check payable to the order of the Company, or by wire transfer in immediately available funds of the aggregate Exercise Price to an account of the Warrant Agent specified in writing by the Warrant Agent for such purpose, no later than 5:00 p.m., New York City time, on the business day immediately prior to the settlement date, which settlement date is three Business Days after a Warrant Exercise Notice is delivered (the “Settlement Date”).  The initial Exercise Price shall be $14.04.

 

In lieu of paying the Exercise Price as set forth in the preceding paragraph, subject to the provisions of the Warrant Agreement (as defined on the reverse hereof), the Warrants shall entitle the holder thereof, at the election of such holder, to exercise the Warrants by authorizing the Company to withhold from issuance a number of Shares issuable upon exercise of the Warrants which when multiplied by the Market Price of the Common Stock is equal to the aggregate Exercise Price for the number of Shares for which the Warrants are being exercised (assuming the Exercise Price for all such Shares was being paid in cash), and such withheld Shares shall no longer be issuable under the Warrants.

 

The Exercise Price and the number of Shares purchasable upon exercise of the Warrants are subject to adjustment upon the occurrence of certain events as set forth in the Warrant Agreement.

 

To the extent that any provision hereof conflicts with any provision of the Warrant Agreement, the provision in the Warrant Agreement shall control.

 

No Warrant may be exercised prior to the date of the Warrant Agreement or after the Expiration Date.

 

After 5:00 p.m., New York City time, on the Expiration Date, the Warrants will become wholly void and of no value.

 

REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS OF THIS WARRANT CERTIFICATE SET FORTH ON THE REVERSE HEREOF.  SUCH FURTHER PROVISIONS SHALL FOR ALL PURPOSES HAVE THE SAME EFFECT AS THOUGH FULLY SET FORTH AT THIS PLACE.

 

This Warrant Certificate shall not be valid unless countersigned by the Warrant Agent.

 

A-2- 2



 

IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to be executed by its duly authorized officer.

 

Dated:

 

 

 

 

 

 

HALCÓN RESOURCES CORPORATION

 

 

 

By:

 

 

Name:

 

Title:

 

 

 

 

 

By:

 

 

Name:

 

Title:

 

 

 

 

 

U.S. Bank National Association

 

as Warrant Agent

 

 

 

By:

 

 

Name:

 

Title:

 

 

A-2- 3



 

FORM OF REVERSE OF INDIVIDUAL WARRANT CERTIFICATE
HALCÓN RESOURCES CORPORATION

 

The Warrants evidenced by this Warrant Certificate is a part of a duly authorized issue of Warrants to purchase shares of Common Stock issued pursuant to that certain Warrant Agreement, dated as of the Effective Date of the Plan (the “Warrant Agreement”), duly executed and delivered by the Company and U.S. Bank National Association, as Warrant Agent (the “Warrant Agent”).  The Warrant Agreement hereby is incorporated by reference in and made a part of this instrument and is hereby referred to for a description of the rights, limitation of rights, obligations, duties and immunities thereunder of the Warrant Agent, the Company and the holders (the words “holders” or “holder” meaning the registered holders or registered holder) of the Warrants.  A copy of the Warrant Agreement may be inspected at the Warrant Agent’s office and is available upon written request addressed to the Company.  All capitalized terms used on the face of this Warrant Certificate but not defined herein and are defined in the Warrant Agreement shall have the meanings assigned to them therein.

 

Warrants may be exercised to purchase Warrant Shares from the Company from the date of the Warrant Agreement through 5:00 p.m., New York City time, on the Expiration Date, at the Exercise Price set forth on the face hereof, subject to adjustment as described in the Warrant Agreement.  Subject to the terms and conditions set forth herein and in the Warrant Agreement, the holder of the Warrants evidenced by this Warrant Certificate may exercise such Warrants by:

 

(i) providing written notice of such election (“Warrant Exercise Notice”) to exercise the Warrants to the Company and the Warrant Agent at the addresses set forth in the Warrant Agreement, by hand or by facsimile, no later than 5:00 p.m., New York City time, on the Expiration Date, which Warrant Exercise Notice shall substantially be in the form of an election to purchase shares of Common Stock set forth herein, properly completed and executed by the holder; (ii) delivering no later than 5:00 p.m., New York City time, on the Business Day immediately prior to the Settlement Date, the Warrant Certificate evidencing such Warrants to the Warrant Agent; and (iii) paying the Exercise Price, together with any applicable taxes and governmental charges.

 

In lieu of paying the Exercise Price as set forth in the preceding paragraph, subject to the provisions of the Warrant Agreement, the Warrants shall entitle the holder thereof, at the election of such holder, to exercise the Warrants by authorizing the Company to withhold from issuance a number of shares of Common Stock issuable upon exercise of the Warrants which when multiplied by the Market Price of the Common Stock is equal to the aggregate Exercise Price for the number of Shares for which the Warrants are being exercised (assuming the Exercise Price for all such Shares was being paid in cash), and such withheld shares shall no longer be issuable under the Warrants.

 

In the event that upon any exercise of the Warrants evidenced hereby the number of shares of Common Stock actually purchased shall be less than the total number of shares of Common Stock purchasable upon exercise of the Warrants evidenced hereby, there shall be issued to the holder hereof, or such holder’s assignee, a new Warrant Certificate evidencing Warrants to purchase the shares of Common Stock not so purchased.  No adjustment shall be made for any cash dividends on any shares of Common Stock issuable upon exercise of Warrants.  After 5:00 p.m., New York City time on the Expiration Date, unexercised Warrants shall become wholly void and of no value.

 

The Company shall not be required to issue fractional shares of Common Stock or any certificates that evidence fractional Shares.

 

Warrant Certificates, when surrendered by book-entry delivery through the facilities of the Depository, may be exchanged, in the manner and subject to the limitations provided in the Warrant Agreement, but

 

A-2- 4



 

without payment of any service charge, for another Warrant Certificate or Warrant Certificates of like tenor evidencing Warrants to purchase in the aggregate a like number of shares of Common Stock.

 

No Warrants may be sold, exchanged or otherwise transferred in violation of the Securities Act or state securities laws.

 

The Company and Warrant Agent may deem and treat the registered holder hereof as the absolute owner of this Warrant Certificate (notwithstanding any notation of ownership or other writing hereon made by anyone) for the purpose of any exercise hereof and for all other purposes, and neither the Company nor the Warrant Agent shall be affected by any notice to the contrary.

 

[Balance of page intentionally remains blank]

 

A-2- 5



 

FORM OF ELECTION TO EXERCISE WARRANT FOR
WARRANT HOLDERS HOLDING INDIVIDUAL WARRANT CERTIFICATES

 

TO BE COMPLETED BY REGISTERD HOLDER

 

HALCÓN RESOURCES CORPORATION

 

Warrants to Purchase                          Shares of Common Stock

 

(TO BE EXECUTED UPON EXERCISE OF THE WARRANT)

 

The undersigned hereby irrevocably elects to exercise the right, represented by Warrants to purchase shares of Common Stock of Halcón Resources Corporation (the “Company”), to purchase                  newly issued shares of Common Stock of the Company at the Exercise Price of $                     per share.

 

The undersigned represents, warrants and promises that it has the full power and authority to exercise and deliver the Warrants exercised hereby.  The undersigned represents, warrants and promises that it has delivered or will deliver in payment for such shares $                         by certified or official bank or bank cashier’s check payable to the order of the Company, or by wire transfer in immediately available funds of the aggregate Exercise Price to an account of the Warrant Agent specified in writing by the Warrant Agent for such purpose or through a cashless exercise (as described below), no later than 5:00 p.m., New York City time, on the Business Day immediately prior to the Settlement Date.

 

Please check if the undersigned, in lieu of paying the Exercise Price as set forth in the preceding paragraph, elects to exercise Warrants by authorizing the Company to withhold from issuance a number of shares of Common Stock issuable upon exercise of the Warrants which when multiplied by the Market Price of the Common Stock is equal to the aggregate Exercise Price for the number of Shares for which the Warrants are being exercised (assuming the Exercise Price for all such Shares was being paid in cash), and such withheld shares of Common Stock shall no longer be issuable under the Warrants.

 

The undersigned requests that the shares of Common Stock purchased hereby be in registered form in the authorized denominations, registered in such names and delivered, all as specified in accordance with the instructions set forth below, provided that if the shares of Common Stock are evidenced by global securities, the shares of Common Stock shall be registered in the name of the Depository or its nominee.

 

Dated:

 

NOTE: THIS EXERCISE NOTICE MUST BE DELIVERED TO THE WARRANT AGENT, PRIOR TO 5:00 P.M., NEW YORK CITY TIME, ON THE EXPIRATION DATE.  THE WARRANT AGENT SHALL NOTIFY YOU OF THE ADDRESS, PHONE NUMBER AND FACSIMILE NUMBER WHERE YOU CAN CONTACT THE WARRANT AGENT AND TO WHICH WARRANT EXERCISE NOTICES ARE TO BE SUBMITTED.

 

NAME OF REGISTERED HOLDER:

 

(PLEASE PRINT)

 

ADDRESS:

 

DELIVERY ADDRESS (IF DIFFERENT):

 

A-2- 6



 

TELEPHONE (INCLUDING INTERNATIONAL CODE):

 

FAX (INCLUDING INTERNATIONAL CODE):

 

SOCIAL SECURITY OR OTHER TAXPAYER IDENTIFICATION NUMBER:

 

NUMBER OF SHARES OF COMMON STOCK FOR WHICH WARRANT IS BEING EXERCISED

 

(ONLY ONE EXERCISE PER WARRANT EXERCISE NOTICE):

 

Signature:

 

 

 

Note: If the Warrant Shares are to be registered in a name other than that in which the Individual Warrants are registered, the signature of the holder hereof must be guaranteed.

