UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

Pursuant to Section 13 OR 15(d)

of The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): October 7, 2016 (October 4, 2016)

 

 

SANDRIDGE ENERGY, INC.

(Exact name of registrant as specified in its charter)

 

 

 

Delaware   1-33784   20-8084793

(State or other jurisdiction

of incorporation)

 

(Commission

File Number)

 

(I.R.S. Employer

Identification No.)

123 Robert S. Kerr Avenue

Oklahoma City, Oklahoma 73102

(Address of principal executive offices, including zip code)

Registrant’s telephone number, including area code : (405) 429-5500

(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:

 

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

 

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

 

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

 

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

 

 

 


As previously disclosed on May 16, 2016, SandRidge Energy, Inc. (the “Company”) and certain of its direct and indirect subsidiaries (collectively, the “Debtors”), filed voluntary petitions (the cases commenced thereby, the “Chapter 11 Cases”) seeking relief under Chapter 11 of Title 11 of the United States Code (the “Bankruptcy Code”) in the United States Bankruptcy Court for the Southern District of Texas (the “Bankruptcy Court”) under the caption  In re SandRidge Energy, Inc., et al.

On September 20, 2016, the Bankruptcy Court entered an amended order, Docket No. 901 (the “Confirmation Order”), confirming the Amended Joint Chapter 11 Plan of Reorganization of SandRidge Energy, Inc. and its Debtor Affiliates, dated September 19, 2016 (the “Plan”) as modified by the Confirmation Order.

On October 4, 2016 (the “Effective Date”), the Plan became effective in accordance with its terms and the Debtors emerged from the Chapter 11 Cases.

The description of the Plan in this Report is qualified in its entirety by reference to the full text of the Plan, which is incorporated herein as Exhibit 2.1 to this Current Report on Form 8-K (this “Report”), by reference to the Company’s registration statement on Form 8-A filed with the Securities and Exchange Commission (the “SEC”) on October 4, 2016.

All capitalized terms used herein but not otherwise defined in this Report have the meanings set forth in the Plan.

 

Item 1.01 Entry Into a Material Definitive Agreement.

New First Lien Exit Facility

On the Effective Date, pursuant to the terms of the Plan, the Company entered into a $425 million reserve-based revolving credit facility (the “New First Lien Exit Facility”) with the lenders party thereto and Royal Bank of Canada, as administrative agent and issuing lender.

The initial borrowing base under the New First Lien Exit Facility is $425 million. There are no scheduled borrowing base redeterminations until October 2018, followed by scheduled semiannual borrowing base redeterminations thereafter. The New First Lien Exit Facility matures on February 4, 2020. The outstanding borrowings under the New First Lien Exit Facility bear interest at a rate equal to, at the option of the Company, either (a) a base rate plus an applicable rate of 3.75% per annum or (b) LIBOR plus 4.75% per annum, subject to a 1.00% LIBOR floor. Interest on base rate borrowings is payable quarterly in arrears and interest on LIBOR borrowings is payable every one, two, three or six months, at the election of the Company. The Company has the right to prepay loans under the New First Lien Exit Facility at any time without a prepayment penalty, other than customary “breakage” costs with respect to LIBOR loans

The New First Lien Exit Facility is guaranteed by SandRidge Holdings, Inc., SandRidge Exploration and Production, LLC, SandRidge Midstream Inc., SandRidge Operating Company, Lariat Services, Inc., and Integra Energy, L.L.C. (collectively, the “Guarantors”). On the Effective Date, the Company and the Guarantors entered into a Pledge and Security Agreement (the “Security Agreement”) in favor of Royal Bank of Canada, as administrative agent, for the benefit of the secured parties, pursuant to which the obligations under the New First Lien Exit Facility were secured by liens on substantially all of the assets of the Company and the Guarantors.

Furthermore, the New First Lien Exit Facility is secured by (i) first-priority mortgages on at least 95% of the PV-9 pricing of the proved developed producing reserves and 95% of the PV-9 pricing of all proved reserves included in the most recently delivered reserve report of the Company, (ii) a first-priority perfected pledge of capital stock of each credit party and their respective wholly owned subsidiaries and (iii) a first-priority security interest in the cash, cash equivalents, deposit, securities and other similar accounts, and a first-priority perfected security interest in substantially all other tangible and intangible assets of the credit parties (including but not limited to as-extracted collateral, accounts receivable, inventory, equipment, general intangibles, investment property, intellectual property, real property and the proceeds of the foregoing).

The New First Lien Exit Facility requires the Company to, (a) commencing with the first full fiscal quarter ending after the Closing Date through the last full fiscal quarter before the occurrence of the end of the borrowing

 

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base protection period, maintain a minimum PDP asset coverage ratio, measured as of the last day of each fiscal quarter, of 1.75 to 1.00 and (b) commencing with the first full fiscal quarter ending after the occurrence of the end of the borrowing base protection period, maintain (i) a maximum consolidated total net leverage ratio, measured as of the last day of each fiscal quarter, (A) on or prior to December 31, 2018, of no greater than 3.50 to 1.00, and (B) any fiscal quarter ending on or after March 31, 2019, of no greater than 3.00 to 1.00 and (ii) a minimum consolidated interest coverage ratio, measured as of the last day of each fiscal quarter, of no less than 2.00 to 1.00. Such financial covenants are subject to customary cure rights.

The New First Lien Exit Facility contains customary affirmative and negative covenants, including as to compliance with laws (including environmental laws, ERISA and anti-corruption laws), maintenance of required insurance, delivery of quarterly and annual financial statements, oil and gas engineering reports, maintenance and operation of property (including oil and gas properties), restrictions on the incurrence of liens, indebtedness, asset dispositions, fundamental changes, restricted payments and other customary covenants.

The description of the New First Lien Exit Facility is qualified in its entirety by reference to the full text of the New First Lien Exit Facility, which is filed herewith as Exhibit 10.1.

New Building Note

On the Effective Date, pursuant to the terms of the Plan, SandRidge Realty, LLC, a subsidiary of the Company entered into the New Building Note with Fir Tree E&P Holdings II, LLC, a Delaware limited liability company and SOLA LTD, a Cayman Islands exempted company. The New Building Note has a principal amount of $35 million and is secured by first priority mortgage on the Company’s headquarters facility and certain other non-oil and gas real property. Interest is payable on the New Building Note at 6% per annum for the first year following the Effective Date, 8% per annum for the second year following the Effective Date, and 10% thereafter through maturity. Interest is payable in kind from the Effective Date through the earlier of August 4, 2020 or 90 days after the refinancing or repayment of the New First Lien Exit Facility and thereafter in cash. The New Building Note matures on October 4, 2021. On the Effective Date, pursuant to the Restructuring Support Agreement, certain holders of the Unsecured Senior Notes purchased the New Building Note for $27 million in cash, net of certain fees and expenses.

The description of the New Building Note is qualified in its entirety by reference to the full text of the New Building Note, which is filed herewith as Exhibit 10.2.

New Convertible Debt

On the Effective Date, pursuant to the terms of the Plan, the Company entered into an indenture by and between the Company, the Guarantors party thereto and Wilmington Trust, National Association, as trustee (the “New Convertible Notes Indenture”) and issued $281,780,873 of the Company’s 0.00% convertible senior subordinated notes due 2020 (the “New Convertible Notes”) pursuant thereto. The New Convertible Notes will not bear regular interest and will mature and mandatorily convert into New Common Stock (as defined below) on October 4, 2020 (the “Maturity Date”), unless earlier repurchased, redeemed or converted. Upon the occurrence of certain events, including any acceleration, repayment or prepayment of the New Convertible Notes (including any optional redemption), the Company will be required to pay a make-whole amount of $0.783478 (the “Make-Whole Amount”) for each $1.00 in principal amount of New Convertible Notes repaid or prepaid in accordance with the provisions of the New Convertible Notes Indenture.

The New Convertible Notes are initially convertible at a conversion rate (the “Conversion Rate”) of 0.05330841 shares of New Common Stock per $1.00 principal amount of New Convertible Notes, which represents, in the aggregate, approximately 15,021,291 shares of New Common Stock, or 43.68% of the New Common Stock outstanding on the Effective Date on an as converted basis, subject to dilution by the Warrants (as defined below) and issuances under the Omnibus Incentive Plan (as defined below). The Conversion Rate for the New Convertible Notes is subject to customary anti-dilution adjustments. Whenever an event occurs such that the Company is required to pay the Make-Whole Amount, the Conversion Rate will be automatically adjusted such that the New Convertible Notes convert into the same percentage of New Common Stock before and after such event.

 

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The New Convertible Notes are convertible at the option of the holders at any time to, and including, the business day immediately preceding the Maturity Date. In addition, the Company is required to convert all outstanding New Convertible Notes upon the earliest to occur of the following: (i) any bona fide arm’s length issuance by the Company of New Common Stock to third parties for cash with (x) a total issuance size that is greater than or equal to $100,000,000 and (y) a per-share price greater than or equal to $34.16; (ii) 30 days’ written notice to the Company to convert the New Convertible Notes from holders of at least a majority in aggregate principal amount of the New Convertible Notes then outstanding; (iii) if the New Common Stock is listed on a U.S. national securities exchange, the average of the last reported sale prices of the New Common Stock over a 30 consecutive trading day period is 50% greater than $34.16; (iv) any bona fide refinancing of the New First Lien Exit Facility after a determination by the Board (as defined below) in good faith that: (A) such refinancing provides for terms that are materially more favorable to the Company and (B) the causing of a conversion is not the primary purpose of such refinancing; (v) any change of control transaction; or (vi) the Maturity Date. Upon conversion, the Company will deliver shares of New Common Stock equal to the Conversion Rate, together with a cash payment in lieu of delivering any fractional share of New Common Stock issuable upon conversion, based on the last reported sale price of the New Common Stock on the relevant conversion date.

The Company may redeem for cash all or part of the New Convertible Notes at any time prior to the Maturity Date, at a redemption price equal to 100% of the principal amount of such New Convertible Notes to be redeemed, as increased by the Make-Whole Amount. With respect to any New Convertible Notes selected for redemption that are converted following a redemption notice, the Conversion Rate will be automatically adjusted such that the New Convertible Notes convert into the same percentage of New Common Stock before and after such redemption notice.

The Company’s obligations pursuant to the New Convertible Notes are fully and unconditionally guaranteed, jointly and severally, by each of the Guarantors that guarantee the New First Lien Exit Facility. Following the occurrence of a Springing Event (as defined in the New Convertible Notes Indenture), the Company will be required to secure $100,000,000 of the New Convertible Notes, which amount may be increased to the full outstanding principal amount of the New Convertible Notes, including any applicable Make-Whole Amount, in accordance with the provisions of the New Convertible Notes Indenture (the “Springing Lien”). The Springing Lien will be a second priority lien on the same collateral securing the New First Lien Exit Facility.

The descriptions of the New Convertible Notes Indenture and New Convertible Notes are qualified in their entirety by reference to the full text of the New Convertible Notes Indenture, which is filed herewith as Exhibit 10.3.

On October 4, 2016, Royal Bank of Canada, as priority lien agent, and Wilmington Trust, National Association, as the subordinated collateral trustee (the “Collateral Trustee”), entered into an intercreditor and subordination agreement, which was acknowledged and agreed to by the Company and certain of the Guarantors (the “Intercreditor and Subordination Agreement”) to govern the relationship of holders of the New Convertible Notes and holders of any other parity lien obligations that the Company may issue in the future, the lenders under the New First Lien Exit Facility and holders of other priority lien obligations and holders of any junior lien debt that the Company may issue in the future, with respect to collateral and certain other matters. The foregoing description of the Intercreditor and Subordination Agreement is qualified in its entirety by reference to the full text of the Intercreditor and Subordination Agreement, a copy of which is filed as Exhibit 10.4 to this report and is incorporated herein by reference.

Collateral Trust Agreement

On October 4, 2016, the Company, certain of the Guarantors, the Trustee and Wilmington Trust, National Association, as collateral trustee (the “Collateral Trustee”), entered into a collateral trust agreement (the “Collateral Trust Agreement”) pursuant to which the Collateral Trustee will receive, hold, administer, maintain, enforce and distribute the proceeds of any liens upon the collateral for the benefit of the current and future holders of the notes and other parity lien obligations, if any.

The description of the Collateral Trust Agreement is qualified in its entirety by reference to the full text of the Collateral Trust Agreement, which is filed herewith as Exhibit 10.5.

 

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Warrant Agreement

On the Effective Date, the Company entered into a warrant agreement (the “Warrant Agreement”) with American Stock Transfer & Trust Company, LLC, as warrant agent (the “Warrant Agent”). On the Effective Date, pursuant to the terms of the Plan, the Company issued 4,913,251 Series A Warrants and 2,068,690 Series B Warrants to certain Holders of General Unsecured Claims (as defined in the Plan) (the Series A Warrants and Series B Warrants collectively referred to as the “Warrants”).

The Warrants are exercisable from the date of the Warrant Agreement until 5:00 p.m., New York City time, on October 4, 2022 (the “Expiration Date”). The Warrants are initially exercisable for one share of New Common Stock per Warrant (such rate, as adjusted pursuant to the Warrant Agreement, being the “Warrant Share Number”) at an initial exercise price of $41.34 for the Series A Warrants and $42.03 for the Series B Warrants (each, an “Exercise Price”). The Warrant Share Number and each applicable Exercise Price are subject to customary anti-dilution adjustments. No adjustments to the applicable Exercise Price or Warrant Share Number are required unless the cumulative adjustments required would result in an increase or decrease of at least 1.0% in the applicable Exercise Price. Additionally, no adjustment need be made for a change in the par value of the New Common Stock.

All Warrants outstanding as of the close of business on the trading day immediately preceding the day on which a Deemed Liquidation Event (as defined in the Warrant Agreement) occurs (the “Automatic Exercise Time”) shall be deemed exercised upon the occurrence of such Deemed Liquidation Event and settled as set forth in the Warrant Agreement. Each person in whose name any shares of Common Stock are issued as a result of an automatic exercise triggered by a Deemed Liquidation Event shall for all purposes be deemed to have become the holder of record of such shares as of the Automatic Exercise Time.

Upon the occurrence of certain events constituting a consolidation, merger, reclassification, exchange, substitution, sale, lease or other transfer to a third party of the consolidated assets of the Company substantially as an entirety or other event in which the previously outstanding shares of New Common Stock shall be cancelled, reclassified or converted or changed into or exchanged for securities or other property (including cash) or any combination thereof, in each case that is not a Deemed Liquidation Event (a “Fundamental Change”), a Warrantholder shall be entitled to receive, upon exercise of a Warrant, the amount and kind of securities and property that a holder of New Common Stock would have been entitled to receive as a result of such Fundamental Change if it held a number of shares of New Common Stock equal to the number of shares of New Common Stock that such Warrantholder would have received if such Warrant had been exercised immediately prior to such Fundamental Change.

Warrantholders are not entitled, by virtue of holding Warrants, to vote, to consent, to receive dividends, to receive notice as stockholders with respect to any meeting of stockholders for the election of the Company’s directors or any other matter, or to exercise any rights whatsoever as the Company’s stockholders unless, until and only to the extent such holders become holders of record of shares of New Common Stock issuable upon exercise of the Warrants.

The Warrants generally only permit a holder of Warrants to exercise the Warrants for net share or “cashless” settlement, except if the New Common Stock is not listed on a national securities exchange as of the applicable exercise date, a holder of Warrants may elect physical settlement instead and pay cash to purchase the shares underlying the Warrant at the then-applicable Exercise Price. If net share settlement applies, the Company will deliver, without any cash payment therefor, a number of shares of New Common Stock equal to (i)(a) the number of Warrants being exercised, multiplied by (b) the Warrant Share Number (as of the exercise date), multiplied by (ii)(a) the Fair Market Value (as defined in the Warrant Agreement) of one share of New Common Stock as of the exercise date, minus (b) the applicable Exercise Price as of the exercise date, divided by (iii) the Fair Market Value of one share of New Common Stock as of the exercise date.

The description of the Warrant Agreement is qualified in its entirety by reference to the full text of the Warrant Agreement, which is filed herewith as Exhibit 10.6.

 

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Registration Rights Agreement

On the Effective Date, the Company and certain holders of the New Common Stock (the “Stockholders”) entered into a registration rights agreement (the “Registration Rights Agreement”).

Pursuant to the Registration Rights Agreement, among other things, holders who collectively have beneficial ownership of at least 10% of the New Common Stock originally issued under the Plan (such Stockholders, the “Required Holders”), calculated on a fully diluted common stock equivalent basis and assuming the conversion of all New Convertible Notes and the exercise of the Warrants, have the right to request the Company to file with the SEC a registration statement on Form S-1 or S-3 of all or any portion of the Registrable Securities (as defined in the Registration Rights Agreement) held by such Required Holders.

A description of the material provisions of the Registration Rights Agreement is contained in the Company’s registration statement on Form 8-A filed with the SEC on October 4, 2016, which description is incorporated by reference herein. The description of the Registration Rights Agreement is qualified in its entirety by reference to the full text of the Registration Rights Agreement, which is incorporated herein as Exhibit 10.7 to this report, by reference to the Company’s registration statement on Form 8-A filed with the SEC on October 4, 2016.

Omnibus Incentive Plan

On the Effective Date, pursuant to the operation of the Plan, the SandRidge Energy, Inc. 2016 Omnibus Incentive Plan (the “Omnibus Incentive Plan”) became effective.

The board of directors of the Company (the “Board”) or any committee duly authorized by the Board (the “Committee”) will administer the Omnibus Incentive Plan. The Committee has broad authority under the Omnibus Incentive Plan to, among other things: (i) select participants; (ii) determine the types of awards that participants are to receive and the number of shares that are to be subject to such awards; and (iii) establish the terms and conditions of awards, including the price (if any) to be paid for the shares or the award.

Persons eligible to receive awards under the Omnibus Incentive Plan include non-employee directors of the Company, employees of the Company or any of its affiliates, and certain consultants and advisors to the Company or any of its affiliates. The types of awards that may be granted under the Omnibus Incentive Plan include stock options, restricted stock, performance awards and other forms of awards granted or denominated in shares of New Common Stock, as well as certain cash-based awards.

The maximum number of shares of New Common Stock that may be issued or transferred pursuant to awards under the Omnibus Incentive Plan is 4,597,163. If any stock option or other stock-based award granted under the Omnibus Incentive Plan expires, terminates or is cancelled for any reason without having been exercised in full, the number of shares of New Common Stock underlying any unexercised award shall again be available for the purpose of awards under the Omnibus Incentive Plan. If any shares of restricted stock, performance awards or other stock-based awards denominated in shares of New Common Stock awarded under the Plan are forfeited for any reason, the number of forfeited shares shall again be available for purposes of awards under the Omnibus Incentive Plan. Any award under the Omnibus Incentive Plan settled in cash shall not be counted against the maximum share limitation.

As is customary in incentive plans of this nature, each share limit and the number and kind of shares available under the Omnibus Incentive Plan and any outstanding awards, as well as the exercise or purchase prices of awards, and performance targets under certain types of performance-based awards, are subject to adjustment in the event of certain reorganizations, mergers, combinations, recapitalizations, stock splits, stock dividends or other similar events that change the number or kind of shares outstanding, and extraordinary dividends or distributions of property to the Company’s stockholders.

The description of the Omnibus Incentive Plan is qualified in its entirety by reference to the full text of the Omnibus Incentive Plan, which is filed herewith as Exhibit 10.8.

 

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Item 1.02 Termination of a Material Definitive Agreement.

Equity Interests

On the Effective Date, by operation of the Plan, all agreements, instruments, and other documents evidencing, relating to or connected with any equity interests of the Company (the “Interests”), including the outstanding shares of the Company’s common stock, par value $0.001 per share (“Pre-Effective Date Common Stock”), issued and outstanding immediately prior to the Effective Date, and any rights of any holder in respect thereof, were deemed cancelled, discharged and of no force or effect.

Debt Securities and Credit Agreement

On the Effective Date, by operation of the Plan, all outstanding obligations under the following notes issued by the Company (collectively, the “Unsecured Notes”) and the related collateral agreements and registration rights, as applicable, were cancelled and the indentures governing such obligations were cancelled, except to the limited extent expressly set forth in the Plan:

 

    8.75% unsecured notes due January 15, 2020, issued pursuant to that certain Indenture dated December 16, 2009, by and among the Company, as issuer; certain of the Company’s subsidiaries, as guarantors; and Wells Fargo Bank, N.A. (the “Unsecured Senior Notes Trustee”);

 

    7.5% unsecured notes due March 15, 2021, issued pursuant to that certain Indenture dated March 15, 2011, by and among the Company, as issuer; certain of the Company’s subsidiaries, as guarantors; and the Unsecured Senior Notes Trustee;

 

    8.125% unsecured notes due October 15, 2022, issued pursuant to that certain Indenture dated April 17, 2012, by and among the Company, as issuer; certain of the Company’s subsidiaries, as guarantors; and the Unsecured Senior Notes Trustee;

 

    7.5% unsecured notes due February 15, 2023, issued pursuant to that certain Indenture dated August 20, 2012, by and among the Company, as issuer; certain of the Company’s subsidiaries, as guarantors; and the Unsecured Senior Notes Trustee;

 

    8.125% convertible notes due October 16, 2022, issued pursuant to that certain Indenture dated April 17, 2012, by and among the Company, as issuer; certain of the Company’s subsidiaries, as guarantors; and Wilmington Trust, National Association (the “Unsecured Convertible Notes Trustee”); and

 

    7.5% convertible notes due February 16, 2023, issued pursuant to that certain Indenture dated August 19, 2015, by and among the Company, as issuer; certain of the Company’s subsidiaries, as guarantors; and the Unsecured Convertible Notes Trustee.

On the Effective Date, by operation of the Plan, all outstanding obligations under the following notes issued by the Company (the “Second Lien Notes” and, together with the Unsecured Notes, the “Old Notes”) and the related collateral agreements and registration rights, as applicable, were cancelled and the indentures governing such obligations were cancelled:

 

    8.75% second lien notes due June 1, 2020 and issued by the Company pursuant to that certain indenture, dated June 10, 2015 (the “Second Lien Notes Indenture”), by and among the Company, as issuer, certain of the Company’s subsidiaries, as guarantors, and U.S. Bank, National Association, in its capacity as indenture trustee under the Second Lien Notes Indenture.

On the Effective Date, by operation of the Plan, all outstanding obligations under the following credit agreement (the “First Lien Credit Agreement”) entered into by the Company and the related collateral agreements were cancelled and the credit agreements governing such obligations were cancelled:

 

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    The Fourth Amended and Restated Credit Agreement, dated as of June 10, 2015 (as amended from time to time), by and among the Company, as the borrower, certain of the Company’s subsidiaries, as guarantors, Royal Bank of Canada, in its capacity as administrative agent and collateral agent under the First Lien Credit Agreement, and the lending institutions party from time to time thereto.

 

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

The information regarding the New First Lien Exit Facility, the New Building Note and the New Convertible Notes Indenture set forth in Item 1.01 of this Report is incorporated by reference herein.

 

Item 3.02 Unregistered Sales of Equity Securities.

On the Effective Date, pursuant to the terms of the Plan, the Company issued an aggregate of 19,371,229 shares of its new Common Stock, par value $0.001 per share (“New Common Stock”) to the Holders of Allowed Claims (as defined in the Plan), including 971,231 shares issued and outstanding to give effect to the election of certain Holders of Second Lien Note Claims (as defined in the Plan) to receive New Common Stock on the Effective Date instead of New Convertible Notes. The Company also issued $281,780,873 of New Convertible Notes (subject to adjustments pursuant to the terms of the New Convertible Notes Indenture) to Holders of Second Lien Note Claims. In addition, the Company issued 4,913,251 Series A Warrants and 2,068,690 Series B Warrants (subject to adjustments pursuant to the terms of the Warrants), at initial exercise prices of $41.34 and $42.03 per share, respectively (subject to adjustments pursuant to the terms of the Warrants), to certain Holders of General Unsecured Claims (as defined in the Plan).

The Company relied on Section 1145(a)(1) of the Bankruptcy Code as an exemption from the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”) for the issuance of the New Common Stock, the New Convertible Notes and the Warrants. Section 1145(a)(1) of the Bankruptcy Code exempts the offer and sale of securities under a plan of reorganization from registration under Section 5 of the Securities Act and state laws if three principal requirements are satisfied:

 

    the securities must be issued under a plan of reorganization by the debtor, its successor under a plan, or an affiliate participating in a joint plan of reorganization with the debtor;

 

    the recipients of the securities must hold a claim against, an interest in, or a claim for administrative expense in the case concerning the debtor or such affiliate; and

 

    the securities must be issued either (a) in exchange for the recipient’s claim against, interest in or claim for administrative expense in the case concerning the debtor or such affiliate or (b) principally in such exchange and partly for cash or property.

 

Item 3.03 Material Modification to Rights of Security Holders.

As provided in the Plan, all notes, stock, agreements, instruments, certificates, and other documents evidencing any claim against or interest in the Debtors were cancelled on the Effective Date and the obligations of the Debtors thereunder or in any way related thereto were fully released. The securities to be cancelled on the Effective Date include all of the Company’s Pre-Effective Date Common Stock, all previously outstanding shares of the Company’s preferred stock as well as the Old Notes. For further information, see Items 1.01, 1.02, 3.02 and 5.01 of this Report, which are incorporated herein by reference.

The information regarding the terms governing the conversion of the New Convertible Notes set forth in Item 1.01 of this Report under the heading “New Convertible Notes” is incorporated by reference herein. The information regarding the terms governing the exercise of the Warrants set forth in Item 1.01 of this Report under the heading “Warrant Agreement” is incorporated by reference herein. The information set forth in Item 5.03 of this Report is incorporated by reference herein.

 

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Item 5.01 Changes in Control of Registrant.

As previously disclosed, on the Effective Date, all previously issued and outstanding shares of the Company’s common stock and preferred stock were cancelled, and the Company issued shares of New Common Stock to certain of its creditors pursuant to the Plan. For further information, see Items 1.01, 1.02, 3.02 and 3.03 of this Report, which is incorporated herein by reference.

 

Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

Departure and Appointment of Directors

Pursuant to the Plan, as of the Effective Date, the following directors ceased to serve on the Company’s board of directors: Jeffrey S. Serota, Jim J. Brewer, Everett R. Dobson, Edward R. Moneypenny, J. Michael Stice, Alan J. Weber and Dan A. Westbrook.

Pursuant to the Plan, the Company’s new board of directors, consisting of the following persons, was appointed as of the Effective Date:

 

    James Bennett has served as President and Chief Executive Officer of the Company since June 2013. Prior to commencing service in his current positions, he served as President and Chief Financial Officer from March 2013 until June 2013 and Executive Vice President and Chief Financial Officer from January 2011 until March 2013. Prior to joining the Company, Mr. Bennett was Managing Director for White Deer Energy, a private equity fund focused on the exploration and production, oilfield service and equipment, and midstream sectors of the oil and gas industry. From 2006 to 2009, Mr. Bennett was employed by GSO Capital Partners L.P., where he served in various capacities, including as its Managing Director. Mr. Bennett graduated with a B.B.A. with a major in finance from Texas Tech University. Mr. Bennett has served on the boards of directors of the general partner of Cheniere Energy Partners L.P. and PostRock Energy Corporation.

 

    Michael Lynn Bennett has over thirty-six years of experience in the chemical industry and serves as a member of the board of directors and the audit committee of Alliant Energy, Chairman of the board of directors of OCI N.V., and Chairman of the board of directors of OCI Partners LP. Mr. Bennett also recently served as Terra Industries Inc.’s President and Chief Executive Officer.

 

    John V. Genova is chairman of the Company’s board of directors. He has over forty years of experience in the energy industry and has most recently served as President and Chief Executive Officer of Sterling Chemicals. He has served as a member of the board of directors and the audit committee of Encore Acquisition Company, as well as an advisory board member of 1859 Partners LLC.

 

    William M. Griffin, Jr. is an independent energy advisor with over thirty-five years of upstream industry experience. Previously, he held the positions of President and Chief Executive Officer of Petro Harvester Oil & Gas, President of Ironwood Oil & Gas and senior executive roles with El Paso Production Corp. He also served as a director on the boards of directors of Black Warrior Methane Corp. and Four Star Oil & Gas Company.

 

    David J. Kornder has over twenty-five years of experience and has previously served as Chief Executive Officer of Cornerstone Natural Resources, LLC, Chief Financial Officer of Petrie Parkman & Co., an energy investment bank, and as Executive Vice President and Chief Financial Officer of Patina Oil & Gas Corporation from 1996 through its acquisition by Noble Energy, Inc. in May 2005. Prior to that, Mr. Kornder began his career at Deloitte & Touche LLP.

Committees of the Directors

The standing committees of the Board are comprised of non-employee directors and consist of an Audit Committee, a Compensation Committee and a Corporate Governance and Nominating Committee.

 

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    The Board has appointed Messrs. Genova and M. Bennett to serve as members on the Compensation Committee. Mr. M. Bennett was appointed Chairman of the Compensation Committee;

 

    The Board has appointed Messrs. Genova and M. Bennett to serve as members on the Nominating and Governance Committee. Mr. Genova was appointed Chairman of the Nominating and Governance Committee; and

 

    The Board has appointed Messrs. Kornder, Griffin and Genova to serve as members on the Audit Committee. Mr. Kornder was appointed Chairman of the Audit Committee.

Compensation of Directors

For the first nine months of service, each non-employee director will receive a restricted stock award under the Omnibus Incentive Plan discussed above (a “RS Award”), made promptly following closing of the tenth full trading day of the New Common Stock following the Effective Date.

Each RS Award will vest in equal one-third installments on each of the first three anniversaries of the grant date, subject to the director’s continued service with the Company through the applicable vesting date. The aggregate grant date fair values of the directors’ respective RS Awards will be as follows: (i) Mr. Genova: $225,000; (ii) Mr. Kornder: $191,000; and (iii) all other directors: $176,000. The number of shares of New Common Stock underlying each RS Award will be determined based on the average per share volume-weighted average price of the New Common Stock in respect of the ten trading days beginning on the first full trading day following the Effective Date.

Indemnification of Directors and Executive Officers

As of the Effective Date, the Company entered into indemnification agreements with each of its directors and executive officers. The indemnification agreements require the Company to (a) indemnify these individuals to the fullest extent permitted under Delaware law against liabilities that may arise by reason of their service to the Company and (b) advance expenses reasonably incurred as a result of any proceeding against them as to which they could be indemnified. The agreements replaced any previously entered indemnification agreement between the Company and its directors and executive officers. The Company may enter into indemnification agreements with any future directors or executive officers.

Each indemnification agreement is in substantially the form included herein as Exhibit 10.9 to this Report. The description of the indemnification agreements is qualified in its entirety by reference to the full text of the form of indemnification agreement, which is incorporated by reference herein.

Executive Officers

As of the Effective Date, by operation of the Plan, the executive officers of the Company consisted of the following existing executive officers: James D. Bennett, President and Chief Executive Officer; Julian Bott, Executive Vice President and Chief Financial Officer; Steven D. Turk, Executive Vice President and Chief Operating Officer; Duane M. Grubert, Executive Vice President — Investor Relations and Strategy; R. Scott Griffin, Senior Vice President — People and Culture; and Philip T. Warman, Senior Vice President, General Counsel and Corporate Secretary.

Biographical information about the Company’s executive officers is set forth in Amendment No. 1 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2015, filed with the SEC on April 29, 2016, under the section entitled “Item 10. Directors, Executive Officers and Corporate Governance – Executive Biographical Information,” which information is incorporated by reference herein.

 

9


The compensation arrangements for the Company’s named executive officers were not amended in connection with the effectiveness of the Plan, except, to the extent that any of such arrangements provided for incentive awards, as of the Effective Date, such awards will no longer be honored.

Initial Incentive Awards

In connection with the Company’s successful emergence from bankruptcy, promptly following closing of the tenth full trading day of the New Common Stock following the Effective Date, each of the Company’s named executive officers will receive an award under the Omnibus Incentive Plan discussed above. Each award will consist of restricted stock (“Restricted Stock”) and cash-settled performance units (“PUs”).

The Restricted Stock will vest in equal one-third installments on each of the first three anniversaries of the grant date, subject to the executive officer’s continued employment with the Company through the applicable vesting date.

The PUs will vest over three vesting periods, as follows: (i)  First Vesting Period : October 1, 2016 through December 31, 2017, (ii)  Second Vesting Period : January 1, 2018 through December 31, 2018; and (iii)  Third Vesting Period : January 1, 2019 through December 31, 2019. The vested PUs will be settled in cash in an amount based on the Company’s performance relative to the annual incentive program performance goals established by the Board for the corresponding annual periods ending December 31, 2017, 2018 and 2019 (each, a “Performance Period”), with such cash payment made within thirty (30) days of the Board’s certification of the extent to which the performance goals for the applicable Performance Period have been met; provided , however , that payment made in respect of any such Performance Period shall be conditioned upon the Company having at least $1 of EBITDA for that Performance Period for the purpose of qualifying such payment as performance-based compensation under Section 162(m) of the Internal Revenue Code.

The aggregate grant date fair value of each named executive officer’s initial award, along with the breakdown between Restricted Stock and PUs, will be as follows: (i) Mr. Bennett: $10,500,000, consisting of $7,875,000 in Restricted Stock and $2,625,000 in PUs; (ii) Mr. Bott: $3,700,000, consisting of $2,775,000 in Restricted Stock and $925,000 in PUs; (iii) Mr. Turk: $3,000,000, consisting of $2,250,000 in Restricted Stock and $750,000 in PUs; and (iv) Mr. Grubert: $2,000,000, consisting of $1,500,000 in Restricted Stock and $500,000 in PUs. The number of shares of New Common Stock underlying each Restricted Stock award will be determined based on the average per share volume-weighted average price of the New Common Stock in respect of the ten trading days beginning on the first full trading day following the Effective Date. The number of units underlying each PU award will be determined based on a designated value of $100 per PU.

 

Item 5.03 Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year.

On the Effective Date, pursuant to the terms of the Plan, the Company filed the Amended and Restated Certificate of Incorporation (the “Certificate of Incorporation”) with the office of the Secretary of State of Delaware. Also on the Effective Date, and pursuant to the terms of the Plan, the Company adopted the Amended and Restated Bylaws (the “Bylaws”). Descriptions of the material provisions of the Certificate of Incorporation and the Bylaws are contained in the Company’s registration statement on Form 8-A filed with the SEC on October 4, 2016, which description is incorporated by reference herein.

The descriptions of the Certificate of Incorporation and the Bylaws are qualified in their entirety by reference to the full texts of the Certificate of Incorporation and the Bylaws, which are incorporated herein as Exhibits 3.1 and 3.2, respectively to this Report, to the Company’s registration statement on Form 8-A filed with the SEC on October 4, 2016.

 

Item 7.01 Regulation FD Disclosure.

On the Effective Date, the Company issued a press release announcing its emergence from bankruptcy. A copy of this press release is included herein as Exhibit 99.1. The press release, including the information contained therein, is furnished pursuant to Item 7.01, is not to be considered “filed” under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and shall not be incorporated by reference into any of the Company’s previous or future filings under the Securities Act.

 

10


Item 8.01 Other Events.

On October 4, 2016, pursuant to the terms of the Plan, the New York Stock Exchange (the “NYSE”) approved the listing of the New Common Stock for trading on the NYSE. On the Effective Date, pursuant to the terms of the Plan, the Company registered the New Common Stock under Section 12(b) of the Exchange Act. On October 4, 2016, trading in the New Common Stock on the NYSE commenced.

 

Item 9.01. Financial Statements and Exhibits.

 

  (d) Exhibits

 

Exhibit No.

  

Description

  2.1    Amended Joint Chapter 11 Plan of Reorganization of SandRidge Energy, Inc. and its Debtor Affiliates, dated September 19, 2016 (incorporated by reference to Exhibit 2.1 to the 8-A of the Company’s registration statement on Form 8-A filed on October 4, 2016).
  3.1    Amended and Restated Certificate of Incorporation of SandRidge Energy, Inc. (incorporated by reference to Exhibit 3.1 of the Company’s registration statement on Form 8-A filed on October 4, 2016).
  3.2    Amended and Restated Bylaws of SandRidge Energy, Inc. (incorporated by reference to Exhibit 3.2 of the Company’s registration statement on Form 8-A filed on October 4, 2016).
  4.1*    Form of specimen New Common Stock certificate of SandRidge Energy, Inc.
  4.2*    Form of specimen Series A Warrant certificate (included in Exhibit 10.6)
  4.3*    Form of specimen Series B Warrant certificate (included in Exhibit 10.6)
  4.4*    Form of New Convertible Note (included in Exhibit 10.3)
10.1*    New First Lien Exit Facility dated as of October 4, 2016, among SandRidge Energy, Inc., the lenders party thereto and Royal Bank of Canada, as administrative agent and issuing lender.
10.2*    New Building Note dated as of October 4, 2016, between SandRidge Energy, Inc. and Fir Tree E&P Holdings II, LLC.
10.3*    New Convertible Notes Indenture dated as of October 4, 2016, among SandRidge Energy, Inc., the guarantors party thereto and Wilmington Trust, National Association, as trustee.
10.4*    Intercreditor and Subordination Agreement dated as of October 4, 2016, among SandRidge Energy, Inc., Royal Bank of Canada, as priority lien agent and Wilmington Trust, National Association, as subordinated collateral trustee.
10.5*    Collateral Trust Agreement dated as of October 4, 2016 among Sandridge Energy, Inc., as the Company, the Guarantors from time to time party hereto, Wilmington Trust, National Association, as Trustee under the Indenture, the other Parity Lien Representatives from time to time party hereto and Wilmington Trust, National Association, as Collateral Trustee.
10.6*    Warrant Agreement dated as of October 4, 2016, between SandRidge Energy, Inc. and American Stock Transfer & Trust Company, LLC, as warrant agent.
10.7    Registration Rights Agreement dated as of October 4, 2016, among SandRidge Energy, Inc. and the holders party thereto (incorporated by reference to Exhibit 10.1 of the Company’s registration statement on Form 8-A filed on October 4, 2016).

 

11


Exhibit No.

  

Description

10.8*    SandRidge Energy, Inc.’s 2016 Omnibus Incentive Plan.
10.9*    Form of Indemnification Agreement between SandRidge Energy, Inc. and the directors and officers of SandRidge Energy, Inc.
99.1*    Press release issued by SandRidge Energy, Inc. dated as of October 4, 2016.

 

* Filed herewith.

 

12


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.

 

    SANDRIDGE ENERGY, INC.
Date: October 7, 2016     By:  

/s/ Julian Bott

    Name: Julian Bott
   

Title:   Executive Vice President and Chief

            Financial Officer


EXHIBIT INDEX

 

Exhibit No.

  

Description

  2.1    Amended Joint Chapter 11 Plan of Reorganization of SandRidge Energy, Inc. and its Debtor Affiliates, dated September 19, 2016 (incorporated by reference to Exhibit 2.1 to the 8-A of the Company’s registration statement on Form 8-A filed on October 4, 2016).
  3.1    Amended and Restated Certificate of Incorporation of SandRidge Energy, Inc. (incorporated by reference to Exhibit 3.1 of the Company’s registration statement on Form 8-A filed on October 4, 2016).
  3.2    Amended and Restated Bylaws of SandRidge Energy, Inc. (incorporated by reference to Exhibit 3.2 of the Company’s registration statement on Form 8-A filed on October 4, 2016).
  4.1*    Form of specimen New Common Stock certificate of SandRidge Energy, Inc.
  4.2*    Form of specimen Series A Warrant certificate (included in Exhibit 10.6)
  4.3*    Form of specimen Series B Warrant certificate (included in Exhibit 10.6)
  4.4*    Form of New Convertible Note (included in Exhibit 10.3)
10.1*    New First Lien Exit Facility dated as of October 4, 2016, among SandRidge Energy, Inc., the lenders party thereto and Royal Bank of Canada, as administrative agent and issuing lender.
10.2*    New Building Note dated as of October 4, 2016, between SandRidge Energy, Inc. and Fir Tree E&P Holdings II, LLC.
10.3*    New Convertible Notes Indenture dated as of October 4, 2016, among SandRidge Energy, Inc., the guarantors party thereto and Wilmington Trust, National Association, as trustee.
10.4*    Intercreditor and Subordination Agreement dated as of October 4, 2016, among SandRidge Energy, Inc., Royal Bank of Canada, as priority lien agent and Wilmington Trust, National Association, as subordinated collateral trustee.
10.5*    Collateral Trust Agreement dated as of October 4, 2016 among Sandridge Energy, Inc., as the Company, the Guarantors from time to time party hereto, Wilmington Trust, National Association, as Trustee under the Indenture, the other Parity Lien Representatives from time to time party hereto and Wilmington Trust, National Association, as Collateral Trustee.
10.6*    Warrant Agreement dated as of October 4, 2016, between SandRidge Energy, Inc. and American Stock Transfer & Trust Company, LLC, as warrant agent.
10.7    Registration Rights Agreement dated as of October 4, 2016, among SandRidge Energy, Inc. and the holders party thereto (incorporated by reference to Exhibit 10.1 of the Company’s registration statement on Form 8-A filed on October 4, 2016).
10.8*    SandRidge Energy, Inc.’s 2016 Omnibus Incentive Plan.
10.9*    Form of Indemnification Agreement between SandRidge Energy, Inc. and the directors and officers of SandRidge Energy, Inc.


Exhibit No.

  

Description

99.1*    Press release issued by SandRidge Energy, Inc. dated as of October 4, 2016.

 

* Filed herewith.

 

2

Exhibit 4.1

 

LOGO


SANDRIDGE ENERGY, INC.

The Corporation will furnish, without charge to each stockholder who so requests, the powers, designations, preferences and relative, participating, optional or other special rights of each class or series of stock of the Corporation, and the qualifications, limitations or restrictions of such preferences and/or rights. Please direct any such request to the Corporation or the Transfer Agent.

 

 

The following abbreviations, when used in the inscription on the face of this certificate, shall be construed as though they were written out in full according to applicable laws or regulations:

 

TEN COM      as tenants in common     UNIF GIFT MIN ACT–   ........................Custodian...................
TEN ENT      as tenants by the entireties                   (Cust)    (Minor)    
JT TEN      as joint tenants with right of       under Uniform Gifts to Minors
     survivorship and not as tenants in common       Act................................................
           (State)

Additional abbreviations may also be used even though not in the above list.

For value received, I,                                                                                        ,now sell, assign and transfer to

PLEASE INSERT SOCIAL SECURITY OR OTHER

IDENTIFYING NUMBER OF ASSIGNEE

 

 
          

 

 

(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING ZIP CODE, OF ASSIGNEE)

 

 

 

 

                                                                                                                                                                                                                  shares of the Common Stock represented by this Certificate, and do irrevocably constitute and appoint                                          

                                                                                                                                                                                                          Attorney to transfer this stock on the books of the Corporation, with full power of substitution in the premises.

Dated                                         

 

   

 

   

 

  NOTICE:   THE SIGNATURE TO THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME AS WRITTEN UPON THE FACE OF THE CERTIFICATE IN EVERY PARTICULAR, WITHOUT ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATEVER.

Signature(s) Guaranteed:

 

By                                                                                                                                                                                            
THE SIGNATURE(S) SHOULD BE GUARANTEED BY AN ELIGIBLE GUARANTOR INSTITUTION (Banks,   
Stockbrokers, Savings and Loan Associations and Credit Unions) WITH MEMBERSHIP IN AN APPROVED   
SIGNATURE GUARANTEE MEDALLION PROGRAM), PURSUANT TO S.E.C. RULE 17Ad-15.   

Exhibit 10.1

 

 

 

 

CREDIT AGREEMENT

Dated as of October 4, 2016

among

SANDRIDGE ENERGY, INC.

as the Borrower,

ROYAL BANK OF CANADA,

as Administrative Agent

and

an L/C Issuer,

and

The Other Lenders Party Hereto

 

 

 

RBC CAPITAL MARKETS 1 ,

as Sole Lead Arranger and Sole Book Manager

 

1   RBC Capital Markets is the global brand name of the corporate and investment banking business of Royal Bank of Canada and its affiliates.


TABLE OF CONTENTS

 

         Page  
ARTICLE I   
DEFINITIONS AND ACCOUNTING TERMS   
Section 1.01   Defined Terms      1   
Section 1.02   Other Interpretive Provisions      34   
Section 1.03   Accounting Terms      35   
Section 1.04   Petroleum Terms      35   
Section 1.05   Rounding      35   
Section 1.06   Times of Day      35   
Section 1.07   Letter of Credit Amounts      36   
Section 1.08   Available Amount Transactions      36   
Section 1.09   Pro Forma Compliance Calculations      36   
ARTICLE II   
THE COMMITMENTS AND CREDIT EXTENSIONS   
Section 2.01   Committed Loans; Prior Loans      36   
Section 2.02   Committed Borrowings, Conversions and Continuations of Committed Loans      36   
Section 2.03   Letters of Credit      38   
Section 2.04   [Reserved]      46   
Section 2.05   Borrowing Base      46   
Section 2.06   Prepayments      48   
Section 2.07   Termination or Reduction of Commitments      50   
Section 2.08   Repayment of Loans      50   
Section 2.09   Interest      50   
Section 2.10   Fees      51   
Section 2.11   Computation of Interest and Fees      51   
Section 2.12   Evidence of Debt      52   
Section 2.13   Payments Generally; Administrative Agent’s Clawback      52   
Section 2.14   Sharing of Payments by Lenders      54   
Section 2.15   Defaulting Lenders      54   
ARTICLE III   
TAXES, YIELD PROTECTION AND ILLEGALITY   
Section 3.01   Taxes      57   
Section 3.02   Illegality      59   
Section 3.03   Inability to Determine Rates      59   
Section 3.04   Increased Costs; Reserves on Eurodollar Rate Loans      59   
Section 3.05   Compensation for Losses      61   
Section 3.06   Mitigation Obligations; Replacement of Lenders      61   
Section 3.07   Survival      62   
ARTICLE IV   
CONDITIONS PRECEDENT TO CREDIT EXTENSIONS   
Section 4.01   Effectiveness      62   
Section 4.02   Conditions to All Credit Extensions      65   
ARTICLE V   
REPRESENTATIONS AND WARRANTIES   
Section 5.01   Existence, Qualification and Power      66   
Section 5.02   Authorization; No Contravention      66   

 

i


         Page  
Section 5.03   Governmental Authorization; Other Consents      67   
Section 5.04   Binding Effect      67   
Section 5.05   Financial Statements; No Material Adverse Effect      67   
Section 5.06   Litigation      68   
Section 5.07   No Default      68   
Section 5.08   Ownership of Property; Liens      68   
Section 5.09   Environmental Compliance      68   
Section 5.10   Insurance      69   
Section 5.11   Taxes      69   
Section 5.12   ERISA Compliance      69   
Section 5.13   Subsidiaries; Equity Interests; Loan Parties      70   
Section 5.14   Margin Regulations; Investment Company Act      70   
Section 5.15   Disclosure      70   
Section 5.16   Compliance with Laws      70   
Section 5.17   Solvency      70   
Section 5.18   Casualty, Etc      71   
Section 5.19   Labor Matters      71   
Section 5.20   Collateral Documents      71   
Section 5.21   Engineered Oil and Gas Properties      71   
Section 5.22   Sale of Production      72   
Section 5.23   OFAC      73   
Section 5.24   Anti-Corruption Laws      73   
Section 5.25   PATRIOT Act      73   
ARTICLE VI   
AFFIRMATIVE COVENANTS   
Section 6.01   Financial Statements      74   
Section 6.02   Certificates; Other Information      75   
Section 6.03   Notices      77   
Section 6.04   Payment of Obligations      77   
Section 6.05   Preservation of Existence, Etc      78   
Section 6.06   Maintenance of Properties      78   
Section 6.07   Maintenance of Insurance      78   
Section 6.08   Compliance with Laws      78   
Section 6.09   Books and Records      78   
Section 6.10   Inspection Rights      79   
Section 6.11   Use of Proceeds      79   
Section 6.12   Covenant to Guarantee Obligations and Give Security      79   
Section 6.13   Compliance with Environmental Laws      80   
Section 6.14   Further Assurances      81   
Section 6.15   Production Proceeds      81   
Section 6.16   Anti-Corruption, Anti-Terrorism and Anti-Money Laundering Laws      81   
Section 6.17   Post-Closing Changes      81   
Section 6.18   Post-Restructuring Cash Collateral Account      81   
Section 6.19   Accounts      82   
ARTICLE VII   
NEGATIVE COVENANTS   
Section 7.01   Liens      83   
Section 7.02   Investments      85   
Section 7.03   Indebtedness      86   

 

ii


         Page  
Section 7.04   Fundamental Changes      89   
Section 7.05   Dispositions      89   
Section 7.06   Restricted Payments      91   
Section 7.07   Change in Nature of Business      91   
Section 7.08   Transactions with Affiliates      92   
Section 7.09   Burdensome Agreements      92   
Section 7.10   Use of Proceeds      92   
Section 7.11   Financial Covenants      92   
Section 7.12   Hedge Transactions      93   
Section 7.13   Sanctions      94   
Section 7.14   Anti-Corruption Laws      94   
Section 7.15   Prepayment of Restricted Debt      94   
Section 7.16   Liquidity      94   
Section 7.17   Capital Expenditures      94   
ARTICLE VIII   
EVENTS OF DEFAULT AND REMEDIES   
Section 8.01   Events of Default      95   
Section 8.02   Remedies Upon Event of Default      97   
Section 8.03   Application of Funds      97   
ARTICLE IX   
ADMINISTRATIVE AGENT   
Section 9.01   Appointment and Authority      98   
Section 9.02   Rights as a Lender      99   
Section 9.03   Exculpatory Provisions      99   
Section 9.04   Reliance by Administrative Agent      100   
Section 9.05   Delegation of Duties      100   
Section 9.06   Resignation of Administrative Agent      100   
Section 9.07   Non-Reliance on Administrative Agent and Other Lenders      101   
Section 9.08   No Other Duties, Etc      101   
Section 9.09   Administrative Agent May File Proofs of Claim      101   
Section 9.10   Collateral and Guaranty Matters      102   
Section 9.11   Flood Insurance      103   
Section 9.12   Intercreditor Agreements      103   
ARTICLE X   
MISCELLANEOUS   
Section 10.01   Amendments, Etc      103   
Section 10.02   Notices; Effectiveness; Electronic Communication      105   
Section 10.03   No Waiver; Cumulative Remedies      106   
Section 10.04   Expenses; Indemnity; Damage Waiver      107   
Section 10.05   Payments Set Aside      108   
Section 10.06   Successors and Assigns      109   
Section 10.07   Treatment of Certain Information; Confidentiality      113   
Section 10.08   Right of Setoff      114   
Section 10.09   Interest Rate Limitation      114   
Section 10.10   Counterparts; Integration; Effectiveness      114   
Section 10.11   Survival of Representations and Warranties      115   
Section 10.12   Severability      115   
Section 10.13   Replacement of Lenders      115   

 

iii


         Page  
Section 10.14   Governing Law; Jurisdiction; Etc      116   
Section 10.15   Waiver of Jury Trial      116   
Section 10.16   No Advisory or Fiduciary Responsibility      117   
Section 10.17   USA PATRIOT Act Notice      117   
Section 10.18   Electronic Execution of Assignments and Certain Other Documents      118   
Section 10.19   Keepwell      118   

Schedules and Exhibits

 

Schedule 2.01   Commitments and Applicable Percentages   
Schedule 2.03   Existing Letters of Credit   
Schedule 5.03   Governmental Authorizations   
Schedule 5.06   Litigation   
Schedule 5.09   Environmental Matters   
Schedule 5.13   Subsidiaries, Other Equity Investments and Loan Party Information   
Schedule 5.22   Sale of Production   
Schedule 7.01   Existing Liens   
Schedule 7.02   Existing Investments   
Schedule 7.03   Existing Indebtedness   
Schedule 10.02   Administrative Agent’s Office; Certain Addresses for Notices   
Exhibit A   Form of Committed Loan Notice   
Exhibit B   Form of Prepayment Notice   
Exhibit C   Form of Note   
Exhibit D   Form of Compliance Certificate   
Exhibit E   Form of Assignment and Assumption   
Exhibit F   Form of Solvency Certificate   
Exhibit G   Form of Guaranty   
Exhibit H   Form of Mortgage   
Exhibit I   Form of Security Agreement   
Exhibit J   Form of Convertible Notes Intercreditor Agreement   

 

iv


CREDIT AGREEMENT

This CREDIT AGREEMENT is entered into as of October 4, 2016 among SANDRIDGE ENERGY, INC., a Delaware corporation (the “ Borrower ”), each LENDER from time to time party hereto (collectively, the “ Lenders ” and individually, a “ Lender ”) and ROYAL BANK OF CANADA., as Administrative Agent and an L/C Issuer.

PRELIMINARY STATEMENTS:

WHEREAS, the Borrower has requested that (i) the Lenders extend credit in the form of Committed Loans made available to the Borrower on the Closing Date and at any time and from time to time after the Closing Date and during the Availability Period, subject to the Aggregate Commitments and the Available Borrowing Base and (ii) the L/C Issuers issue Letters of Credit at any at any time and from time to time after the Closing Date and during the Availability Period, subject to the Aggregate Commitments and the Available Borrowing Base, in an aggregate maximum stated amount at any time outstanding not in excess of the Letter of Credit Sublimit; and

WHEREAS the Lenders and L/C Issuers are willing to make available to the Borrower such revolving credit and letter of credit facilities upon the terms and subject to the conditions set forth herein.

NOW, THEREFORE, in consideration of the premises and mutual covenants and agreements herein contained, the parties hereto covenant and agree as follows:

ARTICLE I

DEFINITIONS AND ACCOUNTING TERMS

Section 1.01 Defined Terms . As used in this Agreement, the following terms shall have the meanings set forth below:

Administrative Agent ” means Royal Bank of Canada in its capacity as administrative agent under any of the Loan Documents, or any successor administrative agent.

Administrative Agent Fee Letter ” means that certain Administrative Agent Fee Letter, dated as of October 4, 2016, among the Administrative Agent and the Borrower.

Administrative Agent’s Office ” means the Administrative Agent’s address and, as appropriate, account as set forth on Schedule 10.02 , or such other address or account as the Administrative Agent may from time to time notify to the Borrower and the Lenders.

Administrative Questionnaire ” means an Administrative Questionnaire in a form supplied by the Administrative Agent.

AFE ” means an authorization for expenditures representing an estimate of work to be performed. AFEs shall include COPAS overhead and other similar expenses related to any Loan Party’s direct overheard expense for drilling and completion costs of any Oil and Gas Properties.

Affiliate ” means, with respect to any Person, another Person that directly, or indirectly through one or more intermediaries, Controls or is Controlled by or is under common Control with the Person specified.

Agent Parties ” has the meaning specified in Section 10.02(c) .


Aggregate Commitments ” means the Commitments of all the Lenders. As of the Closing Date, the amount of the Aggregate Commitments is $425,000,000.

Aggregate Exposure ” means, with respect to any Lender, at any time, the sum of (a) the aggregate Outstanding Amount of the Committed Loans of such Lender plus (b) such Lender’s Applicable Percentage of the Outstanding Amount of all L/C Obligations.

Agreement ” means this Credit Agreement, as the same may be further amended from time to time.

Applicable Percentage ” means with respect to any Lender at any time, the percentage (carried out to the ninth decimal place) of the Aggregate Commitments represented by such Lender’s Commitment at such time. If the commitment of each Lender to make Committed Loans and the obligation of each L/C Issuer to make L/C Credit Extensions have been terminated pursuant to Section 8.02 or if the Aggregate Commitments have expired, then the Applicable Percentage of each Lender shall be determined based on the Applicable Percentage of such Lender most recently in effect, giving effect to any subsequent assignments. The initial Applicable Percentage of each Lender is set forth opposite the name of such Lender on Schedule 2.01 or in the Assignment and Assumption pursuant to which such Lender becomes a party hereto, as applicable.

Applicable Rate ” means, (a) with respect to Committed Loans, (i) that are Eurodollar Rate Loans, 4.75%  per annum and (ii) that are Base Rate Loans, 3.75%  per annum , (b) with respect to the Letter of Credit Fee, 4.75%  per annum and (c) with respect to the Commitment Fee, 0.50%  per annum .

Approved Fund ” means any Fund that is administered or managed by (a) a Lender, (b) an Affiliate of a Lender or (c) an entity or an Affiliate of an entity that administers or manages a Lender.

Approved Petroleum Engineers ” means (a) Cawley, Gillespie & Associates, Inc., (b) DeGolyer and MacNaughton, (c) LaRoche Petroleum Consultants, Ltd., Netherland, Sewell & Associates, Inc., (d) Ryder Scott Company, L.P., (e) W.D. Van Gonten & Co. Petroleum Engineering and (f) at the Borrower’s option, any other independent petroleum engineers selected by the Borrower and reasonably acceptable to the Administrative Agent.

Arranger ” means RBC Capital Markets 2 in its capacity as sole lead arranger and sole book manager in respect of this Agreement.

Assignee Group ” means two or more Eligible Assignees that are Affiliates of one another or two or more Approved Funds managed by the same investment advisor.

Assignment and Assumption ” means an assignment and assumption entered into by a Lender and an Eligible Assignee (with the consent of any party whose consent is required by Section 10.06(b) ), and accepted by the Administrative Agent, in substantially the form of Exhibit E or any other form approved by the Administrative Agent.

Attributable Indebtedness ” means, on any date, (a) in respect of any Capital Lease of any Person, the capitalized amount thereof that would appear on a balance sheet of such Person prepared as of such date in accordance with GAAP and (b) in respect of any Synthetic Lease Obligation, the capitalized amount of the remaining lease payments under the relevant lease that would appear on a balance sheet of such Person prepared as of such date in accordance with GAAP if such lease were accounted for as a Capital Lease.

 

 

2   RBC Capital Markets is the global brand name of the corporate and investment banking business of Royal Bank of Canada and its affiliates

 

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Audited Financial Statements ” means the audited consolidated balance sheet of the Borrower and its Subsidiaries for the fiscal year ended December 31, 2015, and the related consolidated statements of income or operations, shareholders’ equity and cash flows for such fiscal year of the Borrower and its Subsidiaries, including the notes thereto.

Auto-Extension Letter of Credit ” has the meaning specified in Section 2.03(c)(iii) .

Auto-Reinstatement Letter of Credit ” has the meaning specified in Section 2.03(c)(iv) .

Availability Period ” means the period from and including the Closing Date to the earliest of (a) the Maturity Date, (b) the date of termination of the Aggregate Commitments pursuant to Section 2.07 and (c) the date of termination of the commitment of each Lender to make Committed Loans and of the obligation of the L/C Issuers to make L/C Credit Extensions pursuant to Section 8.02 .

Available Amount ” means, at any time (the “ Reference Date ”), the sum of (without duplication):

(a) $75,000,000; plus

(b) the amount of any capital contributions made in cash after the Closing Date or Net Cash Proceeds from the issuance of Equity Interests (other than Disqualified Stock) of the Borrower or any Restricted Subsidiary after the Closing Date (or issuances after the Closing Date of debt securities that have been converted into or exchanged for Qualified Stock) received by or contributed to the Borrower (or any direct or indirect parent thereof and contributed by such parent to the Borrower) during the period from and including the Business Day immediately following the Closing Date through and including the Reference Date, in each case, other than to the extent constituting Cure Proceeds; plus

(c) an amount equal to any returns (including dividends, distributions, returns of principal, repayments and similar amounts) actually received in cash or Cash Equivalents, and any Net Cash Proceeds of any sales or other dispositions actually received, by the Borrower or any of its Subsidiaries in respect of any Investments made after the Closing Date pursuant to Sections 7.02(c) , (h) , (i) , and (q) ; provided that such amount may not exceed the original Investment made using the Available Amount pursuant to Section 7.02(c) , (h) , (i) , or (q) , as applicable; minus

(d) the aggregate amount of Investments made pursuant to Sections 7.02(c) , (h) , (i) , and (q) , Indebtedness incurred and outstanding pursuant to Sections 7.03(g) and Section 7.03(h) , Restricted Payments made pursuant to Section 7.06(g)  and payments in respect of Restricted Debt made pursuant to clause (iv)  of Section 7.15(a) , all during the period commencing on the Closing Date and ending on the Reference Date (but excluding the intended usage of the Available Amount on such Reference Date by the particular Investment or Restricted Payment).

Available Amount Conditions ” shall be satisfied, with respect to any transaction at any time, if (a) no Default or Event of Default shall have occurred and be continuing or shall result from the applicable transaction; (b) the Borrower shall be in compliance, on a pro forma basis, with each of the Financial Covenants set forth in Section 7.11 ; and (c) after giving effect to such transaction, the Available Borrowing Base shall not be less than 10.0% of the Facility Limit.

Available Borrowing Base ” means, at any time of determination, the remainder of (a) the Facility Limit minus (b) the Total Outstandings.

 

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Available Commitment ” means, at any time of determination, the remainder of (a) the Facility Limit at such time minus the Total Outstandings.

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.

Bankruptcy Code ” means Title 11 of the United States Code, or any similar federal or state law for the relief of debtors.

Bankruptcy Court ” means the United States Bankruptcy Court for the Southern District of Texas.

Base Rate ” means for any day a fluctuating rate per annum equal to the highest of (i) the Federal Funds Rate plus 1/2 of 1.00%, (ii) the rate of interest in effect for such day as publicly announced from time to time by the Administrative Agent as its “prime rate” and (iii) the Eurodollar Rate for such day (after giving effect to clause (ii)  of the final paragraph of the definition thereof) plus 1.00%  per annum . The “prime rate” is a rate set by the Administrative Agent based upon various factors including the Administrative Agent’s costs and desired return, general economic conditions and other factors, and is used as a reference point for pricing some loans, which may be priced at, above, or below such announced rate. Any change in such prime rate announced by the Administrative Agent shall take effect at the opening of business on the day specified in the public announcement of such change.

Base Rate Loan ” means a Committed Loan that bears interest based on the Base Rate.

Board ” means the Board of Governors of the Federal Reserve System of the United States (or any successor thereto).

Borrower ” has the meaning specified in the introductory paragraph hereto.

Borrower Materials ” has the meaning specified in Section 6.02 .

Borrowing Base ” means, on any date, either the amount provided for in Section 2.05(a)  or the amount determined in accordance with the provisions of Section 2.05(b) , as the same may be reduced from time to time pursuant to Sections 2.05(c) , (d)  and (e) .

Borrowing Base Deficiency ” means, as of any date, the amount, if any, by which the Total Outstandings on such date exceeds the Borrowing Base in effect on such date.

Business Day ” means any day other than a Saturday, Sunday or other day on which commercial banks are authorized to close under the Laws of, or are in fact closed in, Oklahoma City, Oklahoma and the State of New York, and, if such day relates to any Eurodollar Rate Loan, means any such day on which dealings in Dollar deposits are conducted by and between banks in the London interbank eurodollar market.

Capital Lease ” means, as applied to any Person, any lease of any property (whether real, personal or mixed) by that Person as a lessee that, in conformity with GAAP, is, or is required to be,

 

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accounted for as a capital lease on the balance sheet of that Person; provided that leases that are recharacterized as Capital Leases due to a change in GAAP after the Closing Date shall not be treated as Capital Leases for any purposes under this Agreement but shall instead be treated as they would have been in accordance with GAAP as in effect on the Closing Date.

Cash Collateral ” has the meaning specified in Section 2.03(h) .

Cash Collateral Orders ” means that certain (A) Interim Order (I) Authorizing Post-petition Use of Cash Collateral, (II) Granting Adequate Protection to Prepetition Lenders Pursuant to 11 U.S.C. §§ 105, 361, 362, 363, and 507, Bankruptcy Rules 2002, 4001, and 9014 and Local Bankruptcy Rules 4001-1(b) and 400201 and (III) Scheduling a Final Hearing Pursuant to Bankruptcy Rule 4001(B) entered by the Bankruptcy Court on May 18, 2016 and filed as ECF No. 28 in the Chapter 11 Cases and (B) Final Order (I) Authorizing Postpetition Use of Cash Collateral, and (II) Granting Adequate Protection to Prepetition Lenders Pursuant to 11 U.S.C. §§ 105, 361, 362, 363, and 507, Bankruptcy Rules 2002, 4001, and 9014 and Local Bankruptcy Rules 4001-1(b) and 4002-1.

Cash Collateralize ” has the meaning specified in Section 2.03(h) .

Cash Equivalents ” means, at any date of determination, any of the following types of Investments:

(a) readily marketable obligations issued or directly and fully guaranteed or insured by the United States or any state, territory or commonwealth of the United States or any political subsidizations of any such state, territory of commonwealth of the United States, including any agency or instrumentality thereof, in each case, having maturities of not more than 24 months from the date of acquisition thereof; provided that the full faith and credit of the United States is pledged in support thereof; provided , further , that, for the avoidance of doubt, treasury securities issued by the United States shall be deemed to be Cash Equivalents for purposes of this clause (a) ;

(b) time deposits with, or insured certificates of deposit or bankers’ acceptances of, any commercial bank that (A) is a Lender or (B)(i) is organized under the laws of the United States, any state thereof or the District of Columbia or is the principal banking subsidiary of a bank holding company organized under the laws of the United States, any state thereof or the District of Columbia, and is a member of the Federal Reserve System, (ii) issues (or the parent of which issues) commercial paper rated as described in clause (c)  of this definition and (iii) has combined capital and surplus of at least $500,000,000;

(c) commercial paper issued by any Person organized under the laws of any state of the United States and rated at least “Prime-1” (or the then equivalent grade) by Moody’s or at least “A-1” (or the then equivalent grade) by S&P, in each case with maturities of not more than 12 months from the date of acquisition thereof; and

(d) Investments, classified in accordance with GAAP as current assets of the Borrower or any of its Restricted Subsidiaries, in money market investment programs registered under the Investment Company Act of 1940, which are administered by financial institutions that have the highest rating assigned at that time from either Moody’s or S&P, and the portfolios of which are limited solely to Investments of the character, quality and maturity described in clauses (a) , (b)  and (c)  of this definition;

(e) readily marketable direct obligations issued by any foreign government or any political subdivision or public instrumentality thereof, in each case rated at least “Prime-1” (or the then equivalent grade) by Moody’s or at least “A-1” (or the then equivalent grade) by S&P, in each case with maturities of 24 months or less from the date of acquisition;

 

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(f) repurchase obligations for underlying securities of the types described in clauses (a) and (b)  entered into with any financial institution or recognized securities dealer meeting the qualifications specified in clause (b) above; and

(g) investment funds investing at least 90.0% of their assets in funds or securities of the types described in clauses (a) through (f)  above.

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 Engineered Oil and Gas Property of the Borrower or any of its Restricted Subsidiaries.

CERCLIS ” means the Comprehensive Environmental Response, Compensation and Liability Information System maintained by the U.S. Environmental Protection Agency.

CFC ” means a Person that is a controlled foreign corporation under Section 957 of the Code.

Change in Law ” means the occurrence, after the date of this Agreement, of any of the following: (a) the adoption or taking effect of any Law, rule, regulation or treaty; (b) any change in any Law, rule, regulation or treaty or in the administration, interpretation or application thereof by any Governmental Authority or (c) the making or issuance of any request, guideline, directive or order (whether or not having the force of law) by any Governmental Authority or quasi-Governmental Authority; provided that notwithstanding anything herein to the contrary, (x) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, guidelines, orders, regulations and directives thereunder or issued in connection therewith and (y) all requests, rules, guidelines, orders, regulations 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 or foreign regulatory authorities, in each case pursuant to Basel III, shall in each case be deemed to be a “Change in Law”, regardless of the date enacted, adopted or issued.

Change of Control ” means an event or series of events by which:

(a) (1) any Person (other than any Permitted Holder), or Persons (other than one or more of the Permitted Holders) constituting a “group” (as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, but excluding any employee benefit plan of such Person or its Subsidiaries, and any Person or entity acting in its capacity as trustee, agent or other fiduciary or administrator of any such plan) becomes the “beneficial owner” (as defined in Rules 13d-3 and 13d-5 under the Securities Exchange Act of 1934, except that such Person or group shall be deemed to have “beneficial ownership” of all securities that such Person or group has the right to acquire, whether such right is exercisable immediately or only after the passage of time (such right, an “ option right ”)), directly or indirectly, of more than 35% of the Equity Interests of the Borrower entitled to vote for members of the board of directors or equivalent governing body of the Borrower on a fully-diluted basis (and taking into account all such securities that such “Person” or “group” has the right to acquire pursuant to any option right); or

(b) during any period of 12 consecutive months, a majority of the members of the board of directors or other equivalent governing body of the Borrower cease to be composed of individuals (i) who were members of that board or equivalent governing body on the first day of such period, (ii) whose election or nomination to that board or equivalent governing body was approved by individuals referred

 

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to in clause (i) above constituting at the time of such election or nomination at least a majority of that board or equivalent governing body or (iii) whose election or nomination to that board or other equivalent governing body was approved by individuals referred to in clauses (i) and (ii)  above constituting at the time of such election or nomination at least a majority of that board or equivalent governing body.

Chapter 11 Cases ” shall have the meaning assigned to such term in the definition of “Chapter 11 Plan”.

Chapter 11 Debtors ” means the Borrower, 4th Street Properties, LLC, Black Bayou Exploration, L.L.C., Braniff Restaurant Holdings, LLC, CEBA Gathering, LLC, CEBA Midstream GP, LLC, CEBA Midstream, LP, Cholla Pipeline, L.P., Cornhusker Energy, L.L.C., FAE Holdings 389322R, LLC, Integra Energy, L.L.C., Lariat Services, Inc., MidContinent Resources, LLC, Mistmada Oil Company, Inc., Piñon Gathering Company, LLC, Sabino Exploration, LLC, Sagebrush Pipeline, LLC, SandRidge CO2, LLC, SandRidge Exploration and Production, LLC, SandRidge Holdings, Inc., SandRidge Midstream, Inc., SandRidge Operating Company, SandRidge Realty, LLC, Sierra Madera CO2 Pipeline, LLC, and WTO Gas Gathering Company, LLC, in their respective capacities as debtors and debtors-in-possession in the Chapter 11 Cases.

Chapter 11 Plan ” means the chapter 11 plan of reorganization of the Chapter 11 Debtors substantially in the form of that certain Joint Chapter 11 Plan of Reorganization of SandRidge Energy, Inc. and its Debtor Affiliates, filed as ECF No. 60 in the main case of the jointly administered Chapter 11 Debtors, Case No. 16-32488 in the Bankruptcy Court (collectively, the “ Chapter 11 Cases ”), which may be amended, supplemented, or modified, as time to time as appropriate, in form and substance satisfactory to the Administrative Agent and the Lenders to the extent affecting their treatment or rights.

Closing Date ” means the first date all the conditions precedent in Section 4.01 are satisfied or waived in accordance therewith.

Closing Date Material Adverse Effect ” shall mean a material adverse effect on the operations, business, assets, properties, liabilities or condition (financial or otherwise) of the Borrower and its Restricted Subsidiaries taken as a whole, other than (a) as customarily would occur as a result of the filing of the Chapter 11 Cases or the effect of the bankruptcy or conditions in the industry in which the Borrower operates as existing on May 16, 2016 (without giving effect to any subsequent change in such market conditions following such date) and (b) any matters disclosed in any first day pleadings or declarations in connection with the Chapter 11 Cases (without giving effect to any subsequent changes in such matters following such date)

Code ” means the Internal Revenue Code of 1986, as amended.

Collateral ” means all of the “Collateral” and “Mortgaged Property” referred to in the Collateral Documents and all of the other property that is or is intended under the terms of the Collateral Documents to be subject to Liens in favor of the Administrative Agent for the benefit of the Secured Parties. Notwithstanding anything else to the contrary, “Collateral” shall not include any Building (as defined in the applicable Flood Insurance Regulation) or Manufactured (Mobile) Home (as defined in the applicable Flood Insurance Regulation) included in the definition of “Mortgaged Property” and no Building or Manufactured (Mobile) Home shall be encumbered by any Mortgage.

Collateral Documents ” means, collectively, the Security Agreement, the Mortgages, each of the mortgages, collateral assignments, Security Agreement Supplements, security agreements, pledge agreements or other similar agreements delivered to the Administrative Agent pursuant to the Security Agreement or Sections 4.01 , 6.12 or 6.14 hereof, and each of the other agreements, instruments or documents that creates or purports to create a Lien in favor of the Administrative Agent for the benefit of the Secured Parties.

 

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Collateral Trust Account ” means that certain account established at Wilmington Trust, National Association by the Borrower to hold $100.00 in trust for purposes of establishing the trust estate pursuant to the terms of the Subordinated Collateral Trust Agreement.

Commitment ” means, as to each Lender, its obligation to (a) make Committed Loans to the Borrower pursuant to Section 2.01 and (b) purchase participations in L/C Obligations, in an aggregate principal amount at any one time outstanding not to exceed the amount set forth opposite such Lender’s name on Schedule 2.01 or in the Assignment and Assumption pursuant to which such Lender becomes a party hereto, as applicable, as such amount may be adjusted from time to time in accordance with this Agreement.

Commitment Fee ” means has the meaning specified in Section 2.10(a) .

Committed Borrowing ” means a borrowing consisting of simultaneous Committed Loans of the same Type and, in the case of Eurodollar Rate Loans, having the same Interest Period made by each of the Lenders pursuant to Section 2.02 .

Committed Loan ” has the meaning specified in Section 2.01(a) .

Committed Loan Notice ” means a notice of (a) a Committed Borrowing, (b) a conversion of Committed Loans from one Type to the other, or (c) a continuation of Eurodollar Rate Loans, pursuant to Section 2.02(a) , which shall be substantially in the form of Exhibit A or such other form as may be approved by the Administrative Agent (including any form on an electronic platform or electronic transmission system as shall be approved by the Administrative Agent), appropriately completed and signed by a Responsible Officer of the Borrower.

Commodity 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 a certificate substantially in the form of Exhibit D .

Consolidated ” refers to the consolidation of any Person, in accordance with GAAP, with its properly consolidated subsidiaries. References herein to a Person’s Consolidated financial statements, financial position, financial condition, liabilities, etc. refer to the consolidated financial statements, financial position, financial condition, liabilities, etc. of such Person and its properly consolidated subsidiaries.

Consolidated EBITDA ” means for any period, the Consolidated Net Income of the Borrower for such period, plus each of the following (without duplication) determined for the Borrower and its Consolidated Restricted Subsidiaries on a Consolidated basis for such period: (a) any provision for (or less any benefit from) income or franchise taxes included in determining Consolidated Net Income; (b) any interest expense, premium payments, debt discount and financing fees and expenses of the Borrower or its Restricted Subsidiaries deducted in determining Consolidated Net Income; (c) any depreciation, depletion or amortization expense deducted in determining Consolidated Net Income; (d) any non-cash loss on change in fair value of derivative instruments deducted in determining Consolidated Net Income; (e) any other non-cash charge, expense or loss deducted in determining

 

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Consolidated Net Income; and (f) one-time cash expenses and restructuring, severance, termination and other one-time costs, expenses or charges (whether cash or non-cash) incurred in connection with the acquisition or disposition of any entity or line of business permitted hereunder, the closure or consolidation of facilities, the termination or modification of contracts or any benefit or employee plans, or the institution of cost savings initiatives or other business optimization or restructuring programs; and minus each of the following (without duplication) determined for the Borrower and its Consolidated Restricted Subsidiaries on a Consolidated basis for such period, to the extent included in determining such Consolidated Net Income for such period: (i) any non-cash gain on change in fair value of derivative instruments included in determining Consolidated Net Income; (ii) any interest income included in determining Consolidated Net Income; and (iii) any other non-cash income or gains included in determining Consolidated Net Income; provided , however , that in determining Consolidated Net Income for the purposes of this definition for any period in which the Borrower or any of its Consolidated Restricted Subsidiaries has acquired or acquires additional Consolidated Restricted Subsidiaries (whether by purchase, merger or otherwise) or has acquired or disposed of or acquires or disposes of producing Oil and Gas Properties, (x) the Consolidated Net Income of such acquired Consolidated Restricted Subsidiaries shall be included in such calculation on a pro forma basis as if they had been owned by the Borrower and its Consolidated Restricted Subsidiaries throughout such period, (y) the revenues attributable to the oil and gas production from such acquired Oil and Gas Properties during such period, less the direct operating expenses and severance and ad valorem taxes incurred with respect to such properties during such period, shall be included in such calculation on a pro forma basis as if they had been owned by the Borrower and its Consolidated Restricted Subsidiaries throughout such period and (z) the revenues attributable to the oil and gas production from producing Oil and Gas Properties disposed of during such period, less the direct operating expenses and severance and ad valorem taxes incurred with respect to such properties during such period, shall be deducted in such calculation on a pro forma basis as if they had not been owned by the Borrower and its Consolidated Restricted Subsidiaries throughout such period. Pro forma adjustments made in connection with Subsidiaries or Oil and Gas Properties acquired or disposed of shall be consistent with Article 11 of Regulation S-X and certified by the Borrower’s chief financial officer.

Consolidated Interest Coverage Ratio ” means, as of any date of determination, the ratio of (a) Consolidated EBITDA for the period of four consecutive fiscal quarters most recently ended on or prior to such date for which financial statements have been, or were required to be, delivered pursuant to Section 6.01(a) or (b) , as applicable to (b) Consolidated Interest Expense for such period.

Consolidated Interest Expense ” means, for any period, with respect to the Borrower and its Restricted Subsidiaries on a Consolidated basis, total cash interest expense (including that portion attributable to Capital Leases in accordance with GAAP and capitalized interest) net of cash interest income, including all commissions, discounts and other fees and charges owed with respect to letters of credit and bankers’ acceptance financing and net costs under Swap Contracts and other Hedge Transactions, but excluding, for the avoidance of doubt, (a) amortization of deferred financing costs, debt discounts or premiums, amendment and consent fees, debt issuance costs, commissions, fees and expenses, pay-in-kind interest expense, discounted liabilities and any other amounts of non-cash interest (including as a result of the effects of acquisition method accounting or push-down accounting), (b) any expensing of bridge, commitment fees and other financing fees and any other fees related to the Transactions or any acquisitions after the Closing Date, (c) non-cash interest expense attributable to the movement of the mark-to-market valuation of obligations under Swap Contracts, other Hedge Transactions or other derivative instruments, (d) penalties and interest relating to taxes, (e) any non-recurring cash interest expense consisting of “additional interest” or “liquidated damages” with respect to other securities for failure to timely comply with registration rights obligations, (f) annual agency fees paid to the administrative agents and collateral agents under any credit facilities or other debt instruments or documents and (g) any one-time cash costs associated with breakage in respect of Swap Contracts for interest rates.

 

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Consolidated Net Income ” means, for any period, the net income (or loss) of the Borrower and its Consolidated Restricted Subsidiaries for such period determined in accordance with GAAP; provided that the following shall be excluded in calculating Consolidated Net Income and Consolidated EBITDA: (i) any extraordinary items of gain or loss; (ii) any gain or loss from the sale of assets other than in the ordinary course of business; (iii) any non-cash income, gains, losses or charges resulting from the requirements of SFAS 133 or 143; (iv) the net income (or loss) of any Royalty Trust, any master limited partnership or any person accounted for on the equity method, except to the extent of cash distributions received by the Borrower or a Consolidated Restricted Subsidiary for such period and (v) any income attributable to cancellation or early extinguishment of any Indebtedness of the Borrower or a Consolidated Restricted Subsidiary.

Consolidated Total Indebtedness ” means, as of any date of determination, with respect to the Borrower and its Restricted Subsidiaries on a Consolidated basis, the sum of (without duplication) (a) the aggregate principal amount of Indebtedness of the Borrower and its Restricted Subsidiaries outstanding as of such date, but solely to the extent consisting of Indebtedness for borrowed money, obligations in respect of Capital Leases, Synthetic Lease Obligations, any debt obligations evidenced by bonds, notes, debentures, promissory notes or similar instruments and any obligations in respect of drawn letters of credit (which have not been reimbursed within one Business Day after such amount is drawn), as determined in accordance with GAAP (excluding, for the avoidance of doubt, all undrawn amounts under revolving credit facilities and letters of credit and all Swap Obligations) minus (b) up to $30,000,000 of the aggregate amount of cash and Cash Equivalents of the Borrower and its Restricted Subsidiaries on such date; provided that Consolidated Total Indebtedness shall not, in any event, include Indebtedness in respect of obligations under Swap Contracts (but shall include unpaid termination payments in respect thereof) or obligations in respect of the Post-Restructuring Convertible Notes.

Consolidated Total Net Leverage Ratio ” means, as of any date of determination, the ratio of (a) Consolidated Total Indebtedness on such date to (b) Consolidated EBITDA for the period of four consecutive fiscal quarters most recently ended on or prior to such date for which financial statements have been, or were required to be, delivered pursuant to Section 6.01(a) or (b) , as applicable.

Contractual Obligation ” means, as to any Person, any provision of any security issued by such Person or of any agreement, instrument or other undertaking to which such Person is a party or by which it or any of its property is bound.

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. “ Controlling ” and “ Controlled ” have meanings correlative thereto.

Control Agreement ” means a control agreement, in form and substance reasonably satisfactory to Administrative Agent, providing for the Administrative Agent’s exclusive control of a Deposit Account, Securities Account or Commodity Account, as applicable, after notice of an Event of Default, executed and delivered by the Borrower or Subsidiary, as applicable, and the applicable securities intermediary (with respect to a Securities Account), bank (with respect to a Deposit Account) or commodity intermediary (with respect to a Commodity Account), in each case at which such relevant account is maintained.

Convertible Notes Intercreditor Agreement ” means the Intercreditor and Subordination Agreement executed by Wilmington Trust National Association, as Trustee, and representative for the

 

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holders of the Post-Restructuring Convertible Notes, the Administrative Agent and the Borrower and the Guarantors, in substantially the form attached hereto as Exhibit J , as the same may be amended, restated, amended and restated, modified or supplemented from time to time in accordance with the terms hereof and thereof.

COPAS ” means the Council of Petroleum Accountants Societies.

Credit Extension ” means each of the following: (a) a Committed Borrowing and (b) an L/C Credit Extension.

Cure Proceeds ” has the meaning specified in Section 7.11(d)(ii) .

Debtor Relief Laws ” means the Bankruptcy Code and all other liquidation, conservatorship, bankruptcy, assignment for the benefit of creditors, moratorium, rearrangement, receivership, insolvency, reorganization or similar debtor relief Laws of the United States or other applicable jurisdictions from time to time in effect and affecting the rights of creditors generally.

Default ” means any event or condition that constitutes an Event of Default or that, with the giving of any notice, the passage of time, or both, would be an Event of Default.

Default Rate ” means (a) when used with respect to Obligations other than Letter of Credit Fees, an interest rate equal to (i) the Base Rate plus (ii) the Applicable Rate, if any, applicable to Base Rate Loans plus (iii) 2.00% per annum ; provided , however , that with respect to a Eurodollar Rate Loan, the Default Rate shall be an interest rate equal to the interest rate (including any Applicable Rate) otherwise applicable to such Committed Loan plus 2.00%  per annum and (b) when used with respect to Letter of Credit Fees, a rate equal to the Applicable Rate plus 2.00%  per annum .

Defaulting Lender ” means any Lender that (a) has failed to fund any portion of (i) the Committed Loans within two Business Days of the date such Committed Loans were required to be funded hereunder unless such Lender notifies the Administrative Agent and the Borrower in writing that such failure is the result of such Lender’s determination that one or more conditions precedent to funding (each of which conditions precedent, together with any applicable default, shall be specifically identified in such writing) has not been satisfied or (ii) the participations in L/C Obligations required to be funded by it hereunder within two Business Days of the date required to be funded by it hereunder unless such failure has been cured, (b) has otherwise failed to pay over to the Administrative Agent or any other Lender any other amount required to be paid by it hereunder within two Business Days of the date when due, unless the subject of a good faith dispute or unless such failure has been cured, (c) has notified the Borrower, the Administrative Agent or any L/C Issuer in writing that it does not intend to comply with its funding obligations hereunder, or has made a public statement to that effect (unless such writing or public statement relates to such Lender’s obligation to fund a Committed Loan hereunder and states that such position is based on such Lender’s determination that a condition precedent to funding (which condition precedent, together with any applicable default, shall be specifically identified in such writing or public statement) cannot be satisfied), (d) has failed, within three Business Days after written request by the Administrative Agent or the Borrower, to confirm in writing to the Administrative Agent and the Borrower that it will comply with its prospective funding obligations hereunder ( provided that such Lender shall cease to be a Defaulting Lender pursuant to this clause (d)  upon receipt of such written confirmation by the Administrative Agent and the Borrower) or (e) has, or has a direct or indirect parent company that has, (i) become the subject of a proceeding under any Debtor Relief Law, (ii) had appointed for it a receiver, custodian, conservator, trustee, administrator, assignee for the benefit of creditors or similar Person charged with reorganization or liquidation of its business or assets, including the Federal Deposit Insurance Corporation or any other state or federal regulatory authority acting in such a capacity

 

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or (iii) become the subject of a Bail-In Action; provided that a Lender shall not be a Defaulting Lender solely by virtue of the ownership or acquisition of any equity interest in that Lender or any direct or indirect parent company thereof by a Governmental Authority so long as such ownership interest does not result in or provide such Lender with immunity from the jurisdiction of courts within the United States or from the enforcement of judgments or writs of attachment on its assets or permit such Lender (or such Governmental Authority) to reject, repudiate, disavow or disaffirm any contracts or agreements made with such Lender.

Deposit Account ” has the meaning assigned to such term in the UCC.

Designated Jurisdiction ” means any country or territory to the extent that such country or territory itself is the subject of any Sanction.

Determination Date ” has the meaning specified in Section 2.05(b) .

Disposition ” or “ Dispose ” means the sale, transfer, license, lease or other disposition (including any sale and leaseback transaction but excluding all events described in the definition of “Casualty Event” regardless of the value thereof) of any property by any Person (or the granting of any option or other right to do any of the foregoing), including any sale, assignment, transfer or other disposal, with or without recourse, of any notes or accounts receivable or any rights and claims associated therewith. The issuance of Equity Interests by any Restricted Subsidiary to any Person other than the Borrower or a wholly-owned Restricted Subsidiary shall be deemed a Disposition by the Borrower of its direct or indirect Equity Interest in such Restricted Subsidiary to the extent of the resulting dilution.

Disqualified Stock ” means any capital stock 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 (other than a change in control or asset sale), (a) matures or is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or redeemable at the option of the holder thereof (other than solely as a result of a change of control or asset sale so long as any rights of the holders thereof upon the occurrence of a change of control or asset sale event shall be subject to the prior repayment in full of the Loans and all other Obligations (other than (i) contingent indemnification obligations as to which no claim has been asserted and (ii) Swap Obligations and Treasury Management Services Agreements)), in whole or in part, on or prior to the date that is 91 days after the earlier of the latest final maturity of the Committed Loans or the date the Loans are no longer outstanding, except to the extent that such capital stock is redeemable with, or solely exchangeable for, any capital stock of such Person that is not Disqualified Stock, (b) provide for the scheduled payment of dividends in cash or (c) is or becomes convertible into or exchangeable for Indebtedness or any Equity Interests that would constitute Disqualified Stock, in each case, prior to the date that is 91 days after the Maturity Date; provided that, if such capital stock is issued to any plan for the benefit of employees of the Borrower or its Subsidiaries or by any such plan to such employees, such capital stock shall not constitute Disqualified Stock solely because it may be required to be repurchased by the Borrower or its Subsidiaries in order to satisfy applicable statutory or regulatory obligations; provided , further , that any capital stock held by any future, present or former employee, director, manager or consultant of the Borrower, any of its Subsidiaries or any of its direct or indirect parent companies or any other entity in which the Borrower or a Subsidiary has an Investment and is designated in good faith as an “affiliate” by the board of directors or managers of the Borrower, in each case pursuant to any equity holders’ agreement, management equity plan or stock incentive plan or any other management or employee benefit plan or agreement shall not constitute Disqualified Stock solely because it may be required to be repurchased by the Borrower or its Subsidiaries.

Dollar ” and “ $ ” mean lawful money of the United States.

 

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EEA Financial Institution ” means (a) any credit institution or investment firm established in any EEA Member Country which is subject to the supervision of an EEA Resolution Authority, (b) any entity established in an EEA Member Country which is a parent of an institution described in clause (a)  of this definition, or (c) any financial institution established in an EEA Member Country which is a subsidiary of an institution described in 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.

Election Notice ” has the meaning specified in Section 2.06(b)(ii) .

Electrical Assets ” means (i) assets used primarily for the transmission and delivery of electricity, including electrical substations, power lines and other electrical infrastructure assets and (ii) Equity Interests of any Person that has no substantial assets other than assets referred to in clause (i) .

Eligible Assignee ” means any Person that meets the requirements to be an assignee under Section 10.06(b)(iii) , (v) , (vi)  and (vii)  (subject to such consents, if any, as may be required under Section 10.06(b)(iii) ).

Engineered Oil and Gas Property ” means any Oil and Gas Property listed in the most recent Engineering Report other than any Oil and Gas Property that has been Disposed of as part of or in connection with any Disposition to a Person other than a Loan Party that is permitted hereunder or under any other Loan Document.

Engineering Report ” means the Initial Engineering Report and each engineering report delivered pursuant to Section 2.05 or Section 6.01 setting forth, as of each December 31 and June 30, as applicable, the Proved Reserves attributable to the Oil and Gas Properties of the Borrower and the other Loan Parties, together with a projection of the rate of production of future net income, taxes, operating expenses and capital expenditures with respect thereto as of such date, based upon the economic assumptions consistent with the Administrative Agent’s lending requirements at the time, and reflecting any Oil and Gas Hedge Transactions that are in place with respect to such production. To the extent that two or more engineering firms prepare reports as of the same date for portions of the properties required to be reported on, such reports will collectively constitute a single “Engineering Report” for the purposes hereof.