 

Signature Guaranteed

 

BY:

 

 

 

Signatures must be guaranteed by a participant in a Medallion Signature Guarantee Program at a guarantee level acceptable to the Company’s transfer agent.

 

A-2- 7



 

EXHIBIT B-1

 

FORM OF ASSIGNMENT

 

(TO BE EXECUTED BY THE REGISTERED HOLDER
IF SUCH HOLDER DESIRES TO TRANSFER A WARRANT)

 

FOR VALUE RECEIVED, the undersigned registered holder hereby sells, assigns and transfers unto

 

 

Name of Assignee

 

                                                                                                                                                                                                     Address of Assignee

 

Warrants to purchase                  shares of Common Stock held by the undersigned, together with all right, title and interest therein, and does irrevocably constitute and appoint attorney, to transfer such Warrants on the books of the Warrant Agent, with full power of substitution.

 

 

Dated Signature

 

 

 

 

 

Social Security or Other Taxpayer

 

 

Identification Number of Assignee

 

SIGNATURE GUARANTEED BY:

 

 

 

 

Signatures must be guaranteed by a participant in a Medallion Signature Guarantee Program at a guarantee level acceptable to the Company’s transfer agent.

 

B-1- 1



 

EXHIBIT B-2

 

FORM OF ASSIGNMENT

 

(TO BE EXECUTED BY THE REGISTERED HOLDER
IF SUCH HOLDER DESIRES TO TRANSFER A WARRANT)

 

FOR VALUE RECEIVED, the undersigned registered holder hereby sells, assigns and transfers unto

 

 

Name of Assignee

 

                                                                                                                                                                                                     Address of Assignee

 

Warrants to purchase                  shares of Common Stock held by the undersigned, together with all right, title and interest therein, and does irrevocably constitute and appoint attorney, to transfer such Warrants on the books of the Warrant Agent, with full power of substitution.

 

 

Dated Signature

 

 

 

 

Social Security or Other Taxpayer

 

Identification Number of Assignee

 

SIGNATURE GUARANTEED BY:

 

 

 

 

Signatures must be guaranteed by a participant in a Medallion Signature Guarantee Program at a guarantee level acceptable to the Company’s transfer agent.

 

B-2- 1


Exhibit 10.4

 

HALCÓN RESOURCES CORPORATION
2016 LONG-TERM INCENTIVE PLAN

 

ARTICLE I
PURPOSE

 

SECTION 1.1.                                      Establishment. Halcón Resources Corporation, a Delaware corporation (the “Company”), has established this Halcón Resources Corporation 2016 Long-Term Incentive Plan (the “Plan”), effective as of September 9, 2016 (the “Effective Date”). Unless terminated earlier by the Board pursuant to Section 13.1, the Plan shall terminate as to the granting of new Awards on the day prior to the tenth anniversary of the Effective Date. The Plan shall continue in effect as long as Awards remain outstanding under the Plan and until all matters relating to the administration of the Plan have been settled.

 

SECTION 1.2.                                      Purpose . The purposes of the Plan are to create incentives which are designed to motivate Participants to put forth maximum effort toward the success and growth of the Company and to enable the Company and its Affiliated Entities and Subsidiaries to attract and retain experienced individuals who by their position, ability and diligence are able to make important contributions to the Company’s success, and thereby to enhance shareholder value. Toward these objectives, the Plan provides for the grant of Options, Restricted Stock Awards, Restricted Stock Units, SARs, Performance Units, Performance Bonuses, Stock Awards and Other Incentive Awards to Eligible Employees and the grant of Nonqualified Stock Options, Restricted Stock Awards, Restricted Stock Units, SARs, Performance Units, Stock Awards and Other Incentive Awards to Consultants and Eligible Directors, subject to the conditions set forth in the Plan.

 

SECTION 1.3.                                      Shares Subject to the Plan . Subject to the limitations set forth herein, Awards may be made under this Plan for a total of 10,000,000 shares of the Company’s Common Stock. The limitations of this Section 1.3 shall be subject to the adjustment provisions of Article XII.

 

ARTICLE II
DEFINITIONS

 

SECTION 2.1.                                      162(m) Requirements ” shall have the meaning ascribed to such term on Exhibit A hereto.

 

SECTION 2.2.                                      Affiliated Entity ” means any corporation, partnership, limited liability company or other form of legal entity in which a majority of the partnership or other similar interest thereof is owned or controlled, directly or indirectly, by the Company or one or more of its Subsidiaries or Affiliated Entities or a combination thereof. For purposes hereof, the Company, a Subsidiary or an Affiliated Entity shall be deemed to have a majority ownership interest in a partnership or limited liability company if the Company, such Subsidiary or Affiliated Entity shall be allocated a majority of partnership or limited liability company gains or losses or shall be or control a managing director or a general partner of such partnership or limited liability company.

 

SECTION 2.3.                                      Award ” means, individually or collectively, any Option, Restricted Stock Award, Restricted Stock Unit, SAR, Performance Unit, Performance Bonus, Stock Award or Other Incentive Award granted under the Plan to an Eligible Employee by the Committee or any Nonqualified Stock Option, Performance Unit, SAR, Restricted Stock Award, Restricted Stock Unit, Stock Award or Other Incentive Award granted under the Plan to a Consultant or an Eligible Director by the Committee pursuant to such terms, conditions, restrictions, and/or limitations, if any, as the Committee may establish by the Award Agreement or otherwise.

 



 

SECTION 2.4.                                      Award Agreement ” means any written (including electronic) instrument that establishes the terms, conditions, restrictions, and/or limitations applicable to an Award in addition to those established by this Plan and by the Committee’s exercise of its administrative powers.

 

SECTION 2.5.                                      Board ” means the Board of Directors of the Company.

 

SECTION 2.6.                                      Cash Dividend Right ” means a contingent right, granted in tandem with a specific Restricted Stock Unit Award, to receive an amount in cash equal to the cash distributions made by the Company with respect to a share of Common Stock during the period such Award is outstanding.

 

SECTION 2.7.                                      Change of Control Event ” means each of the following:

 

(a)                                  Any transaction in which shares of voting securities of the Company representing more than 50% of the total combined voting power of all outstanding voting securities of the Company are issued by the Company, or sold or transferred by the shareholders of the Company as a result of which those persons and entities who beneficially owned voting securities of the Company representing more than 50% of the total combined voting power of all outstanding voting securities of the Company immediately prior to such transaction cease to beneficially own voting securities of the Company representing more than 50% of the total combined voting power of all outstanding voting securities of the Company immediately after such transaction;

 

(b)                                  The merger or consolidation of the Company with or into another entity as a result of which those persons and entities who beneficially owned voting securities of the Company representing more than 50% of the total combined voting power of all outstanding voting securities of the Company immediately prior to such merger or consolidation cease to beneficially own voting securities of the Company representing more than 50% of the total combined voting power of all outstanding voting securities of the surviving corporation or resulting entity immediately after such merger of consolidation; or

 

(c)                                   The sale of all or substantially all of the Company’s assets to an entity of which those persons and entities who beneficially owned voting securities of the Company representing more than 50% of the total combined voting power of all outstanding voting securities of the Company immediately prior to such asset sale do not beneficially own voting securities of the purchasing entity representing more than 50% of the total combined voting power of all outstanding voting securities of the purchasing entity immediately after such asset sale.

 

SECTION 2.8.                                      Code ” means the Internal Revenue Code of 1986, as amended. References in the Plan to any section of the Code shall be deemed to include any amendments or successor provisions to such section and any regulations under such section.

 

SECTION 2.9.                                      Committee ” means (i) a committee, comprised of no fewer than two members of the Board, appointed by the Board by resolution to administer the Plan as provided in Section 3.1, or (ii) if no such committee has been appointed, the Board.

 

SECTION 2.10.                               Common Stock ” means the common stock, par value $0.0001 per share, of the Company, and after substitution, such other stock as shall be substituted therefore as provided in Article XII.

 

SECTION 2.11.                               Consultant ” means any person, other than a member of the Board, who is engaged by the Company, a Subsidiary or an Affiliated Entity to render consulting or advisory services.

 

2



 

SECTION 2.12.                               Date of Grant ” means the date on which the grant of an Award is authorized by the Committee or such later date as may be specified by the Committee.

 

SECTION 2.13.                               Disability ” means the Participant is unable to continue employment by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months. For purposes of this Plan, the determination of Disability shall be made in the sole and absolute discretion of the Committee.

 

SECTION 2.14.                               Dividend Unit Right ” means a contingent right, granted in tandem with a specific Restricted Stock Unit Award, to have an additional number of Restricted Stock Units credited to a Participant in respect of the Award equal to the number of shares of Common Stock that could be purchased at Fair Market Value with the amount of each cash distribution made by the Company with respect to a share of Common Stock during the period such Award is outstanding.

 

SECTION 2.15.                               Eligible Employee ” means any employee of the Company, a Subsidiary, or an Affiliated Entity as approved by the Committee.

 

SECTION 2.16.                               Eligible Director ” means any member of the Board who is not an employee of the Company, a Subsidiary or an Affiliated Entity or a Consultant.

 

SECTION 2.17.                               Exchange Act ” means the Securities Exchange Act of 1934, as amended.

 

SECTION 2.18.                               Fair Market Value ” means (a) during such time as the Common Stock is both registered under Section 12 of the Exchange Act and listed upon an established stock exchange or automated quotation system, the closing sales price of the Common Stock (or the closing bid, if no sales were reported) as quoted by an established stock exchange or automated quotation system on the day for which such value is to be determined, or, if there was no quoted price for such day, then for the last preceding business day on which there was a quoted price as reported in The Wall Street Journal or such other sources as the Committee deems reliable, or (b) during any such time as the Common Stock cannot be valued pursuant to (a) above, (i) with respect to Incentive Stock Options, the fair market value of the Common Stock as determined in good faith by the Committee within the meaning of Section 422 of the Code or (ii) the fair market value of the Common Stock as determined in good faith by the Committee using a “reasonable application of a reasonable valuation method” within the meaning of Treasury Regulation Section 1.409A-1(b)(5)(iv)(B) or other applicable valuation rules under the Code or other applicable law.

 

SECTION 2.19.                               Incentive Stock Option ” means an Option that is intended to be an “incentive stock option” within the meaning of Section 422 of the Code.

 

SECTION 2.20.                               Nonqualified Stock Option ” means an Option which is not an Incentive Stock Option.

 

SECTION 2.21.                               Other Incentive Award ” means an incentive award granted to an Eligible Employee, Consultant or Eligible Director under Article XI of the Plan.

 

SECTION 2.22.                               Option ” means an Award granted under Article V of the Plan and includes both Nonqualified Stock Options and Incentive Stock Options to purchase shares of Common Stock.

 

SECTION 2.23.                               Participant ” means an Eligible Employee, a Consultant or an Eligible Director to whom an Award has been granted by the Committee under the Plan.

 

3



 

SECTION 2.24.                               Performance Bonus ” means the bonus which may be granted to Eligible Employees under Article X of the Plan.

 

SECTION 2.25.                               Performance Units ” means those monetary units and/or units representing notional shares of Common Stock that may be granted to Eligible Employees, Consultants or Eligible Directors pursuant to Article IX hereof.

 

SECTION 2.26.                               Plan ” means the Halcón Resources Corporation 2016 Long-Term Incentive Plan.

 

SECTION 2.27.                               Restriction Period ” means the period during which an Award remains subject to time- and/or performance-based restrictions.

 

SECTION 2.28.                               Restricted Stock Award ” means an Award granted to an Eligible Employee, Consultant or Eligible Director under Article VI of the Plan.

 

SECTION 2.29.                               Restricted Stock Unit ” means an Award granted to an Eligible Employee, Consultant or Eligible Director under Article VII of the Plan.

 

SECTION 2.30.                               Retirement ” means the termination of an Eligible Employee’s employment with the Company, a Subsidiary or an Affiliated Entity on or after attaining age 62.

 

SECTION 2.31.                               SAR ” means a stock appreciation right granted to an Eligible Employee, Consultant or Eligible Director under Article VIII of the Plan.

 

SECTION 2.32.                               Stock Award ” means an Award granted to an Eligible Employee, Consultant or Eligible Director under Article XI of the Plan.

 

SECTION 2.33.                               Subsidiary ” means a “subsidiary corporation” of the Company, as defined in Section 424(f) of the Code.

 

ARTICLE III
ADMINISTRATION

 

SECTION 3.1.                                      Administration of the Plan . The Board shall administer the Plan. The Board may, by resolution, appoint a Committee to administer the Plan and delegate its powers described under this Section 3.1 for purposes of Awards granted to Eligible Employees and Consultants. If determined to be necessary by the Board, each Committee member shall satisfy the requirements for (i) an “independent director” under rules adopted by the New York Stock Exchange or other principal exchange on which the Common Stock is then listed, (ii) a “nonemployee director” within the meaning of Rule 16b-3 under the Exchange Act and (iii) an “outside director” under Section 162(m) of the Code. Notwithstanding the foregoing, the mere fact that a Committee member shall fail to qualify under any of the foregoing requirements shall not invalidate any Award made by the Committee that is otherwise validly made under the Plan. Neither the Company nor any member of the Committee shall be liable for any action or determination made in good faith by the Committee with respect to the Plan or any Award thereunder. The acts of the Committee shall be either (i) acts of a majority of the members of the Committee present at any meeting at which a quorum is present or (ii) acts approved by all of the members of the Committee without a meeting. A majority of the Committee shall constitute a quorum. The Committee’s determinations under the Plan need not be uniform and may be made selectively among Participants, whether or not such Participants are similarly situated. Each member of the Committee is entitled to, in good faith, rely or act upon any report or other information furnished to that member by any Eligible

 

4



 

Employee of the Company, the Company’s independent certified public accountants or any executive compensation consultant or other professional retained by the Company or the Committee to assist in the administration of the Plan. The Company shall effect the granting of Awards under the Plan, in accordance with the determinations made by the Committee, by execution of written agreements and/or other instruments in such form as is approved by the Committee. Subject to the provisions of the Plan, the Committee shall have exclusive power to:

 

(a)                                  Select Eligible Employees and Consultants to participate in the Plan.

 

(b)                                  Determine the time or times when Awards will be made to Eligible Employees or Consultants.

 

(c)                                   Determine the form of an Award, whether an Incentive Stock Option, Nonqualified Stock Option, Restricted Stock Award, Restricted Stock Unit, SAR, Performance Unit, Performance Bonus, Stock Award or Other Incentive Award, the number of shares of Common Stock, Performance Units or Restricted Stock Units subject to the Award, the amount and all the terms, conditions (including performance requirements), restrictions and/or limitations, if any, of an Award, including the time and conditions of exercise or vesting, and the terms of any Award Agreement, which may include the waiver or amendment of prior terms and conditions or acceleration or early vesting or payment of an Award.

 

(d)                                  Determine whether Awards will be granted singly or in combination.

 

(e)                                   Adopt rules for the administration, interpretation and application of the Plan as are consistent therewith, and interpret, amend or revoke any such rules.

 

(f)                                    Correct any defect(s) or omission(s) or reconcile any ambiguity(ies) or inconsistency(ies) in the Plan or any Award granted thereunder.

 

(g)                                   Make all other decisions and determinations it deems advisable for the administration of the Plan.

 

(h)                                  Decide all disputes arising in connection with the Plan and otherwise supervise the administration of the Plan.

 

(i)                                      Take any and all other action it deems necessary or advisable for the proper operation or administration of the Plan.

 

SECTION 3.2.                                      Administration of Grants to Eligible Directors . The Board shall have the exclusive power to select Eligible Directors to participate in the Plan and to determine the number of Nonqualified Stock Options, Performance Units, Restricted Stock Units, SARs, Stock Awards, Other Incentive Awards or the number of shares of Common Stock subject to a Restricted Stock Award awarded to Eligible Directors selected for participation. If the Board appoints a separate committee to administer the Plan, it may delegate to such committee administration of all other aspects of the Awards made to Eligible Directors.

 

SECTION 3.3.                                      Committee to Make Rules and Interpret Plan . The Committee in its sole discretion shall have the authority, subject to the provisions of the Plan, to establish, adopt, or revise such rules and regulations and to make all such determinations relating to the Plan, as it may deem necessary or advisable for the administration of the Plan. The Committee’s interpretation of the Plan or any Awards

 

5



 

and all decisions and determinations by the Committee with respect to the Plan shall be final, binding, and conclusive on all parties.

 

SECTION 3.4.                                      Delegation by Committee . Except to the extent prohibited by applicable law or the rules of any stock exchange on which the Common Stock is listed, the Committee may allocate all or any portion of its responsibilities and powers to any one or more of its members and may delegate all or any part of its responsibilities and powers to any person or persons selected by it. Any such allocation or delegation may be revoked by the Committee at any time.

 

SECTION 3.5.                                      Section 162(m) Provisions . In the event that the Committee determines that it is appropriate that an Award granted under the Plan qualify for the exemption from Section 162(m) of the Code for “qualified performance-based compensation”, a committee composed of two or more “outside directors” within the meaning of Section 162(m) of the Code shall make determinations as to the grant of the Award, all performance targets applicable thereto, and all other applicable provisions of the Plan as necessary in order for such Award to satisfy the “qualified performance based compensation” requirements of Section 162(m) of the Code

 

ARTICLE IV
GRANT OF AWARDS

 

SECTION 4.1.                                      Grant of Awards . Awards granted under this Plan shall be subject to the following conditions:

 

(a)                                  Subject to Article XII, (i) the aggregate number of shares of Common Stock made subject to the grant of Options and/or SARs to any Eligible Employee in any calendar year may not exceed 5,000,000, and (ii) the maximum aggregate number of shares that may be issued under the Plan through Incentive Stock Options is 10,000,000.

 

(b)                                  Subject to Article XII, the aggregate number of shares of Common Stock made subject to the grant of Restricted Stock Awards, Restricted Stock Unit Awards, Performance Unit Awards, Performance Bonus Awards, Stock Awards and Other Incentive Awards to any Eligible Employee in any calendar year which are intended to constitute “performance-based compensation” within the meaning of Section 162(m) of the Code may not exceed 10,000,000.

 

(c)                                   The maximum amount made subject to the grant of Performance Bonus Awards to any Eligible Employee in any calendar year may not exceed $5,000,000.

 

(d)                                  Any shares of Common Stock related to Awards which terminate by expiration, forfeiture, cancellation or otherwise without the issuance of shares of Common Stock or are exchanged in the Committee’s discretion for Awards not involving the issuance of shares of Common Stock, shall be available again for grant under the Plan and shall not be counted against the shares authorized under Section 1.3. Any shares of Common Stock issued as Restricted Stock Awards that subsequently are forfeited without vesting shall again be available for grant under the Plan and shall not be counted against the shares authorized under Section 1.3. Any Awards that, pursuant to the terms of the applicable Award Agreement, are to be settled in cash, whether or not denominated in or determined with reference to shares of Common Stock (for example, SARs, Performance Units or Restricted Stock Units to be settled in cash), shall not be counted against the shares authorized under Section 1.3.