Environmental Laws ” means any and all Federal, state, local and foreign statutes, laws, regulations, ordinances, rules, judgments, orders, decrees, permits, concessions, grants, franchises, licenses, agreements or governmental restrictions relating to pollution and the protection of the environment or the release of any materials into the environment, including those related to hazardous substances or wastes, air emissions and discharges to waste or public systems.

Environmental Liability ” means any liability, contingent or otherwise (including any liability for damages, costs of environmental remediation, fines, penalties or indemnities), of the Borrower, any other Loan Party or any of their respective Subsidiaries directly or indirectly resulting from or based upon (a) violation of any Environmental Law, (b) the generation, use, handling, transportation, storage, treatment or disposal of any Hazardous Materials, (c) exposure to any Hazardous Materials, (d) the release or threatened release of any Hazardous Materials into the environment or (e) any contract, agreement or other consensual arrangement pursuant to which liability is assumed or imposed with respect to any of the foregoing.

 

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Environmental Permit ” means any permit, approval, identification number, license or other authorization required under any Environmental Law.

Equity Interests ” means, with respect to any Person, all of the shares of capital stock of (or other ownership or profit interests in) such Person, all of the warrants, options or other rights for the purchase or acquisition from such Person of shares of capital stock of (or other ownership or profit interests in) such Person, all of the securities convertible into or exchangeable for shares of capital stock of (or other ownership or profit interests in) such Person or warrants, rights or options for the purchase or acquisition from such Person of such shares (or such other interests), and all of the other ownership or profit interests in such Person (including partnership, member or trust interests therein), whether voting or nonvoting, and whether or not such shares, warrants, options, rights or other interests are outstanding on any date of determination. For the avoidance of doubt, debt instruments that are convertible into Equity Interests shall not be deemed to be Equity Interests until they are so converted.

ERISA ” means the Employee Retirement Income Security Act of 1974.

ERISA Affiliate ” means any trade or business (whether or not incorporated) under common control with the Borrower within the meaning of Section 414(b) or (c) of the Code (and Sections 414(m) and (o) of the Code for purposes of provisions relating to Section 412 of the Code).

ERISA Event ” means (a) a Reportable Event with respect to a Pension Plan; (b) a withdrawal by the Borrower or any ERISA Affiliate from a Pension Plan subject to Section 4063 of ERISA during a plan year in which it was a substantial employer (as defined in Section 4001(a)(2) of ERISA) or a cessation of operations that is treated as such a withdrawal under Section 4062(e) of ERISA; (c) a complete or partial withdrawal by the Borrower or any ERISA Affiliate from a Multiemployer Plan; (d) the filing of a notice of intent to terminate, the treatment of a Pension or Multiemployer Plan amendment as a termination under Section 4041 or 4041A of ERISA, or the commencement of proceedings by the PBGC to terminate a Pension Plan or Multiemployer Plan; (e) an event or condition which constitutes grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Pension Plan or Multiemployer Plan; or (f) the imposition of any liability under Title IV of ERISA, other than for PBGC premiums due but not delinquent under Section 4007 of ERISA, upon the Borrower or any ERISA Affiliate.

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 Rate ” means:

(a) for any Interest Period with respect to a Eurodollar Rate Loan, the rate per annum equal to the ICE Benchmark Administration Limited LIBOR rate (“ LIBOR ”) or a comparable or successor rate, which rate is approved by the Administrative Agent, as published on the applicable Reuters screen page (or, if such Reuters screen page is not available, such other commercially available source providing such quotations as may be designated by the Administrative Agent from time to time) at approximately 11:00 a.m., London time, two Business Days prior to the commencement of such Interest Period, for Dollar deposits (for delivery on the first day of such Interest Period) with a term equivalent to such Interest Period; and

 

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(b) for any interest calculation with respect to a Base Rate Loan on any date, the rate per annum equal to LIBOR, at or about 11:00 a.m., London time determined two Business Days prior to such date for Dollar deposits with a term of one month commencing that day.

Notwithstanding the foregoing, (i) to the extent a comparable or successor rate is approved by the Administrative Agent in connection herewith, the approved rate shall be applied in a manner consistent with market practice; provided that to the extent such market practice is not administratively feasible for the Administrative Agent, such approved rate shall be applied in a manner as otherwise reasonably determined by the Administrative Agent; and (ii) the Eurodollar Rate shall not, in any event, be less than 1.00%  per annum .

Eurodollar Rate Loan ” means a Committed Loan that bears interest at a rate based on the Eurodollar Rate.

Event of Default ” has the meaning specified in Section 8.01 .

Excluded Accounts ” means (a) each account in which all of the deposits consist solely of amounts utilized to fund payroll, employee benefits (including medical, dental and employee benefits claims) or tax obligations of the Borrower and its Restricted Subsidiaries, (b) accounts used solely as zero balance accounts, (c) any segregated account to the extent such account consists solely of amounts in respect of oil and gas royalty interests held in a fiduciary, trust or similar capacity for one or more third parties and (d) other accounts with funds on deposit not to exceed $2,500,000 in the aggregate for all such accounts at any time; provided that in no event shall any of the principal operating accounts of the Borrower or its Restricted Subsidiaries constitute an Excluded Account.

Excluded Swap Obligation ” means, with respect to any Guarantor, (a) any Swap Obligation in respect of a Swap Contract if, and to the extent that, and only for so long as, 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 of the Commodity Futures Trading Commission (or the application or official interpretation of any thereof) by virtue of such Guarantor’s failure 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 or (b) any other Swap Obligation designated as an “Excluded Swap Obligation” of such Guarantor as specified in any agreement between the relevant Loan Parties and counterparty applicable to such Swap Obligations, and agreed by the Administrative Agent. If a Swap Obligation arises under a master agreement governing more than one Swap Contract, such exclusion shall apply only to the portion of such Swap Obligation that is attributable to Swap Contracts for which such Guarantee or security interest is or becomes illegal.

Excluded Taxes ” means, with respect to the Administrative Agent, any Lender, any L/C Issuer or any other recipient of any payment to be made by or on account of any obligation of the Borrower hereunder, (a) taxes imposed on or measured by its overall net income (however denominated), and franchise taxes imposed on it (in lieu of net income taxes), by the jurisdiction (or any political subdivision thereof) 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) any branch profits taxes imposed by the United States or any similar tax imposed by any other jurisdiction in which the Borrower is located, (c) in the case of a Foreign Lender (other than an assignee pursuant to a request by the Borrower under Section 10.13 ), any withholding tax that is imposed on amounts payable to such Foreign Lender at the time such Foreign Lender becomes a party hereto (or designates a new Lending Office) or is attributable to such Foreign Lender’s failure or inability (other than as a result of a Change in Law) to

 

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comply with Section 3.01(e) , except to the extent that such Foreign Lender (or its assignor, if any) was entitled, at the time of designation of a new Lending Office (or assignment), to receive additional amounts from the Borrower with respect to such withholding tax pursuant to Section 3.01(a) , and (d) any U.S. federal withholding Taxes imposed under FATCA.

Existing Letters of Credit ” has the meaning specified in Section 2.03(b) .

Facility Limit ” means, at any time, the lesser of (a) the Aggregate Commitments at such time and (b) the Borrowing Base at such time.

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 and any intergovernmental agreements entered into by the United States that implement or modify the foregoing (together with the portions of any law implementing such intergovernmental agreements).

Federal Funds Rate ” means, for any day, the rate per annum equal to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers on such day, as published by the Federal Reserve Bank of New York on the Business Day next succeeding such day; provided that (a) if such day is not a Business Day, the Federal Funds Rate for such day shall be such rate on such transactions on the next preceding Business Day as so published on the next succeeding Business Day and (b) if no such rate is so published on such next succeeding Business Day, the Federal Funds Rate for such day shall be the average rate (rounded upward, if necessary, to a whole multiple of 1/100 of 1.00%) charged to the Administrative Agent on such day on such transactions as determined by the Administrative Agent.

Final Confirmation Order ” means an order of the Bankruptcy Court entered in accordance with the Bankruptcy Code, the Federal Rules of Bankruptcy Procedure, any applicable orders of the Bankruptcy Court and any applicable local rules in the Chapter 11 Cases confirming the Chapter 11 Plan, which shall be in form and substance reasonably satisfactory to the Administrative Agent and the Lenders; provided that such order shall be in full force and effect and shall not, without the consent of the Lenders and the Administrative Agent, have been stayed, reversed, modified or amended and shall not be subject to a motion or stay.

Financial Covenant ” means each of (a) the PDP Asset Coverage Ratio covenant set forth in Section 7.11(a) , (b) the Consolidated Total Net Leverage Ratio covenant set forth in Section 7.11(b) and (c) the Consolidated Interest Coverage Ratio covenant set forth in Section 7.11(c) . The foregoing clauses (a) through (c)  are collectively referred to as the “ Financial Covenants ”.

Flood Insurance Regulations ” means, collectively, (i) the National Flood Insurance Act of 1968 as now or hereafter in effect or any successor statute thereto, (ii) the Flood Disaster Protection Act of 1973 as now or hereafter in effect or any successor statue thereto, (iii) the National Flood Insurance Reform Act of 1994 (amending 42 USC 4001, et seq.), as the same may be amended or recodified from time to time and (iv) the Flood Insurance Reform Act of 2004 and any regulations promulgated thereunder.

Foreign Lender ” means any Lender that is organized under the laws of a jurisdiction other than that in which the Borrower is resident for tax purposes. For purposes of this definition, the United States, each State thereof and the District of Columbia shall be deemed to constitute a single jurisdiction.

 

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Fronting Exposure ” means, at any time there is a Defaulting Lender, with respect to any L/C Issuer, such Defaulting Lender’s Applicable Percentage of the outstanding L/C Obligations with respect to Letters of Credit issued by such L/C Issuer other than L/C Obligations as to which such Defaulting Lender’s participation obligation has been reallocated to other Lenders or Cash Collateralized in accordance with the terms hereof.

Fund ” means any Person (other than a natural person) that is (or will be) engaged in making, purchasing, holding or otherwise investing in commercial loans and similar extensions of credit in the ordinary course of its business.

GAAP ” means generally accepted accounting principles in the United States set forth in the opinions and pronouncements of the Accounting Principles Board and the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or such other principles as may be approved by a significant segment of the accounting profession in the United States, that are applicable to the circumstances as of the date of determination, consistently applied.

Governmental Authority ” means the government of the United States or any other nation, or of any political subdivision thereof, whether state or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government (including any supra-national bodies such as the European Union or the European Central Bank).

Granting Lender ” has the meaning specified in Section 10.06(g) .

Guarantee ” means, as to any Person, (a) any obligation, contingent or otherwise, of such Person guaranteeing or having the economic effect of guaranteeing any Indebtedness payable or performable by another Person (the “ primary obligor ”) in any manner, whether directly or indirectly, and including any obligation of such Person, direct or indirect, (i) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness, (ii) to purchase or lease property, securities or services for the purpose of assuring the obligee in respect of such Indebtedness of the payment or performance of such Indebtedness, (iii) to maintain working capital, equity capital or any other financial statement condition or liquidity or level of income or cash flow of the primary obligor so as to enable the primary obligor to pay such Indebtedness or (iv) entered into for the purpose of assuring in any other manner the obligee in respect of such Indebtedness of the payment thereof or to protect such obligee against loss in respect thereof (in whole or in part) or (b) any Lien on any assets of such Person securing any Indebtedness of any other Person, whether or not such Indebtedness is assumed by such Person (or any right, contingent or otherwise, of any holder of such Indebtedness to obtain any such Lien). The amount of any Guarantee shall be deemed to be an amount equal to the stated or determinable amount of the related primary obligation, or portion thereof, in respect of which such Guarantee is made or, if not stated or determinable, the maximum reasonably anticipated liability in respect thereof as determined by the guaranteeing Person in good faith. The term “Guarantee” as a verb has a corresponding meaning.

Guarantors ” means, collectively, (i) SandRidge Holdings, Inc., SandRidge Exploration and Production, LLC, SandRidge Midstream Inc., SandRidge Operating Company, Integra Energy, L.L.C. and Lariat and (ii) each Person which becomes a Guarantor after the Closing Date pursuant to Section 6.12 .

Guaranty ” means the Guaranty executed by the Borrower and the Guarantors in favor of the Administrative Agent and the other Secured Parties in substantially the form attached hereto as Exhibit G , as the same may be amended, modified or supplemented from time to time in accordance with the terms hereof and thereof.

 

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Hazardous Materials ” means all explosive or radioactive substances or wastes and all hazardous or toxic substances, wastes or other pollutants, including petroleum or petroleum distillates, asbestos or asbestos-containing materials, polychlorinated biphenyls, radon gas, infectious or medical wastes and all other substances or wastes of any nature regulated pursuant to any Environmental Law.

Hedging Order ” means that certain Order (A) Authorizing the Debtors to (I) Continue Prepetition Hedging Arrangements, (II) Enter into Postpetition Hedging Arrangements, (III) Grant Liens and Superpriority Claims, and (IV) Pay Prepetition Hedging Obligations, and (B) Modifying the Automatic Stay entered by the Bankruptcy Court on June 30, 2016 and filed as ECF No. 433 in the Chapter 11 Cases.

Hedge Transaction ” means any commodity, interest rate, currency or other swap, option, collar, futures contract or other contract pursuant to which a Person hedges risks related to commodity prices, interest rates, currency exchange rates, securities prices or financial market conditions. Hedge Transactions expressly include Oil and Gas Hedge Transactions.

Honor Date ” has the meaning specified in Section 2.03(d)(i) .

Hydrocarbons ” means oil, gas, casinghead gas, drip gasolines, natural gasoline, condensate, distillate and all other liquid and gaseous hydrocarbons produced or to be produced in conjunction therewith, and all products, by-products and all other substances derived therefrom or the processing thereof, and all other minerals and substances, including, but not limited to, sulphur, lignite, coal, uranium, thorium, iron, geothermal steam, water, carbon dioxide, helium and any and all other minerals, ores or substances of value, and the products and proceeds therefrom, including, without limitation, all gas resulting from the in situ combustion of coal or lignite.

Immaterial Subsidiary ” means any Subsidiary of the Borrower with less than $5,000,000 in total assets on a Consolidated basis.

Immaterial Title Deficiencies ” means, with respect to specified Proved Reserves, defects or clouds on title, discrepancies in reported net revenue and working interest ownership percentages, inaccuracies of representations and warranties in Sections 5.21 and 5.22 that are qualified by reference to this definition, and other Liens, defects, discrepancies and similar matters which do not, in the aggregate, reduce the PV9 Pricing of all Proved Reserves of the Borrower by more than 4.0% of PV9 Pricing of all such Proved Reserves.

Indebtedness ” means, as to any Person at a particular time, without duplication, all of the following, whether or not included as indebtedness or liabilities in accordance with GAAP:

(a) all obligations of such Person for borrowed money and all obligations of such Person evidenced by bonds, debentures, notes or other similar instruments;

(b) all direct or contingent obligations of such Person arising under letters of credit (including standby and commercial), bankers’ acceptances, bank guaranties, surety bonds and similar instruments;

(c) net obligations of such Person under any Swap Contract;

 

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(d) all obligations of such Person to pay the deferred purchase price of property or services (other than trade accounts payable in the ordinary course of business and, in each case, not past due for more than 90 days after the date on which such trade account payable was created);

(e) indebtedness (excluding prepaid interest thereon) secured by a Lien on property owned or being purchased by such Person (including indebtedness arising under conditional sales or other title retention agreements), whether or not such indebtedness shall have been assumed by such Person or is limited in recourse;

(f) Capital Leases and Synthetic Lease Obligations;

(g) the mandatory redemption price of all Disqualified Stock of such Person; and

(h) all Guarantees of such Person in respect of any of the foregoing.

For all purposes hereof, the Indebtedness of any Person shall include the Indebtedness of any partnership or joint venture (other than a joint venture that is itself a corporation or limited liability company) in which such Person is a general partner or a joint venturer, unless such Indebtedness is expressly made non-recourse to such Person. The amount of any net obligation under any Swap Contract on any date shall be deemed to be the Swap Termination Value thereof as of such date. The amount of any Capital Lease or Synthetic Lease Obligation as of any date shall be deemed to be the amount of Attributable Indebtedness in respect thereof as of such date. The amount of any non-recourse Indebtedness described in clause (e)  of this definition shall, for the purposes of this Agreement, be deemed to be equal to the lesser of (i) the aggregate unpaid amount of such Indebtedness and (ii) the fair market value of the property or asset encumbered, as determined by such Person in good faith.

Indemnified Taxes ” means Taxes other than Excluded Taxes.

Indemnitees ” has the meaning specified in Section 10.04(b) .

Information ” has the meaning specified in Section 10.07 .

Initial Engineering Report ” means the engineering report concerning Oil and Gas Properties of Loan Parties dated as of June 30, 2016, prepared internally by the Borrower.

Initial Financial Statements ” means (a) the unaudited consolidated balance sheet and related consolidated income statements and statements of cash flows of the Borrower and its Restricted Subsidiaries for the fiscal quarter ending at least 45 days prior to the Closing Date and (b) the financial statements and variance reports that have been delivered pursuant to the Cash Collateral Orders.

Interest Payment Date ” means, (a) as to any Committed Loan other than a Base Rate Loan, the last day of each Interest Period applicable to such Committed Loan and the Maturity Date; provided , however , that if any Interest Period for a Eurodollar Rate Loan exceeds three months, the respective dates that fall every three months after the beginning of such Interest Period shall also be Interest Payment Dates; and (b) as to any Base Rate Loan, the last Business Day of each March, June, September and December and the Maturity Date.

Interest Period ” means, as to each Eurodollar Rate Loan, the period commencing on the date such Eurodollar Rate Loan is disbursed or converted to or continued as a Eurodollar Rate Loan and ending on the date one, two, three or six months thereafter, as selected by the Borrower in its Committed Loan Notice, or such other period that is twelve months or less requested by the Borrower and commercially available to all the Lenders; provided that:

 

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(i) any Interest Period that would otherwise end on a day that is not a Business Day shall be extended to the next succeeding Business Day unless such Business Day falls in another calendar month, in which case such Interest Period shall end on the next preceding Business Day;

(ii) any Interest Period that begins on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period) shall end on the last Business Day of the calendar month at the end of such Interest Period; and

(iii) no Interest Period shall extend beyond the Maturity Date.

Investment ” means, as to any Person, any direct or indirect acquisition or investment by such Person, whether by means of (a) the purchase or other acquisition of capital stock or other securities of another Person, (b) a loan, advance or capital contribution to, Guarantee or assumption of debt of, or purchase or other acquisition of any other debt or equity participation or interest in, another Person, including any partnership or joint venture interest in such other Person and any arrangement pursuant to which the investor Guarantees Indebtedness of such other Person or (c) the purchase or other acquisition (in one transaction or a series of transactions) of assets of another Person that constitute a business unit. For purposes of covenant compliance, the amount of any Investment shall be the amount actually invested, without adjustment for subsequent increases or decreases in the value of such Investment.

ISP ” means, with respect to any Letter of Credit, the “International Standby Practices 1998” published by the Institute of International Banking Law & Practice (or such later version thereof as may be in effect at the time of issuance).

Issuer Documents ” means with respect to any Letter of Credit, the Letter of Credit Application, and any other document, agreement and instrument entered into by the applicable L/C Issuer and the Borrower (or any other Loan Party) or in favor the applicable L/C Issuer and relating to such Letter of Credit.

Junior Lien Debt ” means Indebtedness (i) of the Borrower and the Guarantors secured by the Collateral on a junior lien basis on the terms and conditions set forth in (and with a Junior Lien Representative at all times party to) a Junior Lien Intercreditor Agreement and not secured by any property or assets of the Borrower or any of its Subsidiaries other than the Collateral (on such junior basis) and (ii) as to which a representative of the holders of such Indebtedness, acting on behalf of such holders, shall have (a) other than in the case of the Post-Restructuring Convertible Notes (to the extent otherwise constituting Junior Lien Debt hereunder), become party to the Junior Lien Intercreditor Agreement as a Junior Lien Representative (or, to the extent no Junior Lien Intercreditor Agreement exists at the time of the incurrence of such Junior Lien Debt, shall have entered into a Junior Lien Intercreditor Agreement with the Administrative Agent) and (b) become a party to the Convertible Notes Intercreditor Agreement as “Priority Lien Representative” or a “Subordinated Representative” (each as defined therein), as applicable.

Junior Lien Financing Documentation ” means any documentation governing any Junior Lien Debt including, without limitation, any Junior Lien Intercreditor Agreement.

Junior Lien Intercreditor Agreement ” means an intercreditor agreement in form and substance reasonably satisfactory to the Administrative Agent, the Majority Lenders and the Borrower, among the Borrower, the Guarantors and the Administrative Agent, as a representative of the Secured Parties, and one or more collateral agents or representatives for the holders of the relevant Junior Lien Debt (for any issuance, the “ Junior Lien Representative ”).

 

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Junior Lien Representative ” has the meaning set forth in the definition of “Junior Lien Intercreditor Agreement”.

Lariat ” means Lariat Services, Inc., a Texas corporation and a wholly-owned Subsidiary of the Borrower.

Laws ” means, collectively, all international, foreign, Federal, state and local statutes, treaties, rules, regulations, ordinances, codes and administrative or judicial precedents or authorities, including the interpretation or administration thereof by any Governmental Authority charged with the enforcement, interpretation or administration thereof, and all applicable administrative orders, licenses, authorizations and permits of, and agreements with, any Governmental Authority.

L/C Advance ” means, with respect to each Lender, such Lender’s funding of its participation in any L/C Borrowing in accordance with its Applicable Percentage.

L/C Borrowing ” means an extension of credit resulting from a drawing under any Letter of Credit which has not been reimbursed on the date when made or refinanced as a Committed Borrowing.

L/C Credit Extension ” means, with respect to any Letter of Credit, the issuance thereof or extension of the expiry date thereof, or the increase of the amount thereof.

L/C Issuer ” means (a) Royal Bank of Canada, (b) any other Lender satisfactory to the Borrower and the Administrative Agent that may agree to issue Letters of Credit hereunder pursuant to an instrument in form reasonably satisfactory to such L/C Issuer and the Borrower and (c) solely with respect to the Existing Letters of Credit, Royal Bank of Canada, in its capacity as issuer of the Existing Letters of Credit, in the case of clauses (a)  and (b) , in their respective capacities as issuers of Letters of Credit hereunder, or any successor issuers of Letters of Credit hereunder.

L/C Obligations ” means, as at any date of determination, the aggregate amount available to be drawn under all outstanding Letters of Credit plus the aggregate of all Unreimbursed Amounts, including all L/C Borrowings. For purposes of computing the amount available to be drawn under any Letter of Credit, the amount of such Letter of Credit shall be determined in accordance with Section 1.07 . For all purposes of this Agreement, if on any date of determination a Letter of Credit has expired by its terms but any amount may still be drawn thereunder by reason of the operation of Rule 3.14 of the ISP, such Letter of Credit shall be deemed to be “outstanding” in the amount so remaining available to be drawn.

Lender ” or “ Lenders ” has the meaning specified in the introductory paragraph hereto.

Lender Counterparty ” means (i) any Lender (or an Affiliate of a Lender) party to any Prepetition Hedging Arrangements or Postpetition Hedging Arrangements (as such terms are defined in the Hedging Order), (ii) any counterparty under a Swap Contract that was a Lender (or an Affiliate of a Lender) at the time such Swap Contract was entered into and/or (iii) any counterparty under a Treasury Management Services Agreement that was a Lender (or an Affiliate of a Lender) at the time such Treasury Management Services Agreement was entered into.

Lending Office ” means, as to any Lender, the office or offices of such Lender described as such in such Lender’s Administrative Questionnaire, or such other office or offices as a Lender may from time to time notify the Borrower and the Administrative Agent.

 

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Letter of Credit ” means any standby letter of credit issued hereunder providing for the payment of cash upon the honoring of a presentation thereunder.

Letter of Credit Application ” means an application and agreement for the issuance or amendment of a Letter of Credit in the form from time to time in use by the applicable L/C Issuer. In the event of any inconsistency between the provisions of any Letter of Credit Application and the provisions of this Agreement, the provisions of this Agreement shall prevail.

Letter of Credit Expiration Date ” means the day that is seven days prior to the Maturity Date then in effect (or, if such day is not a Business Day, the next preceding Business Day).

Letter of Credit Fee ” has the meaning specified in Section 2.03(j) .

Letter of Credit Sublimit ” means an amount equal to $20,000,000. The Letter of Credit Sublimit is part of, and not in addition to, the Aggregate Commitments.

LIBOR ” has the meaning set forth in the definition of “Eurodollar Rate”.

Lien ” means any mortgage, pledge, hypothecation, assignment, encumbrance, lien (statutory or other), charge, or other security interest or preferential arrangement in the nature of a security interest of any kind or nature whatsoever (including any conditional sale or other title retention agreement, any easement, right of way or other encumbrance on title to real property, and any financing lease having substantially the same economic effect as any of the foregoing). Notwithstanding anything to the contrary contained herein, in no event will the deposit of not more than $100.00 into the Collateral Trust Account on or before the Closing Date be deemed to constitute a Lien hereunder.

Liquidity ” means, as of any date of determination, the sum of (a) the Available Commitment on such date and (b) the aggregate amount of Unrestricted Cash and Cash Equivalents listed on the Consolidated balance sheet of the Borrower and its Restricted Subsidiaries at such date (it being understood that all cash and Cash Equivalents held in accounts that are otherwise subject to Control Agreements shall constitute Unrestricted Cash and Cash Equivalents for purposes of the determination of “Liquidity”), less (c) the amount, if any, of any Borrowing Base Deficiency existing on such date of determination; provided that, solely for purposes of determining satisfaction of the condition precedent set forth in Section 4.01(k)(i) , the determination of “Liquidity” shall, in addition to the foregoing amounts, also include any cash and Cash Equivalents, including, for the avoidance of doubt, any cash and Cash Equivalents held in the Post-Restructuring Cash Collateral Account.

Loan ” means an extension of credit by a Lender to the Borrower under Article II in the form of a Committed Loan.

Loan Documents ” means this Agreement, each Note, each Issuer Document, the Guaranty, the Collateral Documents, the Convertible Notes Intercreditor Agreement and any Junior Lien Intercreditor Agreement.

Loan Parties ” means, collectively, the Borrower and each Guarantor.

Majority Lenders ” means, as of any date of determination, Lenders having more than 50% of the Aggregate Commitments or, if the commitment of each Lender to make Loans and the obligation of the L/C Issuers to make L/C Credit Extensions have been terminated pursuant to Section 8.02 , Lenders holding in the aggregate more than 50% of the Total Outstandings (with the aggregate amount of each Lender’s risk participation and funded participation in L/C Obligations being deemed “held” by such

 

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Lender for purposes of this definition); provided that the Commitment of, and the portion of the Total Outstandings held or deemed held by, any Defaulting Lender shall be excluded for purposes of making a determination of Majority Lenders.

Master Agreement ” has the meaning set forth in the definition of “Swap Contract”.

Material Adverse Effect ” means (a) a material adverse change in, or a material adverse effect upon, the operations, business, assets, properties, liabilities or condition (financial or otherwise) of the Borrower and its Restricted Subsidiaries taken as a whole; (b) a material impairment of (i) the rights and remedies of the Administrative Agent or the Lenders under the Loan Documents or (ii) the ability of the Loan Parties to perform their obligations under the Loan Documents; or (c) a material adverse effect upon the legality, validity, binding effect or enforceability against the Loan Parties of the Loan Documents.

Maturity Date ” means February 4, 2020; provided that if such date is not a Business Day, the Maturity Date shall be the next preceding Business Day.

Maximum Rate ” has the meaning set forth in Section 10.09 .

Moody’s ” means Moody’s Investors Service, Inc. and any successor thereto.

Minimum Post-Restructuring Cash Collateral Requirement ” means $50,000,000; provided that, (a)(i) such amount shall be reduced by $12,500,000 upon the delivery by the Borrower to the Administrative Agent of a business plan reasonably acceptable to the Administrative Agent and (ii) such amount shall be further reduced by $12,500,000 on the date on which the Borrower has provided the Administrative Agent with evidence reasonably satisfactory to it that the sum of the Consolidated EBITDA for the first two full fiscal quarters of the Borrower following delivery of the foregoing business plan is not less than the amount set forth for such fiscal quarters in such business plan or (b) solely to the extent all or any portion of the reductions referred to in the foregoing clauses (a)(i) and/or (a)(ii) do not become effective, such amount shall be reduced by up to $25,000,000 ( less the amount of any prior reduction in accordance with clause (a)(i) and/or (a)(ii) ) if, on any date occurring not less than nine months following the Closing Date, the PDP Asset Coverage Ratio is greater than or equal to 2.00:1.00. All deposits made in the Post-Restructuring Cash Collateral Account shall be denominated solely in Dollars. For the avoidance of doubt, the Minimum Post-Restructuring Cash Collateral Requirement shall cease to be applicable upon the occurrence of the Protected Period Termination Date.

Mortgage ” means a mortgage or a deed of trust, deed to secure debt, trust deed, assignment of as-extracted collateral, fixture filing or other security documented entered into by the owner of Mortgaged Property and the Administrative Agent for the benefit of the Secured Parties in respect of that Mortgaged Property, substantially in the form of Exhibit H hereto (with such changes as may be necessary to account for local law matters) or otherwise in such form as agreed between the Borrower and the Administrative Agent, as the same may be amended, modified or supplemented from time to time in accordance with the terms hereof and thereof.

Mortgaged Property ” means real property and improvements thereto with respect to which a Mortgage is required to be granted pursuant to Section 4.01(b)(iv) , Section 6.12 or Section 6.14 hereof.

Multiemployer Plan ” means any employee benefit plan of the type described in Section 4001(a)(3) of ERISA, to which the Borrower or any ERISA Affiliate makes or is obligated to make contributions, or during the preceding five plan years, has made or been obligated to make contributions.

 

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Net Cash Proceeds ” means:

(a) with respect to any Disposition by the Borrower or any of its Restricted Subsidiaries, the excess, if any, of (i) the sum of cash and Cash Equivalents received in connection with such transaction (including any cash or Cash Equivalents received by way of deferred payment pursuant to, or by monetization of, a note receivable or otherwise, but only as and when so received) over (ii) the sum of (A) the principal amount of any Indebtedness that is secured by the applicable asset and that is required to be repaid in connection with such transaction (other than Indebtedness under the Loan Documents), (B) the reasonable and customary out-of-pocket expenses incurred by the Borrower or such Restricted Subsidiary in connection with such transaction, (C) income taxes reasonably estimated to be actually payable within two years of the date of the relevant transaction as a result of any gain recognized in connection therewith and (D) the Swap Termination Value, if any, associated with such transaction; provided that, if the amount of any estimated taxes pursuant to subclause (C)  exceeds the amount of taxes actually required to be paid in cash in respect of such Disposition, the aggregate amount of such excess shall constitute Net Cash Proceeds;

(b) with respect to the incurrence or issuance of any Indebtedness by the Borrower or any of its Restricted Subsidiaries, the excess of (i) the sum of the cash and Cash Equivalents received in connection with such transaction over (ii) the underwriting discounts and commissions, and other reasonable and customary out-of-pocket expenses, incurred by the Borrower or such Restricted Subsidiary in connection therewith; and

(c) with respect to the termination of any Hedge Transaction by the Borrower or any of its Restricted Subsidiaries, the excess of (i) the sum of the cash and Cash Equivalents received in connection with such transaction over (ii) the sum of (A) the reasonable and customary out-of-pocket expenses incurred by the Borrower or such Restricted Subsidiary in connection with such transaction and (B) income taxes reasonably estimated to be actually payable within two years of the date of the relevant transaction as a result of any gain recognized in connection therewith; provided that, if the amount of any estimated taxes pursuant to subclause (B)  exceeds the amount of taxes actually required to be paid in cash in respect of such termination, the aggregate amount of such excess shall constitute Net Cash Proceeds if such aggregate amount exceeds $1,000,000.

Non-Defaulting Lender ” means each Lender that is not, at such time, a Defaulting Lender.

Non-Extension Notice Date ” has the meaning set forth in Section 2.03(c)(iii) .

Non-Reinstatement Deadline ” has the meaning set forth in Section 2.03(c)(iv) .

Note ” means a promissory note made by the Borrower in favor of a Lender evidencing Committed Loans made by such Lender, substantially in the form of Exhibit C .

Obligations ” means all advances to, and debts, liabilities, obligations, covenants and duties of, any Loan Party arising under any Loan Document or otherwise with respect to any Committed Loan or Letter of Credit or any Swap Contract or Treasury Management Services Agreement with a Lender Counterparty, whether direct or indirect (including those acquired by assumption), absolute or contingent, due or to become due, now existing or hereafter arising and including interest and fees that accrue after the commencement by or against any Loan Party or any Restricted Subsidiary thereof of any proceeding under any Debtor Relief Laws naming such Person as the debtor in such proceeding, regardless of whether such interest and fees are allowed claims in such proceeding; provided that the term “Obligations” shall not, with respect to any Guarantor, include any Excluded Swap Obligation with respect to such Guarantor.

 

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OFAC ” means the Office of Foreign Assets Control of the United States Department of the Treasury.

Oil and Gas Business ” means the business of acquiring, exploring, or developing and operating Oil and Gas Properties and the production, marketing, processing and transporting of Hydrocarbons therefrom, and providing services to the oil and gas upstream and midstream segments.

Oil and Gas Hedge Transaction ” means a Hedge Transaction pursuant to which any Person hedges the price to be received by it for future production of Hydrocarbons.

Oil and Gas Properties ” means all oil, gas and/or mineral leases, oil, gas or mineral properties, mineral servitudes and/or mineral rights of any kind (including, without limitation, mineral fee interests, lease interests, farm-out interests, overriding royalty and royalty interests, net profits interests, oil payment interests, production payment interests and other types of mineral interests), and all oil and gas gathering, treating, storage, processing, monitoring and handling assets and all other assets directly related thereto.

Oklahoma Properties ” means (a) the office buildings located at (i) 120 Robert S. Kerr Avenue, Oklahoma City, OK 73102 and (ii) 123 Robert S. Kerr Avenue, Oklahoma City, OK 73102 and (b) the Broadway-Kerr Parking Garage located at the northeast corner of the intersection of Broadway Avenue and Robert S. Kerr Avenue in downtown Oklahoma City.

Organization Documents ” means, (a) with respect to any corporation, the certificate or articles of incorporation and the bylaws (or equivalent or comparable constitutive documents with respect to any non-U.S. jurisdiction); (b) with respect to any limited liability company, the certificate or articles of formation or organization and operating agreement; and (c) with respect to any partnership, joint venture, trust or other form of business entity, the partnership, joint venture or other applicable agreement of formation or organization and any agreement, instrument, filing or notice with respect thereto filed in connection with its formation or organization with the applicable Governmental Authority in the jurisdiction of its formation or organization and, if applicable, any certificate or articles of formation or organization of such entity.

Other Taxes ” means 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 under any other Loan Document or from the execution, delivery or enforcement of, or otherwise with respect to, this Agreement or any other Loan Document.

Outstanding Amount ” means (i) with respect to Committed Loans, on any date, the aggregate outstanding principal amount thereof after giving effect to any borrowings and prepayments or repayments of Committed Loans occurring on such date; and (ii) with respect to any L/C Obligations on any date, the amount by which such L/C Obligations exceed the Cash Collateral held by the Administrative Agent on such date after giving effect to any L/C Credit Extension occurring on such date and any other changes in the aggregate amount of the L/C Obligations as of such date, including as a result of any reimbursements by the Borrower of Unreimbursed Amounts.

Participant ” has the meaning specified in Section 10.06(d) .

Participant Register ” has the meaning specified in Section 10.06(d) .

PATRIOT Act ” has the meaning specified in Section 5.25 .

 

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PBGC ” means the Pension Benefit Guaranty Corporation.

PCAOB ” means the Public Company Accounting Oversight Board.

PDP Asset Coverage Ratio ” means as of any date of determination, the ratio of (a) Total PDP PV9 to (b) the Aggregate Commitments minus the amount of cash and Cash Equivalents held in the Post-Restructuring Cash Collateral Account on such date; provided that, solely for purposes of this definition, the amount of Aggregate Commitments included in clause (b) shall not, in any event, exceed $425,000,000.

Pension Plan ” means any “employee pension benefit plan” (as such term is defined in Section 3(2) of ERISA), other than a Multiemployer Plan, that is subject to Title IV of ERISA and is sponsored or maintained by the Borrower or any ERISA Affiliate or to which the Borrower or any ERISA Affiliate contributes or has an obligation to contribute, or in the case of a multiple employer or other plan described in Section 4064(a) of ERISA, has made contributions at any time during the immediately preceding five plan years.

Permitted Debt Restrictions ” means, an instrument or instruments governing indebtedness which imposes limitations on or requirements with respect to Indebtedness, Restricted Payments or Liens of the type described in Section 7.09 that are substantially the same as or less restrictive than the corresponding limitations or requirements, if any, with respect to such matters contained in any of the Principal Debt Obligations.

Permitted Holders ” means any of (i) GSO / Blackstone Debt Funds Management LLC, (ii) Fir Tree Partners, (iii) Tyrus Capital Event Master Fund Limited, (iv) Monarch Alternative Capital LP, (v) EIG Management Company, LLC, (vi) Guggenheim Partners Investment Management, LLC, (vii) MTP Energy Management LLC, (viii) Apollo Energy Opportunity Management LLC, (ix) Solus Alternative Asset Management LP and (x) any Affiliates of, or any funds or partnerships managed or advised by, any of the foregoing (including those funds or partnerships managed or advised by the Affiliates of any of the foregoing).

Permitted Encumbrances ” has the meaning specified in the Mortgages.

Permitted Refinancing ” means, in respect of any Indebtedness otherwise permitted hereunder (the “ Refinanced Indebtedness ”), any refinancing, refunding, renewal or extension (any of the foregoing, a “ Refinancing ”, and any such new Indebtedness, “ Refinancing Indebtedness ”) of such Refinanced Indebtedness; provided that (i) the amount of such Refinanced Indebtedness is not increased at the time of such Refinancing except by an amount equal to a reasonable premium or other reasonable amount paid, and fees and expenses reasonably incurred, in connection with such refinancing and by an amount equal to any existing commitments unutilized thereunder and the direct or any contingent obligor with respect thereto is not changed, as a result of or in connection with such Refinancing, (ii) the terms relating to principal amount, amortization, collateral (if any) and subordination (if any), and other material terms taken as a whole, of any such Refinancing Indebtedness, and of any agreement entered into and of any instrument issued in connection therewith, are no less favorable taken as a whole in any material respect to the Loan Parties or the Lenders than the terms of any agreement or instrument governing the Refinanced Indebtedness and the interest rate applicable to the Refinancing Indebtedness does not exceed the then applicable market interest rate, (iii) no Default or Event of Default would result from such Refinancing after giving effect thereto and (iv) such Refinancing Indebtedness does not mature and requires no scheduled amortization prior to the 91st day following the Maturity Date.

 

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Person ” means any natural person, corporation, limited liability company, trust, joint venture, association, company, partnership, Governmental Authority or other entity.

Petroleum Industry Standards ” means the Definitions for Oil and Gas Reserves promulgated by the Society of Petroleum Engineers (or any generally recognized successor thereto) as in effect at the time in question.

Plan ” means any “employee benefit plan” (as such term is defined in Section 3(3) of ERISA) established by the Borrower or, with respect to any such plan that is subject to Section 412 of the Code or Title IV of ERISA, any ERISA Affiliate.

Platform ” has the meaning specified in Section 6.02 .

Pledged Equity ” has the meaning specified in the Security Agreement.

Post-Restructuring Cash Collateral Account ” means a deposit account established by the Borrower (a) that is either maintained with the Administrative Agent or otherwise subject to “lock box” control (or, in the Administrative Agent’s sole discretion, customary “blocked account control”) mechanics that are reasonably satisfactory to the Administrative Agent and (b) that is used solely for the purpose of maintaining certain cash collateral pursuant required to be maintained by the Borrower pursuant to Section 6.18 .

Post-Restructuring Convertible Notes ” means the 0.00% Convertible Senior Subordinated Notes due 2020 issued pursuant to that certain Indenture dated October 4, 2016 among the Chapter 11 Debtors, Wilmington Trust National Association, as Trustee, and certain other parties thereto, and any Permitted Refinancings thereof.

Pre-Petition Date Credit Agreement ” means that certain Fourth Amended and Restated Credit Agreement, dated as of June 10, 2015 (as amended, restated, amended and restated, supplemented or otherwise modified from time to time prior to the date hereof), by and among the Borrower, the lenders party thereto, Royal Bank of Canada, as administrative agent and the other Persons party thereto.

Principal Debt Obligations ” means all existing long-term debt issued by the Borrower including, without limitation, any Junior Lien Debt.

Prior Loans ” shall mean “Loans” under and as defined in the Pre-Petition Date Credit Agreement.

Proceeding ” has the meaning specified in Section 10.04(b) .

Protected Period ” means the period commencing on and including the Closing Date through, but excluding, the earliest to occur of (a) October 31, 2018, (b) the date upon which the Post-Restructuring Convertible Notes (or any portion thereof) become secured (or are purported to be secured) by any property, assets or revenues of the Borrower or any of its Restricted Subsidiaries and (c) the date upon which the Borrower provides the Administrative Agent with written notice of its irrevocable election to terminate the Protected Period. Notwithstanding anything herein to the contrary, in no event shall the Borrower’s deposit of not more than $100.00 into the Collateral Trustee Account on or before the Closing Date result in the Post-Restructuring Convertible Notes being treated as secured or purported to be secured under any Loan Document.

 

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Protected Period Termination Date ” means date upon which the Protected Period expires or is otherwise terminated in accordance with the definition thereof.

Proved Developed Producing Reserves ” means, oil and gas reserves that, in accordance with Petroleum Industry Standards, are classified as both “proved reserves” and “developed producing reserves”.

Proved Reserves ” means, collectively, oil and gas reserves that, in accordance with Petroleum Industry Standards, are classified as “proved developed nonproducing reserves”, “proved developed producing reserves” and/or “proved undeveloped reserves”.

PV9 Pricing ” means, with respect to any Engineered Oil and Gas Properties or other Oil and Gas Properties becoming Engineered Oil and Gas 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 Loan Parties’ collective interests in such reserves expected to be produced from such Oil and Gas Properties during the remaining expected economic lives of such reserves made in accordance with the then existing standards of the Society of Petroleum Engineers (with appropriate adjustments made for hedging operations) as follows:

(a) for anticipated sales of oil and gas that are fixed in a firm fixed price sales contract with an investment grade counterparty or a counterparty guaranteed, or for whom a letter of credit has been issued, by an investment grade party (or another counterparty approved by the Administrative Agent), the fixed price or prices provided for in such sales contract during the term thereof; and

(b) for anticipated sales of oil and gas, if such sales are not under a sales contract that is described in clause (a)  above, for the date of calculation (or, if such date is not a Business Day, for the first Business Day thereafter), the prices provided in the most recent price deck provided to the Borrower by the Administrative Agent, adjusted in each case for historical location and quality differentials during the twelve months preceding such date of determination.

Qualified Stock ” means Equity Interests which are not Disqualified Stock.

Reference Date ” has the meaning specified in the definition of “Available Amount”.

Refinanced Indebtedness ” has the meaning set forth in the definition of “Permitted Refinancing”.

Refinancing ” has the meaning set forth in the definition of “Permitted Refinancing”.

Refinancing Indebtedness ” has the meaning set forth in the definition of “Permitted Refinancing”.

Register ” has the meaning specified in Section 10.06(c) .

Regulation T ” means Regulation T of the Board as from time to time in effect and all official rulings and interpretations thereunder or thereof.

Regulation U ” means Regulation U of the Board as from time to time in effect and all official rulings and interpretations thereunder or thereof.

 

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Regulation X ” means Regulation X of the Board as from time to time in effect and all official rulings and interpretations thereunder or thereof.

Registered Public Accounting Firm ” has the meaning specified in the Securities Laws and shall be independent of the Borrower as prescribed by the Securities Laws.

Related Parties ” means, with respect to any Person, such Person’s Affiliates and the partners, directors, officers, employees, agents, trustees, administrators and advisors of such Person and of such Person’s Affiliates.

Reportable Event ” means any of the events set forth in Section 4043(c) of ERISA, other than events for which the 30 day notice period has been waived.

Request for Credit Extension ” means (a) with respect to a Committed Borrowing, conversion or continuation of Committed Loans, a Committed Loan Notice and (b) with respect to an L/C Credit Extension, a Letter of Credit Application.

Required Lenders ” means, as of any date of determination, Lenders having at least 66-2/3% of the Aggregate Commitment or, if the commitment of each Lender to make Committed Loans and the obligation of the L/C Issuers to make L/C Credit Extensions have been terminated pursuant to Section 8.02 , Lenders holding in the aggregate at least 66-2/3% of the Total Outstandings (with the aggregate amount of each Lender’s risk participation and funded participation in L/C Obligations being deemed “held” by such Lender for purposes of this definition); provided that the Commitment of, and the portion of the Total Outstandings held or deemed held by, any Defaulting Lender shall be excluded for purposes of making a determination of Required Lenders.

Responsible Officer ” means the chief executive officer, president, chief financial officer, treasurer, assistant treasurer or controller of a Loan Party, and solely for purposes of the delivery of incumbency certificates pursuant to Section 4.01 , the secretary or any assistant secretary of a Loan Party and, solely for purposes of notices given pursuant to Article II , any other officer or employee of the applicable Loan Party so designated by any of the foregoing officers in a notice to the Administrative Agent or any other officer of employee of the applicable Loan Party designated in or pursuant to an agreement between the applicable Loan Party and the Administrative Agent. Any document delivered hereunder that is signed by a Responsible Officer of a Loan Party shall be conclusively presumed to have been authorized by all necessary corporate, partnership and/or other action on the part of such Loan Party and such Responsible Officer shall be conclusively presumed to have acted on behalf of such Loan Party.

Restricted Debt ” has the meaning set forth in Section 7.15(a) .

Restricted Debt Documentation ” means any documentation governing any Restricted Debt (including, in the case of Junior Lien Debt, Junior Lien Financing Documentation).

Restricted Payment ” means any dividend or other distribution (whether in cash, securities or other property) with respect to any capital stock or other Equity Interest of the Borrower or any Restricted Subsidiary, or any payment (whether in cash, securities or other property), including any sinking fund or similar deposit, on account of the purchase, redemption, retirement, acquisition, cancellation or termination of any such capital stock or other Equity Interest, or on account of any return of capital to the Borrower’s stockholders, partners or members (or the equivalent Person thereof). For the avoidance of doubt, any payment of interest (including payment-in-kind interest) made in respect of any Indebtedness convertible into Equity Interests of the Borrower permitted hereunder shall not constitute a Restricted Payment.

 

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Restricted Subsidiary ” means any Subsidiary of the Borrower that is not an Unrestricted Subsidiary.

Restructuring Support Agreement ” means that certain Restructuring Support and Lock-Up Agreement, dated as of May 11, 2016 (as amended, restated, amended and restated, supplemented or otherwise modified from time to time prior to the date hereof), by and among the Loan Parties signatory thereto, the Lenders thereto, certain other holders of claims and interests and the other Persons party thereto.

Royalty Trust ” means a statutory or business trust, the trustee of which is a financial institution not affiliated with the Borrower, to which the Borrower or one or more of its Restricted Subsidiaries conveys, or intends to convey, royalty interests, net profits interests, or other similar mineral interests in the production of hydrocarbons from properties to which no value was attributed in the then most recent determination of the Borrowing Base, in exchange for units of beneficial interests in the trust and all or part of the cash proceeds of an underwritten public offering or a similar offering under Rule 144A of the trust’s units. For the avoidance of doubt, SandRidge Mississippian Trust I, SandRidge Mississippian Trust II and SandRidge Permian Trust shall each constitute a Royalty Trust.

S&P ” means Standard & Poor’s Ratings Services, a division of The McGraw-Hill Companies, Inc. and any successor thereto.

Sanctions ” means any economic or financial sanction or trade embargoes imposed, administered or enforced from time to time by the United States Government (including without limitation, OFAC or the United States Department of State), the United Nations Security Council, the European Union, Her Majesty’s Treasury of the United Kingdom or other relevant sanctions authority.

SandRidge Realty Office Complex ” means the Oklahoma Properties.

Sarbanes-Oxley ” means the Sarbanes-Oxley Act of 2002.

Scheduled Determination ” has the meaning specified in Section 2.05(b)(i) .

SEC ” means the Securities and Exchange Commission, or any Governmental Authority succeeding to any of its principal functions.

Secured Parties ” means, collectively, the Administrative Agent, the Lenders, the L/C Issuers, the Lender Counterparties, each co-agent or sub-agent appointed by the Administrative Agent from time to time pursuant to Section 9.05 , and the other Persons the Obligations owing to which are or are purported to be secured by the Collateral under the terms of the Collateral Documents.

Securities Account ” has the meaning assigned to such term in the UCC.

Securities Laws ” means the Securities Act of 1933 and regulations thereunder, the Securities Exchange Act of 1934 and regulations thereunder, Sarbanes-Oxley and the applicable accounting and auditing principles, rules, standards and practices promulgated, approved or incorporated by the SEC or the PCAOB.

Security Agreement ” means the Pledge and Security Agreement entered into by the Borrower, the other Loan Parties party thereto as grantors and the Administrative Agent, for the benefit of the Secured Parties, substantially in the form of Exhibit I hereto, as the same may be amended, modified or supplemented from time to time in accordance with the terms hereof and thereof.

 

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Security Agreement Supplement ” has the meaning specified in the Security Agreement.

Solvent ” means, with respect to any Person on any date of determination, that on such date (a) the fair value of the property of such Person is greater than the total amount of liabilities, including contingent liabilities, of such Person, (b) the present fair salable value of the assets of such Person is not less than the amount that will be required to pay the probable liability of such Person on its debts as they become absolute and matured, (c) such Person does not intend to, and does not believe that it will, incur debts or liabilities beyond such Person’s ability to pay such debts and liabilities as they mature, (d) such Person is not engaged in business or a transaction, and is not about to engage in business or a transaction, for which such Person’s property would constitute an unreasonably small capital and (e) such Person is able to pay its debts and liabilities, contingent obligations and other commitments as they mature in the ordinary course of business. The amount of contingent liabilities at any time shall be computed as the amount that, in the light of all the facts and circumstances existing at such time, represents the amount that can reasonably be expected to become an actual or matured liability.

SPC ” has the meaning specified in Section 10.06(g) .

Special Determination ” has the meaning specified in Section 2.05(b)(ii) .

Strip Price ” means, as of the date of any determination (calculated as of a date not more than 60 days prior to the date of determination) with respect to each of the appropriate crude oil, natural gas or natural gas liquids categories, the forward month prices for the most comparable Hydrocarbon commodity applicable to such future production month for a five year period (or such shorter period if forward month prices are not quoted for a reasonably comparable Hydrocarbon commodity for the full five year period), with such prices escalated at 2% each year thereafter based on the last quoted forward month price of such period, as such prices are quoted on the New York Mercantile Exchange (or its successor) and published in a nationally-recognized publication for such pricing as selected by the Administrative Agent, as adjusted to account for the historical basis differential in a manner reasonably acceptable to the Administrative Agent, and held constant thereafter.

Subordinated Collateral Trust Agreement ” has the meaning specified in the Convertible Notes Intercreditor Agreement.

Subsidiary ” of a Person means a corporation, partnership, joint venture, limited liability company or other business entity of which a majority of the shares of securities or other interests having ordinary voting power for the election of directors or other governing body (other than securities or interests having such power only by reason of the happening of a contingency) are at the time beneficially owned, or the management of which is otherwise controlled, directly, or indirectly through one or more intermediaries, or both, by such Person. Notwithstanding the foregoing, neither (i) any Royalty Trust nor (ii) any future venture contemplated by Section 7.02(h)  shall be considered to be a “Subsidiary” of the Borrower or any of its Restricted Subsidiaries for purposes of any Loan Document, except that any of the foregoing entities may be consolidated with the Borrower or any Subsidiary for purposes of such Person’s financial statements. Unless otherwise specified, all references herein to a “Subsidiary” or to “Subsidiaries” shall refer to a Subsidiary or Subsidiaries of the Borrower.

Subsidiary Redesignation ” has the meaning set forth in the definition of “Unrestricted Subsidiary”.

Swap Contract ” means (a) any and all rate swap transactions, basis swaps, credit derivative transactions, forward rate transactions, commodity swaps, commodity options, forward commodity contracts, equity or equity index swaps or options, bond or bond price or bond index swaps or options or

 

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forward bond or forward bond price or forward bond index transactions, interest rate options, forward foreign exchange transactions, cap transactions, floor transactions, collar transactions, currency swap transactions, cross-currency rate swap transactions, currency options, spot contracts, or any other similar transactions or any combination of any of the foregoing (including any options to enter into any of the foregoing), whether or not any such transaction is governed by or subject to any master agreement and (b) any and all transactions of any kind, and the related confirmations, which are subject to the terms and conditions of, or governed by, any form of master agreement published by the International Swaps and Derivatives Association, Inc., any International Foreign Exchange Master Agreement, or any other master agreement (any such master agreement, together with any related schedules, a “ Master Agreement ”), including any such obligations or liabilities under any Master Agreement.

Swap Obligation ” means, with respect to any Person, any obligation to pay or perform under any Swap Contract.

Swap Termination Value ” means, in respect of any one or more Swap Contracts, after taking into account the effect of any legally enforceable netting agreement relating to such Swap Contracts, (a) for any date on or after the date such Swap Contracts have been closed out and termination value(s) determined in accordance therewith, such termination value(s) and (b) for any date prior to the date referenced in clause (a) , the amount(s) determined as the mark-to-market value(s) for such Swap Contracts, as determined based upon one or more mid-market or other readily available quotations provided by any recognized dealer in such Swap Contracts (which may include a Lender or any Affiliate of a Lender).

Synthetic Lease Obligation ” means the monetary obligation of a Person under (a) a so-called synthetic, off-balance sheet or tax retention lease or (b) an agreement for the use or possession of property creating obligations that do not appear on the balance sheet of such Person but which, upon the insolvency or bankruptcy of such Person, would be characterized as the indebtedness of such Person (without regard to accounting treatment).

Taxes ” means all present or future taxes, levies, imposts, duties, deductions, withholdings, assessments, fees or other charges imposed by any Governmental Authority, including any interest, additions to tax or penalties applicable thereto.

Threshold Amount ” means $25,000,000.

Total Outstandings ” means the aggregate Outstanding Amount of all Committed Loans and all L/C Obligations.

Total PDP PV9 ” means, as of the date of any determination, with respect to all Proved Developed Producing Reserves described in the then most recent Engineering Report delivered to the Administrative Agent, the net present value, discounted at 9%  per annum , of the future net revenues expected to accrue to the Loan Parties’ collective interests in such Proved Developed Producing Reserves during the remaining expected economic lives of such Proved Developed Producing Reserves. Each calculation of such expected future net revenues shall be made in accordance with the SEC guidelines for reporting Proved Developed Producing Reserves; provided that in any event (a) appropriate deductions shall be made for severance and ad valorem taxes, and for operating, gathering, transportation and marketing costs required for the production and sale of such Proved Developed Producing Reserves, (b) the pricing assumptions used in determining Total PDP PV9 for any Proved Developed Producing Reserves shall be based upon the Strip Price, (c) if any volumes covered by Oil and Gas Hedge Transactions would effectively result in the Borrower or any other Loan Party receiving greater (or less) than the Strip Price for such volumes as a result of payments made or received pursuant to such Oil and

 

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Gas Hedge Transactions, the contract price for such volumes under the applicable Oil and Gas Hedge Transactions shall be utilized in lieu of the Strip Price and (d) the cash-flows derived from the pricing assumptions set forth in clause (b) above shall be further adjusted to account for the historical basis differential in a manner reasonably acceptable to the Administrative Agent. The amount of Total PDP PV9 at any time shall be calculated on a pro forma basis for dispositions and acquisitions of Oil and Gas Properties consummated by the Loan Parties since the date of the Engineering Report most recently delivered to the Administrative Agent; provided that, in the case of any such acquisition of Oil and Gas Properties, the Administrative Agent shall have received an Engineering Report evaluating the Proved Developed Producing Reserves attributable to such acquired Oil and Gas Properties.

Transactions ” means, collectively, (a) the transactions to occur on or prior to the Closing Date with respect to the Chapter 11 Cases and pursuant to the Final Confirmation Order, (b) the entering into and effectiveness of the senior credit facility under this Agreement, (c) the other transactions related to each of the foregoing and (d) the payment of the fees and expenses incurred in connection with the consummation of the foregoing.

Treasury Management Services Agreement ” means any agreement to provide cash management services, including treasury, depository, overdraft, credit, debit or purchasing card, electronic funds transfer and other cash management arrangements to the Borrower or any Subsidiary.

Type ” means, with respect to a Committed Loan, its character as a Base Rate Loan or a Eurodollar Rate Loan.

UCC ” means the Uniform Commercial Code as in effect in the State of New York; provided that, if perfection or the effect of perfection or non-perfection or the priority of any security interest in any Collateral is governed by the Uniform Commercial Code as in effect in a jurisdiction other than the State of New York, “UCC” means the Uniform Commercial Code as in effect from time to time in such other jurisdiction for purposes of the provisions hereof relating to such perfection, effect of perfection or non-perfection or priority.

Unfunded Pension Liability ” means the excess of a Pension Plan’s benefit liabilities under Section 4001(a)(16) of ERISA, over the current value of that Pension Plan’s assets, determined in accordance with the assumptions used for funding the Pension Plan pursuant to Section 412 of the Code for the applicable plan year.

United States ” and “ U.S. ” mean the United States of America.

Unreimbursed Amount ” has the meaning specified in Section 2.03(d)(i) .

Unrestricted Cash and Cash Equivalents ” means cash or Cash Equivalents of the Borrower or any of its Restricted Subsidiaries that (a) would not appear as “restricted” on a consolidated balance sheet of the Borrower or any of its Restricted Subsidiaries or (b) that would appear as “restricted” solely as the result of such cash or Cash Equivalents being subject to a perfected, first-priority Lien in favor of the Administrative Agent ( provided that any such cash and Cash Equivalents that are subject to a perfected, first-priority Lien in favor of the Administrative Agent may also be subject to a Lien in favor of a Junior Lien Representative in respect of any Junior Lien Debt that was incurred pursuant to, and in accordance with, Sections 7.01 and 7.03) ; provided that, except as set forth in the proviso to the definition of “Liquidity”, any cash or Cash Equivalents held in the Post-Restructuring Cash Collateral Account shall not constitute “Unrestricted Cash and Cash Equivalents” irrespective whether such cash or Cash Equivalents would have otherwise satisfy the requirements set forth in this definition.

 

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Unrestricted Subsidiary ” means (1) any Subsidiary of the Borrower designated by the Borrower as an Unrestricted Subsidiary hereunder by written notice to the Administrative Agent; provided that the Borrower shall only be permitted to so designate a Subsidiary as an Unrestricted Subsidiary so long as (a) no Default or Event of Default or Borrowing Base Deficiency has occurred and is continuing or would result therefrom, (b) immediately after giving effect to such designation, the Borrower shall be in compliance on a pro forma basis with the each Financial Covenant set forth in Section 7.11 , (c) such Unrestricted Subsidiary shall be capitalized (to the extent capitalized by the Borrower or any of its Restricted Subsidiaries) through Investments as permitted by, and in compliance with, Section 7.02 , (d) for purposes of clause (c)  such designation shall be deemed an Investment in an amount equal to the net book value of the total investment of the Borrower and its Restricted Subsidiaries in such Unrestricted Subsidiary, and (e) the Borrower shall have delivered to the Administrative Agent an officer’s certificate executed by a Responsible Officer of the Borrower, certifying compliance with the requirements of preceding clauses (a)  through (d) , and containing the calculations and information required by the preceding clause (b)  and (2) any Subsidiary of an Unrestricted Subsidiary. The Borrower may designate any Unrestricted Subsidiary to be a Restricted Subsidiary for purposes of this Agreement (each, a “ Subsidiary Redesignation ”); provided that (i) no Default or Event of Default or Borrowing Base Deficiency has occurred and is continuing or would result therefrom, (ii) immediately after giving effect to such Subsidiary Redesignation, the Borrower shall be in compliance on a pro forma basis with each Financial Covenant set forth in Section 7.11 and (iii) the Borrower shall have delivered to the Administrative Agent an officer’s certificate executed by a Responsible Officer of the Borrower, certifying compliance with the requirements of preceding clauses (i)  and (ii) , and containing the calculations and information required by the preceding clause (ii) .

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 1.02 Other Interpretive Provisions . With reference to this Agreement and each other Loan Document, unless otherwise specified herein or in such other Loan Document:

(a) 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, (i) any definition of or reference to any agreement, instrument or other document (including any Organization Document) shall be construed as referring to such agreement, instrument or other document as from time to time amended, supplemented or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth herein or in any other Loan Document), (ii) any reference herein to any Person shall be construed to include such Person’s successors and assigns, (iii) the words “herein”, “hereof” and “hereunder”, and words of similar import when used in any Loan Document, shall be construed to refer to such Loan Document in its entirety and not to any particular provision thereof, (iv) all references in a Loan Document to Articles, Sections, Exhibits and Schedules shall be construed to refer to Articles and Sections of, and Exhibits and Schedules to, the Loan Document in which such references appear, (v) any reference to any law shall include all statutory and regulatory provisions consolidating, amending, replacing or interpreting such law and any reference to any law or regulation shall, unless otherwise specified, refer to such law or regulation as amended, modified or supplemented from time to time, and (vi) the words “asset” and “property” shall be construed to have the same meaning and effect and to refer to any and all tangible and intangible assets and properties, including cash, securities, accounts and contract rights.

 

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(b) In the computation of periods of time from a specified date to a later specified date, the word “from” means “from and including”, the words “to” and “until” each mean “to but excluding”, and the word “through” means “to and including”.

(c) Section headings herein and in the other Loan Documents are included for convenience of reference only and shall not affect the interpretation of this Agreement or any other Loan Document.

Section 1.03 Accounting Terms .

(a) Generally . All accounting terms not specifically or completely defined herein shall be construed in conformity with, and all financial data (including financial ratios and other financial calculations) required to be submitted pursuant to this Agreement shall be prepared in conformity with, GAAP applied on a consistent basis, as in effect from time to time, applied in a manner consistent with that used in preparing the Audited Financial Statements, except as otherwise specifically prescribed herein.

(b) Changes in GAAP . If at any time any change in GAAP would affect the computation of any financial ratio or requirement set forth in any Loan Document, and either the Borrower or the Majority Lenders shall so request, the Administrative Agent, the Lenders and the Borrower shall negotiate in good faith to amend such ratio or requirement to preserve the original intent thereof in light of such change in GAAP (subject to the approval of the Majority Lenders); provided that, until so amended, (i) such ratio or requirement shall continue to be computed in accordance with GAAP prior to such change therein and (ii) the Borrower shall provide to the Administrative Agent and the Lenders financial statements and other documents required under this Agreement or as reasonably requested hereunder setting forth a reconciliation between calculations of such ratio or requirement made before and after giving effect to such change in GAAP; provided , further , that all terms of an accounting or financial nature used herein shall be construed, and all computations of amounts and ratios referred to herein shall be made without giving effect to (i) any election under Accounting Standards Codification 825-10-25 (previously referred to as Statement of Financial Accounting Standards 159) (or any other Accounting Standards Codification or Financial Accounting Standard having a similar result or effect) to value any Indebtedness or other liabilities of the Borrower or any Subsidiary at “fair value”, as defined therein and (ii) any treatment of Indebtedness in respect of convertible debt instruments under Accounting Standards Codification 470-20 (or any other Accounting Standards Codification or Financial Accounting Standard having a similar result or effect) to value any such Indebtedness in a reduced or bifurcated manner as described therein, and such Indebtedness shall at all times be valued at the full stated principal amount thereof.

Section 1.04 Petroleum Terms . As used herein, the terms “proved reserves”, “proved developed reserves”, “proved developed producing reserves”, “proved developed nonproducing reserves” and “proved undeveloped reserves” shall be determined in accordance with Petroleum Industry Standards.

Section 1.05 Rounding . Any financial ratios required to be maintained by the Borrower pursuant to this Agreement shall be calculated by dividing the appropriate component by the other component, carrying the result to one place more than the number of places by which such ratio is expressed herein and rounding the result up or down to the nearest number (with a rounding-up if there is no nearest number).

Section 1.06 Times of Day . Unless otherwise specified, all references herein to times of day shall be references to Eastern time (daylight or standard, as applicable).

 

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Section 1.07 Letter of Credit Amounts . Unless otherwise specified herein, the amount of a Letter of Credit at any time shall be deemed to be the stated amount of such Letter of Credit in effect at such time; provided , however , that with respect to any Letter of Credit that, by its terms or the terms of any Issuer Document related thereto, provides for one or more automatic increases in the stated amount thereof, the amount of such Letter of Credit shall be deemed to be the maximum stated amount of such Letter of Credit after giving effect to all such increases, whether or not such maximum stated amount is in effect at such time.

Section 1.08 Available Amount Transactions . If more than one action occurs on any given date the permissibility of the taking of which is determined hereunder by reference to the amount of the Available Amount immediately prior to the taking of such action, the permissibility of the taking of each such action shall be determined independently and in no event may any two or more such actions be treated as occurring simultaneously, i.e., each transaction must be permitted under the Available Amount as so calculated.

Section 1.09 Pro Forma Compliance Calculations . Except as set forth in Section 4.02(d) , for purposes of determining the satisfaction of any provision of this Agreement that requires the Borrower to be in compliance on a pro forma basis with one or more of the Financial Covenants during any period during which one or more of such Financial Covenants is not yet required to be tested, the Borrower shall be required to be in compliance on a pro forma basis with the initial testing level set forth for any such Financial Covenant.

ARTICLE II

THE COMMITMENTS AND CREDIT EXTENSIONS

Section 2.01 Committed Loans; Prior Loans .

(a) Subject to the terms and conditions set forth herein (including, without limitation, clause (b) of this Section 2.01 ), each Lender severally, but not jointly, agrees to make loans denominated in Dollars (each such loan, a “ Committed Loan ”) to the Borrower from time to time, on any Business Day during the Availability Period, in an aggregate amount not to exceed at any time outstanding the amount of such Lender’s Commitment; provided , however , that after giving effect to any Committed Borrowing and the application by the Administrative Agent of the proceeds thereof, (i) the Total Outstandings shall not exceed the Facility Limit and (ii) the Aggregate Exposure of any Lender shall not exceed the lesser of such Lender’s (A) Commitment and (B) Applicable Percentage of the Facility Limit. Within the limits of each Lender’s Commitment, and subject to the other terms and conditions hereof, the Borrower may borrow under this Section 2.01 , prepay under Section 2.06 , and reborrow under this Section 2.01 . Committed Loans may be Base Rate Loans or Eurodollar Rate Loans, as further provided herein.

(b) Immediately prior to the Closing Date of this Agreement, the aggregate outstanding amount of Prior Loans is $459,127,102.99 and such amount hereby is, as of the Closing Date, ratified and restructured as Committed Loans in the aggregate principal amount of $425,000,000.00. On the Closing Date, the Prior Loans shall be deemed repaid from the proceeds of such Committed Loans in a cashless exchange. Upon the terms and conditions of this Agreement, each Lender shall be bound by the conversation of its Prior Loans to the Borrower into Committed Loans hereunder and the Borrower will be liable for such Committed Loans. Accordingly, to the extent necessary to implement the terms and provisions of this Agreement, the Pre-Petition Date Credit Agreement is ratified and reaffirmed in respect of the Obligations in respect of the Committed Loans and other Obligations under this Agreement.

Section 2.02 Committed Borrowings, Conversions and Continuations of Committed Loans .

 

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(a) Each Committed Borrowing, each conversion of Committed Loans from one Type to the other, and each continuation of Eurodollar Rate Loans shall be made upon the Borrower’s irrevocable notice to the Administrative Agent in the form of a Committed Loan Notice. Each such Committed Loan Notice must be received by the Administrative Agent not later than 11:00 a.m. (i) three Business Days prior to the requested date of any Committed Borrowing of, conversion to or continuation of Eurodollar Rate Loans or of any conversion of Eurodollar Rate Loans to Base Rate Loans and (ii) on the Business Day prior to any Committed Borrowing of Base Rate Loans. Each Committed Borrowing of, conversion to or continuation of Eurodollar Rate Loans shall be in a principal amount of $5,000,000 or a whole multiple of $1,000,000 in excess thereof. Except as provided in Section 2.03(d) , each Committed Borrowing of or conversion to Base Rate Loans shall be in a principal amount of $1,000,000 or a whole multiple of $100,000 in excess thereof. Each Committed Loan Notice shall specify (i) whether the Borrower is requesting a Committed Borrowing, a conversion of Committed Loans from one Type to the other, or a continuation of Eurodollar Rate Loans, (ii) the requested date of the Committed Borrowing, conversion or continuation, as the case may be (which shall be a Business Day), (iii) the principal amount of Committed Loans to be borrowed, converted or continued, (iv) the Type of Committed Loans to be borrowed or to which existing Committed Loans are to be converted and (v) if applicable, the duration of the Interest Period with respect thereto. If the Borrower fails to specify a Type of Committed Loan in a Committed Loan Notice or if the Borrower fails to give a timely notice requesting a conversion or continuation, then the applicable Committed Loans shall be made as, or converted to, Base Rate Loans. Any such automatic conversion to Base Rate Loans shall be effective as of the last day of the Interest Period then in effect with respect to the applicable Eurodollar Rate Loans. If the Borrower requests a Committed Borrowing of, conversion to, or continuation of Eurodollar Rate Loans in any such Committed Loan Notice, but fails to specify an Interest Period, it will be deemed to have specified an Interest Period of one month.

(b) Following receipt of a Committed Loan Notice, the Administrative Agent shall promptly notify each Lender of the amount of its Applicable Percentage of the applicable Committed Loans, and if no timely notice of a conversion or continuation is provided by the Borrower, the Administrative Agent shall notify each Lender of the details of any automatic conversion to Base Rate Loans described in the preceding clause (a) . Except for the conversion of the Prior Loans into Committed Loans hereunder on the Closing Date pursuant to Section 2.01(b) , in the case of a Committed Borrowing, each Lender shall make the amount of its Committed Loan available to the Administrative Agent in immediately available funds at the Administrative Agent’s Office not later than 1:00 p.m. on the Business Day specified in the applicable Committed Loan Notice. Upon satisfaction of the applicable conditions set forth in Section 4.02 , the Administrative Agent shall make all funds so received available to the Borrower in like funds as received by the Administrative Agent either by (i) crediting the account of the Borrower on the books of the Administrative Agent with the amount of such funds or (ii) wire transfer of such funds, in each case in accordance with instructions provided to (and reasonably acceptable to) the Administrative Agent by the Borrower.

(c) Except as otherwise provided herein, a Eurodollar Rate Loan may be continued or converted only on the last day of an Interest Period for such Eurodollar Rate Loan. During the existence of an Event of Default, no Committed Loans may be requested as, converted to or continued as Eurodollar Rate Loans without the consent of the Majority Lenders.

(d) The Administrative Agent shall promptly notify the Borrower and the Lenders of the interest rate applicable to any Interest Period for Eurodollar Rate Loans upon determination of such interest rate. At any time that Base Rate Loans are outstanding, the Administrative Agent shall notify the Borrower and the Lenders of any change in the Administrative Agent’s prime rate used in determining the Base Rate promptly following the public announcement of such change.

 

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(e) After giving effect to all Committed Borrowings, all conversions of Committed Loans from one Type to the other, and all continuations of Committed Loans as the same Type, there shall not be more than ten Interest Periods in effect with respect to Committed Loans.

Section 2.03 Letters of Credit .

(a) The Letter of Credit Commitment .

(i) Subject to the terms and conditions set forth herein, (A) each L/C Issuer agrees, in reliance upon the agreements of the Lenders set forth in this Section 2.03 , (1) from time to time on any Business Day during the period from the Closing Date until the Letter of Credit Expiration Date, to issue Letters of Credit for the account of the Borrower, and to amend or extend Letters of Credit previously issued by it, in accordance with clause (c)  below and (2) to honor drawings under the Letters of Credit; and (B) the Lenders severally agree to participate in Letters of Credit issued for the account of the Borrower and any drawings thereunder; provided that after giving effect to any L/C Credit Extension with respect to any Letter of Credit, (x) the Total Outstandings shall not exceed the Facility Limit, (y) the Aggregate Exposure of any Lender, shall not exceed the lesser of such Lender’s (I) Commitment and (II) the Applicable Percentage of the Facility Limit and (z) the Outstanding Amount of the L/C Obligations shall not exceed the Letter of Credit Sublimit. Each request by the Borrower for the issuance or amendment of a Letter of Credit shall be deemed to be a representation by the Borrower that the L/C Credit Extension so requested complies with the conditions set forth in the proviso to the preceding sentence. Within the foregoing limits, and subject to the terms and conditions hereof, the Borrower’s ability to obtain Letters of Credit shall be fully revolving, and accordingly the Borrower may, during the foregoing period, obtain Letters of Credit to replace Letters of Credit that have expired or that have been drawn upon and reimbursed.

(ii) The L/C Issuers shall not issue any Letter of Credit, if:

(A) subject to Section 2.03(c)(iii) , the expiry date of such requested Letter of Credit would occur more than twenty-four months after the date of issuance or last extension, unless the Majority Lenders have approved such expiry date; or

(B) the expiry date of such requested Letter of Credit would occur after the Letter of Credit Expiration Date, unless all the Lenders have approved such expiry date.

(iii) An L/C Issuer shall not be under any obligation to issue any Letter of Credit if:

(A) any order, judgment or decree of any Governmental Authority or arbitrator shall by its terms purport to enjoin or restrain the applicable L/C Issuer from issuing such Letter of Credit, or any Law applicable to the applicable L/C Issuer or any request or directive (whether or not having the force of law) from any Governmental Authority with jurisdiction over the applicable L/C Issuer shall prohibit, or request that the applicable L/C Issuer refrain from, the issuance of letters of credit generally or such Letter of Credit in particular or shall impose upon the applicable L/C Issuer with respect to such Letter of Credit any restriction, reserve or capital requirement (for which the applicable L/C Issuer is not otherwise compensated hereunder) not in effect on the Closing Date, or shall impose upon the applicable L/C Issuer any unreimbursed loss, cost or expense which was not applicable on the Closing Date and which the applicable L/C Issuer in good faith deems material to it;

 

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(B) the issuance of such Letter of Credit would violate one or more policies of the applicable L/C Issuer applicable to letters of credit generally;

(C) except as otherwise agreed by the Administrative Agent and the applicable L/C Issuer, such Letter of Credit is in an initial stated amount less than $50,000;

(D) such Letter of Credit is to be denominated in a currency other than Dollars; or

(E) a default of any Lender’s obligations to fund under Section 2.01 exists or any Lender is at such time a Defaulting Lender hereunder, unless the applicable L/C Issuer has entered into arrangements, including delivery of Cash Collateral, satisfactory to the applicable L/C Issuer (in its sole discretion) either with the Borrower or such Lender to eliminate the applicable L/C Issuer’s risk with respect to such Lender’s Applicable Percentage of the Letter of Credit then requested to be issued.

(iv) Each L/C Issuer shall not amend any Letter of Credit if such L/C Issuer would not be permitted at such time to issue such Letter of Credit in its amended form under the terms hereof.

(v) The L/C Issuers shall be under no obligation to amend any Letter of Credit if (A) the applicable L/C Issuer would have no obligation at such time to issue such Letter of Credit in its amended form under the terms hereof or (B) the beneficiary of such Letter of Credit does not accept the proposed amendment to such Letter of Credit.

(vi) Each L/C Issuer shall act on behalf of the Lenders with respect to any Letters of Credit issued by it and the documents associated therewith, and the L/C Issuers shall have all of the benefits and immunities (A) provided to the Administrative Agent in Article IX with respect to any acts taken or omissions suffered by the applicable L/C Issuer in connection with Letters of Credit issued by it or proposed to be issued by it and Issuer Documents pertaining to such Letters of Credit as fully as if the term “Administrative Agent” as used in Article IX included the applicable L/C Issuer with respect to such acts or omissions and (B) as additionally provided herein with respect to the applicable L/C Issuer.

(b) Existing Letters of Credit . Schedule 2.03 contains a schedule of certain letters of credit issued under the Pre-Petition Date Credit Agreement (such letters of credit, the “ Existing Letters of Credit ”) for the account of the Borrower by Royal Bank of Canada and in an aggregate stated amount equal to $9,929,500.12. On the Closing Date, (i) the Existing Letters of Credit, to the extent outstanding, shall be automatically and without further action by the parties hereto or thereto converted to Letters of Credit issued pursuant to this Agreement for the account of the Borrower and subject to the provisions hereof, as if such Existing Letters of Credit had been issued on the Closing Date ( provided that the for purposes of Section 2.03(c) , the date of the issuance of such Letter of Credit shall be the date of issuance as reflected in such Existing Letters of Credit), (ii) Royal Bank of Canada shall be the “L/C Issuer” hereunder for the purpose of maintaining the Existing Letters of Credit, (iii) the face amount of such Existing Letters of Credit shall be included in the calculation of L/C Obligations and (iv) all liabilities of the Loan Parties and any of their Subsidiaries with respect to such Existing Letters of Credit shall constitute Obligations under this Agreement.

(c) Procedures for Issuance and Amendment of Letters of Credit; Auto-Extension and Auto-Reinstatement Letters of Credit .

 

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(i) Each Letter of Credit shall be issued or amended, as the case may be, upon the request of the Borrower delivered to the applicable L/C Issuer (with a copy to the Administrative Agent) in the form of a Letter of Credit Application, appropriately completed and signed by a Responsible Officer of the Borrower. Such Letter of Credit Application must be received by the applicable L/C Issuer and the Administrative Agent not later than 11:00 a.m. at least three Business Days (or such later date and time as the Administrative Agent and the applicable L/C Issuer may agree in a particular instance in their sole discretion) prior to the proposed issuance date or date of amendment, as the case may be. In the case of a request for an initial issuance of a Letter of Credit, such Letter of Credit Application shall specify in form and detail satisfactory to the applicable L/C Issuer: (A) the proposed issuance date of the requested Letter of Credit (which shall be a Business Day); (B) the amount thereof; (C) the expiry date thereof; (D) the name and address of the beneficiary thereof; (E) the documents to be presented by such beneficiary in case of any drawing thereunder; (F) the full text of any certificate to be presented by such beneficiary in case of any drawing thereunder; and (G) such other matters as the applicable L/C Issuer may require. In the case of a request for an amendment of any outstanding Letter of Credit, such Letter of Credit Application shall specify in form and detail satisfactory to the applicable L/C Issuer (A) the Letter of Credit to be amended; (B) the proposed date of amendment thereof (which shall be a Business Day); (C) the nature of the proposed amendment; and (D) such other matters as the applicable L/C Issuer may require. Additionally, the Borrower shall furnish to the applicable L/C Issuer and the Administrative Agent such other documents and information pertaining to such requested Letter of Credit issuance or amendment, including any Issuer Documents, as the applicable L/C Issuer or the Administrative Agent may require.

(ii) Promptly after receipt of any Letter of Credit Application, the applicable L/C Issuer will confirm with the Administrative Agent (in writing) that the Administrative Agent has received a copy of such Letter of Credit Application from the Borrower and, if not, the applicable L/C Issuer will provide the Administrative Agent with a copy thereof. Unless the applicable L/C Issuer has received written notice from any Lender, the Administrative Agent or any Loan Party, at least one Business Day prior to the requested date of issuance or amendment of the applicable Letter of Credit, that one or more applicable conditions contained in Section 4.02 shall not then be satisfied, then, subject to the terms and conditions hereof, the applicable L/C Issuer shall, on the requested date, issue a Letter of Credit for the account of the Borrower or enter into the applicable amendment, as the case may be, in each case in accordance with the applicable L/C Issuer’s usual and customary business practices. Immediately upon the issuance of each Letter of Credit, each Lender shall be deemed to, and hereby irrevocably and unconditionally agrees to, purchase from the applicable L/C Issuer a risk participation in such Letter of Credit in an amount equal to the product of such Lender’s Applicable Percentage times the amount of such Letter of Credit.

(iii) If the Borrower so requests in any applicable Letter of Credit Application, the applicable L/C Issuer may, in its sole and absolute discretion, agree to issue a Letter of Credit that has automatic extension provisions (each, an “ Auto-Extension Letter of Credit ”); provided that any such Auto-Extension Letter of Credit must permit the applicable L/C Issuer to prevent any such extension at least once in each twelve-month period (commencing with the date of issuance of such Letter of Credit) by giving prior notice to the beneficiary thereof not later than a day (the “ Non-Extension Notice Date ”) in each such twelve-month period to be agreed upon at the time such Letter of Credit is issued. Unless otherwise directed by the applicable L/C Issuer, the Borrower shall not be required to make a specific request to the applicable L/C Issuer for any such extension. Once an Auto-Extension Letter of Credit has been issued, the Lenders shall be deemed to have authorized (but may not require) the applicable L/C Issuer to permit the extension of such Letter of Credit at any time to an expiry date not later than the Letter of Credit Expiration Date; provided , however , that the applicable L/C Issuer shall not permit any such extension if (A) the applicable L/C Issuer has determined that it would not be permitted, or would have no obligation, at such time to issue such Letter of Credit in its revised form (as

 

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extended) under the terms hereof (by reason of the provisions of clause (ii)  or (iii)  of Section 2.03(a)  or otherwise) or (B) it has received notice (in writing) on or before the day that is seven Business Days before the Non-Extension Notice Date (1) from the Administrative Agent that the Majority Lenders have elected not to permit such extension or (2) from the Administrative Agent, any Lender or the Borrower that one or more of the applicable conditions specified in Section 4.02 is not then satisfied, and in each such case directing the applicable L/C Issuer not to permit such extension.

(iv) If the Borrower so requests in any applicable Letter of Credit Application, the applicable L/C Issuer may, in its sole and absolute discretion, agree to issue a Letter of Credit that permits the automatic reinstatement of all or a portion of the stated amount thereof after any drawing thereunder (each, an “ Auto-Reinstatement Letter of Credit ”). Unless otherwise directed by the applicable L/C Issuer, the Borrower shall not be required to make a specific request to the applicable L/C Issuer to permit such reinstatement. Once an Auto-Reinstatement Letter of Credit has been issued, except as provided in the following sentence, the Lenders shall be deemed to have authorized (but may not require) the applicable L/C Issuer to reinstate all or a portion of the stated amount thereof in accordance with the provisions of such Letter of Credit. Notwithstanding the foregoing, if such Auto-Reinstatement Letter of Credit permits the applicable L/C Issuer to decline to reinstate all or any portion of the stated amount thereof after a drawing thereunder by giving notice of such non-reinstatement within a specified number of days after such drawing (the “ Non-Reinstatement Deadline ”), the applicable L/C Issuer shall not permit such reinstatement if it has received a notice (in writing) on or before the day that is five Business Days before the Non-Reinstatement Deadline (A) from the Administrative Agent that the Majority Lenders have elected not to permit such reinstatement or (B) from the Administrative Agent, any Lender or the Borrower that one or more of the applicable conditions specified in Section 4.02 is not then satisfied (treating such reinstatement as an L/C Credit Extension for purposes of this clause (iv) ) and, in each case, directing the applicable L/C Issuer not to permit such reinstatement.

(v) Promptly after its delivery of any Letter of Credit or any amendment to a Letter of Credit to an advising bank with respect thereto or to the beneficiary thereof, the applicable L/C Issuer will also deliver to the Borrower and the Administrative Agent a true and complete copy of such Letter of Credit or amendment. On a monthly basis, each L/C Issuer shall deliver to the Administrative Agent (with a copy to the Borrower) a complete list of all outstanding Letters of Credit issued by such L/C Issuer.

(d) Drawings and Reimbursements; Funding of Participations .

(i) Upon receipt from the beneficiary of any Letter of Credit of any notice of a drawing under such Letter of Credit, the applicable L/C Issuer shall notify the Borrower and the Administrative Agent thereof. Not later than 11:00 a.m. on the date of any payment by the applicable L/C Issuer under a Letter of Credit (each such date, an “ Honor Date ”), the Borrower shall reimburse the applicable L/C Issuer through the Administrative Agent in an amount equal to the amount of such drawing. If the Borrower fails to so reimburse the applicable L/C Issuer by such time, the Administrative Agent shall promptly notify each Lender of the Honor Date, the amount of the unreimbursed drawing (the “ Unreimbursed Amount ”), and the amount of such Lender’s Applicable Percentage thereof. In such event, the Borrower shall be deemed to have requested a Committed Borrowing of Base Rate Loans to be disbursed on the Honor Date in an amount equal to the Unreimbursed Amount, without regard to (A) the minimum and multiples specified in Section 2.02 for the principal amount of Base Rate Loans and (B) the conditions set forth in Section 4.02 , but subject to the amount of the unutilized portion (calculated after giving effect to the application by the Administrative Agent of the proceeds of such Committed Borrowing) of the Aggregate Commitments. Any notice given by the applicable L/C Issuer or the Administrative Agent pursuant to this Section 2.03(d)(i)  may be given by telephone if immediately confirmed in writing; provided that the lack of such an immediate confirmation shall not affect the conclusiveness or binding effect of such notice.

 

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(ii) Each Lender shall upon any notice pursuant to Section 2.03(d)(i)  make funds available to the Administrative Agent for the account of the applicable L/C Issuer at the Administrative Agent’s Office in an amount equal to its Applicable Percentage of the Unreimbursed Amount not later than 1:00 p.m. on the Business Day specified in such notice by the Administrative Agent, whereupon, subject to the provisions of Section 2.03(d)(iii) , each Lender that so makes funds available shall be deemed to have made a Base Rate Loan to the Borrower in such amount. The Administrative Agent shall remit the funds so received to the applicable L/C Issuer.

(iii) With respect to any Unreimbursed Amount that is not fully refinanced by a Committed Borrowing of Base Rate Loans because the conditions set forth in Section 4.02 cannot be satisfied or for any other reason, the Borrower shall be deemed to have incurred from the applicable L/C Issuer an L/C Borrowing in the amount of the Unreimbursed Amount that is not so refinanced, which L/C Borrowing shall be due and payable on demand (together with interest) and shall bear interest at the Default Rate. In such event, each Lender’s payment to the Administrative Agent for the account of the applicable L/C Issuer pursuant to Section 2.03(d)(ii)  shall be deemed payment in respect of its participation in such L/C Borrowing and shall constitute an L/C Advance from such Lender in satisfaction of its participation obligation under this Section 2.03 .

(iv) Until each Lender funds its Committed Loan or L/C Advance pursuant to this Section 2.03(d)  to reimburse the applicable L/C Issuer for any amount drawn under any Letter of Credit, interest in respect of such Lender’s Applicable Percentage of such amount shall be solely for the account of the applicable L/C Issuer.

(v) Each Lender’s obligation to make Committed Loans or L/C Advances to reimburse the L/C Issuers for amounts drawn under Letters of Credit, as contemplated by this Section 2.03(d) , shall be absolute and unconditional and shall not be affected by any circumstance, including (A) any setoff, counterclaim, recoupment, defense or other right which such Lender may have against the applicable L/C Issuer, the Borrower or any other Person for any reason whatsoever; (B) the occurrence or continuance of a Default; or (C) any other occurrence, event or condition, whether or not similar to any of the foregoing. Each Lender’s obligation to make Committed Loans pursuant to this Section 2.03(d)  shall not be subject to the conditions set forth in Section 4.02 . No such making of an L/C Advance shall relieve or otherwise impair the obligation of the Borrower to reimburse the applicable L/C Issuer for the amount of any payment made by such L/C Issuer under any Letter of Credit, together with interest as provided herein.

(vi) If any Lender fails to make available to the Administrative Agent for the account of the applicable L/C Issuer any amount required to be paid by such Lender pursuant to the foregoing provisions of this Section 2.03(d)  by the time specified in Section 2.03(d)(ii) , the applicable L/C Issuer shall be entitled to recover from such Lender (acting through the Administrative Agent), on demand, such amount with interest thereon for the period from the date such payment is required to the date on which such payment is immediately available to the applicable L/C Issuer at a rate per annum equal to the greater of the Federal Funds Rate and a rate determined by the applicable L/C Issuer in accordance with banking industry rules on interbank compensation. If such Lender pays such amount (with interest and fees as aforesaid), the amount so paid shall constitute such Lender’s Committed Loan included in the relevant Committed Borrowing or L/C Advance in respect of the relevant L/C Borrowing, as the case may be. A certificate of the applicable L/C Issuer submitted to any Lender (through the Administrative Agent) with respect to any amounts owing under this clause (vi)  shall be conclusive absent manifest error.

 

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(vii) In the event the Borrower or any Lender shall have entered into the arrangements contemplated pursuant to Section 2.03(a)(iii)(E)  with respect to the applicable L/C Issuer’s risk with respect to another Lender’s Applicable Percentage of any Letter of Credit, the applicable L/C Issuer shall be entitled immediately to exercise its rights under any such arrangement and apply any funds received by it as a result thereof to such Lender’s Applicable Percentage of any Unreimbursed Amount with respect to such Letter of Credit.

(e) Repayment of Participations .

(i) At any time after an L/C Issuer has made a payment under any Letter of Credit and has received from any Lender such Lender’s L/C Advance in respect of such payment in accordance with Section 2.03(d) , if the Administrative Agent receives for the account of such L/C Issuer any payment in respect of the related Unreimbursed Amount or interest thereon (whether directly from the Borrower or otherwise, including proceeds of Cash Collateral applied thereto by the Administrative Agent), the Administrative Agent will distribute to such Lender its Applicable Percentage thereof in the same funds as those received by the Administrative Agent.

(ii) If any payment received by the Administrative Agent for the account of an L/C Issuer pursuant to Section 2.03(d)(i)  is required to be returned under any of the circumstances described in Section 10.05 (including pursuant to any settlement entered into by such L/C Issuer in its discretion), each Lender shall pay to the Administrative Agent for the account of such L/C Issuer its Applicable Percentage thereof on demand of the Administrative Agent, plus interest thereon from the date of such demand to the date such amount is returned by such Lender, at a rate per annum equal to the Federal Funds Rate from time to time in effect. The obligations of the Lenders under this clause (ii)  shall survive the payment in full of the Obligations and the termination of this Agreement.

(f) Obligations Absolute . The obligation of the Borrower to reimburse the L/C Issuers for each drawing under each Letter of Credit and to repay each L/C Borrowing shall be absolute, unconditional and irrevocable, and shall be paid strictly in accordance with the terms of this Agreement under all circumstances, including the following:

(i) any lack of validity or enforceability of such Letter of Credit, this Agreement, or any other Loan Document;

(ii) the existence of any claim, counterclaim, setoff, defense or other right that the Borrower or any Subsidiary may have at any time against any beneficiary or any transferee of such Letter of Credit (or any Person for whom any such beneficiary or any such transferee may be acting), the applicable L/C Issuer or any other Person, whether in connection with this Agreement, the transactions contemplated hereby or by such Letter of Credit or any agreement or instrument relating thereto, or any unrelated transaction;

(iii) any draft, demand, certificate or other document presented under such Letter of Credit proving to be forged, fraudulent, invalid or insufficient in any respect or any statement therein being untrue or inaccurate in any respect; or any loss or delay in the transmission or otherwise of any document required in order to make a drawing under such Letter of Credit;

(iv) any payment by an L/C Issuer under such Letter of Credit against presentation of a draft or certificate that does not strictly comply with the terms of such Letter of Credit; or any payment made by an L/C Issuer under such Letter of Credit to any Person purporting to be a trustee in bankruptcy, debtor-in-possession, assignee for the benefit of creditors, liquidator, receiver or other representative of or successor to any beneficiary or any transferee of such Letter of Credit, including any arising in connection with any proceeding under any Debtor Relief Law; or

 

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(v) any other circumstance or happening whatsoever, whether or not similar to any of the foregoing, including any other circumstance that might otherwise constitute a defense available to, or a discharge of, the Borrower or any Subsidiary.

The Borrower shall promptly examine a copy of each Letter of Credit and each amendment thereto that is delivered to it and, in the event of any claim of noncompliance with the Borrower’s instructions or other irregularity, the Borrower will immediately notify the applicable L/C Issuer. The Borrower shall be conclusively deemed to have waived any such claim against the applicable L/C Issuer and its correspondents unless such notice is given as aforesaid.

(g) Role of L/C Issuer . Each Lender and the Borrower agree that, in paying any drawing under a Letter of Credit, the applicable L/C Issuer shall not have any responsibility to obtain any document (other than any sight draft, certificates and documents expressly required by the Letter of Credit) or to ascertain or inquire as to the validity or accuracy of any such document or the authority of the Person executing or delivering any such document. None of the L/C Issuers, the Administrative Agent, any of their respective Related Parties nor any correspondent, participant or assignee of the L/C Issuers shall be liable to any Lender for (i) any action taken or omitted in connection herewith at the request or with the approval of the Lenders or the Majority Lenders, as applicable; (ii) any action taken or omitted in the absence of gross negligence or willful misconduct, each as determined in a final, non-appealable judgment by a court of competent jurisdiction; or (iii) the due execution, effectiveness, validity or enforceability of any document or instrument related to any Letter of Credit or Issuer Document. The Borrower hereby assumes all risks of the acts or omissions of any beneficiary or transferee with respect to its use of any Letter of Credit; provided , however , that this assumption is not intended to, and shall not, preclude the Borrower’s pursuing such rights and remedies as it may have against the beneficiary or transferee at law or under any other agreement. None of the L/C Issuers, the Administrative Agent, any of their respective Related Parties nor any correspondent, participant or assignee of the applicable L/C Issuer shall be liable or responsible for any of the matters described in clauses (i)  through (v)  of Section 2.03(f) ; provided , however , that anything in such clauses to the contrary notwithstanding, the Borrower may have a claim against the applicable L/C Issuer, and the applicable L/C Issuer may be liable to the Borrower, to the extent, but only to the extent, of any direct, as opposed to consequential or exemplary, damages suffered by the Borrower which the Borrower proves were caused by the applicable L/C Issuer’s willful misconduct or gross negligence or such L/C Issuer’s willful failure, in each case as determined in a final, non-appealable judgment by a court of competent jurisdiction, to pay under any Letter of Credit after the presentation to it by the beneficiary of a sight draft and certificate(s) strictly complying with the terms and conditions of a Letter of Credit. In furtherance and not in limitation of the foregoing, the L/C Issuers may accept documents that appear on their face to be in order, without responsibility for further investigation, regardless of any notice or information to the contrary, and the L/C Issuers shall not be responsible for the validity or sufficiency of any instrument transferring or assigning or purporting to transfer or assign a Letter of Credit or the rights or benefits thereunder or proceeds thereof, in whole or in part, which may prove to be invalid or ineffective for any reason.

(h) Cash Collateral . Upon the request of the Administrative Agent, (i) if an L/C Issuer has honored any full or partial drawing request under any Letter of Credit and such drawing has resulted in an L/C Borrowing or (ii) if, as of the Letter of Credit Expiration Date, any L/C Obligation for any reason remains outstanding, the Borrower shall, in each case, immediately Cash Collateralize the then Outstanding Amount of all L/C Obligations. Sections 2.06 and 8.02(c)  set forth certain additional requirements to deliver Cash Collateral hereunder. For purposes of this Section 2.03 , Section 2.06 and

 

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Section 8.02(c) , “ Cash Collateralize ” means to pledge and deposit with or deliver to the Administrative Agent, for the benefit of the applicable L/C Issuer and the Lenders, as collateral for the L/C Obligations, cash or deposit account balances pursuant to documentation in form and substance satisfactory to the Administrative Agent and the applicable L/C Issuer (which documents are hereby consented to by the Lenders). Such cash and deposit account balances are referred to herein, collectively, as the “ Cash Collateral ”. Derivatives of such term have corresponding meanings. The Borrower hereby grants to the Administrative Agent, for the benefit of the applicable L/C Issuer and the Lenders, a security interest in all such cash, deposit accounts and all balances therein and all proceeds of the foregoing. Cash Collateral shall be maintained in blocked, non-interest bearing deposit accounts at the Administrative Agent.

(i) Applicability of ISP and UCP . Unless otherwise expressly agreed by the applicable L/C Issuer and the Borrower when a Letter of Credit is issued, the rules of the ISP shall apply to each Letter of Credit.

(j) Letter of Credit Fees . The Borrower shall pay to the Administrative Agent for the account of each Lender in accordance with its Applicable Percentage a Letter of Credit fee (the “ Letter of Credit Fee ”) for each Letter of Credit equal to the Applicable Rate times the daily amount available to be drawn under such Letter of Credit; provided that, in the event the Borrower has entered into an arrangement with the applicable L/C Issuer with respect to the applicable L/C Issuer’s risk with respect to any Lender’s obligation to fund its Applicable Percentage of the Unreimbursed Amount with respect to such Letter of Credit as contemplated in Section 2.03(a)(iii)(E)  hereof, no such Letter of Credit Fee shall accrue or be deemed to have accrued, or be owing or payable by the Borrower to the Administrative Agent for the account of such Lender with respect to such Lender’s Applicable Percentage of such Letter of Credit Fee until such time as the applicable L/C Issuer determines in its reasonable discretion that such Lender is no longer a Defaulting Lender. For purposes of computing the daily amount available to be drawn under any Letter of Credit, the amount of such Letter of Credit shall be determined in accordance with Section 1.07 . Letter of Credit Fees shall be (i) due and payable on the fifth Business Day after the end of each March, June, September and December, commencing with the first such date to occur after the issuance of such Letter of Credit, on the Letter of Credit Expiration Date and thereafter on demand and (ii) computed on a quarterly basis in arrears. If there is any change in the Applicable Rate during any quarter, the daily amount available to be drawn under each Letter of Credit shall be computed and multiplied by the Applicable Rate separately for each period during such quarter that such Applicable Rate was in effect. Notwithstanding anything to the contrary contained herein, (A) upon the request of the Majority Lenders, while any Event of Default exists and (B) automatically, upon any Event of Default under Section 8.01(f) , all Letter of Credit Fees shall accrue at the Default Rate.

(k) Fronting Fee and Documentary and Processing Charges Payable to L/C Issuers . The Borrower shall pay directly to the applicable L/C Issuer for its own account a fronting fee with respect to each Letter of Credit, at the rate of 0.125%  per annum (but in no event less than $500.00 per annum or $125.00 per quarter) with respect to each Letter of Credit, computed on the daily amount available to be drawn under such Letter of Credit on a quarterly basis in arrears, and due and payable on the fifth Business Day after the end of each March, June, September and December in respect of the most recently-ended quarterly period (or portion thereof, in the case of the first payment), commencing with the first such date to occur after the issuance of such Letter of Credit, on the Letter of Credit Expiration Date and thereafter on demand. For purposes of computing the daily amount available to be drawn under any Letter of Credit, the amount of such Letter of Credit shall be determined in accordance with Section 1.07 . In addition, the Borrower shall pay directly to the applicable L/C Issuer for its own account the customary issuance, presentation, amendment and other processing fees, and other standard costs and charges, of such L/C Issuer relating to letters of credit as from time to time in effect. Such customary fees and standard costs and charges are due and payable on demand and are nonrefundable.

 

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(l) Conflict with Issuer Documents . In the event of any conflict between the terms hereof and the terms of any Issuer Document, the terms hereof shall control.

Section 2.04 [Reserved] .

Section 2.05 Borrowing Base .

(a) Initial Borrowing Base . During the period from the Closing Date until the next Determination Date the Borrowing Base shall be $425,000,000, subject to adjustment or reduction, as applicable, as set forth in Sections 2.05(c) , 2.05(d) and 2.05(e) .

(b) Subsequent Determinations of the Borrowing Base . Upon each designation of a new Borrowing Base on a Scheduled Determination or a Special Determination, the Administrative Agent shall notify the Borrower of the new Borrowing Base which designation shall take effect immediately on the date such notice is sent (each such date (including the Closing Date), a “ Determination Date ”) and shall remain in effect until, but not including, the next Determination Date. The Borrowing Base shall be determined in accordance with the following methodology:

(i) By April 1 and October 1 of each year beginning October 1, 2016, the Borrower shall furnish to the Administrative Agent (with sufficient copies for each Lender of any information provided on paper, computer disks, or other tangible media) the Engineering Report then required under Section 6.01(e)  or Section 6.01(f)  together with all information, reports and data that the Administrative Agent requests concerning the businesses and properties of the Borrower and the other Loan Parties (including their Oil and Gas Properties and the reserves and production relating thereto). Commencing with the first delivery of such Engineering Report, information, reports and data required to be made after the occurrence of the Protected Period Termination Date, the Administrative Agent shall, as promptly as reasonably practicable after receiving such Engineering Report, information, reports and data, propose a Borrowing Base following the procedures set forth in Section 2.05(b)(iii)  below. Each such determination of the Borrowing Base is herein called a “ Scheduled Determination ”. From and following the occurrence of the Protected Period Termination Date, if the Borrower does not furnish all such information, reports and data by the date specified in the first sentence of this clause (i) , the Administrative Agent may nonetheless designate the Borrowing Base at any amount that Required Lenders determine (or, in the case of an increase, that all the Lenders determine) and the Borrowing Base may similarly be designated from time to time thereafter until each Lender receives all such information, reports and data, whereupon the Lenders shall designate a new Borrowing Base as described above.

(ii) In addition to Scheduled Determinations, following the occurrence of the Protected Period Termination Date, the Borrower may request the Lenders to make additional determinations of the Borrowing Base twice during any fiscal year between Scheduled Determinations, and the Administrative Agent also may (and at the request of the Required Lenders must) request the Lenders to make an additional determination of the Borrowing Base once during any fiscal year between Scheduled Determinations. The Administrative Agent shall give notice to the Borrower of any such request made by the Administrative Agent to the Lenders. The Borrower shall submit any such request made by the Borrower to the Administrative Agent and each Lender and, at the time of such request, the Borrower shall (A) deliver to the Administrative Agent and each Lender an updated Engineering Report prepared either by the Borrower or any Approved Petroleum Engineer and (B) notify the Administrative Agent and each Lender of the Borrowing Base requested by the Borrower. Any determination of the Borrowing Base made pursuant to a request under this clause (ii)  is herein called a “ Special Determination ”. Any Special Determination shall be made by Lenders in accordance with the procedures set forth in Section 2.05(b)(iii) ; provided , however , that the Borrower shall not be required to deliver an updated Engineering Report to the Administrative Agent and Lenders in connection with any Special Determination requested by the Administrative Agent.

 

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(iii) The Administrative Agent shall propose to the Lenders a specific Borrowing Base amount for the Lenders to approve or disapprove, (x) in the case of a Scheduled Determination, (A) if the Administrative Agent shall have received the Engineering Report and all information, reports and data requested by it in connection therewith in a timely manner, then on or before April 15 and October 15th of such year following the date of delivery or (B) if the Administrative Agent shall not have received the Engineering Report and all information, reports and data requested by it in connection therewith in a timely manner, then promptly after the Administrative Agent has received such Engineering Report and all information, reports and data requested by it in connection therewith and has had a reasonable opportunity to determine the Borrowing Base in accordance with Section 2.05(b)(i) ; and (y) in the case of a Special Determination, promptly, and in any event, within 15 days after the Administrative Agent shall have received the Engineering Report and all information, reports and data requested by it in connection therewith. Within 15 days after the date referred to in the foregoing clause (iii)(x) or (iii)(y) , as applicable, each Lender shall respond to the Administrative Agent in writing, either approving such proposed amount or setting out a reasonable alternative amount (based on the criteria described in clause (iv)  below), and any Lender’s failure to respond to such proposal within such time will be deemed a disapproval of the proposed amount. After receiving such responses or deemed responses from all Lenders, the Administrative Agent will designate the new Borrowing Base at the highest amount approved (I) by all Lenders, in the case of an increase to the then current Borrowing Base, or (II) at the highest amount approved by the Required Lenders, in the case of a reduction to or continuation of the then current Borrowing Base.

(iv) Each redetermination of the Borrowing Base pursuant to this Section 2.05 shall be made in good faith by all of the Lenders and the Administrative Agent, in the exercise of their reasonable discretion and in accordance with their respective customary and prudent standards for oil and gas lending and credit transactions as they exist at such time and taking into account any Oil and Gas Hedge Transactions that are in place with respect to the production of Hydrocarbons from the Oil and Gas Properties owned by the Borrower and the other Loan Parties. Without limiting such discretion, Borrower acknowledges and agrees that the Administrative Agent and the Lenders (A) may make such assumptions regarding appropriate existing and projected pricing for Hydrocarbons as they deem appropriate in their discretion, (B) may make such assumptions regarding projected rates and quantities of future production of Hydrocarbons from the Oil and Gas Properties owned by the Borrower and the other Loan Parties as they deem appropriate in their discretion, (C) may consider the projected cash requirements of the Borrower and its Restricted Subsidiaries, (D) are not required to consider any asset other than Proved Reserves owned by the Borrower and the other Loan Parties and (E) may make such other assumptions, considerations and exclusions as they deem appropriate in the exercise of their discretion. It is further acknowledged and agreed that the Administrative Agent and the Lenders may consider such other credit factors as they deem appropriate in the exercise of their discretion (including, without limitation, the status of title information with respect to the Borrowing Base Properties as described in the Engineering Reports and the existence of any other Indebtedness).

(c) Reduction of Borrowing Base Upon Incurrence of Junior Lien Debt and Unsecured Indebtedness . Upon (x) the issuance or incurrence by the Borrower or any Restricted Subsidiary of any Junior Lien Debt and/or unsecured Indebtedness in accordance with Section 7.03(l) (other than to the extent constituting Refinanced Indebtedness incurred to refinance such Indebtedness, but only to the extent that the aggregate principal amount of Refinanced Indebtedness incurred to refinance such Indebtedness does not result in beyond any amounts permitted pursuant to clause (i) of the proviso to the definition of “Refinanced Indebtedness”) and/or (y) the creation of a Lien on any property, assets or revenues of the Borrower or any of its Restricted Subsidiaries securing the Post-Restructuring

 

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Convertible Notes (or any portion thereof), then, in each case, the Borrowing Base then in effect shall immediately and automatically be reduced by an amount equal to the product of 0.25 multiplied by the aggregate principal amount of such Junior Lien Debt, unsecured Indebtedness or Post-Restructuring Convertible Notes, as applicable, (without, for the avoidance of doubt, regard to any original issue discount); provided that no such adjustment shall be required in connection with the Post-Restructuring Convertible Notes outstanding on the Closing Date to the extent such Post-Restructuring Convertible Notes are not (nor is any portion thereof) secured in accordance with their terms. For the avoidance of doubt, the Borrowing Base adjustment provided for pursuant to this Section 2.05(c) shall be applicable at any time from and after the Closing Date, notwithstanding the existence or continuation of the Protected Period.

(d) Reduction of Borrowing Base Upon Hedge Terminations . Upon the completion of any early termination or unwinding of, or the creation of any off-setting position in respect of, any Hedge Transaction used in determining the Borrowing Base on the immediately preceding Determination Date, the effect of which termination, unwinding or off-setting position, when combined with the effect of each other such termination, unwinding and/or off-setting position that has occurred since the immediately preceding Determination Date, would be a reduction in the Borrowing Base then in effect of 5.0% or more on a pro forma basis, the Borrowing Base then in effect shall immediately and automatically be reduced by the Borrowing Base contribution of such Hedge Transaction contemporaneously with the consummation of such transaction. For the avoidance of doubt, the Borrowing Base adjustment provided for pursuant to this Section 2.05(d) shall be applicable at any time from and after the Closing Date, notwithstanding the existence or continuation of the Protected Period.

(e) Reduction of Borrowing Base Upon Dispositions and Casualty Events . Upon the completion of any Disposition of, or Casualty Event with respect to, any assets included in the Borrowing Base on the immediately preceding Determination Date, the effect of which Disposition or Casualty Event, when combined with the effect of each other such Disposition and/or Casualty Event that has occurred since the immediately preceding Determination Date, would be a reduction in the Borrowing Base then in effect of 5.0% or more on a pro forma basis, the Borrowing Base then in effect shall immediately and automatically be reduced by the Borrowing Base contribution of such assets contemporaneously with the consummation of such Disposition or the occurrence of such Casualty Event, as applicable. For the avoidance of doubt, the Borrowing Base adjustment provided for pursuant to this Section 2.05(e) shall be applicable at any time from and after the Closing Date, notwithstanding the existence or continuation of the Protected Period.

Section 2.06 Prepayments .

(a) Optional . The Borrower may, upon written notice to the Administrative Agent, at any time or from time to time voluntarily prepay Committed Loans in whole or in part without premium or penalty; provided that (i) such notice must be received by the Administrative Agent not later than 11:00 a.m. (A) three Business Days prior to any date of prepayment of Eurodollar Rate Loans and (B) one Business Day prior to the date of any prepayment of Base Rate Loans; (ii) any prepayment of Eurodollar Rate Loans shall be in a principal amount of $5,000,000 or a whole multiple of $1,000,000 in excess thereof; and (iii) any prepayment of Base Rate Loans shall be in a principal amount of $500,000 or a whole multiple of $100,000 in excess thereof or, in each case, if less, the entire principal amount thereof then outstanding; provided , further , that any such notice may state that such notice is conditioned upon effectiveness of other financing or the occurrence of other events, in which case such notice may be revoked by the Borrower, by notice to the Administrative Agent on or prior to the date specified therein if such condition is not satisfied. Each such notice shall be substantially in the form of Exhibit B hereto and specify the date and amount of such prepayment and the Type(s) of Committed Loans to be prepaid and, if Eurodollar Rate Loans are to be prepaid, the Interest Period(s) of such Committed Loans. The

 

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Administrative Agent will promptly notify each Lender of its receipt of each such notice, and of the amount of such Lender’s Applicable Percentage of such prepayment. If such notice is given by the Borrower, the Borrower shall make such prepayment and the payment amount specified in such notice shall be due and payable on the date specified therein. Any prepayment of a Eurodollar Rate Loan shall be accompanied by all accrued interest on the amount prepaid, together with any additional amounts required pursuant to Section 3.05 . Each such prepayment shall be applied to the Committed Loans of the Lenders in accordance with their respective Applicable Percentages.

(b) Mandatory .

(i) If for any reason the Total Outstandings at any time exceed the Aggregate Commitments then in effect, the Borrower shall immediately (x) prepay Committed Loans in an aggregate principal amount equal to such excess and (y) if any excess remains after prepaying all Committed Loans as a result of outstanding L/C Obligations, pay to the Administrative Agent, on behalf of the L/C Issuers and the Lenders, an aggregate amount equal to such excess in order to Cash Collateralize such outstanding L/C Obligations.

(ii) Upon any determination of or adjustment to the amount of the Borrowing Base pursuant to Section 2.05 (other than pursuant to Section 2.05(c) , 2.05(d) or 2.05(e) ), if a Borrowing Base Deficiency exists, the Borrower shall, within ten days after being notified of such Borrowing Base Deficiency, provide an irrevocable written notice (the “ Election Notice ”) to Lender stating the action which Borrower proposes to take to remedy such Borrowing Base Deficiency, and the Borrower shall thereafter do one or a combination of the following (as elected by the Borrower pursuant to the Election Notice) in an aggregate amount sufficient to eliminate such Borrowing Base Deficiency:

(A) within ten days following the delivery (or required delivery) of such Election Notice, make a prepayment of the Committed Loans (and, if a Borrowing Base Deficiency remains after prepaying all of the Committed Loans as a result of outstanding L/C Obligations, pay to the Administrative Agent, on behalf of the L/C Issuers and the Lenders, an aggregate amount equal to such remaining deficiency in order to Cash Collateralize such outstanding L/C Obligations);

(B) pay in six equal monthly installments of the Outstanding Amount of the Committed Loans (and, if a Borrowing Base Deficiency remains after prepaying all of the Committed Loans as a result of outstanding L/C Obligations, pay to the Administrative Agent, on behalf of the L/C Issuers and the Lenders, an aggregate amount equal to such remaining deficiency in order to Cash Collateralize such outstanding L/C Obligations) over a term and in an amount satisfactory to the Administrative Agent (but in any event, with the first such monthly installment to be due on the thirtieth day following delivery of the Election Notice and each subsequent installment being equal to 1/6 of the aggregate amount of such Borrowing Base Deficiency due and payable on the dame date in each applicable subsequent calendar month), by immediately dedicating a sufficient amount of monthly cash flow from the Oil and Gas Properties of the Borrower and the other Loan Parties; and/or

(C) within thirty days following the delivery of the Election Notice, grant the Administrative Agent, on behalf of the Secured Parties, a first-priority Lien, pursuant to Collateral in form and substance satisfactory to the Administrative Agent, on additional Oil and Gas Properties not evaluated in the most recently delivered Engineering Report to the Administrative Agent and with an aggregate PV9 Pricing attributable thereto sufficient to eliminate such deficiency; provided that, in no event may the Borrower elect the option specified in this clause (ii)(C) (in whole or in part) if fewer than ninety-one days remain until the Maturity Date.

 

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Notwithstanding anything herein to the contrary, all payments required to be made pursuant to this Section 2.06(b)(ii) must, in any event, be made on or prior to the Maturity Date. In the event the Borrower fails to provide an Election Notice to the Administrative Agent within the ten day period referred to above, the Borrower shall be deemed to have irrevocably elected the option set forth in clause (ii)(B) . The failure of the Borrower to comply with any of the options elected (including any deemed election) pursuant to the provisions of this Section 2.06(b)(ii) and specified in such Election Notice (or relating to such deemed election) shall constitute an immediate Event of Default.

(iii) Upon any adjustment to the amount of the Borrowing Base pursuant to Section 2.05(c) , 2.05(d) or 2.05(e) , if a Borrowing Base Deficiency exists, then the Borrower shall, in each case, within two Business Days after the consummation or occurrence of the event or events giving rise to such Borrowing Base adjustment, prepay Committed Loans in an aggregate principal amount equal to such deficiency and (y) if any deficiency remains after prepaying all Committed Loans as a result of outstanding L/C Obligations, pay to the Administrative Agent, on behalf of the L/C Issuers and the Lenders, an aggregate amount equal to such excess in order to Cash Collateralize such outstanding L/C Obligations; provided that, notwithstanding anything herein to the contrary, all payments required to be made pursuant to this Section 2.06(b)(iii) must, in any event, be made on or prior to the Maturity Date.

Section 2.07 Termination or Reduction of Commitments . The Borrower may, upon notice to the Administrative Agent, terminate the Aggregate Commitments, or from time to time permanently reduce the Aggregate Commitments; provided that (i) any such notice shall be received by the Administrative Agent not later than 11:00 a.m. three Business Days prior to the date of termination or reduction, (ii) any such partial reduction shall be in an aggregate amount of $10,000,000 or any whole multiple of $1,000,000 in excess thereof, (iii) the Borrower shall not terminate or reduce the Aggregate Commitments if, after giving effect thereto and to any concurrent prepayments hereunder, the Total Outstandings would exceed the Aggregate Commitments and (iv) if, after giving effect to any reduction of the Aggregate Commitments, the Letter of Credit Sublimit exceeds the amount of the Aggregate Commitments, such Sublimit shall be automatically reduced by the amount of such excess; provided , further , that any such notice may state that such notice is conditioned upon effectiveness of other financing or the occurrence of other events, in which case such notice may be revoked by the Borrower by notice to the Administrative Agent on or prior to the date specified therein if such condition is not satisfied. The Administrative Agent will promptly notify the Lenders of any such notice of termination or reduction of the Aggregate Commitments. Any reduction of the Aggregate Commitments shall be applied to the Commitment of each Lender according to its Applicable Percentage. All fees accrued until the effective date of any termination of the Aggregate Commitments shall be paid on the effective date of such termination.

Section 2.08 Repayment of Loans . The Borrower shall repay to the Lenders on the Maturity Date the aggregate principal amount of Committed Loans outstanding on such date, together with all accrued but unpaid interest thereon.

Section 2.09 Interest .

(a) Subject to the provisions of clause (b)  below, (i) each Eurodollar Rate Loan shall bear interest on the outstanding principal amount thereof for each Interest Period at a rate per annum equal to the Eurodollar Rate for such Interest Period plus the Applicable Rate and (ii) each Base Rate Loan shall bear interest on the outstanding principal amount thereof from the applicable borrowing date at a rate per annum equal to the Base Rate plus the Applicable Rate.

 

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(b) (1) If any amount of principal of any Committed Loan is not paid when due (without regard to any applicable grace periods), whether at stated maturity, by acceleration or otherwise, such amount shall thereafter bear interest at a fluctuating interest rate per annum at all times equal to the Default Rate to the fullest extent permitted by applicable Laws.

(i) If any amount (other than principal of any Committed Loan) payable by the Borrower under any Loan Document is not paid when due (without regard to any applicable grace periods), whether at stated maturity, by acceleration or otherwise, then upon the request of the Majority Lenders, such amount shall thereafter bear interest at a fluctuating interest rate per annum at all times equal to the Default Rate to the fullest extent permitted by applicable Laws.

(ii) (A) Upon the request of the Majority Lenders, while any Event of Default exists or (B) automatically, while any Event of Default under Section 8.01(f)  exists, the Borrower shall pay interest on the principal amount of all outstanding Committed Loans hereunder at a fluctuating interest rate per annum at all times equal to the Default Rate to the fullest extent permitted by applicable Laws.

(iii) Accrued and unpaid interest on past due amounts (including interest on past due interest) shall be due and payable upon demand.

(c) Interest on each Committed Loan shall be due and payable in arrears on each Interest Payment Date applicable thereto and at such other times as may be specified herein. Interest hereunder (including, for the avoidance of doubt, at the Default Rate) shall be due and payable in accordance with the terms hereof before and after judgment, and before and after the commencement of any proceeding under any Debtor Relief Law.

Section 2.10 Fees . In addition to certain fees described in clauses (j)  and (k)  of Section 2.03 :

(a) Commitment Fee . The Borrower shall pay to the Administrative Agent for the account of each Lender in accordance with its Applicable Percentage, a commitment fee (the “ Commitment Fee ”) equal to the Applicable Rate times the daily amount of the Available Borrowing Base. The Commitment Fee shall accrue at all times during the Availability Period, including at any time during which one or more of the conditions in Section 4.02 is not met, and shall be due and payable quarterly in arrears on the last Business Day of each March, June, September and December, commencing with the first such date to occur after the Closing Date, and on the last day of the Availability Period. The Commitment Fee shall be calculated quarterly in arrears, and if there is any change in the Applicable Rate during any quarter, the actual daily amount shall be computed and multiplied by the Applicable Rate separately for each period during such quarter that such Applicable Rate was in effect.

(b) Other Fees . (2) The Borrower shall pay to the Arranger and the Administrative Agent for their own respective accounts fees in the amounts and at the times specified in the Administrative Agent Fee Letter. Such fees shall be fully earned when paid and shall not be refundable for any reason whatsoever.

(i) The Borrower shall pay to the Lenders such fees as shall have been separately agreed upon in writing in the amounts and at the times so specified. Such fees shall be fully earned when paid and shall not be refundable for any reason whatsoever.

Section 2.11 Computation of Interest and Fees . All computations of interest for Base Rate Loans (if the Base Rate is determined in reliance on clause (ii)  of the definition thereof) shall be made on the basis of a year of 365 or 366 days, as the case may be, and actual days elapsed. All other

 

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computations of fees and interest shall be made on the basis of a 360-day year and actual days elapsed (which results in more fees or interest, as applicable, being paid than if computed on the basis of a 365-day year). Interest shall accrue on each Committed Loan for the day on which the Committed Loan is made, and shall not accrue on a Committed Loan, or any portion thereof, for the day on which the Committed Loan or such portion is paid; provided that any Committed Loan that is repaid on the same day on which it is made shall, subject to Section 2.13(a) , bear interest for one day. Each determination by the Administrative Agent of an interest rate or fee hereunder shall be conclusive and binding for all purposes, absent manifest error.

Section 2.12 Evidence of Debt .

(a) The Credit Extensions made by each Lender shall be evidenced by one or more accounts or records maintained by such Lender and by the Administrative Agent in the ordinary course of business. The accounts or records maintained by the Administrative Agent and each Lender shall be conclusive absent manifest error of the amount of the Credit Extensions made by the Lenders to the Borrower and the interest and payments thereon. Any failure to so record or any error in doing so shall not, however, limit or otherwise affect the obligation of the Borrower hereunder to pay any amount owing with respect to the Obligations. In the event of any conflict between the accounts and records maintained by any Lender and the accounts and records of the Administrative Agent in respect of such matters, the accounts and records of the Administrative Agent shall control in the absence of manifest error. Upon the request of any Lender made through the Administrative Agent, the Borrower shall execute and deliver to such Lender (through the Administrative Agent) a Note, which shall evidence such Lender’s Committed Loans in addition to such accounts or records. Each Lender may attach schedules to its Note and endorse thereon the date, Type (if applicable), amount and maturity of its Committed Loans and payments with respect thereto.

(b) In addition to the accounts and records referred to in clause (a) , each Lender and the Administrative Agent shall maintain in accordance with its usual practice accounts or records evidencing the purchases and sales by such Lender of participations in Letters of Credit. In the event of any conflict between the accounts and records maintained by the Administrative Agent and the accounts and records of any Lender in respect of such matters, the accounts and records of the Administrative Agent shall control in the absence of manifest error.

Section 2.13 Payments Generally; Administrative Agent’s Clawback .

(a) General . All payments to be made by the Borrower shall be made without condition or deduction for any counterclaim, defense, recoupment or setoff. Except as otherwise expressly provided herein, all payments by the Borrower hereunder shall be made to the Administrative Agent, for the account of the respective Lenders to which such payment is owed, at the Administrative Agent’s Office in Dollars and in immediately available funds not later than 2:00 p.m. on the date specified herein. The Administrative Agent will promptly distribute to each Lender its Applicable Percentage (or other applicable share as provided herein) of such payment in like funds as received by wire transfer to such Lender’s Lending Office. All payments received by the Administrative Agent after 2:00 p.m. shall be deemed received on the next succeeding Business Day and any applicable interest or fee shall continue to accrue. If any payment to be made by the Borrower shall come due on a day other than a Business Day, payment shall be made on the next following Business Day, and such extension of time shall be reflected in computing interest or fees, as the case may be.

(b) (3) Funding by Lenders; Presumption by Administrative Agent . Unless the Administrative Agent shall have received notice from a Lender prior to the proposed date of any Committed Borrowing of Eurodollar Rate Loans (or, in the case of any Committed Borrowing of Base

 

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Rate Loans, prior to 12:00 noon on the date of such Committed Borrowing) that such Lender will not make available to the Administrative Agent such Lender’s share of such Committed Borrowing, the Administrative Agent may assume that such Lender has made such share available on such date in accordance with Section 2.02 (or, in the case of a Committed Borrowing of Base Rate Loans, that such Lender has made such share available in accordance with and at the time required by Section 2.02 ) 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 Committed 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 in immediately available funds 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 (A) in the case of a payment to be made by such Lender, the greater of the Federal Funds Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation and (B) in the case of a payment to be made by the Borrower, the interest rate applicable to Base Rate Loans. If the Borrower and such Lender shall pay such interest to the Administrative Agent for the same or an overlapping period, the Administrative Agent shall promptly remit to the Borrower the amount of such interest paid by the Borrower for such period. If such Lender pays its share of the applicable Committed Borrowing to the Administrative Agent, then the amount so paid shall constitute such Lender’s Committed Loan included in such Committed Borrowing. Any payment by the Borrower shall be without prejudice to any claim the Borrower may have against a Lender that shall have failed to make such payment to the Administrative Agent.

(i) Payments by Borrower; Presumptions by Administrative Agent . 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 L/C Issuers hereunder that the Borrower will not make such payment, the Administrative Agent may assume that the Borrower has made such payment on such date in accordance herewith and may, in reliance upon such assumption, distribute to the Lenders or the L/C Issuers, 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 L/C Issuers, as the case may be, severally agrees to repay to the Administrative Agent forthwith on demand the amount so distributed to such Lender or L/C Issuer, in immediately available funds 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 Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation.

A notice of the Administrative Agent to any Lender or the Borrower with respect to any amount owing under this clause (b)  shall be conclusive, absent manifest error.

(c) Failure to Satisfy Conditions Precedent . If any Lender makes available to the Administrative Agent funds for any Committed Loan to be made by such Lender as provided in the foregoing provisions of this Article II , and such funds are not made available to the Borrower by the Administrative Agent because the conditions to the applicable Credit Extension set forth in Section 4.02 are not satisfied or waived in accordance with the terms hereof, the Administrative Agent shall promptly return such funds (in like funds as received from such Lender) to such Lender, without interest.

(d) Obligations of Lenders Several . The obligations of the Lenders hereunder to make Committed Loans, to fund participations in Letters of Credit and to make payments pursuant to Section 10.04(c)  are several and not joint. The failure of any Lender to make any Committed Loan, to fund any such participation or to make any payment under Section 10.04(c)  on any date required hereunder shall not relieve any other Lender of its corresponding obligation to do so on such date, and no Lender shall be responsible for the failure of any other Lender to so make its Committed Loan, to purchase its participation or to make its payment under Section 10.04(c) .

 

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(e) Funding Source . Nothing herein shall be deemed to obligate any Lender to obtain the funds for any Committed 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 any Committed Loan in any particular place or manner.

Section 2.14 Sharing of Payments by Lenders . If any Lender shall, by exercising any right of setoff or counterclaim or otherwise, obtain payment in respect of any principal of or interest on any of the Committed Loans made by it, or the participations in L/C Obligations held by it resulting in such Lender’s receiving payment of a proportion of the aggregate amount of such Committed Loans or participations and accrued interest thereon greater than its pro rata share thereof as provided herein, then the Lender receiving such greater proportion shall (a) notify the Administrative Agent of such fact and (b) purchase (for cash at face value) participations in the Committed Loans and subparticipations in L/C Obligations of the other Lenders, or make such other adjustments as shall be equitable, so that the benefit of all such payments shall be shared by the Lenders ratably in accordance with the aggregate amount of principal of and accrued interest on their respective Committed Loans and other amounts owing them; provided that:

(i) if any such participations or subparticipations are purchased and all or any portion of the payment giving rise thereto is recovered, such participations or subparticipations shall be rescinded and the purchase price restored to the extent of such recovery, without interest; and

(ii) the provisions of this Section 2.14 shall not be construed to apply to (x) any payment made by the Borrower pursuant to and in accordance with the express terms of this Agreement or (y) any payment obtained by a Lender as consideration for the assignment of or sale of a participation in any of its Committed Loans or subparticipations in L/C Obligations to any assignee or participant, other than to the Borrower or any Subsidiary thereof (as to which the provisions of this Section 2.14 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 setoff 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 2.15 Defaulting Lenders . Notwithstanding anything to the contrary contained in this Agreement, if any Lender becomes a Defaulting Lender, then, until such time as such Lender is no longer a Defaulting Lender, to the extent permitted by applicable Law:

(a) Defaulting Lender Waterfall . Any payment of principal, interest, fees or other amounts received by the Administrative Agent for the account of such Defaulting Lender (whether voluntary or mandatory, at maturity, pursuant to Article VIII or otherwise) or received by the Administrative Agent from a Defaulting Lender pursuant to Section 10.08 shall be applied at such time or times as may be determined by the Administrative Agent as follows: first , to the payment of any amounts owing by such Defaulting Lender to the Administrative Agent hereunder; second , to the payment on a pro rata basis of any amounts owing by such Defaulting Lender to any L/C Issuer hereunder; third , to Cash Collateralize the L/C Issuers’ Fronting Exposure with respect to such Defaulting Lender; fourth , as the Borrower may request (so long as no Default or Event of Default exists), to the funding of any Committed Loans in respect of which such Defaulting Lender has failed to fund its portion thereof as required by this Agreement, as determined by the Administrative Agent; fifth , if so determined by the Administrative

 

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Agent and the Borrower, to be held in a deposit account and released pro rata in order to (x) satisfy such Defaulting Lender’s potential future funding obligations with respect to Committed Borrowings under this Agreement and (y) Cash Collateralize the L/C Issuers’ future Fronting Exposure with respect to such Defaulting Lender with respect to future Letters of Credit issued under this Agreement; sixth , to the payment of any amounts owing to the Lenders or the L/C Issuers as a result of any judgment of a court of competent jurisdiction obtained by any Lender or any L/C Issuer against such Defaulting Lender as a result of such Defaulting Lender’s breach of its obligations under this Agreement; seventh , so long as no Default or Event of Default exists, to the payment of any amounts owing to the Borrower as a result of any judgment of a court of competent jurisdiction obtained by the Borrower against such Defaulting Lender as a result of such Defaulting Lender’s breach of its obligations under this Agreement; and eighth , to such Defaulting Lender or as otherwise directed by a court of competent jurisdiction; provided that if (x) such payment is a payment of the principal amount of any Committed Loan or L/C Advance in respect of which such Defaulting Lender has not fully funded its appropriate share and (y) such Committed Loans were made or the related Letters of Credit were issued at a time when the conditions set forth in Section 4.02 were satisfied or waived, such payment shall be applied solely to pay the Committed Loans of, and L/C Advance owed to, all Non-Defaulting Lenders on a pro rata basis prior to being applied to the payment of any Committed Loans of, or L/C Advances owed to, such Defaulting Lender until such time as all Committed Loans and funded and unfunded participations in L/C Obligations are held by the Lenders pro rata in accordance with the Commitments under the facility without giving effect to Section 2.15(d) . Any payments, prepayments or other amounts paid or payable to a Defaulting Lender that are applied (or held) to pay amounts owed by a Defaulting Lender or to post Cash Collateral pursuant to this Section 2.15(a)  shall be deemed paid to and redirected by such Defaulting Lender, and each Lender irrevocably consents hereto.

(b) Certain Fees .

(i) No Defaulting Lender shall be entitled to receive any Commitment Fee for any period during which that Lender is a Defaulting Lender (and the Borrower shall not be required to pay any such fee that otherwise would have been required to have been paid to that Defaulting Lender).

(ii) Each Defaulting Lender shall be entitled to receive Letter of Credit Fees for any period during which that Lender is a Defaulting Lender only to the extent allocable to its Applicable Percentage of the stated amount of Letters of Credit for which it has provided Cash Collateral pursuant to Section 2.15(e) .

(iii) With respect to any fee not required to be paid to any Defaulting Lender pursuant to clause (i)  or (ii)  above, the Borrower shall (x) pay to each Non-Defaulting Lender that portion of any such fee otherwise payable to such Defaulting Lender with respect to such Defaulting Lender’s participation in L/C Obligations that has been reallocated to such Non-Defaulting Lender pursuant to clause (c)  below, (y) pay to each L/C Issuer the amount of any such fee otherwise payable to such Defaulting Lender to the extent allocable to such L/C Issuer’s Fronting Exposure to such Defaulting Lender, and (z) not be required to pay the remaining amount of any such fee.

(c) Reallocation of Participations to Reduce Fronting Exposure . All or any part of such Defaulting Lender’s participation in L/C Obligations shall be reallocated among the Non-Defaulting Lenders in accordance with their respective Applicable Percentages (calculated without regard to such Defaulting Lender’s Commitment) but only to the extent that such reallocation does not cause the Aggregate Exposure of any Non-Defaulting Lender to exceed the lesser of such Non-Defaulting Lender’s (i) Commitment and (ii) Applicable Percentage of the Facility Limit. Subject to Section 2.15(g)  below, no reallocation hereunder shall constitute a waiver or release of any claim of any party hereunder against a Defaulting Lender arising from that Lender having become a Defaulting Lender, including any claim of a Non-Defaulting Lender as a result of such Non-Defaulting Lender’s increased exposure following such reallocation.

 

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(d) Cash Collateral . If the reallocation described in clause (c)  above cannot, or can only partially, be effected, the Borrower shall, without prejudice to any right or remedy available to it hereunder or under Law, Cash Collateralize the L/C Issuers’ Fronting Exposure in accordance with the procedures set forth in Section 2.03(h) .

(e) Defaulting Lender Cure . If the Borrower, the Administrative Agent and each L/C Issuer agree in writing that a Lender is no longer a Defaulting Lender, the Administrative Agent will so notify the parties hereto, whereupon as of the effective date specified in such notice and subject to any conditions set forth therein (which may include arrangements with respect to any Cash Collateral), that Lender will, to the extent applicable, purchase at par that portion of outstanding Committed Loans of the other Lenders or take such other actions as the Administrative Agent may determine to be necessary to cause the Committed Loans and funded and unfunded participations in Letters of Credit to be held pro rata by the Lenders in accordance with the Commitments under the applicable facility (without giving effect to Section 2.15(c) ), whereupon such Lender will cease to be a Defaulting Lender; provided that no adjustments will be made retroactively with respect to fees accrued or payments made by or on behalf of the Borrower while that Lender was a Defaulting Lender; provided , further , that except to the extent otherwise expressly agreed by the affected parties, no change hereunder from Defaulting Lender to Lender will constitute a waiver or release of any claim of any party hereunder arising from that Lender’s having been a Defaulting Lender.

(f) New Letters of Credit . So long as any Lender is a Defaulting Lender, no L/C Issuer shall be required to issue, extend, renew or increase any Letter of Credit unless it is satisfied that it will have no Fronting Exposure after giving effect thereto.

(g) 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, to the extent such liability is unsecured, 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:

(i) 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

(ii) the effects of any Bail-In Action on any such liability, including, if applicable:

(A) a reduction in full or in part or cancellation of any such liability;

(B) a conversion of all, or a portion of, such liability into shares or other instruments of ownership in such EEA Financial Institution, its parent undertaking, or a bridge institution that may be issued to it or otherwise conferred on it, and that such shares or other instruments of ownership will be accepted by it in lieu of any rights with respect to any such liability under this Agreement or any other Loan Document; or

(C) 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.

 

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ARTICLE III

TAXES, YIELD PROTECTION AND ILLEGALITY

Section 3.01 Taxes .

(a) Payments Free of Taxes . Any and all payments by or on account of any obligation of the Borrower hereunder or under any other Loan Document shall be made free and clear of and without reduction or withholding for any Indemnified Taxes or Other Taxes; provided that if the Borrower shall be required by applicable Law to deduct any Indemnified Taxes (including any Other Taxes) from such payments, then (i) 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 3.01 ) the Administrative Agent, Lender or L/C Issuer, as the case may be, receives an amount equal to the sum it would have received had no such deductions been made, (ii) the Borrower shall make such deductions and (iii) the Borrower shall timely pay the full amount deducted to the relevant Governmental Authority in accordance with applicable Law.

(b) Payment of Other Taxes by the Borrower . Without limiting the provisions of clause (a)  above, the Borrower shall timely pay any Other Taxes to the relevant Governmental Authority in accordance with applicable Law.

(c) Indemnification by the Borrower . The Borrower shall indemnify the Administrative Agent, each Lender and the L/C Issuers, within 10 days after demand therefor, for the full amount of any Indemnified Taxes or Other Taxes (including Indemnified Taxes or Other Taxes imposed or asserted on or attributable to amounts payable under this Section 3.01 ) paid by the Administrative Agent, such Lender or L/C Issuer, as the case may be, 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 as to the amount of such payment or liability delivered to the Borrower by a Lender or L/C Issuer (with a copy to the Administrative Agent), or by the Administrative Agent on its own behalf or on behalf of a Lender or an L/C Issuer, shall be conclusive absent manifest error.

(d) Evidence of Payments . As soon as practicable after any payment of Indemnified Taxes or Other Taxes by the Borrower to a Governmental Authority, 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) Status of Lenders . Any Foreign Lender that is entitled to an exemption from or reduction of withholding tax under the law of the jurisdiction in which the Borrower is resident for tax purposes, or any treaty to which such jurisdiction is a party, with respect to payments hereunder or under any other Loan Document shall deliver to the Borrower (with a copy to the Administrative Agent), at the time or times prescribed by applicable Law or reasonably requested by the Borrower or the Administrative Agent, such properly completed and executed documentation prescribed by applicable Law as will permit such payments to be made without withholding or at a reduced rate of withholding. In addition, any Lender, if requested by the Borrower or the Administrative Agent, shall deliver such other documentation prescribed by applicable Law or reasonably requested by the Borrower or the Administrative Agent as will enable the Borrower or the Administrative Agent to determine whether or not such Lender is subject to backup withholding or information reporting requirements.

Without limiting the generality of the foregoing, in the event that the Borrower is resident for tax purposes in the United States, any Foreign Lender shall deliver to the Borrower and the Administrative

 

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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 request of the Borrower or the Administrative Agent, but only if such Foreign Lender is legally entitled to do so), whichever of the following is applicable:

(i) duly completed copies of Internal Revenue Service Forms W-8BEN, W-8BEN-E or applicable W-8 claiming eligibility for benefits of an income tax treaty to which the United States is a party;

(ii) duly completed copies of Internal Revenue Service Form W-8ECI;

(iii) in the case of a Foreign Lender claiming the benefits of the exemption for portfolio interest under Section 881(c) of the Code, (x) a certificate to the effect that such Foreign Lender is not (A) a “bank” within the meaning of Section 881(c)(3)(A) of the Code, (B) a “10 percent shareholder” of the Borrower within the meaning of Section 881(c)(3)(B) of the Code or (C) a “controlled foreign corporation” described in Section 881(c)(3)(C) of the Code and (y) duly completed copies of Internal Revenue Service Forms W-8BEN, W-8BEN-E or applicable W-8; or

(iv) any other form prescribed by applicable Law as a basis for claiming exemption from or a reduction in United States Federal withholding tax duly completed together with such supplementary documentation as may be prescribed by applicable Law to permit the Borrower to determine the withholding or deduction required to be made.

Without limiting the generality of the foregoing, in the event that the Borrower is resident for tax purposes in the United States, 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. For purposes of determining withholding Taxes imposed under FATCA, from and after the Closing Date, the Borrower and the Administrative Agent shall treat (and the Lenders hereby authorize the Administrative Agent to treat) this Agreement as not qualifying as a “grandfathered obligation” within the meaning of Treasury Regulation Section 1.1471-2(b)(2)(i).

(f) Treatment of Certain Refunds . If the Administrative Agent, any Lender or an L/C Issuer 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 3.01 , it shall pay to the Borrower an amount equal to such refund (but only to the extent of indemnity payments made, or additional amounts paid, by the Borrower under this Section 3.01 with respect to the Taxes or Other Taxes giving rise to such refund), net of all out-of-pocket expenses of the Administrative Agent, such Lender or such L/C Issuer, as the case may be, 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, such Lender or such L/C Issuer, 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, such Lender or such L/C Issuer in the event the Administrative Agent, such Lender or such L/C Issuer is required to

 

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repay such refund to such Governmental Authority. This clause (f)  shall not be construed to require the Administrative Agent, any Lender or any L/C Issuer to make available its tax returns (or any other information relating to its taxes that it deems confidential) to the Borrower or any other Person. Notwithstanding anything to the contrary in this clause (f) , in no event will the Administrative Agent or any Lender be required to pay any amount to the Borrower pursuant to this clause (f) , the payment of which would place the Administrative Agent or such Lender in a less favorable net after-Tax position than the Administrative Agent or such Lender would have been in if the indemnification payments or additional amounts giving rise to such refund had never been paid.

Section 3.02 Illegality . If any Lender determines that any Law has made it unlawful, or that any Governmental Authority has asserted that it is unlawful, for any Lender or its applicable Lending Office to make, maintain or fund Eurodollar Rate Loans, or to determine or charge interest rates based upon the Eurodollar Rate, or any Governmental Authority has imposed material restrictions on the authority of such Lender to purchase or sell, or to take deposits of, Dollars in the London interbank market, then, on notice thereof by such Lender to the Borrower through the Administrative Agent, any obligation of such Lender to make or continue Eurodollar Rate Loans or to convert Base Rate Loans to Eurodollar Rate Loans shall be suspended until such Lender notifies the Administrative Agent and the Borrower that the circumstances giving rise to such determination no longer exist. Upon receipt of such notice, the Borrower shall, upon demand from such Lender (with a copy to the Administrative Agent), prepay or, if applicable, convert all Eurodollar Rate Loans of such Lender to Base Rate Loans, either on the last day of the Interest Period therefor, if such Lender may lawfully continue to maintain such Eurodollar Rate Loans to such day, or immediately, if such Lender may not lawfully continue to maintain such Eurodollar Rate Loans. Upon any such prepayment or conversion, the Borrower shall also pay accrued interest on the amount so prepaid or converted.

Section 3.03 Inability to Determine Rates . If the Majority Lenders determine that for any reason in connection with any request for a Eurodollar Rate Loan or a conversion to or continuation thereof that (a) Dollar deposits are not being offered to banks in the London interbank eurodollar market for the applicable amount and Interest Period of such Eurodollar Rate Loan, (b) adequate and reasonable means do not exist for determining the Eurodollar Rate for any requested Interest Period with respect to a proposed Eurodollar Rate Loan or (c) the Eurodollar Rate for any requested Interest Period with respect to a proposed Eurodollar Rate Loan does not adequately and fairly reflect the cost to such Lenders of funding such Committed Loan, the Administrative Agent will promptly so notify the Borrower and each Lender. Thereafter, the obligation of the Lenders to make or maintain Eurodollar Rate Loans shall be suspended until the Administrative Agent (upon the instruction of the Majority Lenders) revokes such notice. Upon receipt of such notice, the Borrower may revoke any pending request for a Committed Borrowing of, conversion to or continuation of Eurodollar Rate Loans or, failing that, will be deemed to have converted such request into a request for a Committed Borrowing of Base Rate Loans in the amount specified therein.

Section 3.04 Increased Costs; Reserves on Eurodollar Rate Loans .

(a) Increased Costs Generally . If any Change in Law shall:

(i) impose, modify or deem applicable any reserve, special deposit, compulsory loan, insurance charge or similar requirement against assets of, deposits with or for the account of, or credit extended or participated in by, any Lender (except any reserve requirement contemplated by Section 3.04(e) ) or any L/C Issuer;

(ii) subject any Lender or any L/C Issuer to any tax of any kind whatsoever with respect to its loans, loan principal, letters of credit, commitments or other obligations, or its deposits,

 

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reserves or other liabilities attributable thereto (except for Indemnified Taxes or Other Taxes covered by Section 3.01 and the imposition of, or any change in the rate of, any Excluded Tax payable by such Lender or L/C Issuer); or

(iii) impose on any Lender or any L/C Issuer or the London interbank market any other condition, cost or expense affecting this Agreement or Eurodollar Rate Loans made by such Lender or any Letter of Credit or participation therein;

and the result of any of the foregoing shall be to increase the cost to such Lender of making, continuing, converting to or maintaining any Eurodollar Rate Loan (or of maintaining its obligation to make any such Committed Loan), or to increase the cost to such Lender or such L/C Issuer of participating in, issuing or maintaining any Letter of Credit (or of maintaining its obligation to participate in or to issue any Letter of Credit), or to reduce the amount of any sum received or receivable by such Lender or such L/C Issuer hereunder (whether of principal, interest or any other amount) then, upon request of such Lender or such L/C Issuer, the Borrower will pay to such Lender or such L/C Issuer, as the case may be, such additional amount or amounts as will compensate such Lender or such L/C Issuer, as the case may be, for such additional costs incurred or reduction suffered.

(b) Capital or Liquidity Requirements . If any Lender or any L/C Issuer determines that any Change in Law affecting such Lender or such L/C Issuer or any Lending Office of such Lender or such Lender’s or such L/C Issuer’s holding company, if any, regarding capital or liquidity requirements has or would have the effect of reducing the rate of return on such Lender’s or such L/C Issuer’s capital or liquidity, or on the capital or liquidity of such Lender’s or such L/C Issuer’s holding company, if any, as a consequence of this Agreement, the Commitments of such Lender or the Committed Loans made by, or participations in Letters of Credit held by, such Lender, or the Letters of Credit issued by the L/C Issuer, to a level below that which such Lender or such L/C Issuer or such Lender’s or such L/C Issuer’s holding company could have achieved but for such Change in Law (taking into consideration such Lender’s or such L/C Issuer’s policies and the policies of such Lender’s or such L/C Issuer’s holding company with respect to capital adequacy), then from time to time the Borrower will pay to such Lender or such L/C Issuer, as the case may be, such additional amount or amounts as will compensate such Lender or such L/C Issuer or such Lender’s or such L/C Issuer’s holding company for any such reduction suffered.

(c) Certificates for Reimbursement . A certificate of a Lender or an L/C Issuer setting forth the amount or amounts necessary to compensate such Lender or such L/C Issuer or its holding company, as the case may be, as specified in clause (a)  or (b)  of this Section 3.04 and delivered to the Borrower shall be conclusive absent manifest error. The Borrower shall pay such Lender or such L/C Issuer, as the case may be, the amount shown as due on any such certificate within 10 Business Days after receipt thereof.

(d) Delay in Requests . Failure or delay on the part of any Lender or any L/C Issuer to demand compensation pursuant to the foregoing provisions of this Section 3.04 shall not constitute a waiver of such Lender’s or such L/C Issuer’s right to demand such compensation; provided that the Borrower shall not be required to compensate a Lender or an L/C Issuer pursuant to the foregoing provisions of this Section 3.04 for any increased costs incurred or reductions suffered more than 180 days prior to the date that such Lender or such L/C Issuer, 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 such L/C Issuer’s intention to claim compensation therefor (except that, if the Change in Law giving rise to such increased costs or reductions is retroactive, then the 180-day period referred to above shall be extended to include the period of retroactive effect thereof).

 

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(e) Reserves on Eurodollar Rate Loans . The Borrower shall pay to each Lender, as long as such Lender shall be required to maintain reserves with respect to liabilities or assets consisting of or including Eurocurrency funds or deposits, additional interest on the unpaid principal amount of each Eurodollar Rate Loan equal to the actual costs of such reserves allocated to such Committed Loan by such Lender (as determined by such Lender in good faith, which determination shall be conclusive absent manifest error), which shall be due and payable on each date on which interest is payable on such Committed Loan; provided that the Borrower shall have received at least 10 Business Days’ prior notice (with a copy to the Administrative Agent) of such additional interest from such Lender. If a Lender fails to give notice 10 Business Days prior to the relevant Interest Payment Date, such additional interest shall be due and payable 10 Business Days from receipt of such notice.

Section 3.05 Compensation for Losses . Upon demand of any Lender (with a copy to the Administrative Agent) from time to time, the Borrower shall promptly compensate such Lender for and hold such Lender harmless from any loss, cost or expense incurred by it as a result of:

(a) any continuation, conversion, payment or prepayment of any Committed Loan other than a Base Rate Loan on a day other than the last day of the Interest Period for such Committed Loan (whether voluntary, mandatory, automatic, by reason of acceleration, or otherwise) (including, for avoidance of doubt, any payments pursuant to clause (b)  of Section 2.06 );

(b) any failure by the Borrower (for a reason other than the failure of such Lender to make a Committed Loan) to prepay, borrow, continue or convert any Committed Loan other than a Base Rate Loan on the date or in the amount notified by the Borrower (including by reason of a revocation of notice of prepayment pursuant to the further proviso in the first sentence of Section 2.06(a) ); or

(c) any assignment of a Eurodollar Rate Loan on a day other than the last day of the Interest Period therefor as a result of a request by the Borrower pursuant to Section 10.13 ; including any loss or expense arising from the liquidation or reemployment of funds obtained by it to maintain such Committed Loan or from fees payable to terminate the deposits from which such funds were obtained. The Borrower shall also pay any customary administrative fees charged by such Lender in connection with the foregoing.

For purposes of calculating amounts payable by the Borrower to the Lenders under this Section 3.05 , each Lender shall be deemed to have funded each Eurodollar Rate Loan made by it at the Eurodollar Rate for such Committed Loan by a matching deposit or other borrowing in the London interbank eurodollar market for a comparable amount and for a comparable period, whether or not such Eurodollar Rate Loan was in fact so funded.

Section 3.06 Mitigation Obligations; Replacement of Lenders .

(a) Designation of a Different Lending Office . If any Lender requests compensation under Section 3.04 , or 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 3.01 , or if any Lender gives a notice pursuant to Section 3.02 , then such Lender shall use reasonable efforts to designate a different Lending Office for funding or booking its Committed 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 3.01 or Section 3.04 , as the case may be, in the future, or eliminate the need for the notice pursuant to Section 3.02 , as applicable and (ii) in each case, 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.

 

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(b) Replacement of Lenders . If any Lender requests compensation under Section 3.04 , 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 3.01 , the Borrower may replace such Lender in accordance with Section 10.13 .

Section 3.07 Survival . All of the Borrower’s obligations, and any corresponding Lenders’ obligations, under this Article III shall survive termination of the Aggregate Commitments and repayment of all other Obligations hereunder.

ARTICLE IV

CONDITIONS PRECEDENT TO CREDIT EXTENSIONS

Section 4.01 Effectiveness . The initial Credit Extension under this Agreement shall become available and this Agreement shall become effective on the date that each of the following conditions shall have been satisfied (or waived by each Lender party hereto on the Closing Date):

(a) Loan Documents . The Administrative Agent’s receipt of the following, each of which shall be originals or telecopies (followed promptly by originals) unless otherwise specified, each properly executed by a Responsible Officer of the signing Loan Party (and, in the case of the Convertible Notes Intercreditor Agreement, each of the other parties thereto), each dated the Closing Date (or, in the case of certificates of governmental officials, a recent date before the Closing Date) and each in form and substance satisfactory to the Administrative Agent and each of the Lenders: (i) this Agreement, (ii) the Guaranty, (iii) the Security Agreement, (iv) the Administrative Agent Fee Letter, (v) the Convertible Notes Intercreditor Agreement and (vi) a Note executed by the Borrower in favor of each Lender requesting a Note, in each case, executed by the relevant parties.

(b) Collateral Matters; Title . The Administrative Agent shall have received:

(i) all certificates, agreements or instruments representing or evidencing the Pledged Equity, if any, accompanied by instruments of transfer and undated stock powers endorsed in blank;

(ii) UCC financing statements in appropriate form for filing under the UCC and filings with the United States Patent and Trademark Office and United States Copyright Office;

(iii) certified copies of UCC, tax and judgment lien searches, bankruptcy and pending lawsuit searches or equivalent reports or searches, each of a recent date listing all effective financing statements, lien notices or comparable documents that name any Loan Party as debtor and that are filed in those states in which any Loan Party is organized and such other searches that are required by the Security Agreement or that the Administrative Agent deems necessary or appropriate, none of which encumber the Collateral covered or intended to be covered by the Collateral Documents (other than Liens permitted by Section 7.01 );

(iv) duly authorized and executed Mortgages, supplements or assignments of mortgages, in each case, in form and substance reasonably acceptable to the Administrative Agent, and which shall be sufficient to grant, evidence and perfect first-priority Liens with respect to at least (x) 95% of the PV9 Pricing of the Proved Developed Producing Reserves and (y) 95% of the PV9 Pricing of the Proved Reserves, in each case, attributable to the Engineered Oil and Gas Properties included in the Initial

 

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Engineering Report (without taking into account any adjustments for hedging, together with such other assignments, conveyances, amendments, agreements and other writings each duly authorized and executed) and such certificates and opinions of counsel with respect thereto, in each case as the Administrative Agent shall deem necessary or appropriate; and

(v) title information consistent with usual and customary standards for the geographic regions in which the Engineered Oil and Gas Properties are located, taking into account the size, scope and number of leases and wells of the Borrower and the other Loan Parties; provided that that after giving effect to its receipt of the title information to be provided pursuant to this clause (b)(v) , the Administrative Agent shall be reasonably satisfied with the title information covering Engineered Oil and Gas Properties comprising at least 70% of the total PV9 Pricing of the Proved Reserves attributable to Oil and Gas Properties that are subject to a Mortgage granted pursuant to clause (b)(iv) above.

(c) Corporate Documents; Certificates . The Administrative Agent’s receipt of the following, in each case, in form and substance reasonably satisfactory to the Administrative Agent and each of the Lenders:

(i) a duly authorized and executed certificate of a Responsible Officer of each Loan Party dated the Closing Date, certifying (x) that attached thereto is a true and complete copy of each Organization Document of such Loan Party certified (to the extent applicable) as of a recent date by the Secretary of State of the state of its organization, (y) that attached thereto is a true and complete copy of resolutions duly adopted by such Loan Party authorizing the execution, delivery and performance of the Loan Documents to which such Loan Party is a party and, in the case of the Borrower, the borrowings hereunder, and that such resolutions have not been modified, rescinded or amended and are in full force and effect and (z) as to the incumbency and specimen signature of each officer executing any Loan Document or any other document delivered in connection herewith on behalf of such Loan Party (together with a certificate of another Responsible Officer as to the incumbency and specimen signature of the secretary or assistant secretary executing the certificate in this clause (b)(i) );

(ii) a certificate as to the good standing of each Loan Party (in so-called “long-form” (if available)) as of a recent date, from the applicable Secretary of State (or other applicable Governmental Authority) for the jurisdiction of each such Loan Party’s incorporation or organization;

(iii) a certificate dated the Closing Date and signed by a Responsible Officer of the Borrower, confirming compliance with the conditions precedent set forth in Sections 4.01(g) , (h) , (i) , (j)  and (n) ; and

(iv) a solvency certificate in the form of Exhibit F , dated the Closing Date and signed by the chief financial officer of the Borrower.

(d) Financial Statements; Pro Forma Balance Sheet; Projections . The Administrative Agent and the Lenders shall have received and shall be satisfied with the form and substance of the Initial Financial Statements.

(e) Opinions of Counsel . The Administrative Agent shall have received, on behalf of itself and the Lenders, customary written opinions of (i) Kirkland & Ellis, LLP, counsel for the Loan Parties and (ii) local counsel for the Loan Parties in the States of Colorado, Kansas and Oklahoma, in each case, (x) dated the Closing Date, (y) addressed to the Administrative Agent and the Lenders and (z) covering such matters relating to the Loan Parties, the Loan Documents and the Transactions as the Administrative Agent shall reasonably request.

 

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(f) Evidence of Insurance . The Administrative Agent shall have received evidence that all insurance required to be maintained pursuant to the Loan Documents has been obtained and is in effect, together with the certificates of insurance, naming the Administrative Agent, on behalf of the Lenders, as an additional insured or loss payee, as the case may be, under all insurance policies maintained with respect to the assets and properties of the Loan Parties that constitutes Collateral.

(g) Indebtedness . After giving effect to the Transactions and the other transactions contemplated hereby, the Borrower and its Restricted Subsidiaries shall not have any outstanding Indebtedness other than (i) the Obligations pursuant to the Loan Documents and (ii) other Indebtedness permitted to be incurred and remain outstanding pursuant to Section 7.03 .

(h) Representations and Warranties . Each of the representations and warranties of the Borrower and each other Loan Party contained in Article V of this Agreement or in any other Loan Document, or which are contained in any document furnished at any time under or in connection herewith or therewith, shall be true and correct in all material respects (or if such representation or warranty is qualified by or subject to a “materiality”, “material adverse effect”, “material adverse change” or any similar term or qualification, such representation or warranty shall be true and correct in all respects) on and as of the date of the Closing Date (and immediately after giving effect to the Transactions), except to the extent that such representations and warranties specifically refer to an earlier date, in which case they shall be true and correct, in all material respects(or if such representation or warranty is qualified by or subject to a “materiality”, “material adverse effect”, “material adverse change” or any similar term or qualification, such representation or warranty shall be true and correct in all respects), as of such earlier date.

(i) No Default . At the time of, and immediately after giving effect to the Transactions on the Closing Date and the application of the proceeds of any Credit Extension pursuant to this Agreement, no Default or Event of Default shall have occurred and be continuing on such date.

(j) No Closing Date Material Adverse Effect . Since May 16, 2016, there shall not have occurred a Closing Date Material Adverse Effect.

(k) Minimum Liquidity; Establishment of Post-Restructuring Cash Collateral Account .

(i) At the time of, and immediately after giving effect to, the Transactions on the Closing Date and the application of the proceeds of any Credit Extension pursuant to this Agreement, the Liquidity of the Borrower and its Restricted Subsidiaries shall be no less than $300,000,000.

(ii) Prior to, or substantially contemporaneously with, the effectiveness of this Agreement and the occurrence of the Closing Date, (x) the Borrower shall have established the Post-Restructuring Cash Collateral Account in compliance with the requirements set forth in the definition thereof and (y) such Post-Restructuring Cash Collateral Account shall have a cash balance that is no less than the Minimum Post-Restructuring Cash Collateral Requirement.

(l) USA PATRIOT Act . The Administrative Agent and the Lenders shall have received at least three Business Days prior to the Closing Date, the documentation and information required under applicable “know your customer” and anti-money laundering rules and regulations, including without limitation, the information required under Section 10.17 ; provided that the Administrative Agent or any such Lender shall have requested such documentation and information at least seven days prior to the Closing Date.

 

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(m) No Legal Bar . No requirement of law, order, judgment or decree of any Governmental Authority shall purport to restrain any Lender from making any Credit Extensions to be made by it pursuant to this Agreement. No injunction or other restraining order shall have been issued, shall be pending or noticed with respect to any action, suit or proceeding seeking to enjoin or otherwise prevent the consummation of, or to recover any damages or obtain relief as a result of, the Transactions or the other transactions contemplated by this Agreement or the making (or incurrence) of any Credit Extensions hereunder; provided that any such injunction, other restraining order, suit or proceeding with respect to the Pre-Petition Date Credit Agreement against parties other than the parties to the Pre-Petition Date Credit Agreement shall be excluded for purposes of determining compliance with this clause (m) .

(n) Restructuring and other Transactions; Etc . Each of the following shall have occurred prior to, or shall occur substantially contemporaneously with, the occurrence of effectiveness of this Agreement and the occurrence of the Closing Date:

(i) the Final Confirmation Order shall have been entered and shall be in effect and shall not have been stayed, reversed, modified or amended and shall not be subject to a motion to stay;

(ii) the Transactions shall have been consummated in a manner consistent in all material respects with the Plan and the Restructuring Support Agreement with all conditions set forth therein having been satisfied or waived in accordance with the terms set forth therein;

(iii) a substantial consummation (as defined in Section 1101 of the Bankruptcy Code) of the Chapter 11 Plan shall have occurred or will occur substantially contemporaneously with the Closing Date; and

(iv) the Administrative Agent and each Lender shall have received confirmation in form and substance reasonably satisfactory to it that all conditions set forth in the Chapter 11 Plan have been satisfied or waived and the Chapter 11 Plan has become effective in accordance with its terms.

Without limiting the generality of the provisions of Section 9.04 , for purposes of determining compliance with the conditions specified in this Section 4.01 , each Lender that has signed this Agreement shall be deemed to have consented to, approved or accepted or to be satisfied with, each document or other matter required thereunder to be consented to or approved by or acceptable or satisfactory to a Lender unless the Administrative Agent shall have received notice from such Lender prior to the proposed Closing Date specifying its objection thereto.

Section 4.02 Conditions to All Credit Extensions . The obligation of each Lender to honor any Request for Credit Extension (other than a Committed Loan Notice requesting only a conversion of Committed Loans to the other Type, or a continuation of Eurodollar Rate Loans) is subject to the following conditions precedent:

(a) After giving effect to such Credit Extension and the application by the Administrative Agent of the proceeds thereof, (i) the Total Outstandings shall not exceed the Facility Limit, (ii) the Aggregate Exposure of any Lender shall not exceed the lesser of such Lender’s (x) Commitment and (y) Applicable Percentage of the Facility Limit and (iii) the Outstanding Amount of the L/C Obligations shall not exceed the Letter of Credit Sublimit.

(b) The representations and warranties of the Borrower and each other Loan Party contained in Article V or any other Loan Document, or which are contained in any document furnished at

 

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any time under or in connection herewith or therewith, shall be true and correct in all material respects (or if such representation or warranty is qualified by qualified by or subject to a “materiality”, “material adverse effect”, “material adverse change” or any similar term or qualification, such representation or warranty shall be true and correct in all respects) on and as of the date of such Credit Extension, except to the extent that such representations and warranties specifically refer to an earlier date, in which case they shall be true and correct, in all material respects(or if such representation or warranty is qualified by or subject to a “materiality”, “material adverse effect”, “material adverse change” or any similar term or qualification, such representation or warranty shall be true and correct in all respects), as of such earlier date, and except that for purposes of this Section 4.02 , the representations and warranties contained in clause (a)  of Section 5.05 shall be deemed, from and after the first delivery of financial statements pursuant thereto, to refer to the most recent statements furnished pursuant to clause (a)  of Section 6.01 .

(c) No Default or Event of Default shall exist, or would result from such proposed Credit Extension or from the application of the proceeds thereof.

(d) With respect to any proposed Credit Extension that would occur from or after the first full fiscal quarter ending after the occurrence of the Protected Period Termination Date, immediately after giving effect to such proposed Credit Extension, the Borrower would be in compliance, on a pro forma basis, with each Financial Covenant set forth in Section 7.11 .

(e) The Administrative Agent and, if applicable, the L/C Issuers shall have received a Request for Credit Extension in accordance with the requirements hereof.

Each Request for Credit Extension (other than a Committed Loan Notice requesting only a conversion of Committed Loans to the other Type or a continuation of Eurodollar Rate Loans) submitted by the Borrower shall be deemed to be a representation and warranty that the conditions specified in Section 4.02(a) , Section 4.02(b) Section 4.02(c)  and Section 4.02(d) have been satisfied on and as of the date of the applicable Credit Extension.

ARTICLE V

REPRESENTATIONS AND WARRANTIES

The Borrower, on behalf of itself and each Restricted Subsidiary, represents and warrants to the Administrative Agent and the Lenders that:

Section 5.01 Existence, Qualification and Power . Each Loan Party and each of its Restricted Subsidiaries (a) is duly organized or formed, validly existing and, as applicable, in good standing under the Laws of the jurisdiction of its incorporation or organization, (b) has all requisite power and authority and all requisite governmental licenses, authorizations, consents and approvals to (i) own or lease its assets and carry on its business and (ii) execute, deliver and perform its obligations under the Loan Documents to which it is a party and consummate the Transactions, and (c) is duly qualified and is licensed and, as applicable, in good standing under the Laws of each jurisdiction where its ownership, lease or operation of properties or the conduct of its business requires such qualification or license; except in each case referred to in clause (b)(i)  or (c) , to the extent that failure to do so could not reasonably be expected to have a Material Adverse Effect.

Section 5.02 Authorization; No Contravention . The execution, delivery and performance by each Loan Party of each Loan Document to which such Person is or is to be a party have been duly authorized by all necessary corporate or other organizational action, and do not and will not (a) contravene the terms of any of such Person’s Organization Documents; (b) conflict with or result in any breach or contravention of, or the creation of any Lien under, or require any payment to be made

 

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under (i) any Contractual Obligation that is material to the Loan Parties to which such Person is a party or (ii) any order, injunction, writ or decree of any Governmental Authority or any arbitral award to which such Person or its property is subject; or (c) violate any Law.

Section 5.03 Governmental Authorization; Other Consents . No approval, consent, exemption, authorization, or other action by, or notice to, or filing with, any Governmental Authority or any other Person is necessary or required in connection with (a) the execution, delivery or performance by, or enforcement against, any Loan Party of this Agreement or any other Loan Document, or for the consummation of the Transactions, (b) the grant by any Loan Party of the Liens granted by it pursuant to the Collateral Documents, (c) the perfection or maintenance of the Liens created under the Collateral Documents (including the first-priority nature thereof) or (d) the exercise by the Administrative Agent or the Lenders of their rights under the Loan Documents or the remedies in respect of the Collateral pursuant to the Collateral Documents, except for (i) the authorizations, approvals, actions, notices and filings listed on Schedule 5.03 , all of which have been duly obtained, taken, given or made and are in full force and effect, (ii) authorizations, approvals, actions, notices and filings in connection with the enforcement of pledges of, and the sale of, the Pledged Equity in connection therewith, (iii) authorizations, approvals, actions, notices and filings required in connection with the additional mortgage and security interests required to be granted under this Agreement; (iv) routine authorizations, approvals, actions, notices and filings in the ordinary course of business (e.g. tax filings, annual reports, environmental filings, etc.); (v) authorizations, approvals and consents necessary in connection with the Borrower’s mineral class leases with the general land office of the State of Texas; and (vi) the periodic filing of continuation statements under the UCC, and (vii) authorizations, approvals, actions, notices and filings the failure of which to obtain, take or make could not reasonably be expected to have a Material Adverse Effect.

Section 5.04 Binding Effect . This Agreement has been, and each other Loan Document, when delivered hereunder, will have been, duly executed and delivered by each Loan Party that is party thereto. This Agreement constitutes, and each other Loan Document when so delivered will constitute, a legal, valid and binding obligation of such Loan Party, enforceable against each Loan Party that is party thereto in accordance with its terms.

Section 5.05 Financial Statements; No Material Adverse Effect . ii) The Initial Financial Statements (i) were prepared in accordance with GAAP consistently applied throughout the period covered thereby, except as otherwise expressly noted therein; (ii) fairly present in all material respects the financial condition of the Borrower and its Restricted Subsidiaries as of the date thereof and their results of operations for the period covered thereby in accordance with GAAP consistently applied throughout the period covered thereby, except as otherwise expressly noted therein; and (iii) show, in accordance with and as required by GAAP, all material indebtedness and other material liabilities, direct or contingent, of the Borrower and its Restricted Subsidiaries as of the date thereof, including material liabilities for taxes, material commitments and material Indebtedness.

(a) The unaudited pro forma financial statements delivered by the Borrower pursuant to Section 4.01(d) have, in each case, been prepared in good faith by the Borrower, based on the assumptions stated therein (which assumptions are believed by the Borrower on the Closing Date to be reasonable in light of current conditions and facts then known to the Borrower), are based on the information available to the Borrower as of the date of delivery thereof, accurately reflect all adjustments required to be made to give effect to the Transactions, and present fairly in all material respects the pro forma consolidated financial position and results of operations of the Borrower and its Restricted Subsidiaries as of such date and for such periods, assuming that the Transactions had occurred on such date or as of the beginning of such period, as the case may be.

 

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(b) The forecasts of financial performance of the Borrower and its Restricted Subsidiaries delivered by the Borrower pursuant to Section 4.01(d) have, in each case, been prepared in good faith by the Borrower and based on assumptions believed by the Borrower to be reasonable at the time such forecasts were provided (and on the Closing Date in the case of forecasts provided prior to the Closing Date) (it being recognized, however, that projections as to future events are not to be viewed as facts and that actual results during the period(s) covered by such projections may differ from the projected results and that such differences may be material and that the Loan Parties make no representation that such projections will be realized).

(c) Since December 31, 2015, there has been no event or circumstance, either individually or in the aggregate, that has had or could reasonably be expected to have a Material Adverse Effect.

Section 5.06 Litigation . There are no actions, suits, proceedings, claims or disputes pending or, to the knowledge of the Borrower after due and diligent investigation, threatened, at law, in equity, in arbitration or before any Governmental Authority, by or against the Borrower or any of its Subsidiaries or against any of their properties or revenues that (a) purport to affect or pertain to this Agreement, any other Loan Document or the consummation of the Transactions or (b) except as specifically disclosed in Schedule 5.06 , either individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect, and there has been no change in the status, or financial effect on any Loan Party or any Subsidiary thereof, of the matters described in Schedule 5.06 that could reasonably be expected to have a Material Adverse Effect.

Section 5.07 No Default . Neither any Loan Party nor any Restricted Subsidiary thereof is in default under or with respect to, or a party to, any Contractual Obligation that could, either individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. No Default or Event of Default has occurred and is continuing or would result from the consummation of the transactions contemplated by this Agreement or any other Loan Document.

Section 5.08 Ownership of Property; Liens . iii) Each Loan Party and each of its Restricted Subsidiaries has good record and marketable title in fee simple to, or valid leasehold interests in, all real property necessary or used in the ordinary conduct of its business, except for such defects in title as could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

(a) The property of each Loan Party and each of its Restricted Subsidiaries is subject to no Liens, other than Liens permitted by Section 7.01 .

Section 5.09 Environmental Compliance . iv) The Loan Parties and their respective Subsidiaries are in compliance with all existing Environmental Laws and have not received any claims alleging potential liability or responsibility for violation of any Environmental Law on their respective businesses, operations and properties, except as specifically disclosed in Schedule 5.09 , such Environmental Laws and except for such non-compliance or claims that could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

(a) As of the Closing Date and except (i) as otherwise set forth in Schedule 5.09 or (ii) to the extent the same could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect: none of the properties currently or formerly owned or operated by any Loan Party or any of its Subsidiaries is listed or proposed for listing on the National Priorities List under 42 USC § 9605(a)(8)(B) or on the CERCLIS or any analogous foreign, state or local list or is adjacent to any such property; there is no asbestos or asbestos-containing material on any property currently owned or operated by any Loan Party or any of its Subsidiaries; and Hazardous Materials have not been released, discharged or disposed of on any property currently or formerly owned or operated by any Loan Party or any of its Subsidiaries in quantities or in a manner as to create Environmental Liability.

 

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(b) As of the Closing Date and except (i) as otherwise set forth in Schedule 5.09 or (ii) to the extent the same could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect: neither any Loan Party nor any of its Subsidiaries is undertaking, and has not completed, either individually or together with other potentially responsible parties, any investigation or assessment or remedial or response action relating to any actual or threatened release, discharge or disposal of Hazardous Materials at any site, location or operation, either voluntarily or pursuant to the order of any Governmental Authority or the requirements of any Environmental Law that is reasonably expected to result in material Environmental Liability to any Loan Party or any of its Subsidiaries; and all Hazardous Materials generated, used, treated, handled or stored at, or transported to or from, any property currently or formerly owned or operated by any Loan Party or any of its Subsidiaries have been disposed of in a manner not reasonably expected to result in material Environmental Liability to any Loan Party or any of its Subsidiaries.

Section 5.10 Insurance . The properties of the Borrower and its Restricted Subsidiaries are insured (a) with financially sound and reputable insurance companies in such amounts, with such limitations or deductibles, against such risks, and in such form as are customarily maintained by companies of established repute engaged in the same or similar businesses operating in the same or similar locations and/or (b) through a system or systems of self-insurance which are in accord with sound practices of similarly situated corporations of established reputation maintaining such systems and with respect to which the Borrower or such Restricted Subsidiary maintain adequate insurance reserves in accordance with GAAP and in accordance with sound actuarial and insurance principles.

Section 5.11 Taxes . The Borrower and its Subsidiaries have filed all Federal, state and other material tax returns and reports required to be filed, and have paid all Federal, state and other material taxes, assessments, fees and other governmental charges levied or imposed upon them or their properties, income or assets otherwise due and payable, except those which are being contested in good faith by appropriate proceedings diligently conducted and for which adequate reserves have been provided in accordance with GAAP. Neither the Borrower nor any Subsidiary has received written notice of any proposed tax assessment against it that could reasonably be expected to have a Material Adverse Effect.

Section 5.12 ERISA Compliance . v) Each Plan is in compliance in all material respects with the applicable provisions of ERISA, the Code and other Federal or state Laws except for such events of noncompliance which could not, in the aggregate, reasonably be expected to result in a Material Adverse Effect.

(a) There are no pending or, to the best knowledge of the Borrower, threatened claims, actions or lawsuits, or action by any Governmental Authority, with respect to any Plan that could reasonably be expected to have a Material Adverse Effect. There has been no prohibited transaction or violation of the fiduciary responsibility rules with respect to any Plan that has resulted or could reasonably be expected to result in a Material Adverse Effect.

(b) Except to the extent the same could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect: (i) no ERISA Event has occurred or is reasonably expected to occur; (ii) no Pension Plan has any Unfunded Pension Liability; (iii) neither the Borrower nor any ERISA Affiliate has incurred, or reasonably expects to incur, any liability under Title IV of ERISA with respect to any Pension Plan (other than premiums due and not delinquent under Section 4007 of ERISA); (iv) neither the Borrower nor any ERISA Affiliate has incurred, or reasonably expects to incur, any liability (and no event has occurred which, with the giving of notice under

 

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Section 4219 of ERISA, would result in such liability) under Section 4201 or 4243 of ERISA with respect to a Multiemployer Plan; and (v) neither the Borrower nor any ERISA Affiliate has engaged in a transaction that could reasonably be expected to be subject to Section 4069 or 4212(c) of ERISA.

Section 5.13 Subsidiaries; Equity Interests; Loan Parties . As of the Closing Date, no Loan Party has any Subsidiaries other than those specifically disclosed in Part (a) of Schedule 5.13 , and all of the outstanding Equity Interests in such Subsidiaries have been validly issued, are (in the case of corporate securities) fully paid and non-assessable and are owned by a Loan Party in the amounts specified on Part (a) of Schedule 5.13 free and clear of all Liens except those created under the Collateral Documents or permitted by Section 7.01 . As of the Closing Date, no Loan Party has any equity investments in any other corporation or entity other than those specifically disclosed in Part (b) of Schedule 5.13 . Set forth on Part (c) of Schedule 5.13 is a complete and accurate list of all Loan Parties as of the Closing Date, showing as of the Closing Date (as to each Loan Party) the jurisdiction of its incorporation, the address of its principal place of business and its U.S. taxpayer identification number or, in the case of any non-U.S. Loan Party that does not have a U.S. taxpayer identification number, its unique identification number issued to it by the jurisdiction of its incorporation.

Section 5.14 Margin Regulations; Investment Company Act . (a) Neither the making of any Credit Extension hereunder nor the use of the proceeds thereof will violate Regulation T, Regulation U or Regulation X.

(b) No Loan Party or Restricted Subsidiary of a Loan Party is an “investment company” within the meaning of the Investment Company Act of 1940.

Section 5.15 Disclosure . No report, financial statement, certificate or other information furnished in writing by or on behalf of any Loan Party to the Administrative Agent or any Lender in connection with the transactions contemplated hereby and the negotiation of this Agreement or delivered hereunder or under any other Loan Document (in each case as modified or supplemented by other information so furnished), when taken together with all other information previously furnished or that is publicly available, contains as of the date so furnished 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 materially 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 by it to be reasonable at the time. There are no statements or conclusions in any Engineering Report which are based upon or include, as of the date of such Engineering Report, misleading information or fail to take into account, as of the date of such Engineering Report, material information regarding the matters reported therein, it being understood that projections concerning volumes attributable to the Oil and Gas Properties and production and cost estimates contained in each Engineering Report are necessarily based upon professional opinions, estimates and projections and that the Borrower does not warrant that such opinions, estimates and projections will ultimately prove to have been accurate.

Section 5.16 Compliance with Laws . Each Loan Party and each Subsidiary thereof is in compliance in all material respects with the requirements of all Laws and all orders, writs, injunctions and decrees applicable to it or to its properties, except in such instances in which (a) such requirement of Law or order, writ, injunction or decree is being contested in good faith by appropriate proceedings diligently conducted or (b) the failure to comply therewith, either individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect.

Section 5.17 Solvency . The Loan Parties are, together with their Subsidiaries on a Consolidated basis, Solvent.

 

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Section 5.18 Casualty, Etc . Neither the businesses nor the properties of any Loan Party or any of its Restricted Subsidiaries are affected by any fire, explosion, accident, strike, lockout or other labor dispute, drought, storm, hail, earthquake, embargo, act of God or of the public enemy or other casualty (whether or not covered by insurance) that, either individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect.

Section 5.19 Labor Matters . There are no collective bargaining agreements or Multiemployer Plans covering the employees of the Borrower or any of its Restricted Subsidiaries as of the Closing Date and neither the Borrower nor any Restricted Subsidiary has suffered any strikes, walkouts, work stoppages or other material labor difficulty within the last five years that, either individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect.

Section 5.20 Collateral Documents . The provisions of the Collateral Documents are effective to create in favor of the Administrative Agent for the benefit of the Secured Parties a legal, valid and enforceable first-priority Lien (subject to Liens permitted by Section 7.01 ) on all right, title and interest of the respective Loan Parties in the Collateral described therein. Except as expressly contemplated hereby and by the Collateral Documents, no filing or other action will be necessary to perfect or protect such Liens.

Section 5.21 Engineered Oil and Gas Properties .

(a) The Borrower or another Loan Party has good and defensible title to all Engineered Oil and Gas Properties, free and clear of all Liens except as permitted pursuant to Section 7.01 and Immaterial Title Deficiencies. With the exception of Immaterial Title Deficiencies, all such Oil and Gas Properties are valid, subsisting, and in full force and effect, and all material rentals, royalties, and other amounts due and payable in respect thereof have been duly paid. Without regard to any consent or non-consent provisions of any joint operating agreement covering any of the Loan Parties’ Proved Reserves, and with the exception of Immaterial Title Deficiencies, the Loan Parties’ share of (a) the costs for each Engineered Oil and Gas Property is not greater than the decimal fraction set forth in the most recent Engineering Report, before and after payout, as the case may be, and described therein by the respective designations “working interests”, “WI”, “gross working interest”, “GWI” or similar terms and (b) production from, allocated to, or attributed to each Engineered Oil and Gas Property is not less than the decimal fraction set forth in the most recent Engineering Report, before and after payout, as the case may be, and described therein by the designations “net revenue interest”, “NRI” or similar terms. Except to the extent constituting an Immaterial Title Deficiency, each well drilled in respect of each Engineered Oil and Gas Property described in the Engineering Report (y) is capable of, and is presently, producing Hydrocarbons in commercial quantities, and the applicable Loan Party is currently receiving payments for its share of production, with no material funds in respect of any thereof being presently held in suspense, other than any such funds being held in suspense pending delivery of appropriate division orders and other usual and customary suspense accounts, and (z) has been drilled, bottomed, completed, and operated in compliance in all material respects with all applicable Laws and no such well which is currently producing hydrocarbons is subject to any penalty in production by reason of such well having produced in excess of its allowable production. To the Borrower’s knowledge, there are no unrecorded assignments or conveyances affecting the Engineered Oil and Gas Properties or any Loan Party’s interest therein that would result in the Borrower or its Restricted Subsidiaries having a WI or NRI that is less than the WI/NRI set forth in the Engineering Report, except the interests of Sierra Madera CO2 Pipeline LP and Symbol Energy Inc., which constitute Immaterial Title Deficiencies.

(b) The Engineered Oil and Gas Properties (and all properties unitized therewith) are, in all material respects, being (and, to the extent the same could materially and adversely affect the ownership or operation of the Engineered Oil and Gas Properties after the date hereof, to the

 

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applicable Loan Party’s knowledge, have in the past been) maintained, operated and developed in a good and workmanlike manner, in accordance with prudent industry standards and in conformity with all applicable Laws and in conformity with all oil, gas or other mineral leases and other contracts and agreements forming a part of the Engineered Oil and Gas Property and in conformity with the Permitted Encumbrances. No Engineered Oil and Gas Property is subject to having allowable production after the date hereof 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) prior to the date hereof and none of the wells located on the Engineered Oil and Gas Properties (or properties unitized therewith) are or will be deviated from the vertical more than the maximum permitted by applicable Laws, regulations, rules and orders, and such wells are bottomed under and producing from, with the well bores wholly within, the Engineered Oil and Gas Properties (or, in the case of wells located on properties unitized therewith, such unitized properties). There are no dry holes, or otherwise inactive wells, located on the Engineered Oil and Gas Properties or on lands pooled or unitized therewith, except for wells that have been properly plugged and abandoned or for which appropriate plugging and abandonment has been scheduled. Each Loan Party has all material governmental licenses and permits reasonably necessary or appropriate to own and operate its Engineered Oil and Gas Properties, and no Loan Party has received notice in writing of any material violations in respect of any such licenses or permits.