 

(e)                                   Common Stock delivered by the Company in payment of an Award authorized under Articles V and VI of the Plan may be authorized and unissued Common Stock or Common

 

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Stock held in the treasury of the Company, but, for avoidance of doubt, shall not be available again for grant under the Plan.

 

(f)                                    The Committee shall, in its sole discretion, determine the manner in which fractional shares arising under this Plan shall be treated.

 

(g)                                   Separate certificates or a book-entry registration representing Common Stock shall be delivered to a Participant upon the exercise of any Option.

 

(h)                                  Except for adjustments pursuant to Article XII or reductions of the Exercise Price approved by the Company’s stockholders, the Exercise Price for any outstanding Option or SAR may not be decreased after the date of grant nor may an outstanding Option or SAR granted under the Plan be surrendered to the Company as consideration for the grant of a replacement Option or SAR with a lower exercise price or any other award under the Plan. Except as approved by the Company’s shareholders, in no event shall any Option or SAR granted under the Plan be surrendered to the Company in consideration for a cash payment if, at the time of such surrender, the Exercise Price of the Option or SAR is greater than the then current Fair Market Value of a share of Common Stock.

 

(i)                                      Eligible Directors and Consultants may only be granted Nonqualified Stock Options, Restricted Stock Awards, Restricted Stock Units, SARs, Performance Units, Stock Awards or Other Incentive Awards under this Plan.

 

(j)                                     The maximum term of any Award shall be ten years.

 

(k)                                  If an Award is denominated in Common Stock but an equivalent amount of cash is delivered in lieu of delivery of shares of Common Stock, any limitations in this Section 4.1 shall be applied based on the methodology used by the Committee to convert the number of shares of Common Stock into cash. If an Award is denominated in cash but an equivalent number of shares of Common Stock are delivered in lieu of delivery of cash, any limitations in this Section 4.1 shall be applied based on the methodology used by the Committee to convert the cash to shares of Common Stock.

 

ARTICLE V
STOCK OPTIONS

 

SECTION 5.1.                                      Grant of Options . The Committee may, from time to time, subject to the provisions of the Plan and such other terms and conditions as it may determine, grant Options to Eligible Employees. These Options may be Incentive Stock Options or Nonqualified Stock Options, or a combination of both. The Committee may, subject to the provisions of the Plan and such other terms and conditions as it may determine, grant Nonqualified Stock Options to Eligible Directors and Consultants. Each grant of an Option shall be evidenced by an Award Agreement executed by the Company and the Participant, and shall contain such terms and conditions and be in such form as the Committee may from time to time approve, subject to the requirements of Section 5.2. An Option will be deemed to be a Nonqualified Stock Option unless it is specifically designated by the Committee as an Incentive Stock Option. Any Stock Option that is intended to constitute an Incentive Stock Option shall satisfy any other requirements of Code Section 422 and, to the extent such Option does not satisfy such requirements, the Option shall be treated as a Nonqualified Stock Option. The Shares subject to any Option granted to a Participant under the Plan shall qualify as “service recipient stock” with respect to such Participant for purposes of Section 409A of the Code.

 

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SECTION 5.2.                                      Conditions of Options . Each Option so granted shall be subject to the following conditions:

 

(a)                                  Exercise Price . As limited by Section 5.2(e) below, each Option shall state the exercise price, which shall be set by the Committee at the Date of Grant; provided, however, no Option shall be granted at an exercise price which is less than the Fair Market Value of the Common Stock on the Date of Grant unless the Option is granted through the assumption of, or in substitution for, outstanding awards previously granted to individuals who became Eligible Employees (or other service providers) as a result of a merger, consolidation, acquisition or other corporate transaction involving the Company which complies with Treasury Regulation § 1.409A-1(b)(5)(v)(D).

 

(b)                                  Form of Payment . The exercise price of an Option may be paid (i) in cash or by check, bank draft or money order payable to the order of the Company; (ii) subject to prior approval by the Committee in its discretion, by delivering previously acquired shares of Common Stock having an aggregate Fair Market Value on the date of payment equal to the amount of the exercise price, but only to the extent such exercise of an Option would not result in an adverse accounting charge to the Company for financial accounting purposes with respect to the shares used to pay the exercise price unless otherwise determined by the Committee; (iii) subject to prior approval by the Committee in its discretion, by withholding shares of Common Stock which otherwise would be acquired on exercise having an aggregate Fair Market Value on the date of payment equal to the amount of the exercise price; or (iv) subject to prior approval by the Committee in its discretion, by a combination of the foregoing. In addition to the foregoing, the Committee may permit an Option granted under the Plan to be exercised by a broker-dealer acting on behalf of a Participant through procedures approved by the Committee. Such procedures may include a broker either (A) selling all of the shares of Common Stock received when an Option is exercised and paying the Participant the proceeds of the sale (minus the exercise price, withholding taxes and any fees due to the broker) or (B) selling enough of the shares of Common Stock received upon exercise of the Option to cover the exercise price, withholding taxes and any fees due to the broker and delivering to the Participant (either directly or through the Company) a stock certificate for the remaining shares of Common Stock.

 

(c)                                   Exercise of Options .

 

(i)                                      Options granted under the Plan shall be exercisable, in whole or in such installments and at such times, and shall expire at such time, as shall be provided by the Committee in the Award Agreement. Exercise of an Option shall be by written notice to the Senior Vice President, Human Resources of the Company (or such other officer as may be designated by the Committee) in advance of such exercise stating the election to exercise in the form and manner determined by the Committee. Every share of Common Stock acquired through the exercise of an Option shall be deemed to be fully paid at the time of exercise and payment of the exercise price.

 

(ii)                                   Unless otherwise provided in an Award Agreement or determined by the Committee, the following provisions will apply to the exercisability of Options following the termination of a Participant’s employment or service with the Company, a Subsidiary or an Affiliated Entity:

 

(A)                                If an Eligible Employee’s employment with the Company, the Subsidiaries and the Affiliated Entities terminates as a result of death, Disability or Retirement, the Eligible Employee (or personal representative in the case of

 

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death) shall be entitled to purchase all or any part of the shares subject to any (i) vested Incentive Stock Option for a period of up to three months from such date of termination (one year in the case of death or Disability in lieu of the three-month period) and (ii) vested Nonqualified Stock Option during the remaining term of the Option. If an Eligible Employee’s employment terminates for any other reason, except for cause (as determined by the Committee), the Eligible Employee shall be entitled to purchase all or any part of the shares subject to any vested Option for a period of up to three months from such date of termination. In no event shall any Option be exercisable past the term of the Option.

 

(B)                                In the event a Consultant ceases to provide services to the Company, the Subsidiaries and the Affiliated Entities, or an Eligible Director ceases to serve as a director of the Company, the unvested portion of any Option shall be forfeited unless otherwise accelerated pursuant to the terms of the Consultant’s or Eligible Director’s Award Agreement or by the Committee. The Consultant or Eligible Director shall have a period of three years following the date he or she ceases to provide consulting services or ceases to be a director, as applicable, to exercise any Nonqualified Stock Options which are otherwise exercisable on his or her date of termination of service.

 

(d)                                  Other Terms and Conditions . Among other conditions that may be imposed by the Committee, if deemed appropriate, are those relating to (i) the period or periods and the conditions of exercisability of any Option; (ii) the minimum periods during which Participants must be employed by or in service to the Company, its Subsidiaries, or an Affiliated Entity, or must hold Options before they may be exercised; (iii) the minimum periods during which shares acquired upon exercise must be held before sale or transfer shall be permitted; (iv) conditions under which such Options or shares may be subject to forfeiture; (v) the frequency of exercise or the minimum or maximum number of shares that may be acquired at any one time; (vi) the achievement by the Company of specified performance criteria; and (vii) non-compete and protection of business matters.

 

(e)                                   Special Restrictions Relating to Incentive Stock Options .

 

(i)                                      Options issued in the form of Incentive Stock Options shall only be granted to Eligible Employees of the Company or a Subsidiary.

 

(ii)                                   No Incentive Stock Option shall be granted to an Eligible Employee who owns or who would own immediately before the grant of such Incentive Stock Option more than 10% of the combined voting power of the Company or its Subsidiaries or a “parent corporation,” unless (A) at the time such Incentive Stock Option is granted the exercise price is at least 110% of the Fair Market Value of a share of Common Stock on the Date of Grant and (B) such Option by its terms is not exercisable after the expiration of five years from the Date of Grant. For purposes of this Section 5.2(e), “parent corporation” means a “parent corporation” of the Company, as defined in Section 424(e) of the Code.

 

(iii)                                To the extent that the aggregate Fair Market Value (determined at the time an Incentive Stock Option is granted) of shares of Common Stock with respect to which Incentive Stock Options are exercisable for the first time by an individual during any calendar year under all incentive stock option plans of the Company and its Subsidiaries and parent corporations exceeds $100,000, such excess Incentive Stock

 

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Options shall be treated as Nonqualified Stock Options. The Committee shall determine, in accordance with applicable provisions of the Code, Treasury Regulations and other administrative pronouncements, which of a Participant’s Options will not constitute Incentive Stock Options because of such limitation and shall notify the Participant of such determination as soon as practicable after such determination is made.