Section 5.22 Sale of Production . Except (x) as of the Closing Date, as set forth in Schedule 5.22 , or (y) thereafter, as disclosed in writing to the Administrative Agent and the Lenders and reflected in the most recent determination of the Borrowing Base, or (z) for matters that constitute Immaterial Title Deficiencies:

(a) No Engineered Oil and Gas Property is subject to any material contractual or other arrangement (i) whereby payment for production is or can be deferred for a substantial period after the month in which such production is delivered (in the case of oil, not in excess of 60 days, and in the case of gas, not in excess of 90 days) or (ii) whereby payments are made to a Loan Party other than by checks, drafts, wire transfer advises or other similar writings, instruments or communications for the immediate payment of money;

(b) (i) No Engineered Oil and Gas Property is subject to any material contractual or other arrangement for the sale, processing or transportation of production (or otherwise related to the marketing of production) which cannot be canceled on 120 days’ (or less) notice and (ii) all material contractual or other arrangements for the sale, processing or transportation of production (or otherwise related to the marketing of production) are bona fide arm’s length transactions made with third parties not affiliated with Loan Parties;

(c) Each Loan Party is presently receiving a price for all production (other than gas used for operations at a field location) from (or attributable to) each Engineered Oil and Gas Property covered by a production sales contract or marketing contract that is computed in accordance with the terms of such contract, and no Loan Party is having deliveries of production from such Engineered Oil and Gas Property curtailed substantially below such property’s delivery capacity, except for curtailments caused (i) by an act or event of force majeure, or (ii) by routine maintenance requirements in the ordinary course of business;

(d) No Loan Party, nor, to such Loan Party’s knowledge, any Loan Party’s predecessors in title, has received prepayments (including payments for gas not taken pursuant to “take or pay” or other similar arrangements) for any oil, gas or other hydrocarbons produced or to be produced from any Engineered Oil and Gas Properties after the date hereof;

 

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(e) No Engineered Oil and Gas Property is subject to any “take or pay” or other similar arrangement (i) which can be satisfied in whole or in part by the production or transportation of gas from other properties or (ii) as a result of which production from any Engineered Oil and Gas Property may be required to be delivered to one or more third parties without payment (or without full payment) therefor as a result of payments made, or other actions taken, with respect to other properties;

(f) There is no Engineered Oil and Gas Property with respect to which any Loan Party, or, to such Loan Party’s knowledge, any Loan Party’s predecessors in title, has, prior to the date hereof, taken more (“overproduced”), or less (“underproduced”), in any material respect, gas from the lands covered thereby (or pooled or unitized therewith) than its ownership interest in such Engineered Oil and Gas Property would entitle it to take; and as of the Closing Date, Schedule 5.22 accurately reflects, in all material respects, for each well or unit with respect to which such an imbalance is shown thereon to exist, (i) whether such Loan Party is overproduced or underproduced and (ii) the volumes (in cubic feet or British thermal units) of such overproduction or underproduction and the effective date of such information;

(g) No Engineered Oil and Gas Property is subject to a gas balancing arrangement under which one or more third parties may take a portion of the production attributable to such Engineered Oil and Gas Property without payment (or without full payment) therefor as a result of production having been taken from, or as a result of other actions or inactions with respect to, other properties; and

(h) No Engineered Oil and Gas Property is subject at the present time to any regulatory refund obligation and, to such Loan Party’s knowledge, no facts exist which might cause the same to be imposed.

Section 5.23 OFAC .

(a) Neither the Borrower, nor any of its Subsidiaries, nor, to its knowledge, any director, officer, employee, agent, affiliate or representative thereof, is an individual or entity that is, or is owned or controlled by any individual or entity that is (i) currently the subject or target of any Sanctions or (ii) located, organized or resident in a Designated Jurisdiction.

(b) The Borrower and its Subsidiaries have conducted their businesses in compliance in all material respects with Sanctions and have instituted and maintained policies and procedures designed to promote and achieve compliance with such Sanctions or any Laws related thereto.

Section 5.24 Anti-Corruption Laws . The Borrower and its Subsidiaries have conducted their businesses in compliance in all material respects with applicable anti-corruption Laws (including FCPA) and have instituted and maintained policies and procedures designed to promote and achieve compliance with such Laws.

Section 5.25 PATRIOT Act . The Borrower and its Subsidiaries are in compliance in all material respects with all applicable anti-money laundering Laws and regulations, including without limitation the Bank Secrecy Act, as amended by Title III of the USA PATRIOT Act (the “ PATRIOT Act ”).

 

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ARTICLE VI

AFFIRMATIVE COVENANTS

So long as any Lender shall have any Commitment hereunder, any Committed Loan or other Obligation owing to any Lender or to the Administrative Agent hereunder shall remain unpaid or unsatisfied, or any Letter of Credit shall remain outstanding and not fully Cash Collateralized, the Borrower shall, and shall (except in the case of the covenants set forth in Sections 6.01 , 6.02 , and 6.03 ) cause each Restricted Subsidiary to:

Section 6.01 Financial Statements . Deliver to the Administrative Agent and the Lenders as contemplated by the last paragraph of Section 6.02 :

(a) as soon as available, but in any event within 90 days after the end of each fiscal year of the Borrower, a consolidated balance sheet of the Borrower and its Subsidiaries as at the end of such fiscal year, and the related consolidated and consolidating statements of income or operations, shareholders’ equity and cash flows for such fiscal year, setting forth in each case in comparative form the figures for the previous fiscal year, all in reasonable detail and prepared in accordance with GAAP, such consolidated statements to be audited and accompanied by a report and opinion of a Registered Public Accounting Firm of nationally recognized standing, which report and opinion shall be prepared in accordance with generally accepted auditing standards and applicable Securities Laws and, in the case of any such report and opinion delivered with respect to the fiscal year of the Borrower ending December 31, 2017 and with respect to each fiscal year thereafter, shall not be subject to any “going concern” or like qualification or exception or any qualification or exception as to the scope of such audit (except for any such going concern qualification pertaining to the maturity of the credit facility provided pursuant to this Agreement within 12 months of the relevant audit) or with respect to the absence of any material misstatement, and such consolidating statements to be certified by the chief executive officer, chief financial officer, treasurer or controller of the Borrower to the effect that such statements are fairly stated in all material respects when considered in relation to the consolidated financial statements of the Borrower and its Subsidiaries;

(b) as soon as available, but in any event within 45 days after the end of each of the first three fiscal quarters of each fiscal year of the Borrower, a consolidated balance sheet of the Borrower and its Subsidiaries as at the end of such fiscal quarter, and the related consolidated statements of income or operations, shareholders’ equity and cash flows for such fiscal quarter and for the portion of the Borrower’s fiscal year then ended, setting forth in each case in comparative form the figures for the corresponding fiscal quarter of the previous fiscal year and the corresponding portion of the previous fiscal year, all in reasonable detail, certified by the chief executive officer, chief financial officer, treasurer or controller of the Borrower as fairly presenting in all material respects the financial condition, results of operations, shareholders’ equity and cash flows of the Borrower and its Subsidiaries in accordance with GAAP, subject only to normal year-end audit adjustments and the absence of footnotes;

(c) if there shall be any Unrestricted Subsidiaries at the end of any fiscal period in respect of which any consolidated financial statements referred to in Sections 6.01(a)  and (b)  above is delivered, concurrently with such delivery, the related consolidating financial statements reflecting the adjustments necessary to eliminate the accounts of such Unrestricted Subsidiaries from such consolidated financial statements;

(d) as soon as available, but in any event within 90 days after the end of each fiscal year of the Borrower, an annual business plan and budget of the Borrower and its Subsidiaries on a Consolidated basis, including forecasts prepared by management of the Borrower, in form satisfactory to the Administrative Agent and the Majority Lenders, of consolidated balance sheets and statements of income or operations of the Borrower and its Subsidiaries on a monthly basis for the immediately following fiscal year;

 

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(e) by April 1 of each year, commencing April 1, 2017, an Engineering Report prepared as of the preceding January 1 by one or more of Netherland, Sewell & Associates, DeGolyer & MacNaughton, or other independent petroleum engineers chosen by the Borrower and reasonably acceptable to the Administrative Agent, concerning all Oil and Gas Properties owned by any Loan Party which are located within the geographic boundaries of the United States and which have attributable to them Proved Reserves. Such report shall be reasonably satisfactory to the Administrative Agent, shall be prepared using PV9 Pricing, shall take into account any “overproduced” status under gas balancing arrangements, and shall contain information and analysis consistent in form and scope in all material respects to that contained in the Initial Engineering Report. Such report shall distinguish (or shall be delivered together with a certificate from an appropriate officer of the Borrower which distinguishes) (i) the Oil and Gas Properties owned by each Loan Party and (ii) those properties treated in the report which are Collateral from those properties treated in the report which are not Collateral;

(f) by October 1 of each year, commencing October 1, 2016, an Engineering Report prepared as of the preceding July 1 (or the last day of the preceding calendar month in the case of a Special Determination) by petroleum engineers who are employees of the Borrower (or, at the option of Borrower, by the independent engineers named above or selected in accordance with clause (e)  above), together with an accompanying report on property sales, property purchases and changes in categories that have occurred since the date of the prior Engineering Report, both in the same form and scope as the reports in clause (e)  above; and

(g) by April 1 and October 1 of each year, (i) a drilling and completion capital budget with respect to the next two succeeding fiscal quarters, setting forth in reasonable detail, the projected drilling and development plan, related drilling and completion costs and the anticipated well performance and anticipated internal rates of return with respect to each budgeted drilling and completion project, in each case, as prepared in good faith by the Borrower based on assumptions believed by the Borrower to be reasonable at the time such budget is provided and (ii) a summary of actual drilling and completion projects undertaken, the related drilling and completion costs and the well performance and internal rates of return with respect to the undertaken drilling and completion projects, in each case, as compared against the last budget provided pursuant to the immediately preceding clause (g)(i) .

As to any information contained in materials furnished pursuant to Section 6.02(c) , the Borrower shall not be separately required to furnish such information under clause (a)  or (b)  above, but the foregoing shall not be in derogation of the obligation of the Borrower to furnish the information and materials described in clauses (a)  and (b)  above at the times specified therein.

Section 6.02 Certificates; Other Information . Deliver to the Administrative Agent and the Lenders as contemplated by the last paragraph of this Section 6.02 :

(a) concurrently with the delivery of the financial statements referred to in Sections 6.01(a)  and (b) , a duly completed Compliance Certificate signed by the chief executive officer, chief financial officer, treasurer or controller of the Borrower;

(b) promptly after any request by the Administrative Agent or any Lender, copies of any detailed audit reports, management letters or recommendations submitted to the board of directors (or the audit committee of the board of directors) of the Borrower by independent accountants in connection with the accounts or books of the Borrower or any Restricted Subsidiary, or any audit of any of them;

(c) promptly after the same are available, copies of all annual, regular, periodic and special reports, registration statements and proxy statements which the Borrower may file or be required to file with the SEC under Sections 13, 14 or 15(d) of the Securities Exchange Act of 1934, or with any national securities exchange, and in any case not otherwise required to be delivered to the Administrative Agent pursuant hereto;

 

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(d) promptly after the furnishing thereof, copies of any statement or report furnished to any holder of debt securities of any Loan Party or any Restricted Subsidiary thereof pursuant to the terms of any indenture, loan or credit or similar agreement relating to Indebtedness with a principal amount in excess of the Threshold Amount and not otherwise required to be furnished to the Lenders pursuant to Section 6.01 or any other clause of this Section 6.02 ;

(e) promptly, and in any event within five Business Days after receipt thereof by any Loan Party or any Subsidiary thereof, copies of each notice or other correspondence received from the SEC (or comparable agency in any applicable non-U.S. jurisdiction) concerning any investigation or possible investigation by such agency regarding financial or other operational results of any Loan Party or any Subsidiary thereof;

(f) not later than five Business Days after receipt thereof by any Loan Party or any Restricted Subsidiary thereof, copies of all notices, requests and other documents (including amendments, waivers and other modifications) so received under or pursuant to any instrument, indenture, loan or credit or similar agreement relating to Indebtedness with a principal amount in excess of the Threshold Amount and regarding or related to any breach or default by any party thereto or any other event that could reasonably be expected to materially impair the value of the interests or the rights of any Loan Party or otherwise have a Material Adverse Effect and, from time to time upon request by the Administrative Agent, such information and reports regarding such instruments, indentures and loan and credit and similar agreements as the Administrative Agent may reasonably request;

(g) promptly after the assertion or occurrence thereof, notice of any action or proceeding against or of any noncompliance by any Loan Party or any of its Subsidiaries with any Environmental Law or Environmental Permit that could (i) reasonably be expected to have a Material Adverse Effect or (ii) cause any property described in the Mortgages to be subject to any materially adverse restrictions on ownership, occupancy, use or transferability under any Environmental Law;

(h) promptly, such additional information regarding the business, financial or corporate affairs of the Borrower or any Restricted Subsidiary, or compliance with the terms of the Loan Documents, as the Administrative Agent or any Lender may from time to time reasonably request.

Documents required to be delivered pursuant to Section 6.01(a)  or (b)  or Section 6.02(c)  (to the extent any such documents are included in materials otherwise filed with the SEC) may be delivered electronically and if so delivered, shall be deemed to have been delivered on the date (i) on which the Borrower posts such documents, or provides a link thereto on the Borrower’s website on the Internet at the website address listed on Schedule 10.02 or (ii) on which such documents are posted on the Borrower’s behalf on an Internet or intranet website, if any, to which each Lender and the Administrative Agent have access (whether a commercial, third-party website or whether sponsored by the Administrative Agent); provided that: (A) the Borrower shall deliver paper copies of such documents to the Administrative Agent or any Lender that requests the Borrower to deliver such paper copies until a written request to cease delivering paper copies is given by the Administrative Agent or such Lender and (B) the Borrower shall notify the Administrative Agent and each Lender (by telecopier, facsimile or electronic mail) of the posting of any such documents and provide to the Administrative Agent by electronic mail electronic versions (i.e., soft copies) of such documents. Notwithstanding anything contained herein, in every instance the Borrower shall be required to provide paper copies of the Compliance Certificates required by Section 6.02(a)  to the Administrative Agent. Except for such Compliance Certificates, the Administrative Agent shall have no obligation to request the delivery or to

 

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maintain copies of the documents referred to above, and in any event shall have no responsibility to monitor compliance by the Borrower with any such request for delivery, and each Lender shall be solely responsible for requesting delivery to it or maintaining its copies of such documents.

The Borrower hereby acknowledges that the Administrative Agent and/or the Arranger will make available to the Lenders and the L/C Issuers materials and/or information provided by or on behalf of the Borrower hereunder (collectively, the “ Borrower Materials ”) by posting the Borrower Materials on SyndTrak or another similar electronic system (the “ Platform ”).

Section 6.03 Notices . Promptly notify the Administrative Agent and each Lender:

(a) of the occurrence of any Default or Event of Default known to any Responsible Officer, which notice shall specify the nature thereof, the period of existence thereof and what action the Borrower proposed to take with respect thereto;

(b) of any matter (other than matters of a general economic or industry-specific nature) that has resulted or could reasonably be expected to result in a Material Adverse Effect, including (i) breach or non-performance of, or any default under, a Contractual Obligation of the Borrower or any Subsidiary; (ii) any dispute, litigation, investigation, proceeding or suspension between the Borrower or any Subsidiary and any Governmental Authority; or (iii) the commencement of, or any material development in, any litigation or proceeding affecting the Borrower or any Subsidiary, including pursuant to any applicable Environmental Laws;

(c) of the occurrence of any ERISA Event that would result in a Material Adverse Effect;

(d) of any material change in accounting policies or financial reporting practices by the Borrower or any Restricted Subsidiary; and

(e) of the (i) incurrence or issuance of any Indebtedness which would require an adjustment to the Borrowing Base pursuant to Section 2.05(c) , (ii) occurrence of any Disposition of, or Casualty Event with respect to, property or assets which would require, or could reasonably be expected to require, an adjustment to the Borrowing Base pursuant to Section 2.05(d)  and (iii) completion of any early termination or unwinding of, or the creation of any off-setting position in respect of, any Hedge Transaction which would require, or could reasonably be expected to require, an adjustment to the Borrowing Base pursuant to Section 2.05(e) .

Each notice pursuant to this Section 6.03 (other than Section 6.03(e) ) shall be accompanied by a statement of a Responsible Officer of the Borrower setting forth details of the occurrence referred to therein and stating what action the Borrower has taken and proposes to take with respect thereto. Each notice pursuant to Section 6.03(a)  shall describe with particularity any and all provisions of this Agreement and any other Loan Document that have been breached.

Section 6.04 Payment of Obligations . Pay and discharge as the same shall become due and payable, (a) all tax liabilities, assessments and governmental charges or levies upon it or its properties or assets, unless the same are being contested in good faith by appropriate proceedings diligently conducted and adequate reserves in accordance with GAAP are being maintained by the Borrower or such Restricted Subsidiary, except for such amounts that, individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect; (b) all lawful claims which, if unpaid, would by Law become a Lien (other than any Lien permitted exist in accordance with Section 7.01 ) upon its property.

 

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Section 6.05 Preservation of Existence, Etc . (a) Preserve, renew and maintain in full force and effect its legal existence and good standing under the Laws of the jurisdiction of its organization except in a transaction permitted by Section 7.04 or Section 7.05 ; (b) take all reasonable action to maintain all rights, privileges, permits, licenses and franchises necessary or desirable in the normal conduct of its business, except to the extent that failure to do so could not reasonably be expected to have a Material Adverse Effect; and (c) preserve or renew all of its registered patents, trademarks, trade names and service marks, the non-preservation of which could reasonably be expected to have a Material Adverse Effect.

Section 6.06 Maintenance of Properties . (a) Maintain, preserve and protect all of its material properties and equipment necessary in the operation of its business in good working order and condition, ordinary wear and tear excepted; (b) make all necessary repairs thereto and renewals and replacements thereof except where the failure to do so could not reasonably be expected to have a Material Adverse Effect; and (c) use the standard of care typical in the industry in the operation and maintenance of its facilities.

Section 6.07 Maintenance of Insurance . vi) Maintain (at its own expense) insurance for its property with financially sound and reputable insurance companies in such amounts, with such limitations or deductibles, against such risks, and in such form as are customarily maintained by companies of established repute engaged in the same or similar businesses operating in the same or similar locations; provided , however , that in lieu of any such insurance, the Borrower or any of its Restricted Subsidiaries may maintain a system or systems of self-insurance which are in accord with sound practices of similarly situated corporations of established reputation maintaining such systems and with respect to which the Borrower or such Restricted Subsidiary shall maintain adequate insurance reserves in accordance with GAAP and in accordance with sound actuarial and insurance principles. All insurance policies covering Collateral shall be endorsed (i) to provide for payment of losses to the Administrative Agent as its interests may appear, (ii) to provide that such policies may not be canceled or reduced or affected in any material manner for any reason without ten days prior notice to the Administrative Agent, and (iii) to provide for any other matters specified in any applicable Collateral Document. Each Loan Party shall at all times maintain insurance against its liability for injury to persons or property with financially sound and reputable insurers in such amounts, with such limitations or deductibles, against such risks, and in such form as are customarily maintained by companies of established repute engaged in the same or similar businesses operating in the same or similar locations.

(a) Reimbursement under any liability insurance maintained by Loan Parties pursuant to this Section 6.07 may be paid directly to the Person who has incurred the liability covered by such insurance. With respect to any loss involving damage to Collateral, each Loan Party will make or cause to be made the necessary repairs to or replacements of such Collateral, and any proceeds of insurance maintained by each Loan Party pursuant to this Section 6.07 shall be paid to such Loan Party by the Administrative Agent as reimbursement for the costs of such repairs or replacements as such repairs or replacements are made or acquired; provided that the Administrative Agent shall be entitled (but not obligated) to retain and apply such proceeds as Collateral during the continuance of any Event of Default.

Section 6.08 Compliance with Laws . Comply in all material respects with the requirements of all Laws and all orders, writs, injunctions and decrees applicable to it or to its business or property, except in such instances in which (a) such requirement of Law or order, writ, injunction or decree is being contested in good faith by appropriate proceedings diligently conducted or (b) the failure to comply therewith could not reasonably be expected to have a Material Adverse Effect.

Section 6.09 Books and Records . (a) Maintain proper books of record and account, in which full, true and correct entries in conformity with GAAP consistently applied shall be made of all financial

 

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transactions and matters involving the assets and business of the Borrower or such Restricted Subsidiary, as the case may be and (b) maintain such books of record and account in material conformity with all applicable requirements of any Governmental Authority having regulatory jurisdiction over the Borrower or such Restricted Subsidiary, as the case may be.

Section 6.10 Inspection Rights . Permit representatives and independent contractors of the Administrative Agent and each Lender to visit and inspect any of its properties, to examine its corporate, financial and operating records, and make copies thereof or abstracts therefrom, and to discuss its affairs, finances and accounts with its directors, officers, and independent public accountants, all at the expense of the Borrower and at such reasonable times during normal business hours and as often as may be reasonably desired, upon reasonable advance notice to the Borrower; provided , however , that when an Event of Default exists the Administrative Agent or any Lender (or any of their respective representatives or independent contractors) may do any of the foregoing at the expense of the Borrower at any time during normal business hours and without advance notice.

Section 6.11 Use of Proceeds . The Borrower shall apply the proceeds of the Credit Extensions for general corporate purposes, including to provide working capital for the Borrower and its Subsidiaries, the issuance of letters of credit, capital expenditures and acquisitions by the Borrower and its Subsidiaries of oil and gas properties and other assets related to the exploration, production and development of oil and gas properties.

Section 6.12 Covenant to Guarantee Obligations and Give Security . (a) Upon the formation or acquisition of any new direct or indirect wholly-owned Subsidiary (excluding (x) any CFC or any Subsidiary that is held directly or indirectly by a CFC, (y) any Unrestricted Subsidiary and (z) any Immaterial Subsidiary (except that up to 66% of the Equity Interest in a CFC held directly by the Borrower or any Subsidiary, other than a Subsidiary described in clause (x) , (y)  or (z)  above, is subject to pledge as contemplated by clause (ii)  below)) by any Loan Party, then the Borrower shall, at the Borrower’s expense:

(i) within 20 days after such formation or acquisition (or such longer period as the Administrative Agent may in its discretion approve), cause such Subsidiary, and cause each direct and indirect parent of such Subsidiary (if it has not already done so), to duly execute and deliver to the Administrative Agent a guaranty or guaranty supplement, in form and substance reasonably satisfactory to the Administrative Agent, guaranteeing the other Loan Parties’ obligations under the Loan Documents;

(ii) subject in the case of Oil and Gas Properties to Section 6.12(b) , within 30 days after such formation or acquisition (or such longer period as the Administrative Agent may in its discretion approve), cause such Subsidiary and each direct and indirect parent of such Subsidiary (if it has not already done so) to duly execute and deliver to the Administrative Agent deeds of trust, trust deeds, deeds to secure debt, mortgages, leasehold mortgages, leasehold deeds of trust, Security Agreement Supplements and other security and pledge agreements, as specified by and in form and substance reasonably satisfactory to the Administrative Agent (including delivery of all Pledged Equity in and of such Subsidiary, and other instruments required under the Security Agreement) securing payment of all the Obligations of such Subsidiary or such parent, as the case may be, under the Loan Documents and constituting Liens on all such real and personal properties; provided , however , that notwithstanding the foregoing, neither the Borrower nor any Subsidiary will be required to grant a security interest in the Equity Interest of any (i) CFC in excess of 66% of the Equity Interest of such CFC, (ii) Immaterial Subsidiary or (iii) Unrestricted Subsidiary;

(iii) subject in the case of Oil and Gas Properties to Section 6.12(b) , within 30 days after such formation or acquisition (or such longer period as the Administrative Agent may in its

 

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discretion approve), cause such Subsidiary and each direct and indirect parent of such Subsidiary (if it has not already done so) to take whatever action (including the recording of mortgages, the filing of UCC financing statements, the giving of notices and the endorsement of notices on title documents) may be necessary or advisable in the opinion of the Administrative Agent to vest in the Administrative Agent (or in any representative of the Administrative Agent designated by it) valid and subsisting Liens on the properties purported to be subject to the deeds of trust, trust deeds, deeds to secure debt, mortgages, leasehold mortgages, leasehold deeds of trust, Security Agreement Supplements and security and pledge agreements delivered pursuant to this Section 6.12 , enforceable against all third parties in accordance with their terms; and

(iv) within 60 days after such formation or acquisition (or such longer period as the Administrative Agent may in its discretion approve), deliver to the Administrative Agent, upon the request of the Administrative Agent in its sole discretion, a signed copy of a favorable opinion, addressed to the Administrative Agent and the other Secured Parties, of counsel for the Loan Parties reasonably acceptable to the Administrative Agent as to the matters contained in clauses (i) , (ii)  and (iii)  above, and as to such other matters as the Administrative Agent may reasonably request.

(b) If the report or certificate delivered under Section 6.01(e)  or Section 6.01(f)  does not confirm that the Obligations are secured by first-priority Liens covering and encumbering at least (x) 95% of the PV9 Pricing of the Proved Developed Producing Reserves and (y) 95% of the PV9 Pricing of the Proved Reserves, in each case, attributable to the Engineered Oil and Gas Properties (without taking into account any adjustments for hedging), then (i) within 30 days of the delivery of such report or certificate (or such longer period as may be appropriate in the sole discretion of the Administrative Agent), the Loan Parties that own Engineered Oil and Gas Properties shall execute and deliver mortgages and deeds of trust (or supplements with respect thereto) in form and substance reasonably acceptable to the Administrative Agent, together with such other assignments, conveyances, amendments, agreements and other writings (each duly authorized and executed) and together with such certificates and opinions of counsel with respect thereto, in each case as the Administrative Agent shall deem necessary to grant, evidence and perfect the first-priority Liens on such additional properties required by this Section 6.12(b) and (ii) upon the request of the Administrative Agent, which request shall not be made more than once per calendar year so long as no Default, Event of Default or Borrowing Base Deficiency is then continuing, evidence of title reasonably satisfactory to the Administrative Agent with respect to such additional properties, but only to the extent necessary such that the Borrower shall have delivered evidence of title covering Engineered Oil and Gas Properties subject to the Mortgages comprising at least 70% of the total PV9 Pricing of the Proved Reserves attributable to the Engineered Oil and Gas Properties required by this Section 6.12(b)  to be subject to the Mortgages; provided , however , that the requirements of this Section 6.12(b)  shall not apply to any Oil and Gas Properties as to which the Administrative Agent shall determine in its reasonable discretion, after consultation with the Borrower, that the costs and burden of obtaining such evidence of title are excessive in relation to the value of the benefits afforded thereby.

Section 6.13 Compliance with Environmental Laws . Except as could not reasonably be expected to result in a Material Adverse Effect, (a) comply, and cause all lessees and other Persons operating or occupying its properties to comply with all applicable Environmental Laws and Environmental Permits; (b) obtain and renew all Environmental Permits necessary for its current operations and properties; and (c) conduct any investigation, study, sampling and testing, and undertake any cleanup, removal, remedial or other action necessary to remove and clean up all Hazardous Materials from any of its properties, in accordance with the requirements of all applicable Environmental Laws; provided , however , that neither the Borrower nor any of its Restricted Subsidiaries shall be required to undertake any such cleanup, removal, remedial or other action to the extent that its obligation to do so is not required by applicable Environmental Laws or being contested in good faith and by proper proceedings and appropriate reserves are being maintained with respect to such circumstances in accordance with GAAP.

 

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Section 6.14 Further Assurances . Promptly upon request by the Administrative Agent, or any Lender through the Administrative Agent, (a) correct any material defect or error that may be discovered in any Loan Document or in the execution, acknowledgment, filing or recordation thereof and (b) do, execute, acknowledge, deliver, record, re-record, file, re-file, register and re-register any and all such further acts, deeds, certificates, assurances and other instruments as the Administrative Agent, or any Lender through the Administrative Agent, may reasonably require from time to time in order to (i) to the fullest extent permitted by applicable Law, subject any Loan Party’s or any of its Restricted Subsidiaries’ properties, assets, rights or interests to the Liens now or hereafter intended to be covered by any of the Collateral Documents, (ii) perfect and maintain the validity, effectiveness and priority of any of the Collateral Documents and any of the Liens intended to be created thereunder and (iii) assure, convey, grant, assign, transfer, preserve, protect and confirm more effectively unto the Secured Parties the rights granted or now or hereafter intended to be granted to the Secured Parties under any Loan Document or under any other instrument executed in connection with any Loan Document to which any Loan Party or any of its Restricted Subsidiaries is or is to be a party, and cause each of its Restricted Subsidiaries to do so.

Section 6.15 Production Proceeds . Notwithstanding that, by the terms of the various Mortgages, certain Guarantors and Borrower are and will be assigning to the Administrative Agent and Lenders all of the “Production Proceeds” (as defined therein) accruing to the property covered thereby, so long as no Event of Default has occurred such Loan Parties may continue to receive from the purchasers of production all such Production Proceeds, subject, however, to the Liens created under the Mortgages, which Liens are hereby affirmed and ratified. Upon the occurrence of an Event of Default, the Administrative Agent and Lenders may exercise all rights and remedies granted under the Mortgages, including the right to obtain possession of all Production Proceeds then held by Loan Parties or to receive directly from the purchasers of production all other Production Proceeds. In no case shall any failure, whether purposed or inadvertent, by the Administrative Agent or Lenders to collect directly any such Production Proceeds constitute in any way a waiver, remission or release of any of their rights under the Mortgages, nor shall any release of any Production Proceeds by the Administrative Agent or Lenders to Loan Parties constitute a waiver, remission, or release of any other Production Proceeds or of any rights of the Administrative Agent or Lenders to collect other Production Proceeds thereafter.

Section 6.16 Anti-Corruption, Anti-Terrorism and Anti-Money Laundering Laws . Conduct its businesses in compliance in all material respects with all applicable anti-corruption Laws, applicable anti-terrorism Laws and applicable anti-money laundering Laws and maintain policies and procedures designed to promote and achieve compliance with such Laws.

Section 6.17 Post-Closing Changes . The Borrower shall notify the Administrative Agent within 30 days of any change made to a Loan Party’s name, type of organization, jurisdiction of organization, organizational identification number or location from those set forth in the schedules to the Security Agreement.

Section 6.18 Post-Restructuring Cash Collateral Account .

(a) The Borrower shall, from and after the Closing Date and through and including the occurrence of the Protected Period Termination Date, (i) maintain at all times the Post-Restructuring Cash Collateral Account in accordance with the requirements set forth in the definition thereof (including, without limitation, with respect to “lock-box” or “blocked” nature thereof and the maintenance of the Administrative Agent’s “control” and perfected first-priority Lien with respect thereto) and (ii) shall not permit, at any time, the cash balance maintained in the Post-Restructuring Cash Collateral Account to be less than the Minimum Post-Restructuring Cash Collateral Requirement then in effect.

 

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(b) Notwithstanding the requirements set forth in the preceding clause (a) , (i)(x) $12,500,000 of the cash held in the Post-Restructuring Cash Collateral Account shall be released to the Borrower upon (and subject to) the satisfaction by the Borrower of the conditions set forth in clause (a)(i)  of the definition of “Minimum Post-Restructuring Cash Collateral Requirement” in accordance with the terms thereof and (y) an additional $12,500,000 of the cash held in the Post-Restructuring Cash Collateral Account shall be released to the Borrower upon (and subject to) the satisfaction by the Borrower of the conditions set forth in clause (a)(ii)  of the definition of “Minimum Post-Restructuring Cash Collateral Requirement” in accordance with the terms thereof; (ii) solely to the extent all or any portion of the disbursements referred to in the foregoing clauses (b)(i)(x) and/or (b)(i)(y) are not made, up to $25,000,000 ( less the amount of any prior disbursement in accordance with clause (b)(i)(x) and/or (b)(i)(y) ), of the cash held in the Post-Restructuring Cash Collateral Account shall be released to the Borrower upon (and subject to) the satisfaction by the Borrower of the conditions set forth in clause (b) of the definition of “Minimum Post-Restructuring Cash Collateral Requirement” in accordance with the terms thereof; and (iii) so long as (A) no Borrowing Base Deficiency has occurred and is continuing and (B) no Default or Event of Default has occurred and is continuing, upon the occurrence of the Protected Period Termination Date any remaining amounts held in the Post-Restructuring Cash Collateral Account shall be released to the Borrower.

Section 6.19 Accounts .

(a) Within 45 days after the Closing Date (or such later date as the Administrative Agent shall reasonably agree), the Loan Parties shall execute and deliver to the Administrative Agent one or more Control Agreements with respect to each Deposit Account, Securities Account and Commodity Account (other than to the extent constituting an Excluded Account) held or maintained by or for the benefit of a Loan Party on the Closing Date, executed and delivered by a duly authorized Responsible Officer of such Loan Party in form and substance reasonably satisfactory to the Administrative Agent and the Borrower, or otherwise cause such Deposit Account, Securities Account and/or Commodity Account, as applicable, to become and thereafter remain continually subject to the “control” (within the meaning of Section 9-104 or Section 9-106 of the UCC, as applicable) of the Administrative Agent pursuant to arrangements that are reasonably satisfactory to the Administrative Agent.

(b) The Borrower will, and will cause each other Loan Party to, in connection with any Deposit Account, Securities Account and Commodity Account (other than Excluded Accounts, but only for so long as it is an Excluded Account) established, held, acquired, assumed, or otherwise maintained after the Closing Date, promptly, but in any event within 45 days of the establishment, acquisition, or assumption of such account (or, in the case of a Deposit Account or Securities Account that ceases to be an Excluded Account, within 45 days after cessation of its status as an Excluded Account) or by such later date as the Administrative Agent shall reasonably agree, deliver a Control Agreement executed by a duly authorized Responsible Officer of such Loan Party in form and substance reasonably satisfactory to the Administrative Agent and the Borrower, otherwise cause such Deposit Account, Securities Account and/or Commodity Account, as applicable, to become and thereafter remain continually subject to the “control” (within the meaning of Section 9-104 or Section 9-106 of the UCC, as applicable) of the Administrative Agent; provided that, notwithstanding the foregoing, each such account referred to in this clause (b) shall be permitted to be maintained as an Excluded Account (and shall comply with the requirements set forth in such definition), for all periods of time from the date of establishment, acquisition or assumption thereof by a Loan Party through the date on which such Control Agreement or other satisfactory control arrangements are established.

 

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ARTICLE VII

NEGATIVE COVENANTS

So long as any Lender shall have any Commitment hereunder, any Committed Loan or other Obligation owing to any Lender or to the Administrative Agent hereunder shall remain unpaid or unsatisfied, or any Letter of Credit shall remain outstanding and not fully Cash Collateralized, the Borrower shall not, nor shall it permit any Restricted Subsidiary to, directly or indirectly:

Section 7.01 Liens . Create, incur, assume or suffer to exist any Lien upon any of its property, assets or revenues, whether now owned or hereafter acquired, other than the following:

(a) Liens pursuant to any Loan Document;

(b) Liens existing on the date hereof and listed on Schedule 7.01 and any renewals or extensions thereof; provided that (i) the property covered thereby is not changed, (ii) the amount secured or benefited thereby is not increased except as contemplated by Section 7.03(c) , (iii) the direct or any contingent obligor with respect thereto is not changed, and (iv) any renewal or extension of the obligations secured or benefited thereby is permitted by Section 7.03(c) ;

(c) Liens for taxes and other governmental charges not yet due or which are being contested in good faith and by appropriate proceedings diligently conducted, if adequate reserves with respect thereto are maintained on the books of the applicable Person in accordance with GAAP;

(d) operators’, carriers’, landlords’, suppliers’, workers’, construction, warehousemen’s, mechanics’, materialmen’s, repairmen’s or other like Liens arising in the ordinary course of business which are not overdue for a period of more than 90 days or which are being contested in good faith and by appropriate proceedings diligently conducted, if adequate reserves with respect thereto are maintained on the books of the applicable Person;

(e) pledges or deposits in the ordinary course of business in connection with workers’ compensation, unemployment insurance and other social security legislation or other liabilities of a like nature, other than any Lien imposed by ERISA;

(f) Liens to secure the performance of bids, trade contracts and leases (other than Indebtedness), licenses, statutory obligations, surety and appeal bonds, performance bonds, regulatory obligations and other obligations of a like nature incurred in the ordinary course of business;

(g) (i) easements, rights-of-way, restrictions and other similar encumbrances affecting real property which, in the aggregate, are not substantial in amount, and which do not in any case materially detract from the value of the property subject thereto or materially interfere with the ordinary conduct of the business of the applicable Person and (ii) Immaterial Title Deficiencies;

(h) Liens securing judgments for the payment of money not constituting an Event of Default under Section 8.01(h) ;

(i) Liens on pipelines and pipeline facilities that arise by operation of law or other like Liens arising by operation of law in the ordinary course of business and incident to the exploration, development, operation and maintenance of Oil and Gas Properties each of which is in respect of obligations that do not constitute Indebtedness and that 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;

 

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(j) customary contractual Liens under operating lease agreements or which arise in the ordinary course of business under operating agreements, joint venture agreements, oil and gas partnership agreements, oil and gas leases, farm-out and farm-in 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 obligations that do not constitute Indebtedness and that are not delinquent or that 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 (j)  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;

(k) Permitted Encumbrances;

(l) Liens existing on assets at the time of acquisition thereof, or Liens existing on assets of any Person at the time such Person became a Subsidiary, which in each case (i) were not created in contemplation thereof and (ii) do not encumber Oil and Gas Properties to be included in the Borrowing Base;

(m) UCC financing statements filed in connection with an operating lease under which the Borrower or a Restricted Subsidiary is the lessee;

(n) Liens on assets of Lariat securing obligations of Lariat;

(o) Liens on Oklahoma Properties or Electrical Assets securing Indebtedness permitted by Section 7.03(b)  or Section 7.03(c) ;

(p) [reserved];

(q) Liens securing Indebtedness permitted under Section 7.03(f) ; provided that (i) such Liens attach concurrently with or within 270 days after the acquisition, lease, repair, replacement, construction or improvement (as applicable) being financed with such Indebtedness, (ii) such Liens do not at any time encumber any property other than the property financed by such Indebtedness or the assets subject to such Capital Lease, as applicable, and (iii) the Indebtedness secured thereby does not exceed the cost or fair market value, whichever is lower, of the property being acquired on the date of acquisition;

(r) Liens in favor of banking and other financial institutions arising by operation of law or otherwise encumbering deposits held by such banking institution or securities and other financial assets held by such financial institution (in each case including the right of set-off) and which are within the general parameters customary in the banking industry or the securities brokerage industry, as applicable;

(s) Liens not otherwise permitted by this Section 7.01 ; provided that the aggregate outstanding principal amount of the obligations secured thereby does not exceed (as to the Borrower and its Restricted Subsidiaries) $5,000,000 at any one time; and

 

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(t) Liens to secure (i) the Post-Restructuring Convertible Notes (to the extent required to be secured in accordance with their terms); provided that any such Lien granted on any property is only permitted to the extent that it is junior to a valid and enforceable first-priority Lien granted on such property to secure the Obligations (subject to the Convertible Notes Intercreditor Agreement) and (ii) Junior Lien Debt incurred pursuant to Section 7.03(l) ; provided that any such Lien granted on any property is only permitted to the extent that it is junior to a valid and enforceable first-priority Lien granted on such property to secure the Obligations (subject to the applicable Junior Lien Intercreditor Agreement).

Section 7.02 Investments . Make any Investments, except:

(a) Investments held by the Borrower or such Restricted Subsidiary in the form of Cash Equivalents;

(b) advances to officers, directors and employees of the Borrower and Restricted Subsidiaries in an aggregate amount not to exceed $500,000 at any time outstanding, for travel, entertainment, relocation and analogous ordinary business purposes;

(c) Investments of the Borrower in any now existing or hereafter acquired wholly-owned Restricted Subsidiary and Investments of any Restricted Subsidiary in the Borrower or in another now existing or hereafter acquired wholly-owned Restricted Subsidiary; provided , however , that (i) in the case of any Investment made by a Loan Party in any Restricted Subsidiary that is not a Loan Party, (x) the Borrower shall be in compliance with the Available Amount Conditions at the time of such Investment and (y) the amount of such Investments shall not, in the aggregate, exceed the Available Amount at such time and (ii) in the case of an Investment constituting the acquisition from a third party of a Person which thereby becomes a wholly-owned Restricted Subsidiary, such Investment is permitted pursuant to another clause of this Section 7.02 ;

(d) Investments consisting of extensions of credit in the nature of accounts receivable or notes receivable arising from the grant of trade credit in the ordinary course of business, and Investments received in satisfaction or partial satisfaction thereof from financially troubled account debtors to the extent reasonably necessary in order to prevent or limit loss;

(e) Investments in Oil and Gas Properties that will, pursuant to such Investment, become Engineered Oil and Gas Properties (or in Persons at least 60% of whose assets consist of Oil and Gas Properties that will, pursuant to such Investment, become Engineered Oil and Gas Properties, and which Persons will become Loan Parties pursuant to such Investment);

(f) Guarantees permitted by Section 7.03 ;

(g) Investments received in connection with bankruptcy or reorganization of, or settlement of delinquent accounts and disputes with, customers and suppliers, in each case in the ordinary course of business;

(h) Investments (including, without limitation, capital contributions) in general or limited partnerships or other types of entities (each a “ venture ”) entered into by the Borrower or a 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, (iii) the Borrower shall be in compliance with the Available Amount Conditions at the time of such Investment and (iv) the aggregate net amount of such Investments does not exceed the Available Amount at such time;

 

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(i) Investments under clause (a)  or (c)  of the definition thereof in Persons (which become Loan Parties pursuant to such Investment) or business units, respectively, in each case whose assets consist solely of oil and gas service business assets, including drilling rigs, workover rigs, drilling fluids and other assets involved in providing services to the oil and gas upstream and midstream segments (and which assets shall become Collateral to the extent required by the terms of the Loan Documents); provided that (i) the Borrower shall be in compliance with the Available Amount Conditions at the time of such Investment and (i) the amount of such Investments shall not, in the aggregate, exceed the Available Amount at such time;

(j) solely to the extent the SandRidge Realty Office Complex is wholly-owned by a Restricted Subsidiary of the Borrower, Investments made by the Borrower to such Restricted Subsidiary in an aggregate amount not to exceed the amount of interest, operating expenses and taxes due and payable by such Restricted Subsidiary in the ordinary course of business as a direct result of its ownership of the SandRidge Realty Office Complex; provided that the proceeds of such Investment shall be promptly applied by such Restricted Subsidiary to fund such interest, operating expense and tax obligations;

(k) Investments for consideration consisting of common stock of the Borrower;

(l) capital stock, promissory notes, and other similar non-cash consideration received by the Borrower or any of its Restricted Subsidiaries in connection with any transaction permitted by Section 7.05 ;

(m) Investments expressly permitted by Section 7.06 (other than Section 7.06(f) );

(n) Investments in existence on the Closing Date and, in the case of any Investment in excess of $1,000,000, listed on Schedule 7.02 , and extensions, renewals, modifications, or restatements or replacements thereof; provided that no such extension, renewal, modification, restatement or replacement shall (i) increase the amount of the original Investment or (ii) adversely affect the interest of the Lenders with respect to such original Investment or the interests of the Lenders under this Agreement and the other Loan Documents in any material respect;

(o) Investments in Royalty Trusts;

(p) Investments in Unrestricted Subsidiaries to the extent resulting from Dispositions permitted by Section 7.05(o) ; and

(q) subject to satisfaction of the Available Amount Conditions, other Investments not permitted by the foregoing provisions of this Section 7.02 in an amount not to exceed the Available Amount at such time.

Section 7.03 Indebtedness . Create, incur, assume or suffer to exist any Indebtedness, except:

(a) Indebtedness under the Loan Documents;

(b) Attributable Indebtedness and Synthetic Lease Obligations created in connection with the sale-leaseback of the Oklahoma Properties or the Electrical Assets;

 

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(c) Indebtedness outstanding on the date hereof and listed on Schedule 7.03 and any Permitted Refinancing thereof;

(d) Guarantees of the Borrower or any Guarantor in respect of Indebtedness otherwise permitted hereunder of the Borrower or any Guarantor;

(e) obligations (contingent or otherwise) of the Borrower or any Restricted Subsidiary existing or arising under any Swap Contract; provided that (i) such obligations are (or were) entered into by such Person in the ordinary course of business for the purpose of directly mitigating risks associated with liabilities, commitments, investments, assets, or property held or reasonably anticipated by such Person, or changes in the value of securities issued by such Person, and not for purposes of speculation or taking a “market view” and (ii) such Swap Contract does not contain any provision exonerating the non-defaulting party from its obligation to make payments on outstanding transactions to the defaulting party (other than customary netting arrangements);

(f) Indebtedness in respect of Capital Leases, Synthetic Lease Obligations and purchase money obligations for fixed or capital assets within the limitations set forth in Section 7.01(q) ; provided , however , that the aggregate principal amount of all such Indebtedness incurred pursuant to this clause (f)  at any one time outstanding shall not exceed $25,000,000;

(g) Indebtedness of the Borrower or a Restricted Subsidiary owing to the Borrower or a wholly-owned Restricted Subsidiary (other than Lariat); provided that in the case of any such Indebtedness owing from a Loan Party to a non-Loan Party, (x) the Borrower shall be in compliance with the Available Amount Conditions at the time such Indebtedness is issued or incurred and (y) the amount of such Indebtedness shall not, in the aggregate, exceed the Available Amount at such time;

(h) Indebtedness incurred by Lariat, and Guarantees of the Borrower in respect of such Indebtedness; provided that (x) the Borrower shall be in compliance with the Available Amount Conditions at the time such Indebtedness is issued or incurred and (y) the amount of such Indebtedness shall not, in the aggregate, exceed the Available Amount at such time;

(i) Indebtedness related to any sale-leaseback transaction with respect to the Oklahoma Properties;

(j) other Indebtedness in an aggregate principal amount not to exceed $5,000,000 at any time outstanding;

(k) Indebtedness in respect of surety bonds obtained by the Borrower or a Restricted Subsidiary in the ordinary course of business and supporting other obligations undertaken by the Borrower or a Restricted Subsidiary in the ordinary course of business which other obligations do not constitute Indebtedness;

(l) Indebtedness that constitutes Junior Lien Debt and unsecured Indebtedness not otherwise permitted by this Section 7.03 in an aggregate principal amount for all Indebtedness under this clause (l)  not to exceed $500,000,000 at any time outstanding; provided that (1) no Default or Event of Default or Borrowing Base Deficiency has occurred and is then continuing or would result therefrom, (2) after giving effect to the incurrence of such Indebtedness, the Borrower shall be in compliance, on a pro forma basis with the Financial Covenants contained in Section 7.11 , (3) the Borrowing Base shall be adjusted as set forth in Section 2.05(c) , (4) such Indebtedness does not mature and requires no scheduled amortization prior to the 91st day following the Maturity Date, (5) the terms of such Indebtedness are not materially more onerous, taken as a whole, than the terms of this Agreement and the other Loan

 

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Documents, (6) if any Person Guarantees such Indebtedness, such Person shall also Guarantee the Obligations by providing a guaranty or guaranty supplement, in form and substance reasonably satisfactory to the Administrative Agent and (7) such Indebtedness and any guarantees and Liens in respect thereof are otherwise on terms and conditions reasonably acceptable to the Administrative Agent;

(m) Indebtedness of any Person at the time such Person becomes a Restricted Subsidiary of the Borrower, or is merged or consolidated with or into the Borrower or any of its Restricted Subsidiaries, in a transaction permitted by this Agreement, and extensions, renewals, refinancings, refundings and replacements of any such Indebtedness that do not increase the outstanding principal amount thereof (other than any increase not exceeding the amount of any fees, premium, if any, and financing costs relating to such refinancing); provided that (i) such Indebtedness (other than any such extension, renewal, refinancing, refunding or replacement) exists at the time such Person becomes a Restricted Subsidiary and is not created in contemplation of such event, (ii) other than Guarantee obligations permitted by clause (d)  of this Section 7.03 , neither the Borrower nor any of its other Restricted Subsidiaries shall be liable for such Indebtedness and (iii) the Borrower is in compliance, on a pro forma basis after giving effect to the incurrence of such Indebtedness and the use of proceeds thereof, with the Financial Covenants contained in Section 7.11 ;

(n) Indebtedness of the Borrower or any Restricted Subsidiary to the seller representing all or part of the purchase price of an Investment or acquisition permitted hereunder, or assumed by the Borrower or any of its Restricted Subsidiaries in connection therewith, and extensions, renewals, refinancings, refundings and replacements of any such Indebtedness that do not increase the outstanding principal amount thereof (other than any increase not exceeding the amount of any fees, premium, if any, and financing costs relating to such refinancing); provided that (i) as to any such assumed Indebtedness, such Indebtedness (other than any extension, renewal, refinancing, refunding or replacement thereof) exists at the time of such acquisition and is not created in contemplation of such event and (ii) the Borrower is in compliance, on a pro forma basis after giving effect to the assumption of such Indebtedness, with the covenants contained in Section 7.11 ;

(o) Indebtedness arising from judgments or orders in circumstances not constituting an Event of Default under Section 8.01(h) ;

(p) Indebtedness in respect of the Post-Restructuring Convertible Notes issued on the Closing Date in an aggregate principal amount not to exceed the sum of (x) $300,000,000 plus (y) any interest that is paid-in-kind and otherwise added to the outstanding principal amount of such Indebtedness and any interest that is accrued and unpaid in respect of such Indebtedness; provided that such $300,000,000 amount in clause (x) above shall increase in connection with any “make-whole event” or “Corporate Event” such that each $1.00 in outstanding principal amount shall be increased by $0.783478 to equal $1.783487, as described in the definitive documentation governing such Post-Restructuring Convertible Notes as in effect on the Closing Date;

(q) Indebtedness arising from or representing deferred compensation to employees of the Borrower or its Restricted Subsidiaries that constitute or are deemed to be Indebtedness under GAAP and that are incurred in the ordinary course of business;

(r) Indebtedness arising pursuant to clause (e)  of the definition thereof as a result of Liens permitted under Sections 7.01(c) , (d) , (e) , (f)  and (j) ; and

(s) obligations of the Borrower or any Restricted Subsidiary existing or arising under any Treasury Management Services Agreement.

 

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Section 7.04 Fundamental Changes . Merge, dissolve, liquidate, amalgamate, consolidate with or into another Person, or Dispose of (whether in one transaction or in a series of transactions) all or substantially all of its assets (whether now owned or hereafter acquired) to or in favor of any Person, except that, so long as no Default exists or would result therefrom:

(a) any Restricted Subsidiary may merge with (i) the Borrower; provided that the Borrower shall be the continuing or surviving Person or (ii) any one or more other Restricted Subsidiaries; provided that when any wholly-owned Restricted Subsidiary is merging with another Restricted Subsidiary, the continuing or surviving Person shall be a wholly-owned Restricted Subsidiary; provided , further , that when any Guarantor is merging with another Restricted Subsidiary, the continuing or surviving Person shall be a Guarantor (other than Lariat);

(b) any Restricted Subsidiary may Dispose of all or substantially all of its assets (upon voluntary liquidation or otherwise) to the Borrower or to another Restricted Subsidiary (and thereafter dissolve, liquidate or wind-up its affairs); provided that if the transferor in such a transaction is a wholly-owned Restricted Subsidiary, then the transferee must either be the Borrower or a wholly-owned Restricted Subsidiary; provided , further , that if the transferor in such a transaction is a Guarantor, then the transferee must either be the Borrower or a Guarantor (other than Lariat);

(c) any Disposition of a Restricted Subsidiary expressly permitted by Section 7.05 may be structured as a merger, consolidation or amalgamation to which such Restricted Subsidiary is a party and as a result of which such Restricted Subsidiary ceases to be a Restricted Subsidiary; and

(d) any Investment expressly permitted by Section 7.02 may be structured as a merger, consolidation or amalgamation; provided that if the Borrower is a party thereto, the Borrower shall be the continuing or surviving Person; provided , further , that the continuing or surviving Person shall be the Borrower or a Guarantor (other than Lariat) to the extent required by Section 6.12 .

Section 7.05 Dispositions . Make any Disposition except:

(a) Dispositions of (i) obsolete or worn out property or assets, whether now owned or hereafter acquired, in the ordinary course of business or (ii) equipment that is no longer useful in the conduct of the business of the Borrower and its Restricted Subsidiaries in the ordinary course of business;

(b) Dispositions of inventory (including Hydrocarbons sold after severance) in the ordinary course of business;

(c) Dispositions of equipment or real property or other assets (other than (x) Oil and Gas Properties or (y) Investments in Restricted Subsidiaries) to the extent that (i) such equipment, property or other asset is exchanged for credit against the purchase price of similar replacement equipment, property or other asset or (ii) the proceeds of such Disposition are reasonably promptly applied to the purchase price of such replacement equipment, property, or other assets;

(d) Dispositions of property or assets by any Restricted Subsidiary to the Borrower or to a wholly-owned Restricted Subsidiary or by the Borrower to any wholly-owned Restricted Subsidiary; provided that if the transferor of such property or assets is a Loan Party, the transferee thereof must be a Loan Party (other than Lariat);

(e) Dispositions permitted by Section 7.04(a)  or Section 7.04(b) ;

(f) Dispositions of Electrical Assets;

 

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(g) (1) Dispositions of Oil and Gas Properties which are sold or otherwise transferred for fair market value to Persons who are not Affiliates of Borrower, (2) farm-outs of undeveloped acreage and assignments in connection with such farm-outs or the abandonment, farm-out, exchange or Disposition of Oil and Gas Properties not containing Proved Reserves and (3) Dispositions of Oil and Gas Properties to which no value has been attributed by the Administrative Agent in the most recent determination of the Borrowing Base in the ordinary course of business; provided that (i) no Default or Event of Default exists at the time of and after giving effect to any such sale or other transfer of Collateral (other than Defaults that will be cured upon the application of the proceeds of such sale or other transfer), (ii) the Borrower must first give at least five Business Days’ notice to the Administrative Agent of any such sale, (iii) no Borrowing Base Deficiency shall exist and be continuing immediately prior to the consummation of such sale or other transfer, (iv) concurrently with such sale or other transfer the Borrower must pay in full any Borrowing Base Deficiency that results from the adjustment to the Borrowing Base in connection with such Disposition pursuant to Section 2.05(e) and (v) for the avoidance of doubt, any Disposition of Oil and Gas Properties pursuant to this Section 7.05(g)  may be structured as a Disposition of Equity Interests in a Person, substantially all of whose assets consist of Oil and Gas Properties;

(h) Dispositions of the Equity Interests or assets of Lariat;

(i) Dispositions of interest in Oil and Gas Properties in respect of Immaterial Title Deficiencies in order to discharge such Immaterial Title Deficiencies or an obligation giving rise thereto;

(j) Dispositions of overdue accounts receivable arising in the ordinary course of business, but only in connection with the compromise or collection thereof;

(k) Dispositions of Investments made pursuant to Sections 7.02(a) , (d)  and (g) ;

(l) Dispositions of Oil and Gas Properties to ventures pursuant to Section 7.02(h) ; provided that no value was attributed to such Oil and Gas Properties in the then most recent determination of the Borrowing Base;

(m) Dispositions of assets to Royalty Trusts, and of Equity Interests in Royalty Trusts;

(n) any Disposition that constitutes an Investment that is permitted pursuant to Section, 7.02(h) , Section 7.02(j)  or Section 7.02(q) ; provided that such Dispositions may not consist of any Oil and Gas Properties included in the Borrowing Base;

(o) Dispositions of assets comprising the Loan Parties’ salt water gathering and disposal business, or of equity interests owned by the Borrower or its Restricted Subsidiaries in persons that solely own assets of, and conduct the business of, the Loan Parties’ salt water gathering and disposal business;

(p) Dispositions of the Oklahoma Properties, including without limitation, Dispositions directly related to any sale-leaseback transaction with respect to the Oklahoma Properties; and

(q) other Dispositions not exceeding $10,000,000 in the aggregate in any fiscal year of the Borrower and $30,000,000 in the aggregate at all times prior to the Maturity Date; provided that such Dispositions may not consist of any Oil and Gas Properties included in the Borrowing Base; provided , further , that, to the extent, the Borrower does not utilize all or any portion of the capacity provided pursuant to this clause (q) in any fiscal year, the Borrower shall be permitted to carry-forward any such unutilized capacity to the succeeding fiscal years.

 

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Section 7.06 Restricted Payments . Declare or make, directly or indirectly, any Restricted Payment except that, so long as no Default shall have occurred and be continuing at the time of any action described below or would result therefrom:

(a) each Restricted Subsidiary may make Restricted Payments to the Borrower, the Guarantors and any other Person that owns an Equity Interest in such Restricted Subsidiary, ratably according to their respective holdings of the type of Equity Interest in respect of which such Restricted Payment is being made;

(b) the Borrower and each Restricted Subsidiary may declare and make dividend payments or other distributions payable solely in the Qualified Stock of such Person;

(c) the Borrower and each Restricted Subsidiary may purchase, redeem or otherwise acquire Equity Interests issued by it with the proceeds received from the substantially concurrent issue of new shares of its Qualified Stock;

(d) the Borrower and each Restricted Subsidiary may make Restricted Payments in respect of, and in the amount of, any withholding tax obligation related to the issuance, vesting, repurchase, forfeiture, transfer, liquidation, or distributions with respect to any equity compensation held by or for the benefit of the employees, officers or directors of the Borrower or any Restricted Subsidiary; provided that the aggregate amount of payments under this clause (d) in any fiscal year of the Borrower shall not exceed $5,000,000; provided , further , that any Restricted Payments permitted (but not made) pursuant to this clause (d) in any prior fiscal year may be carried forward to any subsequent fiscal year (subject to an annual cap of no greater than $10,000,000);

(e) in the ordinary course of its business, the Borrower may make Restricted Payments pursuant to and in connection with stock option plans or other benefit plans or arrangements for directors, management, employees or consultants of the Borrower and its Restricted Subsidiaries;

(f) the Borrower and its Restricted Subsidiaries may make Restricted Payments constituting purchases by the Borrower or any of its Restricted Subsidiaries of any other Subsidiary’s capital stock pursuant to a transaction expressly permitted by Section 7.02 (other than Section 7.02(m) );

(g) subject to satisfaction of the Available Amount Conditions, the Borrower and each Restricted Subsidiary may make Restricted Payments not otherwise permitted by this Section 7.06 in an amount not to exceed the Available Amount at such time; and

(h) so long as no Borrowing Base Deficiency has occurred and is continuing or would result therefrom, the Borrower and each Restricted Subsidiary may make payments of cash in lieu of the issuance of fractional shares upon the exercise of options or warrants or upon the conversion or exchange of Equity Interests or debt securities that are convertible into, or exchangeable for, Equity Interests of any such Person in accordance with their terms.

Section 7.07 Change in Nature of Business . Engage in any material line of business substantially different from those lines of business conducted by the Borrower and its Restricted Subsidiaries on the date hereof or any business substantially related or incidental thereto.

 

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Section 7.08 Transactions with Affiliates . Enter into any transaction of any kind with any Affiliate of the Borrower, whether or not in the ordinary course of business, other than on fair and reasonable terms substantially as favorable to the Borrower or such Restricted Subsidiary as would be obtainable by the Borrower or such Restricted Subsidiary at the time in a comparable arm’s length transaction with a Person other than an Affiliate; provided that the foregoing restriction shall not apply to (i) transactions between or among (x) the Borrower and any other Loan Party, (y) a Restricted Subsidiary that is a Loan Party and any other Restricted Subsidiary that is a Loan Party or (z) a Restricted Subsidiary that is not a Loan Party and any other Restricted Subsidiary that is not a Loan Party or (ii) payment of customary cash and non-cash compensation, including stock option and similar employee benefit plans, to directors and officers on an arm’s length basis.

Section 7.09 Burdensome Agreements . After the date of this Agreement, enter into any Contractual Obligation (other than (x) this Agreement or any other Loan Document and (y) Permitted Debt Restrictions) that (a) limits the ability (i) of any Restricted Subsidiary to make Restricted Payments to the Borrower or any Guarantor or to otherwise transfer property to the Borrower or any Guarantor, (ii) of any Restricted Subsidiary to Guarantee the Indebtedness of the Borrower or (iii) of the Borrower or any Restricted Subsidiary to create, incur, assume or suffer to exist Liens on property of such Person to secure any of the Loan Documents or (b) requires the grant of a Lien to secure an obligation of such Person if a Lien is granted to secure another obligation of such Person, or amend any Contractual Obligation existing on the date of this Agreement so as to impose or make more restrictive such a limitation, in each case other than the following: (A) any negative pledge incurred or provided in favor of any holder of Indebtedness permitted under Section 7.03(b)  and Section 7.03(f)  solely to the extent any such negative pledge relates to the property financed by or the subject of such Indebtedness or property subject to a Lien permitted hereunder which secures such Indebtedness; (B) Swap Contracts and any Guarantee in respect of such Swap Contracts; (C) any encumbrances or restrictions imposed by reason of customary provisions contained in leases, licenses, joint ventures agreements and similar agreements entered into in the ordinary course of business; (D) any encumbrances or restrictions that are or were created by virtue of any transfer of, agreement to transfer or option or right with respect to any property, assets or capital stock not otherwise prohibited by this Agreement; (E) any restrictions regarding licenses or sublicenses by the Borrower and its Restricted Subsidiaries of intellectual property in the ordinary course of business; (F) any restrictions in a Contractual Obligation incurred in the ordinary course of business and on customary terms which prohibit transfer of assets subject of the applicable Contractual Obligation; (G) restrictions on cash or other deposits or net worth imposed by customers, suppliers or, in the ordinary course of business, other third parties; (H) any restrictions contained in agreements related to Indebtedness permitted by Section 7.03(e) , (m)  or (n) ; and (I) any restriction contained in a Contractual Obligation relating to property, an interest in which has been Disposed of to a Royalty Trust, in accordance with Section 7.05 .

Section 7.10 Use of Proceeds . Use the proceeds of any Credit Extension, in violation of Regulation T, Regulation U or Regulation X.

Section 7.11 Financial Covenants .

(a) Minimum PDP Asset Coverage Ratio . For the period commencing with the first full fiscal quarter ending after the Closing Date through the last full fiscal quarter before the occurrence of the Protected Period Termination Date, permit the PDP Asset Coverage Ratio as of the end of any fiscal quarter of the Borrower occurring during such period to be less than 1.75:1.00. For the avoidance of doubt, the Financial Covenant set forth in this Section 7.11(a) shall cease to be applicable from and after the occurrence of the Protected Period Termination Date.

 

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(b) Maximum Consolidated Total Net Leverage Ratio . Commencing with the first full fiscal quarter ending after the occurrence of the Protected Period Termination Date, permit the Consolidated Total Net Leverage Ratio as of the end of any fiscal quarter of the Borrower to exceed (i) in the case of any such fiscal quarter ending on or prior to December 31, 2018, 3.50:1.00 and (ii) in the case of any such fiscal quarter ending on or after March 31, 2019, 3.00:1.00

(c) Minimum Consolidated Interest Coverage Ratio . Commencing with the first full fiscal quarter ending after the occurrence of the Protected Period Termination Date, permit the Consolidated Interest Coverage Ratio as of the end of any fiscal quarter of the Borrower to be less than 2.00:1.00.

(d) Right to Cure . In the event the Borrower fails to comply with the requirements of Section 7.11(a) , 7.11(b) or 7.11(c) , then (i) with respect to any failure to comply with Section 7.11(a) , the Borrower shall, within ten Business Days of the date the Compliance Certificate for the applicable fiscal quarter is required to be delivered pursuant to Section 6.02(a) , provide written notice to the Administrative Agent stating the action or combination of actions specified below which the Borrower proposes to take to remedy such failure to comply, and the Borrower shall thereafter take one or more of the following actions (as specified to the Administrative Agent): (x) so long as such reduction would not result in the Total Outstandings exceeding the Facility Limit, cure such failure by permanently reducing the Aggregate Commitments in accordance with Section 2.07 hereof or (y) within thirty days after the date the applicable Compliance Certificate for calculating the PDP Asset Coverage Ratio pursuant to Section 7.11(a) is required to be delivered pursuant to Section 6.02(a) , submit additional Oil and Gas Properties owned by the Loan Parties for consideration in connection with the calculation of the PDP Asset Coverage Ratio which, after giving effect to any other actions taken by the Borrower provided above, the Administrative Agent deems sufficient, in is sole discretion to cure such failure or (ii) with respect to any failure to comply with Section 7.11(b) or 7.11(c) , until the expiration of the tenth Business Day subsequent to the date the Compliance Certificate for the applicable fiscal quarter is required to be delivered pursuant to Section 6.02(a) , the Borrower shall be permitted to cure any such failure to comply by requesting that such Consolidated Total Net Leverage Ratio and/or Consolidated Interest Coverage Ratio, as applicable, be recalculated by increasing Consolidated EBITDA for the fiscal quarter most recently ended by an amount equal to the proceeds of common equity issued by the Borrower or by contributions to the common equity of the Borrower received by the Borrower on or after the last day of such fiscal quarter and prior to the expiration of such ten Business Day Period (and such proceeds, “ Cure Proceeds ”); provided that the Borrower may not exercise its right to cure under this Section 7.11(d) more than twice, in the aggregate, in any four consecutive fiscal quarter period and more than five times, in the aggregate, prior to the Maturity Date. Any increase in Consolidated EBITDA pursuant to this Section 7.11(d)  shall be taken into account in calculating the Financial Covenants under Sections 7.11(b) and 7.11(c) for any four-quarter period that includes the last fiscal quarter of the four-quarter period with respect to which such cure right was exercise. If after giving effect to the foregoing recalculations, the Borrower would then be in compliance with the applicable Financial Covenant or Financial Covenants, the Borrower shall be deemed to have satisfied the requirements of such Financial Covenant or Financial Covenants 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, Default or Event of Default that had occurred shall be deemed cured for the purpose of this Agreement and the other Loan Documents

Section 7.12 Hedge Transactions . Enter into any Oil and Gas Hedge Transactions which would cause the notional volume of Hydrocarbons for each of crude oil and natural gas, calculated separately, with respect to which a settlement payment is calculated under such Oil and Gas Hedge Transactions (other than basis swaps, floors and puts on volumes hedged pursuant to Swap Contracts) to exceed ninety percent (90%) of the Borrower’s or such Restricted Subsidiary’s production that may

 

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reasonably be anticipated to be produced from Proved Reserves during the period from the immediately preceding settlement date (or the commencement of such Hedge Transaction if there is no prior settlement date) to such settlement date. Notwithstanding the foregoing, the Loan Parties may purchase commodity puts and floors without limitation. Calculations in respect of the foregoing shall cover production for the immediately following 66 month period and be based on the most recently delivered Engineering Report (subject to certain adjustments as may be required by acquisitions or dispositions made subsequent to the date of such Engineering Report) and any additional information reasonably satisfactory to the Administrative Agent delivered by the Loan Parties to the Administrative Agent subsequent to the publication of the most recently delivered Engineering Report.

Section 7.13 Sanctions . Directly or, to the Borrower’s knowledge, indirectly use the proceeds of any Credit Extension, or lend, contribute or otherwise make available such proceeds to any Subsidiary, joint venture partner or other individual or entity, to fund any activities of or business with any individual or entity that, at the time of such funding, is the subject of Sanctions, or with or in any country that, at the time of such funding, is a Designated Jurisdiction, or in any other manner that will result in a violation by any individual or entity (including any individual or entity participating in the transaction, whether as Lender, Arranger, Administrative Agent, L/C Issuers, or otherwise) of Sanctions.

Section 7.14 Anti-Corruption Laws . Directly or, to the Borrower’s knowledge, indirectly use the proceeds of any Credit Extension for any purpose which would breach the United States Foreign Corrupt Practices Act of 1977, the UK Bribery Act 2010, or other similar legislation in other jurisdictions.

Section 7.15 Prepayment of Restricted Debt .

(a) Optionally prepay, redeem, purchase, defease or otherwise satisfy prior to the scheduled maturity thereof in any manner (it being understood that mandatory payments shall be permitted to the extent permitted by the applicable provisions of the intercreditor agreement applicable thereto; provided that no such mandatory payments shall be made using any funds or proceeds that may otherwise be reinvested by the Borrower), any Principal Debt Obligations or any other Indebtedness permitted under Section 7.03(c) , Section 7.03(o)  or Section 7.03(l)  (collectively, “ Restricted Debt ”) or make any payment in violation of any terms of any Restricted Debt Documentation, except (i) with the proceeds of, or in exchange for, any Refinancing Indebtedness in respect thereof, (ii) the conversion of any Restricted Debt to Equity Interests (other than Disqualified Stock) of the Borrower, (iii) the redemption of any Restricted Debt with the Net Cash Proceeds of any offering of Equity Interests (other than Disqualified Stock) of the Borrower, (iv) subject to the satisfaction of the Available Amount Conditions, other prepayments, redemptions, purchases, defeasances and other payments in respect of Restricted Debt in an amount not to exceed the Available Amount at such time.

(b) Amend, modify or change in any manner materially adverse to the interests of the Lenders any term or condition of any Restricted Debt Documentation without the consent of the Majority Lenders; provided that nothing herein shall limit the ability of the Company to make payment-in-kind interest payments or additions to the principal amount in connection with the Post-Restructuring Convertible Notes as contemplated by Section 7.03(p) .

Section 7.16 Liquidity . From and after the Closing Date, the Borrower shall not, at any time, permit Liquidity to be less than $20,000,000.

Section 7.17 Capital Expenditures . The Borrower shall not permit less than 80% of the costs and expenditures set forth on the quarterly drilling and completion capital budgets delivered pursuant to Section 6.01(g) to be in respect of AFEs that are associated with projects that have an anticipated minimum internal rate of return (as set forth on such drilling and completion capital budget) of not less than 15%.

 

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ARTICLE VIII

EVENTS OF DEFAULT AND REMEDIES

Section 8.01 Events of Default . Any of the following shall constitute an “ Event of Default ”:

(a) Non-Payment . The Borrower or any other Loan Party fails to pay (i) when and as required to be paid herein, any amount of principal of any Committed Loan or any L/C Obligation; (ii) within three Business Days after the same becomes due, any interest on any Committed Loan or on any L/C Obligation, or any fee due hereunder; or (iii) within five Business Days that the same has come due, any other amount payable hereunder or under any other Loan Document; or

(b) Specific Covenants . The Borrower fails to perform or observe any term, covenant or agreement contained in any of Section 6.03(a) , Section 6.05(a)  (with respect to the Borrower only), Section 6.11 , Section 6.12 , Section 6.18 , Section 6.19 or Article VII ; or

(c) Other Defaults . Any Loan Party fails to perform or observe any other covenant or agreement (not specified in clause (a)  or (b)  above) contained in any Loan Document on its part to be performed or observed and such failure continues for 30 days after receipt of written notice from the Administrative Agent of the occurrence of such failure; or

(d) Representations and Warranties . Any representation, warranty, or certification made or deemed made by or on behalf of the Borrower or any other Loan Party herein, in any other Loan Document, or in any document delivered in connection herewith or therewith shall be incorrect or misleading in any material respect when made or deemed made; or

(e) Cross-Default . (i) The Borrower or any Restricted Subsidiary (A) fails to make any payment when due (whether by scheduled maturity, required prepayment, acceleration, demand, or otherwise) in respect of any Indebtedness or Guarantee (other than Indebtedness hereunder and Indebtedness under Swap Contracts) having an aggregate principal amount (including undrawn committed or available amounts and including amounts owing to all creditors under any combined or syndicated credit arrangement) of more than the Threshold Amount or (B) fails to observe or perform any other agreement or condition relating to any such Indebtedness or Guarantee or contained in any instrument or agreement evidencing, securing or relating thereto, or any other event occurs, the effect of which default or other event is to cause, or to permit the holder or holders of such Indebtedness or the beneficiary or beneficiaries of such Guarantee (or a trustee or agent on behalf of such holder or holders or beneficiary or beneficiaries) to cause, such Indebtedness to be demanded or to become due or to be repurchased, prepaid, defeased or redeemed (automatically or otherwise), or an offer to repurchase, prepay, defease or redeem such Indebtedness to be made, prior to its stated maturity, or such Guarantee to become payable or cash collateral in respect thereof to be demanded; or (ii) there occurs under any Swap Contract an Early Termination Date (as defined in such Swap Contract) resulting from any event of default under such Swap Contract as to which the Borrower or any Restricted Subsidiary (excluding Immaterial Subsidiaries) is the Defaulting Party (as defined in such Swap Contract) and the Swap Termination Value owed by the Borrower or such Restricted Subsidiary as a result thereof is greater than the Threshold Amount; or

(f) Insolvency Proceedings, Etc . Any Loan Party or any of its Restricted Subsidiaries (excluding Immaterial Subsidiaries) institutes or consents to the institution of any proceeding under any Debtor Relief Law, or makes a general assignment for the benefit of creditors; or applies for or

 

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consents to the appointment of any receiver, trustee, custodian, conservator, liquidator, rehabilitator or similar officer for it or for all or any material part of its property; or any receiver, trustee, custodian, conservator, liquidator, rehabilitator or similar officer is appointed without the application or consent of such Person and the appointment continues undischarged or unstayed for 60 calendar days; or any proceeding under any Debtor Relief Law relating to any such Person or to all or any material part of its property is instituted without the consent of such Person and continues undismissed or unstayed for 60 calendar days, or an order for relief is entered in any such proceeding; or

(g) Inability to Pay Debts; Attachment . (i) The Borrower or any Restricted Subsidiary (excluding Immaterial Subsidiaries) becomes unable or admits in writing its inability or fails generally to pay its debts as they become due or (ii) any writ or warrant of attachment or execution or similar process is issued or levied against all or any material part of the property of any such Person and is not released, vacated or fully bonded within 30 days after its issue or levy; or

(h) Judgments . There is entered against the Borrower or any Restricted Subsidiary (i) one or more final judgments or orders for the payment of money in an aggregate amount (as to all such judgments or orders) exceeding the Threshold Amount (to the extent not covered by independent third-party insurance as to which the insurer does not dispute coverage) or (ii) any one or more non-monetary final judgments that have, or could reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect and, in either case, (A) enforcement proceedings are commenced by any creditor upon such judgment or order or (B) there is a period of 30 consecutive days during which a stay of enforcement of such judgment, by reason of a pending appeal or otherwise, is not in effect; or

(i) ERISA . (i) An ERISA Event occurs with respect to a Pension Plan or Multiemployer Plan which has resulted or could reasonably be expected to result in a Material Adverse Effect or (ii) the Borrower or any ERISA Affiliate fails to pay when due, after the expiration of any applicable grace period, any installment payment with respect to its withdrawal liability under Section 4201 of ERISA under a Multiemployer Plan which has resulted or could reasonably be expected to result in a Material Adverse Effect; or

(j) Invalidity of Loan Documents . Any material provision of the Loan Documents, at any time after its execution and delivery and for any reason other than as expressly permitted hereunder or thereunder or satisfaction in full of all the Obligations, ceases to be in full force and effect; or any Loan Party or any other Person contests in any manner the validity or enforceability of any material provision of the Loan Documents; or any Loan Party denies that it has any material or further liability or obligation under any material provision of the Loan Documents, or purports to revoke, terminate or rescind any material provision of the Loan Documents; or

(k) Change of Control . There occurs any Change of Control;

(l) Collateral Documents . Any Collateral Document after delivery thereof pursuant to the Security Agreement or Section 4.01 , Section 6.12 or Section 6.14 hereof shall for any reason (other than pursuant to the terms thereof) cease to create a valid and perfected first-priority Lien (subject to Liens permitted by Section 7.01 ) on any material portion of the Collateral purported to be covered by the Collateral Documents;

(m) Convertible Notes Intercreditor Agreement; Junior Lien Financing Documentation . (i) Any of the Obligations of the Loan Parties under the Loan Documents for any reason shall cease to be “Priority Lien Obligations” (or any comparable term) under, and as defined in, the Convertible Notes Intercreditor Agreement shall, in whole or in part, otherwise cease to be effective or cease to be legally valid, binding and enforceable against the holders thereof (or any applicable trustee or

 

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representative on behalf of such holders), (ii) any of the Obligations of the Loan Parties under the Loan Documents for any reason shall cease to be “First Lien Obligations” (or any comparable term) under, and as defined in, the Junior Lien Intercreditor Agreement under, and as defined in any Junior Lien Financing Documentation or (iii) the lien subordination provisions set forth in any Junior Lien Financing Documentation shall, in whole or in part, cease to be effective or cease to be legally valid, binding and enforceable against the holders of any Junior Lien Debt, if applicable; or

(n) Final Confirmation Order . The Final Confirmation Order shall (i) have been amended or modified in any material manner that is adverse to the interests of the Lenders in their capacities as such, revoked, rescinded, vacated, reversed or stayed or (ii) otherwise cease to be in full force and effect in any material manner that is adverse to the interests of the Lenders in their capacities as such, in each case, without the written consent of the Administrative Agent and the Lenders.

Section 8.02 Remedies Upon Event of Default . If any Event of Default occurs and is continuing, the Administrative Agent shall, at the request of Majority Lenders, take any or all of the following actions:

(a) declare the commitment of each Lender to make Committed Loans and any obligation of the L/C Issuers to make L/C Credit Extensions to be terminated, whereupon such commitments and obligation shall be terminated;

(b) declare the unpaid principal amount of all outstanding Committed Loans, all interest accrued and unpaid thereon, and all other amounts owing or payable hereunder or under any other Loan Document to be immediately due and payable, without presentment, demand, protest or other notice of any kind, all of which are hereby expressly waived by the Borrower;

(c) require that the Borrower Cash Collateralize the L/C Obligations (in an amount equal to the then Outstanding Amount thereof); and

(d) exercise on behalf of itself, the Lenders and the L/C Issuers all rights and remedies available to it, the Lenders and the L/C Issuers under the Loan Documents;

provided , however , that upon the occurrence of an actual or deemed entry of an order for relief with respect to the Borrower under the Bankruptcy Code, the obligation of each Lender to make Committed Loans and any obligation of each L/C Issuer to make L/C Credit Extensions shall automatically terminate, the unpaid principal amount of all outstanding Committed Loans and all interest and other amounts as aforesaid shall automatically become due and payable, and the obligation of the Borrower to Cash Collateralize the L/C Obligations as aforesaid shall automatically become effective, in each case without further act of, and without the need for notice from, the Administrative Agent or any Lender.

Section 8.03 Application of Funds . After the exercise of remedies provided for in Section 8.02 (or after the Committed Loans have automatically become immediately due and payable and the L/C Obligations have automatically been required to be Cash Collateralized as set forth in the proviso to Section 8.02 ), any amounts received on account of the Obligations shall be applied by the Administrative Agent in the following order:

(a) First , to payment of that portion of the Obligations constituting fees, indemnities, expenses and other amounts (including fees, charges and disbursements of counsel to the Administrative Agent and amounts payable under Article III ) payable to the Administrative Agent in its capacity as such;

 

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(b) Second , to payment of that portion of the Obligations constituting fees, indemnities and other amounts (other than principal, interest and Letter of Credit Fees) payable to the Lenders and the L/C Issuers (including fees, charges and disbursements of counsel to the respective Lenders and the L/C Issuers (including fees and time charges for attorneys who may be employees of any Lender or any L/C Issuer) and amounts payable under Article III ), ratably among them in proportion to the respective amounts described in this clause Second payable to them;

(c) Third , to payment of that portion of the Obligations constituting accrued and unpaid Letter of Credit Fees and interest on the Committed Loans, L/C Borrowings and other Obligations, ratably among the Lenders and the L/C Issuers in proportion to the respective amounts described in this clause Third payable to them;

(d) Fourth , to payment of that portion of the Obligations constituting unpaid principal of the Committed Loans and L/C Borrowings, amounts payable under Swap Contracts, amounts payable under Treasury Management Services Agreements, and to the Administrative Agent for the account of each L/C Issuer, to Cash Collateralize that portion of L/C Obligations comprised of the aggregate undrawn amount of Letters of Credit, ratably among the Lenders, the L/C Issuers and the Lender Counterparties, in proportion to the respective amounts described in this clause Fourth held by them; and

(e) Last , the balance, if any, after all of the Obligations have been indefeasibly paid in full, to the Borrower or as otherwise required by Law.

Subject to Section 2.03(d) , amounts used to Cash Collateralize the aggregate undrawn amount of Letters of Credit pursuant to clause Fourth above shall be applied to satisfy drawings under such Letters of Credit as they occur. If any amount remains on deposit as Cash Collateral after all Letters of Credit have either been fully drawn or expired, such remaining amount shall be applied to the other Obligations, if any, in the order set forth above.

ARTICLE IX

ADMINISTRATIVE AGENT

Section 9.01 Appointment and Authority .

(a) Each of the Lenders and each L/C Issuer hereby irrevocably appoints Royal Bank of Canada to act on its behalf as the Administrative Agent hereunder and under the other Loan Documents and authorizes the Administrative Agent to take such actions on its behalf and to exercise such powers as are delegated to the Administrative Agent by the terms hereof or thereof, together with such actions and powers as are reasonably incidental thereto. Except to the extent Sections 9.01(b)  and 9.06 expressly contemplate rights of others, the provisions of this Article IX are solely for the benefit of the Administrative Agent, the Lenders and the L/C Issuers, and the Borrower shall not have rights as a third party beneficiary of any of such provisions.

(b) The Administrative Agent shall also act as the “collateral agent” under the Loan Documents, and each of the Lenders (in its capacities as a Lender and potential Lender Counterparty) and each L/C Issuer hereby irrevocably appoints and authorizes the Administrative Agent to act as the agent of such Lender and such L/C Issuer for purposes of acquiring, holding and enforcing any and all Liens on Collateral granted by any of the Loan Parties to secure any of the Obligations, together with such powers and discretion as are reasonably incidental thereto. In this connection, the Administrative Agent, as “collateral agent” and any co-agents, sub-agents and attorneys-in-fact appointed by the Administrative Agent pursuant to Section 9.05 for purposes of holding or enforcing any Lien on the Collateral (or any

 

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portion thereof) granted under the Collateral Documents, or for exercising any rights and remedies thereunder at the direction of the Administrative Agent, shall be entitled to the benefits of all provisions of this Article IX and Article X (including Section 10.04(c) , as though such co-agents, sub-agents and attorneys-in-fact were the “collateral agent” under the Loan Documents) as if set forth in full herein with respect thereto.

Section 9.02 Rights as a Lender . The Person serving as the Administrative Agent hereunder shall have the same rights and powers in its capacity as a Lender as any other Lender and may exercise the same as though it were not the Administrative Agent and the term “Lender” or “Lenders” shall, unless otherwise expressly indicated or unless the context otherwise requires, include the Person serving as the Administrative Agent hereunder in its individual capacity. Such Person and its Affiliates may accept deposits from, lend money to, act as the financial advisor or in any other advisory capacity for and generally engage in any kind of business with the Borrower or any Subsidiary or other Affiliate thereof as if such Person were not the Administrative Agent hereunder and without any duty to account therefor to the Lenders.

Section 9.03 Exculpatory Provisions . The Administrative Agent shall not have any duties or obligations except those expressly set forth herein and in the other Loan Documents. Without limiting the generality of the foregoing, the Administrative Agent:

(a) shall not be subject to any fiduciary or other implied duties, regardless of whether a Default has occurred and is continuing;

(b) shall not have any duty to take any discretionary action or exercise any discretionary powers, except discretionary rights and powers expressly contemplated hereby or by the other Loan Documents that the Administrative Agent is required to exercise as directed in writing by the Majority Lenders (or such other number or percentage of the Lenders as shall be expressly provided for herein or in the other Loan Documents); provided that the Administrative Agent shall not be required to take any action that, in its opinion or the opinion of its counsel, may expose the Administrative Agent to liability or that is contrary to any Loan Document or applicable Law; and

(c) shall not, except as expressly set forth herein and in the other Loan Documents, have any duty to disclose, and shall not be liable for the failure to disclose, any information relating to the Borrower or any of its Affiliates that is communicated to or obtained by the Person serving as the Administrative Agent or any of its Affiliates in any capacity.

The Administrative Agent shall not be liable for any action taken or not taken by it (i) with the consent or at the request of the Majority Lenders (or such other number or percentage of the Lenders as shall be necessary, or as the Administrative Agent shall believe in good faith shall be necessary, under the circumstances as provided in Sections 8.02 and 10.01 ) or (ii) in the absence of its own gross negligence or willful misconduct, in each case as determined in a final, non-appealable judgment by a court of competent jurisdiction. The Administrative Agent shall be deemed not to have knowledge of any Default unless and until notice describing such Default is given to the Administrative Agent by the Borrower, a Lender or an L/C Issuer.

The Administrative Agent shall not be responsible for or have any duty to ascertain or inquire into (i) any statement, warranty or representation made in or in connection with this Agreement or any other Loan Document, (ii) the contents of any certificate, report or other document delivered hereunder or thereunder or in connection herewith or therewith, (iii) the performance or observance of any of the covenants, agreements or other terms or conditions set forth herein or therein or the occurrence of any Default, (iv) the validity, enforceability, effectiveness or genuineness of this Agreement, any other Loan

 

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Document or any other agreement, instrument or document or the creation, perfection or priority of any Lien purported to be created by the Collateral Documents, (v) the value or the sufficiency of any Collateral, or (vi) the satisfaction of any condition set forth in Article IV or elsewhere herein, other than to confirm receipt of items expressly required to be delivered to the Administrative Agent.

Section 9.04 Reliance by Administrative Agent .

The Administrative Agent shall be entitled to rely upon, and shall not incur any liability for relying upon, any notice, request, certificate, consent, statement, instrument, document or other writing (including any electronic message, Internet or intranet website posting or other distribution) believed by it to be genuine and to have been signed, sent or otherwise authenticated by the proper Person. The Administrative Agent also may rely upon any statement made to it orally or by telephone and believed by it to have been made by the proper Person, and shall not incur any liability for relying thereon. In determining compliance with any condition hereunder to the making of a Committed Loan, or the issuance of a Letter of Credit, that by its terms must be fulfilled to the satisfaction of a Lender or an L/C Issuer, the Administrative Agent may presume that such condition is satisfactory to such Lender or such L/C Issuer unless the Administrative Agent shall have received notice to the contrary from such Lender or such L/C Issuer prior to the making of such Committed Loan or the issuance of such Letter of Credit. The Administrative Agent may consult with legal counsel (who may be counsel for the Borrower), independent accountants and other experts selected by it, and shall not be liable for any action taken or not taken by it in accordance with the advice of any such counsel, accountants or experts.

Section 9.05 Delegation of Duties . The Administrative Agent may perform any and all of its duties and exercise its rights and powers hereunder or under any other Loan Document by or through any one or more sub-agents appointed by the Administrative Agent. The Administrative Agent and any such sub-agent may perform any and all of its duties and exercise its rights and powers by or through their respective Related Parties. The exculpatory provisions of this Article IX 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 the Administrative Agent.

Section 9.06 Resignation of Administrative Agent . The Administrative Agent may at any time give notice of its resignation to the Lenders, the L/C Issuers and the Borrower. Upon receipt of any such notice of resignation, the Majority Lenders shall have the right, in consultation with the Borrower, to appoint a successor, which shall be a bank with an office in the United States, or an Affiliate of any such bank with an office in the United States. If no such successor shall have been so appointed by the Majority Lenders and shall have accepted such appointment within 30 days after the retiring Administrative Agent gives notice of its resignation, then the retiring Administrative Agent may (in consultation with the Borrower) on behalf of the Lenders and the L/C Issuers, appoint a successor Administrative Agent meeting the qualifications set forth above; provided that if the Administrative Agent shall notify the Borrower and the Lenders that no qualifying Person has accepted such appointment, then such resignation shall nonetheless become effective in accordance with such notice and (1) the retiring Administrative Agent shall be discharged from its duties and obligations hereunder and under the other Loan Documents (except that in the case of any collateral security held by the Administrative Agent on behalf of the Lenders or the L/C Issuers under any of the Loan Documents, the retiring Administrative Agent shall continue to hold such collateral security until such time as a successor Administrative Agent is appointed) and (2) all payments, communications and determinations provided to be made by, to or through the Administrative Agent shall instead be made by or to each Lender and each L/C Issuer directly, until such time as the Majority Lenders appoint a successor Administrative Agent as provided for above in this Section 9.06 . Upon the acceptance of a successor’s appointment as Administrative Agent hereunder, such successor shall succeed to and become vested with all of the rights,

 

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powers, privileges and duties of the retiring (or retired) Administrative Agent, and the retiring Administrative Agent shall be discharged from all of its duties and obligations hereunder or under the other Loan Documents (if not already discharged therefrom as provided above in this Section 9.06 ). The fees payable by the Borrower to a successor Administrative Agent shall be the same as those payable to its predecessor unless otherwise agreed between the Borrower and such successor. After the retiring Administrative Agent’s resignation hereunder and under the other Loan Documents, the provisions of this Article IX and Section 10.04 shall continue in effect for the benefit of such retiring Administrative Agent, its sub-agents and their respective Related Parties in respect of any actions taken or omitted to be taken by any of them while the retiring Administrative Agent was acting as Administrative Agent.

Any resignation by Royal Bank of Canada as Administrative Agent pursuant to this Section 9.06 shall also constitute its resignation as an L/C Issuer. Upon the acceptance of a successor’s appointment as Administrative Agent hereunder, (a) such successor shall succeed to and become vested with all of the rights, powers, privileges and duties of the retiring L/C Issuer, (b) the retiring L/C Issuer shall be discharged from all of their respective duties and obligations hereunder or under the other Loan Documents, and (c) the successor L/C Issuer shall issue letters of credit in substitution for the Letters of Credit, if any, outstanding at the time of such succession or make other arrangements satisfactory to the retiring L/C Issuer to effectively assume the obligations of the retiring L/C Issuer with respect to such Letters of Credit.