 

(iv)                               Each Participant awarded an Incentive Stock Option shall notify the Company in writing immediately after the date he or she makes a disqualifying disposition of any shares of Common Stock acquired pursuant to the exercise of such Incentive Stock Option. A disqualifying disposition is any disposition (including any sale) of such Common Stock before the later of (i) two years after the Date of Grant of the Incentive Stock Option or (ii) one year after the date of exercise of the Incentive Stock Option.

 

(v)                                  Except in the case of death, an Option will not be treated as an Incentive Stock Option unless at all times beginning on the Date of Grant and ending on the day three months (one year in the case of a Participant who is “disabled” within the meaning of Section 22(e)(3) of the Code) before the date of exercise of the Option, the Participant is an employee of the Company or a parent corporation of the Company or a Subsidiary (or a corporation or a parent corporation or subsidiary corporation of such corporation issuing or assuming an Option in a transaction to which Section 424(a) of the Code applies).

 

(f)                                    Application of Funds . The proceeds received by the Company from the sale of Common Stock pursuant to Options will be used for general corporate purposes.

 

(g)                                   Shareholder Rights . No Participant shall have a right as a shareholder with respect to any share of Common Stock subject to an Option prior to purchase of such shares of Common Stock by exercise of the Option.

 

ARTICLE VI
RESTRICTED STOCK AWARDS

 

SECTION 6.1.                                      Grant of Restricted Stock Awards . The Committee may, from time to time, subject to the provisions of the Plan and such other terms and conditions as it may determine, grant a Restricted Stock Award to Eligible Employees, Consultants or Eligible Directors. Restricted Stock Awards shall be awarded in such number and at such times during the term of the Plan as the Committee shall determine. Each Restricted Stock Award shall be subject to an Award Agreement setting forth the terms of such Restricted Stock Award and may be evidenced in such manner as the Committee deems appropriate, including, without limitation, a book-entry registration or issuance of a stock certificate or certificates.

 

SECTION 6.2.                                      Conditions of Restricted Stock Awards . The grant of a Restricted Stock Award shall be subject to the following:

 

(a)                                  Restriction Period . Restricted Stock Awards shall be subject to such time- and/or performance-based restrictions as the Committee shall determine and set forth in the applicable Award Agreement. Restricted Stock Awards granted to an Eligible Employee may require the holder to remain in the employment of the Company, a Subsidiary, or an Affiliated Entity for a prescribed period. Restricted Stock Awards granted to Consultants or Eligible Directors may require the holder to provide continued services to the Company for a period of time. In addition

 

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to or in lieu of any time vesting conditions determined by the Committee, vesting and/or the grant of Restricted Stock Awards may be subject to the achievement by the Company of specified performance criteria, which may, without limitation, be based upon the Company’s achievement of all or any of the operational, financial or stock performance criteria set forth on Exhibit A annexed hereto, in all events as may from time to time be established by the Committee. The Committee also will determine whether the Award is intended to satisfy the 162(m) Requirements, as described in Exhibit A. Upon the fulfillment of any specified vesting conditions, the Restriction Period shall expire, and the restrictions imposed by the Committee shall lapse with respect to the shares of Common Stock covered by the Restricted Stock Award or portion thereof.

 

(b)                                  Restrictions . The holder of a Restricted Stock Award may not sell, transfer, pledge, exchange, hypothecate, or otherwise dispose of the shares of Common Stock represented by the Restricted Stock Award during the applicable Restriction Period. The Committee shall impose such other restrictions and conditions on any shares of Common Stock covered by a Restricted Stock Award as it may deem advisable including, without limitation, restrictions under applicable federal or state securities laws, and may legend the certificates representing shares of Common Stock covered by a Restricted Stock Award to give appropriate notice of such restrictions.

 

(c)                                   Rights as Shareholders . During any Restriction Period, the Committee may, in its discretion, grant to the holder of a Restricted Stock Award all or any of the rights of a shareholder with respect to the shares, including, but not by way of limitation, the right to vote such shares and to receive dividends. If any dividends or other distributions are paid in shares of Common Stock, all such shares shall be subject to the same restrictions on transferability as the shares of Common Stock covered by the Restricted Stock Award with respect to which they were paid.

 

ARTICLE VII
RESTRICTED STOCK UNITS

 

SECTION 7.1.                                      Grant of Restricted Stock Units. The Committee may, from time to time, subject to the provisions of the Plan and such other terms and conditions as it may determine, grant Restricted Stock Units to Eligible Employees, Consultants or Eligible Directors. Restricted Stock Units shall be awarded in such number and at such times during the term of the Plan as the Committee shall determine. Each Award of Restricted Stock Units shall be subject to an Award Agreement setting forth the terms of such Award of Restricted Stock Units. A Participant shall not be required to make any payment for Restricted Stock Units.

 

SECTION 7.2.                                      Conditions of Restricted Stock Units . The grant of Restricted Stock Units shall be subject to the following:

 

(a)                                  Restriction Period . Restricted Stock Units shall be subject to such time- and/or performance-based restrictions as the Committee shall determine and set forth in the applicable Award Agreement. Restricted Stock Units granted to an Eligible Employee may require the holder to remain in the employment of the Company, a Subsidiary, or an Affiliated Entity for a prescribed period. Restricted Stock Units granted to Consultants or Eligible Directors may require the holder to provide continued services to the Company for a period of time. In addition to or in lieu of any time vesting conditions determined by the Committee, vesting and/or the grant of Restricted Stock Units may be subject to the achievement by the Company of specified performance criteria, which may, without limitation, be based upon the Company’s achievement of all or any of the operational, financial or stock performance criteria set forth on Exhibit A

 

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annexed hereto, in all events as may from time to time be established by the Committee. The Committee also will determine whether the Award is intended to satisfy the 162(m) Requirements, as described in Exhibit A. Upon the fulfillment of any specified vesting conditions, the Restriction Period shall expire, and the restrictions imposed by the Committee shall lapse with respect to the Restricted Stock Units.

 

(b)                                  Lapse of Restrictions . The Participant shall be entitled to receive one share of Common Stock or an amount of cash equal to the Fair Market Value of one share of Common Stock, as provided in the Award Agreement upon settlement of a Restricted Stock Unit for which the restrictions have lapsed.

 

(c)                                   Cash Dividend Rights and Dividend Unit Rights . The Committee may, in its sole discretion, grant a tandem Cash Dividend Right or Dividend Unit Right grant with respect to Restricted Stock Units. A grant of Cash Dividend Rights may provide that such Cash Dividend Rights shall be paid directly to the Participant at the time of payment of related dividend, be credited to a bookkeeping account subject to the same vesting and payment provisions as the tandem Award (with or without interest in the sole discretion of the Committee), or be subject to such other provisions or restrictions as determined by the Committee in its sole discretion. A grant of Dividend Unit Rights shall be subject to the same vesting and payment provisions as the tandem Award.

 

ARTICLE VIII
STOCK APPRECIATION RIGHTS

 

SECTION 8.1.                                      Grant of SARs . The Committee may from time to time, in its sole discretion, subject to the provisions of the Plan and subject to other terms and conditions as the Committee may determine, grant a SAR to any Eligible Employee, Consultant or Eligible Director. Each grant of a SAR shall be evidenced by an Award Agreement executed by the Company and the Participant and shall contain such terms and conditions and be in such form as the Committee may from time to time approve, subject to the requirements of the Plan. The exercise price of the SAR shall not be less than the Fair Market Value of a share of Common Stock on the Date of Grant of the SAR.

 

SECTION 8.2.                                      Exercise and Payment . SARs granted under the Plan shall be exercisable in whole or in installments and at such times as shall be provided by the Committee in the Award Agreement. Exercise of a SAR shall be by written notice to the Senior Vice President, Human Resources of the Company at least two business days in advance of such exercise. The amount payable with respect to each SAR shall be equal in value to the excess, if any, of the Fair Market Value of a share of Common Stock on the exercise date over the exercise price of the SAR. Payment of amounts attributable to a SAR shall be made in cash or in shares of Common Stock, as provided by the terms of the applicable Award Agreement.

 

ARTICLE IX
PERFORMANCE UNITS

 

SECTION 9.1.                                      Grant of Awards . The Committee may, from time to time, subject to the provisions of the Plan and such other terms and conditions as it may determine, grant Performance Units to Eligible Employees, Consultants and Eligible Directors. Each Award of Performance Units shall be evidenced by an Award Agreement executed by the Company and the Participant, and shall contain such terms and conditions and be in such form as the Committee may from time to time approve, subject to the requirements of Section 9.2.

 

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SECTION 9.2.                                      Conditions of Awards . Each Award of Performance Units shall be subject to the following conditions:

 

(a)                                  Establishment of Award Terms . Each Award shall state the target, maximum and minimum value of each Performance Unit payable upon the achievement of performance goals.

 

(b)                                  Achievement of Performance Goals . The Committee shall establish performance targets for each Award for a period of no less than a year based upon such operational, financial or performance criteria determined by the Committee, and determine whether the Award is intended to satisfy the 162(m) Requirements, as described in Exhibit A. The Committee shall also establish such other terms and conditions as it deems appropriate to such Award. The Award may be paid out in cash or Common Stock as determined in the sole discretion of the Committee

 

ARTICLE X
PERFORMANCE BONUS

 

SECTION 10.1.                               Grant of Performance Bonus . The Committee may from time to time, subject to the provisions of the Plan and such other terms and conditions as the Committee may determine, grant a Performance Bonus to certain Eligible Employees selected for participation. The Committee will determine the amount that may be earned as a Performance Bonus in any period of one year or more upon the achievement of one or more performance targets established by the Committee. The Committee shall select the applicable performance target(s) for each period in which a Performance Bonus is awarded. The performance target(s) shall be based upon such operational, financial or performance criteria determined by the Committee. The Committee also will determine whether the Award is intended to satisfy the 162(m) Requirements, as described in Exhibit A.