Section 9.07 Non-Reliance on Administrative Agent and Other Lenders . Each Lender and each L/C Issuer acknowledges that it has, independently and without reliance upon the Administrative Agent or any other Lender or any of their Related Parties and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement. Each Lender and each L/C Issuer also acknowledges that it will, independently and without reliance upon the Administrative Agent or any other Lender or any of their Related Parties and based on such documents and information as it shall from time to time deem appropriate, continue to make its own decisions in taking or not taking action under or based upon this Agreement, any other Loan Document or any related agreement or any document furnished hereunder or thereunder.

Section 9.08 No Other Duties, Etc . Anything herein to the contrary notwithstanding, the Arranger shall not have any powers, duties or responsibilities under this Agreement, except in its capacity (and solely in such capacity), as applicable, as the Administrative Agent, a Lender or an L/C Issuer hereunder.

Section 9.09 Administrative Agent May File Proofs of Claim . In case of the pendency of any proceeding under any Debtor Relief Law or any other judicial proceeding relative to any Loan Party, the Administrative Agent (irrespective of whether the principal of any Committed Loan or L/C Obligation 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 Committed Loans, L/C Obligations and all other Obligations that are owing and unpaid and to file such other documents as may be necessary or advisable in order to have the claims of the Lenders, the L/C Issuers and the Administrative Agent (including any claim for the reasonable compensation, expenses, disbursements and advances of the Lenders, the L/C Issuers and the Administrative Agent and their respective agents and counsel and all other amounts due the Lenders, the L/C Issuers and the Administrative Agent under Sections 2.03(j)  and (k) , 2.09 and 10.04 ) allowed in such judicial proceeding; and

 

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(b) to collect and receive any monies or other property payable or deliverable on any such claims and to distribute the same;

and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such judicial proceeding is hereby authorized by each Lender and each L/C Issuer to make such payments to the Administrative Agent and, in the event that the Administrative Agent shall consent to the making of such payments directly to the Lenders and the L/C Issuers, 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 Sections 2.09 and 10.04 .

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 any L/C Issuer any plan of reorganization, arrangement, adjustment or composition affecting the Obligations or the rights of any Lender or any L/C Issuer to authorize the Administrative Agent to vote in respect of the claim of any Lender or any L/C Issuer in any such proceeding.

Section 9.10 Collateral and Guaranty Matters . The Lenders and the L/C Issuers irrevocably authorize:

(a) and instruct the Administrative Agent to release (and the following shall automatically be released without any further action on the part of any Person): any Lien on any property granted to or held by the Administrative Agent under any Loan Document (i) upon termination of the Aggregate Commitments and payment in full of all Obligations (other than contingent indemnification obligations, obligations with respect to Swap Contracts and obligations with respect to Treasury Management Services Agreements) and the expiration, termination or Cash Collateralization in full of all Letters of Credit, (ii) which property is Disposed of or to be Disposed of as part of or in connection with any Disposition permitted hereunder or under any other Loan Document, (iii) which property is owned by a Subsidiary at the time it is designated an Unrestricted Subsidiary, or (iv) subject to Section 10.01 , if approved, authorized or ratified in writing by the Majority Lenders;

(b) and instruct the Administrative Agent to release (and the following Guarantors shall automatically be released without any further action on the part of any Person): (i) any Guarantor from its obligations under the Guaranty if such Person ceases to be a Restricted Subsidiary as a result of a transaction permitted hereunder and (ii) any Restricted Subsidiary from its obligations under any Collateral Document upon its designation as an Unrestricted Subsidiary;

(c) the Administrative Agent, at its option and in its discretion to subordinate or release any Lien on any property granted to or held by the Administrative Agent under any Loan Document to the holder of any Lien on such property that is permitted by Section 7.01(i)  or Section 7.01(j) ; and

(d) and instruct the Administrative Agent to release (and the following shall automatically be released without any further action on the part of any Person): any Lien on any property (an interest in which has been Disposed of to a Royalty Trust) granted to or held by the Administrative Agent under any Loan Document if, and when, a Lien on such property is granted in favor of such Royalty Trust.

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 pursuant to this

 

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Section 9.10 . In each case as specified in this Section 9.10 , the Administrative Agent will, at the Borrower’s expense, execute and deliver to the applicable Loan Party such documents as such Loan Party may reasonably request to evidence the release of such item of Collateral from the assignment and security interest granted under the Collateral Documents or to subordinate its interest in such item, or to release such Guarantor from its obligations under the Guaranty, in each case in accordance with the terms of the Loan Documents and this Section 9.10 .

The benefit of the Collateral Documents and of the provisions of this Agreement relating to any collateral securing the Obligations shall also extend to and be available to each Lender Counterparty in respect of any Obligations owed to such Lender Counterparty under any Swap Contract. Except as set forth in Sections 10.01(f), no Lender Counterparty shall have any voting rights under any Loan Document as a result of the existence of Obligations owed to it under any Swap Contract.

Section 9.11 Flood Insurance . The Administrative Agent has adopted internal policies and procedures that address requirements placed on federally regulated lenders under the Flood Insurance Regulations. The Administrative Agent will post on the Platform (or otherwise distribute to each lender in the syndicate) documents that it receives, if any, in connection with the Flood Insurance Regulations. However, the Administrative Agent reminds each Lender and Participant in the facility that, pursuant to the Flood Insurance Regulations, each federally regulated lender (whether acting as a Lender or a Participant in the facility) is responsible for assuring its own compliance with the Flood Insurance Regulations.

Section 9.12 Intercreditor Agreements . Each Lender (and each Person that becomes a Lender hereunder pursuant Section 10.06 ) hereby irrevocably authorizes and directors the Administrative Agent to enter into (a) the Convertible Notes Intercreditor Agreement and (b) any other Junior Lien Intercreditor Agreement 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 intercreditor agreement. Without limiting the provisions of Sections 9.03 and 10.04 , 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 or any such intercreditor agreement 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 (as determined in a final and non-appealable judgment by a court of competent jurisdiction). In addition, the Administrative Agent to, without any further consent of any Lender (other than the consent as to the form of Junior Lien Intercreditor Agreement contemplated by the definition of “Junior Lien Intercreditor Agreement”), enter into a Junior Lien Intercreditor Agreement with the collateral agent or other representatives of the holders of Indebtedness permitted under Section 7.03 that is intended to be secured on a junior basis to the Liens securing the Obligations, in each case, where such Indebtedness is secured by Liens permitted under Section 7.01 . The Administrative Agent may rely exclusively on a certificate of a Responsible Officer of the Borrower as to whether any such other Liens are permitted. The Convertible Notes Intercreditor Agreement and any Junior Lien Intercreditor Agreement entered into by the Administrative Agent in accordance with the terms of this Agreement shall be binding on the Secured Parties.

ARTICLE X

MISCELLANEOUS

Section 10.01 Amendments, Etc . No amendment or waiver of any provision of this Agreement or any other Loan Document, and no consent to any departure by the Borrower or any other Loan Party therefrom, shall be effective unless in writing signed by the Majority Lenders and the Borrower or the

 

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applicable Loan Party, as the case may be, and acknowledged by the Administrative Agent, and each such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given; provided , however , that no such amendment, waiver or consent shall:

(a) extend or increase the Commitment of any Lender (or reinstate any Commitment terminated pursuant to Section 8.02 ) without the written consent of such Lender;

(b) postpone any date fixed by this Agreement or any other Loan Document for any payment (excluding mandatory prepayments) of principal, interest, fees or other amounts due to the Lenders (or any of them) hereunder or under any other Loan Document without the written consent of each Lender directly affected thereby;

(c) reduce the principal of, or the rate of interest specified herein on, any Committed Loan or L/C Borrowing, or (subject to clause (iii)  of the second proviso to this Section 10.01 ) any fees or other amounts payable hereunder or under any other Loan Document without the written consent of each Lender directly affected thereby; provided , however , that only the consent of the Majority Lenders shall be necessary to amend the definition of “Default Rate” or to waive any obligation of the Borrower to pay interest or Letter of Credit Fees at the Default Rate;

(d) change Section 2.14 or Section 8.03 in a manner that would alter the pro rata sharing of payments required thereby without the written consent of each Lender adversely affected thereby;

(e) change any provision of this Section 10.01 or the definition of “Majority Lenders”, “Required Lenders”, “Applicable Percentage” or any other provision hereof specifying the number or percentage of Lenders required to amend, waive or otherwise modify any rights hereunder or make any determination or grant any consent hereunder without the written consent of each Lender;

(f) amend, modify or waive this Agreement or the Security Agreement so as to alter the ratable treatment of Obligations arising under the Loan Documents and Obligations arising under Hedge Transactions or the definition of “Lender Counterparty”, “Hedge Transactions”, “Obligations” or “Secured Obligations” in a manner adverse to any Lender Counterparty except with the written consent of each affected Lender Counterparty;

(g) release all or substantially all of the value of the Guaranty without the written consent of each Lender;

(h) amend any provision of Section 2.05(c) , Section 2.05(d)  or Section 2.05(e) relating to the automatic reduction of the Borrowing Base set forth therein, in each case without the written consent of the Required Lenders; or

(i) release all or substantially all of the Collateral in any transaction or series of related transactions, without the written consent of each Lender;

provided , further , that (i) no amendment, waiver or consent shall, unless in writing and signed by each L/C Issuer in addition to the Lenders required above, affect the rights or duties of the L/C Issuers under this Agreement or any Issuer Document relating to any Letter of Credit issued or to be issued by it; (ii) no amendment, waiver or consent shall, unless in writing and signed by the Administrative Agent in addition to the Lenders required above, affect the rights or duties of the Administrative Agent under this Agreement or any other Loan Document; and (iii)  Section 10.06(g)  may not be amended, waived or otherwise modified without the consent of each Granting Lender all or any part of whose Committed

 

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Loans are being funded by an SPC at the time of such amendment, waiver or other modification. Notwithstanding anything to the contrary herein, no Defaulting Lender shall have any right to approve or disapprove any amendment, waiver or consent hereunder, except as provided in clauses (a) , (b) , (c)  and (to the extent such Defaulting Lender’s rights are directly and adversely affected thereby)  (e)  above.

Notwithstanding the foregoing, no Lender consent is required to effect any amendment or supplement to the Convertible Notes Intercreditor Agreement, any Junior Lien Intercreditor Agreement or other intercreditor agreement or arrangement permitted under this Agreement that is for the purpose of adding any holders of Junior Lien Debt, as expressly contemplated by the terms of the Convertible Notes Intercreditor Agreement, such Junior Lien Intercreditor Agreement or such other intercreditor agreement or arrangement permitted under this Agreement, as applicable (it being understood that any such amendment or supplement may make such other changes to the applicable intercreditor agreement as, in the good faith determination of the Administrative Agent, are required to effectuate the foregoing; provided that such other changes are not adverse, in any material respect, to the interests of the Lenders); provided , further , that no such agreement shall amend, modify or otherwise affect the rights or duties of the Administrative Agent hereunder or under any other Loan Document without the prior written consent of the Administrative Agent.

Section 10.02 Notices; Effectiveness; Electronic Communication .

(a) Notices Generally . Except in the case of notices and other communications expressly permitted to be given by telephone (and except as provided in clause (b)  below), all notices and other communications provided for herein shall be in writing and shall be delivered by hand or overnight courier service, mailed by certified or registered mail or sent by telecopier as follows, and all notices and other communications expressly permitted hereunder to be given by telephone shall be made to the applicable telephone number, as follows:

(i) if to the Borrower, the Administrative Agent or an L/C Issuer, to the address, telecopier number, electronic mail address or telephone number specified for such Person on Schedule 10.02 ; and

(ii) if to any other Lender, to the address, telecopier number, electronic mail address or telephone number specified in its Administrative Questionnaire.

Notices sent by hand or overnight courier service, or mailed by certified or registered mail, shall be deemed to have been given when received; notices sent by telecopier shall be deemed to have been given when sent (except that, if not given during normal business hours for the recipient, shall be deemed to have been given at the opening of business on the next business day for the recipient). Notices delivered through electronic communications to the extent provided in clause (b)  below, shall be effective as provided in such clause (b) .

(b) Electronic Communications . Notices and other communications to the Lenders and the L/C Issuers hereunder may be delivered or furnished by electronic communication (including e mail and Internet or intranet websites) pursuant to procedures approved by the Administrative Agent; provided that the foregoing shall not apply to notices to any Lender or any L/C Issuer pursuant to Article II if such Lender or such L/C Issuer, as applicable, has notified the Administrative Agent that it is incapable of receiving notices under such Article II by electronic communication. The Administrative Agent or the Borrower may, in its discretion, agree to accept notices and other communications to it hereunder by electronic communications pursuant to procedures approved by it; provided that approval of such procedures may be limited to particular notices or communications.

 

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Unless the Administrative Agent otherwise prescribes, (i) notices and other communications sent to an e-mail address shall be deemed received upon the sender’s receipt of an acknowledgement from the intended recipient (such as by the “return receipt requested” function, as available, return e-mail or other written acknowledgement); provided that if such notice or other communication is not sent during the normal business hours of the recipient, such notice or communication shall be deemed to have been sent at the opening of business on the next business day for the recipient and (ii) notices or communications posted to an Internet or intranet website shall be deemed received upon the deemed receipt by the intended recipient at its e-mail address as described in the foregoing clause (i)  of notification that such notice or communication is available and identifying the website address therefor.

(c) The Platform . THE PLATFORM IS PROVIDED “AS IS” AND “AS AVAILABLE”. THE AGENT PARTIES DO NOT WARRANT THE ACCURACY OR COMPLETENESS OF THE BORROWER MATERIALS OR THE ADEQUACY OF THE PLATFORM, AND EXPRESSLY DISCLAIM LIABILITY FOR ERRORS IN OR OMISSIONS FROM THE BORROWER MATERIALS. NO WARRANTY OF ANY KIND, EXPRESS, IMPLIED OR STATUTORY, INCLUDING ANY WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NON-INFRINGEMENT OF THIRD PARTY RIGHTS OR FREEDOM FROM VIRUSES OR OTHER CODE DEFECTS, IS MADE BY ANY AGENT PARTY IN CONNECTION WITH THE BORROWER MATERIALS OR THE PLATFORM. In no event shall the Administrative Agent or any of its Related Parties (collectively, the “ Agent Parties ”) have any liability to the Borrower, any Lender, any L/C Issuer or any other Person for losses, claims, damages, liabilities or expenses of any kind (whether in tort, contract or otherwise) arising out of the Borrower’s or the Administrative Agent’s transmission of Borrower Materials through the Internet, except to the extent that such losses, claims, damages, liabilities or expenses are determined by a court of competent jurisdiction by a final and non-appealable judgment to have resulted from the gross negligence or willful misconduct of such Agent Party; provided , however , that in no event shall any Agent Party have any liability to the Borrower, any Lender, any L/C Issuer or any other Person for indirect, special, incidental, consequential or punitive damages (as opposed to direct or actual damages).

(d) Change of Address, Etc . Each of the Borrower, the Administrative Agent and the L/C Issuers may change its address, telecopier or telephone number for notices and other communications hereunder by notice to the other parties hereto. Each other Lender may change its address, telecopier or telephone number for notices and other communications hereunder by notice to the Borrower, the Administrative Agent and each L/C Issuer. In addition, each Lender agrees to notify the Administrative Agent from time to time to ensure that the Administrative Agent has on record (i) an effective address, contact name, telephone number, telecopier number and electronic mail address to which notices and other communications may be sent and (ii) accurate wire instructions for such Lender.

(e) Reliance by Administrative Agent, L/C Issuer and Lenders . The Administrative Agent, the L/C Issuers and the Lenders shall be entitled to rely and act upon any notices purportedly given by or on behalf of the Borrower even if (i) such notices were not made in a manner specified herein, were incomplete or were not preceded or followed by any other form of notice specified herein or (ii) the terms thereof, as understood by the recipient, varied from any confirmation thereof. The Borrower shall indemnify the Administrative Agent, each L/C Issuer, each Lender and the Related Parties of each of them from all losses, costs, expenses and liabilities resulting from the reliance by such Person on each notice purportedly given by or on behalf of the Borrower. All telephonic notices to and other telephonic communications with the Administrative Agent may be recorded by the Administrative Agent, and each of the parties hereto hereby consents to such recording.

Section 10.03 No Waiver; Cumulative Remedies . No failure by any Person to exercise, and no delay by any such Person in exercising, any right, remedy, power or privilege hereunder shall operate as a

 

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waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege. The rights, remedies, powers and privileges herein provided are cumulative and not exclusive of any rights, remedies, powers and privileges provided by Law.

Section 10.04 Expenses; Indemnity; Damage Waiver .

(a) Costs and Expenses . The Borrower shall pay (i) all reasonable out of pocket expenses incurred by the Administrative Agent and its Affiliates (including the reasonable fees, charges and disbursements of counsel for the Administrative Agent), in connection with the syndication of the credit facilities provided for herein, the preparation, negotiation, execution, delivery and administration of this Agreement and the other Loan Documents or any amendments, modifications or waivers of the provisions hereof or thereof (whether or not the transactions contemplated hereby or thereby shall be consummated), (ii) all reasonable out of pocket expenses incurred by each L/C Issuer in connection with the issuance, amendment, renewal or extension of any Letter of Credit or any demand for payment thereunder and (iii) all out of pocket expenses incurred by the Administrative Agent, any Lender or any L/C Issuer (including the fees, charges and disbursements of any counsel for the Administrative Agent, any Lender or any L/C Issuer), and shall pay all fees and time charges for attorneys who may be employees of the Administrative Agent, any Lender or any L/C Issuer, in connection with the enforcement of its rights (A) in connection with this Agreement and the other Loan Documents, including its rights under this Section 10.04 , or (B) in connection with the Committed 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 Committed Loans or Letters of Credit.

(b) Indemnification by the Borrower . The Borrower shall indemnify the Administrative Agent (and any sub-agent thereof), each Lender and each L/C Issuer, 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 fees, charges and disbursements of any counsel for any Indemnitee), and shall indemnify and hold harmless each Indemnitee from all fees and time charges and disbursements for attorneys who may be employees of any Indemnitee, incurred by any Indemnitee or asserted against any Indemnitee by any third party or by the Borrower or any other Loan Party arising out of, in connection with, or as a result of (i) the execution or delivery of this Agreement, any other Loan Document or any agreement or instrument contemplated hereby or thereby, the performance by the parties hereto of their respective obligations hereunder or thereunder, the consummation of the transactions contemplated hereby or thereby, or, in the case of the Administrative Agent (and any sub-agent thereof) and its Related Parties only, the administration of this Agreement and the other Loan Documents, (ii) any Committed Loan or Letter of Credit or the use or proposed use of the proceeds therefrom (including any refusal by any L/C Issuer to honor a demand for payment under a Letter of Credit if the documents presented in connection with such demand do not strictly comply with the terms of such Letter of Credit), (iii) any actual or alleged presence or release of Hazardous Materials on or from any property owned or operated by the Borrower or any of its Subsidiaries, or any Environmental Liability related in any way to the Borrower or any of its Subsidiaries, or (iv) any actual or prospective claim, litigation, investigation or proceeding relating to any of the foregoing, whether based on contract, tort or any other theory, whether brought by a third party or by the Borrower or any other Loan Party, and regardless of whether any Indemnitee is a party thereto, IN ALL CASES, WHETHER OR NOT CAUSED BY OR ARISING, IN WHOLE OR IN PART, OUT OF THE COMPARATIVE, CONTRIBUTORY OR SOLE NEGLIGENCE OF THE INDEMNITEE; provided that such indemnity shall not, as to any Indemnitee, be available to the extent that such losses, claims, damages, liabilities or related expenses (x) are determined by a court of competent jurisdiction by final and non-appealable judgment to have resulted from the gross negligence or willful misconduct of such Indemnitee or (y) result from a claim brought by the Borrower or any other

 

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Loan Party against an Indemnitee for breach in bad faith of such Indemnitee’s obligations hereunder or under any other Loan Document, if the Borrower or such Loan Party has obtained a final and nonappealable judgment in its favor on such claim as determined by a court of competent jurisdiction. No Loan Party will, without the prior written consent of the relevant Indemnitee (which consent shall not be unreasonably withheld), effect any settlement of any pending or threatened claim, litigation, investigation or proceeding (any of the foregoing, a “ Proceeding ”) against an Indemnitee in respect of which indemnity could have been sought hereunder by such Indemnitee unless (i) such settlement includes an unconditional release of such Indemnitee from all liability or claims that are the subject matter of such Proceeding and (ii) does not include any statement as to any admission. Notwithstanding the foregoing, no Loan Party shall be liable for any settlement of any pending or threatened Proceeding effected without the Borrower’s prior written consent (which consent shall not be unreasonably withheld).

(c) Reimbursement by Lenders . To the extent that the Borrower for any reason fails to indefeasibly pay any amount required under clause (a)  or (b)  of this Section 10.04 to be paid by it to the Administrative Agent (or any sub-agent thereof), the applicable L/C Issuer or any Related Party of any of the foregoing, each Lender severally agrees to pay to the Administrative Agent (or any such sub-agent), the applicable L/C Issuer or such Related Party, 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 the Administrative Agent (or any such sub-agent) or the applicable L/C Issuer in its capacity as such, or against any Related Party of any of the foregoing acting for the Administrative Agent (or any such sub-agent) or applicable L/C Issuer in connection with such capacity. The obligations of the Lenders under this clause (c)  are subject to the provisions of Section 2.13(d) .

(d) Waiver of Consequential Damages, Etc . To the fullest extent permitted by applicable Law, the Borrower shall not assert, and hereby waives, any claim against any Indemnitee, on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct or actual damages) arising out of, in connection with, or as a result of, this Agreement, any other Loan Document or any agreement or instrument contemplated hereby, the transactions contemplated hereby or thereby, any Committed Loan or Letter of Credit or the use of the proceeds thereof. No Indemnitee referred to in clause (b)  above shall be liable for any damages arising from the use by unintended recipients of any information or other materials distributed to such unintended recipients by such Indemnitee through telecommunications, electronic or other information transmission systems in connection with this Agreement or the other Loan Documents or the transactions contemplated hereby or thereby other than for direct or actual damages resulting from the gross negligence or willful misconduct of such Indemnitee as determined by a final and non-appealable judgment of a court of competent jurisdiction.

(e) Payments . All amounts due under this Section 10.04 shall be payable not later than ten Business Days after demand therefor.

(f) Survival . The agreements in this Section 10.04 shall survive the resignation of the Administrative Agent and any L/C Issuer, the replacement of any Lender, the termination of the Aggregate Commitments and the repayment, satisfaction or discharge of all the other Obligations.

Section 10.05 Payments Set Aside . To the extent that any payment by or on behalf of the Borrower is made to the Administrative Agent, the applicable L/C Issuer or any Lender, or the Administrative Agent, any L/C Issuer or any Lender exercises its right of setoff, and such payment or the proceeds of such setoff or any part thereof is subsequently invalidated, declared to be fraudulent or preferential, set aside or required (including pursuant to any settlement entered into by the Administrative

 

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Agent, such L/C Issuer or such Lender in its discretion) to be repaid to a trustee, receiver or any other party, in connection with any proceeding under any Debtor Relief Law or otherwise, then (a) to the extent of such recovery, the obligation or part thereof originally intended to be satisfied shall be revived and continued in full force and effect as if such payment had not been made or such setoff had not occurred and (b) each Lender and each L/C Issuer severally agrees to pay to the Administrative Agent upon demand its applicable share (without duplication) of any amount so recovered from or repaid by the Administrative Agent, plus interest thereon from the date of such demand to the date such payment is made at a rate per annum equal to the Federal Funds Rate from time to time in effect. The obligations of the Lenders and the L/C Issuers under clause (b)  of the preceding sentence shall survive the payment in full of the Obligations and the termination of this Agreement.

Section 10.06 Successors and Assigns .

(a) Successors and Assigns Generally . The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns permitted hereby, except that the Borrower may not assign or otherwise transfer any of its rights or obligations hereunder without the prior written consent of the Administrative Agent and each Lender and no Lender may assign or otherwise transfer any of its rights or obligations hereunder except (i) to an assignee in accordance with the provisions of clause (b)  of this Section 10.06 , (ii) by way of participation in accordance with the provisions of clause (d)  of this Section 10.06 , (iii) by way of pledge or assignment of a security interest subject to the restrictions of clause (f)  of this Section 10.06 , or (iv) to an SPC in accordance with the provisions of clause (g)  of this Section 10.06 (and any other attempted assignment or transfer by any party hereto shall be null and void). Nothing in this Agreement, expressed or implied, shall be construed to confer upon any Person (other than the parties hereto, their respective successors and assigns permitted hereby, Participants to the extent provided in clause (d)  of this Section 10.06 and, to the extent expressly contemplated hereby, the Related Parties of each of the Administrative Agent, the L/C Issuers and the Lenders) any legal or equitable right, remedy or claim under or by reason of this Agreement.

(b) Assignments by Lenders . Any Lender may at any time assign to one or more assignees all or a portion of its rights and obligations under this Agreement (including all or a portion of its Commitment and the Committed Loans (including for purposes of this clause (b) , participations in L/C Obligations) at the time owing to it); provided that any such assignment shall be subject to the following conditions:

(i) Minimum Amounts .

(A) in the case of an assignment of the entire remaining amount of the assigning Lender’s Commitment and the Committed Loans at the time owing to it or in the case of an assignment to a Lender, an Affiliate of a Lender or an Approved Fund, no minimum amount need be assigned; and

(B) in any case not described in clause (b)(i)(A)  of this Section 10.06 , the aggregate amount of the Commitment (which for this purpose includes Committed Loans outstanding thereunder) or, if the Commitment is not then in effect, the principal outstanding balance of the Committed Loans of the assigning Lender subject to each such assignment, determined as of the date the Assignment and Assumption with respect to such assignment is delivered to the Administrative Agent or, if a “Trade Date” is specified in the Assignment and Assumption, as of the Trade Date, shall not be less than $5,000,000 unless each of the Administrative Agent and, so long as no Event of Default has occurred and is continuing, the Borrower otherwise consents (each such consent not to be unreasonably withheld or delayed);

 

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provided , however , that concurrent assignments to members of an Assignee Group and concurrent assignments from members of an Assignee Group to a single assignee (or to an assignee and members of its Assignee Group) will be treated as a single assignment for purposes of determining whether such minimum amount has been met.

(ii) Proportionate Amounts . Each partial assignment shall be made as an assignment of a proportionate part of all the assigning Lender’s rights and obligations under this Agreement with respect to the Committed Loans or the Commitment assigned;

(iii) Required Consents . No consent shall be required for any assignment except to the extent required by clause (b)(i)(B)  of this Section 10.06 and, in addition:

(A) the consent of the Borrower (such consent not to be unreasonably withheld or delayed) shall be required unless (1) an Event of Default has occurred and is continuing at the time of such assignment or (2) such assignment is to a Lender, an Affiliate of a Lender or an Approved Fund; provided that the Borrower shall be deemed to have consented to any such assignment unless it shall object thereto by written notice to the Administrative Agent within five Business Days after having received notice thereof;

(B) the consent of the Administrative Agent (such consent not to be unreasonably withheld or delayed) shall be required if such assignment is to a Person that is not a Lender, an Affiliate of such Lender or an Approved Fund with respect to such Lender; and the consent of the L/C Issuers (such consent not to be unreasonably withheld or delayed) shall be required for any assignment.

(iv) Assignment and Assumption . The parties to each assignment shall execute and deliver to the Administrative Agent an Assignment and Assumption, together with a processing and recordation fee per assignment payable by the assignor (subject to Section 10.13(a) ) directly to the Administrative Agent in the amount of $3,500; provided , however , that the Administrative Agent may, in its sole discretion, elect to waive such processing and recordation fee in the case of any assignment. The assignee, if it is not a Lender, shall deliver to the Administrative Agent an Administrative Questionnaire.

(v) No Assignment to Borrower . No such assignment shall be made to the Borrower or any of the Borrower’s Affiliates or Subsidiaries.

(vi) No Assignment to Natural Persons . No such assignment shall be made to a natural person.

(vii) No Assignment to Defaulting Lenders . No such assignment shall be made to a Defaulting Lender.

Subject to acceptance and recording thereof by the Administrative Agent pursuant to clause (c)  of this Section 10.06 , from and after the effective date specified in each Assignment and Assumption, the assignee thereunder shall be a party to this Agreement and, to the extent of the interest assigned by such Assignment and Assumption, have the rights and obligations of a Lender under this Agreement, and the assigning Lender thereunder shall, to the extent of the interest assigned by such Assignment and Assumption, be released from its obligations under this Agreement (and, in the case of an Assignment and Assumption covering all of the assigning Lender’s rights and obligations under this Agreement, such Lender shall cease to be a party hereto) but shall continue to be entitled to the benefits of Sections 3.01 , 3.04 , 3.05 , and 10.04 with respect to facts and circumstances occurring prior to the effective date of such

 

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assignment. Upon request, the Borrower (at its expense) shall execute and deliver a Note to the assignee Lender. Any assignment or transfer by a Lender of rights or obligations under this Agreement that does not comply with this clause (b)  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 clause (d)  of this Section 10.06 .

(c) Register . The Administrative Agent, acting solely for this purpose as a non-fiduciary agent of the Borrower, shall maintain at the Administrative Agent’s Office a copy of each Assignment and Assumption delivered to it and a register for the recordation of the names and addresses of the Lenders, and the Commitments of, and principal amounts of the Committed Loans and L/C Obligations owing to, each Lender pursuant to the terms hereof from time to time (the “ Register ”). The entries in the Register shall be conclusive absent manifest error, and the Borrower, the Administrative Agent and the Lenders may 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 and any Lender, at any reasonable time and from time to time upon reasonable prior notice.

(d) Participations . Any Lender may at any time, without the consent of, or notice to, the Borrower or the Administrative Agent, sell participations to any Person (other than a natural person or the Borrower or any of the Borrower’s Affiliates or Subsidiaries) (each, a “ Participant ”) in all or a portion of such Lender’s rights and/or obligations under this Agreement (including all or a portion of its Commitment and/or the Committed Loans (including such Lender’s participations in L/C Obligations) owing to it); provided that (i) such Lender’s obligations under this Agreement shall remain unchanged, (ii) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations and (iii) the Borrower, the Administrative Agent, the Lenders and the L/C Issuers 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, waiver or other modification described in the first proviso to Section 10.01 that affects such Participant. Subject to clause (e)  of this Section 10.06 , the Borrower agrees that each Participant shall be entitled to the benefits of Sections 3.01 , 3.04 , and 3.05 to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to clause (b)  of this Section 10.06 . To the extent permitted by Law, each Participant also shall be entitled to the benefits of Section 10.08 as though it were a Lender; provided that such Participant agrees to be subject to Section 2.14 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 Committed Loans or other obligations under the Loan Documents (the “ Participant Register ”); provided that no Lender shall have any obligation to disclose all or any portion of the Participant Register (including the identity of any Participant or any information relating to a Participant’s interest in any commitments, loans, letters of credit or its other obligations under any Loan Document) to any Person except to the extent that such disclosure is necessary to establish that such commitment, loan, letter of credit or other obligation is in registered form under Section 5f.103-1(c) of the United States Treasury Regulations. The entries in the Participant Register shall be conclusive absent manifest error, and such Lender shall treat each Person whose name is recorded in the Participant Register as the owner of such participation for all purposes of this Agreement notwithstanding any notice to the contrary. For the avoidance of doubt, the Administrative Agent (in its capacity as Administrative Agent) shall have no responsibility for maintaining a Participant Register.

 

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(e) Limitations upon Participant Rights . A Participant shall not be entitled to receive any greater payment under Section 3.01 or Section 3.04 than the applicable Lender would have been entitled to receive with respect to the participation sold to such Participant, unless the sale of the participation to such Participant is made with the Borrower’s prior written consent. A Participant that would be a Foreign Lender if it were a Lender shall not be entitled to the benefits of Section 3.01 unless the Borrower is notified of the participation sold to such Participant and such Participant agrees, for the benefit of the Borrower, to comply with Section 3.01(e)  as though it were a Lender.

(f) Certain Pledges . Any Lender may at any time pledge or assign a security interest in all or any portion of its rights under this Agreement (including under its Note, if any) to secure obligations of such Lender, including any pledge or assignment to secure obligations to a Federal Reserve Bank or any central bank having jurisdiction over such Lender; provided that no such pledge or assignment shall release such Lender from any of its obligations hereunder or substitute any such pledgee or assignee for such Lender as a party hereto.

(g) Special Purpose Funding Vehicles . Notwithstanding anything to the contrary contained herein, any Lender (a “ Granting Lender ”) may grant to a special purpose funding vehicle identified as such in writing from time to time by the Granting Lender to the Administrative Agent and the Borrower (an “ SPC ”) the option to provide all or any part of any Committed Loan that such Granting Lender would otherwise be obligated to make pursuant to this Agreement; provided that (i) nothing herein shall constitute a commitment by any SPC to fund any Committed Loan and (ii) if an SPC elects not to exercise such option or otherwise fails to make all or any part of such Committed Loan, the Granting Lender shall be obligated to make such Committed Loan pursuant to the terms hereof or, if it fails to do so, to make such payment to the Administrative Agent as is required under Section 2.13(b)(ii) . Each party hereto hereby agrees that (i) neither the grant to any SPC nor the exercise by any SPC of such option shall increase the costs or expenses or otherwise increase or change the obligations of the Borrower under this Agreement (including its obligations under Section 3.04 ), (ii) no SPC shall be liable for any indemnity or similar payment obligation under this Agreement for which a Lender would be liable, and (iii) the Granting Lender shall for all purposes, including the approval of any amendment, waiver or other modification of any provision of any Loan Document, remain the lender of record hereunder. The making of a Committed Loan by an SPC hereunder shall utilize the Commitment of the Granting Lender to the same extent, and as if, such Committed Loan were made by such Granting Lender. In furtherance of the foregoing, each party hereto hereby agrees (which agreement shall survive the termination of this Agreement) that, prior to the date that is one year and one day after the payment in full of all outstanding commercial paper or other senior debt of any SPC, it will not institute against, or join any other Person in instituting against, such SPC any bankruptcy, reorganization, arrangement, insolvency, or liquidation proceeding under the laws of the United States or any State thereof. Notwithstanding anything to the contrary contained herein, any SPC may (i) with notice to, but without prior consent of the Borrower and the Administrative Agent and with the payment of a processing fee to the Administrative Agent in the amount of $3,500, assign all or any portion of its right to receive payment with respect to any Committed Loan to the Granting Lender and (ii) disclose on a confidential basis any non-public information relating to its funding of Committed Loans to any rating agency, commercial paper dealer or provider of any surety or Guarantee or credit or liquidity enhancement to such SPC.

(h) Resignation as an L/C Issuer after Assignment . Notwithstanding anything to the contrary contained herein, if at any time an L/C Issuer assigns all of its Commitment and Committed Loans pursuant to clause (b)  above, such L/C Issuer may, upon 30 days’ notice to the Borrower and the Lenders, resign as an L/C Issuer. In the event of any such resignation as L/C Issuer, the Borrower shall

 

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be entitled to appoint from among the Lenders a successor L/C Issuer hereunder (and any such appointment shall be subject to the acceptance of such appointed Lender); provided , however , that no failure by the Borrower to appoint any such successor shall affect the resignation of the exiting L/C Issuer as L/C Issuer. If such L/C Issuer resigns as L/C Issuer, it shall retain all the rights, powers, privileges and duties of the L/C Issuer hereunder with respect to all Letters of Credit outstanding as of the effective date of its resignation as L/C Issuer and all L/C Obligations with respect thereto (including the right to require the Lenders to make Base Rate Loans or fund risk participations in Unreimbursed Amounts pursuant to Section 2.03(d) ). Upon the appointment of a successor L/C Issuer, (i) such successor shall succeed to and become vested with all of the rights, powers, privileges and duties of the retiring L/C Issuer and (ii) the successor L/C Issuer shall issue letters of credit in substitution for the Letters of Credit, if any, outstanding at the time of such succession or make other arrangements satisfactory to the exiting L/C Issuer to effectively assume the obligations of exiting L/C Issuer with respect to such Letters of Credit.

Section 10.07 Treatment of Certain Information; Confidentiality . Each of the Administrative Agent, the Lenders and each L/C Issuer agrees to maintain the confidentiality of the Information, except that Information may be disclosed (a) to its Affiliates and to its and its Affiliates’ respective partners, directors, officers, employees, agents, advisors and representatives (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 purporting to have jurisdiction over it (including any self-regulatory authority, such as the National Association of Insurance Commissioners), (c) to the extent required by applicable Laws or regulations or by any subpoena or similar legal process, (d) to any other party hereto, (e) in connection with the exercise of any remedies hereunder or under any other Loan Document or any action or proceeding relating to this Agreement or any other Loan Document or the enforcement of rights hereunder or thereunder, (f) subject to an agreement containing provisions substantially the same as those of this Section 10.07 , 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 or derivative transaction relating to the Borrower and its obligations, (g) to credit rating agencies, the CUSIP Service Bureau and credit insurers, (h) with the consent of the Borrower or (i) to the extent such Information (x) becomes publicly available other than as a result of a breach of this Section 10.07 or (y) becomes available to the Administrative Agent, any Lender, any L/C Issuer or any of their respective Affiliates on a non-confidential basis from a source other than the Borrower.

For purposes of this Section 10.07 , “ Information ” means all information received from the Borrower or any Subsidiary relating to the Borrower or any Subsidiary or any of their respective businesses, other than any such information that is available to the Administrative Agent, any Lender or any L/C Issuer on a non-confidential basis prior to disclosure by the Borrower or any Subsidiary; provided that, in the case of information received from the Borrower or any Subsidiary after the date hereof, such information is clearly identified at the time of delivery as nonpublic and confidential. Any Person required to maintain the confidentiality of Information as provided in this Section 10.07 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 confidential information of a similar nature.

Each of the Administrative Agent, the Lenders and the L/C Issuers acknowledges that (a) the Information may include material non-public information concerning the Borrower or a Subsidiary, as the case may be, (b) it has developed compliance procedures regarding the use of material non-public information and (c) it will handle such material non-public information in accordance with applicable Law, including Federal and state securities Laws.

 

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In addition, the Arranger, the Administrative Agent and the Lenders may disclose the existence of this Agreement and the substantive terms of this Agreement to market data collectors, similar service providers to the lending industry and service providers to the Arranger, the Administrative Agent or a Lender, as applicable, in connection with the administration of this Agreement, the other Loan Documents and the Commitments.

Section 10.08 Right of Setoff . If an Event of Default shall have occurred and be continuing, each Lender, each L/C Issuer and each of their respective Affiliates is hereby authorized at any time and from time to time, to the fullest extent permitted by applicable Law, to set off and apply any and all deposits (general or special, time or demand, provisional or final, in whatever currency) at any time held and other obligations (in whatever currency) at any time owing by such Lender, such L/C Issuer or any such Affiliate to or for the credit or the account of the Borrower against any and all of the obligations of the Borrower now or hereafter existing under this Agreement or any other Loan Document to such Lender or such L/C Issuer, irrespective of whether or not such Lender or such L/C Issuer shall have made any demand under this Agreement or any other Loan Document and although such obligations of the Borrower may be contingent or unmatured or are owed to a branch or office of such Lender or such L/C Issuer different from the branch or office holding such deposit or obligated on such indebtedness. The rights of each Lender, each L/C Issuer and their respective Affiliates under this Section 10.08 are in addition to other rights and remedies (including other rights of setoff) that such Lender, such L/C Issuer or their respective Affiliates may have. Each Lender and each L/C Issuer 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 10.09 Interest Rate Limitation . Notwithstanding anything to the contrary contained in any Loan Document, the interest paid or agreed to be paid under the Loan Documents shall not exceed the maximum rate of non-usurious interest permitted by applicable Law (the “ Maximum Rate ”). If the Administrative Agent or any Lender shall receive interest in an amount that exceeds the Maximum Rate, the excess interest shall be applied to the principal of the Committed Loans or, if it exceeds such unpaid principal, refunded to the Borrower. In determining whether the interest contracted for, charged, or received by the Administrative Agent or a Lender exceeds the Maximum Rate, such Person may, to the extent permitted by applicable Law, (a) characterize any payment that is not principal as an expense, fee, or premium rather than interest, (b) exclude voluntary prepayments and the effects thereof, and (c) amortize, prorate, allocate, and spread in equal or unequal parts the total amount of interest throughout the contemplated term of the Obligations hereunder.

Section 10.10 Counterparts; Integration; Effectiveness . This Agreement may be executed in counterparts (and by different parties hereto in different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract. This Agreement and the other Loan Documents constitute the entire contract among the parties relating to the subject matter hereof, supersede any and all previous agreements and understandings, oral or written, relating to the subject matter hereof. 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. Except as provided in Section 4.01 , 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 that, when taken together, bear the signatures of each of the other parties hereto. Delivery of an executed counterpart of a signature page of this Agreement by telecopy facsimile, photocopy or by sending a scanned copy by electronic mail shall be effective as delivery of a manually executed counterpart of this Agreement. To the extent any inconsistency exists between this Agreement and any other Loan Document, the terms of this Agreement shall be deemed controlling.

 

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Section 10.11 Survival of Representations and Warranties . All representations and warranties made hereunder and in any other Loan Document or other document delivered pursuant hereto or thereto or in connection herewith or therewith shall survive the execution and delivery hereof and thereof. Such representations and warranties have been or will be relied upon by the Administrative Agent and each Lender, regardless of any investigation made by the Administrative Agent or any Lender or on their behalf and notwithstanding that the Administrative Agent or any Lender may have had notice or knowledge of any Default at the time of any Credit Extension, and shall continue in full force and effect as long as any Committed Loan or any other Obligation hereunder shall remain unpaid or unsatisfied or any Letter of Credit shall remain outstanding.

Section 10.12 Severability . If any provision of this Agreement or the other Loan Documents is held to be illegal, invalid or unenforceable, (a) the legality, validity and enforceability of the remaining provisions of this Agreement and the other Loan Documents shall not be affected or impaired thereby and (b) the parties shall endeavor in good faith negotiations to replace the illegal, invalid or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the illegal, invalid or unenforceable provisions. The invalidity of a provision in a particular jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.

Section 10.13 Replacement of Lenders . If (i) any Lender requests compensation under Section 3.04 , (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 3.01 , (iii) any Lender is a Defaulting Lender, or (iv) any Lender is unwilling to approve an increase in the Borrowing Base or other amendment hereto which has been approved by the Required Lenders but requires approval of such Lender to be effective, then the Borrower may, at its sole expense and effort, upon notice to such Lender and the Administrative Agent, require such Lender to assign and delegate, without recourse (in accordance with and subject to the restrictions contained in, and consents required by, Section 10.06 ), all of its interests, rights and obligations under this Agreement and the related Loan Documents to an assignee that shall assume such obligations (which assignee may be another Lender, if a Lender accepts such assignment); provided that:

(a) the Borrower shall have paid to the Administrative Agent the assignment fee specified in Section 10.06(b) ;

(b) such Lender shall have received payment of an amount equal to the outstanding principal of its Committed Loans and L/C Advances, accrued interest thereon, accrued fees and all other amounts payable to it hereunder and under the other Loan Documents (including any amounts under Section 3.05 ) 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);

(c) in the case of any such assignment resulting from a claim for compensation under Section 3.04 or payments required to be made pursuant to Section 3.01 , such assignment will result in a reduction in such compensation or payments thereafter;

(d) in the case of an assignment resulting from clause (iv)  above, such assignment will result in effectiveness of such increase or amendment; and

(e) such assignment does not conflict with applicable Laws.

A Lender shall not be required to make any such assignment or delegation if, prior thereto, as a result of a waiver by such Lender or otherwise, the circumstances entitling the Borrower to require such assignment and delegation cease to apply.

 

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Each Lender hereby grants to the Administrative Agent an irrevocable power of attorney (which power is coupled with an interest) to execute and deliver, on behalf of such Lender as assignor, any Assignment and Assumption necessary to effectuate any assignment of such Lender’s interests hereunder in the circumstances contemplated by this Section 10.13 .

Section 10.14 Governing Law; Jurisdiction; Etc .

(a) GOVERNING LAW . THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.

(b) SUBMISSION TO JURISDICTION . EACH PARTY HERETO IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR ITSELF AND ITS PROPERTY, TO THE EXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK SITTING IN NEW YORK COUNTY AND OF THE UNITED STATES DISTRICT COURT OF THE SOUTHERN DISTRICT OF NEW YORK SITTING IN NEW YORK COUNTY, AND ANY APPELLATE COURT FROM ANY THEREOF, IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR FOR RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND EACH OF THE PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH NEW YORK STATE COURT OR, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, IN SUCH FEDERAL COURT. EACH OF THE PARTIES HERETO AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW. NOTHING IN THIS AGREEMENT OR IN ANY OTHER LOAN DOCUMENT SHALL AFFECT ANY RIGHT THAT A PARTY HERETO MAY OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AGAINST ANOTHER PARTY HERETO OR ITS PROPERTIES IN THE COURTS OF ANY JURISDICTION.

(c) WAIVER OF VENUE . EACH PARTY HERETO IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT IN ANY COURT REFERRED TO IN CLAUSE (b)  OF THIS SECTION 10.14 . EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH COURT.

(d) SERVICE OF PROCESS . EACH PARTY HERETO IRREVOCABLY CONSENTS TO SERVICE OF PROCESS IN THE MANNER PROVIDED FOR NOTICES IN SECTION 10.02 . NOTHING IN THIS AGREEMENT WILL AFFECT THE RIGHT OF ANY PARTY HERETO TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY APPLICABLE LAW.

Section 10.15 Waiver of Jury Trial . EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT

 

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NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PERSON WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 10.15 .

Section 10.16 No Advisory or Fiduciary Responsibility .

In connection with all aspects of each transaction contemplated hereby, the Borrower acknowledges and agrees that: (i) the credit facility provided for hereunder and any related arranging or other services in connection therewith (including in connection with any amendment, waiver or other modification hereof or of any other Loan Document) are an arm’s-length commercial transaction between the Borrower and its Affiliates, on the one hand, and the Administrative Agent, the Arranger and the Lenders, on the other hand, and the Borrower is capable of evaluating and understanding and understands and accepts the terms, risks and conditions of the transactions contemplated hereby and by the other Loan Documents (including any amendment, waiver or other modification hereof or thereof); (ii) in connection with the process leading to such transaction, the Administrative Agent, the Arranger and each Lender is and has been acting solely as a principal and is not the financial advisor, agent or fiduciary, for the Borrower or any of its Affiliates, stockholders, creditors or employees or any other Person; (iii) neither the Administrative Agent, the Arranger nor any Lender has assumed or will assume an advisory, agency or fiduciary responsibility in favor of the Borrower with respect to any of the transactions contemplated hereby or the process leading thereto, including with respect to any amendment, waiver or other modification hereof or of any other Loan Document (irrespective of whether the Administrative Agent, the Arranger or any Lender has advised or is currently advising the Borrower or any of its Affiliates on other matters) and neither the Administrative Agent nor the Arranger or any Lender has any obligation to the Borrower or any of its Affiliates with respect to the transactions contemplated hereby except those obligations expressly set forth herein and in the other Loan Documents; (iv) the Administrative Agent, the Arranger, each Lender and their respective Affiliates may be engaged in a broad range of transactions that involve interests that differ from those of the Borrower and its Affiliates, and neither the Administrative Agent nor the Arranger or any Lender has any obligation to disclose any of such interests by virtue of any advisory, agency or fiduciary relationship; and (v) the Administrative Agent, the Arranger and the Lenders have not provided and will not provide any legal, accounting, regulatory or tax advice with respect to any of the transactions contemplated hereby (including any amendment, waiver or other modification hereof or of any other Loan Document) and the Borrower has consulted its own legal, accounting, regulatory and tax advisors to the extent it has deemed appropriate. The Borrower hereby waives and releases, to the fullest extent permitted by Law, any claims that it may have against the Administrative Agent, the Arranger and each Lender with respect to any breach or alleged breach of agency or fiduciary duty in connection with the Transactions.

Section 10.17 USA PATRIOT Act Notice . Each Lender and each L/C Issuer that is subject to the PATRIOT Act and the Administrative Agent (for itself and not on behalf of any 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 the Guarantors, which information includes the name and address of the Borrower and other information that will allow such Lender, L/C Issuer or the Administrative Agent, as applicable, to identify the Borrower in accordance with the PATRIOT Act. The Borrower shall promptly provide such additional information and documentation reasonably requested by any Lender, L/C Issuer or the Administrative Agent as may be necessary for such Lender, L/C Issuer or the Administrative Agent to comply with its obligations under the PATRIOT Act.

 

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Section 10.18 Electronic Execution of Assignments and Certain Other Documents . The words “execute”, “execution”, “signed”, “signature” and words of like import in or related to any document to be signed in connection with this Agreement and the transactions contemplated hereby (including without limitation Assignment and Assumptions, amendments or other modifications, Committed Loan Notices, waivers and consents) shall be deemed to include electronic signatures, the electronic matching of assignment terms and contract formations on electronic platforms approved by the Administrative Agent, or the keeping of records in electronic form, each of which shall be of the same legal effect, validity or enforceability as a manually executed signature or the use of a paper-based recordkeeping system, as the case may be, to the extent and as provided for in any applicable Law, including the Federal Electronic Signatures in Global and National Commerce Act, the New York State Electronic Signatures and Records Act, or any other similar state laws based on the Uniform Electronic Transactions Act; provided that notwithstanding anything contained herein to the contrary the Administrative Agent is under no obligation to agree to accept electronic signatures in any form or in any format unless expressly agreed to by the Administrative Agent pursuant to procedures approved by it.

Section 10.19 Keepwell . The Borrower absolutely, unconditionally, and irrevocably undertakes to provide such funds or other support as may be needed from time to time by each other Loan Party to honor all of its obligations under the Guaranty in respect of any Swap Obligations ( provided , however , that the Borrower shall only be liable under this Section 10.19 for the maximum amount of such liability that can be hereby incurred without rendering its obligations under this Section 10.19 , or otherwise under this Agreement, voidable under applicable Law relating to fraudulent conveyance or fraudulent transfer, and not for any greater amount). The obligations of the Borrower under this Section 10.19 shall remain in full force and effect until the payment in full of the Obligations and the termination of this Agreement and the Guaranty. The Borrower intends that this Section 10.19 constitute, and this Section 10.19 shall be deemed to constitute, a “keepwell, support, or other agreement” for the benefit of each other Loan Party for all purposes of Section 1a(18)(A)(v)(II) of the Commodity Exchange Act.

[SIGNATURES BEGIN NEXT PAGE]

 

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the date first above written.

 

SANDRIDGE ENERGY, INC.
By:  

/s/ Julian Bott

Name:   Julian Bott
Title:   Executive Vice President and Chief Financial Officer

 

 

Signature Page to Credit Agreement


ROYAL BANK OF CANADA , as Administrative Agent
By:   /s/ Susan Khokher
Name:   Susan Khokher
Title:   Manager, Agency
ROYAL BANK OF CANADA , as a Lender and an L/C Issuer
By:   /s/ Leslie P. Vowell
Name:   Leslie P. Vowell
Title:   Attorney-in-Fact
Royal Bank of Canada , as a Lender
By:   /s/ Leslie P. Vowell
Name:   Leslie P. Vowell
Title:   Attorney-in-Fact
Barclays Bank PLC , as a Lender
By:   /s/ Vanessa Kurbatskiy
Name:   Vanessa Kurbatskiy
Title:   Vice President
UBS AG, Stamford Branch , as a Lender
By:   /s/ Kenneth Chin
Name:   Kenneth Chin
Title:   Director
By:   /s/ Darlene Arias
Name:   Darlene Arias
Title:   Director

 

Signature Page to Credit Agreement -


SunTrust Bank , as a Lender
By:   /s/ Janet R. Naifeh
Name:   Janet R. Naifeh
Title:   Senior Vice President
Natixis , New York Branch, as a Lender
By:   /s/ Brice Le Foyer
Name:   Brice Le Foyer
Title:   Director
By:   /s/ Vikram Nath
Name:   Vikram Nath
Title:   Vice President
Citizens Bank, N.A. , as a Lender
By:   /s/ Michael Flynn
Name:   Michael Flynn
Title:   Senior Vice President
Capital One, National Association , as a Lender
By:   /s/ Michael Higgins
Name:   Michael Higgins
Title:   Senior Director
Morgan Stanley Senior Funding, Inc. , as a Lender
By:   /s/ Kevin Newman
Name:   Kevin Newman
Title:   Vice President

 

Signature Page to Credit Agreement -


Morgan Stanley Bank, N.A. , as a Lender
By:   /s/ Kevin Newman
Name:   Kevin Newman
Title:   Authorized Signatory
NextEra Energy Power Marketing, LLC , as a Lender
By:   /s/ Jeffrey T. Palumbo
Name:   Jeffrey T. Palumbo
Title:   Vice President
Goldman Sachs Lending Partners LLC , as a Lender
By:   /s/ Annie Carr
Name:   Annie Carr
Title:   Authorized Signatory
Macquarie Bank Limited , as a Lender
By:   /s/ Andrew McGrath
Name:   Andrew McGrath
Title:   Executive Director
By:   /s/ Nathan Booker
Name:   Nathan Booker
Title:   Division Director

 

Signature Page to Credit Agreement -

Exhibit 10.2

PROMISSORY NOTE

 

$35,000,000    New York, New York
   October 4, 2016

FOR VALUE RECEIVED , SandRidge Realty, LLC, an Oklahoma limited liability company (“ Borrower ”), promises to pay to Fir Tree E&P Holdings II, LLC, a Delaware limited liability company (“ Fir Tree ”), and SOLA LTD, a Cayman Islands exempted company (“ Solus ”; and together with Fir Tree and certain other co-lenders from time to time, together with their successors and assigns, collectively, “ Lender ”), the principal sum of Thirty-Five Million and NO/100 Dollars ($35,000,000.00) (the “ Principal Balance ”), with interest on the Principal Balance, until paid in full, at the rates per annum hereinafter specified, in coin or currency, which, at the time or times of payment, is legal tender for the payment of public and private debts in the United States of America, all in accordance with the terms hereinafter set forth. Unless the context otherwise indicates, capitalized terms not otherwise defined herein shall have the meanings provided for such terms on Exhibit A attached hereto and made a part hereof.

1. Interest; Payments . From and after the date hereof, and until the date on which this Note (as defined below) is paid in full, interest on the unpaid Principal Balance shall accrue at the Loan Rate and be payable as hereinafter provided.

(a) Borrower shall pay interest on the unpaid Principal Balance from the date hereof through and including the Maturity Date.

(b) On each January 1st and July 1st thereafter (each, a “ Payment Date ”) through and including the month in which the Maturity Date occurs, Borrower shall pay interest on the unpaid Principal Balance which has accrued through and including the day immediately preceding such Payment Date at the Loan Rate. Notwithstanding the foregoing, from the date hereof through the earlier of: (x) the date that is forty-six (46) months following the date hereof; (y) the date that is ninety (90) days following the refinancing or repayment of all of the indebtedness and other sums owing and/or payable under the First Lien Credit Agreement and/or the other First Lien Credit Documents; and (z) September 30, 2020 (such earlier date, the “ PIK Date ”), interest shall be payable in-kind and added to the Principal Balance of this Note on each Payment Date and shall thereafter accrue at the Loan Rate. On each Payment Date occurring after the PIK Date, interest shall be payable in cash, by wire transfer, or automated clearing house payment, as directed by Lender.

(c) The entire unpaid Principal Balance (including deferred and capitalized interest) and all unpaid interest accrued thereon together with any other amounts due under this Note shall be due and payable in full on the Maturity Date.

(d) All amounts due under this Note shall be payable without setoff, counterclaim or any other deduction whatsoever.

 

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(e) This Note is being issued pursuant to the Amended Joint Chapter 11 Plan of Reorganization of SandRidge Energy, Inc. and its Debtor Affiliates filed in the United States Bankruptcy Court for the Southern District of Texas, Houston Division (Case No. 16-32488 (DRJ)), dated September 2, 2016 (Docket No. 839) (the “ Plan ”) and was purchased by affiliates of Fir Tree and Solus at an auction held pursuant to the Plan. The Principal Balance of this Note on the date hereof is Thirty-Five Million and NO/100 Dollars ($35,000,000) and all interest and deferred interest due under this Note shall be calculated based on such Principal Balance. If under applicable law, the difference between the amount advanced and the stated Principal Balance is deemed to be a loan finance charge, said loan finance charge will be deemed earned on the date hereof in consideration of the making of the Loan evidenced by this Note, will be capitalized and added to the amount advanced, and interest will accrue on said capitalized loan finance charge. To induce Lender to make the Loan, Borrower hereby waives and releases to the fullest extent permitted by applicable law any claim of usury or clogging of its equity of redemption under the Mortgage, as hereinafter defined, by reason of having to pay the difference between the amount advanced and the Principal Balance, and interest thereon, whether characterized as additional principal or a loan finance charge.

2. Making of Payments . Each payment by Borrower hereunder shall be made in funds settled through the New York Clearing House Interbank Payments System or other funds immediately available to Lender by 1:00 p.m., New York City time, on the date such payment is due, to Lender by deposit to such account as Lender may designate by written notice to Borrower. Whenever any such payment shall be stated to be due on a day that is not a business day, such payment shall be made on the next business day. All such payments shall be made irrespective of, and without any deduction, set-off or counterclaim whatsoever (each of which is hereby waived) and are payable without relief from valuation and appraisement laws (each of which is hereby waived, except as specifically otherwise provided in the Mortgage with respect to judicial foreclosure thereof) and with all costs and charges incurred in the collection or enforcement thereof, including attorneys’ fees and court costs. Remittances in payment of any part of the Indebtedness other than in the required amount in immediately available U.S. funds shall not, regardless of any receipt or credit issued therefor, constitute payment until the required amount is actually received by Lender in immediately available U.S. funds.

3. Calculation of Interest . Interest payable hereunder shall compound monthly. All interest payable hereunder shall be computed of the actual number of days elapsed over a 360-day year.

4. Default Rate . Upon the occurrence of an Event of Default (as defined in the Mortgage) (except to the extent such Event of Default has been waived in Lender’s sole discretion), the entire unpaid Principal Balance shall bear interest at the Default Rate, and shall be payable upon demand from time to time, to the extent permitted by applicable law.

5. Maximum Rate . Borrower and Lender agree that no payment of interest or other consideration made or agreed to be made by Borrower to Lender pursuant to this Promissory Note (together with any renewals, extensions, amendments or supplements hereof, this “ Note ”), the Mortgage or any other instrument referring to or securing this Note shall, at any time, be deemed to have been computed at an interest rate in excess of the maximum rate of interest or loan finance charge permissible by law, if any. In the event such payments of interest or other

 

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consideration provided for in this Note, the Mortgage or any other instrument referring to or securing this Note shall result in payment of an effective rate of interest or loan finance charge which, for any period of time, is in excess of the limit of the usury law or any other law applicable to the Loan, all sums in excess of those lawfully collectible as interest for the period in question shall, without further agreement or notice between or by any party or parties hereto, be applied to the Principal Balance (or any portion thereof designated by Lender) immediately upon receipt of such monies by Lender with the same force and effect as though Borrower had specifically designated, and Lender had agreed to accept, such extra payments as a principal payment, without premium or penalty. If the Principal Balance has been fully paid, any such excess amount shall be refunded to Borrower. This provision shall control over every other obligation of Borrower and Lender hereunder, under the Mortgage and under any instrument which secures this Note.

6. Order of Payment Application . Except upon the occurrence of an Event of Default (except to the extent such Event of Default has been waived in Lender’s sole discretion), all proceeds of any repayment, including any prepayments of the Principal Balance, shall be applied, to the extent thereof, by Lender in the following order of priority: First, to costs and expenses of Lender pursuant to the Loan Documents (as defined below); Second, to current unpaid interest at the applicable interest rate described herein; Third, to accrued and unpaid interest at the applicable interest rate described herein; Fourth, to the Principal Balance; and Fifth, to any other amounts then due and owing under the Loan Documents. Upon the occurrence of an Event of Default, all proceeds of repayment, including any payment or recovery on the Mortgaged Property (whether through foreclosure, deed-in-lieu of foreclosure, or otherwise) shall, unless otherwise provided in the Loan Documents, be applied in such order and in such manner as Lender shall elect in Lender’s sole and absolute discretion.

7. Loan Documents . The payment and performance of this Note is secured by (i) the Mortgage, Security Agreement and Fixture Filing made by Borrower in favor of Lender, dated as of the date hereof and covering the Mortgaged Property (the “ Mortgage ”), (ii) that certain Environmental Indemnification Agreement made by Borrower in favor of Lender, dated as of the date hereof (the “ Environmental Indemnity Agreement ”), (iii) that certain Guaranty of Recourse Obligations executed by Borrower in favor of Lender, dated as of the date hereof (the “ Guaranty Agreement ”), (iv) that certain Assignment of Leases and Rents executed by Borrower in favor of Lender, dated as of the date hereof (the “ ALR ”), (v) that certain Assignment of Contracts and Other Agreements executed by Borrower in favor of Lender, dated as of the date hereof (the “ Assignment ”), and (vi) such other documents and instruments executed and delivered by Borrower to Lender in connection with the Loan (such documents and instruments, together with the Mortgage, the Environmental Indemnity Agreement, the Guaranty Agreement, the ALR, and the Assignment, as the same may be amended, modified or supplemented from time to time, are referred to herein collectively as, the “ Loan Documents ” and in individually as, a “ Loan Document ”).

8. Prepayment . This Note shall not be prepayable except upon Lender’s prior written consent or as provided in Section 5 above. Notwithstanding the foregoing, commencing on the date on which all of the indebtedness and other sums owing and/or payable under the First Lien Credit Agreement and/or the other First Lien Credit Documents have been paid in full, Borrower may prepay this Note in whole or in part at any time, at par, and from time to time

 

3


during the term hereof upon ten (10) days’ prior written notice to Lender, without any prepayment premium or penalty, subject to the application of payments provisions set forth in Section 6 above.

9. Remedies . All of the terms, covenants and conditions contained in the Mortgage and Loan Documents are hereby made part of this Note to the same extent and with the same force as if they were fully set forth herein. If Borrower’s obligations under this Note, the Mortgage or the other Loan Documents are enforced by Lender through an attorney-at-law, or any payment due under this Note, the Mortgage or the Loan Documents is collected by or through an attorney-at-law or collection agency, Borrower agrees to pay all costs incurred by Lender in connection therewith, including, but not limited to, reasonable fees and disbursements of legal counsel, collection agency costs, whether or not suit be brought, and any and all costs or fees arising as a result of the filing of or during the course of any case under any bankruptcy laws with respect to Borrower or its affiliates.

10. Time . Time is of the essence hereof in the performance of all obligations of Borrower hereunder.

11. Events of Default . The occurrence of an “Event of Default” under the Mortgage shall constitute an Event of Default under this Note. Upon the occurrence of an Event of Default, Lender shall have the rights to declare the unpaid Principal Balance and accrued but unpaid interest on this Note, and all other amounts due hereunder and under the other Loan Documents, to be immediately due and payable (and upon such declaration, the same shall be immediately due and payable), to foreclose any liens and security interests securing payment hereof and to exercise any of its other rights, powers and remedies under this Note, under any other Loan Document, or at law or in equity.

12. No Modification . This Note, and any of the provisions hereof, cannot be altered, modified, amended, waived, extended, changed, discharged or terminated orally or by any act on the part of Borrower or Lender, but only by an agreement in writing signed by the party against whom enforcement of any alteration, modification, amendment, waiver, extension, change, discharge or termination is sought.

13. Successors and Assigns . Lender shall have the right at any time and from time to time (i) to sell or otherwise transfer this Note, the Loan or any portion thereof or the Loan Documents or any interest therein to one or more investors and (ii) to sell participation interests in the Loan to one or more investors, provided that Lender provides Borrower with the name and address of any transferee and the principal amount and interest transferred, so that Borrower can maintain a register with respect to the Note. The terms of this Note shall bind Borrower and its successors and assigns and inure to the benefit of Lender and its successors and assigns.

14. Commercial Purpose . Borrower warrants that the Loan is being made solely to acquire or carry on a business or commercial enterprise, and/or Borrower is a business or commercial organization. Borrower further warrants that all of the proceeds of this Note shall be used for commercial purposes and stipulates that the Loan shall be construed for all purposes as a commercial loan, and is made for other than personal, family, household or agricultural purposes.

 

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15. Miscellaneous . Borrower and each co-maker, endorser, surety and guarantor hereby waives demand for payment, presentment for payment, notice of nonpayment, protest, notice of protest, notice of dishonor, notice of intention to accelerate maturity, notice of acceleration of maturity, notice of intent to foreclose on any collateral securing this Note, all other notices as to this Note, diligence in collection as to each and every payment due hereunder, and all other requirements necessary to charge or hold such person or entity to any obligation hereunder, and agrees that without any notice Lender may take additional security herefor or may release any or all security herefor, or alone or together with any present or future owner or owners of any property covered by the Mortgage or by any other Loan Documents, may from time to time extend, renew, or otherwise modify the date or dates or amount or amounts of payment above recited, or Lender may from time to time release any part or parts of the property and interest subject to the Mortgage or the other Loan Documents from the Mortgage and/or the other Loan Documents, with or without consideration, and that, in any such case, Borrower and each co-maker, endorser, surety and guarantor shall continue to be bound hereby and to be liable to pay the unpaid balance of the Indebtedness, as so additionally secured, extended, renewed or modified, and notwithstanding any such release, and further agrees to indemnify Lender against and hold Lender harmless from and pay all costs and expenses of collection, including court costs and attorneys’ fees (prior to trial, at trial and on appeal) incurred in collecting the Indebtedness, or in exercising or defending, or obtaining the right to exercise, the rights of Lender hereunder, under any Loan Document, whether suit be brought or not, and in foreclosure, in bankruptcy, insolvency, arrangement, reorganization and other debtor-relief proceedings, in probate, in other court proceedings, or otherwise, whether or not Lender prevails therein, and all costs and expenses incurred by Lender in protecting or preserving the property and interests which are subject to the Mortgage and/or the other Loan Documents.

16. No Waiver . Lender shall not by any act, delay, omission or otherwise be deemed to have waived any of its rights or remedies, and no waiver of any kind shall be valid unless in writing and signed by Lender. All rights and remedies of Lender under the terms of this Note, under the terms of any Loan Document, and under any statutes or rules of law shall be cumulative and may be exercised successively or concurrently. Borrower agrees that Lender shall be entitled to all the rights of a holder in due course of negotiable instruments. Any provision of this Note which may be unenforceable or invalid under any law shall be ineffective to the extent of such unenforceability or invalidity without affecting the enforceability or validity of any other provision hereof.

17. Non-Recourse .

(a) Lender agrees that it will look solely to the Mortgaged Property to secure the repayment of the Indebtedness. No other property or assets of Borrower, or any beneficial owner of Borrower, or any partner, member, manager, shareholder, director, trustee, officer or principal of Borrower, or such beneficial owner or any transferee permitted pursuant to the Loan Documents or the respective successors and assigns of any of the foregoing (collectively, “ Non-Recourse Parties ”) shall be subject to levy, execution or other enforcement procedure for the satisfaction of the remedies of Lender, or for any payment required to be made under this Note or any of the other Loan Documents or for the performance of any of the covenants or warranties contained in the Loan Documents, and Lender agrees that it shall have no right to proceed against the Non-Recourse Parties for the satisfaction of any of the foregoing or for any

 

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deficiency judgment, except as may be necessary to enforce its rights in any of the Mortgaged Property, other collateral, or Rents (as defined in the Mortgage) or other funds held by a receiver of the Mortgaged Property, after foreclosure of the Mortgage.

(b) The foregoing provisions of Section 17(a) shall not (i) constitute a waiver of the obligations secured by or arising under the Mortgage, this Note or the other Loan Documents, (ii) limit the right of Lender to name Borrower, the beneficial owner of Borrower or the partners, members or principals of the Non-Recourse Parties as parties in any action or suit for judicial foreclosure and sale under the Mortgage (or in an action following the foreclosure of the Mortgage by judicial action or power of sale to recover any funds held by a receiver collected during the pendency of a foreclosure action or proceeding), this Note or the other Loan Documents or with respect to any other remedies available to Lender thereunder, so long as no monetary judgment shall be enforced against Borrower or any partner, member or principal of Borrower, or any other Non-Recourse Party, (iii) release, reduce or impair this Note, the Indebtedness, or the lien of the Mortgage, (iv) prevent or in any way hinder Lender from exercising any remedy available to Lender under this Note or any of the Loan Documents including, without limitation, the appointment of a receiver or naming Borrower or, if necessary in order to ensure the availability of Lender’s remedies as set forth in the Loan Documents, any person, entity, association or joint venture (“ Person ”) owning an interest in Borrower in any action, suit or proceeding in connection with the exercise of any such remedy, as long as no monetary judgment, including a deficiency judgment, shall be enforced against any assets of Borrower or any Person owning an interest in Borrower, other than the Mortgaged Property or such other collateral, or (v) release or limit the liability of Borrower under the Environmental Indemnity Agreement or the Guaranty Agreement or affect in any way the validity or enforceability of the Guaranty Agreement or the Environmental Indemnity Agreement.

(c) Notwithstanding any provision hereof or in any Loan Document to the contrary, including, without limitation, Section 17(a) above, Borrower shall be personally liable hereunder for any and all liabilities, obligations, losses, damages, costs, expenses (including reasonable attorneys’ fees, costs and disbursements), causes of action, suits, claims, demands and judgments paid, imposed upon Lender or to which Lender may be subject as a result of Borrower or any affiliate, indemnitor, agent or employee of Borrower (all such liability and obligation of Borrower for any or all of the following being referred to herein as “ Borrower’s Recourse Obligations ”):

(1) misapplying, misappropriating or the conversion by Borrower of any loan proceeds or funds received in connection with the Mortgaged Property, including, without limitation, funds from insurance policies or condemnation awards, proceeds or other amounts in connection with a condemnation of the Mortgaged Property in violation of the Loan Documents;

(2) committing waste, arson or damage to the Mortgaged Property or any portion thereof, or removing or disposing of any portion of the Mortgaged Property in violation of the terms of the Loan Documents;

(3) failing to comply with Sections 1.14 (Hazardous Substances) or 1.15 (Environmental Regulations) of the Mortgage and any other provision of the Loan Documents relating to hazardous or toxic substances or compliance with environmental laws and regulations from and after the date hereof;

 

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(4) any fraud or intentional misrepresentation or statement by Borrower in connection with the Loan;

(5) any willful misconduct, gross negligence or criminal acts committed by Borrower;

(6) failure to pay any transfer taxes, recording taxes, deed stamps, mortgage taxes, intangible taxes or other amounts in the nature of transfer taxes, mortgage taxes, or recording taxes, charges or fees or similar charges required to be paid under all applicable law in connection with the filing or foreclosure of the Note or Mortgage;

(7) failure to obtain and maintain insurance and the Policies (as defined in the Mortgage) as set forth in Section 1.7 of the Mortgage;

(8) failure to pay any taxes when due as set forth in the Mortgage;

(9) violating any provision set forth in Section 1.19 (Permitted Indebtedness) of the Mortgage or any other provisions of the Loan Documents relating to impermissible debt.

Notwithstanding anything to the contrary in this Note, including, without limitations, Sections 17(a) and (b) above, or in any of the other Loan Documents, (A) Lender shall not be deemed to have waived any right which Lender may have under Section 506(a), 506(b) 1111(b) or any other provision of the U.S. Bankruptcy Code, as amended, or any successor thereto, or similar provisions under applicable state law, to file a claim for the full amount of the Indebtedness owing to Lender in accordance with this Note and the other Loan Documents or to require that all collateral shall continue to secure all of the Indebtedness owing to Lender in accordance with this Note, and (B) Lender’s agreement not to pursue personal liability of Borrower as set forth above SHALL BECOME NULL AND VOID and shall be of no further force and effect, and the Indebtedness evidenced by this Note shall be fully recourse to Borrower in the event that one or more of the following occurs (each, a “ Springing Recourse Event ”): (1) a transfer or encumbrance of the Mortgaged Property in violation of Section 1.11 of the Mortgage, or (2) the occurrence of any event of condition described in Section 3.1(c) of the Mortgage; provided, however, with respect to any event of condition described in Section 3.1(c) of the Mortgage, only if Borrower or any Person owning an interest (directly or indirectly) in Borrower consents to, aids, solicits, supports, or otherwise cooperates or colludes to cause such condition or event or fails to contest such event or condition.

18. Waiver of Jury Trial . BORROWER AND LENDER EACH HEREBY IRREVOCABLY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL WITH RESPECT TO ANY ACTION, CLAIM OR OTHER PROCEEDING ARISING OUT OF ANY DISPUTE, JUDICIAL PROCEEDING, CLAIM OR CONTROVERSY IN CONNECTION WITH THIS NOTE, THE MORTGAGE OR THE OTHER LOAN DOCUMENTS, ANY RIGHTS OR OBLIGATIONS HEREUNDER OR THEREUNDER, OR THE PERFORMANCE OF SUCH RIGHTS AND OBLIGATIONS.

 

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19. Governing Law . THIS NOTE WAS NEGOTIATED, EXECUTED AND DELIVERED IN THE STATE OF NEW YORK, IN ALL RESPECTS, INCLUDING, WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE, AND THIS NOTE AND THE OBLIGATIONS ARISING HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND PERFORMED IN SUCH STATE (WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS) AND ANY LAWS OF THE UNITED STATES OF AMERICA APPLICABLE TO LENDER. TO THE FULLEST EXTENT PERMITTED BY LAW, BORROWER HEREBY UNCONDITIONALLY AND IRREVOCABLY WAIVES ANY RIGHT TO ASSERT THAT THE LAW OF ANY OTHER JURISDICTION GOVERNS THIS NOTE, AND THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK AND ANY LAWS OF THE UNITED STATES OF AMERICA APPLICABLE TO LENDER.

20. Venue; Jurisdiction . AT THE OPTION OF LENDER, THIS NOTE, THE MORTGAGE AND THE OTHER LOAN DOCUMENTS MAY BE ENFORCED (A) IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT IN WHICH THE MORTGAGED PROPERTY LIES, (B) IN THE DISTRICT COURT SITTING IN THE COUNTY IN WHICH THE MORTGAGED PROPERTY IS LOCATED, OR (C) IN THE STATE COURT SITTING IN NEW YORK COUNTY, NEW YORK; BORROWER CONSENTS TO THE JURISDICTION AND VENUE OF ANY SUCH COURTS AND WAIVES ANY ARGUMENT THAT JURISDICTION IN SUCH FORUMS IS NOT PROPER OR THAT VENUE IN SUCH FORUMS IS NOT CONVENIENT. IN THE EVENT ANY ACTION IS COMMENCED IN ANOTHER JURISDICTION OR VENUE UNDER ANY TORT OR CONTRACT THEORY ARISING DIRECTLY OR INDIRECTLY FROM THE RELATIONSHIP CREATED BY THIS NOTE, THE MORTGAGE OR THE OTHER LOAN DOCUMENTS, LENDER AT ITS OPTION SHALL BE ENTITLED TO HAVE THE CASE TRANSFERRED TO ONE OF THE JURISDICTIONS AND VENUES ABOVE DESCRIBED, OR IF SUCH TRANSFER CANNOT BE ACCOMPLISHED UNDER APPLICABLE LAW, TO HAVE SUCH CASE DISMISSED WITHOUT PREJUDICE.

21. Modification, Waiver in Writing . No modification, amendment, extension, discharge, termination or waiver of any provision of this Note, nor consent to any departure by Borrower therefrom, shall in any event be effective, unless the same shall be in a writing signed by the party against whom enforcement is sought, and then such waiver or consent shall be effective only in the specific instance, and for the purpose, for which given. Except as otherwise expressly provided herein, no notice to, or demand on Borrower, shall entitle Borrower to any other or future notice or demand in the same, similar or other circumstances.

22. Delay Not a Waiver . Neither any failure nor any delay on the part of Lender in insisting upon strict performance of any term, condition, covenant or agreement, or exercising any right, power, remedy or privilege hereunder shall operate as or constitute a waiver thereof, nor shall a single or partial exercise thereof preclude any other future exercise, or the exercise of

 

8


any other right, power, remedy or privilege. In particular, and not by way of limitation, by accepting payment after the due date of any amount payable under this Note, Lender shall not be deemed to have waived any right either to require prompt payment when due of all other amounts due under this Note or to declare a default for failure to effect prompt payment of any such other amount.

[ Remainder of Page Intentionally Left Blank; Signature Page Follows ]

 

9


IN WITNESS WHEREOF, Borrower has caused this Note to be duly executed and delivered as of the date first set forth above.

 

BORROWER :

SANDRIDGE REALTY, LLC,

an Oklahoma limited liability company

By:  

/s/ Julian Bott

Name:   Julian Bott
Title:   Executive Vice President and Chief Financial Officer

[ Signature Page to Promissory Note ]


EXHIBIT A

DEFINITIONS

Default Rate ” shall mean the Loan Rate plus 4% per annum.

Effective Date ” shall mean the date first above written.

First Lien Credit Agreement ” shall mean that certain Credit Agreement dated as of October     , 2016, by and among SandRidge, as the borrower, Royal Bank of Canada, as Administrative Agent and L/C Issuer (as such terms are defined therein), and each Lender (as defined therein) from time to time party thereto (as amended, restated, supplemented or otherwise modified from time to time).

First Lien Credit Documents ” shall mean the First Lien Credit Agreement and all other documents and instruments entered into by SandRidge and/or any of its direct or indirect subsidiaries or other affiliates with, or in favor of, Royal Bank of Canada, as Administrative Agent and/or L/C Issuer (as such terms are defined in the First Lien Credit Agreement) and, as applicable, the Lenders (as defined in the First Lien Credit Agreement), in connection with the First Lien Credit Agreement (in each case, as amended, restated, supplemented or otherwise modified from time to time).

Indebtedness ” shall mean any and all of the indebtedness to Lender evidenced, governed or secured by or arising under this Note or any other Loan Document.

Loan ” shall mean the loan evidenced by this Note.

Loan Rate ” shall mean a rate of interest as in effect from time to time equal to the following: (i) with respect to the period beginning on the Effective Date and ending on the day that immediately precedes the first anniversary thereof, six percent (6.00%) per annum; (ii) with respect to the period beginning on the first anniversary of the Effective Date and ending on the day that immediately precedes the second anniversary of the Effective Date, eight percent (8.00%) per annum; and (iii) with respect to the period beginning on the second anniversary of the Effective Date and ending on the Maturity Date, ten percent (10.00%) per annum.

Maturity Date ” shall mean the date that is two days prior to the fifth (5th) anniversary of the Effective Date.

Mortgaged Property ” shall have the meaning ascribed to such term in the Mortgage.

SandRidge ” shall mean SandRidge Energy, Inc., a Delaware corporation.

Exhibit 10.3

 

 

 

SANDRIDGE ENERGY, INC.,

as Issuer,

THE GUARANTORS NAMED HEREIN,

as Guarantors

AND

WILMINGTON TRUST, NATIONAL ASSOCIATION,

as Trustee

INDENTURE

Dated as of October 4, 2016

0.00% Convertible Senior Subordinated Notes due 2020

 

 

 


TABLE OF CONTENTS

 

 

          PAGE  
ARTICLE 1   
D EFINITIONS   
Section 1.01 .    Definitions      2   
Section 1.02 .    References to Principal Amount      12   
ARTICLE 2   
I SSUE , D ESCRIPTION , E XECUTION , R EGISTRATION AND E XCHANGE OF N OTES   
Section 2.01 .    Designation and Amount      12   
Section 2.02 .    Repayment Premium Applicable to Notes      13   
Section 2.03 .    Form of Notes      13   
Section 2.04 .    Date and Denomination of Notes; No Regular Interest and Defaulted Amounts      14   
Section 2.05 .    Execution, Authentication and Delivery of Notes      15   
Section 2.06 .    Exchange and Registration of Transfer of Notes; Restrictions on Transfer; Depositary      16   
Section 2.07 .    Mutilated, Destroyed, Lost or Stolen Notes      19   
Section 2.08 .    Temporary Notes      20   
Section 2.09 .    Cancellation of Notes Paid, Converted, Etc      21   
Section 2.10 .    CUSIP Numbers      21   
Section 2.11 .    Repurchases      21   
ARTICLE 3   
S ATISFACTION AND D ISCHARGE   
Section 3.01 .    Satisfaction and Discharge      21   
ARTICLE 4   
P ARTICULAR C OVENANTS OF THE C OMPANY   
Section 4.01 .    Payment of Principal      22   
Section 4.02 .    Increase in Principal Amount      22   
Section 4.03 .    Maintenance of Office or Agency      22   
Section 4.04 .    Appointments to Fill Vacancies in Trustee’s Office      23   
Section 4.05 .    Provisions as to Paying Agent      23   
Section 4.06 .    Existence      24   
Section 4.07 .    Information Requirement and Annual Reports      24   
Section 4.08 .    Springing Event Notice      25   
Section 4.09 .    Springing Lien      25   
Section 4.10 .    Note Guarantees      26   
Section 4.11 .    Additional Guarantors      26   

 

i


Section 4.12 .    Stay, Extension and Usury Laws      26   
Section 4.13 .    Compliance Certificate; Statements as to Defaults      26   
Section 4.14 .    Further Instruments and Acts      26   
ARTICLE 5   
L ISTS OF H OLDERS AND R EPORTS BY THE C OMPANY AND THE T RUSTEE   
Section 5.01 .    Lists of Holders      26   
Section 5.02 .    Preservation and Disclosure of Lists      27   
ARTICLE 6   
D EFAULTS AND R EMEDIES   
Section 6.01 .    Events of Default      27   
Section 6.02.    Acceleration; Rescission and Annulment      28   
Section 6.03 .    Payments of Notes on Default; Suit Therefor      29   
Section 6.04 .    Application of Monies or Other Property Collected by Trustee      31   
Section 6.05 .    Proceedings by Holders      31   
Section 6.06 .    Proceedings by Trustee      32   
Section 6.07 .    Remedies Cumulative and Continuing      32   
Section 6.08 .    Direction of Proceedings and Waiver of Defaults by Majority of Holders      33   
Section 6.09 .    Notice of Defaults      33   
Section 6.10 .    Undertaking to Pay Costs      34   
ARTICLE 7   
C ONCERNING THE T RUSTEE   
Section 7.01 .    Duties and Responsibilities of Trustee      34   
Section 7.02 .    Reliance on Documents, Opinions, Etc      36   
Section 7.03 .    No Responsibility for Recitals, Etc      37   
Section 7.04 .    Trustee, Paying Agents, Conversion Agents or Note Registrar May Own Notes      37   
Section 7.05 .    Monies and Shares of Common Stock to Be Held in Trust      37   
Section 7.06 .    Reports by Trustee to Holders      37   
Section 7.07 .    Compensation and Expenses of Trustee      37   
Section 7.08 .    Officers’ Certificate as Evidence      38   
Section 7.09 .    Eligibility of Trustee      38   
Section 7.10 .    Resignation or Removal of Trustee      39   
Section 7.11 .    Acceptance by Successor Trustee      40   
Section 7.12 .    Succession by Merger, Etc      40   
Section 7.13 .    Trustee’s Application for Instructions from the Company      41   
Section 7.14 .    Preferential Collection of Claims Against Company      41   

 

ii


ARTICLE 8   
C ONCERNING THE H OLDERS   
Section 8.01 .    Action by Holders      41   
Section 8.02 .    Proof of Execution by Holders      42   
Section 8.03 .    Who Are Deemed Absolute Owners      42   
Section 8.04 .    Company-Owned Notes Disregarded      42   
Section 8.05 .    Revocation of Consents; Future Holders Bound      43   
ARTICLE 9   
H OLDERS ’ M EETINGS   
Section 9.01 .    Purpose of Meetings      43   
Section 9.02 .    Call of Meetings by Trustee      44   
Section 9.03 .    Call of Meetings by Company or Holders      44   
Section 9.04 .    Qualifications for Voting      44   
Section 9.05 .    Regulations      44   
Section 9.06 .    Voting      45   
Section 9.07 .    No Delay of Rights by Meeting      45   
ARTICLE 10   
S UPPLEMENTAL I NDENTURES   
Section 10.01 .    Supplemental Indentures Without Consent of Holders      46   
Section 10.02 .    Supplemental Indentures with Consent of Holders      47   
Section 10.03 .    Effect of Supplemental Indentures      48   
Section 10.04 .    Notation on Notes      48   
Section 10.05 .    Evidence of Compliance of Supplemental Indenture to Be Furnished Trustee      48   
Section 10.06 .    Compliance with Trust Indenture Act      48   
ARTICLE 11   
C ONSOLIDATION , M ERGER , S ALE , C ONVEYANCE AND L EASE   
Section 11.01 .    Company May Consolidate, Etc. on Certain Terms      48   
Section 11.02 .    Successor Corporation to Be Substituted      49   
Section 11.03 .    Opinion of Counsel to Be Given to Trustee      50   
ARTICLE 12   
I MMUNITY OF I NCORPORATORS , S TOCKHOLDERS , O FFICERS AND D IRECTORS   
Section 12.01 .    Indenture and Notes Solely Corporate Obligations      50   
ARTICLE 13   
G UARANTEE OF N OTES   
Section 13.01 .    The Note Guarantee      50   
Section 13.02 .    Note Guarantee Unconditional      50   

 

iii


Section 13.03 .    Discharge; Reinstatement      51   
Section 13.04 .    Guarantor May Consolidate, Etc. on Certain Terms      51   
Section 13.05 .    Existence      52   
Section 13.06 .    Waiver by the Guarantors      52   
Section 13.07 .    Subrogation and Contribution      52   
Section 13.08 .    Stay of Acceleration      53   
Section 13.09 .    Limitation on Amount of Note Guarantee      53   
Section 13.10 .    Additional Guarantors      53   
Section 13.11 .    Delivery of Note Guarantee      53   
Section 13.12 .    Release of Note Guarantee      53   
ARTICLE 14   
C ONVERSION OF N OTES   
Section 14.01 .    Conversion Rate      53   
Section 14.02 .    Optional Conversion      54   
Section 14.03 .    Mandatory Conversion      54   
Section 14.04 .    Conversion Procedure; Settlement Upon Conversion      55   
Section 14.05 .    Decreased Conversion Rate Applicable to Notes      56   
Section 14.06 .    Adjustment of Conversion Rate      57   
Section 14.07 .    Adjustments of Prices      65   
Section 14.08 .    Shares to Be Fully Paid      65   
Section 14.09 .    Effect of Recapitalizations, Reclassifications and Changes of the Common Stock      65   
Section 14.10 .    Certain Covenants      67   
Section 14.11 .    Responsibility of Trustee      67   
Section 14.12 .    Notice to Holders Prior to Certain Actions      68   
Section 14.13 .    Stockholder Rights Plans      68   
ARTICLE 15   
C OLLATERAL AND S ECURITY   
Section 15.01 .    Security Documents      69   
Section 15.02 .    Intercreditor and Subordination Agreement      70   
Section 15.03 .    Release of Liens in Respect of Notes      70   
Section 15.04 .    Concerning the Trustee      71   
Section 15.05 .    Appointment of Collateral Trustee      71   
ARTICLE 16   
O PTIONAL R EDEMPTION   
Section 16.01.    Optional Redemption      72   
Section 16.02.    Notice of Optional Redemption; Selection of Notes      72   
Section 16.03.    Payment of Notes Called for Redemption      74   
Section 16.04.    Restrictions on Redemption      74   

 

iv


ARTICLE 17   
M ISCELLANEOUS P ROVISIONS   
Section 17.01 .    Indenture Subject to Trust Indenture Act      74   
Section 17.02 .    Provisions Binding on Successors      74   
Section 17.03 .    Official Acts by Successor Corporation      74   
Section 17.04 .    Addresses for Notices, Etc      75   
Section 17.05 .    Communication by Holders with Other Holders      75   
Section 17.06 .    Governing Law; Jurisdiction      75   
Section 17.07 .    Evidence of Compliance with Conditions Precedent; Certificates and Opinions of Counsel to Trustee      76   
Section 17.08 .    Legal Holidays      76   
Section 17.09 .    Benefits of Indenture      76   
Section 17.10 .    Table of Contents, Headings, Etc      77   
Section 17.11 .    Authenticating Agent      77   
Section 17.12 .    Execution in Counterparts      78   
Section 17.13 .    Severability      78   
Section 17.14 .    Waiver of Jury Trial      78   
Section 17.15 .    Force Majeure      78   
Section 17.16 .    Calculations      78   
Section 17.17.    USA PATRIOT Act      79   

EXHIBIT

 

Exhibit A

  

Form of Note

     A-1   

Exhibit B

  

Form of Collateral Trust Agreement

     B-1   

Exhibit C

  

Form of Intercreditor and Subordination Agreement

     C-1   

Exhibit D

  

Form of Security Agreement

     D-1   

 

v


INDENTURE dated as of October 4, 2016 among SANDRIDGE ENERGY, INC., a Delaware corporation, as issuer (the “ Company ,” as more fully set forth in Section 1.01), the GUARANTORS named in the signature pages hereto (each, a “ Guarantor ” and collectively, the “ Guarantors ,” as more fully set forth in Section 1.01) and WILMINGTON TRUST, NATIONAL ASSOCIATION, a national banking association, as trustee (the “ Trustee ,” as more fully set forth in Section 1.01).