 

SECTION 10.2.                               Payment of Performance Bonus . In order for any Participant to be entitled to payment of a Performance Bonus, the applicable performance target(s) established by the Committee must first be obtained or exceeded. Payment of a Performance Bonus shall be made within 60 days of the Committee’s certification that the performance target(s) has been achieved and, in any event, within 2.5 months of the year following the year in which the Performance Bonus is earned. Payment of a Performance Bonus may be made in cash or shares of Common Stock, as provided by the terms of the applicable Award Agreement.

 

ARTICLE XI
STOCK AWARDS AND OTHER INCENTIVE AWARDS

 

SECTION 11.1.                               Grant of Stock Awards . The Committee may, from time to time, subject to the provisions of the Plan and such other terms and conditions as it may determine, grant Stock Awards of shares of Common Stock not subject to vesting or forfeiture restrictions to Eligible Employees, Consultants or Eligible Directors. Stock Awards shall be awarded with respect to such number of shares of Common Stock and at such times during the term of the Plan as the Committee shall determine. Each Stock Award shall be subject to an Award Agreement setting forth the terms of such Stock Award. The Committee may in its sole discretion require a Participant to pay a stipulated purchase price for each share of Common Stock covered by a Stock Award.

 

SECTION 11.2.                               Grant of Other Incentive Awards . The Committee may, from time to time, subject to the provisions of the Plan and such other terms and conditions as it may determine, grant Other Incentive Awards to Eligible Employees, Consultants or Eligible Directors. Other Incentive Awards may be granted based upon, payable in or otherwise related to, in whole or in part, shares of Common Stock if the Committee, in its sole discretion, determines that such Other Incentive Awards are consistent with the

 

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purposes of the Plan. Such Awards may include, but are not limited to, Common Stock awarded as a bonus, dividend equivalents, convertible or exchangeable debt securities, other rights convertible or exchangeable into Common Stock, purchase rights for Common Stock, Awards with value and payment contingent upon the Company’s performance or any other factors designated by the Committee, and Awards valued by reference to the book value of Common Stock or the value of securities of or the performance of specified subsidiaries. Long-term cash Awards also may be made under the Plan. Cash Awards also may be granted as an element of or a supplement to any Awards permitted under the Plan. Awards may also be granted in lieu of obligations to pay cash or deliver other property under the Plan or under other plans or compensation arrangements, subject to any applicable provision under Section 16 of the Exchange Act. Each grant of an Other Incentive Award shall be evidenced by an Award Agreement that shall specify the amount of the Other Incentive Award and the terms, conditions, restrictions and limitations applicable to such Award. Payment of Other Incentive Awards shall be made at such times and in such form, which may be cash, shares of Common Stock or other property (or a combination thereof), as established by the Committee, subject to the terms of the Plan.

 

ARTICLE XII
STOCK ADJUSTMENTS

 

SECTION 12.1.                               Recapitalizations and Reorganizations . In the event that the shares of Common Stock, as constituted on the Effective Date, shall be changed into or exchanged for a different number or kind of shares of stock or other securities of the Company or of another corporation (whether by reason of merger, consolidation, recapitalization, reclassification, stock split, spin-off, combination of shares or otherwise), or if the number of such shares of Common Stock shall be increased through the payment of a stock dividend, or an extraordinary dividend on the shares of Common Stock, or if rights or warrants to purchase securities of the Company shall be issued to holders of all outstanding Common Stock, then the maximum number and kind of shares of Common Stock available for issuance under the Plan, the maximum number and kind of shares of Common Stock for which any individual may receive Awards in any calendar year under the Plan, the number and kind of shares of Common Stock covered by outstanding Awards, and the price per share or the applicable market value or performance target of such Awards will be appropriately adjusted by the Committee to reflect any increase or decrease in the number of, or change in the kind or value of, issued shares of Common Stock to preclude, to the extent practicable, the enlargement or dilution of rights under such Awards. Notwithstanding the provisions of this Section, (i) the number and kind of shares of Common Stock available for issuance as Incentive Stock Options under the Plan shall be adjusted only in accordance with the applicable provisions of Sections 422 and 424 of the Code and the regulations thereunder, and (ii) outstanding Awards and Award Agreements shall be adjusted in accordance with (A) Sections 422 and 424 of the Code and the regulations thereunder with respect to Incentive Stock Options and (B) Section 409A of the Code with respect to Nonqualified Stock Options, SARs and, to the extent applicable, other Awards. In the event there shall be any other change in the number or kind of the outstanding shares of Common Stock, or any stock or other securities into which the Common Stock shall have been changed or for which it shall have been exchanged, then if the Committee shall, in its sole discretion, determine that such change equitably requires an adjustment in the shares available under and subject to the Plan, or in any Award, theretofore granted, such adjustments shall be made in accordance with such determination. No fractional shares of Common Stock or units of other securities shall be issued pursuant to any such adjustment, and any fractions resulting from any such adjustment shall be eliminated in each case by rounding downward to the nearest whole share.

 

SECTION 12.2.                               Adjustments Upon Change of Control Event . Upon the occurrence of a Change of Control Event, the Committee, in its sole discretion, without the consent of any Participant or holder of the Award, and on such terms and conditions as it deems appropriate, may take any one or more of the following actions in connection with such Change of Control Event:

 

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(a)                                  provide for either (i) the termination of any Award in exchange for an amount of cash, if any, equal to the amount that would have been attained upon the realization of the Participant’s rights (and, for the avoidance of doubt, if as of the date of the occurrence of such transaction or event the Committee determines in good faith that no amount would have been attained upon the realization of the Participant’s rights, then such Award may be terminated by the Committee without payment) or (ii) the replacement of such Award with other rights or property selected by the Committee in its sole discretion;

 

(b)                                  provide that such Award be assumed by a successor or survivor entity, or a parent or subsidiary thereof, or be exchanged for similar rights or awards covering the equity of the successor or survivor, or a parent or subsidiary thereof, with appropriate adjustments as to the number and kind of equity interests and prices;

 

(c)                                   make adjustments in the number and type of Common Stock (or other securities or property) subject to outstanding Awards, and in the number and kind of outstanding Awards or in the terms and conditions of, and the vesting criteria included in, outstanding Awards, or both;

 

(d)                                  provide that such Award shall be payable, notwithstanding anything to the contrary in the Plan or the applicable Award Agreement; and/or

 

(e)                                   provide that the Award cannot become payable after such event, i.e., shall terminate upon such event.

 

Notwithstanding the foregoing, any such action contemplated under this Section shall be effective only to the extent that such action will not cause any Award that is designed to satisfy Section 409A of the Code to fail to satisfy such section.

 

ARTICLE XIII
GENERAL

 

SECTION 13.1.                               Amendment or Termination of Plan . The Board, in its sole discretion, may alter, suspend or terminate the Plan, or any part thereof, at any time and for any reason; provided, however, that if an amendment to the Plan (i) would materially increase the aggregate number of shares of Common Stock available under the Plan (except by operation of Article XII), (ii) would materially modify the requirements as to eligibility for participation in the Plan, (iii) would materially increase the benefits to Participants provided by the Plan, (iv) would modify the provisions of Section 4.1(h), or (v) must otherwise be approved by shareholders of the Company in order to comply with applicable law or the rules of the New York Stock Exchange or, if the Common Stock is not traded on the New York Stock Exchange, the principal national securities exchange upon which the Common Stock is traded or quoted, then such amendment will be subject to shareholder approval and will not be effective unless and until such approval has been obtained, subject to any other requirement of shareholder approval required by applicable law, rule or regulation, including, without limitation, Section 422 of the Code and the rules of the applicable securities exchange.

 

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SECTION 13.2.                               Transferability .

 

(a)                                  Except as provided in Section 13.2(b) hereof or as otherwise determined by the Committee, Awards under the Plan shall not be assignable or transferable by the Participant, and shall not be subject in any manner to assignment, alienation, pledge, encumbrance or charge. Notwithstanding the foregoing, in the event of the death of a Participant, except as otherwise provided by the Committee in an Award Agreement, an outstanding Award may be exercised by or shall become payable to the Participant’s legatee or legatees of such Award designated under the Participant’s last will or by such Participant’s executors, personal representatives or distributees of such Award in accordance with the Participant’s will or the laws of descent and distribution. The Committee may provide in the terms of an Award Agreement or in any other manner prescribed by the Committee that the Participant shall have the right to designate a beneficiary or beneficiaries who shall be entitled to any rights, payments or other benefits specified under an Award following the Participant’s death.