W I T N E S S E T H:

WHEREAS, pursuant to the terms and conditions of the Plan of Reorganization, dated May 18, 2016, as the same may be amended, modified or restated from time to time (the “ Plan of Reorganization ”) relating to the reorganization under Chapter 11 of Title 11 of the United States Code of the Company and certain of its direct and indirect Subsidiaries, the Holders of Second Lien Note Claims (as defined in the Plan of Reorganization) are to be issued 0.00% Convertible Senior Subordinated Notes due 2020 (the “ Notes ”) of the Company, initially in an aggregate principal amount not to exceed $281,780,873 (as increased by an amount equal to the aggregate principal amount of any additional Notes issued pursuant to Section 2.02); and

WHEREAS, the Company has duly authorized the issuance of the Notes, and in order to provide the terms and conditions upon which the Notes are to be authenticated, issued and delivered, the Company has duly authorized the execution and delivery of this Indenture; and

WHEREAS, the Notes are subordinate in the manner and to the extent set forth in the Intercreditor and Subordination Agreement (as defined in Section 1.01); and

WHEREAS, the Form of Note, the certificate of authentication to be borne by each Note, the Form of Notice of Conversion and the Form of Assignment and Transfer to be borne by the Notes are to be substantially in the forms hereinafter provided; and

WHEREAS, this Indenture is subject to, and will be governed by, the provisions of the Trust Indenture Act of 1939 (the “ Trust Indenture Act ” as more fully set forth in Section 1.01) that are required to be a part of and govern indentures qualified under the Trust Indenture Act; and

WHEREAS, all acts and things necessary to make the Notes, when executed by the Company and authenticated and delivered by the Trustee or a duly authorized authenticating agent, as in this Indenture provided, the valid, binding and legal obligations of the Company, each Note Guarantee, when duly executed by the applicable Guarantor and delivered hereunder, the valid, binding and legal obligations of such Guarantor, and this Indenture a valid agreement of the Company and each Guarantor according to its terms, have been done and performed, and the execution of this Indenture and the issuance hereunder of the Notes and each Note Guarantee have in all respects been duly authorized.


NOW, THEREFORE, THIS INDENTURE WITNESSETH:

That in order to declare the terms and conditions upon which the Notes are, and are to be, authenticated, issued and delivered, and in consideration of the premises and of the purchase and acceptance of the Notes by the Holders thereof, the Company and each Guarantor covenant and agree with the Trustee for the equal and proportionate benefit of the respective Holders from time to time of the Notes and the Note Guarantees (except as otherwise provided below), as follows:

ARTICLE 1

D EFINITIONS

Section 1.01 .   Definitions .  The terms defined in this Section 1.01 (except as herein otherwise expressly provided or unless the context otherwise requires) for all purposes of this Indenture and of any indenture supplemental hereto shall have the respective meanings specified in this Section 1.01. The words “herein,” “hereof,” “hereunder” and words of similar import refer to this Indenture as a whole and not to any particular Article, Section or other subdivision. The terms defined in this Article include the plural as well as the singular.

Affiliate ” of any specified Person means any other Person (x) directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person or (y) advising or sub-advising or advised or sub-advised by or under common advisory or sub-advisory with such specified Person. For the purposes of this definition, “control,” when used with respect to any specified Person means the power to direct or cause the direction of the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms “controlling” and “controlled” have meanings correlative to the foregoing. Notwithstanding anything to the contrary herein, the determination of whether one Person is an “ Affiliate ” of another Person for purposes of this Indenture shall be made based on the facts at the time such determination is made or required to be made, as the case may be, hereunder.

Board of Directors ” means the board of directors of the Company or a committee of such board duly authorized to act for it hereunder.

Board Resolution ” means a copy of a resolution certified by the Secretary or an Assistant Secretary of the Company to have been duly adopted by the Board of Directors, and to be in full force and effect on the date of such certification, and delivered to the Trustee.

Business Day ” means, with respect to any Note, any day other than a Saturday, a Sunday or a day on which the Federal Reserve Bank of New York is authorized or required by law or executive order to close or be closed.

Capital Stock ” means, for any entity, any and all shares, interests, rights to purchase, warrants, options, participations or other equivalents of or interests in (however designated) stock issued by that entity.

 

2


Change of Control Transaction ” shall mean the consummation of: (A) any recapitalization, reclassification or change of the Common Stock (other than changes resulting from a subdivision or combination) as a result of which the Common Stock would be converted into, or exchanged for, stock, other securities, other property or assets; (B) any share exchange, consolidation or merger of the Company pursuant to which the Common Stock will be converted into cash, securities or other property or assets; or (C) any sale, lease or other transfer in one transaction or a series of transactions of all or substantially all of the consolidated assets of the Company and its Subsidiaries, taken as a whole, to any Person other than one of the Company’s Wholly Owned Subsidiaries; provided, however , that a transaction described in clause (B) in which the holders of all classes of the Company’s Common Equity immediately prior to such transaction own, directly or indirectly, more than 50% of all classes of Common Equity of the continuing or surviving corporation or transferee or the parent thereof immediately after such transaction in substantially the same proportions as such ownership immediately prior to such transaction shall not be a Change of Control Transaction.

Clause A Distribution ” shall have the meaning specified in Section 14.06(c).

Clause B Distribution ” shall have the meaning specified in Section 14.06(c).

Clause C Distribution ” shall have the meaning specified in Section 14.06(c).

close of business ” means 5:00 p.m. (New York City time).

Collateral ” means all property wherever located and whether now owned or at any time acquired after the date hereof by the Company or any Guarantor as to which a Lien is granted under the Security Documents to secure the Notes or any Note Guarantee; provided that (a) so long as Priority Lien Obligations are outstanding, such “Collateral” shall consist solely of properties and assets subject to Liens securing the Priority Lien Obligations and (b) if no Priority Lien Obligations are outstanding, such “Collateral” shall consist of all property and assets that would be required to secure the Priority Lien Obligations pursuant to the requirements of the Priority Lien Documents as in effect immediately prior to the discharge of all Priority Lien Obligations.

Collateral Trust Account ” shall have the meaning assigned to such term in the Collateral Trust Agreement.

Collateral Trust Agreement ” means that certain collateral trust agreement dated as of the date hereof among the Company, the Guarantors party thereto, the Trustee and the Collateral Trustee, as the same may be amended, supplemented or otherwise modified or replaced from time to time and substantially in the form set forth in Exhibit B attached hereto.

Collateral Trustee ” means Wilmington Trust, National Association, the collateral trustee for all Holders pursuant to the terms hereof, and any successor thereof.

Commission ” means the U.S. Securities and Exchange Commission.

 

3


Common Equity ” of any Person means Capital Stock of such Person that is generally entitled (a) to vote in the election of directors of such Person or (b) if such Person is not a corporation, to vote or otherwise participate in the selection of the governing body, partners, managers or others that will control the management or policies of such Person.

Common Stock ” means the common stock of the Company, par value $0.001 per share, at the date of this Indenture, subject to Section 14.09.

Company ” shall have the meaning specified in the first paragraph of this Indenture, and subject to the provisions of Article 11, shall include its successors and assigns.

Company Order ” means a written order of the Company, signed by (a) the Company’s Chief Executive Officer, Chief Financial Officer, President, Executive or Senior Vice President or any Vice President (whether or not designated by a number or numbers or word or words added before or after the title “Vice President”) and (b) any such other Officer designated in clause (a) of this definition or the Company’s Treasurer or Assistant Treasurer or Secretary or any Assistant Secretary, and delivered to the Trustee.

Conversion Agent ” shall have the meaning specified in Section 4.03.

Conversion Date ” shall have the meaning specified in Section 14.04(c).

Conversion Obligation ” shall have the meaning specified in Section 14.01.

Conversion Rate ” shall have the meaning specified in Section 14.01.

Corporate Trust Office ” means the principal office of the Trustee at which at any time its corporate trust business shall be administered, which office at the date hereof is located at 15950 N. Dallas Parkway, Suite 550, Dallas, Texas 75248, Attention: SandRidge Energy Administrator, or such other address as the Trustee may designate from time to time by notice to the Holders and the Company, or the principal corporate trust office of any successor trustee (or such other address as such successor trustee may designate from time to time by notice to the Holders and the Company).

Custodian ” means the Trustee, as custodian for The Depository Trust Company, with respect to the Global Notes, or any successor entity thereto.

Default ” means any event that is, or after notice or passage of time, or both, would be, an Event of Default.

Defaulted Amounts ” means any amounts on any Note (including, without limitation, the Redemption Price and principal) that are payable but are not punctually paid or duly provided for.

Depositary ” means, with respect to each Global Note, the Person specified in Section 2.06(c) as the Depositary with respect to such Notes, until a successor shall have been appointed and become such pursuant to the applicable provisions of this Indenture, and thereafter, “ Depositary ” shall mean or include such successor.

 

4


Distributed Property ” shall have the meaning specified in Section 14.06(c).

Domestic Subsidiary ” means any Subsidiary of the Company other than a Foreign Subsidiary or a FSHCO.

Effective Date ” means the first date on which shares of the Common Stock trade on the applicable exchange or in the applicable market, regular way, reflecting the relevant share split or share combination, as applicable.

Event of Default ” shall have the meaning specified in Section 6.01.

Ex-Dividend Date ” means the first date on which shares of the Common Stock trade on the applicable exchange or in the applicable market, regular way, without the right to receive the issuance, dividend or distribution in question, from the Company or, if applicable, from the seller of Common Stock on such exchange or market (in the form of due bills or otherwise) as determined by such exchange or market.

Exchange Act ” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.

First Lien Credit Facility ” means the Credit Agreement dated as of October 4, 2016 among the Company, the lenders party thereto and Royal Bank of Canada, as Administrative Agent and L/C Issuer, as amended, restated, modified, renewed, refunded, restructured, supplemented, replaced or refinanced from time to time in whole or in part from time to time.

Foreign Subsidiary ” means any Subsidiary of the Company that is (i) a “controlled foreign corporation” within the meaning of the Internal Revenue Code or (ii) a Subsidiary of a “controlled foreign corporation” within the meaning of the Internal Revenue Code.

Form of Assignment and Transfer ” means the “Form of Assignment and Transfer” attached as Attachment 2 to the Form of Note attached hereto as Exhibit A.

Form of Note ” means the “Form of Note” attached hereto as Exhibit A.

Form of Notice of Conversion ” means the “Form of Notice of Conversion” attached as Attachment 1 to the Form of Note attached hereto as Exhibit A.

FSHCO ” means any Subsidiary of the Company substantially all of the assets of which constitute the equity interests of Foreign Subsidiaries.

Global Note ” shall have the meaning specified in Section 2.06(b).

 

5


guarantee ” means any obligation, contingent or otherwise, of any Person directly or indirectly guaranteeing any indebtedness or other obligation of any other Person and, without limiting the generality of the foregoing, any obligation, direct or indirect, contingent or otherwise, of such Person (i) to purchase or pay (or advance or supply funds for the purchase or payment of) such indebtedness or other obligation of such other Person (whether arising by virtue of partnership arrangements, or by agreement to keep well, to purchase assets, goods, securities or services, to take-or-pay, or to maintain financial statement conditions or otherwise) or (ii) entered into for purposes of assuring in any other manner the obligee of such indebtedness or other obligation of the payment thereof or to protect such obligee against loss in respect thereof, in whole or in part; provided that the term “ guarantee ” does not include endorsements for collection or deposit in the ordinary course of business. The term “ guarantee ” used as a verb has a corresponding meaning.

Guarantor ” means, collectively, (i) SandRidge Holdings, Inc., SandRidge Exploration and Production, LLC, SandRidge Midstream Inc., SandRidge Operating Company, Integra Energy, L.L.C. and Lariat Services, Inc. and (ii) each Guarantor Subsidiary that executes a supplemental indenture hereto providing for the guarantee of the payment of the Notes, and subject to the provisions of Section 13.04, shall include their respective successors and assigns, in each case unless and until such Guarantor is released from its Note Guarantee pursuant to this Indenture.

Guarantor Subsidiary ” means (i) each Subsidiary of the Company party hereto on the date hereof, (ii) if any Priority Lien Debt (or any refinancing thereof secured by substantially similar collateral) is not in effect, (x) any Domestic Subsidiary (other than a Domestic Subsidiary that is an Immaterial Subsidiary), including any such Subsidiary acquired or created by the Company or any Guarantor after the date hereof and (y) any Domestic Subsidiary that guarantees any indebtedness in respect of borrowed money of the Company or any Guarantor, which indebtedness is pari passu or junior to the Company’s or such Guarantor’s respective obligations under this Indenture, any Note Guarantee or the Notes, as applicable and (iii) for so long as any Priority Lien Debt (or any refinancing thereof secured by substantially similar collateral) is in effect, any other guarantor under such Priority Lien Debt (or any refinancing thereof secured by substantially similar collateral).

Holder ,” as applied to any Note, or other similar terms (but excluding the term “beneficial holder”), means any Person in whose name at the time a particular Note is registered on the Note Register.

Immaterial Subsidiary ” means any Subsidiary of the Company with less than $5,000,000 in total assets on a consolidated basis.

Indenture ” means this instrument as originally executed or, if amended or supplemented as herein provided, as so amended or supplemented.

Intercreditor and Subordination Agreement ” means the Intercreditor and Subordination Agreement between Royal Bank of Canada, as Priority Lien Agent (as defined therein), the Collateral Trustee, and acknowledged and agreed by the Company and certain of its Subsidiaries party thereto, dated as of the date hereof, as it may be amended, restated, supplemented or otherwise modified from time to time and substantially in the form set forth in Exhibit C attached hereto.

 

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Last Reported Sale Price ” of the Common Stock on any date means the closing sale price per share (or if no closing sale price is reported, the average of the bid and ask prices or, if more than one in either case, the average of the average bid and the average ask prices) on that date as reported in composite transactions for the principal U.S. national or regional securities exchange on which the Common Stock is traded. If the Common Stock is not listed for trading on a U.S. national or regional securities exchange on the relevant date, the “ Last Reported Sale Price ” shall be the last quoted bid price for the Common Stock in the over-the-counter market on the relevant date as reported by OTC Markets Group Inc. or a similar organization. If the Common Stock is not so quoted, the “ Last Reported Sale Price ” shall be the average of the mid-point of the last bid and ask prices for the Common Stock on the relevant date from each of at least three nationally recognized independent investment banking firms selected by the Company for this purpose.

Lien ” means any mortgage, pledge, security interest, encumbrance, lien or charge of any kind (including, without limitation, any conditional sale or other title retention agreement or lease in the nature thereof or any agreement to give any security interest).

Make-Whole Amount ” shall have the meaning specified in Section 2.02.

Mandatory Conversion ” shall have the meaning specified in Section 14.03(a).

Mandatory Conversion Event ” shall have the meaning specified in Section 14.03(a).

Material Adverse Effect ” means a material adverse change in, or a material adverse effect upon, the operations, earnings, business, assets, properties, liabilities, condition (financial or otherwise) or prospects of the Company and its Subsidiaries, taken as a whole.

Maturity Date ” means October 4, 2020.

Merger Event ” shall have the meaning specified in Section 14.09(a).

Mortgages ” means all mortgages, debentures, hypothecs, deeds of trust, deeds to secure indebtedness and similar documents, instruments and agreements (and all amendments, modifications and supplements thereof) creating, evidencing, perfecting or otherwise establishing the Liens on the Collateral to secure payment of the Notes and the Note Guarantees or any part thereof; provided that (a) so long as Priority Lien Obligations are outstanding, the property and assets subject to the Mortgages shall consist solely of all “Mortgaged Property” under and as defined (or such similar defined term) in the Priority Lien Documents and (b) if no Priority Lien Obligations are outstanding, such property and assets shall consist solely of all “Mortgaged Property” under and as defined (or such similar defined term) in the Priority Lien Documents as in effect immediately prior to the discharge of all Priority Lien Obligations.

Note ” or “ Notes ” shall have the meaning specified in the first paragraph of the recitals of this Indenture.

 

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Note Guarantee ” means the guarantee of the Notes by a Guarantor pursuant to this Indenture.

Note Register ” shall have the meaning specified in Section 2.06(a).

Note Registrar ” shall have the meaning specified in Section 2.06(a).

Officer ” means, with respect to the Company, the President, the Chief Executive Officer, the Chief Financial Officer, the Treasurer, the Secretary, any Executive or Senior Vice President or any Vice President (whether or not designated by a number or numbers or word or words added before or after the title “Vice President”).

Officers’ Certificate ,” when used with respect to the Company, means a certificate that is delivered to the Trustee and that is signed by (a) two Officers of the Company or (b) one Officer of the Company and one of the Treasurer, any Assistant Treasurer, the Secretary, any Assistant Secretary or the Controller of the Company. Each such certificate shall include the statements provided for in Section 17.07 if and to the extent required by the provisions of such Section. One of the Officers giving an Officers’ Certificate pursuant to Section 4.13 shall be the principal executive, financial or accounting officer of the Company.

open of business ” means 9:00 a.m. (New York City time).

Opinion of Counsel ” means an opinion in writing signed by legal counsel, who may be an employee of or counsel to the Company, or other counsel acceptable to the Trustee, that is delivered to the Trustee. Each such opinion shall include the statements provided for in Section 17.07 if and to the extent required by the provisions of such Section 17.07.

Optional Conversion ” shall have the meaning specified in Section 14.02.

Optional Conversion Date ” shall have the meaning specified in Section 14.04(c).

Optional Redemption ” shall have the meaning specified in Section 16.01.

outstanding ,” when used with reference to Notes, shall, subject to the provisions of Section 8.04, mean, as of any particular time, all Notes authenticated and delivered by the Trustee under this Indenture, except:

(a)    Notes theretofore canceled by the Trustee or accepted by the Trustee for cancellation;

(b)    Notes, or portions thereof, that have become due and payable and in respect of which monies in the necessary amount shall have been deposited in trust with the Trustee or with any Paying Agent (other than the Company) or shall have been set aside and segregated in trust by the Company (if the Company shall act as its own Paying Agent);

 

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(c)    Notes that have been paid pursuant to Section 2.07 or Notes in lieu of which, or in substitution for which, other Notes shall have been authenticated and delivered pursuant to the terms of Section 2.07 unless proof satisfactory to the Trustee is presented that any such Notes are held by protected purchasers in due course;

(d)    Notes converted pursuant to Article 14 and required to be cancelled pursuant to Section 2.09;

(e)    Notes redeemed pursuant to Article 16; and

(f)    Notes repurchased by the Company pursuant to the penultimate sentence of Section 2.11.

Paying Agent ” shall have the meaning specified in Section 4.03.

Person ” means an individual, a corporation, a limited liability company, an association, a partnership, a joint venture, a joint stock company, a trust, an unincorporated organization or a government or an agency or a political subdivision thereof.

Plan of Reorganization ” shall have the meaning specified in the first paragraph of the recitals of this Indenture.

Physical Notes ” means permanent certificated Notes in registered form initially issued in minimum denominations of $1.00 principal amount and multiples of $1.00 in excess thereof.

Predecessor Note ” of any particular Note means every previous Note evidencing all or a portion of the same debt as that evidenced by such particular Note; and, for the purposes of this definition, any Note authenticated and delivered under Section 2.07 in lieu of or in exchange for a mutilated, lost, destroyed or stolen Note shall be deemed to evidence the same debt as the mutilated, lost, destroyed or stolen Note that it replaces.

Priority Lien Debt ” means Priority Lien Debt as such term is defined in the Intercreditor and Subordination Agreement.

Priority Lien Documents ” means Priority Lien Documents as such term is defined in the Intercreditor and Subordination Agreement.

Priority Lien Obligations ” means Priority Lien Obligations as such term is defined in the Intercreditor and Subordination Agreement.

Priority Lien Secured Parties ” means Priority Lien Secured Parties as such term is defined in the Intercreditor and Subordination Agreement.

Record Date ” means, with respect to any dividend, distribution or other transaction or event in which the holders of Common Stock (or other applicable security) have the right to receive any cash, securities or other property or in which the Common Stock (or such other security) is exchanged for or converted into any combination of cash, securities or other property,

 

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the date fixed for determination of holders of the Common Stock (or such other security) entitled to receive such cash, securities or other property (whether such date is fixed by the Board of Directors, by statute, by contract or otherwise).

Redemption Date ” shall have the meaning specified in Section 16.02(a).

Redemption Notice ” shall have the meaning specified in Section 16.02(a).

Redemption Price ” means, for any Notes to be redeemed pursuant to Section 16.01, 100% of the principal amount of such Notes, as increased by the Make-Whole Amount applicable to such Notes.

Reference Property ” shall have the meaning specified in Section 14.09(a).

Required Shares ” means the greater of (x) at least 8,483,489 shares of Common Stock or (y) at least a majority of the aggregate number of shares of Common Stock outstanding as of the date of delivery of a Springing Event Notice.

Required Springing Holders ” means, as of any date of determination, Holders that hold or otherwise have beneficial ownership (as defined in Rules 13d-3 and 13d-5 under the Exchange Act) of at least two-thirds in aggregate principal amount of the Notes then outstanding.

Responsible Officer ” means, when used with respect to the Trustee, any officer within the corporate trust department of the Trustee, including any vice president, assistant vice president, assistant secretary, assistant treasurer, trust officer or any other officer of the Trustee who customarily performs functions similar to those performed by the Persons who at the time shall be such officers, respectively, or to whom any corporate trust matter is referred because of such person’s knowledge of and familiarity with the particular subject and who shall have direct responsibility for the administration of this Indenture.

Scheduled Trading Day ” means a day that is scheduled to be a Trading Day on the principal U.S. national or regional securities exchange or market on which the Common Stock is listed or admitted for trading. If the Common Stock is not so listed or admitted for trading, “ Scheduled Trading Day ” means a Business Day.

Securities Act ” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.

Security Agreement ” means that certain security agreement, to be entered into by and among the Company, the Guarantors party thereto and the Collateral Trustee, on behalf of itself and the Secured Parties (as defined therein), as the same may be amended, supplemented or otherwise modified or replaced from time to time and substantially in the form set forth in Exhibit D attached hereto.

Security Documents ” means the Collateral Trust Agreement, Security Agreement, and all other security agreements, pledge agreements, hypothecs, collateral assignments, Mortgages, deeds of trust, deeds to secure debt, collateral agency agreements, debentures, control

 

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agreements or other grants or transfers for security executed and delivered by the Company or any Guarantor creating (or purporting to create) a Lien upon Collateral in favor of the Collateral Trustee (including, without limitation, the financing statements under the Uniform Commercial Code of the relevant state), in each case, as amended, modified, renewed, restated or replaced, in whole or in part, from time to time, in accordance with its terms.

Significant Subsidiary ” means a Subsidiary of the Company that meets the definition of “significant subsidiary” in Article 1, Rule 1-02 of Regulation S-X under the Exchange Act.

Specified Litigation Event ” means (i)(a) the entry of an order by a court of competent jurisdiction denying summary judgment to the Company or its Affiliates or (b) the expiration of the time period in which the Company or its Affiliates may move for summary judgment, in either case, in a class action lawsuit against the Company (other than such a lawsuit initiated by any Holder or Affiliate of a Holder) that is reasonably expected to result in the Company’s entry into bankruptcy proceedings or otherwise to result in a Material Adverse Effect.

Spin-Off ” shall have the meaning specified in Section 14.06(c).

Springing Event ” means, subject to the Intercreditor and Subordination Agreement, the requirement pursuant to Section 4.08 and Section 4.09 to create perfected Liens on the Collateral pursuant to the Security Documents, which secure the obligations of the Company under the Notes and the Indenture and of each Guarantor under any Note Guarantee and the Indenture.

Springing Event Notice ” shall have the meaning specified in Section 4.08(a).

Springing Lien Amount ” means initially $100,000,000 (subject to increase pursuant to Section 4.08(b)).

Subsidiary ” means, with respect to any Person, any corporation, association, partnership or other business entity of which more than 50% of the total voting power of shares of Capital Stock or other interests (including partnership interests) entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers, general partners or trustees thereof is at the time owned or controlled, directly or indirectly, by (i) such Person; (ii) such Person and one or more Subsidiaries of such Person; or (iii) one or more Subsidiaries of such Person.

Successor Company ” shall have the meaning specified in Section 11.01(a).

Successor Guarantor ” shall have the meaning specified in Section 13.04(a).

Trading Day ” means a day on which (i) trading in the Common Stock (or other security for which a closing sale price must be determined) generally occurs on The New York Stock Exchange or, if the Common Stock (or such other security) is not then listed on The New York Stock Exchange, on the principal other U.S. national or regional securities exchange on which the Common Stock (or such other security) is then listed or, if the Common Stock (or such other security) is not then listed on a U.S. national or regional securities exchange, on the principal other market on which the Common Stock (or such other security) is then traded and (ii) a Last

 

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Reported Sale Price for the Common Stock (or such other security) is available on such securities exchange or market; provided that if the Common Stock (or such other security) is not so listed or traded, “ Trading Day ” means a Business Day.

transfer ” shall have the meaning specified in Section 2.06(c).

Trigger Event ” shall have the meaning specified in Section 14.06(c).

Trust Indenture Act ” means the Trust Indenture Act of 1939, as amended, as it was in force at the date of execution of this Indenture; provided , however , that in the event the Trust Indenture Act of 1939 is amended after the date hereof, the term “ Trust Indenture Act ” shall mean, to the extent required by such amendment, the Trust Indenture Act of 1939, as so amended.

Trustee ” means the Person named as the “ Trustee ” in the first paragraph of this Indenture until a successor trustee shall have become such pursuant to the applicable provisions of this Indenture, and thereafter “ Trustee ” shall mean or include each Person who is then a Trustee hereunder.

unit of Reference Property ” shall have the meaning specified in Section 14.09(a).

Valuation Period ” shall have the meaning specified in Section 14.06(c).

Wholly Owned Subsidiary ” means, with respect to any Person, any Subsidiary of such Person, except that, solely for purposes of this definition, the reference to “more than 50%” in the definition of “Subsidiary” shall be deemed replaced by a reference to “100%”.

Section 1.02 .   References to Principal Amount.  Unless the context otherwise requires, any reference to principal of, or in respect of, any Note in this Indenture shall be deemed to include the Make-Whole Amount if, in such context, the Make-Whole Amount is, was or would be issuable pursuant to Section 2.02. Unless the context otherwise requires, any express mention of the Make-Whole Amount in any provision hereof shall not be construed as excluding the Make-Whole Amount in those provisions hereof where such express mention is not made.

ARTICLE 2

I SSUE , D ESCRIPTION , E XECUTION , R EGISTRATION AND E XCHANGE OF N OTES

Section 2.01 .   Designation and Amount.  The Notes shall be designated as the “0.00% Convertible Senior Subordinated Notes due 2020.” The aggregate principal amount of Notes that may be authenticated and delivered under this Indenture is initially limited to $281,780,873 (as increased by an amount equal to the aggregate principal amount of any additional Notes issued pursuant to Section 2.02), except for Notes authenticated and delivered upon registration or transfer of, or in exchange for, or in lieu of other Notes to the extent expressly permitted hereunder.

 

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Section 2.02 .   Repayment Premium Applicable to Notes.  (a) In connection with any acceleration of Notes pursuant to Section 6.02 or repayment or prepayment of Notes, including, without limitation, any Optional Redemption or any repayment following acceleration of the Notes pursuant to Section 6.02, the Company shall be required to pay a make-whole amount of $0.783478 (the “ Make-Whole Amount ”) for each $1.00 in principal amount of Notes repaid or prepaid such that for each $1.00 in outstanding principal amount of such Notes so repaid or prepaid the Company is required to repay or prepay $1.783478.

(b)    Upon any conversion of Notes after the Make-Whole Amount has become payable, the Company shall deliver shares of Common Stock based on the principal amount of Notes to be converted, as increased to reflect the applicable Make-Whole Amount and pursuant to an adjusted Conversion Rate as set forth in Section 14.05.

(c)    Upon any acceleration of Notes pursuant to Section 6.02 or repayment or prepayment of Notes and the issuance of the Make-Whole Amount, the Company shall, without the consent of the Holders, (i) in the case of a Global Note, increase the outstanding principal amount of such Global Note (in minimum denominations of $1.00 principal amount and multiples thereof) or (ii) in the case of Physical Notes, issue additional Physical Notes (in minimum denominations of $1.00 principal amount and multiples thereof) under this Indenture on the same terms and conditions as the Notes initially issued under this Indenture on the date hereof; provided , in each case, the Make-Whole Amount shall be rounded up to $1.00 as necessary to satisfy any minimum denomination requirements or the procedures of the Depositary.

(d)    Upon any acceleration of Notes pursuant to Section 6.02 or repayment or prepayment of Notes, the Company shall promptly file with the Trustee an Officers’ Certificate setting forth the Make-Whole Amount of Notes due and setting forth a brief statement of the facts requiring such increase, together with a Company Order, directing the Trustee to increase the Global Notes or authenticate additional Physical Notes representing the Make-Whole Amount. Unless and until a Responsible Officer of the Trustee shall have received such Officers’ Certificate, the Trustee shall not be deemed to have knowledge that any Make-Whole Amount is due and may assume without inquiry that no such Make-Whole Amount is due. Promptly after delivery of such certificate, the Company shall prepare a notice of such increase of the principal amount of Notes setting forth the increased principal amount of Notes and the date on which each increase becomes effective and shall deliver such notice of such increase of the principal amount of Notes to each Holder. Failure to deliver such Officers’ Certificate or notice shall not affect the legality or validity of any such increase.

Section 2.03 .   Form of Notes.  The Notes and the Trustee’s certificate of authentication to be borne by such Notes shall be substantially in the respective forms set forth in Exhibit A, the terms and provisions of which shall constitute, and are hereby expressly incorporated in and made a part of this Indenture. To the extent applicable, the Company, each Guarantor and the Trustee, by their execution and delivery of this Indenture, expressly agree to such terms and provisions and to be bound thereby.

Any Global Note may be endorsed with or have incorporated in the text thereof such legends or recitals or changes not inconsistent with the provisions of this Indenture as may be required by the Custodian or the Depositary, or as may be required to comply with any

 

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applicable law or any regulation thereunder or with the rules and regulations of any securities exchange or automated quotation system upon which the Notes may be listed or traded or designated for issuance or to conform with any usage with respect thereto, or to indicate any special limitations or restrictions to which any particular Notes are subject.

Any of the Notes may have such letters, numbers or other marks of identification and such notations, legends or endorsements as the Officer executing the same may approve (execution thereof to be conclusive evidence of such approval) and as are not inconsistent with the provisions of this Indenture, or as may be required to comply with any law or with any rule or regulation made pursuant thereto or with any rule or regulation of any securities exchange or automated quotation system on which the Notes may be listed or designated for issuance, or to conform to usage or to indicate any special limitations or restrictions to which any particular Notes are subject.

Each Global Note shall represent such principal amount of the outstanding Notes as shall be specified therein and shall provide that it shall represent the aggregate principal amount of outstanding Notes from time to time endorsed thereon and that the aggregate principal amount of outstanding Notes represented thereby may from time to time be increased or reduced to reflect redemptions, repurchases, cancellations, conversions, transfers or exchanges permitted hereby. Any endorsement of a Global Note to reflect the amount of any increase or decrease in the amount of outstanding Notes represented thereby shall be made by the Trustee or the Custodian, at the direction of the Trustee, in such manner and upon instructions given by the Holder of such Notes in accordance with this Indenture. Payment of principal (including the Redemption Price, if applicable) of a Global Note shall be made to the Holder of such Note on the date of payment, unless a record date or other means of determining Holders eligible to receive payment is provided for herein.

Section 2.04 .   Date and Denomination of Notes; No Regular Interest and Defaulted Amounts.  (a) The Notes shall be initially issuable in registered form without coupons in minimum denominations of $1.00 principal amount and multiples of $1.00 in excess thereof. Each Note shall be dated the date of its authentication and shall not bear regular interest.

(b)    Subject to Section 14.02 and Section 14.03, the principal amount (including the Redemption Price, if applicable) of any Note (x) in the case of any Physical Note, shall be payable at the office or agency of the Company maintained by the Company for such purposes in the contiguous United States, which shall initially be the Corporate Trust Office and (y) in the case of any Global Note, shall be payable by wire transfer of immediately available funds to the account of the Depositary or its nominee.

(c)    Any Defaulted Amounts shall be paid by the Company, at its election in each case, as provided in clause (i) or (ii) below:

(i)    The Company may elect to make payment of any Defaulted Amounts to the Persons in whose names the Notes (or their respective Predecessor Notes) are registered at the close of business on a special record date for the payment of such Defaulted Amounts, which shall be fixed in the following manner. The Company shall

 

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notify the Trustee in writing of the amount of the Defaulted Amounts proposed to be paid on each Note and the date of the proposed payment (which shall be not less than 25 days after the receipt by the Trustee of such notice, unless the Trustee shall consent to an earlier date), and at the same time the Company shall deposit with the Trustee an amount of money equal to the aggregate amount to be paid in respect of such Defaulted Amounts or shall make arrangements satisfactory to the Trustee for such deposit on or prior to the date of the proposed payment, such money when deposited to be held in trust for the benefit of the Persons entitled to such Defaulted Amounts as in this clause provided. Thereupon the Company shall fix a special record date for the payment of such Defaulted Amounts which shall be not more than 15 days and not less than 10 days prior to the date of the proposed payment, and not less than 10 days after the receipt by the Trustee of the notice of the proposed payment. The Company shall promptly notify the Trustee in writing of such special record date and the Trustee, in the name and at the expense of the Company, shall cause notice of the proposed payment of such Defaulted Amounts and the special record date therefor to be delivered to each Holder not less than 10 days prior to such special record date. Notice of the proposed payment of such Defaulted Amounts and the special record date therefor having been so delivered, such Defaulted Amounts shall be paid to the Persons in whose names the Notes (or their respective Predecessor Notes) are registered at the close of business on such special record date and shall no longer be payable pursuant to the following clause (ii) of this Section 2.04(c).

(ii)    The Company may make payment of any Defaulted Amounts in any other lawful manner not inconsistent with the requirements of any securities exchange or automated quotation system on which the Notes may be listed or designated for issuance, and upon such notice as may be required by such exchange or automated quotation system, if, after written notice given by the Company to the Trustee of the proposed payment pursuant to this clause, such manner of payment shall be deemed practicable by the Trustee.

Section 2.05 .   Execution, Authentication and Delivery of Notes.  The Notes shall be signed in the name and on behalf of the Company by the manual or facsimile signature of its Chief Executive Officer, President, Chief Financial Officer, Treasurer, Secretary or any of its Executive or Senior Vice Presidents.

At any time and from time to time after the execution and delivery of this Indenture, the Company may deliver Notes executed by the Company to the Trustee for authentication, together with a Company Order for the authentication and delivery of such Notes, and the Trustee in accordance with such Company Order shall authenticate and deliver such Notes, without any further action by the Company hereunder.

Upon any acceleration of Notes pursuant to Section 6.02 or repayment or prepayment of Notes: (i) in the case of a Global Note, the Trustee, upon receipt of a Company Order, shall distribute the principal amount of any Global Note, as increased by the aggregate Make-Whole Amount, rounded up to the nearest $1.00, to be allocated for the credit of the Holders on such date in accordance with their interests and subject to the procedures of the Depositary, and an adjustment shall be made on the books and records of the Trustee (if it is then the Custodian for

 

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such Global Note) with respect to such Global Note, by the Trustee or the Custodian, as applicable, to reflect such increase; and (ii) in the case of a Physical Note, the Company shall deliver to the Trustee additional Physical Notes in the applicable Make-Whole Amount, rounded up to the nearest $1.00 and in minimum denominations of $1.00 principal amount and multiples thereof, executed by the Company for authentication by the Trustee, together with a Company Order for the authentication and delivery of such Notes, and the Trustee shall authenticate and deliver such additional Physical Notes in accordance with such Company Order. In each case, the Company shall deliver a notice to Holders as provided in Section 2.02(d).

Only such Notes as shall bear thereon a certificate of authentication substantially in the form set forth on the form of Note attached as Exhibit A hereto, executed manually by an authorized signatory of the Trustee (or an authenticating agent appointed by the Trustee as provided by Section 17.11), shall be entitled to the benefits of this Indenture or be valid or obligatory for any purpose. Such certificate by the Trustee (or such authenticating agent) upon any Note executed by the Company shall be conclusive evidence that the Note so authenticated has been duly authenticated and delivered hereunder and that the Holder is entitled to the benefits of this Indenture.

In case any Officer of the Company who shall have signed any of the Notes shall cease to be such Officer before the Notes so signed shall have been authenticated and delivered by the Trustee, or disposed of by the Company, such Notes nevertheless may be authenticated and delivered or disposed of as though the Person who signed such Notes had not ceased to be such Officer of the Company; and any Note may be signed on behalf of the Company by such Persons as, at the actual date of the execution of such Note, shall be the Officers of the Company, although at the date of the execution of this Indenture any such Person was not such an Officer.

Section 2.06 .   Exchange and Registration of Transfer of Notes; Restrictions on Transfer; Depositary.  (a) The Company shall cause to be kept at the Corporate Trust Office a register (the register maintained in such office or in any other office or agency of the Company designated pursuant to Section 4.03, the “ Note Register ”) in which, subject to such reasonable regulations as it may prescribe, the Company shall provide for the registration of Notes and of transfers of Notes. Such register shall be in written form or in any form capable of being converted into written form within a reasonable period of time. The Trustee is hereby initially appointed the “ Note Registrar ” for the purpose of registering Notes and transfers of Notes as herein provided. The Company may appoint one or more co-Note Registrars in accordance with Section 4.03.

Upon surrender for registration of transfer of any Note to the Note Registrar or any co-Note Registrar, and satisfaction of the requirements for such transfer set forth in this Section 2.06, the Company shall execute, and the Trustee shall authenticate and deliver, in the name of the designated transferee or transferees, one or more new Notes of any authorized denominations and of a like aggregate principal amount and bearing such legends as may be required by this Indenture.

Notes may be exchanged for other Notes of any authorized denominations and of a like aggregate principal amount, upon surrender of the Notes to be exchanged at any such office or agency maintained by the Company pursuant to Section 4.03. Whenever any Notes are so

 

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surrendered for exchange, the Company shall execute, and the Trustee shall authenticate and deliver, the Notes that the Holder making the exchange is entitled to receive, bearing registration numbers not contemporaneously outstanding.

All Notes presented or surrendered for registration of transfer or for exchange, repurchase or conversion shall (if so required by the Company, the Trustee, the Note Registrar or any co-Note Registrar) be duly endorsed, or be accompanied by a written instrument or instruments of transfer in form satisfactory to the Company and duly executed, by the Holder thereof or its attorney-in-fact duly authorized in writing.

No service charge shall be imposed by the Company, the Trustee, the Note Registrar, any co-Note Registrar or the Paying Agent for any exchange or registration of transfer of Notes, but the Company may require a Holder to pay a sum sufficient to cover any documentary, stamp or similar issue or transfer tax required in connection therewith as a result of the name of the Holder of new Notes issued upon such exchange or registration of transfer being different from the name of the Holder of the old Notes surrendered for exchange or registration of transfer.

None of the Company, the Trustee, the Note Registrar or any co-Note Registrar shall be required to exchange or register a transfer of (i) any Notes surrendered for conversion or, if a portion of any Note is surrendered for conversion, such portion thereof surrendered for conversion or (ii) any Notes selected for redemption in accordance with Article 16, except the unredeemed portion of any Note being redeemed in part.

All Notes issued upon any registration of transfer or exchange of Notes in accordance with this Indenture shall be the valid obligations of the Company, evidencing the same debt, and entitled to the same benefits under this Indenture as the Notes surrendered upon such registration of transfer or exchange.

(b)    So long as the Notes are eligible for book-entry settlement with the Depositary, unless otherwise required by law, subject to the fourth paragraph from the end of Section 2.06(c) all Notes shall be represented by one or more Notes in global form (each, a “ Global Note ”) registered in the name of the Depositary or the nominee of the Depositary. The transfer and exchange of beneficial interests in a Global Note that does not involve the issuance of a Physical Note shall be effected through the Depositary (but not the Trustee or the Custodian) in accordance with this Indenture (including the restrictions on transfer set forth herein) and the procedures of the Depositary therefor.

(c)    As used in this Section 2.06(c) and Section 2.06(d), the term “ transfer ” encompasses any sale, pledge, transfer or other disposition whatsoever of any Note or Common Stock issued upon the conversion or exchange of a Note.

Notwithstanding any other provisions of this Indenture (other than the provisions set forth in this Section 2.06(c)), a Global Note may not be transferred as a whole or in part except (i) by the Depositary to a nominee of the Depositary or by a nominee of the Depositary to the Depositary or another nominee of the Depositary or by the Depositary or any such nominee to a successor Depositary or a nominee of such successor Depositary and (ii) for exchange of a Global Note or a portion thereof for one or more Physical Notes in accordance with the second immediately succeeding paragraph.

 

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The Depositary shall be a clearing agency registered under the Exchange Act. The Company initially appoints The Depository Trust Company to act as Depositary with respect to each Global Note. Initially, each Global Note shall be issued to the Depositary, registered in the name of Cede & Co., as the nominee of the Depositary, and deposited with the Trustee as custodian for Cede & Co.

If (i) the Depositary notifies the Company at any time that the Depositary is unwilling or unable to continue as depositary for the Global Notes and a successor depositary is not appointed within 90 days, (ii) the Depositary ceases to be registered as a clearing agency under the Exchange Act and a successor depositary is not appointed within 90 days or (iii) an Event of Default with respect to the Notes has occurred and is continuing and a beneficial owner of any Note requests that its beneficial interest therein be issued as a Physical Note, the Company shall execute, and the Trustee, upon receipt of an Officers’ Certificate and a Company Order for the authentication and delivery of Notes, shall authenticate and deliver (x) in the case of clause (iii), a Physical Note to such beneficial owner in a principal amount equal to the principal amount of such Note corresponding to such beneficial owner’s beneficial interest and (y) in the case of clause (i) or (ii), Physical Notes to each beneficial owner of the related Global Notes (or a portion thereof) in an aggregate principal amount equal to the aggregate principal amount of such Global Notes in exchange for such Global Notes, and upon delivery of the Global Notes to the Trustee such Global Notes shall be canceled.

Physical Notes issued in exchange for all or a part of the Global Note pursuant to this Section 2.06(c) shall be registered in such names and in such authorized denominations as the Depositary shall instruct the Trustee pursuant to instructions from its direct or indirect participants or otherwise, or, in the case of clause (iii) of the immediately preceding paragraph, the relevant beneficial owner through the direct or indirect participant shall instruct the Trustee. Upon execution and authentication, the Trustee shall deliver such Physical Notes to the Persons in whose names such Physical Notes are so registered.

At such time as all interests in a Global Note have been converted, canceled, repurchased, redeemed or transferred, such Global Note shall be, upon receipt thereof, canceled by the Trustee in accordance with standing procedures and existing instructions between the Depositary and the Custodian. At any time prior to such cancellation, if any interest in a Global Note is exchanged for Physical Notes, converted, canceled, repurchased, redeemed or transferred to a transferee who receives Physical Notes therefor or any Physical Note is exchanged or transferred for part of such Global Note, the principal amount of such Global Note shall, in accordance with the standing procedures and instructions existing between the Depositary and the Custodian, be appropriately reduced or increased, as the case may be, and an endorsement shall be made on such Global Note, by the Trustee or the Custodian, at the direction of the Trustee, to reflect such reduction or increase.

 

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The Trustee shall have no obligation or duty to monitor, determine or inquire as to compliance with any restrictions on transfer imposed under this Indenture or under applicable law with respect to any transfer of any interest in any Note (including any transfers between or among Depositary participants or beneficial owners of interests in any Global Notes) other than to require delivery of such certificates and other documentation or evidence as are expressly required by, and to do so if and when expressly required by the terms of, this Indenture, and to examine the same to determine substantial compliance as to form with the express requirements hereof.

None of the Company, the Trustee, the Conversion Agent or any agent of the Company, the Trustee or the Conversion Agent shall have any responsibility or liability for any aspect of the records relating to or payments made on account of beneficial ownership interests of a Global Note or maintaining, supervising or reviewing any records relating to such beneficial ownership interests.

(d)    Any Note or Common Stock issued upon the conversion or exchange of a Note that is repurchased or owned by any Affiliate of the Company (or any Person who was an Affiliate of the Company at any time during the three months immediately preceding) may not be resold by such Affiliate (or such Person, as the case may be) unless registered under the Securities Act or resold pursuant to an exemption from the registration requirements of the Securities Act. The Notes and the Common Stock issued upon the conversion or exchange of a Note are being offered and sold pursuant to an exemption from the registration requirement of Section 5 of the Securities Act provided by Section 1145 of Title 11 of the United States Code, and to the extent that any Holder or beneficial owner of a Note is an “underwriter” as defined in Section 1145(b)(1) of Title 11 of the United States Code, such Holder or beneficial owner, as applicable, may not be able to sell or transfer any Notes in the absence of an effective registration statement under the Securities Act or an exemption from registration thereunder. By accepting a transfer of a Note, the Holder or beneficial owner, as applicable, acknowledges the restrictions set forth herein. The Company shall cause any Note that is repurchased or owned by it to be surrendered to the Trustee for cancellation in accordance with Section 2.09.

Section 2.07 .   Mutilated, Destroyed, Lost or Stolen Notes.  In case any Note shall become mutilated or be destroyed, lost or stolen, the Company in its discretion may execute, and upon its written request the Trustee or an authenticating agent appointed by the Trustee shall authenticate and deliver, a new Note, bearing a registration number not contemporaneously outstanding, in exchange and substitution for the mutilated Note, or in lieu of and in substitution for the Note so destroyed, lost or stolen. In every case the applicant for a substituted Note shall furnish to the Company, to the Trustee and, if applicable, to such authenticating agent such security or indemnity as may be required by them to save each of them harmless from any loss, liability, cost or expense caused by or connected with such substitution, and, in every case of destruction, loss or theft, the applicant shall also furnish to the Company, to the Trustee and, if applicable, to such authenticating agent evidence to their satisfaction of the destruction, loss or theft of such Note and of the ownership thereof.

The Trustee or such authenticating agent may authenticate any such substituted Note and deliver the same upon the receipt of such security or indemnity as the Trustee, the Company and, if applicable, such authenticating agent may require. No service charge shall be imposed by the Company, the Trustee, the Note Registrar, any co-Note Registrar or the Paying Agent upon the

 

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issuance of any substitute Note, but the Company may require a Holder to pay a sum sufficient to cover any documentary, stamp or similar issue or transfer tax required in connection therewith as a result of the name of the Holder of the new substitute Note being different from the name of the Holder of the old Note that became mutilated or was destroyed, lost or stolen. In case any Note that has matured or is about to mature or has been surrendered for required repurchase or is about to be converted in accordance with Article 14 shall become mutilated or be destroyed, lost or stolen, the Company may, in its sole discretion, instead of issuing a substitute Note, pay or authorize the payment of or convert or authorize the conversion of the same (without surrender thereof except in the case of a mutilated Note), as the case may be, if the applicant for such payment or conversion shall furnish to the Company, to the Trustee and, if applicable, to such authenticating agent such security or indemnity as may be required by them to save each of them harmless for any loss, liability, cost or expense caused by or connected with such substitution, and, in every case of destruction, loss or theft, evidence satisfactory to the Company, the Trustee and, if applicable, any Paying Agent or Conversion Agent of the destruction, loss or theft of such Note and of the ownership thereof.

Every substitute Note issued pursuant to the provisions of this Section 2.07 by virtue of the fact that any Note is destroyed, lost or stolen shall constitute an additional contractual obligation of the Company, whether or not the destroyed, lost or stolen Note shall be found at any time, and shall be entitled to all the benefits of (but shall be subject to all the limitations set forth in) this Indenture equally and proportionately with any and all other Notes duly issued hereunder. To the extent permitted by law, all Notes shall be held and owned upon the express condition that the foregoing provisions are exclusive with respect to the replacement, payment, redemption, conversion or repurchase of mutilated, destroyed, lost or stolen Notes and shall preclude any and all other rights or remedies notwithstanding any law or statute existing or hereafter enacted to the contrary with respect to the replacement, payment, redemption, conversion or repurchase of negotiable instruments or other securities without their surrender.

Section 2.08 .   Temporary Notes.  Pending the preparation of Physical Notes, the Company may execute and the Trustee or an authenticating agent appointed by the Trustee shall, upon written request of the Company, authenticate and deliver temporary Notes (printed or lithographed). Temporary Notes shall be issuable in any authorized denomination, and substantially in the form of the Physical Notes but with such omissions, insertions and variations as may be appropriate for temporary Notes, all as may be determined by the Company. Every such temporary Note shall be executed by the Company and authenticated by the Trustee or such authenticating agent upon the same conditions and in substantially the same manner, and with the same effect, as the Physical Notes. Without unreasonable delay, the Company shall execute and deliver to the Trustee or such authenticating agent Physical Notes (other than any Global Note) and thereupon any or all temporary Notes (other than any Global Note) may be surrendered in exchange therefor, at each office or agency maintained by the Company pursuant to Section 4.03 and the Trustee or such authenticating agent shall authenticate and deliver in exchange for such temporary Notes an equal aggregate principal amount of Physical Notes. Such exchange shall be made by the Company at its own expense and without any charge therefor. Until so exchanged, the temporary Notes shall in all respects be entitled to the same benefits and subject to the same limitations under this Indenture as Physical Notes authenticated and delivered hereunder.

 

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Section 2.09 .   Cancellation of Notes Paid, Converted, Etc.  The Company shall cause all Notes surrendered for the purpose of payment, repurchase, redemption, registration of transfer or exchange or conversion, if surrendered to any Person other than the Trustee (including any of the Company’s agents, Subsidiaries or Affiliates), to be surrendered to the Trustee for cancellation. All Notes delivered to the Trustee shall be canceled promptly by it, and no Notes shall be authenticated in exchange therefor except as expressly permitted by any of the provisions of this Indenture. The Trustee shall dispose of canceled Notes in accordance with its customary procedures and, after such disposition, shall deliver a certificate of such cancellation to the Company, at the Company’s written request in a Company Order.

Section 2.10 .   CUSIP Numbers.  The Company in issuing the Notes may use “CUSIP” numbers (if then generally in use), and, if so, the Trustee shall use “CUSIP” numbers in all notices issued to Holders as a convenience to such Holders; provided that any such notice may state that no representation is made as to the correctness of such numbers either as printed on the Notes or on such notice and that reliance may be placed only on the other identification numbers printed on the Notes. The Company shall promptly notify the Trustee in writing of any change in the “CUSIP” numbers.

Section 2.11 .   Repurchases.  The Company may, to the extent permitted by law, and directly or indirectly (regardless of whether such Notes are surrendered to the Company), repurchase Notes in the open market or otherwise, whether by the Company or its Subsidiaries or through a private or public tender or exchange offer or through counterparties to private agreements, including by cash-settled swaps or other derivatives. The Company shall cause any Notes so repurchased (other than Notes repurchased pursuant to cash-settled swaps or other derivatives) to be surrendered to the Trustee for cancellation in accordance with Section 2.09 and such Notes shall no longer be considered outstanding under this Indenture upon their surrender to the Trustee.

ARTICLE 3

S ATISFACTION AND D ISCHARGE

Section 3.01 .   Satisfaction and Discharge.  This Indenture shall upon request of the Company contained in an Officers’ Certificate cease to be of further effect, and the Trustee, at the expense of the Company, shall execute such instruments reasonably requested by the Company acknowledging satisfaction and discharge of this Indenture, when (a)(i) all Notes theretofore authenticated and delivered (other than (x) Notes which have been destroyed, lost or stolen and which have been replaced, paid or converted as provided in Section 2.07 and (y) Notes for whose payment money or other consideration has theretofore been deposited in trust or segregated and held in trust by the Company and thereafter repaid to the Company or discharged from such trust, as provided in Section 4.05(d)) have been delivered to the Trustee for cancellation; or (ii) the Company has deposited with the Trustee or delivered to Holders, as applicable, after the Notes have become due and payable, whether on the Maturity Date, any Redemption Date, upon conversion or otherwise, cash or cash and shares of Common Stock, if any (solely to satisfy the Company’s Conversion Obligation, if applicable), sufficient to pay all of the outstanding Notes and all other sums due and payable under this Indenture by the

 

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Company; and (b) the Company has delivered to the Trustee an Officers’ Certificate and an Opinion of Counsel, each stating that all conditions precedent herein provided for relating to the satisfaction and discharge of this Indenture have been complied with. Notwithstanding the satisfaction and discharge of this Indenture, the obligations of the Company to the Trustee under Section 7.07 shall survive.

ARTICLE 4

P ARTICULAR C OVENANTS OF THE C OMPANY

Section 4.01 .   Payment of Principal.  The Company covenants and agrees that it will cause to be paid the principal (including the Redemption Price and the Make-Whole Amount, if applicable) of each of the Notes at the places, at the respective times and in the manner provided herein and in the Notes.

Section 4.02 .   Increase in Principal Amount.  The Company covenants and agrees that it will cause the principal of the Notes to be increased by any applicable Make-Whole Amount at the respective times and in the manner provided herein.

Section 4.03 .   Maintenance of Office or Agency.  The Company will maintain in the contiguous United States, an office or agency where the Notes may be surrendered for registration of transfer or exchange or for presentation for payment or repurchase (“ Paying Agent ”) or for conversion (“ Conversion Agent ”) and where notices and demands to or upon the Company in respect of the Notes and this Indenture may be served. The Company will give prompt written notice to the Trustee of the location, and any change in the location, of such office or agency. If at any time the Company shall fail to maintain any such required office or agency or shall fail to furnish the Trustee with the address thereof, such presentations, surrenders, notices and demands may be made or served at the Corporate Trust Office.

The Company may also from time to time designate as co-Note Registrars one or more other offices or agencies where the Notes may be presented or surrendered for any or all such purposes and may from time to time rescind such designations; provided that no such designation or rescission shall in any manner relieve the Company of its obligation to maintain an office or agency in the contiguous United States, for such purposes. The Company will give prompt written notice to the Trustee of any such designation or rescission and of any change in the location of any such other office or agency. The terms “ Paying Agent ” and “ Conversion Agent ” include any such additional or other offices or agencies, as applicable.

The Company hereby initially designates the Trustee as the Paying Agent, Note Registrar, Custodian and Conversion Agent and the Corporate Trust Office as the office or agency in the contiguous United States, where Notes may be surrendered for registration of transfer or exchange or for presentation for payment or repurchase or for conversion and where notices and demands to or upon the Company in respect of the Notes and this Indenture may be served; provided that, the Corporate Trust Office shall not be an office or agency for the purposes of service of legal process on the Company.

 

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Section 4.04 .   Appointments to Fill Vacancies in Trustee’s Office.  The Company, whenever necessary to avoid or fill a vacancy in the office of Trustee, will appoint, in the manner provided in Section 7.10, a trustee, so that there shall at all times be a Trustee hereunder.

Section 4.05 .   Provisions as to Paying Agent.  (a) If the Company shall appoint a Paying Agent other than the Trustee, the Company will cause such Paying Agent to execute and deliver to the Trustee an instrument in which such agent shall agree with the Trustee, subject to the provisions of this Section 4.05:

(i)    that it will hold all sums held by it as such agent for the payment of the principal (including the Redemption Price, if applicable) of the Notes in trust for the benefit of the Holders of the Notes;

(ii)    that it will give the Trustee prompt notice of any failure by the Company to make any payment of the principal (including the Redemption Price, if applicable) of the Notes when the same shall be due and payable; and

(iii)    that at any time during the continuance of an Event of Default, upon request of the Trustee, it will forthwith pay to the Trustee all sums so held in trust.

The Company shall, on or before each due date of the principal (including the Redemption Price, if applicable) of the Notes, deposit with the Paying Agent a sum sufficient to pay such principal (including the Redemption Price, if applicable), and (unless such Paying Agent is the Trustee) the Company will promptly notify the Trustee of any failure to take such action; provided that if such deposit is made on the due date, such deposit must be received by the Paying Agent by 11:00 a.m., New York City time, on such date.

(b)    If the Company shall act as its own Paying Agent, it will, on or before each due date of the principal (including the Redemption Price, if applicable) of the Notes, set aside, segregate and hold in trust for the benefit of the Holders of the Notes a sum sufficient to pay such principal (including the Redemption Price, if applicable) so becoming due and will promptly notify the Trustee in writing of any failure to take such action and of any failure by the Company to make any payment of the principal (including the Redemption Price, if applicable) of the Notes when the same shall become due and payable.

(c)    Anything in this Section 4.05 to the contrary notwithstanding, the Company may, at any time, for the purpose of obtaining a satisfaction and discharge of this Indenture, or for any other reason, pay, cause to be paid or deliver to the Trustee all sums or amounts held in trust by the Company or any Paying Agent hereunder as required by this Section 4.05, such sums or amounts to be held by the Trustee upon the trusts herein contained and upon such payment or delivery by the Company or any Paying Agent to the Trustee, the Company or such Paying Agent shall be released from all further liability but only with respect to such sums or amounts. Upon the occurrence of any event specified in Section 6.01(h) or Section 6.01(i), the Trustee shall automatically become the Paying Agent.

 

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(d)    Subject to applicable abandoned property law, any money and shares of Common Stock deposited with the Trustee or any Paying Agent, or then held by the Company, in trust for the payment of the principal (including the Redemption Price, if applicable) of and the consideration due upon conversion of any Note and remaining unclaimed for two years after such principal (including the Redemption Price, if applicable) or consideration due upon conversion has become due and payable shall be paid to the Company on request of the Company contained in an Officers’ Certificate, or (if then held by the Company) shall be discharged from such trust; and the Holder of such Note shall thereafter, as an unsecured general creditor, look only to the Company for payment thereof, and all liability of the Trustee or such Paying Agent with respect to such trust money and shares of Common Stock, and all liability of the Company as trustee thereof, shall thereupon cease; provided , however , that the Trustee or such Paying Agent, before being required to make any such repayment, may at the expense of the Company cause to be published once, in a newspaper published in the English language, customarily published on each Business Day and of general circulation in The Borough of Manhattan, The City of New York, notice that such money and shares of Common Stock remain unclaimed and that, after a date specified therein, which shall not be less than 30 days from the date of such publication, any unclaimed balance of such money and shares of Common Stock then remaining will be repaid or delivered to the Company.

Section 4.06 .   Existence.  Subject to Article 11, the Company shall do or cause to be done all things necessary to preserve and keep in full force and effect its corporate existence.

Section 4.07 .   Information Requirement and Annual Reports.  (a) The Company shall file with the Trustee, within 15 days after the same are required to be filed with the Commission (giving effect to any grace period provided by Rule 12b-25 under the Exchange Act), copies of any documents or reports that the Company is required to file with the Commission pursuant to Section 13 or 15(d) of the Exchange Act. Any such document or report that the Company files with the Commission via the Commission’s EDGAR system shall be deemed to be filed with the Trustee for purposes of this Section 4.07(a) at the time such documents are filed via the EDGAR system.

(b)    To the extent that the Company is not subject to Section 13 or 15(d) of the Exchange Act, the Company shall, in lieu of the requirements set forth in subsection (a) above, promptly provide to the Trustee and, upon written request, any Holder, beneficial owner or prospective purchaser of such Notes or the shares of Common Stock issuable upon conversion of such Notes, all quarterly and annual financial information that would be required to be contained in a filing with the Commission on Forms 10-Q and 10-K if the Company were required to file such forms, including a “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and, with respect to annual information only, a report thereon by the Company’s certified independent accountants.

(c)    Delivery of the reports and documents described in subsection (a) or (b) above to the Trustee is for informational purposes only, and the Trustee’s receipt of such shall not constitute constructive notice of any information contained therein or determinable from information contained therein, including the Company’s compliance with any of its covenants hereunder (as to which the Trustee is entitled to conclusively rely on an Officers’ Certificate).

 

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Section 4.08 .   Springing Event Notice.   (a) Upon the earlier to occur of (i) the Company’s good faith determination that the Specified Litigation Event has occurred or (ii) the receipt of written notice from the Required Springing Holders that the Specified Litigation Event has occurred, the Springing Event shall be deemed to have occurred, and the Company shall take, or cause to be taken, all such appropriate actions required pursuant to Section 4.09. Within five Business Days of the Springing Event, the Company shall, or cause the Trustee (upon written request to the Trustee made at least two Business Days (unless a shorter period shall be agreed to by the Trustee) prior to the date on which notice is to be delivered) to, deliver a written notice (the “ Springing Event Notice ”) of the Springing Event to all Holders of outstanding Notes. The Springing Event Notice shall (i) provide reasonable background on the facts and circumstances of the Specified Litigation Event, (ii) inform the Holders that the Springing Event has occurred and (iii) request that each of the Holders notify the Company of the number of shares of Common Stock held by such Holders or their Affiliates.

(b)    Upon receiving notices from the Holders or their Affiliates on or after the date of the Specified Litigation Event setting forth the number of shares of Common Stock held by such Holders or their Affiliates (whether in response to the Springing Event Notice or otherwise), the Company shall calculate the total number of shares of Common Stock held by such Holders or their Affiliates. Immediately upon receiving sufficient notices that the Holders or their Affiliates own the Required Shares in the aggregate, the Springing Lien Amount shall be increased to the full outstanding principal amount of the Notes, including the Make-Whole Amount, if applicable, and the Company shall take, or cause to be taken, all appropriate actions required pursuant to Section 4.09. For the avoidance of doubt, if any amount becomes due in connection with any acceleration of Notes pursuant to Section 6.02 or repayment or prepayment of Notes after the occurrence of a Springing Event, the Springing Lien Amount shall be increased to include the Make-Whole Amount and the Company shall take, or cause to be taken, all appropriate actions required pursuant to Section 4.09.

Section 4.09 .   Springing Lien.  Subject to the Intercreditor and Subordination Agreement, promptly upon the occurrence of a Springing Event, and from time to time thereafter, including, without limitation, upon any increase in the Springing Lien Amount, the Company shall take such actions as are necessary or as the Trustee or Collateral Trustee may reasonably request (it being understood that the Trustee or Collateral Trustee shall have no duty to make such request unless directed by the Holders in accordance with this Indenture), including (a) the Company executing an amendment to the Collateral Trust Agreement as contemplated in Section 2.4 of the Collateral Trust Agreement and executing the Security Agreement within three Business Days after the occurrence of a Springing Event, (b) the Company executing other Security Documents within fifteen Business Days after the occurrence of a Springing Event and (c) the filing of financing statements and Mortgages and delivery of other security documents, authorization documents and opinions of counsel, to ensure and confirm that the obligations of the Company under the Notes and of each Guarantor under any Note Guarantee will be secured by a perfected Lien on the Collateral, as provided in the Security Documents, junior only to the Liens securing the Priority Lien Obligations and to the extent of the Springing Lien Amount.

 

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Section 4.10 .   Note Guarantees.  Each of the Company and the Guarantors shall, and the Company shall cause each of the Guarantors to, ensure at all times that, unless otherwise permitted by this Indenture, each Note Guarantee shall remain in full force and effect and shall not be subordinated in right of payment to any indebtedness for borrowed money of any of the Company and the Guarantors, unless required by applicable law.

Section 4.11 .   Additional Guarantors.  The Company shall cause each of its Guarantor Subsidiaries to execute and deliver a supplemental indenture pursuant to which it shall become a Guarantor under this Indenture in accordance with Section 13.10.

Section 4.12 .   Stay, Extension and Usury Laws.  Each of the Company and the Guarantors covenants (to the extent that it may lawfully do so) that it shall not at any time insist upon, plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay, extension or usury law or other law that would prohibit or forgive the Company from paying all or any portion of the principal (including the Redemption Price, if applicable) of the Notes as contemplated herein, wherever enacted, now or at any time hereafter in force, or that may affect the covenants or the performance of this Indenture or any Note Guarantee; and each of the Company and the Guarantors (to the extent it may lawfully do so) hereby expressly waives all benefit or advantage of any such law, and covenants that it will not, by resort to any such law, hinder, delay or impede the execution of any power herein granted to the Trustee, but will suffer and permit the execution of every such power as though no such law had been enacted.

Section 4.13 .   Compliance Certificate; Statements as to Defaults.  The Company shall deliver to the Trustee within 120 days after the end of each fiscal year of the Company (beginning with the fiscal year ending on December 31, 2016) an Officers’ Certificate stating whether the signers thereof have knowledge of any failure by the Company to comply with all conditions and covenants then required to be performed under this Indenture and, if so, specifying each such failure and the nature thereof.

In addition, the Company shall deliver to the Trustee, as soon as possible, and in any event within 30 days after the occurrence of any Event of Default or Default, an Officers’ Certificate setting forth the details of such Event of Default or Default, its status and the action that the Company is taking or proposing to take in respect thereof.

Section 4.14 .   Further Instruments and Acts.  Upon request of the Trustee, the Company and each Guarantor will execute and deliver such further instruments and do such further acts as may be reasonably necessary or proper to carry out more effectively the purposes of this Indenture.

ARTICLE 5

L ISTS OF H OLDERS AND R EPORTS BY THE C OMPANY AND THE T RUSTEE

Section 5.01 .   Lists of Holders.  The Company covenants and agrees that it will furnish or cause to be furnished to the Trustee, semi-annually, not more than 15 days after each March 15 and September 15 in each year beginning with March 15, 2017, and at such other times as the Trustee may request in writing, within 30 days after receipt by the Company of any such request (or such lesser time as the Trustee may reasonably request in order to enable it to timely provide

 

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any notice to be provided by it hereunder), a list in such form as the Trustee may reasonably require of the names and addresses of the Holders as of a date not more than 15 days (or such other date as the Trustee may reasonably request in order to so provide any such notices) prior to the time such information is furnished, except that no such list need be furnished so long as the Trustee is acting as Note Registrar.

Section 5.02 .   Preservation and Disclosure of Lists.  The Trustee shall preserve, in as current a form as is reasonably practicable, all information as to the names and addresses of the Holders contained in the most recent list furnished to it as provided in Section 5.01 or maintained by the Trustee in its capacity as Note Registrar, if so acting. The Trustee may destroy any list furnished to it as provided in Section 5.01 upon receipt of a new list so furnished.

ARTICLE 6

D EFAULTS AND R EMEDIES

Section 6.01 .   Events of Default.  Each of the following events shall be an “ Event of Default ” with respect to the Notes:

(a)    default in the payment of principal (including the Redemption Price, if applicable) of any Note when due and payable upon Optional Redemption, upon declaration of acceleration or otherwise;

(b)    failure by the Company to comply with its obligations under Section 4.08 or Section 4.09;

(c)    failure by the Company to comply with its obligation to convert the Notes in accordance with this Indenture upon exercise of a Holder’s conversion right;

(d)    failure by the Company to comply with its obligations under Article 11 or by any Guarantor to comply with its obligations under Section 13.04;

(e)    failure by the Company or any Guarantor for 60 days after written notice from the Trustee or the Holders of at least 25% in principal amount of the Notes then outstanding has been received by the Company to comply with any of the Company’s or any Guarantor’s other agreements contained in the Notes or this Indenture;

(f)    default by the Company or any Subsidiary of the Company with respect to any Mortgage, agreement or other instrument under which there may be outstanding, or by which there may be secured or evidenced, any indebtedness for money borrowed in excess of $50,000,000 (or its foreign currency equivalent) in the aggregate of the Company and/or any such Subsidiary, whether such indebtedness now exists or shall hereafter be created (i) resulting in such indebtedness becoming or being declared due and payable or (ii) constituting a failure to pay the principal or interest of any such debt when due and payable at its stated maturity, upon required repurchase, upon declaration of acceleration or otherwise;

 

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(g)    a final judgment or judgments for the payment of $50,000,000 (or its foreign currency equivalent) or more (excluding any amounts covered by insurance) in the aggregate rendered against the Company or any Subsidiary of the Company, which judgment is not discharged, bonded, paid, waived or stayed within 60 days after (i) the date on which the right to appeal thereof has expired if no such appeal has commenced, or (ii) the date on which all rights to appeal have been extinguished;

(h)    the Company, any Guarantor or any Significant Subsidiary shall commence a voluntary case or other proceeding seeking liquidation, reorganization or other relief with respect to the Company, any such Guarantor or any such Significant Subsidiary or its debts under any bankruptcy, insolvency or other similar law now or hereafter in effect or seeking the appointment of a trustee, receiver, liquidator, custodian or other similar official of the Company, any such Guarantor or any such Significant Subsidiary or any substantial part of its property, or shall consent to any such relief or to the appointment of or taking possession by any such official in an involuntary case or other proceeding commenced against it, or shall make a general assignment for the benefit of creditors, or shall fail generally to pay its debts as they become due;

(i)    an involuntary case or other proceeding shall be commenced against the Company, any Guarantor or any Significant Subsidiary seeking liquidation, reorganization or other relief with respect to the Company, such Guarantor or such Significant Subsidiary or its debts under any bankruptcy, insolvency or other similar law now or hereafter in effect or seeking the appointment of a trustee, receiver, liquidator, custodian or other similar official of the Company, such Guarantor or such Significant Subsidiary or any substantial part of its property, and such involuntary case or other proceeding shall remain undismissed and unstayed for a period of 30 consecutive days; or

(j)    except as permitted in this Indenture, any Note Guarantee shall be held in any judicial proceeding to be unenforceable or invalid or shall cease for any reason to be in full force and effect, or any Guarantor, or any Person acting on its behalf, shall deny or disaffirm its obligation under the Note Guarantee.

Section 6.02.  Acceleration; Rescission and Annulment . If one or more Events of Default shall have occurred and be continuing (whatever the reason for such Event of Default and whether it shall be voluntary or involuntary or be effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body), then, and in each and every such case (other than an Event of Default specified in Section 6.01(h) or Section 6.01(i) with respect to the Company, any of its Significant Subsidiaries or any Guarantor), unless the principal of all of the Notes shall have already become due and payable, either the Trustee or the Holders of at least 25% in aggregate principal amount of the Notes then outstanding determined in accordance with Section 8.04, by notice in writing to the Company (and to the Trustee if given by Holders), may declare 100% of the principal (including the Redemption Price, if applicable and the Make-Whole Amount) of all the Notes to be due and payable immediately, and upon any such declaration the same shall become and shall automatically be immediately due and payable in cash, anything contained in this Indenture or in the Notes to the contrary notwithstanding. If an Event of Default specified in Section 6.01(h) or Section 6.01(i) with respect to the Company, any of its Significant Subsidiaries or any Guarantor

 

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occurs and is continuing, 100% of the principal (including the Redemption Price and the Make-Whole Amount, if applicable) of all Notes shall become and shall automatically be immediately due and payable in cash.

The immediately preceding paragraph, however, is subject to the conditions that if, at any time after the principal (including the Redemption Price, if applicable and the Make-Whole Amount) of the Notes shall have been so declared due and payable, and before any judgment or decree for the payment of the monies due shall have been obtained or entered as hereinafter provided, the Company shall pay or shall deposit with the Trustee a sum sufficient to pay the principal (including the Redemption Price, if applicable and the Make-Whole Amount) of any and all Notes that shall have become due otherwise than by acceleration and amounts due to the Trustee pursuant to Section 7.07, and if (1) rescission would not conflict with any judgment or decree of a court of competent jurisdiction and (2) any and all existing Events of Default under this Indenture, other than the nonpayment of the principal (including the Redemption Price, if applicable and the Make-Whole Amount) of Notes that shall have become due solely by such acceleration, shall have been cured or waived pursuant to Section 6.08, then and in every such case (except as provided in the immediately succeeding sentence) the Holders of a majority in aggregate principal amount of the Notes then outstanding, by written notice to the Company and to the Trustee, may waive all Defaults or Events of Default with respect to the Notes and rescind and annul such declaration and its consequences and such Default shall cease to exist, and any Event of Default arising therefrom shall be deemed to have been cured for every purpose of this Indenture; but no such waiver or rescission and annulment shall extend to or shall affect any subsequent Default or Event of Default, or shall impair any right consequent thereon. Notwithstanding anything to the contrary herein, no such waiver or rescission and annulment shall extend to or shall affect any Default or Event of Default resulting from (i) the nonpayment of the principal (including the Redemption Price, if applicable and the Make-Whole Amount) of any Notes or (ii) a failure to pay or deliver, as the case may be, the consideration due upon conversion of the Notes.

Section 6.03 .   Payments of Notes on Default; Suit Therefor.  If an Event of Default described in clause (a) of Section 6.01 shall have occurred, the Company shall, upon demand of the Trustee, pay to the Trustee, for the benefit of the Holders of the Notes, the whole amount then due and payable on the Notes for principal, and, in addition thereto, such further amount as shall be sufficient to cover any amounts due to the Trustee under Section 7.07. If the Company shall fail to pay such amounts forthwith upon such demand, the Trustee, in its own name and as trustee of an express trust, may institute a judicial proceeding for the collection of the sums so due and unpaid, may prosecute such proceeding to judgment or final decree and may enforce the same against the Company or any other obligor upon the Notes and collect the monies adjudged or decreed to be payable in the manner provided by law out of the property of the Company or any other obligor upon the Notes, wherever situated.

In the event there shall be pending proceedings for the bankruptcy or for the reorganization of the Company or any other obligor on the Notes under Title 11 of the United States Code, or any other applicable law, or in case a receiver, assignee or trustee in bankruptcy or reorganization, liquidator, sequestrator or similar official shall have been appointed for or taken possession of the Company or such other obligor, the property of the Company or such

 

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other obligor, or in the event of any other judicial proceedings relative to the Company or such other obligor upon the Notes, or to the creditors or property of the Company or such other obligor, the Trustee, irrespective of whether the principal of the Notes shall then be due and payable as therein expressed or by declaration or otherwise and irrespective of whether the Trustee shall have made any demand pursuant to the provisions of this Section 6.03, shall be entitled and empowered, by intervention in such proceedings or otherwise, to file and prove a claim or claims for the whole amount of principal in respect of the Notes, and, in case of any judicial proceedings, to file such proofs of claim and other papers or documents and to take such other actions as it may deem necessary or advisable in order to have the claims of the Trustee (including any claim for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel) and of the Holders allowed in such judicial proceedings relative to the Company or any other obligor on the Notes, its or their creditors, or its or their property, and to collect and receive any monies or other property payable or deliverable on any such claims, and to distribute the same after the deduction of any amounts due to the Trustee under Section 7.07; and any receiver, assignee or trustee in bankruptcy or reorganization, liquidator, custodian or similar official is hereby authorized by each of the Holders to make such payments to the Trustee, as administrative expenses, and, in the event that the Trustee shall consent to the making of such payments directly to the Holders, to pay to the Trustee any amount due it for reasonable compensation, expenses, advances and disbursements, including agents and counsel fees, and including any other amounts due to the Trustee under Section 7.07, incurred by it up to the date of such distribution. To the extent that such payment of reasonable compensation, expenses, advances and disbursements out of the estate in any such proceedings shall be denied for any reason, payment of the same shall be secured by a lien on, and shall be paid out of, any and all distributions, dividends, monies, securities and other property that the Holders of the Notes may be entitled to receive in such proceedings, whether in liquidation or under any plan of reorganization or arrangement or otherwise.

Nothing herein contained shall be deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf of any Holder any plan of reorganization, arrangement, adjustment or composition affecting such Holder or the rights of any Holder thereof, or to authorize the Trustee to vote in respect of the claim of any Holder in any such proceeding.

All rights of action and of asserting claims under this Indenture, or under any of the Notes, may be enforced by the Trustee without the possession of any of the Notes, or the production thereof at any trial or other proceeding relative thereto, and any such suit or proceeding instituted by the Trustee shall be brought in its own name as trustee of an express trust, and any recovery of judgment shall, after provision for the payment of the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, be for the ratable benefit of the Holders of the Notes.

In any proceedings brought by the Trustee (and in any proceedings involving the interpretation of any provision of this Indenture to which the Trustee shall be a party) the Trustee shall be held to represent all the Holders of the Notes, and it shall not be necessary to make any Holders of the Notes parties to any such proceedings.

 

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In case the Trustee shall have proceeded to enforce any right under this Indenture and such proceedings shall have been discontinued or abandoned because of any waiver pursuant to Section 6.08 or any rescission and annulment pursuant to Section 6.02 or for any other reason or shall have been determined adversely to the Trustee, then and in every such case the Company, the Holders and the Trustee shall, subject to any determination in such proceeding, be restored respectively to their several positions and rights hereunder, and all rights, remedies and powers of the Company, the Holders and the Trustee shall continue as though no such proceeding had been instituted.

Section 6.04 .   Application of Monies or Other Property Collected by Trustee.  Any monies or other property collected by the Trustee pursuant to this Article 6 shall be applied in the following order, at the date or dates fixed by the Trustee for the distribution of such monies or other property, upon presentation of the several Notes, and stamping thereon the payment, if only partially paid, and upon surrender thereof, if fully paid:

First , to the payment of all amounts due the Trustee under Section 7.07;

Second , in case the principal of the outstanding Notes shall not have become due and be unpaid, to the payment of any cash due upon conversion of the Notes in default in the order of the date due of the payments of such cash due upon conversion, such payments to be made ratably to the Persons entitled thereto;

Third , in case the principal of the outstanding Notes shall have become due, by declaration or otherwise, and be unpaid to the payment of the whole amount (including, if applicable, the payment of the Redemption Price, Make-Whole Amount and any cash due upon conversion) then owing and unpaid upon the Notes for principal, and in case such monies or other property shall be insufficient to pay in full the whole amounts so due and unpaid upon the Notes, then to the payment of such principal (including, if applicable, the Redemption Price, Make-Whole Amount and the cash due upon conversion) without preference or priority of any Note over any other Note, ratably to the aggregate of such principal (including, if applicable, the Redemption Price, Make-Whole Amount and any cash due upon conversion); and

Fourth , to the payment of the remainder, if any, to the Company.

Section 6.05 .   Proceedings by Holders.  Except to enforce the right to receive payment of principal (including, if applicable, the Redemption Price) or the right to receive payment or delivery of the consideration due upon conversion, no Holder of any Note shall have any right by virtue of or by availing of any provision of this Indenture to institute any suit, action or proceeding in equity or at law upon or under or with respect to this Indenture, or for the appointment of a receiver, trustee, liquidator, custodian or other similar official, or for any other remedy hereunder, unless:

(a) such Holder previously shall have given to the Trustee written notice of an Event of Default and of the continuance thereof, as herein provided;

 

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(b) Holders of at least 25% in aggregate principal amount of the Notes then outstanding shall have made written request upon the Trustee to institute such action, suit or proceeding in its own name as Trustee hereunder;

(c) such Holders shall have offered to the Trustee such security or indemnity reasonably satisfactory to it against any loss, liability or expense to be incurred therein or thereby;

(d) the Trustee for 60 days after its receipt of such notice, request and offer of such security or indemnity, shall have neglected or refused to institute any such action, suit or proceeding; and

(e) no direction that, in the opinion of the Trustee, is inconsistent with such written request shall have been given to the Trustee by the Holders of a majority of the aggregate principal amount of the Notes then outstanding within such 60-day period pursuant to Section 6.08,

it being understood and intended, and being expressly covenanted by the taker and Holder of every Note with every other taker and Holder and the Trustee that no one or more Holders shall have any right in any manner whatever by virtue of or by availing of any provision of this Indenture to affect, disturb or prejudice the rights of any other Holder, or to obtain or seek to obtain priority over or preference to any other such Holder, or to enforce any right under this Indenture, except in the manner herein provided and for the equal, ratable and common benefit of all Holders (except as otherwise provided herein). For the protection and enforcement of this Section 6.05, each and every Holder and the Trustee shall be entitled to such relief as can be given either at law or in equity.

Notwithstanding any other provision of this Indenture and any provision of any Note, each Holder shall have the right to receive payment or delivery, as the case may be, of (x) the principal (including, if applicable, the Redemption Price and the Make-Whole Amount) of, and (y) the consideration due upon conversion of, such Note, on or after the respective due dates expressed or provided for in such Note or in this Indenture, or to institute suit for the enforcement of any such payment or delivery, as the case may be, on or after such respective dates against the Company, which right shall not be impaired or affected without the consent of such Holder.

Section 6.06 .   Proceedings by Trustee.  In case of an Event of Default, the Trustee may in its discretion proceed to protect and enforce the rights vested in it by this Indenture by such appropriate judicial proceedings as are necessary to protect and enforce any of such rights, either by suit in equity or by action at law or by proceeding in bankruptcy or otherwise, whether for the specific enforcement of any covenant or agreement contained in this Indenture or in aid of the exercise of any power granted in this Indenture, or to enforce any other legal or equitable right vested in the Trustee by this Indenture or by law.

Section 6.07 .   Remedies Cumulative and Continuing.  Except as provided in the last paragraph of Section 2.07, all powers and remedies given by this Article 6 to the Trustee or to the Holders shall, to the extent permitted by law, be deemed cumulative and not exclusive of any

 

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thereof or of any other powers and remedies available to the Trustee or the Holders of the Notes, by judicial proceedings or otherwise, to enforce the performance or observance of the covenants and agreements contained in this Indenture, and no delay or omission of the Trustee or of any Holder of any of the Notes to exercise any right or power accruing upon any Default or Event of Default shall impair any such right or power, or shall be construed to be a waiver of any such Default or Event of Default or any acquiescence therein; and, subject to the provisions of Section 6.05, every power and remedy given by this Article 6 or by law to the Trustee or to the Holders may be exercised from time to time, and as often as shall be deemed expedient, by the Trustee or by the Holders.

Section 6.08 .   Direction of Proceedings and Waiver of Defaults by Majority of Holders.  The Holders of a majority of the aggregate principal amount of the Notes at the time outstanding determined in accordance with Section 8.04 shall have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or exercising any trust or power conferred on the Trustee with respect to the Notes; provided , however , that (a) such direction shall not be in conflict with any rule of law or with this Indenture, and (b) the Trustee may take any other action deemed proper by the Trustee that is not inconsistent with such direction. The Trustee may refuse to follow any direction that it determines is unduly prejudicial to the rights of any other Holder or that would involve the Trustee in personal liability. The Holders of a majority in aggregate principal amount of the Notes at the time outstanding determined in accordance with Section 8.04 may on behalf of the Holders of all of the Notes waive any past Default or Event of Default hereunder and its consequences except (i) a default in the payment of the principal (including any Redemption Price) of, the Notes when due that has not been cured pursuant to the provisions of Section 6.01, (ii) a failure by the Company to pay or deliver, as the case may be, the consideration due upon conversion of the Notes or (iii) a default in respect of a covenant or provision hereof which under Article 10 cannot be modified or amended without the consent of each Holder of an outstanding Note affected. Upon any such waiver the Company, the Trustee and the Holders of the Notes shall be restored to their former positions and rights hereunder; but no such waiver shall extend to any subsequent or other Default or Event of Default or impair any right consequent thereon. Whenever any Default or Event of Default hereunder shall have been waived as permitted by this Section 6.08, said Default or Event of Default shall for all purposes of the Notes and this Indenture be deemed to have been cured and to be not continuing; but no such waiver shall extend to any subsequent or other Default or Event of Default or impair any right consequent thereon. The Trustee will be under no obligation to exercise any of the rights or powers under this Indenture at the request or direction of any of the Holders unless such Holders have offered to the Trustee indemnity or security satisfactory to the Trustee against any loss, liability or expense that might be incurred by it in compliance with such request or direction.

Section 6.09 .   Notice of Defaults.  The Trustee shall, within 90 days after the occurrence and continuance of a Default of which a Responsible Officer has actual knowledge, deliver to all Holders notice of all Defaults known to a Responsible Officer, unless such Defaults shall have been cured or waived before the giving of such notice; provided that, except in the case of a Default in the payment of the principal of (including the Redemption Price, if applicable) any of the Notes or a Default in the payment or delivery of the consideration due upon conversion, the Trustee shall be protected in withholding such notice if and so long as the Trustee in good faith determines that the withholding of such notice is in the interests of the Holders.

 

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Section 6.10 .   Undertaking to Pay Costs.  All parties to this Indenture agree, and each Holder of any Note by its acceptance thereof shall be deemed to have agreed, that any court may, in its discretion, require, in any suit for the enforcement of any right or remedy under this Indenture, or in any suit against the Trustee for any action taken or omitted by it as Trustee, the filing by any party litigant in such suit of an undertaking to pay the costs of such suit and that such court may in its discretion assess reasonable costs, including reasonable attorneys’ fees and expenses, against any party litigant in such suit, having due regard to the merits and good faith of the claims or defenses made by such party litigant; provided that the provisions of this Section 6.10 (to the extent permitted by law) shall not apply to any suit instituted by the Trustee, to any suit instituted by any Holder, or group of Holders, holding in the aggregate more than 10% in principal amount of the Notes at the time outstanding determined in accordance with Section 8.04, or to any suit instituted by any Holder for the enforcement of the payment of the principal of any Note (including, but not limited to, the Redemption Price, if applicable) on or after the due date expressed or provided for in such Note or to any suit for the enforcement of the right to convert any Note, or receive the consideration due upon conversion, in accordance with the provisions of Article 14.

ARTICLE 7

C ONCERNING THE T RUSTEE

Section 7.01 .   Duties and Responsibilities of Trustee.  The Trustee, prior to the occurrence of an Event of Default and after the curing or waiver of all Events of Default that may have occurred, undertakes to perform such duties and only such duties as are specifically set forth in this Indenture or the Trust Indenture Act. In the event an Event of Default has occurred and is continuing, the Trustee shall exercise such of the rights and powers vested in it by this Indenture, and use the same degree of care and skill in its exercise, as a prudent person would exercise or use under the circumstances in the conduct of such person’s own affairs; provided that if an Event of Default occurs and is continuing, the Trustee will be under no obligation to exercise any of the rights or powers under this Indenture at the request or direction of any of the Holders unless such Holders have offered to the Trustee indemnity or security satisfactory to the Trustee against any loss, liability or expense that might be incurred by it in compliance with such request or direction.

No provision of this Indenture shall be construed to relieve the Trustee from liability for its own grossly negligent action, its own grossly negligent failure to act or its own willful misconduct, except that:

(a) prior to the occurrence of an Event of Default and after the curing or waiving of all Events of Default that may have occurred:

(i) the duties and obligations of the Trustee shall be determined solely by the express provisions of this Indenture or the Trust Indenture Act, and the Trustee shall not be liable except for the performance of such duties and obligations as are specifically set forth in this Indenture or the Trust Indenture Act and no implied covenants or obligations shall be read into this Indenture against the Trustee; and

 

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(ii) in the absence of bad faith and willful misconduct on the part of the Trustee, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon any certificates or opinions furnished to the Trustee and conforming to the requirements of this Indenture; but, in the case of any such certificates or opinions that by any provisions hereof are specifically required to be furnished to the Trustee, the Trustee shall be under a duty to examine the same to determine whether or not they conform to the requirements of this Indenture (but need not confirm or investigate the accuracy of any mathematical calculations or other facts stated therein);

(b) the Trustee shall not be liable for any error of judgment made in good faith by a Responsible Officer or Officers of the Trustee, unless it shall be proved that the Trustee was grossly negligent in ascertaining the pertinent facts;

(c) the Trustee shall not be liable with respect to any action taken or omitted to be taken by it in good faith in accordance with the direction of the Holders of not less than a majority of the aggregate principal amount of the Notes at the time outstanding determined as provided in Section 8.04 relating to the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred upon the Trustee, under this Indenture;

(d) whether or not therein provided, every provision of this Indenture relating to the conduct or affecting the liability of, or affording protection to, the Trustee shall be subject to the provisions of this Section;

(e) the Trustee shall not be liable in respect of any payment (as to the correctness of amount, entitlement to receive or any other matters relating to payment) or notice effected by the Company or any Paying Agent or any records maintained by any co-Note Registrar with respect to the Notes;

(f) if any party fails to deliver a notice relating to an event the fact of which, pursuant to this Indenture, requires notice to be sent to the Trustee, the Trustee may conclusively rely on its failure to receive such notice as reason to act as if no such event occurred, unless a Responsible Officer of the Trustee had actual knowledge of such event;

(g) in the absence of written investment direction from the Company, all cash received by the Trustee shall be placed in a non-interest bearing trust account, and in no event shall the Trustee be liable for the selection of investments or for investment losses incurred thereon or for losses incurred as a result of the liquidation of any such investment prior to its maturity date or the failure of the party directing such investments prior to its maturity date or the failure of the party directing such investment to provide timely written investment direction, and the Trustee shall have no obligation to invest or reinvest any amounts held hereunder in the absence of such written investment direction from the Company; and

 

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(h) in the event that the Trustee is also acting as Custodian, Note Registrar, Paying Agent, Conversion Agent or transfer agent hereunder, the rights and protections afforded to the Trustee pursuant to this Article 7 shall also be afforded to such Custodian, Note Registrar, Paying Agent, Conversion Agent or transfer agent.

None of the provisions contained in this Indenture shall require the Trustee to expend or risk its own funds or otherwise incur personal financial liability in the performance of any of its duties or in the exercise of any of its rights or powers.

Section 7.02 .   Reliance on Documents, Opinions, Etc.  Subject to Trust Indenture Act Section 315(a) through (d), except as otherwise provided in Section 7.01:

(a) the Trustee may conclusively rely and shall be fully protected in acting upon any resolution, certificate, statement, instrument, opinion, report, notice, request, consent, order, bond, note, coupon or other paper or document believed by it in good faith to be genuine and to have been signed or presented by the proper party or parties;

(b) any request, direction, order or demand of the Company mentioned herein shall be sufficiently evidenced by an Officers’ Certificate (unless other evidence in respect thereof be herein specifically prescribed); and any Board Resolution may be evidenced to the Trustee by a copy thereof certified by the Secretary or an Assistant Secretary of the Company;

(c) the Trustee may consult with counsel and require an Opinion of Counsel and any advice of such counsel or Opinion of Counsel shall be full and complete authorization and protection in respect of any action taken or omitted by it hereunder in good faith and in accordance with such advice or Opinion of Counsel;

(d) the Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture or other paper or document, but the Trustee, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit, and, if the Trustee shall determine to make such further inquiry or investigation, it shall be entitled to examine the books, records and premises of the Company, personally or by agent or attorney at the expense of the Company and shall incur no liability of any kind by reason of such inquiry or investigation;

(e) the Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through agents, custodians, nominees or attorneys and the Trustee shall not be responsible for any misconduct or negligence on the part of any agent, custodian, nominee or attorney appointed by it with due care hereunder; and

(f) the permissive rights of the Trustee enumerated herein shall not be construed as duties.

 

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In no event shall the Trustee be liable for any punitive, consequential loss or damage of any kind whatsoever (including but not limited to lost profits), even if the Trustee has been advised of the likelihood of such loss or damage and regardless of the form of action. The Trustee shall not be charged with knowledge of any Default or Event of Default with respect to the Notes, unless either (1) a Responsible Officer shall have actual knowledge of such Default or Event of Default or (2) written notice of such Default or Event of Default shall have been given to the Trustee by the Company or by any Holder of the Notes.