 

(b)                                  The Committee may, in its discretion, authorize all or a portion of the Nonqualified Stock Options granted under this Plan to be on terms which permit transfer by the Participant to (i) the ex-spouse of the Participant pursuant to the terms of a domestic relations order, (ii) the spouse, children or grandchildren of the Participant (“Immediate Family Members”), (iii) a trust or trusts for the exclusive benefit of such Immediate Family Members, or (iv) a partnership or limited liability company in which such Immediate Family Members are the only partners or members. In addition there may be no consideration for any such transfer. The Award Agreement pursuant to which such Nonqualified Stock Options are granted expressly provides for transferability in a manner consistent with this paragraph. Subsequent transfers of transferred Nonqualified Stock Options shall be prohibited except as set forth below in this Section 13.2. Following transfer, any such Nonqualified Stock Options shall continue to be subject to the same terms and conditions as were applicable immediately prior to transfer, provided that for purposes of Section 5.2(c)(ii) or similar provisions of an Award Agreement the term “Participant” shall be deemed to refer to the transferee. The events of termination of employment of Section 5.2(c)(ii) or similar provisions of an Award Agreement shall continue to be applied with respect to the original Participant, following which the Nonqualified Stock Options shall be exercisable by the transferee only to the extent, and for the periods specified in Section 5.2(c)(ii). No transfer pursuant to this Section 13.2 shall be effective to bind the Company unless the Company shall have been furnished with written notice of such transfer together with such other documents regarding the transfer as the Committee shall request. With the exception of a transfer in compliance with the foregoing provisions of this Section 13.2, all other types of Awards authorized under this Plan shall be transferable only by will or the laws of descent and distribution; however, no such transfer shall be effective to bind the Company unless the Committee has been furnished with written notice of such transfer and an authenticated copy of the will and/or such other evidence as the Committee may deem necessary to establish the validity of the transfer and the acceptance by the transferee of the terms and conditions of such Award.

 

SECTION 13.3.                               Withholding Taxes . Unless otherwise paid by the Participant, the Company, its Subsidiaries or any of its Affiliated Entities shall be entitled to deduct from any payment under the Plan, regardless of the form of such payment, the amount of all applicable income and employment taxes required by law to be withheld with respect to such payment, may require the Participant to pay to it such tax prior to and as a condition of the making of such payment, and shall be entitled to deduct from any other compensation payable to the Participant any withholding obligations with respect to Awards. In accordance with any applicable administrative guidelines it establishes, the Committee may allow a Participant to pay the amount of taxes required by law to be withheld from an Award by (i) directing the

 

16



 

Company to withhold from any payment of the Award a number of shares of Common Stock having a Fair Market Value on the date of payment equal to the amount of the required withholding taxes or (ii) delivering to the Company previously owned shares of Common Stock having a Fair Market Value on the date of payment equal to the amount of the required withholding taxes. However, any payment made by the Participant pursuant to either of the foregoing clauses (i) or (ii) shall not be permitted if it would result in an adverse accounting charge with respect to such shares used to pay such taxes unless otherwise approved by the Committee.

 

SECTION 13.4.                               Amendments to Awards . Subject to the limitations of Article IV and the other terms and conditions of the Plan, such as the prohibition on repricing of Options, the Committee may at any time unilaterally amend the terms of any Award Agreement, whether or not currently exercisable or vested, to the extent it deems appropriate. However, amendments which are adverse to the Participant shall require the Participant’s consent.

 

SECTION 13.5.                               Regulatory Approval and Listings. In the sole discretion of the Committee, the Company shall use its best efforts to file with the Securities and Exchange Commission and keep continuously effective, a Registration Statement on Form S-8 with respect to shares of Common Stock subject to Awards hereunder. Notwithstanding anything contained in this Plan to the contrary, the Company shall have no obligation to issue shares of Common Stock under this Plan prior to the obtaining of any approval from, or satisfaction of any waiting period or other condition imposed by, any governmental agency which the Committee shall, in its sole discretion, determine to be necessary or advisable. In addition, and notwithstanding anything contained in this Plan to the contrary, at such time as the Company is subject to the reporting requirements of Section 12 of the Exchange Act, the Company shall have no obligation to issue shares of Common Stock under this Plan prior to:

 

(a)                                  the admission of such shares to listing on the stock exchange on which the Common Stock may be listed; and

 

(b)                                  the completion of any registration or other qualification of such shares under any state or federal law or ruling of any governmental body which the Committee shall, in its sole discretion, determine to be necessary or advisable.

 

SECTION 13.6.                               Right to Continued Employment or Other Service . Participation in the Plan shall not give any Eligible Employee, Consultant or Eligible Director any right to remain in the employ or other service of the Company, any Subsidiary, or any Affiliated Entity. The Company or, in the case of employment or other service with a Subsidiary or an Affiliated Entity, the Subsidiary or Affiliated Entity reserves the right to terminate any Eligible Employee, Consultant or Eligible Director at any time. Further, the adoption of this Plan shall not be deemed to give any Eligible Employee, Consultant, Eligible Director or any other individual any right to be selected as a Participant or to be granted an Award.

 

SECTION 13.7.                               Reliance on Reports . Each member of the Board shall be fully justified in relying or acting in good faith upon any report made by the independent public accountants of the Company and its Subsidiaries and upon any other information furnished in connection with the Plan by any person or persons other than himself or herself. In no event shall any person who is or shall have been a member of the Board be liable for any determination made or other action taken or any omission to act in reliance upon any such report or information or for any action taken, including the furnishing of information, or failure to act, if in good faith.

 

SECTION 13.8.                               Construction . Masculine pronouns and other words of masculine gender shall refer to both men and women. The titles and headings of the sections in the Plan are for the convenience

 

17



 

of reference only, and in the event of any conflict, the text of the Plan, rather than such titles or headings, shall control.

 

SECTION 13.9.                               Governing Law . The Plan shall be governed by and construed in accordance with the laws of the State of Texas except as superseded by applicable federal law.

 

SECTION 13.10.                        Other Laws . The Committee may refuse to issue or transfer any shares of Common Stock or other consideration under an Award if, acting in its sole discretion, it determines that the issuance or transfer of such shares or such other consideration might violate any applicable law or regulation or entitle the Company to recover the same under Section 16(b) of the Exchange Act, and any payment tendered to the Company by a Participant, other holder or beneficiary in connection with the exercise of such Award shall be promptly refunded to the relevant Participant, holder or beneficiary. In addition, by accepting or exercising any Award granted under the Plan (or any predecessor plan), the Participant agrees to abide and be bound by any policies adopted by the Company pursuant to Section 954 of the Dodd-Frank Wall Street Reform and Consumer Protection Act and any rules or exchange listing standards promulgated thereunder calling for the repayment and/or forfeiture of any Award or payment resulting from an accounting restatement. Such repayment and/or forfeiture provisions shall apply whether or not the Participant is employed by or affiliated with the Company.

 

SECTION 13.11.                        No Trust or Fund Created . Neither the Plan nor an Award shall create or be construed to create a trust or separate fund of any kind or a fiduciary relationship between the Company and a Participant or any other person. To the extent that a Participant acquires the right to receive payments from the Company pursuant to an Award, such right shall be no greater than the right of any general unsecured creditor of the Company.

 

SECTION 13.12.                        Section 409A of the Code .

 

(a)                                  To the extent applicable, it is intended that the Plan and all Awards hereunder comply with, or be exempt from, the requirements of Section 409A of the Code and the Treasury Regulations and other guidance issued thereunder, and that the Plan and all Award Agreements shall be interpreted and applied by the Committee in a manner consistent therewith. In the event that any (i) provision of the Plan or an Award Agreement, (ii) Award, payment, transaction or (iii) other action or arrangement contemplated by the provisions of the Plan is determined by the Committee to not comply with the applicable requirements of Section 409A of the Code and the Treasury Regulations and other guidance issued thereunder, the Committee shall have the authority to take such actions and to make such changes to the Plan or an Award Agreement as the Committee deems necessary to comply with such requirements without the consent of the Participant.

 

(b)                                  No payment that constitutes deferred compensation under Section 409A of the Code that would otherwise be made under the Plan or an Award Agreement upon a termination of employment or other service will be made or provided unless and until such termination is also a “separation from service,” as determined in accordance with Section 409A of the Code.

 

(c)                                   Notwithstanding the foregoing or anything elsewhere in the Plan or an Award Agreement to the contrary, if a Participant is a “specified employee” as defined in Section 409A of the Code at the time of termination of service with respect to an Award, then solely to the extent necessary to avoid the imposition of any additional tax under Section 409A of the Code, the commencement of any payments or benefits under the Award shall be deferred until the date that is six months plus one day following the date of the Participant’s termination or, if earlier, the Participant’s death (or such other period as required to comply with Section 409A).

 

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(d)                                  In no event whatsoever shall the Company be liable for any additional tax, interest or penalties that may be imposed on a Participant by Section 409A of the Code or any damages for failing to comply with Section 409A of the Code.

 

*               *               *

 

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EXHIBIT A

 

2016 Long-Term Incentive Plan
Performance Criteria

 

The performance criteria to be used for purposes of Awards shall be set in the Committee’s sole discretion and may be described in terms of objectives that are related to the individual Participant or objectives that are Company-wide or related to a subsidiary, division, department, region, function or business unit of the Company in which the Participant is employed or with respect to which the Participant performs services, and may consist of one or more or any combination of the following criteria:

 

Operational Criteria may include:

 

·                        Reserve additions/replacements

·                        Finding & development costs

·                        Production volume

·                        Production costs

·                        Production growth

 

Financial Criteria may include:

 

·                        Earnings (Net income, Earnings before interest, taxes, depreciation and amortization (“EBITDA”), Earnings per share)

·                        Cash flow

·                        Operating income

·                        General and Administrative Expenses

·                        Debt to equity ratio

·                        Debt to cash flow

·                        Debt to EBITDA

·                        EBITDA to Interest Expense

·                        Return on Assets

·                        Return on Equity

·                        Return on Invested Capital

·                        Profit returns/margins

·                        Midstream margins

 

Stock Performance Criteria:

 

·                        Stock price appreciation

·                        Total shareholder return

·                        Relative stock price performance

 

Code Section 162(m) Requirements . The Committee will have the discretion to determine whether all or any portion of a Restricted Stock Award, Restricted Stock Unit Award, Performance Unit Award, Performance Bonus Award, Stock Award or Other Incentive Award is intended to satisfy the requirements for “performance-based compensation” under Section 162(m) of the Code (the “162(m) Requirements”). The performance criteria for any such Award that is intended to satisfy the 162(m) Requirements shall be established in writing by the Committee based on one or more performance criteria listed in this Exhibit A not later than 90 days after commencement of the performance period with respect to such Award or any such other date as may be required or permitted for “performance-based compensation” under the 162(m) Requirements, provided that the outcome of the performance in respect of the goals remains substantially uncertain as of such time. At the time of the grant of an Award and to the extent permitted under Code Section 162(m) and regulations thereunder for an Award intended to

 

A- 1



 

satisfy the 162(m) Requirements, the Committee may provide for the manner in which the performance goals will be measured in light of specified corporate transactions, extraordinary events, accounting changes and other similar occurrences. All determinations made by the Committee as to the establishment or achievement of performance goals, or the final settlement of an Award intended to satisfy the 162(m) Requirements shall be made in writing.