Section 7.03 .   No Responsibility for Recitals, Etc.  The recitals contained herein and in the Notes (except in the Trustee’s certificate of authentication) shall be taken as the statements of the Company, and the Trustee assumes no responsibility for the correctness of the same. The Trustee makes no representations as to the validity or sufficiency of this Indenture or of the Notes. The Trustee shall not be accountable for the use or application by the Company of any Notes or the proceeds of any Notes authenticated and delivered by the Trustee in conformity with the provisions of this Indenture.

Section 7.04 .   Trustee, Paying Agents, Conversion Agents or Note Registrar May Own Notes.  The Trustee, any Paying Agent, any Conversion Agent or Note Registrar, in its individual or any other capacity, may become the owner or pledgee of Notes with the same rights it would have if it were not the Trustee, Paying Agent, Conversion Agent or Note Registrar.

Section 7.05 .   Monies and Shares of Common Stock to Be Held in Trust.  All monies and shares of Common Stock received by the Trustee shall, until used or applied as herein provided, be held in trust for the purposes for which they were received. Money and shares of Common Stock held by the Trustee in trust hereunder need not be segregated from other funds or property except to the extent required by law. The Trustee shall be under no liability for interest on any money or shares of Common Stock received by it hereunder except as may be agreed from time to time by the Company and the Trustee.

Section 7.06 .   Reports by Trustee to Holders.  Within 60 days after October 4 in each year, beginning October 4, 2017, the Trustee shall send to Holders as provided in Trust Indenture Act Section 313(c) a brief report dated as of such October 4 that complies with Trust Indenture Act Section 313(a) (if such report is required by Trust Indenture Act Section 313(a)). The Trustee shall also comply with Trust Indenture Act Section 313(b)(2). A copy of each report at the time of its mailing to Holders shall be sent to the Company and filed with the Commission and each stock exchange on which any of the Notes are listed, as required by Trust Indenture Act Section 313(d). The Company shall notify the Trustee when the Notes are listed on any stock exchange, and of any delisting thereof.

Section 7.07 .   Compensation and Expenses of Trustee.  The Company covenants and agrees to pay to the Trustee from time to time, and the Trustee shall be entitled to, compensation for all services rendered by it hereunder in any capacity (which shall not be limited by any provision of law in regard to the compensation of a trustee of an express trust) as mutually agreed to in writing between the Trustee and the Company, and the Company will pay or reimburse the Trustee upon its request for all reasonable expenses, disbursements and advances reasonably incurred or made by the Trustee in accordance with any of the provisions of this

 

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Indenture in any capacity thereunder (including the reasonable compensation and expenses and disbursements of its agents and counsel and of all Persons not regularly in its employ) except any such expense, disbursement or advance as shall have been caused by its gross negligence, willful misconduct or bad faith, as determined by a court of competent jurisdiction. The Company also covenants to indemnify the Trustee in any capacity under this Indenture and any other document or transaction entered into in connection herewith and its agents and any authenticating agent for, and to hold them harmless against, any loss, claim, damage, liability or expense incurred without gross negligence, willful misconduct or bad faith on the part of the Trustee, its officers, directors, agents or employees, or such agent or authenticating agent, as the case may be, as determined by a court of competent jurisdiction, and arising out of or in connection with the acceptance or administration of this Indenture or in any other capacity hereunder, including the costs and expenses of defending themselves against any claim of liability in the premises. The obligations of the Company under this Section 7.07 to compensate or indemnify the Trustee and to pay or reimburse the Trustee for expenses, disbursements and advances shall be secured by a senior lien to which the Notes are hereby made subordinate on all money or property held or collected by the Trustee, except, subject to the effect of Section 6.04, funds or other property held in trust herewith for the benefit of the Holders of particular Notes. The Trustee’s right to receive payment of any amounts due under this Section 7.07 shall not be subordinate to any other liability or indebtedness of the Company. The obligation of the Company under this Section 7.07 shall survive the satisfaction and discharge of this Indenture and the earlier resignation or removal or the Trustee. The Company need not pay for any settlement made without its consent, which consent shall not be unreasonably withheld. The indemnification provided in this Section 7.07 shall extend to the officers, directors, agents and employees of the Trustee.

Without prejudice to any other rights available to the Trustee under applicable law, when the Trustee and its agents and any authenticating agent incur expenses or render services after an Event of Default specified in Section 6.01(h) or Section 6.01(i) occurs, the expenses and the compensation for the services are intended to constitute expenses of administration under any bankruptcy, insolvency or similar laws.

Section 7.08 .   Officers Certificate as Evidence.   Except as otherwise provided in Section 7.01, whenever in the administration of the provisions of this Indenture the Trustee shall deem it necessary or desirable that a matter be proved or established prior to taking or omitting any action hereunder, such matter (unless other evidence in respect thereof be herein specifically prescribed) may, in the absence of gross negligence, willful misconduct and bad faith on the part of the Trustee, be deemed to be conclusively proved and established by an Officers’ Certificate delivered to the Trustee, and such Officers’ Certificate, in the absence of gross negligence, willful misconduct and bad faith on the part of the Trustee, shall be full warrant to the Trustee for any action taken or omitted by it under the provisions of this Indenture upon the faith thereof.

Section 7.09 .   Eligibility of Trustee.  There shall at all times be a Trustee hereunder which shall be a Person that is eligible pursuant to the Trust Indenture Act to act as such and has a combined capital and surplus of at least $50,000,000. If such Person publishes reports of condition at least annually, pursuant to law or to the requirements of any supervising or examining authority, then for the purposes of this Section, the combined capital and surplus of such Person shall be deemed to be its combined capital and surplus as set forth in its most recent

 

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report of condition so published. If at any time the Trustee shall cease to be eligible in accordance with the provisions of this Section, it shall resign immediately in the manner and with the effect hereinafter specified in this Article. The Trustee is subject to Trust Indenture Act Section 310(b).

Section 7.10 .   Resignation or Removal of Trustee.  (a) The Trustee may at any time resign by giving written notice of such resignation to the Company and by delivering notice thereof to the Holders. Upon receiving such notice of resignation, the Company shall promptly appoint a successor trustee by written instrument, in duplicate, executed by order of the Board of Directors, one copy of which instrument shall be delivered to the resigning Trustee and one copy to the successor trustee. If no successor trustee shall have been so appointed and have accepted appointment within 60 days after the giving of such notice of resignation to the Holders, the resigning Trustee may, upon ten Business Days’ notice to the Company and the Holders, petition any court of competent jurisdiction for the appointment of a successor trustee, or any Holder who has been a bona fide holder of a Note or Notes for at least six months (or since the date of this Indenture) may, subject to the provisions of Section 6.10, on behalf of himself or herself and all others similarly situated, petition any such court for the appointment of a successor trustee. Such court may thereupon, after such notice, if any, as it may deem proper and prescribe, appoint a successor trustee.

(b)    In case at any time any of the following shall occur:

(i)    the Trustee shall cease to be eligible in accordance with the provisions of Section 7.09 and shall fail to resign after written request therefor by the Company or by any such Holder, or

(ii)    the Trustee shall become incapable of acting, or shall be adjudged a bankrupt or insolvent, or a receiver of the Trustee or of its property shall be appointed, or any public officer shall take charge or control of the Trustee or of its property or affairs for the purpose of rehabilitation, conservation or liquidation,

then, in either case, the Company may by a Board Resolution remove the Trustee and appoint a successor trustee by written instrument, in duplicate, executed by order of the Board of Directors, one copy of which instrument shall be delivered to the Trustee so removed and one copy to the successor trustee, or, subject to the provisions of Section 6.10, any Holder who has been a bona fide holder of a Note or Notes for at least six months (or since the date of this Indenture) may, on behalf of himself or herself and all others similarly situated, petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor trustee. Such court may thereupon, after such notice, if any, as it may deem proper and prescribe, remove the Trustee and appoint a successor trustee.

(c)    The Holders of a majority in aggregate principal amount of the Notes at the time outstanding, as determined in accordance with Section 8.04, may at any time remove the Trustee and nominate a successor trustee that shall be deemed appointed as successor trustee unless within ten days after notice to the Company of such nomination the Company objects thereto, in which case the Trustee so removed or any Holder, upon the terms and conditions and otherwise as in Section 7.10(a) provided, may petition any court of competent jurisdiction for an appointment of a successor trustee.

 

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(d)    If the Trustee fails to comply with this Section 7.10 with respect to any Notes, any Holder of Notes who satisfies the requirements of Trust Indenture Act Section 310(b) may petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor Trustee.

(e)    Any resignation or removal of the Trustee and appointment of a successor trustee pursuant to any of the provisions of this Section 7.10 shall become effective upon acceptance of appointment by the successor trustee as provided in Section 7.11.

Section 7.11 .   Acceptance by Successor Trustee.  Any successor trustee appointed as provided in Section 7.10 shall execute, acknowledge and deliver to the Company and to its predecessor trustee an instrument accepting such appointment hereunder, and thereupon the resignation or removal of the predecessor trustee shall become effective and such successor trustee, without any further act, deed or conveyance, shall become vested with all the rights, powers, duties and obligations of its predecessor hereunder, with like effect as if originally named as Trustee herein; but, nevertheless, on the written request of the Company or of the successor trustee, the trustee ceasing to act shall, upon payment of any amounts then due it pursuant to the provisions of Section 7.07, execute and deliver an instrument transferring to such successor trustee all the rights and powers of the trustee so ceasing to act. Upon request of any such successor trustee, the Company shall execute any and all instruments in writing for more fully and certainly vesting in and confirming to such successor trustee all such rights and powers. Any trustee ceasing to act shall, nevertheless, retain a senior claim to which the Notes are hereby made subordinate on all money or property held or collected by such trustee as such, except for funds or other property held in trust for the benefit of Holders of particular Notes, to secure any amounts then due it pursuant to the provisions of Section 7.07.

No successor trustee shall accept appointment as provided in this Section 7.11 unless at the time of such acceptance such successor trustee shall be eligible under the provisions of Section 7.09.

Upon acceptance of appointment by a successor trustee as provided in this Section 7.11, each of the Company and the successor trustee, at the written direction and at the expense of the Company shall deliver or cause to be delivered notice of the succession of such trustee hereunder to the Holders. If the Company fails to deliver such notice within ten days after acceptance of appointment by the successor trustee, the successor trustee shall cause such notice to be delivered at the expense of the Company.

Section 7.12 .   Succession by Merger, Etc.  Any corporation or other entity into which the Trustee may be merged or converted or with which it may be consolidated, or any corporation or other entity resulting from any merger, conversion or consolidation to which the Trustee shall be a party, or any corporation or other entity succeeding to all or substantially all of the corporate trust business of the Trustee (including the administration of this Indenture), shall be the successor to the Trustee hereunder without the execution or filing of any paper or any further act

 

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on the part of any of the parties hereto; provided that in the case of any corporation or other entity succeeding to all or substantially all of the corporate trust business of the Trustee such corporation or other entity shall be eligible under the provisions of Section 7.09.

In case at the time such successor to the Trustee shall succeed to the trusts created by this Indenture, any of the Notes shall have been authenticated but not delivered, any such successor to the Trustee may adopt the certificate of authentication of any predecessor trustee or authenticating agent appointed by such predecessor trustee, and deliver such Notes so authenticated; and in case at that time any of the Notes shall not have been authenticated, any successor to the Trustee or an authenticating agent appointed by such successor trustee may authenticate such Notes either in the name of any predecessor trustee hereunder or in the name of the successor trustee; and in all such cases such certificates shall have the full force which it is anywhere in the Notes or in this Indenture provided that the certificate of the Trustee shall have; provided , however , that the right to adopt the certificate of authentication of any predecessor trustee or to authenticate Notes in the name of any predecessor trustee shall apply only to its successor or successors by merger, conversion or consolidation.

Section 7.13 .   Trustee s Application for Instructions from the Company.  Any application by the Trustee for written instructions from the Company (other than with regard to any action proposed to be taken or omitted to be taken by the Trustee that affects the rights of the Holders of the Notes under this Indenture) may, at the option of the Trustee, set forth in writing any action proposed to be taken or omitted by the Trustee under this Indenture and the date on and/or after which such action shall be taken or such omission shall be effective. The Trustee shall not be liable to the Company for any action taken by, or omission of, the Trustee in accordance with a proposal included in such application on or after the date specified in such application (which date shall not be less than three Business Days after the date any officer that the Company has indicated to the Trustee should receive such application receives such application determined in accordance with Section 17.04, unless any such officer shall have consented in writing to any earlier date), unless, prior to taking any such action (or the effective date in the case of any omission), the Trustee shall have received written instructions in accordance with this Indenture in response to such application specifying the action to be taken or omitted.

Section 7.14 .   Preferential Collection of Claims Against Company.  The Trustee is subject to Trust Indenture Act Section 311(a), excluding any creditor relationship listed in Trust Indenture Act Section 311(b). A trustee who has resigned or been removed shall be subject to Trust Indenture Act Section 311(a) to the extent indicated therein.

ARTICLE 8

C ONCERNING THE H OLDERS

Section 8.01 .   Action by Holders.  Whenever in this Indenture it is provided that the Holders of a specified percentage of the aggregate principal amount of the Notes may take any action (including the making of any demand or request, the giving of any notice, consent or waiver or the taking of any other action), the fact that at the time of taking any such action, the Holders of such specified percentage have joined therein may be evidenced (a) by any instrument

 

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or any number of instruments of similar tenor executed by Holders in person or by agent or proxy appointed in writing, or (b) by the record of the Holders voting in favor thereof at any meeting of Holders duly called and held in accordance with the provisions of Article 9, or (c) by a combination of such instrument or instruments and any such record of such a meeting of Holders. Whenever the Company or the Trustee solicits the taking of any action by the Holders of the Notes, the Company or the Trustee may, but shall not be required to, fix in advance of such solicitation, a date as the record date for determining Holders entitled to take such action. The record date if one is selected shall be not more than fifteen days prior to the date of commencement of solicitation of such action.

Section 8.02 .   Proof of Execution by Holders.  Subject to the provisions of Section 7.01, Section 7.02 and Section 9.05, proof of the execution of any instrument by a Holder or its agent or proxy shall be sufficient if made in accordance with such reasonable rules and regulations as may be prescribed by the Trustee or in such manner as shall be satisfactory to the Trustee. The holding of Notes shall be proved by the Note Register or by a certificate of the Note Registrar. The record of any Holders’ meeting shall be proved in the manner provided in Section 9.06.

Section 8.03 .   Who Are Deemed Absolute Owners.  The Company, the Trustee, any authenticating agent, any Paying Agent, any Conversion Agent and any Note Registrar may deem the Person in whose name a Note shall be registered upon the Note Register to be, and may treat it as, the absolute owner of such Note (whether or not such Note shall be overdue and notwithstanding any notation of ownership or other writing thereon made by any Person other than the Company or any Note Registrar) for the purpose of receiving payment of or on account of the principal (including any Redemption Price) of such Note, for conversion of such Note and for all other purposes; and neither the Company nor the Trustee nor any Paying Agent nor any Conversion Agent nor any Note Registrar shall be affected by any notice to the contrary. The sole registered holder of a Global Note shall be the Depositary or its nominee. All such payments or deliveries so made to any Holder for the time being, or upon its order, shall be valid, and, to the extent of the sums or shares of Common Stock so paid or delivered, effectual to satisfy and discharge the liability for monies payable or shares deliverable upon any such Note. Notwithstanding anything to the contrary in this Indenture or the Notes following an Event of Default, any holder of a beneficial interest in a Global Note may directly enforce against the Company, without the consent, solicitation, proxy, authorization or any other action of the Depositary or any other Person, such holder’s right to exchange such beneficial interest for a Physical Note in accordance with the provisions of this Indenture. Without limiting the generality of the foregoing, a Holder, including the Depositary, that is the Holder of a Global Note, may make, give or take, by a proxy or proxies duly appointed in writing, any request, demand, authorization, direction, notice, consent, waiver or other action provided in this Indenture to be made, given or taken by Holders, and Depositary that is the Holder of a Global Note may provide its proxy or proxies to the beneficial owners of interests in any such Global Note through such Depositary’s standing instructions and customary practices.

Section 8.04 .   Company-Owned Notes Disregarded.  In determining whether the Holders of the requisite aggregate principal amount of Notes have concurred in any direction, consent, waiver or other action under this Indenture, Notes that are owned by the Company, by any Subsidiary thereof or by any Affiliate of the Company or any Subsidiary thereof shall be

 

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disregarded and deemed not to be outstanding for the purpose of any such determination; provided that for the purposes of determining whether the Trustee shall be protected in relying on any such direction, consent, waiver or other action only Notes that a Responsible Officer knows are so owned shall be so disregarded. Notes so owned that have been pledged in good faith may be regarded as outstanding for the purposes of this Section 8.04 if the pledgee shall establish to the satisfaction of the Trustee the pledgee’s right to so act with respect to such Notes and that the pledgee is not the Company, a Subsidiary thereof or an Affiliate of the Company or a Subsidiary thereof. In the case of a dispute as to such right, any decision by the Trustee taken upon the advice of counsel shall be full protection to the Trustee. Upon request of the Trustee, the Company shall furnish to the Trustee promptly an Officers’ Certificate listing and identifying all Notes, if any, known by the Company to be owned or held by or for the account of any of the above described Persons; and, subject to Section 7.01, the Trustee shall be entitled to accept such Officers’ Certificate as conclusive evidence of the facts therein set forth and of the fact that all Notes not listed therein are outstanding for the purpose of any such determination.

Section 8.05 .   Revocation of Consents; Future Holders Bound.  At any time prior to (but not after) the evidencing to the Trustee, as provided in Section 8.01, of the taking of any action by the Holders of the percentage of the aggregate principal amount of the Notes specified in this Indenture in connection with such action, any Holder of a Note that is shown by the evidence to be included in the Notes the Holders of which have consented to such action may, by filing written notice with the Trustee at its Corporate Trust Office and upon proof of holding as provided in Section 8.02, revoke such action so far as concerns such Note. Except as aforesaid, any such action taken by the Holder of any Note shall be conclusive and binding upon such Holder and upon all future Holders and owners of such Note and of any Notes issued in exchange or substitution therefor or upon registration of transfer thereof, irrespective of whether any notation in regard thereto is made upon such Note or any Note issued in exchange or substitution therefor or upon registration of transfer thereof.

ARTICLE 9

H OLDERS ’ M EETINGS

Section 9.01 .   Purpose of Meetings.  A meeting of Holders may be called at any time and from time to time pursuant to the provisions of this Article 9 for any of the following purposes:

(a)    to give any notice to the Company, any Guarantor or to the Trustee or to give any directions to the Trustee permitted under this Indenture, or to consent to the waiving of any Default or Event of Default hereunder (in each case, as permitted under this Indenture) and its consequences, or to take any other action authorized to be taken by Holders pursuant to any of the provisions of Article 6;

(b)    to remove the Trustee and nominate a successor trustee pursuant to the provisions of Article 7;

(c)    to consent to the execution of an indenture or indentures supplemental hereto pursuant to the provisions of Section 10.02; or

 

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(d)    to take any other action authorized to be taken by or on behalf of the Holders of any specified aggregate principal amount of the Notes under any other provision of this Indenture or under applicable law.

Section 9.02 .   Call of Meetings by Trustee.  The Trustee may at any time call a meeting of Holders to take any action specified in Section 9.01, to be held at such time and at such place as the Trustee shall determine. Notice of every meeting of the Holders, setting forth the time and the place of such meeting and in general terms the action proposed to be taken at such meeting and the establishment of any record date pursuant to Section 8.01, shall be delivered to Holders of such Notes. Such notice shall also be delivered to the Company. Such notices shall be delivered not less than 20 nor more than 90 days prior to the date fixed for the meeting.

Any meeting of Holders shall be valid without notice if the Holders of all Notes then outstanding are present in person or by proxy or if notice is waived before or after the meeting by the Holders of all Notes then outstanding, and if the Company and the Trustee are either present by duly authorized representatives or have, before or after the meeting, waived notice.

Section 9.03 .   Call of Meetings by Company or Holders.  In case at any time the Company, pursuant to a Board Resolution, or the Holders of at least 10% of the aggregate principal amount of the Notes then outstanding, shall have requested the Trustee to call a meeting of Holders, by written request setting forth in reasonable detail the action proposed to be taken at the meeting, and the Trustee shall not have delivered the notice of such meeting within 20 days after receipt of such request, then the Company or such Holders may determine the time and the place for such meeting and may call such meeting to take any action authorized in Section 9.01, by delivering notice thereof as provided in Section 9.02.

Section 9.04 .   Qualifications for Voting.  To be entitled to vote at any meeting of Holders a Person shall (a) be a Holder of one or more Notes on the record date pertaining to such meeting or (b) be a Person appointed by an instrument in writing as proxy by a Holder of one or more Notes on the record date pertaining to such meeting. The only Persons who shall be entitled to be present or to speak at any meeting of Holders shall be the Persons entitled to vote at such meeting and their counsel and any representatives of the Trustee and its counsel and any representatives of the Company and its counsel.

Section 9.05 .   Regulations.  Notwithstanding any other provisions of this Indenture, the Trustee may make such reasonable regulations as it may deem advisable for any meeting of Holders, in regard to proof of the holding of Notes and of the appointment of proxies, and in regard to the appointment and duties of inspectors of votes, the submission and examination of proxies, certificates and other evidence of the right to vote, and such other matters concerning the conduct of the meeting as it shall think fit.

The Trustee shall, by an instrument in writing, appoint a temporary chairman of the meeting, unless the meeting shall have been called by the Company or by Holders as provided in Section 9.03, in which case the Company or the Holders calling the meeting, as the case may be, shall in like manner appoint a temporary chairman. A permanent chairman and a permanent secretary of the meeting shall be elected by vote of the Holders of a majority in aggregate principal amount of the Notes represented at the meeting and entitled to vote at the meeting.

 

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Subject to the provisions of Section 8.04, at any meeting of Holders each Holder or proxyholder shall be entitled to one vote for each $1.00 principal amount of Notes held or represented by him or her; provided , however , that no vote shall be cast or counted at any meeting in respect of any Note challenged as not outstanding and ruled by the chairman of the meeting to be not outstanding. The chairman of the meeting shall have no right to vote other than by virtue of Notes held by it or instruments in writing as aforesaid duly designating it as the proxy to vote on behalf of other Holders. Any meeting of Holders duly called pursuant to the provisions of Section 9.02 or Section 9.03 may be adjourned from time to time by the Holders of a majority of the aggregate principal amount of Notes represented at the meeting, whether or not constituting a quorum, and the meeting may be held as so adjourned without further notice.

Section 9.06 .   Voting.  The vote upon any resolution submitted to any meeting of Holders shall be by written ballot on which shall be subscribed the signatures of the Holders or of their representatives by proxy and the outstanding aggregate principal amount of the Notes held or represented by them. The permanent chairman of the meeting shall appoint two inspectors of votes who shall count all votes cast at the meeting for or against any resolution and who shall make and file with the secretary of the meeting their verified written reports in duplicate of all votes cast at the meeting. A record in duplicate of the proceedings of each meeting of Holders shall be prepared by the secretary of the meeting and there shall be attached to said record the original reports of the inspectors of votes on any vote by ballot taken thereat and affidavits by one or more Persons having knowledge of the facts setting forth a copy of the notice of the meeting and showing that said notice was delivered as provided in Section 9.02. The record shall show the aggregate principal amount of the Notes voting in favor of or against any resolution. The record shall be signed and verified by the affidavits of the permanent chairman and secretary of the meeting and one of the duplicates shall be delivered to the Company and the other to the Trustee to be preserved by the Trustee, the latter to have attached thereto the ballots voted at the meeting.

Any record so signed and verified shall be conclusive evidence of the matters therein stated.

Section 9.07 .   No Delay of Rights by Meeting.  Nothing contained in this Article 9 shall be deemed or construed to authorize or permit, by reason of any call of a meeting of Holders or any rights expressly or impliedly conferred hereunder to make such call, any hindrance or delay in the exercise of any right or rights conferred upon or reserved to the Trustee or to the Holders under any of the provisions of this Indenture or of the Notes.

 

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ARTICLE 10

S UPPLEMENTAL I NDENTURES

Section 10.01 .   Supplemental Indentures Without Consent of Holders.  The Company, when authorized by the resolutions of the Board of Directors, the Guarantors and the Trustee, at the Company’s expense, may from time to time and at any time enter into an indenture or indentures supplemental hereto for one or more of the following purposes:

(a)    to cure any ambiguity, omission, defect or inconsistency;

(b)    to provide for the assumption by a Successor Company of the obligations of the Company under this Indenture pursuant to Article 11;

(c)    to provide for the assumption by a Successor Guarantor of the obligations of the applicable Guarantor under its Note Guarantee and this Indenture pursuant to Section 13.04;

(d)    to add guarantees with respect to the Notes;

(e)    to secure the Notes;

(f)    to add to the covenants or Events of Default of the Company for the benefit of the Holders or surrender any right or power conferred upon the Company;

(g)    to make any change that does not adversely affect the rights of any Holder;

(h)    in connection with any Merger Event, provide that the Notes are convertible into Reference Property, subject to the provisions of Section 14.04, and make such related changes to the terms of the Notes to the extent expressly required by Section 14.09;

(i)    to adjust the Conversion Rate pursuant to this Indenture;

(j)    to increase the outstanding principal amount of the Notes by the applicable Make-Whole Amount pursuant to this Indenture;

(k)    to provide for the acceptance of appointment by a successor trustee pursuant to Section 7.10 or to facilitate the administration of the trusts under this Indenture by more than one trustee; or

(l)    to comply with any requirement of the Commission in connection with the qualification or to maintain the qualification of this Indenture under the Trust Indenture Act.

Upon the written request of the Company, the Trustee is hereby authorized to join with the Company and the Guarantors in the execution of any such supplemental indenture, to make any further appropriate agreements and stipulations that may be therein contained, but the Trustee shall not be obligated to, but may in its discretion, enter into any supplemental indenture that affects the Trustee’s own rights, duties, liabilities or immunities under this Indenture or otherwise.

Any supplemental indenture authorized by the provisions of this Section 10.01 may be executed by the Company, the Guarantors and the Trustee without the consent of the Holders of any of the Notes at the time outstanding, notwithstanding any of the provisions of Section 10.02.

 

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Section 10.02 .   Supplemental Indentures with Consent of Holders.  With the consent (evidenced as provided in Article 8) of the Holders of at least a majority of the aggregate principal amount of the Notes then outstanding (determined in accordance with Article 8 and including, without limitation, consents obtained in connection with a repurchase of, or tender or exchange offer for, Notes), the Company, when authorized by the resolutions of the Board of Directors, the Guarantors and the Trustee, at the Company’s expense, may from time to time and at any time enter into an indenture or indentures supplemental hereto for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of this Indenture or any supplemental indenture or of modifying in any manner the rights of the Holders; provided , however , that, without the consent of each Holder of an outstanding Note affected, no such supplemental indenture shall:

(a)    reduce the amount of Notes whose Holders must consent to an amendment;

(b)    reduce the principal of or extend the Maturity Date of any Note;

(c)    make any change that adversely affects the conversion rights of any Notes;

(d)    reduce the Redemption Price of any Note or amend or modify in any manner adverse to the Holders the Company’s obligation to make such payments, whether through an amendment or waiver of provisions in the covenants, definitions or otherwise;

(e)    make any Note payable in a currency, or at a place of payment, other than that stated in the Note;

(f)    change the ranking of the Notes;

(g)    make any change in this Article 10 that requires each Holder’s consent or in the waiver provisions in Section 6.02 or Section 6.08;

(h)    other than in accordance with the provisions of this Indenture, eliminate any existing Note Guarantee;

(i)    make any change to the provisions of this Indenture governing the Collateral, including the Security Documents, if such change would adversely affect the rights of Holders; or

(j)    impair the right of any Holder to receive payment of principal (including the Redemption Price, if applicable) of such Holder’s Notes on or after the due dates therefor or to institute suit for the enforcement of any payment on or with respect to such Holder’s Note.

Upon the written request of the Company, and upon the filing with the Trustee of evidence of the consent of Holders as aforesaid and subject to Section 10.05, the Trustee shall join with the Company and the Guarantors in the execution of such supplemental indenture unless such supplemental indenture affects the Trustee’s own rights, duties, liabilities or immunities under this Indenture or otherwise, in which case the Trustee may in its discretion, but shall not be obligated to, enter into such supplemental indenture.

 

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Holders do not need under this Section 10.02 to approve the particular form of any proposed supplemental indenture. It shall be sufficient if such Holders approve the substance thereof. After any such supplemental indenture becomes effective, the Company shall deliver to the Holders a notice briefly describing such supplemental indenture. However, the failure to give such notice to all the Holders, or any defect in the notice, will not impair or affect the validity of the supplemental indenture.

Section 10.03 .   Effect of Supplemental Indentures.  Upon the execution of any supplemental indenture pursuant to the provisions of this Article 10, this Indenture shall be and be deemed to be modified and amended in accordance therewith and the respective rights, limitation of rights, obligations, duties and immunities under this Indenture of the Trustee, the Company, the Guarantors and the Holders shall thereafter be determined, exercised and enforced hereunder subject in all respects to such modifications and amendments and all the terms and conditions of any such supplemental indenture shall be and be deemed to be part of the terms and conditions of this Indenture for any and all purposes.

Section 10.04 .   Notation on Notes.  Notes authenticated and delivered after the execution of any supplemental indenture pursuant to the provisions of this Article 10 may, at the Company’s expense, bear a notation in form approved by the Company as to any matter provided for in such supplemental indenture. If the Company or the Trustee shall so determine, new Notes so modified as to conform, in the opinion of the Trustee and the Board of Directors, to any modification of this Indenture contained in any such supplemental indenture may, at the Company’s expense, be prepared and executed by the Company, authenticated by the Trustee (or an authenticating agent duly appointed by the Trustee pursuant to Section 17.11) and delivered in exchange for the Notes then outstanding, upon surrender of such Notes then outstanding.

Section 10.05 .   Evidence of Compliance of Supplemental Indenture to Be Furnished Trustee.  In addition to the documents required by Section 17.07, the Trustee shall receive an Officers’ Certificate and an Opinion of Counsel as conclusive evidence that any supplemental indenture executed pursuant hereto complies with the requirements of this Article 10 and is permitted or authorized by this Indenture.

Section 10.06 .   Compliance with Trust Indenture Act.  Every amendment, waiver or supplement to this Indenture or the Notes shall comply with the Trust Indenture Act as then in effect.

ARTICLE 11

C ONSOLIDATION , M ERGER , S ALE , C ONVEYANCE AND L EASE

Section 11.01 .   Company May Consolidate, Etc. on Certain Terms.  Subject to the provisions of Section 11.02, the Company shall not consolidate with, merge with or into, or sell, convey, transfer or lease all or substantially all of its properties and assets to another Person, unless:

(a)    the resulting, surviving or transferee Person (the “ Successor Company ”), if not the Company, shall be a corporation organized and existing under the laws of the United States of America, any State thereof or the District of Columbia, and the Successor Company (if not the Company) shall expressly assume, by supplemental indenture all of the obligations of the Company under the Notes and this Indenture; and

 

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(b)    immediately after giving effect to such transaction, no Default or Event of Default shall have occurred and be continuing under this Indenture.

For purposes of this Section 11.01, the sale, conveyance, transfer or lease of all or substantially all of the properties and assets of one or more Subsidiaries of the Company to another Person, which properties and assets, if held by the Company instead of such Subsidiaries, would constitute all or substantially all of the properties and assets of the Company on a consolidated basis, shall be deemed to be the sale, conveyance, transfer or lease of all or substantially all of the properties and assets of the Company to another Person.

Section 11.02 .   Successor Corporation to Be Substituted.  In case of any such consolidation, merger, sale, conveyance, transfer or lease and upon the assumption by the Successor Company, by supplemental indenture, executed and delivered to the Trustee, of the due and punctual payment of the principal (including the Redemption Price, if applicable) of all of the Notes, the due and punctual delivery or payment, as the case may be, of any consideration due upon conversion of the Notes and the due and punctual performance of all of the covenants and conditions of this Indenture to be performed by the Company, such Successor Company (if not the Company) shall succeed to and, except in the case of a lease of all or substantially all of the Company’s properties and assets, shall be substituted for the Company, with the same effect as if it had been named herein as the party of the first part. Such Successor Company thereupon may cause to be signed, and may issue either in its own name or in the name of the Company any or all of the Notes issuable hereunder which theretofore shall not have been signed by the Company and delivered to the Trustee; and, upon the order of such Successor Company instead of the Company and subject to all the terms, conditions and limitations in this Indenture prescribed, the Trustee shall authenticate and shall deliver, or cause to be authenticated and delivered, any Notes that previously shall have been signed and delivered by the Officers of the Company to the Trustee for authentication, and any Notes that such Successor Company thereafter shall cause to be signed and delivered to the Trustee for that purpose. All the Notes so issued shall in all respects have the same legal rank and benefit under this Indenture as the Notes theretofore or thereafter issued in accordance with the terms of this Indenture as though all of such Notes had been issued at the date of the execution hereof. In the event of any such consolidation, merger, sale, conveyance or transfer (but not in the case of a lease), upon compliance with this Article 11 the Person named as the “Company” in the first paragraph of this Indenture (or any successor that shall thereafter have become such in the manner prescribed in this Article 11) may be dissolved, wound up and liquidated at any time thereafter and, except in the case of a lease, such Person shall be released from its liabilities as obligor and maker of the Notes and from its obligations under this Indenture and the Notes.

 

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In case of any such consolidation, merger, sale, conveyance, transfer or lease, such changes in phraseology and form (but not in substance) may be made in the Notes thereafter to be issued as may be appropriate.

Section 11.03 .   Opinion of Counsel to Be Given to Trustee.  No such consolidation, merger, sale, conveyance, transfer or lease shall be effective unless the Trustee shall receive an Officers’ Certificate and an Opinion of Counsel as conclusive evidence that any such consolidation, merger, sale, conveyance, transfer or lease and any such assumption and, if a supplemental indenture is required in connection with such transaction, such supplemental indenture, complies with the provisions of this Article 11.

ARTICLE 12

I MMUNITY OF I NCORPORATORS , S TOCKHOLDERS , O FFICERS AND D IRECTORS

Section 12.01 .   Indenture and Notes Solely Corporate Obligations.  No recourse for the payment of the principal of any Note, nor for any claim based thereon or otherwise in respect thereof, and no recourse under or upon any obligation, covenant or agreement of the Company in this Indenture or in any supplemental indenture or in any Note, nor because of the creation of any indebtedness represented thereby, shall be had against any incorporator, stockholder, employee, agent, Officer or director or Subsidiary, as such, past, present or future, of the Company or of any successor corporation, either directly or through the Company or any successor corporation, whether by virtue of any constitution, statute or rule of law, or by the enforcement of any assessment or penalty or otherwise; it being expressly understood that all such liability is hereby expressly waived and released as a condition of, and as a consideration for, the execution of this Indenture and the issue of the Notes.

ARTICLE 13

G UARANTEE OF N OTES

Section 13.01 .   The Note Guarantee.  Subject to the provisions of this Article 13, each Guarantor hereby fully and unconditionally guarantees, jointly and severally, the full and punctual payment (whether at maturity, by acceleration, upon redemption or otherwise) of the principal (including the Redemption Price, if applicable) of, and all other amounts payable under, each Note, and the full and punctual payment of all other amounts payable by the Company under this Indenture. Upon failure by the Company to pay punctually any such amount, each Guarantor shall forthwith on demand pay the amount not so paid at the place and in the manner specified in this Indenture.

Section 13.02 .   Note Guarantee Unconditional.  The obligations of each Guarantor hereunder are unconditional and absolute and, without limiting the generality of the foregoing, will not be released, discharged or otherwise affected by:

(a)    any extension, renewal, settlement, compromise, waiver or release in respect of any obligation of the Company under this Indenture or any Note, by operation of law or otherwise;

 

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(b)    any modification or amendment of or supplement to this Indenture or any Note;

(c)    any change in the corporate existence, structure or ownership of the Company, or any insolvency, bankruptcy, reorganization or other similar proceeding affecting the Company or its assets or any resulting release or discharge of any obligation of the Company contained in this Indenture or any Note;

(d)    the existence of any claim, set off or other rights which the Guarantor may have at any time against the Company, the Trustee or any other Person, whether in connection with this Indenture or any unrelated transactions, provided that nothing herein prevents the assertion of any such claim by separate suit or compulsory counterclaim;

(e)    any invalidity or unenforceability relating to or against the Company for any reason of this Indenture or any Note, or any provision of applicable law or regulation purporting to prohibit the payment by the Company of the principal (including the Redemption Price, if applicable) of any Note or any other amount payable by the Company under this Indenture; or

(f)    any other act or omission to act or delay of any kind by the Company, the Trustee or any other Person or any other circumstance whatsoever which might, but for the provisions of this paragraph, constitute a legal or equitable discharge of or defense to such Guarantor’s obligations hereunder, other than payment in full of the principal (including the Redemption Price, if applicable) of the Notes and all other amounts payable by the Company under this Indenture.

Section 13.03 .   Discharge; Reinstatement .  Subject to Section 13.12, each Guarantor’s obligations hereunder will remain in full force and effect until the principal (including the Redemption Price, if applicable) of the Notes and all other amounts payable by the Company under this Indenture have been paid in full. If at any time any payment of the principal (including the Redemption Price, if applicable) of any Note or any other amount payable by the Company under this Indenture is rescinded or must be otherwise restored or returned upon the insolvency, bankruptcy or reorganization of the Company or otherwise, each Guarantor’s obligations hereunder with respect to such payment will be reinstated as though such payment had been due but not made at such time.

Section 13.04 .   Guarantor May Consolidate, Etc. on Certain Terms.  Each Guarantor shall not consolidate with, merge with or into, or sell, convey, transfer or lease all or substantially all of its properties and assets to another Person, unless:

(a)    the resulting, surviving or transferee Person (the “ Successor Guarantor ”), if not the applicable Guarantor, shall be organized and existing under the laws of the United States of America, any State thereof or the District of Columbia, and the Successor Guarantor (if not the applicable Guarantor) shall expressly assume, by supplemental indenture all of the obligations of the applicable Guarantor under the applicable Note Guarantee and this Indenture; and

(b)    immediately after giving effect to such transaction, no Default or Event of Default shall have occurred and be continuing under this Indenture.

 

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The foregoing limitations in this Section 13.04 shall not apply to any consolidation with, merger with or into or sale, conveyance, transfer or lease of all or substantially all properties and assets to the Company or another Guarantor of the Notes.

For purposes of this Section 13.04, the sale, conveyance, transfer or lease of all or substantially all of the properties and assets of one or more Subsidiaries of a Guarantor to another Person, which properties and assets, if held by such Guarantor instead of such Subsidiaries, would constitute all or substantially all of the properties and assets of such Guarantor on a consolidated basis, shall be deemed to be the sale, conveyance, transfer or lease of all or substantially all of the properties and assets of such Guarantor to another Person.

In case of any such consolidation, merger, sale, conveyance, transfer or lease and upon the assumption by a Successor Guarantor, by supplemental indenture, executed and delivered to the Trustee, of the applicable Note Guarantee and all other obligations of the applicable Guarantor under such Note Guarantee and this Indenture, such Successor Guarantor (if not the applicable Guarantor) shall succeed to and, except in the case of a lease of all or substantially all of such Guarantor’s properties and assets, shall be substituted for such Guarantor, with the same effect as if it had been named herein as the party of the first part. In the event of any such consolidation, merger, sale, conveyance or transfer (but not in the case of a lease), upon compliance with this Section 13.04 the Person named as a “Guarantor” in the first paragraph of this Indenture (or any successor that shall thereafter have become such in the manner prescribed in this Section 13.04) may be dissolved, wound up and liquidated at any time thereafter and, except in the case of a lease, such Person shall be released from its obligations under the applicable Note Guarantee and this Indenture.

In case of any such consolidation, merger, sale, conveyance, transfer or lease, such changes in phraseology and form (but not in substance) may be made in the Notes thereafter to be issued as may be appropriate.

Section 13.05 .   Existence.  Subject to Section 13.04, each Guarantor shall do or cause to be done all things necessary to preserve and keep in full force and effect its existence.

Section 13.06 .   Waiver by the Guarantors .  Each Guarantor irrevocably waives, to the fullest extent permitted by applicable law, acceptance hereof, presentment, demand, protest and any notice not provided for herein, as well as any requirement that at any time any action be taken by any Person against the Company or any other Person.

Section 13.07 .   Subrogation and Contribution.  Upon making any payment with respect to any obligation of the Company under this Article 13, the Guarantor making such payment will be subrogated to the rights of the payee against the Company with respect to such obligation, provided that the Guarantor may not enforce either any right of subrogation, or any right to receive payment in the nature of contribution, or otherwise, from any other Guarantor, with respect to such payment so long as any amount payable by the Company hereunder or under the Notes remains unpaid.

 

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Section 13.08 .   Stay of Acceleration.  If acceleration of the time for payment of any amount payable by the Company under this Indenture or the Notes is stayed upon the insolvency, bankruptcy or reorganization of the Company, all such amounts otherwise subject to acceleration under the terms of this Indenture are nonetheless payable by the Guarantors hereunder forthwith on demand by the Trustee or the Holders.

Section 13.09 .   Limitation on Amount of Note Guarantee.  Notwithstanding anything to the contrary in this Article 13, each Guarantor, and by its acceptance of Notes, each Holder, hereby confirms that it is the intention of all such parties that the Note Guarantee of such Guarantor not constitute a fraudulent conveyance under applicable fraudulent conveyance provisions of Title 11 of the United States Code or any comparable provision of state law. To effectuate that intention, the Trustee, the Holders and the Guarantors hereby irrevocably agree that the obligations of each Guarantor under its Note Guarantee are limited to the maximum amount that would not render the Guarantor’s obligations subject to avoidance under applicable fraudulent conveyance provisions of Title 11 of the United States Code or any comparable provision of state law.

Section 13.10 .   Additional Guarantors .  Any Guarantor Subsidiary may become a Guarantor by executing and delivering to the Trustee (a) a supplemental indenture, which subjects such Person to the provisions of this Indenture as a Guarantor, and (b) an Opinion of Counsel to the effect that such supplemental indenture has been duly authorized and executed by such Person and constitutes the legal, valid and binding obligation of such Person (subject to customary assumptions and exceptions).

Section 13.11 .   Delivery of Note Guarantee.  The execution by each Guarantor of this Indenture (or a supplemental indenture) evidences the Note Guarantee of such Guarantor, whether or not the person signing as an officer of the Guarantor still holds that office at the time of authentication of any Note. The delivery of any Note by the Trustee after authentication constitutes due delivery of the Note Guarantee set forth in this Indenture on behalf of each Guarantor.

Section 13.12 .   Release of Note Guarantee.  The Note Guarantee of a Guarantor will terminate upon satisfaction and discharge of this Indenture in accordance with the terms hereof.

Upon delivery by the Company to the Trustee of an Officers’ Certificate and an Opinion of Counsel to the foregoing effect, the Trustee will execute any documents reasonably requested by such Guarantor in order to evidence the release of the Guarantor from its obligations under its Note Guarantee.

ARTICLE 14

C ONVERSION OF N OTES

Section 14.01 .   Conversion Rate.  The initial conversion rate of the Notes shall be 0.05330841 shares of Common Stock (subject to adjustment as provided in this Article 14, the “ Conversion Rate ”) per $1.00 principal amount of Notes (subject to, and in accordance with, the settlement provisions of Section 14.04, the “ Conversion Obligation ”).

 

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Section 14.02 .   Optional Conversion.  Subject to and upon compliance with the provisions of this Article 14, each Holder of a Note shall have the right (which right shall be subject to Section 14.03), at such Holder’s option, to convert all or any portion of such Note at any time to, and including, the Business Day immediately preceding the Maturity Date, at the Conversion Rate (an “ Optional Conversion ”); provided that if the Company calls any or all of the Notes for redemption pursuant to Article 16, then a Holder may surrender all or any portion of its Notes designated by the Company for redemption for conversion at any time prior to the close of business on the Scheduled Trading Day prior to the Redemption Date; provided further that, after that time, the right to convert such Notes shall expire, unless the Company defaults in the payment of the Redemption Price, in which case a Holder of Notes may convert such Notes until the Redemption Price has been paid or duly provided for.

Section 14.03 .   Mandatory Conversion.  (a) Subject to and upon compliance with the provisions of this Article 14, the Company shall convert all outstanding Notes into Common Stock at the Conversion Rate (a “ Mandatory Conversion ”) upon the earliest to occur of the following (each, a “ Mandatory Conversion Event ”):

(i)    the closing or effective date of any bona fide arm’s length issuance by the Company of Common Stock to third parties that are not stockholders of the Company (or Affiliates of stockholders of the Company) for cash with (x) a total issuance size that is greater than or equal to $100,000,000 and (y) a per-share price greater than or equal to $34.16, before underwriting commissions, placement fees or similar expenses;

(ii)    the Business Day immediately succeeding the thirty (30) day period beginning on the date on which the Holders of at least a majority in aggregate principal amount of the Notes then outstanding deliver written notice to the Company to convert the Notes;

(iii)    if the Common Stock is listed on a U.S. national securities exchange, the first Trading Day on which the average of the Last Reported Sale Prices of the Common Stock over the thirty (30) consecutive Trading Day period ending on such Trading Day is 50% greater than $34.16;

(iv)    the closing or effective date of any bona fide refinancing of the First Lien Credit Facility after a determination by the Board of Directors in good faith that: (A) such refinancing provides for terms that are materially more favorable to the Company than the terms of the First Lien Credit Facility before such refinancing and (B) the causing of a Mandatory Conversion is not the primary purpose of such refinancing;

(v)    the closing or effective date of any Change of Control Transaction; or

(vi)    the Maturity Date.

 

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(b)    Notwithstanding the foregoing, no Mandatory Conversion shall be effected if a Default or Event of Default has occurred or is continuing.

(c)    Neither the Trustee nor the Conversion Agent shall have any duty or responsibility to monitor or determine whether a Mandatory Conversion Event has occurred.

Section 14.04 .   Conversion Procedure; Settlement Upon Conversion.  (a) Upon conversion of any Note, the Company shall deliver to the converting Holder, in respect of each $1.00 principal amount of Notes being converted, a number of shares of Common Stock equal to the Conversion Rate, together with a cash payment, if applicable, in lieu of delivering any fractional share of Common Stock in accordance with subsection (i) of this Section 14.04, on the third Business Day immediately following the relevant Conversion Date. Notwithstanding anything to the contrary herein, the Company shall not be required to issue any fraction of a share of Common Stock upon exercise of any Note; provided that the Company makes the cash payment in lieu of such fractional share.

(b)    Subject to Section 14.04(e), before any Holder of a Note shall be entitled to convert a Note pursuant to an Optional Conversion, such Holder shall (i) in the case of a Global Note, comply with the procedures of the Depositary in effect at that time and (ii) in the case of a Physical Note (1) complete, manually sign and deliver an irrevocable notice to the Conversion Agent as set forth in the Form of Notice of Conversion (or a facsimile thereof) at the office of the Conversion Agent and state in writing therein the principal amount of Notes to be converted and the name or names (with addresses) in which such Holder wishes the certificate or certificates for the shares of Common Stock to be delivered upon settlement of the Conversion Obligation to be registered, (2) surrender such Notes, duly endorsed to the Company or in blank (and accompanied by appropriate endorsement and transfer documents), at the office of the Conversion Agent and (3) if required, furnish appropriate endorsements and transfer documents. The Trustee (or if different, the Conversion Agent) shall notify the Company of any conversion pursuant to this Article 14 on the Conversion Date for such conversion.

If more than one Note shall be surrendered for conversion at one time by the same Holder, the Conversion Obligation with respect to such Notes shall be computed on the basis of the aggregate principal amount of the Notes (or specified portions thereof to the extent permitted thereby) so surrendered.

Any Note converted pursuant to a Mandatory Conversion shall be deemed to have been submitted or surrendered for conversion by the Holder thereof for all purposes of this Indenture.

(c)    A Note shall be deemed to have been converted (x) in the case of an Optional Conversion, immediately prior to the close of business on the date (the “ Optional Co nversion Date ”) that the Holder has complied with the requirements set forth in subsection (b) above or (y) subject to Section 14.03(b), in the case of a Mandatory Conversion, immediately prior to the close of business on the date (together with the Optional Conversion Date, the “ Conversion Date ”) that a Mandatory Conversion Event has occurred. The Company shall issue or cause to be issued, and deliver to the Conversion Agent or to such Holder, or such Holder’s nominee or nominees, the full number of shares of Common Stock to which such Holder shall be entitled, in certificate form or in book-entry format, in satisfaction of the Company’s Conversion Obligation.

 

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(d)    In case any Note shall be surrendered for partial conversion, the Company shall execute and the Trustee shall authenticate and deliver to or upon the written order of the Holder of the Note so surrendered a new Note or Notes in authorized denominations in an aggregate principal amount equal to the unconverted portion of the surrendered Note, without payment of any service charge by the converting Holder but, if required by the Company or Trustee, with payment of a sum sufficient to cover any documentary, stamp or similar issue or transfer tax or similar governmental charge required by law or that may be imposed in connection therewith as a result of the name of the Holder of the new Notes issued upon such conversion being different from the name of the Holder of the old Notes surrendered for such conversion.

(e)    If a Holder submits a Note for conversion, the Company shall pay any documentary, stamp or similar issue or transfer tax due on the issue of the shares of Common Stock upon conversion, unless the tax is due because the Holder requests such shares to be issued in a name other than the Holder’s name, in which case the Holder shall pay that tax. The Conversion Agent may refuse to deliver the certificates representing the shares of Common Stock being issued in a name other than the Holder’s name until the Conversion Agent receives a sum sufficient to pay any tax that is due by such Holder in accordance with the immediately preceding sentence.

(f)    Except as provided in Section 14.06, no adjustment shall be made for dividends on any shares of Common Stock issued upon the conversion of any Note as provided in this Article 14.

(g)    Upon the conversion of an interest in a Global Note, the Trustee, or the Custodian at the direction of the Trustee, shall make a notation on such Global Note as to the reduction in the principal amount represented thereby. The Company shall notify the Trustee in writing of any conversion of Notes effected through any Conversion Agent other than the Trustee.

(h)    The Person in whose name the shares of Common Stock shall be issuable upon conversion shall be treated as a stockholder of record as of the close of business on the relevant Conversion Date. Upon a conversion of Notes, such Person shall no longer be a Holder of such Notes surrendered for conversion.

(i)    The Company shall not issue any fractional share of Common Stock upon conversion of the Notes and shall instead pay cash in lieu of delivering any fractional share of Common Stock issuable upon conversion based on the Last Reported Sale Price of the Common Stock on the relevant Conversion Date.

Section 14.05 .   Decreased Conversion Rate Applicable to Notes.  Concurrently with any increase to the outstanding principal amount of the Notes pursuant to Section 2.02, the Conversion Rate shall be adjusted such that the Conversion Rate in effect immediately following the effectiveness of such increase in principal amount shall be equal to the Conversion Rate in effect immediately prior to such increase in principal amount, multiplied by a fraction, (a) the

 

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numerator of which is the aggregate principal amount of the Notes outstanding immediately prior to such increase in principal amount and (b) the denominator of which is the aggregate principal amount of the Notes outstanding immediately following such increase in principal amount.

Section 14.06 .   Adjustment of Conversion Rate.  The Conversion Rate shall be adjusted from time to time by the Company if any of the following events occurs, except that the Company shall not make any adjustments to the Conversion Rate if Holders of the Notes participate (other than in the case of (x) a share split or share combination or (y) a tender or exchange offer), at the same time and upon the same terms as holders of the Common Stock and solely as a result of holding the Notes, in any of the transactions described in this Section 14.06, without having to convert their Notes, as if they held a number of shares of Common Stock equal to the Conversion Rate, multiplied by the principal amount of Notes held by such Holder.

(a)    If the Company exclusively issues shares of Common Stock as a dividend or distribution on shares of the Common Stock, or if the Company effects a share split or share combination, the Conversion Rate shall be adjusted based on the following formula:

 

CR’ = CR 0 x  

OS

  
  OS 0   

where,

 

CR 0    =    the Conversion Rate in effect immediately prior to the close of business on the Record Date of such dividend or distribution, or immediately prior to the open of business on the Effective Date of such share split or share combination, as applicable;
CR’    =    the Conversion Rate in effect immediately after the close of business on such Record Date or immediately after the open of business on such Effective Date, as applicable;
OS 0    =    the number of shares of Common Stock outstanding immediately prior to the close of business on such Record Date or immediately prior the open of business on such Effective Date, as applicable; and
OS’    =    the number of shares of Common Stock outstanding immediately after giving effect to such dividend, distribution, share split or share combination.

Any adjustment made under this Section 14.06(a) shall become effective immediately after the close of business on the Record Date for such dividend or distribution, or immediately after the open of business on the Effective Date for such share split or share combination, as applicable. If any dividend or distribution of the type described in this Section 14.06(a) is declared but not so paid or made, the Conversion Rate shall be immediately readjusted, effective as of the date the Board of Directors determines not to pay such dividend or distribution, to the Conversion Rate that would then be in effect if such dividend or distribution had not been declared.

 

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(b)    If the Company issues to all or substantially all holders of the Common Stock any rights, options or warrants entitling them, for a period of not more than 45 calendar days after the announcement date of such issuance, to subscribe for or purchase shares of the Common Stock at a price per share that is less than the average of the Last Reported Sale Prices of the Common Stock for the 10 consecutive Trading Day period ending on, and including, the Trading Day immediately preceding the date of announcement of such issuance, the Conversion Rate shall be increased based on the following formula:

 

CR’ = CR 0 x  

OS 0  + X

  
  OS 0  + Y   

where,

 

CR 0    =    the Conversion Rate in effect immediately prior to the close of business on the Record Date for such issuance;
CR’    =    the Conversion Rate in effect immediately after the close of business on such Record Date;
OS 0    =    the number of shares of Common Stock outstanding immediately prior to the close of business on such Record Date;
X    =    the total number of shares of Common Stock issuable pursuant to such rights, options or warrants; and
Y    =    the number of shares of Common Stock equal to the aggregate price payable to exercise such rights, options or warrants, divided by the average of the Last Reported Sale Prices of the Common Stock over the 10 consecutive Trading Day period ending on, and including, the Trading Day immediately preceding the date of announcement of the issuance of such rights, options or warrants.

Any increase made under this Section 14.06(b) shall be made successively whenever any such rights, options or warrants are issued and shall become effective immediately after the close of business on the Record Date for such issuance. To the extent that shares of the Common Stock are not delivered after the expiration of such rights, options or warrants, the Conversion Rate shall be decreased to the Conversion Rate that would then be in effect had the increase with respect to the issuance of such rights, options or warrants been made on the basis of delivery of only the number of shares of Common Stock actually delivered. If such rights, options or warrants are not so issued, the Conversion Rate shall be decreased to the Conversion Rate that would then be in effect if such Ex-Dividend Date for such issuance had not occurred.

For purposes of this Section 14.06(b), in determining whether any rights, options or warrants entitle the holders to subscribe for or purchase shares of the Common Stock at less than such average of the Last Reported Sale Prices of the Common Stock for the 10 consecutive Trading Day period ending on, and including, the Trading Day immediately preceding the date of announcement for such issuance, and in determining the aggregate offering price of such

 

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shares of Common Stock, there shall be taken into account any consideration received by the Company for such rights, options or warrants and any amount payable on exercise or conversion thereof, the value of such consideration, if other than cash, to be determined by the Board of Directors.

(c)    If the Company distributes shares of its Capital Stock, evidences of its indebtedness, other assets or property of the Company or rights, options or warrants to acquire its Capital Stock or other securities, to all or substantially all holders of the Common Stock, excluding (i) dividends, distributions or issuances as to which an adjustment was effected pursuant to Section 14.06(a) or Section 14.06(b), (ii) dividends or distributions paid exclusively in cash as to which the provisions set forth in Section 14.06(d) shall apply, and (iii) Spin-Offs as to which the provisions set forth below in this Section 14.06(c) shall apply (any of such shares of Capital Stock, evidences of indebtedness, other assets or property or rights, options or warrants to acquire Capital Stock or other securities, the “ Distributed Property ”), then the Conversion Rate shall be increased based on the following formula:

 

CR’ = CR 0 x  

      SP 0        

  
  SP 0  – FMV   

where,

 

CR 0    =    the Conversion Rate in effect immediately prior to the close of business on the Record Date for such distribution;
CR’    =    the Conversion Rate in effect immediately after the close of business on such Record Date;
SP 0    =    the average of the Last Reported Sale Prices of the Common Stock over the 10 consecutive Trading Day period ending on, and including, the Trading Day immediately preceding the Ex-Dividend Date for such distribution; and
FMV    =    the fair market value (as determined by the Board of Directors) of the Distributed Property with respect to each outstanding share of the Common Stock on the Ex-Dividend Date for such distribution.

Any increase made under the portion of this Section 14.06(c) above shall become effective immediately after the close of business on the Record Date for such distribution. If such distribution is not so paid or made, the Conversion Rate shall be decreased to the Conversion Rate that would then be in effect if such distribution had not been declared. Notwithstanding the foregoing, if “FMV” (as defined above) is equal to or greater than “SP 0 ” (as defined above), in lieu of the foregoing increase, each Holder of a Note shall receive, in respect of each $1.00 principal amount thereof, at the same time and upon the same terms as holders of the Common Stock receive the Distributed Property, the amount and kind of Distributed Property such Holder would have received if such Holder owned a number of shares of Common Stock equal to the Conversion Rate in effect on the Ex-Dividend Date for the distribution. If the Board of Directors determines the “FMV” (as defined above) of any distribution for purposes of this

 

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Section 14.06(c) by reference to the actual or when-issued trading market for any securities, it shall in doing so consider the prices in such market over the same period used in computing the Last Reported Sale Prices of the Common Stock over the 10 consecutive Trading Day period ending on, and including, the Trading Day immediately preceding the Ex-Dividend Date for such distribution.

With respect to an adjustment pursuant to this Section 14.06(c) where there has been a payment of a dividend or other distribution on the Common Stock of shares of Capital Stock of any class or series, or similar equity interest, of or relating to a Subsidiary or other business unit of the Company, that are, or, when issued, will be, listed or admitted for trading on a U.S. national securities exchange (a “ Spin-Off ”), the Conversion Rate shall be increased based on the following formula:

 

CR’ = CR 0 x  

FMV 0  + MP 0

  
  MP 0   

where,

 

CR 0    =    the Conversion Rate in effect immediately prior to the end of the Valuation Period;
CR’    =    the Conversion Rate in effect immediately after the end of the Valuation Period;
FMV 0    =    the average of the Last Reported Sale Prices of the Capital Stock or similar equity interest distributed to holders of the Common Stock applicable to one share of the Common Stock (determined by reference to the definition of Last Reported Sale Price as set forth in Section 1.01 as if references therein to Common Stock were to such Capital Stock or similar equity interest) over the first 10 consecutive Trading Day period after, and including, the Ex-Dividend Date of the Spin-Off (the “ Valuation Period ”); and
MP 0    =    the average of the Last Reported Sale Prices of the Common Stock over the Valuation Period.

The increase to the Conversion Rate under the preceding paragraph shall occur at the close of business on the last Trading Day of the Valuation Period; provided that in respect of any conversion of Notes, if the relevant Conversion Date occurs during the Valuation Period, references to “10” in the preceding paragraph shall be deemed to be replaced with such lesser number of Trading Days as have elapsed between the Ex-Dividend Date of such Spin-Off and the Conversion Date in determining the Conversion Rate.

For purposes of this Section 14.06(c) (and subject in all respect to Section 14.13), rights, options or warrants distributed by the Company to all holders of the Common Stock entitling them to subscribe for or purchase shares of the Company’s Capital Stock, including Common Stock (either initially or under certain circumstances), which rights, options or warrants, until the occurrence of a specified event or events (“ Trigger Event ”): (i) are deemed to be transferred with such shares of the Common Stock; (ii) are not exercisable; and (iii) are also issued in

 

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respect of future issuances of the Common Stock, shall be deemed not to have been distributed for purposes of this Section 14.06(c) (and no adjustment to the Conversion Rate under this Section 14.06(c) will be required) until the occurrence of the earliest Trigger Event, whereupon such rights, options or warrants shall be deemed to have been distributed and an appropriate adjustment (if any is required) to the Conversion Rate shall be made under this Section 14.06(c). If any such right, option or warrant, including any such existing rights, options or warrants distributed prior to the date of this Indenture, are subject to events, upon the occurrence of which such rights, options or warrants become exercisable to purchase different securities, evidences of indebtedness or other assets, then the date of the occurrence of any and each such event shall be deemed to be the date of distribution and Record Date with respect to new rights, options or warrants with such rights (in which case the existing rights, options or warrants shall be deemed to terminate and expire on such date without exercise by any of the holders thereof). In addition, in the event of any distribution (or deemed distribution) of rights, options or warrants, or any Trigger Event or other event (of the type described in the immediately preceding sentence) with respect thereto that was counted for purposes of calculating a distribution amount for which an adjustment to the Conversion Rate under this Section 14.06(c) was made, (1) in the case of any such rights, options or warrants that shall all have been redeemed or purchased without exercise by any holders thereof, upon such final redemption or purchase (x) the Conversion Rate shall be readjusted as if such rights, options or warrants had not been issued and (y) the Conversion Rate shall then again be readjusted to give effect to such distribution, deemed distribution or Trigger Event, as the case may be, as though it were a cash distribution, equal to the per share redemption or purchase price received by a holder or holders of Common Stock with respect to such rights, options or warrants (assuming such holder had retained such rights, options or warrants), made to all holders of Common Stock as of the date of such redemption or purchase, and (2) in the case of such rights, options or warrants that shall have expired or been terminated without exercise by any holders thereof, the Conversion Rate shall be readjusted as if such rights, options and warrants had not been issued.

For purposes of Section 14.06(a), Section 14.06(b) and this Section 14.06(c), if any dividend or distribution to which this Section 14.06(c) is applicable also includes one or both of:

(A)    a dividend or distribution of shares of Common Stock to which Section 14.06(a) is applicable (the “ Clause A Distribution ”); or

(B)    a dividend or distribution of rights, options or warrants to which Section 14.06(b) is applicable (the “ Clause B Distribution ”),

then, in either case, (1) such dividend or distribution, other than the Clause A Distribution and the Clause B Distribution, shall be deemed to be a dividend or distribution to which this Section 14.06(c) is applicable (the “ Clause C Distribution ”) and any Conversion Rate adjustment required by this Section 14.06(c) with respect to such Clause C Distribution shall then be made, and (2) the Clause A Distribution and Clause B Distribution shall be deemed to immediately follow the Clause C Distribution and any Conversion Rate adjustment required by Section 14.06(a) and Section 14.06(b) with respect thereto shall then be made, except that, if determined by the Company (I) the “Record Date” of the Clause A Distribution and the Clause B Distribution shall be deemed to be the Record Date of the Clause C Distribution and (II) any

 

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shares of Common Stock included in the Clause A Distribution or Clause B Distribution shall be deemed not to be “outstanding immediately prior to the close of business on such Record Date or immediately after the open of business on such Effective Date, as applicable” within the meaning of Section 14.06(a) or “outstanding immediately prior to the close of business on such Record Date” within the meaning of Section 14.06(b).

(d)    If any cash dividend or distribution is made to all or substantially all holders of the Common Stock, the Conversion Rate shall be adjusted based on the following formula:

 

CR’ = CR 0 x  

    SP 0     

  
  SP 0 – C   

where,

 

CR 0    =    the Conversion Rate in effect immediately prior to the close of business on the Record Date for such dividend or distribution;
CR’    =    the Conversion Rate in effect immediately after the close of business on the Record Date for such dividend or distribution;
SP 0    =    the Last Reported Sale Price of the Common Stock on the Trading Day immediately preceding the Ex-Dividend Date for such dividend or distribution; and
C    =    the amount in cash per share the Company distributes to all or substantially all holders of the Common Stock.

Any increase pursuant to this Section 14.06(d) shall become effective immediately after the close of business on the Record Date for such dividend or distribution. If such dividend or distribution is not so paid, the Conversion Rate shall be decreased, effective as of the date the Board of Directors determines not to make or pay such dividend or distribution, to be the Conversion Rate that would then be in effect if such dividend or distribution had not been declared. Notwithstanding the foregoing, if “C” (as defined above) is equal to or greater than “SP 0 ” (as defined above), in lieu of the foregoing increase, each Holder of a Note shall receive, for each $1.00 principal amount of Notes, at the same time and upon the same terms as holders of shares of the Common Stock, the amount of cash that such Holder would have received if such Holder owned a number of shares of Common Stock equal to the Conversion Rate on the Ex-Dividend Date for such cash dividend or distribution.

(e)    If the Company or any of its Subsidiaries make a payment in respect of a tender or exchange offer for the Common Stock, to the extent that the cash and value of any other consideration included in the payment per share of the Common Stock exceeds the average of the Last Reported Sale Prices of the Common Stock over the 10 consecutive Trading Day period commencing on, and including, the Trading Day next succeeding the last date on which tenders or exchanges may be made pursuant to such tender or exchange offer, the Conversion Rate shall be increased based on the following formula:

 

CR’ = CR 0 x  

AC + (SP ’xOS’)

  
  OS 0 x SP’   

 

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where,

 

CR 0    =    the Conversion Rate in effect immediately prior to the close of business on the 10th Trading Day immediately following, and including, the Trading Day next succeeding the date such tender or exchange offer expires;
CR’    =    the Conversion Rate in effect immediately after the close of business on the 10th Trading Day immediately following, and including, the Trading Day next succeeding the date such tender or exchange offer expires;
AC    =    the aggregate value of all cash and any other consideration (as determined by the Board of Directors) paid or payable for shares of Common Stock purchased in such tender or exchange offer;
OS 0    =    the number of shares of Common Stock outstanding immediately prior to the date such tender or exchange offer expires (prior to giving effect to the purchase of all shares of Common Stock accepted for purchase or exchange in such tender or exchange offer);
OS’    =    the number of shares of Common Stock outstanding immediately after the date such tender or exchange offer expires (after giving effect to the purchase of all shares of Common Stock accepted for purchase or exchange in such tender or exchange offer); and
SP’    =    the average of the Last Reported Sale Prices of the Common Stock over the 10 consecutive Trading Day period commencing on, and including, the Trading Day next succeeding the date such tender or exchange offer expires.

The increase to the Conversion Rate under this Section 14.06(e) shall occur at the close of business on the 10th Trading Day immediately following, and including, the Trading Day next succeeding the date such tender or exchange offer expires; provided that in respect of any conversion of Notes, if the relevant Conversion Date occurs during the 10 Trading Days immediately following, and including, the Trading Day next succeeding the date any such tender or exchange offer expires, references to “10” or “10th” in the preceding paragraph shall be deemed replaced with such lesser number of Trading Days as have elapsed between the date that such tender or exchange offer expires and the Conversion Date in determining the Conversion Rate.

(f)    Notwithstanding this Section 14.06 or any other provision of this Indenture or the Notes, if a Conversion Rate adjustment becomes effective, and a Holder that has converted its Notes on or after the relevant Ex-Dividend Date and on or prior to the related Record Date would be treated as the record holder of the shares of Common Stock as of the related Conversion Date as described under Section 14.04(h) based on an adjusted Conversion Rate for such Ex-Dividend

 

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Date, then, notwithstanding the Conversion Rate adjustment provisions in this Section 14.06, the Conversion Rate adjustment relating to such Ex-Dividend Date shall not be made for such converting Holder. Instead, such Holder shall be treated as if such Holder were the record owner of the shares of Common Stock on an unadjusted basis and participate in the related dividend, distribution or other event giving rise to such adjustment.

(g)    Except as stated in Section 14.05 and this Section 14.06, the Company shall not adjust the Conversion Rate for the issuance of shares of the Common Stock or any securities convertible into or exchangeable for shares of the Common Stock or the right to purchase shares of the Common Stock or such convertible or exchangeable securities.

(h)    In addition to those adjustments required by Section 14.05 and clauses (a), (b), (c), (d) and (e) of this Section 14.06, and to the extent permitted by applicable law and subject to the applicable rules of any exchange on which any of the Company’s securities are then listed, the Company from time to time may increase the Conversion Rate by any amount for a period of at least 20 Business Days if the Board of Directors determines that such increase would be in the Company’s best interest. In addition, to the extent permitted by applicable law and subject to the applicable rules of any exchange on which any of the Company’s securities are then listed, the Company may (but is not required to) increase the Conversion Rate to avoid or diminish any income tax to holders of Common Stock or rights to purchase Common Stock in connection with a dividend or distribution of shares of Common Stock (or rights to acquire shares of Common Stock) or similar event. Whenever the Conversion Rate is increased pursuant to either of the preceding two sentences, the Company shall deliver to the Holder of each Note a notice of the increase at least 15 days prior to the date the increased Conversion Rate takes effect, and such notice shall state the increased Conversion Rate and the period during which it will be in effect.

(i)    Notwithstanding anything to the contrary in this Article 14, the Conversion Rate shall not be adjusted:

(i)    upon the issuance of any shares of Common Stock pursuant to any present or future plan providing for the reinvestment of dividends or interest payable on the Company’s securities and the investment of additional optional amounts in shares of Common Stock under any plan;

(ii)    upon the issuance of any shares of Common Stock or options or rights to purchase those shares pursuant to any present or future employee, director or consultant benefit plan or program of or assumed by the Company or any of the Company’s Subsidiaries;

(iii)    upon the issuance of any shares of the Common Stock pursuant to any option, warrant, right or exercisable, exchangeable or convertible security not described in clause (ii) of this subsection and outstanding as of the date the Notes were first issued;

(iv)    solely for a change in the par value of the Common Stock; or

 

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(v)    upon the repurchase of shares of Common Stock pursuant to an open-market share repurchase program or other buy-back transaction that is not a tender offer or exchange offer of the nature described under Section 14.06(e).

(j)    All calculations and other determinations under this Article 14 shall be made by the Company and shall be made to the nearest one-one millionth (1/1,000,000th) of a share.

(k)    Whenever the Conversion Rate is adjusted as herein provided, the Company shall promptly file with the Trustee (and the Conversion Agent if not the Trustee) an Officers’ Certificate setting forth the Conversion Rate after such adjustment and setting forth a brief statement of the facts requiring such adjustment. Unless and until a Responsible Officer of the Trustee shall have received such Officers’ Certificate, the Trustee shall not be deemed to have knowledge of any adjustment of the Conversion Rate and may assume without inquiry that the last Conversion Rate of which it has knowledge is still in effect. Promptly after delivery of such certificate, the Company shall prepare a notice of such adjustment of the Conversion Rate setting forth the adjusted Conversion Rate and the date on which each adjustment becomes effective and shall deliver such notice of such adjustment of the Conversion Rate to each Holder. Failure to deliver such notice shall not affect the legality or validity of any such adjustment.

(l)    For purposes of this Section 14.06, the number of shares of Common Stock at any time outstanding shall not include shares of Common Stock held in the treasury of the Company so long as the Company does not pay any dividend or make any distribution on shares of Common Stock held in the treasury of the Company, but shall include shares of Common Stock issuable in respect of scrip certificates issued in lieu of fractions of shares of Common Stock.

Section 14.07 . Adjustments of Prices.   Whenever any provision of this Indenture requires the Company to calculate the Last Reported Sale Prices over a span of multiple days, the Board of Directors shall make appropriate adjustments to each to account for any adjustment to the Conversion Rate that becomes effective, or any event requiring an adjustment to the Conversion Rate where the Record Date, Effective Date or expiration date, as the case may be, of the event occurs, at any time during the period when the Last Reported Sale Prices are to be calculated.

Section 14.08 .   Shares to Be Fully Paid.  The Company shall provide, free from preemptive rights, out of its authorized but unissued shares or shares held in treasury, sufficient shares of Common Stock to provide for conversion of the Notes from time to time as such Notes are presented for conversion (assuming that at the time of computation of such number of shares, all such Notes would be converted by a single Holder).

Section 14.09 .   Effect of Recapitalizations, Reclassifications and Changes of the Common Stock.

(a)    In the case of:

(i)    any recapitalization, reclassification or change of the Common Stock (other than changes resulting from a subdivision or combination),

 

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(ii)    any consolidation, merger, combination or similar transaction involving the Company,

(iii)    any sale, lease or other transfer to a third party of the consolidated assets of the Company and the Company’s Subsidiaries substantially as an entirety or

(iv)    any statutory share exchange,

in each case, as a result of which the Common Stock would be converted into, or exchanged for, stock, other securities, other property or assets (including cash or any combination thereof) (any such event, a “ Merger Event ”), then, at and after the effective time of such Merger Event, the right to convert each $1.00 principal amount of Notes shall be changed into a right to convert such principal amount of Notes into the kind and amount of shares of stock, other securities or other property or assets (including cash or any combination thereof) that a holder of a number of shares of Common Stock equal to the Conversion Rate immediately prior to such Merger Event would have owned or been entitled to receive (the “ Reference Property ,” with each “ unit of Reference Property ” meaning the kind and amount of Reference Property that a holder of one share of Common Stock is entitled to receive) upon such Merger Event and, prior to or at the effective time of such Merger Event, the Company or the successor or purchasing Person, as the case may be, shall execute with the Trustee a supplemental indenture permitted under Section 10.01(h) providing for such change in the right to convert each $1.00 principal amount of Notes; provided , however , that at and after the effective time of the Merger Event the number of shares of Common Stock otherwise deliverable upon conversion of the Notes in accordance with Section 14.04 shall instead be deliverable in the amount and type of Reference Property that a holder of that number of shares of Common Stock would have received in such Merger Event.

If the Merger Event causes the Common Stock to be converted into, or exchanged for, the right to receive more than a single type of consideration (determined based in part upon any form of stockholder election), then (i) the Reference Property into which the Notes will be convertible shall be deemed to be (x) the weighted average of the types and amounts of consideration received by the holders of Common Stock that affirmatively make such an election or (y) if no holders of Common Stock affirmatively make such an election, the types and amounts of consideration actually received by the holders of Common Stock, and (ii) the unit of Reference Property for purposes of the immediately preceding paragraph shall refer to the consideration referred to in clause (i) attributable to one share of Common Stock. The Company shall notify Holders, the Trustee and the Conversion Agent (if other than the Trustee) of such weighted average as soon as practicable after such determination is made.

Such supplemental indenture described in the second immediately preceding paragraph shall provide for anti-dilution and other adjustments that shall be as nearly equivalent as is possible to the adjustments provided for in this Article 14. If, in the case of any Merger Event, the Reference Property includes shares of stock, securities or other property or assets (including cash or any combination thereof) of a Person other than the successor or purchasing corporation, as the case may be, in such Merger Event, then such supplemental indenture shall also be executed by such other Person and shall contain such additional provisions to protect the interests of the Holders of the Notes as the Board of Directors shall reasonably consider necessary by reason of the foregoing, including the provisions providing for the purchase rights set forth in Article 15.

 

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(b)    When the Company executes a supplemental indenture pursuant to subsection (a) of this Section 14.09, the Company shall promptly file with the Trustee an Officers’ Certificate briefly stating the reasons therefor, the kind or amount of cash, securities or property or asset that will comprise a unit of Reference Property after any such Merger Event, any adjustment to be made with respect thereto and that all conditions precedent have been complied with, and shall promptly deliver notice thereof to all Holders. The Company shall cause notice of the execution of such supplemental indenture to be delivered to each Holder within 20 days after execution thereof. Failure to deliver such notice shall not affect the legality or validity of such supplemental indenture.

(c)    The Company shall not become a party to any Merger Event unless its terms are consistent with this Section 14.09. None of the foregoing provisions shall affect the right of a holder of Notes to convert, or have converted, its Notes into shares of Common Stock as set forth in Section 14.01, Section 14.02, Section 14.03 and Section 14.04 prior to the effective date of such Merger Event.

(d)    The above provisions of this Section shall similarly apply to successive Merger Events.

Section 14.10 .   Certain Covenants.  (a) The Company covenants that all shares of Common Stock issued upon conversion of Notes will be fully paid and non-assessable by the Company and free from all taxes, liens and charges with respect to the issue thereof.

(b)    The Company covenants that, if any shares of Common Stock to be provided for the purpose of conversion of Notes hereunder require registration with or approval of any governmental authority under any federal or state law before such shares of Common Stock may be validly issued upon conversion, the Company will, to the extent then permitted by the rules and interpretations of the Commission, secure such registration or approval, as the case may be.

(c)    The Company further covenants that if at any time the Common Stock shall be listed on any national securities exchange or automated quotation system the Company will list and keep listed, so long as the Common Stock shall be so listed on such exchange or automated quotation system, any Common Stock issuable upon conversion of the Notes.

Section 14.11 .   Responsibility of Trustee.  The Trustee and any other Conversion Agent shall not at any time be under any duty or responsibility to any Holder to determine the Conversion Rate (or any adjustment thereto) or whether any facts exist that may constitute a Mandatory Conversion Event or that may require any adjustment (including any increase) of the Conversion Rate, or with respect to the nature or extent or calculation of any such adjustment when made, or with respect to the method employed, or herein or in any supplemental indenture provided to be employed, in making the same. The Trustee and any other Conversion Agent shall not be accountable with respect to the validity or value (or the kind or amount) of any shares of Common Stock, or of any securities, property or cash that may at any time be issued or

 

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delivered upon the conversion of any Note; and the Trustee and any other Conversion Agent make no representations with respect thereto. Neither the Trustee nor any Conversion Agent shall be responsible for any failure of the Company to issue, transfer or deliver any shares of Common Stock or stock certificates or other securities or property or cash upon the surrender of any Note for the purpose of conversion or to comply with any of the duties, responsibilities or covenants of the Company contained in this Article. Without limiting the generality of the foregoing, neither the Trustee nor any Conversion Agent shall be under any responsibility to determine the correctness of any provisions contained in any supplemental indenture entered into pursuant to Section 14.09 relating either to the kind or amount of shares of stock or securities or property (including cash) receivable by Holders upon the conversion of their Notes after any event referred to in such Section 14.09 or to any adjustment to be made with respect thereto, but, subject to the provisions of Section 7.01, may accept (without any independent investigation) as conclusive evidence of the correctness of any such provisions, and shall be protected in relying upon, the Officers’ Certificate (which the Company shall be obligated to file with the Trustee prior to the execution of any such supplemental indenture) with respect thereto.

Section 14.12 .   Notice to Holders Prior to Certain Actions.  In case of any:

(a)    action by the Company or one of its Subsidiaries that would require an adjustment in the Conversion Rate pursuant to Section 14.05, Section 14.06 or Section 14.13;

(b)    Merger Event; or

(c)    voluntary or involuntary dissolution, liquidation or winding-up of the Company or any of its Subsidiaries;

then, in each case (unless notice of such event is otherwise required pursuant to another provision of this Indenture), the Company shall cause to be filed with the Trustee and the Conversion Agent (if other than the Trustee) and to be delivered to each Holder, as promptly as possible but in any event at least 20 days prior to the applicable date hereinafter specified, a notice stating (i) the date on which a record is to be taken for the purpose of such action by the Company or one of its Subsidiaries or, if a record is not to be taken, the date as of which the holders of Common Stock of record are to be determined for the purposes of such action by the Company or one of its Subsidiaries, or (ii) the date on which such Merger Event, dissolution, liquidation or winding-up is expected to become effective or occur, and the date as of which it is expected that holders of Common Stock of record shall be entitled to exchange their Common Stock for securities or other property deliverable upon such Merger Event, dissolution, liquidation or winding-up. Failure to give such notice, or any defect therein, shall not affect the legality or validity of such action by the Company or one of its Subsidiaries, Merger Event, dissolution, liquidation or winding-up.

Section 14.13 .   Stockholder Rights Plans.  If the Company has a stockholder rights plan in effect upon conversion of the Notes, each share of Common Stock issued upon such conversion shall be entitled to receive the appropriate number of rights, if any, and the certificates representing the Common Stock issued upon such conversion shall bear such legends, if any, in each case as may be provided by the terms of any such stockholder rights plan, as the

 

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same may be amended from time to time. However, if, prior to any conversion of Notes, the rights have separated from the shares of Common Stock in accordance with the provisions of the applicable stockholder rights plan, the Conversion Rate shall be adjusted at the time of separation as if the Company distributed to all or substantially all holders of the Common Stock Distributed Property as provided in Section 14.06(c), subject to readjustment in the event of the expiration, termination or redemption of such rights.

ARTICLE 15

C OLLATERAL AND S ECURITY

Upon securing the Notes in accordance with Section 4.09, the following provisions shall apply:

Section 15.01 .   Security Documents.   (a) The Company and each of the Guarantors consent and agree to be bound by the terms of the Security Documents to which they are parties, as the same may be in effect from time to time, and agree to perform their obligations thereunder in accordance therewith. The Company and the Guarantors hereby agree that the Collateral Trustee shall hold the Collateral on behalf of and for the benefit of itself, the Trustee and all of the Holders. Furthermore, it is further understood and agreed that the Collateral Trustee is holding the Collateral Trust Account solely for purposes of establishing the Trust Estate (as defined in the Collateral Trust Agreement) and is not holding such Collateral Trust Account as Collateral on behalf of and for the benefit of all of the Holders and as such has no duty or obligations to the Holders with respect to such Collateral Trust Account.

(b)    Each Holder of Notes, by its acceptance thereof and of the Note Guarantees, consents and agrees to the terms of the Intercreditor and Subordination Agreement and the Security Documents (including, without limitation, the provisions providing for foreclosure and release of Collateral and amendments to the Security Documents) as the same may be in effect or may be amended from time to time in accordance with their terms and authorizes and appoints (and authorizes and directs the Trustee to appoint) Wilmington Trust, National Association, as the Collateral Trustee. The Trustee hereby authorizes and appoints Wilmington Trust, National Association, as Collateral Trustee, and each Holder of Notes and the Trustee direct (and each Holder authorizes and directs the Trustee to direct) the Collateral Trustee to enter into the Security Documents (other than the Collateral Trust Agreement, after the occurrence of a Springing Event as provided in Section 4.09), enter into the amendment of the Collateral Trust Agreement after the occurrence of Springing Event as provided in Section 4.09 and to perform its obligations and exercise its rights thereunder in accordance therewith, subject to the terms and conditions thereof. The Trustee, the Collateral Trustee and each Holder of Notes, by accepting the Notes and the Note Guarantees of the Guarantors, acknowledges that, as more fully set forth in the Security Documents, the Collateral as now or hereafter constituted shall be held, subject to the Intercreditor and Subordination Agreement, for the benefit of all the Holders, the Collateral Trustee and the Trustee, and the Lien of this Indenture and the Security Documents is subject to and qualified and limited in all respects by the Intercreditor and Subordination Agreement, the Security Documents and actions that may be taken thereunder.

 

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Section 15.02 .   Intercreditor and Subordination Agreement.   This Article 15 and the provisions of each other Security Document are subject to the terms, conditions and benefits set forth in the Intercreditor and Subordination Agreement. The Company and each Guarantor consents to, and agrees to be bound by, the terms of the Intercreditor and Subordination Agreement, as the same may be in effect from time to time, and to perform its obligations thereunder in accordance with the terms thereof. Each Holder of Notes, by its acceptance of the Notes (a) consents to the subordination terms provided for in the Intercreditor and Subordination Agreement, (b) agrees that it will be bound by, and will take no actions contrary to, the provisions of the Intercreditor and Subordination Agreement and (c) authorizes and instructs the Collateral Trustee and the Trustee (and the Trustee to direct the Collateral Trustee, if applicable) on behalf of each Holder to enter into the Intercreditor and Subordination Agreement on the date hereof as Collateral Trustee on behalf of such Holders. The foregoing provisions are intended as an inducement to the Priority Lien Secured Parties under the Priority Lien Documents to extend credit to the Company and certain of its Subsidiaries, and such Priority Lien Secured Parties are intended third party beneficiaries of such provisions and the provisions of the Intercreditor and Subordination Agreement.

Section 15.03 .   Release of Liens in Respect of Notes.   The Collateral Trustee’s Liens upon the Collateral will no longer secure the obligations of the Company under the Notes and of each Guarantor under any Note Guarantee, and the right of the Holders to the benefits and proceeds of the Collateral Trustee’s Liens on the Collateral will terminate and be discharged:

(a)    upon satisfaction and discharge of this Indenture in accordance with the terms hereof;

(b)    upon payment in full and discharge of all Notes outstanding under this Indenture and all other obligations of the Company under the Notes and of each Guarantor under any Note Guarantee, due and payable under this Indenture and the other Security Documents at the time the Notes are paid in full and discharged (other than contingent indemnity obligations for which no claim has been made);

(c)    as to any Collateral of the Company or a Guarantor that is sold, transferred or otherwise disposed of by the Company or any Guarantor to a Person that is not (either before or after such sale, transfer or disposition) the Company or any of its Subsidiaries in a transaction or other circumstance that complies with the terms of the Indenture and is permitted by all of the other Security Documents, at the time of such sale, transfer or other disposition or to the extent of the interest sold, transferred or otherwise disposed of;

(d)    in whole or in part, with the consent of the Holders of the requisite aggregate principal amount of Notes in accordance with Article 10;

(e)    with respect to the assets of any Guarantor, at the time that such Guarantor is released from its Note Guarantee in accordance with Section 13.12; or

(f)    if and to the extent required by the terms of the Intercreditor and Subordination Agreement.

 

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Upon delivery to the Trustee and Collateral Trustee of an Officers’ Certificate and Opinion of Counsel stating that all conditions precedent set forth in the Indenture and the Security Documents to release the Collateral Trustee’s Liens have been satisfied, the Trustee and Collateral Trustee, if applicable, shall execute and deliver such instruments reasonably requested by the Company to effect such release.

Section 15.04 .   Concerning the Trustee and Collateral Trustee.   (a) None of the Trustee, Collateral Trustee and any of their officers, directors, employees, attorneys or agents shall be responsible or liable (i) for the legality, enforceability, effectiveness or sufficiency of the Security Documents, for the creation, perfection, priority, sufficiency, maintenance, renewal or protection of any Lien, or for any defect or deficiency as to any such matters, or (ii) for any failure to demand, collect, foreclose or realize upon or otherwise enforce any of the Liens or Security Documents or any delay in doing so, or (iii) for the validity or sufficiency of the Collateral or any agreement or assignment contained therein, for the validity of the title, for insuring the Collateral or for the payment of taxes, charges, assessments or Liens upon the Collateral or otherwise as to the maintenance of the Collateral.

(b)    The rights, privileges, protections, immunities and benefits given to the Trustee under this Indenture, including, without limitation, its right to be indemnified and compensated and all other rights, privileges, protections, immunities and benefits set forth in this Indenture are extended to the Trustee and Collateral Trustee when each is acting under the Collateral Trust Agreement and, if applicable, the other Security Documents.

(c)    Neither the Trustee nor Collateral Trustee will be responsible for filing any financing or continuation statements or recording any documents or instruments at any time or times or otherwise perfecting or maintaining the perfection of any Liens on the Collateral.

(d)    Whenever an action under the Collateral Trust Agreement requires an Act of Parity Lien Debtholders (as defined in the Collateral Trust Agreement), the Trustee, in its capacity as a Parity Lien Representative (as defined in the Collateral Trust Agreement), shall seek the direction of Holders of the Notes (if Holder consent or direction is required under this Indenture). Subject to the next succeeding sentence, the Trustee shall deliver an affirmative vote in such Act of Parity Lien Debtholders in the entire aggregate outstanding principal amount of the Notes, if the minimum consent or directions of Holders for such action required under this Indenture are met. If the requested action requires the consent or direction of each Holder of the Notes affected thereby, then the Trustee shall not deliver an affirmative vote in such Act of Parity Lien Debtholders unless it receives the consent of each Holder.

Section 15.05 .   Appointment of Collateral Trustee.   The Company and each of the Holders by acceptance of the Notes hereby designates and appoints the Collateral Trustee as its agent under this Indenture, the Collateral Trust Agreement and the Intercreditor and Subordination Agreement (and the Security Documents (other than the Collateral Trust Agreement) upon the occurrence of a Springing Event), and the Company and each of the Holders by acceptance of the Notes hereby irrevocably authorizes the Collateral Trustee to take such action on its behalf under the provisions of this Indenture, the Security Documents and the Intercreditor and Subordination Agreement, and to exercise such powers and perform such duties

 

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as are expressly delegated to the Collateral Trustee by the terms of this Indenture, the Security Documents and the Intercreditor and Subordination Agreement, and consents and agrees to the terms of the Intercreditor and Subordination Agreement and each Security Document, as the same may be in effect or may be amended, restated, supplemented or otherwise modified from time to time in accordance with their respective terms. The Collateral Trust Agreement shall provide that the Collateral Trustee shall act as such on the express conditions contained in this Section 15.05. Each Holder agrees that any action taken by the Collateral Trustee in accordance with the provisions of this Indenture, the Intercreditor and Subordination Agreement and the Security Documents, and the exercise by the Collateral Trustee of any rights or remedies set forth herein and therein, shall be authorized and binding upon all Holders. Notwithstanding any provision to the contrary contained elsewhere in this Indenture, the Security Documents and the Intercreditor and Subordination Agreement, the duties of the Collateral Trustee shall be ministerial and administrative in nature, and the Collateral Trustee shall not have any duties or responsibilities, except those expressly set forth herein and in the Security Documents and the Intercreditor and Subordination Agreement to which the Collateral Trustee is a party, nor shall the Collateral Trustee have or be deemed to have any trust or other fiduciary relationship with the Trustee or any Holder, and no implied covenants, functions, responsibilities, duties, obligations or liabilities shall be read into this Indenture, the Security Documents and the Intercreditor and Subordination Agreement or otherwise exist against the Collateral Trustee. Without limiting the generality of the foregoing sentence, the use of the term “trustee” or “Trustee” in this Indenture with reference to the Collateral Trustee is not intended to connote any fiduciary or other implied (or express) obligations arising under agency doctrine of any applicable law. Instead, such term is used merely as a matter of market custom, and is intended to create or reflect only an administrative relationship between independent contracting parties.