 

Certification and Negative Discretion . Before payment is made in relation to any Award that is intended to satisfy the 162(m) Requirements, the Committee shall certify the extent to which the performance goals and other material terms of the Award have been satisfied, and the Committee in its sole discretion shall have the authority to reduce, but not to increase, the amount payable and/or the number of shares of Common Stock to be granted, issued, retained or vested pursuant to any such Award.

 

Committee . In the case of an Award intended to meet the 162(m) Requirements, the Committee shall be composed of two or more “outside directors” within the meaning of Section 162(m) of the Code, and the Committee may not delegate its duties with respect to such Awards.

 

A- 2


Exhibit 99.1

NEWS RELEASE

 

Halcón Resources Completes Restructuring and Exits Prepackaged Bankruptcy

 

HOUSTON, TEXAS — September 9, 2016 — Halcón Resources Corporation (NYSE:HK) (“Halcón” or the “Company”) , today announced it has completed its financial restructuring (the “Restructuring Plan”) and has emerged from its pre-packaged chapter 11 bankruptcy cases.  All of the conditions under its Plan of Reorganization, which was confirmed by the US Bankruptcy Court for the District of Delaware on September 8, 2016, have been satisfied or otherwise waived in accordance with the terms of the Restructuring Plan.

 

Approximately $1.8 billion of the Company’s long-term debt has been eliminated under the Restructuring Plan along with more than $200 million of annual interest expense going forward.  The table below summarizes Halcón’s pro forma capital structure as of June 30, 2016.

 

Face Value

 

Actual

 

 

 

Pro Forma

 

Pro Forma Capitalization ($MM)

 

6/30/2016

 

Restructuring

 

6/30/2016

 

 

 

 

 

 

 

 

 

Cash & Cash Equivalents (Including HKTMS Restricted Cash)

 

$

24

 

$

 

$

24

 

Senior Secured Revolving Credit Facility

 

101

 

203

 

304

 

8.625% Senior Secured Second Lien Notes due 2020

 

700

 

 

700

 

12.000% Senior Secured Second Lien Notes due 2022

 

113

 

 

113

 

13.000% Senior Secured Third Lien Notes due 2022

 

1,018

 

(1,018

)

 

Total Secured Debt

 

$

1,932

 

$

(815

)

$

1,117

 

9.750% Senior Notes due 2020

 

316

 

(316

)

 

8.875% Senior Notes due 2021

 

297

 

(297

)

 

9.250% Senior Notes due 2022

 

37

 

(37

)

 

8.000% Senior Convertible Notes due 2020

 

290

 

(290

)

 

Total Debt

 

$

2,871

 

$

(1,755

)

$

1,117

 

 

 

 

 

 

 

 

 

Redeemable Noncontrolling Interest

 

213

 

 

213

 

Preferred Stockholders’ Equity

 

222

 

(222

)

 

Stockholders’ Equity

 

(1,108

)

1,977

 

870

 

Total Capitalization

 

$

2,223

 

$

 

$

2,223

 

Borrowing Base

 

$

700

 

$

(100

)

$

600

 

Less: Borrowings

 

(101

)

(203

)

(304

)

Less: Letters of Credit

 

(5

)

 

 

(5

)

Plus: Cash

 

24

 

 

 

24

 

Total Liquidity

 

$

618

 

$

(303

)

$

315

 

Total Debt / Proved Reserves ($/Boe) (1)

 

$

19.56

 

 

 

$

7.61

 

Total Debt / Q2 2016A Production ($/Boe/d)

 

$

80,001

 

 

 

$

31,114

 

 


Note: Includes ~$48 MM of anticipated transaction fees and expenses.

(1) HK as of 12.31.15 as estimated by Halcón’s independent reserve engineers using SEC pricing.

 

1



 

As previously disclosed, pre-petition holders of Hal cón common stock are receiving 4.0% of the common stock of the reorganized Company and the remaining 96.0% of common stock is being allocated to pre-petition debt holders in the Company, subject to dilution by new common shares issued or reserved for issuance in connection with the management incentive program (the “MIP”) and warrants issued to certain debtholders pursuant to the Restructuring Plan (the “New Warrants”).  The Company has determined that it will have 90 million new common shares outstanding before an allocation of shares for the MIP and the New Warrants.  This results in pre-petition Halcón equity holders receiving 3.6 million new common shares in the Company, or the effective equivalent of a 1 for 34 reverse stock split considering Halcón had 122.2 million common shares outstanding on September 8, 2016.  The new common shares are scheduled to begin trading on the New York Stock Exchange at the open of trading hours on September 12, 2016.  The table below summarizes the new ownership structure of Halcón.

 

Pro Forma Ownership Summary

 

 

 

 

 

Shares Excluding

 

 

 

 

Including MIP

 

Fully Diluted

 

Holder

 

 

 

MIP & Warrants

 

% Ownership

 

 

Including Warrants

 

% Ownership

 

New Shares issued to Current HK Shareholders

 

 

 

3,600,000

 

4.0

%

 

3,600,000

 

3.4

%

New Shares Issued Under MIP

 

(1)

 

 

 

0.0

%

 

10,000,000

 

9.5

%

New Shares Issued to 3L Holders

 

 

 

68,850,000

 

76.5

%

 

68,850,000

 

65.7

%

New Shares Issued to Unsecured Holders

 

 

 

13,950,000

 

15.5

%

 

13,950,000

 

13.3

%

New Shares Issued to Convert Holders

 

 

 

3,600,000

 

4.0

%

 

3,600,000

 

3.4

%

New Warrants Issued to Unsecured Holders

 

(2)

 

 

 

0.0

%

 

3,789,474

 

3.6

%

New Warrants Issued to Convert Holders

 

(2)

 

 

 

0.0

%

 

947,368

 

0.9

%

Total

 

 

 

90,000,000

 

100.0

%

 

104,736,842

 

100.0

%

 


Note: Final share allocations may vary slightly from the amounts seen above due to rounding.

(1) Shares underlying the MIP include 7.5 million which are expected to be awarded on September 12, 2016, and 2.5 million to be awarded in the future at the discretion of the board of directors. The shares already awarded under the MIP consist of 1.25 million vested shares of common stock, 1.25 million shares of restricted stock that vest in 12 months and options to purchase 5.0 million shares with an exercise price to be determined (which vest ratably over 3 years).

(2) The warrants have a strike price of $14.04 and a term of 4 years.

 

As part of the emergence, Halcón’s $600 million debtor-in-possession credit facility was converted into a $600 million reserve-based senior revolving credit facility.  The first borrowing base redetermination is scheduled for May of 2017.

 

In accordance with the Restructuring Plan, the terms of the Company’s previous Board of Directors expired and a new Board of Directors was appointed.  The new Board of Directors consists of nine members including: Floyd Wilson, Jim Christmas, Tom Fuller, Nate Walton, Darryl Schall, Eric Takaha, Michael Clark, Ronald Scott and William Campbell.  Background information on the new directors is available on the Company’s website.

 

The Company has also posted a new investor presentation to the investor relations section of its website.

 

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PJT Partners served as Halcón’s financial advisor and Weil, Gotshal & Manges, LLP acted as legal advisor to the Company in relation to the Restructuring Plan and the chapter 11 cases.

 

About Halcón Resources

 

Halcón Resources Corporation is an independent energy company engaged in the acquisition, production, exploration and development of onshore oil and natural gas properties in the United States.

 

For more information contact Quentin Hicks, Senior Vice President of Finance & Investor Relations, at 832-538-0557 or qhicks@halconresources.com.

 

Forward-Looking Statements

 

This release may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended.  Statements that are not strictly historical statements constitute forward-looking statements and may often, but not always, be identified by the use of such words such as “expects”, “believes”, “intends”, “anticipates”, “plans”, “estimates”, “potential”, “possible”, or “probable” or statements that certain actions, events or results “may”, “will”, “should”, or “could” be taken, occur or be achieved.  Forward-looking statements are based on current beliefs and expectations and involve certain assumptions or estimates that involve various risks and uncertainties that could cause actual results to differ materially from those reflected in the statements.  These risks include, but are not limited to the risks set forth in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2015 and other filings submitted by the Company to the SEC, copies of which may be obtained from the SEC’s website at www.sec.gov or through the Company’s website at www.halconresources.com.  Readers should not place undue reliance on any such forward-looking statements, which are made only as of the date hereof.  The Company has no duty, and assumes no obligation, to update forward-looking statements as a result of new information, future events or changes in the Company’s expectations.

 

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