ARTICLE 16

O PTIONAL R EDEMPTION

Section 16.01.  Optional Redemption . Prior to the Maturity Date, the Company may redeem (an “ Optional Redemption ”) for cash all or part of the Notes, at the Redemption Price.

Section 16.02.  Notice of Optional Redemption; Selection of Notes . (a) In case the Company exercises its Optional Redemption right to redeem all or, as the case may be, any part of the Notes pursuant to Section 16.01, it shall fix a date for redemption (each, a “ Redemption Date ”) and it or, at its written request received by the Trustee not less than 55 calendar days prior to the Redemption Date (or such shorter period of time as may be acceptable to the Trustee), the Trustee, in the name of and at the expense of the Company, shall deliver or cause to be delivered a notice of such Optional Redemption (a “ Redemption Notice ”) not less than 45 nor more than 60 calendar days prior to the Redemption Date to each Holder of Notes so to be redeemed as a whole or in part; provided , however , that, if the Company shall give such notice, it shall also give written notice of the Redemption Date to the Trustee. The Redemption Date must be a Business Day.

 

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(b)    The Redemption Notice, if delivered in the manner herein provided, shall be conclusively presumed to have been duly given, whether or not the Holder receives such notice. In any case, failure to give such Redemption Notice or any defect in the Redemption Notice to the Holder of any Note designated for redemption as a whole or in part shall not affect the validity of the proceedings for the redemption of any other Note.

(c)    Each Redemption Notice shall specify:

(i)    the Redemption Date;

(ii)    the Redemption Price;

(iii)    that on the Redemption Date, the Redemption Price will become due and payable upon each Note to be redeemed;

(iv)    the place or places where such Notes are to be surrendered for payment of the Redemption Price;

(v)    that Holders may surrender their Notes for conversion at any time prior to the close of business on the Scheduled Trading Day immediately preceding the Redemption Date;

(vi)    the procedures a converting Holder must follow to convert its Notes;

(vii)    the Conversion Rate;

(viii)    the CUSIP, ISIN or other similar numbers, if any, assigned to such Notes; and

(ix)    in case any Note is to be redeemed in part only, the portion of the principal amount (including the applicable Make-Whole Amount) thereof to be redeemed, and on and after the Redemption Date, upon surrender of such Note, a new Note in principal amount equal to the unredeemed portion (including the applicable Make-Whole Amount) thereof shall be issued.

A Redemption Notice shall be irrevocable.

(d)    If fewer than all of the outstanding Notes are to be redeemed, the Trustee shall select the Notes or portions thereof of a Global Note or the Notes in certificated form to be redeemed (in principal amounts of $1.00 or multiples thereof) in compliance with the requirements of the principal national securities exchange, if any, on which such Notes are listed and if such listing is known to the Trustee, or if such Notes are not so listed, by lot, on a pro rata basis or by another method the Trustee considers to be fair and appropriate and in the case of Global Notes, in accordance with the applicable procedures of the Depositary. If any Note selected for partial redemption is submitted for conversion in part after such selection, the portion of the Note submitted for conversion shall be deemed (so far as may be possible) to be the portion selected for redemption. The Trustee shall make the selection from outstanding Notes not previously called for redemption. The Trustee may select for redemption portions of the principal of Notes that have denominations larger than $1.00. Notes and portions of them the

 

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Trustee selects shall be in amounts of $1.00 or a whole multiple of $1.00 in excess thereof. Provisions of this Indenture that apply to Notes called for redemption also apply to portions of Notes called for redemption. The Trustee shall notify the Company promptly of the Notes or portions of Notes to be redeemed.

Section 16.03.  Payment of Notes Called for Redemption . (a) If any Redemption Notice has been given in respect of the Notes in accordance with Section 16.02, the Notes shall become due and payable on the Redemption Date at the place or places stated in the Redemption Notice and at the applicable Redemption Price. On presentation and surrender of the Notes at the place or places stated in the Redemption Notice, the Notes shall be paid and redeemed by the Company at the applicable Redemption Price.

(b)    Prior to the open of business on the Redemption Date, the Company shall deposit with the Paying Agent or, if the Company or a Subsidiary of the Company is acting as the Paying Agent, shall segregate and hold in trust as provided in Section 7.05 an amount of cash (in immediately available funds if deposited on the Redemption Date), sufficient to pay the Redemption Price of all of the Notes to be redeemed on such Redemption Date. Subject to receipt of funds by the Paying Agent, payment for the Notes to be redeemed shall be made on the Redemption Date for such Notes. The Paying Agent shall, promptly after such payment and upon written demand by the Company, return to the Company any funds in excess of the Redemption Price.

Section 16.04.  Restrictions on Redemption . The Company may not redeem any Notes on any date if the principal amount of the Notes has been accelerated in accordance with the terms of this Indenture, and such acceleration has not been rescinded, on or prior to the Redemption Date (except in the case of an acceleration resulting from a Default by the Company in the payment of the Redemption Price with respect to such Notes).

ARTICLE 17

M ISCELLANEOUS P ROVISIONS

Section 17.01 .   Indenture Subject to Trust Indenture Act.  This Indenture is subject to the provisions of the Trust Indenture Act that are required to be part of this Indenture, and shall, to the extent applicable, be governed by such provisions.

Section 17.02 .   Provisions Binding on Successors.  All the covenants, stipulations, promises and agreements of each of the Company and the Guarantors contained in this Indenture shall bind its successors and assigns whether so expressed or not.

Section 17.03 .   Official Acts by Successor Corporation.  Any act or proceeding by any provision of this Indenture authorized or required to be done or performed by any board, committee or Officer of the Company shall and may be done and performed with like force and effect by the like board, committee or officer of any corporation or other entity that shall at the time be the lawful sole successor of the Company.

 

74


Section 17.04 .   Addresses for Notices, Etc.  Any notice or demand that by any provision of this Indenture is required or permitted to be given or served by the Trustee or by the Holders on the Company or any Guarantor shall be deemed to have been sufficiently given or made, for all purposes if given or served by being deposited postage prepaid by registered or certified mail in a post office letter box addressed (until another address is filed by the Company with the Trustee) to SandRidge Energy, Inc., 123 Robert S. Kerr Avenue, Oklahoma City, Oklahoma 73102, Attention: General Counsel or sent electronically in PDF format to the Company’s General Counsel at pwarman@sandridgeenergy.com. Any notice, direction, request or demand hereunder to or upon the Trustee shall be deemed to have been sufficiently given or made, for all purposes, if given or served by being deposited postage prepaid by registered or certified mail in a post office letter box addressed to the Corporate Trust Office or sent electronically in PDF format.

The Trustee, by notice to the Company, may designate additional or different addresses for subsequent notices or communications.

Any notice or communication delivered or to be delivered to a Holder of Physical Notes shall be mailed to it by first class mail, postage prepaid, at its address as it appears on the Note Register and shall be sufficiently given to it if so mailed within the time prescribed. Any notice or communication delivered or to be delivered to a Holder of Global Notes shall be delivered in accordance with the applicable procedures of the Depositary and shall be sufficiently given to it if so delivered within the time prescribed. Any notice or communication shall also be mailed to any Person described in Trust Indenture Act Section 313(c), to the extent required by the Trust Indenture Act.

Failure to mail or deliver a notice or communication to a Holder or any defect in it shall not affect its sufficiency with respect to other Holders. If a notice or communication is mailed or delivered, as the case may be, in the manner provided above, it is duly given, whether or not the addressee receives it.

Section 17.05 .   Communication by Holders with Other Holders.  Holders may communicate pursuant to Trust Indenture Act Section 312(b) with other Holders with respect to their rights under this Indenture or the Notes. The Company, the Trustee, the Note Registrar, and anyone else shall have the protection of Trust Indenture Act Section 312(c).

Section 17.06 .   Governing Law; Jurisdiction.  THIS INDENTURE AND EACH NOTE, AND ANY CLAIM, CONTROVERSY OR DISPUTE ARISING UNDER OR RELATED TO THIS INDENTURE AND EACH NOTE, SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK (WITHOUT REGARD TO THE CONFLICTS OF LAWS PROVISIONS THEREOF).

Each of the Company and the Guarantors irrevocably consents and agrees, for the benefit of the Holders from time to time of the Notes and the Trustee, that any legal action, suit or proceeding against it with respect to obligations, liabilities or any other matter arising out of or in connection with this Indenture, any Note Guarantee or the Notes may be brought in the courts of the State of New York or the courts of the United States located in the Borough of Manhattan,

 

75


New York City, New York and, until amounts due and to become due in respect of the Notes have been paid, hereby irrevocably consents and submits to the non-exclusive jurisdiction of each such court in personam , generally and unconditionally with respect to any action, suit or proceeding for itself in respect of its properties, assets and revenues.

Each of the Company and the Guarantors irrevocably and unconditionally waives, to the fullest extent permitted by law, any objection which it may now or hereafter have to the laying of venue of any of the aforesaid actions, suits or proceedings arising out of or in connection with this Indenture, any Note Guarantee or the Notes brought in the courts of the State of New York or the courts of the United States located in the Borough of Manhattan, New York City, New York and hereby further irrevocably and unconditionally waives and agrees not to plead or claim in any such court that any such action, suit or proceeding brought in any such court has been brought in an inconvenient forum.

Section 17.07 .   Evidence of Compliance with Conditions Precedent; Certificates and Opinions of Counsel to Trustee.  Upon any application or demand by the Company to the Trustee to take any action under any of the provisions of this Indenture, the Company shall, if requested by the Trustee, furnish to the Trustee an Officers’ Certificate or Opinion of Counsel or both, as applicable, stating that such action is permitted by the terms of this Indenture.

Each Officers’ Certificate provided for, by or on behalf of the Company in this Indenture and delivered to the Trustee with respect to compliance with this Indenture (other than the Officers’ Certificates provided for in Section 4.13 pursuant to Trust Indenture Act Section 314(a)(4)) shall include (a) a statement that the person signing such certificate is familiar with the requested action and this Indenture; (b) a brief statement as to the nature and scope of the examination or investigation upon which the statement contained in such certificate is based; (c) a statement that, in the judgment of such person, he or she has made such examination or investigation as is necessary to enable him or her to express an informed judgment as to whether or not such action is permitted by this Indenture; and (d) a statement as to whether or not, in the judgment of such person, such action is permitted by this Indenture.

Notwithstanding anything to the contrary in this Section 17.07, if any provision in this Indenture specifically provides that the Trustee shall or may receive an Opinion of Counsel in connection with any action to be taken by the Trustee or the Company hereunder, the Trustee shall be entitled to such Opinion of Counsel.

Section 17.08 .   Legal Holidays.  In any case where any Conversion Date or Maturity Date is not a Business Day, then any action to be taken on such date need not be taken on such date, but may be taken on the next succeeding Business Day with the same force and effect as if taken on such date.

Section 17.09 .   Benefits of Indenture.  Nothing in this Indenture or in the Notes, expressed or implied, shall give to any Person, other than the Holders, the parties hereto, any Paying Agent, any Conversion Agent, any authenticating agent, any Note Registrar and their successors hereunder, any benefit or any legal or equitable right, remedy or claim under this Indenture.

 

76


Section 17.10 .   Table of Contents, Headings, Etc.  The table of contents and the titles and headings of the articles and sections of this Indenture have been inserted for convenience of reference only, are not to be considered a part hereof, and shall in no way modify or restrict any of the terms or provisions hereof.

Section 17.11 .   Authenticating Agent.  The Trustee may appoint an authenticating agent that shall be authorized to act on its behalf and subject to its direction in the authentication and delivery of Notes in connection with the original issuance thereof and transfers and exchanges of Notes hereunder, including under Section 2.05, Section 2.06, Section 2.07, Section 2.08, Section 10.04 and Section 16.02 as fully to all intents and purposes as though the authenticating agent had been expressly authorized by this Indenture and those Sections to authenticate and deliver Notes. For all purposes of this Indenture, the authentication and delivery of Notes by the authenticating agent shall be deemed to be authentication and delivery of such Notes “by the Trustee” and a certificate of authentication executed on behalf of the Trustee by an authenticating agent shall be deemed to satisfy any requirement hereunder or in the Notes for the Trustee’s certificate of authentication. Such authenticating agent shall at all times be a Person eligible to serve as trustee hereunder pursuant to Section 7.09.

Any corporation or other entity into which any authenticating agent may be merged or converted or with which it may be consolidated, or any corporation or other entity resulting from any merger, consolidation or conversion to which any authenticating agent shall be a party, or any corporation or other entity succeeding to the corporate trust business of any authenticating agent, shall be the successor of the authenticating agent hereunder, if such successor corporation or other entity is otherwise eligible under this Section 17.11, without the execution or filing of any paper or any further act on the part of the parties hereto or the authenticating agent or such successor corporation or other entity.

Any authenticating agent may at any time resign by giving written notice of resignation to the Trustee and to the Company. The Trustee may at any time terminate the agency of any authenticating agent by giving written notice of termination to such authenticating agent and to the Company. Upon receiving such a notice of resignation or upon such a termination, or in case at any time any authenticating agent shall cease to be eligible under this Section, the Trustee may appoint a successor authenticating agent (which may be the Trustee), shall give written notice of such appointment to the Company and shall deliver notice of such appointment to all Holders.

The Company agrees to pay to the authenticating agent from time to time reasonable compensation for its services although the Company may terminate the authenticating agent, if it determines such agent’s fees to be unreasonable.

The provisions of Section 7.02, Section 7.03, Section 7.04, Section 8.03 and this Section 17.11 shall be applicable to any authenticating agent.

 

77


If an authenticating agent is appointed pursuant to this Section 17.11, the Notes may have endorsed thereon, in addition to the Trustee’s certificate of authentication, an alternative certificate of authentication in the following form:

 

                                                                                   ,

as Authenticating Agent, certifies that this is one of the Notes described

in the within-named Indenture.

 

By:  

 

Authorized Officer

Section 17.12 .   Execution in Counterparts.  This Indenture may be executed in any number of counterparts, each of which shall be an original, but such counterparts shall together constitute but one and the same instrument. The exchange of copies of this Indenture and of signature pages by facsimile or PDF transmission shall constitute effective execution and delivery of this Indenture as to the parties hereto and may be used in lieu of the original Indenture for all purposes. Signatures of the parties hereto transmitted by facsimile or PDF shall be deemed to be their original signatures for all purposes.

Section 17.13 .   Severability.  In the event any provision of this Indenture or in the Notes shall be invalid, illegal or unenforceable, then (to the extent permitted by law) the validity, legality or enforceability of the remaining provisions shall not in any way be affected or impaired.

Section 17.14 .   Waiver of Jury Trial.  EACH OF THE COMPANY, THE GUARANTORS AND THE TRUSTEE HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS INDENTURE, ANY NOTE GUARANTEE, THE NOTES OR THE TRANSACTIONS CONTEMPLATED HEREBY.

Section 17.15 .   Force Majeure.  In no event shall the Trustee be responsible or liable for any failure or delay in the performance of its obligations hereunder arising out of or caused by, directly or indirectly, forces beyond its 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 and hardware) services; it being understood that the Trustee shall use reasonable efforts that are consistent with accepted practices in the banking industry to resume performance as soon as practicable under the circumstances.

Section 17.16 .   Calculations . Except as otherwise provided herein, the Company shall be responsible for making all calculations called for under the Notes. These calculations include, but are not limited to, determinations of the Last Reported Sale Prices of the Common Stock, any Make-Whole Amount and the Conversion Rate of the Notes. The Company shall make all these calculations in good faith and, absent manifest error, the Company’s calculations shall be final and binding on Holders of Notes. The Company shall provide a schedule of its calculations to each of the Trustee and the Conversion Agent, and each of the Trustee and Conversion Agent is entitled to rely conclusively upon the accuracy of the Company’s calculations without independent verification. The Trustee will forward the Company’s calculations to any Holder of Notes upon the request of that Holder at the sole cost and expense of the Company.

 

78


Section 17.17.  USA PATRIOT Act.   The parties hereto acknowledge that in accordance with Section 326 of the USA PATRIOT Act, the Trustee, like all financial institutions and in order to help fight the funding of terrorism and money laundering, is required to obtain, verify, and record information that identifies each person or legal entity that establishes a relationship or opens an account with the Trustee. The parties to this Indenture agree that they will provide the Trustee with such information as it may request in order for the Trustee to satisfy the requirements of the USA PATRIOT Act.

[ Remainder of page intentionally left blank ]

 

79


IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly executed as of the date first written above.

 

SANDRIDGE ENERGY, INC., as Issuer
By:  

/s/ Julian Bott

Name:   Julian Bott
Title:   Executive Vice President and
  Chief Financial Officer
INTEGRA ENERGY, L. L.C., as Guarantor
By:  

/s/ Julian Bott

Name:   Julian Bott
Title:   Executive Vice President and
  Chief Financial Officer
LARIAT SERVICES, INC., as Guarantor
By:  

/s/ Julian Bott

Name:   Julian Bott
Title:   Executive Vice President and
  Chief Financial Officer
SANDRIDGE EXPLORATION AND
  PRODUCTION, LLC, as Guarantor
By:  

/s/ Julian Bott

Name:   Julian Bott
Title:   Executive Vice President and
  Chief Financial Officer

 

[Signature Page to Indenture]


SANDRIDGE HOLDINGS, INC., as Guarantor
By:  

/s/ Julian Bott

Name:   Julian Bott
Title:   Executive Vice President and
  Chief Financial Officer
SANDRIDGE MIDSTREAM, INC., as Guarantor
By:  

/s/ Julian Bott

Name:   Julian Bott
Title:   Executive Vice President and
  Chief Financial Officer
SANDRIDGE OPERATING
  COMPANY, as Guarantor
By:  

/s/ Julian Bott

Name:   Julian Bott
Title:   Executive Vice President and
  Chief Financial Officer

 

[Signature Page to Indenture]


WILMINGTON TRUST, NATIONAL
  ASSOCIATION, as Trustee
By:  

/s/ Shawn Goffinet

Name:   Shawn Goffinet
Title:   Assistant Vice President

 

[Signature Page to Indenture]


EXHIBIT A

[FORM OF FACE OF NOTE]

[INCLUDE FOLLOWING LEGEND IF A GLOBAL NOTE]

[UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (“DTC”), TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT HEREUNDER IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.]

[INCLUDE FOLLOWING LEGEND IN ALL SECURITIES]

[THE OBLIGATIONS EVIDENCED HEREBY ARE SUBORDINATE IN THE MANNER AND TO THE EXTENT SET FORTH IN THAT CERTAIN INTERCREDITOR AND SUBORDINATION AGREEMENT DATED AS OF OCTOBER 4, 2016, BETWEEN ROYAL BANK OF CANADA, AS THE ORIGINAL PRIORITY LIEN AGENT, AND WILMINGTON TRUST, NATIONAL ASSOCIATION, AS THE ORIGINAL SUBORDINATED NOTES TRUSTEE AND ACKNOWLEDGED AND AGREED BY SANDRIDGE ENERGY, INC. AND CERTAIN OF ITS SUBSIDIARIES, AND EACH HOLDER OF THIS SECURITY, BY ITS ACCEPTANCE HEREOF, SHALL BE BOUND BY THE PROVISIONS OF THE INTERCREDITOR AND SUBORDINATION AGREEMENT, INCLUDING WITHOUT LIMITATION, THE SUBORDINATION TERMS THEREIN.]

 

A-1


SANDRIDGE ENERGY, INC.

0.00% Convertible Senior Subordinated Note due 2020

 

No. [        ]    [Initially] 1 $[        ]

CUSIP No. [80007P BC2]

SANDRIDGE ENERGY, INC., a corporation duly organized and validly existing under the laws of the State of Delaware (the “ Company ,” which term includes any successor corporation or other entity under the Indenture referred to on the reverse hereof), for value received hereby promises to pay to [CEDE & CO.] 2 [        ] 3 , or registered assigns, the principal sum [as may be increased or decreased as set forth in the “Schedule of Exchanges of Notes” attached hereto] 4 [of $[        ]] 5 , which amount, taken together with the principal amounts of all other outstanding Notes, shall not, unless permitted by the Indenture, exceed $281,780,873 in aggregate at any time (as increased by an amount equal to the aggregate principal amount of any additional Notes issued pursuant to Section 2.02 of the within-mentioned Indenture), in accordance with the rules and procedures of the Depositary, on October 4, 2020.

The Make-Whole Amount will be issued and payable as set forth in Section 2.02 of the within-mentioned Indenture, and any reference to principal of, or in respect of, any Note therein shall be deemed to include the Make-Whole Amount if, in such context, the Make-Whole Amount is, was or would be payable pursuant to such Section 2.02, and any express mention of the payment of the Make-Whole Amount in any provision therein shall not be construed as excluding the Make-Whole Amount in those provisions thereof where such express mention is not made.

This Note shall not bear regular interest.

The Company shall pay the principal of this Note, if and so long as such Note is a Global Note, in immediately available funds to the Depositary or its nominee, as the case may be, as the registered Holder of such Note. As provided in and subject to the provisions of the Indenture, the Company shall pay the principal of any Notes (other than Notes that are Global Notes) at the office or agency designated by the Company for that purpose. The Company has initially designated the Trustee as its Paying Agent and Note Registrar in respect of the Notes and its agency in the contiguous United States, as a place where Notes may be presented for payment or for registration of transfer and exchange.

 

1   Include if a global note.
2   Include if a global note.
3   Include if a physical note.
4   Include if a global note.
5   Include if a physical note.

 

A-2


Reference is made to the further provisions of this Note set forth on the reverse hereof, including, without limitation, provisions giving the Holder of this Note the right to convert this Note into shares of Common Stock on the terms and subject to the limitations set forth in the Indenture, the creation of a second priority perfected Lien on the Collateral, the Note Guarantees and the subordination of this Note to the Priority Lien Obligations. Such further provisions shall for all purposes have the same effect as though fully set forth at this place.

This Note, and any claim, controversy or dispute arising under or related to this Note, shall be construed in accordance with and governed by the laws of the State of New York (without regard to the conflicts of laws provisions thereof).

In the case of any conflict between this Note and the Indenture, the provisions of the Indenture shall control and govern.

This Note shall not be valid or become obligatory for any purpose until the certificate of authentication hereon shall have been signed manually by the Trustee or a duly authorized authenticating agent under the Indenture.

[ Remainder of page intentionally left blank ]

 

A-3


IN WITNESS WHEREOF, the Company has caused this Note to be duly executed.

 

SANDRIDGE ENERGY, INC.
By:  

 

Name:  
Title:  

Dated:

TRUSTEE’S CERTIFICATE OF AUTHENTICATION

WILMINGTON TRUST, NATIONAL ASSOCIATION

as Trustee, certifies that this is one of the Notes described

in the within-named Indenture.

 

By:  

 

  Authorized Signatory

 

A-4


[FORM OF REVERSE OF NOTE]

SANDRIDGE ENERGY, INC.

0.00% Convertible Senior Subordinated Note due 2020

This Note is one of a duly authorized issue of Notes of the Company, designated as its 0.00% Convertible Senior Subordinated Notes due 2020 (the “ Notes ”), initially limited to the aggregate principal amount of $281,780,873 (as increased by an amount equal to the aggregate principal amount of any additional Notes issued pursuant to Section 2.02 of the within-mentioned Indenture) all issued or to be issued under and pursuant to an Indenture dated as of October 4, 2016 (the “ Indenture ”), among the Company, the guarantors named therein (the “ Guarantors ”) and Wilmington Trust, National Association (the “ Trustee ”), to which Indenture and all indentures supplemental thereto reference is hereby made for a description of the rights, limitations of rights, obligations, duties and immunities thereunder of the Trustee, the Company, each Guarantor and the Holders of the Notes. Capitalized terms used in this Note and not defined in this Note shall have the respective meanings set forth in the Indenture.

In case certain Events of Default shall have occurred and be continuing, the principal (including the Redemption Price and the Make-Whole Amount, if applicable) of all Notes may be declared, by either the Trustee or Holders of at least 25% in aggregate principal amount of Notes then outstanding, and upon said declaration shall become, due and payable in cash, in the manner, with the effect and subject to the conditions and certain exceptions set forth in the Indenture.

Subject to the terms and conditions of the Indenture, the Company will make all payments and deliveries in respect of the Redemption Price on the Redemption Date and the principal amount on the Maturity Date, as the case may be, to the Holder who surrenders a Note to a Paying Agent to collect such payments in respect of the Note. The Company will pay cash amounts in money of the United States that at the time of payment is legal tender for payment of public and private debts.

The Indenture contains provisions permitting the Company, the Guarantors and the Trustee in certain circumstances, without the consent of the Holders of the Notes, and in certain other circumstances, with the consent of the Holders of not less than a majority in aggregate principal amount of the Notes at the time outstanding, evidenced as in the Indenture provided, to execute supplemental indentures modifying the terms of the Indenture and the Notes as described therein. It is also provided in the Indenture that, subject to certain exceptions, the Holders of a majority in aggregate principal amount of the Notes at the time outstanding may on behalf of the Holders of all of the Notes waive any past Default or Event of Default under the Indenture and its consequences.

No reference herein to the Indenture and no provision of this Note or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay or deliver, as the case may be, the principal (including the Redemption Price, if applicable) of, and the consideration due upon conversion of, this Note at the place, at the respective times, at the rate and in the lawful money herein prescribed.

 

A-5


The Notes are issuable in registered form without coupons in minimum denominations of $1.00 principal amount and multiples of $1.00 in excess thereof. At the office or agency of the Company referred to on the face hereof, and in the manner and subject to the limitations provided in the Indenture, Notes may be exchanged for a like aggregate principal amount of Notes of other authorized denominations, without payment of any service charge but, if required by the Company or Trustee, with payment of a sum sufficient to cover any transfer or similar tax that may be imposed in connection therewith as a result of the name of the Holder of the new Notes issued upon such exchange of Notes being different from the name of the Holder of the old Notes surrendered for such exchange.

The Notes shall be redeemable at the Company’s option prior to the Maturity Date in accordance with the terms and subject to the conditions specified in the Indenture.

Subject to the provisions of the Indenture, the Holder hereof has the right, at its option, prior to the close of business on the Business Day immediately preceding the Maturity Date, to convert any Notes or portion thereof that is $1.00 or a multiple thereof, into shares of Common Stock at the Conversion Rate specified in the Indenture, as adjusted from time to time as provided in the Indenture.

Subject to the provisions of the Indenture, the Notes shall be converted into shares of Common Stock at the Conversion Rate specified in the Indenture, as adjusted from time to time as provided in the Indenture.

Upon the occurrence of a Springing Event, subject to the Intercreditor and Subordination Agreement, the Notes shall be secured by a second priority perfected Lien on the Collateral as provided in the Security Documents, in accordance with the terms and subject to the conditions specified in the Indenture.

The Notes are initially entitled to the benefits of certain Note Guarantees of the Guarantors and may thereafter be entitled to certain other Note Guarantees made for the benefit of the Holders as set forth in the Indenture.

To the extent provided in the Intercreditor and Subordination Agreement, this Note and all Notes are subordinated to the Priority Lien Obligations. To the extent provided in the Intercreditor and Subordination Agreement, the Priority Lien Obligations must be paid in full before the Notes may be paid. The Company agrees, and each Holder by accepting a Note agrees, to the subordination provisions contained in the Intercreditor and Subordination Agreement and authorizes the Trustee to give it effect and appoints the Trustee as attorney-in-fact for such purpose.

 

A-6


ABBREVIATIONS

The following abbreviations, when used in the inscription of the face of this Note, shall be construed as though they were written out in full according to applicable laws or regulations:

TEN COM = as tenants in common

UNIF GIFT MIN ACT = Uniform Gifts to Minors Act

CUST = Custodian

TEN ENT = as tenants by the entireties

JT TEN = joint tenants with right of survivorship and not as tenants in common

Additional abbreviations may also be used though not in the above list.

 

A-7


SCHEDULE A 6

SCHEDULE OF EXCHANGES OF NOTES

SANDRIDGE ENERGY, INC.

0.00% Convertible Senior Subordinated Notes due 2020

The initial principal amount of this Global Note is [        ] DOLLARS ($[        ]). The following increases or decreases in this Global Note have been made:

 

Date of exchange

  

Amount of

decrease in

principal amount

of this Global Note

  

Amount of

increase in

principal amount

of this Global Note

  

Principal amount

of this Global Note
following such

decrease or

increase

  

Signature of

authorized

signatory of

Trustee or

Custodian

 

  

 

  

 

  

 

  

 

 

  

 

  

 

  

 

  

 

 

  

 

  

 

  

 

  

 

 

  

 

  

 

  

 

  

 

 

  

 

  

 

  

 

  

 

 

  

 

  

 

  

 

  

 

 

  

 

  

 

  

 

  

 

 

  

 

  

 

  

 

  

 

 

  

 

  

 

  

 

  

 

 

  

 

  

 

  

 

  

 

 

  

 

  

 

  

 

  

 

 

  

 

  

 

  

 

  

 

 

  

 

  

 

  

 

  

 

 

  

 

  

 

  

 

  

 

 

  

 

  

 

  

 

  

 

 

  

 

  

 

  

 

  

 

 

  

 

  

 

  

 

  

 

 

 

6   Include if a global note.

 

A-8


ATTACHMENT 1

[FORM OF NOTICE OF CONVERSION]

 

To: SandRidge Energy, Inc.

 

To: Wilmington Trust, National Association

Global Capital Markets

15950 N. Dallas Parkway, Suite 550

Dallas, TX 75248

Attention: SandRidge Energy Administrator

The undersigned registered owner of this Note hereby exercises the option to convert this Note, or the portion hereof (that is $1.00 principal amount or a multiple thereof) below designated, into shares of Common Stock in accordance with the terms of the Indenture referred to in this Note, and directs that the shares of Common Stock issuable and deliverable upon such conversion, together with any cash for any fractional share, and any Notes representing any unconverted principal amount hereof, be issued and delivered to the registered Holder hereof unless a different name has been indicated below. If any shares of Common Stock or any portion of this Note not converted are to be issued in the name of a Person other than the undersigned, the undersigned will pay all documentary, stamp or similar issue or transfer taxes, if any in accordance with Section 14.04(d) and Section 14.04(e) of the Indenture. Capitalized terms used herein but not defined shall have the meanings ascribed to such terms in the Indenture.

 

Dated:

 

                                                      

    

 

  
      

 

  
       Signature(s)   

 

                                                                 

Signature Guarantee

Signature(s) must be guaranteed

by an eligible Guarantor Institution

(banks, stock brokers, savings and

loan associations and credit unions)

with membership in an approved

signature guarantee medallion program

pursuant to Securities and Exchange

Commission Rule 17Ad-15 if shares

of Common Stock are to be issued, or

Notes are to be delivered, other than

to and in the name of the registered holder.

 

1


Fill in for registration of shares if

to be issued, and Notes if to

be delivered, other than to and in the

name of the registered holder:

 

(Name)

 

(Street Address)

 

(City, State and Zip Code)

Please print name and address

 

Principal amount to be converted (if less than all):

 

$                                                                           

NOTICE: The above signature(s) of the Holder(s) hereof must correspond with the name as written upon the face of the Note in every particular without alteration or enlargement or any change whatever.

 

                                                                             

Social Security or Other Taxpayer

Identification Number

 

2


ATTACHMENT 2

[FORM OF ASSIGNMENT AND TRANSFER]

 

To: Wilmington Trust, National Association

Global Capital Markets

15950 N. Dallas Parkway, Suite 550

Dallas, TX 75248

Attention: SandRidge Energy Administrator

For value received                                          hereby sell(s), assign(s) and transfer(s) unto                                          (Please insert social security or Taxpayer Identification Number of assignee) the within Note, and hereby irrevocably constitutes and appoints                                               attorney to transfer the said Note on the books of the Company, with full power of substitution in the premises.

In connection with any transfer of the within Note, the undersigned confirms that such Note is being transferred:

 

To SandRidge Energy, Inc. or a subsidiary thereof; or

 

Pursuant to a registration statement that has become or been declared effective under the Securities Act of 1933, as amended; or

 

Pursuant to and in compliance with Section 1145 of Title 11 of the United States Code; or

 

Pursuant to and in compliance with Rule 144 under the Securities Act of 1933, as amended, or any other available exemption from the registration requirements of the Securities Act of 1933, as amended.

 

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Dated:                                                      

 

 

Signature(s)

 

Signature Guarantee

Signature(s) must be guaranteed by an

eligible Guarantor Institution (banks, stock

brokers, savings and loan associations and

credit unions) with membership in an approved

signature guarantee medallion program pursuant

to Securities and Exchange Commission

Rule 17Ad-15 if Notes are to be delivered, other

than to and in the name of the registered holder.

NOTICE: The signature on the assignment must correspond with the name as written upon the face of the Note in every particular without alteration or enlargement or any change whatever.

 

2


EXHIBIT B

FORM OF COLLATERAL TRUST AGREEMENT

[See Attached]

 

B-1


EXHIBIT C

FORM OF INTERCREDITOR AND SUBORDINATION AGREEMENT

[See Attached]

 

C-1


EXHIBIT D

FORM OF SECURITY AGREEMENT

[See Attached]

 

D-1

Exhibit 10.4

 

 

 

INTERCREDITOR AND SUBORDINATION AGREEMENT

dated as of October 4, 2016 between

Royal Bank of Canada,

as Priority Lien Agent,

and

Wilmington Trust, National Association,

as Subordinated Collateral Trustee

and Acknowledged and Agreed by

SandRidge Energy, Inc. and certain of its subsidiaries

 

 

THIS IS THE INTERCREDITOR AGREEMENT REFERRED TO IN (A) THE INDENTURE DATED AS OF OCTOBER 4, 2016, AMONG SANDRIDGE ENERGY, INC., CERTAIN OF ITS SUBSIDIARIES FROM TIME TO TIME PARTY THERETO AND WILMINGTON TRUST, NATIONAL ASSOCIATION, AS TRUSTEE, (B) THE SENIOR REVOLVING CREDIT AGREEMENT DATED AS OF OCTOBER 4, 2016 AS AMENDED, SUPPLEMENTED, RESTATED OR OTHERWISE MODIFIED FROM TIME TO TIME, AMONG SANDRIDGE ENERGY, INC., THE LENDERS PARTY THERETO FROM TIME TO TIME AND ROYAL BANK OF CANADA, AS ADMINISTRATIVE AGENT, (C) THE OTHER NOTE DOCUMENTS REFERRED TO IN SUCH INDENTURE AND (D) THE OTHER LOAN DOCUMENTS REFERRED TO IN SUCH CREDIT AGREEMENT.

 

 


TABLE OF CONTENTS

 

          Page  
ARTICLE I   
DEFINITIONS   
Section 1.01    Construction; Certain Defined Terms      1   
ARTICLE II   
SUBORDINATION   
Section 2.01    Subordination of Subordinated Debt to Priority Lien Debt      15   
Section 2.02    Subordinated Debt Payment Restrictions      16   
Section 2.03    Relative Priorities      16   
Section 2.04    Prohibition on Marshalling, Etc      17   
Section 2.05    No New Liens      17   
Section 2.06    Similar Collateral and Agreements      17   
Section 2.07    No Duties of Priority Lien Agent      18   
ARTICLE III   
ENFORCEMENT RIGHTS; PURCHASE OPTION   
Section 3.01    Limitation on Enforcement Action      18   
Section 3.02    Standstill Period; Permitted Enforcement Action      19   
Section 3.03    Insurance      20   
Section 3.04    Notification of Release of Collateral      20   
Section 3.05    No Interference; Payment Over      20   
Section 3.06    Purchase Option      21   
ARTICLE IV   
OTHER AGREEMENTS   
Section 4.01    Release of Liens; Automatic Release of Subordinated Liens      23   
Section 4.02    Certain Agreements With Respect to Insolvency or Liquidation Proceedings      24   
Section 4.03    Reinstatement      27   
Section 4.04    Refinancings; Additional Priority Lien Debt; Additional Subordinated Debt      27   
Section 4.05    Amendments to Subordinated Documents      29   
Section 4.06    Legends      29   
Section 4.07    Subordinated Secured Parties Rights as Unsecured Creditors; Judgment Lien Creditor      30   
Section 4.08    Postponement of Subrogation      30   
Section 4.09    Acknowledgment by the Secured Debt Representatives      30   
ARTICLE V   
GRATUITOUS BAILMENT FOR PERFECTION OF CERTAIN SECURITY INTERESTS   
Section 5.01    General      30   
Section 5.02    Deposit Accounts      31   
ARTICLE VI   
APPLICATION OF PROCEEDS; DETERMINATION OF AMOUNTS   
Section 6.01    Application of Proceeds      31   
Section 6.02    Determination of Amounts      31   
ARTICLE VII   
NO RELIANCE; NO LIABILITY; OBLIGATIONS ABSOLUTE; CONSENT OF GRANTORS; ETC.   
Section 7.01    No Reliance; Information      32   

 

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          Page  
Section 7.02    No Warranties or Liability      32   
Section 7.03    Obligations Absolute      33   
Section 7.04    Grantors Consent      33   
ARTICLE VIII   
REPRESENTATIONS AND WARRANTIES   
Section 8.01    Representations and Warranties of Each Party      33   
Section 8.02    Representations and Warranties of Each Representative      34   
ARTICLE IX   
MISCELLANEOUS   
Section 9.01    Notices      34   
Section 9.02    Waivers; Amendment      35   
Section 9.03    Actions Upon Breach; Specific Performance      35   
Section 9.04    Parties in Interest      35   
Section 9.05    Survival of Agreement      35   
Section 9.06    Counterparts      36   
Section 9.07    Severability      36   
Section 9.08    Governing Law; Jurisdiction; Consent to Service of Process      36   
Section 9.09    WAIVER OF JURY TRIAL      36   
Section 9.10    Headings      37   
Section 9.11    Conflicts      37   
Section 9.12    Provisions Solely to Define Relative Rights      37   
Section 9.13    Certain Terms Concerning the Subordinated Collateral Trustee      37   
Section 9.14    Certain Terms Concerning the Priority Lien Agent and the Subordinated Collateral Trustee      37   
Section 9.15    Authorization of Secured Agents      38   
Section 9.16    Further Assurances      38   
Section 9.17    Relationship of Secured Parties      38   
Section 9.18    Springing Event      38   
Annex and Exhibits   
Annex I   
Exhibit A    Form of Priority Confirmation Joinder   
Exhibit B    Security Documents   

 

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INTERCREDITOR AND SUBORDINATION AGREEMENT , dated as of October 4, 2016 (as amended, supplemented or otherwise modified from time to time in accordance with the terms hereof, this “ Agreement ”), between Royal Bank of Canada, as administrative agent for the Priority Lien Secured Parties referred to herein (in such capacity, and together with its successors and assigns in such capacity, the “ Original Priority Lien Agent ”), and Wilmington Trust, National Association, as collateral trustee for the Subordinated Secured Parties referred to herein (in such capacity, and together with its successors in such capacity, the “ Original Subordinated Collateral Trustee ”) and agreed by SandRidge Energy, Inc., a Delaware corporation (together with its successors and assigns, “ SandRidge ”) and certain of its subsidiaries.

Reference is made to (a) the Priority Credit Agreement (defined below) and (b) the Subordinated Notes Indenture (defined below) governing the Subordinated Notes (defined below).

From time to time following the date hereof, SandRidge may (i) incur Additional Priority Lien Obligations (defined below) to the extent permitted by the Secured Debt Documents (defined below); in connection with any Additional Priority Lien Obligations, SandRidge and the Priority Lien Agent (defined below) shall, concurrently with the incurrence of such Additional Priority Lien Obligations, enter into a Priority Lien Intercreditor Agreement (defined below) and (ii) with respect to the Subordinated Notes and the Subordinated Obligations (each defined below), in accordance with the terms of and to the extent permitted by the Subordinated Notes Indenture, the Priority Lien Documents and subject to the express conditions set forth in Section 4.04 of this Agreement, incur liens on the Collateral securing such Subordinated Obligations on a second priority, subordinated basis (any such Subordinated Obligations so secured, the Subordinated Secured Obligations); in connection with the Subordinated Notes Indenture and any Subordinated Secured Obligations, SandRidge and certain Grantors (defined below), the Subordinated Notes Trustee (defined below) and the Subordinated Collateral Trustee (defined below) shall, concurrently with the incurrence of such Subordinated Secured Obligations, enter into a Subordinated Collateral Trust Agreement (defined below).

In consideration of the mutual agreements herein contained and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Priority Lien Agent (for itself and on behalf of the Priority Lien Secured Parties) and the Subordinated Collateral Trustee (for itself and on behalf of the Subordinated Secured Parties (defined below), if any) agree as follows:

ARTICLE I

DEFINITIONS

Section 1.01 Construction; Certain Defined Terms . (a) 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, (i) any reference herein to any agreement, instrument, other document, statute or regulation shall be construed as referring to such agreement, instrument, other document, statute or regulation as from time to time amended, supplemented or otherwise modified, (ii) any reference herein to any Person shall be construed to include such Person’s successors and assigns, but shall not be deemed to include the subsidiaries of such Person unless express reference is made to such subsidiaries, (iii) 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, (iv) all references herein to Articles, Sections and Annexes shall be construed to refer to Articles, Sections and Annexes of this Agreement, (v) unless otherwise expressly qualified herein, the words “asset” and “property” shall be construed to have the same meaning and effect and to refer to any and all tangible and intangible assets and properties, including cash, securities, accounts and contract rights and (vi) the term “or” is not exclusive.


(b) All terms used in this Agreement that are defined in Article 1, 8 or 9 of the New York UCC (whether capitalized herein or not) and not otherwise defined herein have the meanings assigned to them in Article 1, 8 or 9 of the New York UCC. If a term is defined in Article 9 of the New York UCC and another Article of the UCC, such term shall have the meaning assigned to it in Article 9 of the New York UCC.

(c) Unless otherwise set forth herein, all references herein to the Subordinated Collateral Trustee shall be deemed to refer to the Subordinated Collateral Trustee in its capacity as collateral trustee under the Subordinated Collateral Trust Agreement.

(d) As used in this Agreement, the following terms have the meanings specified below:

Accounts ” has the meaning assigned to such term in Section 3.01 .

Additional Priority Lien Debt Facility ” means any indebtedness for which the requirements of Section 4.04(b) of this Agreement have been satisfied, as amended, restated, modified, renewed, refunded, restated, restructured, increased, supplemented, replaced or refinanced in whole or in part from time to time in accordance with each applicable Secured Debt Document; provided that neither the Priority Credit Agreement nor any Priority Substitute Credit Facility shall constitute an Additional Priority Lien Debt Facility at any time.

Additional Priority Lien Documents ” means the Additional Priority Lien Debt Facility, the Priority Lien Intercreditor Agreement and the Additional Priority Lien Security Documents.

Additional Priority Lien Obligations ” means, with respect to any Grantor, any obligations of such Grantor owed to any Additional Priority Lien Secured Party (or any of its Affiliates) in respect of the Additional Priority Lien Documents.

Additional Priority Lien Secured Parties ” means, at any time, the Priority Lien Agent, the trustee, agent or other representative of the holders of any Series of Priority Lien Debt who maintains the transfer register for such Series of Priority Lien Debt, the beneficiaries of each indemnification obligation undertaken by any Grantor under any Additional Priority Lien Document and each other holder of, or obligee in respect of, any holder or lender pursuant to any Series of Priority Lien Debt outstanding at such time; provided that the Credit Agreement Secured Parties (other than the Priority Lien Agent) shall not be deemed Additional Priority Lien Secured Parties.

Additional Priority Lien Security Documents ” means the Additional Priority Lien Debt Facility (insofar as the same grants a Lien on the Collateral) and any other security agreements, pledge agreements, collateral assignments, mortgages, deeds of trust, collateral agency agreements, control agreements, or grants or transfers for security, now existing or entered into after the date hereof, executed and delivered by SandRidge or any other Grantor to the Priority Lien Agent creating (or purporting to create) a Lien upon the Priority Lien Collateral in favor of the Additional Priority Lien Secured Parties.

Additional Subordinated Debt Facility ” means any indebtedness for which the requirements of Section 4.04(b) of this Agreement have been satisfied, as amended, restated, modified, renewed, refunded, restated, restructured, increased, supplemented, replaced or refinanced in whole or in part from time to time in accordance with each applicable Secured Debt Document; provided that neither the Subordinated Notes Indenture nor any Subordinated Substitute Facility shall constitute an Additional Subordinated Debt Facility at any time.

 

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Additional Subordinated Documents ” means the Additional Subordinated Debt Facility and the Additional Subordinated Security Documents.

Additional Subordinated Obligations ” means, with respect to any Grantor, any obligations of such Grantor owed to any Additional Subordinated Secured Party (or any of its Affiliates) in respect of the Additional Subordinated Documents.

Additional Subordinated Secured Parties ” means, at any time, the Subordinated Collateral Trustee, the trustee, agent or other representative of the holders of any Series of Subordinated Debt who maintains the transfer register for such Series of Subordinated Debt, the beneficiaries of each indemnification obligation undertaken by any Grantor under any Additional Subordinated Document and each other holder of, or obligee in respect of, any holder or lender pursuant to any Series of Subordinated Debt outstanding at such time; provided that the Indenture Subordinated Secured Parties shall not be deemed Additional Subordinated Secured Parties.

Additional Subordinated Security Documents ” means the Additional Subordinated Debt Facility (insofar as the same grants a Lien on the Collateral) and any other security agreements, pledge agreements, collateral assignments, mortgages, deeds of trust, collateral agency agreements, control agreements, or grants or transfers for security, now existing or entered into after the date hereof, executed and delivered by SandRidge or any other Grantor creating (or purporting to create) a Lien upon the Subordinated Collateral in favor of the Additional Subordinated Secured Parties.

Affiliate ” means, with respect to any specified Person: (a) any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person; (b) any other Person that owns, directly or indirectly, 10% or more of the Voting Stock of such specified Person (or any of such specified Person’s direct or indirect parent’s Voting Stock); or (c) any other Person 10% or more of the Voting Stock of which is beneficially owned or held directly or indirectly by such specified Person. For purposes of this definition, “control” when used with respect to any specified Person means the power to direct the management and policies of such Person, whether through the ownership of voting securities, by contract or otherwise; and the terms “controlling” and “under common control with” have meanings correlative to the foregoing.

Agreement ” has the meaning assigned to such term in the preamble hereto.

Bank Product ” means each and any of the following bank services and products provided to SandRidge or any other Grantor by any lender under the Priority Credit Agreement or any Affiliate of any such lender: (a) commercial credit cards; (b) stored value cards; and (c) Treasury Management Arrangements (including controlled disbursement, automated clearinghouse transactions, return items, overdrafts and interstate depository network services).

Bank Product Obligations ” means any and all obligations of SandRidge or any other Grantor, whether absolute or contingent and howsoever and whensoever created, arising, evidenced or acquired (including all renewals, extensions and modifications thereof and substitutions therefor) in connection with any Bank Product.

Bankruptcy Code ” means Title 11 of the United States Code.

 

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Bankruptcy Law ” means the Bankruptcy Code and any other liquidation, conservatorship, bankruptcy, assignment for the benefit of creditors, moratorium, administration, rearrangement, judicial management, receivership, insolvency, reorganization (by way of voluntary arrangement, scheme of arrangement or otherwise), or similar federal, state, or foreign debtor relief laws (including under any applicable corporate statute) of the United States or other applicable jurisdictions from time to time in effect.

Business Day ” means each day that is not a Saturday, Sunday or other day on which banking institutions in Houston, Texas or in New York, New York are authorized or required by law to close.

Capital Stock ” of any Person means any and all shares, units, interests, participations, rights in or other equivalents (however designated) of such Person’s capital stock, other equity interests whether now outstanding or issued after the date hereof, partnership interests (whether general or limited), limited liability company interests, any other interest or participation that confers on a Person the right to receive a share of the profits and losses of, or distributions of assets of, the issuing Person, including any Preferred Stock, and any rights (other than debt securities or other indebtedness convertible into Capital Stock), warrants or options exchangeable for or convertible into such Capital Stock.

Collateral ” means all of the assets and property of any Grantor, whether real, personal or mixed, constituting the Priority Lien Collateral and/or the Subordinated Collateral, if any.

Credit Agreement Debt ” means the indebtedness under the Priority Credit Agreement (including letters of credit and reimbursement obligations with respect thereto) that was permitted to be incurred and secured under the Priority Credit Agreement or any Additional Priority Lien Debt Facility (or as to which the lenders under the Priority Credit Agreement obtained an Officer’s Certificate at the time of incurrence to the effect that such indebtedness was permitted to be incurred and secured by all applicable Secured Debt Documents) and additional indebtedness under any Priority Substitute Credit Facility. For purposes of this Agreement, indebtedness under the Priority Credit Agreement is permitted to be incurred under the Subordinated Notes Indenture.

Credit Agreement Documents ” means the Priority Credit Agreement, the Credit Agreement Security Documents, the other “Loan Documents” (as defined in the Priority Credit Agreement) and all other loan documents, notes, guarantees, instruments and agreements governing or evidencing, or executed or delivered in connection with, any Priority Substitute Credit Facility.

Credit Agreement Obligations ” means the Credit Agreement Debt and all other Obligations in respect of or in connection with Credit Agreement Debt including, without limitation, the principal amount of all debts, claims and indebtedness and accrued interest, fees, costs, and other charges incurred under the Priority Credit Agreement and the other Credit Agreement Documents, whether incurred before or after commencement of an Insolvency or Liquidation Proceeding, and whether or not allowable in an Insolvency or Liquidation Proceeding together with (a) any amendments, modifications, renewals or extensions thereof to the extent not prohibited by the terms of this Agreement, (b) any interest accruing thereon after the commencement of an Insolvency or Liquidation Proceeding, without regard to whether or not such interest is an allowed claim, and (c) Hedging Obligations and the Bank Product Obligations. For the avoidance of doubt, Hedging Obligations shall only constitute Credit Agreement Obligations to the extent that such Hedging Obligations are secured under the terms of the Credit Agreement Documents. To the extent that any payment with respect to the Credit Agreement Obligations (whether by or on behalf of SandRidge, as proceeds of security, enforcement of any right of set-off, or otherwise) is declared to be fraudulent or preferential in any respect, set aside, or required to be paid to a debtor in possession, trustee, receiver, or similar Person, then the obligation or part thereof originally intended to be satisfied will be deemed to be reinstated and outstanding as if such payment had not occurred.

 

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Credit Agreement Secured Parties ” means, at any time, (a) the Priority Lien Agent, (b) each lender or issuing bank under the Priority Credit Agreement, (c) each holder, provider or obligee of any Hedging Obligations and Bank Product Obligations that (i) is a lender under the Priority Credit Agreement or an Affiliate (as defined herein or in the Priority Credit Agreement) thereof at the time such Hedging Obligation or Bank Product Obligation is entered into or (ii) is a holder, provider or obligee of Hedging Obligations and Bank Product Obligations designated on Schedule 1.01A or 1.01B, respectively of the Priority Credit Agreement, and, in the case of each of the foregoing clauses (i) and (ii), is a secured party (or a party entitled to the benefits of the security) under any Credit Agreement Document, (d) the beneficiaries of each indemnification obligation undertaken by any Grantor under any Credit Agreement Document, (e) each other Person that provides letters of credit, guarantees or other credit support related thereto under any Credit Agreement Document and (f) each other holder of, or obligee in respect of, any Credit Agreement Obligations (including pursuant to a Priority Substitute Credit Facility), in each case to the extent designated as a secured party (or a party entitled to the benefits of the security) under any Credit Agreement Document outstanding at such time.

Credit Agreement Security Documents ” means the Priority Credit Agreement (insofar as the same grants a Lien on the Collateral), each agreement listed in Part A of Exhibit B hereto, and any other security agreements, pledge agreements, collateral assignments, mortgages, deeds of trust, control agreements, or grants or transfers for security, now existing or entered into after the date hereof, executed and delivered by SandRidge or any other Grantor creating (or purporting to create) a Lien upon Collateral in favor of the Priority Lien Agent (including any such agreements, assignments, mortgages, deeds of trust and other documents or instruments associated with any Priority Substitute Credit Facility).

Credit Facilities ” means one or more debt facilities (including, without limitation, the Priority Credit Agreement), commercial paper facilities or other debt instruments, indentures or agreements providing for revolving credit loans, term loans, receivables financings (including through the sale of receivables to the lenders or to special purpose entities formed to borrow from the lenders against such receivables), letters of credit, capital markets financings and/or private placements involving bonds or other debt securities, or other debt obligations, in each case, as amended, restated, modified, renewed, refunded, restructured, supplemented, replaced or refinanced from time to time in whole or in part from time to time, including without limitation any amendment increasing the amount of indebtedness incurred or available to be borrowed thereunder, extending the maturity of any indebtedness incurred thereunder or contemplated thereby or deleting, adding or substituting one or more parties thereto (whether or not such added or substituted parties are banks or other institutional lenders).

DIP Financing ” has the meaning assigned to such term in Section 4.02(b) .

DIP Financing Liens ” has the meaning assigned to such term in Section 4.02(b) .

DIP Lenders ” has the meaning assigned to such term in Section 4.02(b) .

Discharge of Priority Lien Obligations ” means the occurrence of all of the following:

(a) termination or expiration of all commitments to lend and to extend credit (and to acquire participations in letters of credit and all obligations to issue, amend, renew or extend letters of credit) that would constitute Priority Lien Obligations;

(b) payment in full in cash of the principal of and interest (including interest accruing on or after the commencement of any Insolvency or Liquidation Proceeding, whether or not such interest would be allowed in such proceeding), premium (if any), and expenses (including, without limitation, all professional fees and expenses) on all Priority Lien Obligations (other than any undrawn letters of credit);

 

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(c) discharge or cash collateralization (at the lower of (i) 105% of the aggregate undrawn amount and (ii) the percentage of the aggregate undrawn amount required for release of Liens under the terms of the applicable Priority Lien Document) of all outstanding letters of credit constituting Priority Lien Obligations;

(d) payment in full in cash of obligations in respect of Hedging Obligations constituting Priority Lien Obligations (and, with respect to any particular agreement regarding Hedging Obligations, termination of such agreement and payment in full in cash of all obligations thereunder or such other arrangements as have been made by the counterparty thereto (and communicated to the Priority Lien Agent) pursuant to the terms of the Priority Credit Agreement);

(e) the provision of cash collateral to the applicable Priority Lien Secured Parties in such amount as such Priority Lien Secured Parties determine is reasonably necessary to secure such Priority Lien Secured Parties in respect of any asserted or threatened (in writing) claims, demands, actions, suits, proceedings, investigations, liabilities, fines, costs, penalties, or damages for which any such Priority Lien Secured Parties may be entitled to indemnification or reimbursement by any Obligor pursuant to the indemnification or reimbursement provisions of the applicable Priority Lien Documents; and

(f) payment in full in cash of all other Priority Lien Obligations, including without limitation, Bank Product Obligations, that are outstanding and unpaid at the time the Priority Lien Debt is paid in full in cash (other than any obligations for taxes, costs, indemnifications, reimbursements, damages and other liabilities in respect of which no claim or demand for payment has been made at or prior to such time, except to the extent provided for in the preceding clause (e)).

provided that, if, at any time after the Discharge of Priority Lien Obligations has occurred, SandRidge or any Grantor enters into any Priority Lien Document evidencing a Priority Lien Obligation which incurrence is not prohibited by the applicable Secured Debt Documents, then such Discharge of Priority Lien Obligations shall automatically be deemed not to have occurred for all purposes of this Agreement with respect to such new Priority Lien Obligations (other than with respect to any actions taken as a result of the occurrence of such first Discharge of Priority Lien Obligations), and, from and after the date on which SandRidge designates such indebtedness as Priority Lien Debt in accordance with this Agreement, the obligations under such Priority Lien Document shall automatically and without any further action be treated as Priority Lien Obligations for all purposes of this Agreement, including for purposes of the Lien priorities and rights in respect of Collateral set forth in this Agreement, any Subordinated Obligations shall be deemed to have been at all times Subordinated Obligations and at no time Priority Lien Obligations. For the avoidance of doubt, a Replacement as contemplated by Section 4.04(a) shall not be deemed to cause a Discharge of Priority Lien Obligations. In the event that any Priority Lien Obligations are modified and are paid, or to be paid, over time pursuant to section 1129 of the Bankruptcy code or any similar provision under another Bankruptcy Law, such Priority Lien Obligations shall be deemed to be Discharged when the final payment is made, in cash, in respect of such Debt and all obligations pursuant to such new Debt shall have been satisfied.

Disposition ” shall mean any sale, lease, exchange, assignment, license, contribution, transfer or other disposition. “ Dispose ” shall have a correlative meaning.

Enforcement Action ” means an action to:

(a) foreclose, execute, levy, or collect on, take possession or control of, sell or otherwise realize upon (judicially or non-judicially), or lease, license or otherwise dispose of (whether publicly or privately), Collateral, or otherwise exercise or enforce remedial rights with respect to Collateral under the Priority Lien Documents or the Subordinated Documents (including by way of setoff, recoupment,

 

6


notification of a public or private sale or other disposition pursuant to the New York UCC or other applicable law, notification to account debtors, notification to depositary banks under deposit account control agreements, or exercise of rights under letters-in-lieu, bailee’s letter, landlord consents or similar agreements or arrangements, if applicable);

(b) solicit bids from third Persons to conduct the liquidation or disposition of Collateral or to engage or retain sales brokers, marketing agents, auctioneers, investment bankers or other third Persons for the purposes of marketing, promoting and selling Collateral;

(c) receive a transfer of Collateral in satisfaction of Debt or any other Obligations secured thereby;

(d) otherwise enforce a security interest or exercise another right or remedy, as a secured creditor or otherwise, pertaining to the Collateral at law, in equity or pursuant to the Priority Lien Documents or Subordinated Documents (including the commencement of applicable legal proceedings or other actions with respect to all or any portion of the Collateral to facilitate the actions described in the preceding clauses, and exercising voting rights in respect of equity interests comprising Collateral);

(e) effect the disposition of Collateral by any Grantor (in lieu of a foreclosure sale) after the occurrence and during the continuation of an Event of Default (as defined in the Priority Credit Agreement or the Subordinated Collateral Trust Agreement) with the consent of the Priority Lien Agent or the Subordinated Collateral Trustee, as applicable;

(f) after the occurrence of an Event of Default under the Priority Credit Agreement, obtain payment of, collect or realize upon any Subordinated Debt; or

(g) commence, or join in filing of a petition for commencement of, an Insolvency or Liquidation Proceeding against any Obligor or the owner of Collateral.

provided that “ Enforcement Action ” shall not include any forbearance from the exercise of any remedies by the Priority Lien Agent or any other Priority Lien Secured Parties or by the Subordinated Collateral Trustee or any other Subordinated Secured Parties, as the case may be.

Governmental Authority ” means the government of the United States or any other nation, or any political subdivision thereof, whether state, provincial or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other Person exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government.

Grantor ” means SandRidge, each other subsidiary of SandRidge that shall have granted any Lien in favor of any of the Priority Lien Agent or the Subordinated Collateral Trustee on any of its assets or properties to secure any of the Secured Obligations.

Hedging Obligations ” means, with respect to any Grantor, the obligations of such Grantor incurred in the normal course of business and consistent with past practices and not for speculative purposes under:

(a) interest rate swap agreements, interest rate cap agreements and interest rate collar agreements entered into with one or more financial institutions and designed to protect such Grantor or any subsidiary thereof entering into the agreement against fluctuations in interest rates with respect to indebtedness incurred;

 

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(b) foreign exchange contracts and currency protection agreements entered into with one or more financial institutions and designed to protect such Grantor or any subsidiary thereof entering into the agreement against fluctuations in currency exchanges rates with respect to indebtedness incurred;

(c) any commodity futures contract, commodity option or other similar agreement or arrangement designed to protect against fluctuations in the price of oil, natural gas or other commodities used, produced, processed or sold by that Grantor or any subsidiary thereof at the time; and

(d) other agreements or arrangements designed to protect such Grantor or any subsidiary thereof against fluctuations in interest rates, commodity prices or currency exchange rates.

Indebtedness ” has the meaning set forth in the Priority Credit Agreement as in effect on the date hereof, and any component definition used therein has the meaning set forth in the Priority Credit Agreement as of the date hereof.

Indenture Subordinated Documents ” means the Subordinated Notes Indenture, the Subordinated Indenture Notes, the Indenture Subordinated Security Documents and all other loan documents, notes, guarantees, instruments and agreements governing or evidencing the Indenture Subordinated Obligations or any Subordinated Substitute Facility.

Indenture Subordinated Obligations ” means, with respect to any Grantor, any obligations of such Grantor owed to any Indenture Subordinated Secured Party (or any of its Affiliates) in respect of the Indenture Subordinated Documents.

Indenture Subordinated Secured Parties ” means, at any time, the Subordinated Notes Trustee, the Subordinated Collateral Trustee, the trustees, agents and other representatives of the holders of the Subordinated Indenture Notes (including any holders of notes pursuant to supplements executed in connection with the issuance of any Series of Subordinated Debt under the Subordinated Notes Indenture) who maintain the transfer register for such Subordinated Indenture Notes or such Series of Subordinated Debt, the beneficiaries of each indemnification obligation undertaken by any Grantor under any Indenture Subordinated Document and each other holder of, or obligee in respect of, any Subordinated Indenture Notes, any holder or lender pursuant to any Indenture Subordinated Document outstanding at such time; provided that the Additional Subordinated Secured Parties shall not be deemed Indenture Subordinated Secured Parties.

Indenture Subordinated Security Documents ” means the Subordinated Notes Indenture (insofar as the same grants a Lien on the Collateral), the Subordinated Collateral Trust Agreement, each agreement listed in Part B of Exhibit B hereto and any other security agreements, pledge agreements, collateral assignments, mortgages, deeds of trust, collateral agency agreements, control agreements, or grants or transfers for security, now existing or entered into after the date hereof, executed and delivered by SandRidge or any other Grantor creating (or purporting to create) a Lien upon Collateral in favor of the Subordinated Collateral Trustee (including any such agreements, assignments, mortgages, deeds of trust and other documents or instruments associated with any Subordinated Substitute Facility).

Insolvency or Liquidation Proceeding ” means:

(a) any case commenced by or against SandRidge or any other Grantor under the Bankruptcy Code or any other Bankruptcy Law, any other proceeding for the reorganization, recapitalization or adjustment or marshalling of the assets or liabilities of SandRidge or any other Grantor, any receivership or assignment for the benefit of creditors relating to SandRidge or any other Grantor or any similar case or proceeding relative to SandRidge or any other Grantor or its creditors, as such, in each case whether or not voluntary;

 

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(b) any liquidation, dissolution, marshalling of assets or liabilities or other winding up of or relating to SandRidge or any other Grantor, in each case whether or not voluntary and whether or not involving bankruptcy or insolvency; or

(c) any other proceeding of any type or nature in which substantially all claims of creditors of SandRidge or any other Grantor are determined and any payment or distribution is or may be made on account of such claims.

Lien ” means any mortgage or deed of trust, charge, pledge, lien (statutory or otherwise), privilege, security interest, assignment, deposit, arrangement, hypothecation, claim, preference, priority or other encumbrance for security purposes upon or with respect to any property of any kind (including any conditional sale, capital lease or other title retention agreement, any leases in the nature thereof, and any agreement to give any security interest), real or personal, movable or immovable, now owned or hereafter acquired.

Material Adverse Effect ” means a material adverse change in, or a material adverse effect upon, the operations, earnings, business, assets, properties, liabilities, condition (financial or otherwise) or prospects of the Company and its Subsidiaries, taken as a whole; provided, without limiting the generality of the foregoing, that the Company’s entry into bankruptcy proceedings shall be deemed to constitute a “ Material Adverse Effect .”

New York UCC ” means the Uniform Commercial Code as from time to time in effect in the State of New York.

Obligations ” means any principal (including reimbursement obligations and obligations to provide cash collateral with respect to letters of credit whether or not drawn), interest (including, to the extent legally permitted, all interest accrued thereon after the commencement of any Insolvency or Liquidation Proceeding at the rate, including any applicable post-default rate even if such interest is not enforceable, allowable or allowed as a claim in such proceeding), premium (if any), fees, indemnifications, reimbursements, expenses and other liabilities payable under the documentation governing any indebtedness.

Officer ” means, with respect to any Person, the Chairman of the Board, the Chief Executive Officer, the President, the Chief Operating Officer, the Chief Financial Officer, the Treasurer, any Assistant Treasurer, the Controller, the Secretary, any Senior Vice President, any Vice President or any Assistant Vice President of such Person.

Officer’s Certificate ” means a certificate signed on behalf of SandRidge by any Officer of SandRidge.

Original Priority Lien Agent ” has the meaning assigned to such term in the preamble hereto.

Original Subordinated Collateral Trustee ” has the meaning assigned to such term in the preamble hereto.

Permitted Subordinated Debt Payments ” means any payment permitted by Section 7.15 of the Priority Credit Agreement and any similar restriction in any successor agreement no more favorable to the Subordinated Debt than as provided in such Section 7.15; provided that nothing shall prevent the Subordinated Debt from paying interest-in-kind or making a claim in any Insolvency or Liquidation Proceeding.

 

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Person ” means an individual, a corporation, a partnership, a limited liability company, an association, a trust or any other entity, including a government or political subdivision or an agency or instrumentality thereof.

Preferred Stock ” means, with respect to any Person, any Capital Stock of any class or classes (however designated) which is preferred as to the payment of dividends or distributions, or as to the distribution of assets upon any voluntary or involuntary liquidation or dissolution of such Person, over the Capital Stock of any other class in such Person.

Priority Confirmation Joinder ” means an agreement substantially in the form of Exhibit. A .

Priority Credit Agreement ” means that certain Credit Agreement, dated as of October 4, 2016, by and among SandRidge, as borrower, the Original Priority Lien Agent, and the other lenders party thereto, as such agreement, in whole or in part, in one or more instances, may be amended, restated, renewed, extended, substituted, refinanced, restructured, replaced, supplemented or otherwise modified from time to time (including, without limitation, any successive amendments, restatements, renewals, extensions, substitutions, foregoing) and any credit agreement, loan agreement, note agreement, promissory note, indenture or any other agreement or instrument evidencing or governing the terms of any Priority Substitute Credit Facility.

Priority Lien ” means a Lien granted by SandRidge or any other Grantor in favor of the Priority Lien Agent, at any time, upon any Property of SandRidge or such Grantor to secure Priority Lien Obligations (including Liens on such Collateral under the security documents associated with any Priority Substitute Credit Facility).

Priority Lien Agent ” means (a) the Original Priority Lien Agent, and, from and after the date of execution and delivery of a Priority Substitute Credit Facility, the agent, collateral agent, trustee or other representative of the lenders or holders of the indebtedness and other Obligations evidenced thereunder or governed thereby, in each case, together with its successors in such capacity and (b) any collateral trustee or agent in respect of any Additional Priority Lien Debt Facility pursuant to the Priority Lien Intercreditor Agreement.

Priority Lien Collateral ” shall mean all “Collateral”, as defined in the Priority Credit Agreement or any other Priority Lien Document, and any other assets of any Grantor now or at any time hereafter subject to Liens which secure, but only to the extent securing, any Priority Lien Obligation.

Priority Lien Debt ” means the Credit Agreement Debt and all additional indebtedness incurred under any Additional Priority Lien Documents and with respect to which the requirements of Section 4.04(b) have been satisfied, and all indebtedness incurred under any Priority Substitute Credit Facility.

Priority Lien Documents ” means the Credit Agreement Documents and the Additional Priority Lien Documents.

Priority Lien Intercreditor Agreement ” means from and after the date of execution and delivery of any Additional Priority Lien Debt Facility and/or a Priority Substitute Credit Facility, an intercreditor agreement entered into among SandRidge, the other Grantors, the Priority Lien Agent and the other Priority Lien Representatives, as amended, restated, adjusted, waived, renewed, extended, supplemented or otherwise modified from time to time, in accordance with each applicable Priority Lien Document.

 

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Priority Lien Obligations ” means the Credit Agreement Obligations, Additional Priority Lien Obligations and, in each case, all other Obligations in respect thereof. Notwithstanding any other provision hereof, the term “Priority Lien Obligations” will include accrued interest, fees, costs and other charges incurred under the Priority Lien Documents, whether incurred before or after commencement of an Insolvency or Liquidation Proceeding.

Priority Lien Representative ” means (a) in the case of the Priority Credit Agreement, the Priority Lien Agent, and (b) in the case of any other Series of Priority Lien Debt, the trustee, agent or representative of the holders of such Series of Priority Lien Debt who (i) is appointed as a Priority Lien Representative (for purposes related to the administration of the security documents) pursuant to the indenture, credit agreement or other agreement governing such Series of Priority Lien Debt, together with its successors in such capacity, and (ii) has executed the Priority Lien Intercreditor Agreement or become party to the Priority Lien Intercreditor Agreement by executing a joinder in the form required under the Priority Lien Intercreditor Agreement.

Priority Lien Secured Parties ” means, at any time, the Credit Agreement Secured Parties and the Additional Priority Lien Secured Parties at such time.

Priority Lien Security Documents ” means the Credit Agreement Security Documents and the Additional Priority Lien Security Documents.

Priority Substitute Credit Facility ” means any Credit Facility with respect to which the requirements contained in Section 4.04(a) of this Agreement have been satisfied and that Replaces the Priority Credit Agreement then in existence. For the avoidance of doubt, no Priority Substitute Credit Facility shall be required to be a revolving or asset-based loan facility and may be a facility evidenced or governed by a credit agreement, loan agreement, note agreement, promissory note, indenture or any other agreement or instrument; provided that any Priority Lien securing such Priority Substitute Credit Facility shall be subject to the terms of this Agreement for all purposes (including the lien priorities as set forth herein as of the date hereof).

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.

Recovery ” has the meaning assigned to such term in Section 4.03 .

Replaces ” means, (a) in respect of any agreement with reference to the Priority Credit Agreement or the Priority Lien Obligations or any Priority Substitute Credit Facility, that such agreement refunds, refinances, increases or replaces the Priority Credit Agreement, the Priority Lien Obligations or such Priority Substitute Credit Facility in whole (in a transaction that is in compliance with Section 4.04(a)) and that all commitments thereunder are terminated, or, to the extent permitted by the terms of the Priority Credit Agreement, Priority Lien Obligations or such Priority Substitute Credit Facility, in part, and (b) in respect of any agreement with reference to the Subordinated Documents, the Subordinated Obligations or any Subordinated Substitute Facility, that such indebtedness refunds, refinances, increases or replaces the Subordinated Documents, the Subordinated Obligations or such Subordinated Substitute Facility in whole (in a transaction that is in compliance with Section 4.04(a)) and that all commitments thereunder are terminated, or, to the extent permitted by the terms of the Subordinated Documents, the Subordinated Obligations or such Subordinated Substitute Facility, in part. “ Replace ,” “ Replaced ” and “ Replacement ” shall have correlative meanings.

SandRidge ” has the meaning assigned to such term in the preamble hereto.

 

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Secured Debt Documents ” means the Priority Lien Documents and the Subordinated Documents.

Secured Debt Representative ” means the Priority Lien Agent and the Subordinated Collateral Trustee.

Secured Obligations ” means the Priority Lien Obligations and the Subordinated Obligations.

Secured Parties ” means the Priority Lien Secured Parties and the Subordinated Secured Parties.

Security Documents ” means the Priority Lien Security Documents and the Subordinated Security Documents.

Series of Priority Lien Debt ” means, severally, the Priority Credit Agreement and each other issue or series of Priority Lien Debt (including any Additional Priority Lien Debt Facility) for which a single transfer register is maintained.

Series of Subordinated Debt ” means, severally, the Subordinated Indenture Notes and each other issue or series of Subordinated Debt (including any Additional Subordinated Debt Facility) for which a single transfer register is maintained.

Series of Secured Debt ” means each Series of Priority Lien Debt and each Series of Subordinated Debt.

Specified Litigation Event ” means (i)(a) the entry of an order by a court of competent jurisdiction denying summary judgment to the Company or its Affiliates or (b) the expiration of the time period in which the Company or its Affiliates may move for summary judgment, in either case, in a class action lawsuit against the Company (other than such a lawsuit initiated by any Subordinated Secured Party or Affiliate of a Subordinated Secured Party) that is reasonably expected to result in a Material Adverse Effect under the relevant Subordinated Documents.

Springing Event ” shall mean the creation of a Subordinated Lien on the Collateral to secure up to $100,000,000 in aggregate principal amount, subject to increase pursuant to Section 9.18(c) , of the obligations of the Company under the relevant Subordinated Debt Documents and guarantee obligations of any subsidiary of the Company providing a guarantee of such Subordinated Debt upon the earlier to occur of (i) the Company’s good faith determination that the Specified Litigation Event has occurred or (ii) the receipt of written notice from holders or lenders constituting at least two-thirds in aggregate principal amount of the relevant Subordinated Obligations then outstanding (or the Subordinated Representative acting pursuant to the direction of such holders or lenders) that the Specified Litigation Event has occurred, the Springing Event shall be deemed to have occurred.

Springing Event Notice ” has the meaning assigned to such term in Section 9.18 .

Standstill Period ” has the meaning assigned to such term in Section 3.02(a)(i) .

Subordinated Collateral ” shall mean all “Collateral”, as defined in any Subordinated Document, and any other assets of any Grantor now or at any time hereafter subject to Liens which secure, but only to the extent securing, any Subordinated Obligations.

Subordinated Collateral Trust Agreement ” means the Collateral Trust Agreement, dated as of October 4, among SandRidge, the other Grantors from time to time party thereto, the Subordinated Notes

 

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Trustee, the other Subordinated Representatives from time to time party thereto and the Subordinated Collateral Trustee, as amended, restated, adjusted, waived, renewed, extended, supplemented or otherwise modified from time to time, in accordance with each applicable Subordinated Document.

Subordinated Collateral Trustee ” means the Original Subordinated Collateral Trustee, and, from and after the date of execution and delivery of a Subordinated Substitute Facility, the agent, collateral agent, trustee or other representative of the lenders or other holders of the indebtedness and other obligations evidenced thereunder or governed thereby, in each case, together with its successors in such capacity.

Subordinated Debt ” means the indebtedness under the Subordinated Indenture Notes issued on the date hereof and guarantees thereof and all additional indebtedness incurred under any Additional Subordinated Documents, in each case, that was permitted to be incurred and secured in accordance with the Secured Debt Documents (or as to which the lenders or other financing sources under the applicable Subordinated Documents obtained an Officer’s Certificate at the time of incurrence to the effect that such indebtedness was permitted to be incurred and secured by all applicable Secured Debt Documents) and with respect to which the requirements of Section 4.04(b) have been (or are deemed) satisfied, and all indebtedness incurred under any Subordinated Substitute Facility.

Subordinated Documents ” means the Indenture Subordinated Documents and the Additional Subordinated Documents.

Subordinated Indenture Notes ” means (i) the Subordinated Notes due 2020 issued under the Subordinated Notes Indenture.

Subordinated Lien ” means a Lien granted by a Subordinated Document to the Subordinated Collateral Trustee, at any time, upon any Collateral by any Grantor to secure Subordinated Obligations (including Liens on such Collateral under the security documents associated with any Subordinated Substitute Facility); provided , that in no event shall any Subordinated Lien be granted unless a Springing Event has occurred.

Subordinated Notes Indenture ” means the Indenture, dated as of October 4, 2016, among SandRidge, the Grantors party thereto from time to time and the Subordinated Notes Trustee, as amended, restated, adjusted, waived, renewed, extended, supplemented or otherwise modified from time to time in accordance with the terms hereof (including any supplements executed in connection with the issuance of any Series of Subordinated Debt under the Subordinated Notes Indenture) unless restricted by the terms of this Agreement, and any credit agreement, loan agreement, note agreement, promissory note, indenture or any other agreement or instrument evidencing or governing the terms of any Subordinated Substitute Facility.

Subordinated Notes Trustee ” means the Original Subordinated Notes Trustee, and, from and after the date of execution and delivery of a Subordinated Substitute Facility, the agent, collateral agent, trustee or other representative of the lenders or other holders of the indebtedness and other obligations evidenced thereunder or governed thereby, together with its successors in such capacity.

Subordinated Obligations ” means Subordinated Debt and all other Obligations in respect thereof. Notwithstanding any other provision hereof, the term “Subordinated Obligations” will include accrued interest, fees, costs and other charges incurred under the Subordinated Notes Indenture and the other Subordinated Documents, whether incurred before or after commencement of an Insolvency or Liquidation Proceeding and whether or not allowable in an Insolvency or Liquidation Proceeding.

 

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Subordinated Purchasers ” has the meaning assigned to such term in Section 3.06(a) .

Subordinated Representative ” means (a) in the case of the Subordinated Indenture Notes, the Subordinated Notes Trustee, and (b) in the case of any other Series of Subordinated Debt, the trustee, agent or representative of the holders of such Series of Subordinated Debt who (i) is appointed as a Subordinated Representative (for purposes related to the administration of the security documents) pursuant to the indenture, credit agreement or other agreement governing such Series of Subordinated Debt, together with its successors in such capacity, and (ii) has become party to the Subordinated Collateral Trust Agreement by executing a joinder in the form required under the Subordinated Collateral Trust Agreement.

Subordinated Secured Parties ” means the Indenture Subordinated Secured Parties and the Additional Subordinated Secured Parties.

Subordinated Security Documents ” means the Indenture Subordinated Security Documents and the Additional Subordinated Security Documents.

Subordinated Substitute Facility ” means any facility with respect to which the requirements contained in Section 4.04(a) of this Agreement have been satisfied and that is permitted to be incurred pursuant to the Priority Lien Documents, the proceeds of which are used to, among other things, Replace the Subordinated Notes Indenture and/or any Additional Subordinated Debt Facility then in existence. For the avoidance of doubt, no Subordinated Substitute Facility shall be required to be evidenced by notes or other instruments and may be a facility evidenced or governed by a credit agreement, loan agreement, note agreement, promissory note, indenture or any other agreement or instrument; provided that any such Subordinated Substitute Facility shall be subject to the terms of this Agreement for all purposes (including the lien priority as set forth herein as of the date hereof) as the other Liens securing the Subordinated Obligations are subject to under this Agreement.

subsidiary ” of a Person means:

(a) any corporation more than 50% of the outstanding voting power of the Voting Stock of which is owned or controlled, directly or indirectly, by such Person or by one or more other subsidiaries of such Person, or by such Person and one or more other subsidiaries thereof, or

(b) any limited partnership of which such Person or any subsidiary of such Person is a general partner, or

(c) any other Person in which such Person, or one or more other subsidiaries of such Person, or such Person and one or more other subsidiaries, directly or indirectly, has more than 50% of the outstanding Capital Stock or has the power, by contract or otherwise, to direct or cause the direction of the policies, management and affairs thereof.

Treasury Management Arrangement ” means any agreement or other arrangement governing the provision of treasury or cash management services, including deposit accounts, overdraft, credit or debit card, funds transfer, automated clearinghouse, zero balance accounts, returned check concentration, controlled disbursement, lockbox, account reconciliation and reporting and trade finance services and other cash management services.

Voting Stock ” of a Person means Capital Stock of such Person of the class or classes pursuant to which the holders thereof have the general voting power under ordinary circumstances to elect at least a majority of the board of directors, managers or trustees of such Person (irrespective of whether or not at the time Capital Stock of any other class or classes shall have or might have voting power by reason of the happening of any contingency).

 

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ARTICLE II

SUBORDINATION

Section 2.01 Subordination of Subordinated Debt to Priority Lien Debt .

(a) SandRidge covenants and agrees, and each of the Subordinated Collateral Trustee and each Subordinated Secured Party by its acceptance of the Subordinated Documents (whether upon original issue or upon transfer or assignment) likewise covenants and agrees, notwithstanding anything to the contrary contained in any of the Subordinated Documents, that the payment of any and all of the Subordinated Debt shall be subordinate and subject in right and time of payment, to the extent and in the manner hereinafter set forth, to the prior indefeasible payment in full in cash of all Priority Lien Debt and all the termination of all commitments to lend under the Priority Lien Documents, subject to Section 2.02 . Each holder of Priority Lien Debt, whether now outstanding or hereafter created, incurred, assumed or guaranteed, shall be deemed to have acquired Priority Lien Debt in reliance upon the provisions contained in this Agreement.

(b) In the event of any Insolvency or Liquidation Proceeding involving any Credit Party:

(i) All Priority Lien Debt shall first be indefeasibly paid in full in cash and all commitments to lend under the Priority Lien Documents shall have been terminated before any Distribution, whether in cash, securities or other property, shall be made on account of any Subordinated Debt.

(ii) Any Distribution, whether in cash, securities or other property which would otherwise, but for the terms hereof, be payable or deliverable in respect of the Subordinated Debt shall be paid or delivered directly to the Priority Lien Agent (to be held and/or applied by the Priority Lien Agent in accordance with the terms of the applicable Priority Lien Documents) until all Priority Lien Debt is indefeasibly paid in full in cash and all commitments to lend under the Priority Lien Documents have terminated. Each of the Subordinated Collateral Trustee and each Subordinated Secured Party irrevocably authorizes, empowers and directs any debtor, debtor in possession, receiver, trustee, liquidator, custodian, conservator or other Person having authority, to pay or otherwise deliver all such Distributions to the Priority Lien Agent. Each of the Subordinated Collateral Trustee and each Subordinated Secured Party also irrevocably authorizes and empowers the Priority Lien Agent, in the name of each such Person, to demand, sue for, collect and receive any and all such Distributions.

(iii) Each of the Subordinated Collateral Trustee and each Subordinated Secured Party agrees not to (and hereby waives any right to) initiate, prosecute or participate (or support any other Person in initiating, prosecuting or participating) in any claim, action or other proceeding challenging the enforceability or validity of the Priority Lien Debt or the perfection or priority of any Liens securing the Priority Lien Debt, including without limitation, any Lien on the Collateral securing the Priority Lien Debt.

(iv) The Priority Lien Debt shall continue to be treated as Priority Lien Debt and the provisions of this Agreement shall continue to govern the relative rights and priorities of the holders of the Priority Lien Debt even if all or part of the Senior Debt or any security interests securing the Priority Lien Debt are subordinated, set aside, avoided, invalidated or disallowed in connection with any such Insolvency and Liquidation Proceeding, and this Agreement shall be reinstated if at any time any payment of any of the Prior Lien Debt is rescinded or must otherwise be returned by any holder of the Priority Lien Debt or any representative of such holder.

 

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Section 2.02 Subordinated Debt Payment Restrictions .

(a) Notwithstanding the terms of the Subordinated Documents, SandRidge hereby agrees that it may not make, and the Subordinated Collateral Trustee for itself and on behalf of each Subordinated Secured Party hereby agrees that it will not accept, any Distribution with respect to the Subordinated Debt (including without limitation, any Distribution in respect of any put or repurchase of warrants or similar instruments) until the Priority Lien Debt is indefeasibly paid in full in cash and all commitments to lend under the Priority Lien Documents have terminated, other than Permitted Subordinated Debt Payments, subject to the terms of this Agreement.

(b) If any Distribution on account of the Subordinated Debt not permitted to be made by SandRidge or accepted by any Subordinated Secured Creditor under this Agreement is made and received by any Subordinated Secured Creditor, such Distribution shall not be commingled with any of the assets of such Subordinated Secured Creditor, shall be held in trust by such Subordinated Secured Creditor for the benefit of the holder of the Priority Lien Debt and shall be promptly paid over to the Priority Lien Agent for application (in accordance with the relevant Priority Lien Documents) to the payment of the Priority Lien Debt then remaining unpaid, until all of the Priority Lien Debt is indefeasibly paid in full in cash and all commitments to lend under the Priority Lien Documents have terminated.

Section 2.03 Relative Priorities . (a) The grant of the Priority Liens pursuant to the Priority Lien Documents and the grant of the Subordinated Liens, if any, pursuant to the Subordinated Documents create two separate and distinct Liens on the Collateral; provided , however , that no Subordinated Liens shall be granted unless and until a Springing Event occurs and such Subordinated Liens are granted in accordance with Section 4.04 .

(b) Notwithstanding anything contained in this Agreement, the Priority Lien Documents, the Subordinated Documents or any other agreement or instrument or operation of law to the contrary, or any other circumstance whatsoever and irrespective of (i) how a Lien was acquired (whether by grant, possession, statute, operation of law, subrogation, or otherwise), (ii) the time, manner, or order of the grant, attachment or perfection of a Lien, (iii) any conflicting provision of the New York UCC or other applicable law, (iv) any defect in, or non-perfection, setting aside, or avoidance of, a Lien or a Priority Lien Document or a Subordinated Document, (v) the modification of a Priority Lien Obligation or a Subordinated Obligation, or (vi) the subordination of a Lien on Collateral securing a Priority Lien Obligation to a Lien securing another obligation of SandRidge or other Person that is permitted under the Priority Lien Documents as in effect on the date hereof or securing a DIP Financing and the Subordinated Collateral Trustee, on behalf of itself and the other Subordinated Secured Parties, hereby agrees that (i) any Priority Lien on any Collateral now or hereafter held by or for the benefit of any Priority Lien Secured Party shall be senior in right, priority, operation, effect and all other respects to any and all Subordinated Liens on any Collateral and (ii) any Subordinated Lien on any Collateral now or hereafter held by or for the benefit of any Subordinated Secured Party shall be junior and subordinate in right, priority, operation, effect and all other respects to any and all Priority Liens on any Collateral.

(c) It is acknowledged that (i) the aggregate amount of the Priority Lien Obligations may be increased from time to time pursuant to the terms of the Priority Lien Documents, (ii) a portion of the Priority Lien Obligations consists or may consist of indebtedness that is revolving in nature, and the amount thereof that may be outstanding at any time or from time to time may be increased or reduced and subsequently reborrowed, and (iii) (A) the Priority Lien Documents may be replaced, restated,

 

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supplemented, restructured or otherwise amended or modified from time to time and (B) the Priority Lien Obligations may be increased, extended, renewed, replaced, restated, supplemented, restructured, repaid, refunded, refinanced or otherwise amended or modified from time to time, in the case of the foregoing (A) and (B) all without affecting the subordination and lien priorities of the Subordinated Debt and Subordinated Liens provided hereunder or the provisions of this Agreement defining the relative rights of the Priority Lien Secured Parties and the Subordinated Secured Parties. The lien priorities provided for herein shall not be altered or otherwise affected by any amendment, modification, supplement, extension, increase, renewal, restatement or Replacement of either the Priority Lien Obligations (or any part thereof) or the Subordinated Obligations (or any part thereof), by the release of any Collateral or of any guarantees for any Priority Lien Obligations or by any action that any Secured Debt Representative or Secured Party may take or fail to take in respect of any Collateral.

Section 2.04 Prohibition on Marshalling, Etc . Until the Discharge of Priority Lien Obligations, the Subordinated Collateral Trustee will not assert any marshalling, appraisal, valuation, or other similar right that may otherwise be available to a junior secured creditor.

Section 2.05 No New Liens . The parties hereto agree that, so long as the Discharge of Priority Lien Obligations has not occurred, none of the Grantors shall, nor shall any Grantor permit any of its subsidiaries to, (i) grant or permit any additional Liens (other than, for the avoidance of doubt, Liens granted upon the occurrence of a Springing Event) on any asset of a Grantor to secure any Subordinated Obligation, or take any action to perfect any additional Liens (other than, for the avoidance of doubt, Liens granted upon the occurrence of a Springing Event), unless it has granted, or substantially concurrently therewith grants (or offers to grant), a Lien on such asset of such Grantor to secure the Priority Lien Obligations and has taken all actions required to perfect such Liens; provided , however , the refusal or inability of the Priority Lien Agent to accept such Lien will not prevent the Subordinated Collateral Trustee from taking the Lien or (ii) grant or permit any additional Liens on any asset of a Grantor to secure any Priority Lien Obligation, or take any action to perfect any additional Liens, unless it has granted, or substantially concurrently therewith grants (or offers to grant), a Lien on such asset of such Grantor to secure the Subordinated Obligations and has taken all actions required to perfect such Liens; provided , however , the refusal or inability of the Subordinated Collateral Trustee to accept such Lien will not prevent the Priority Lien Agent from taking the Lien, with each such Lien as described in this Section 2.05 to be subject to the provisions of this Agreement. To the extent that the provisions of the immediately preceding sentence are not complied with for any reason, without limiting any other right or remedy available to the Priority Lien Agent, the other Priority Lien Secured Parties, the Subordinated Collateral Trustee or the other Subordinated Secured Parties, the Subordinated Collateral Trustee, for itself and on behalf of the other Subordinated Secured Parties agrees that any amounts received by or distributed to any Subordinated Secured Party pursuant to or as a result of any Lien granted in contravention of this Section 2.05 shall be subject to Section 3.05(b) .

Section 2.06 Similar Collateral and Agreements . The parties hereto acknowledge and agree that it is their intention that the Priority Lien Collateral and the Subordinated Collateral be identical. In furtherance of the foregoing, the parties hereto agree (a) to cooperate in good faith in order to determine, upon any reasonable request by the Priority Lien Agent or the Subordinated Collateral Trustee, the specific assets included in the Priority Lien Collateral and the Subordinated Collateral, the steps taken to perfect the Priority Liens and the Subordinated Liens thereon and the identity of the respective parties obligated under the Priority Lien Documents and the Subordinated Documents in respect of the Priority Lien Obligations and the Subordinated Obligations, respectively, (b) that the Subordinated Security Documents creating Liens on the Collateral shall be in all material respects the same forms of documents as the respective Priority Lien

 

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Security Documents creating Liens on the Collateral other than (i) with respect to the priority nature of the Liens created thereunder in such Collateral, (ii) such modifications to such Subordinated Security Documents which are less restrictive than the corresponding Priority Lien Security Documents, (iii) provisions in the Subordinated Security Documents which are solely applicable to the rights and duties of the Subordinated Secured Parties, and (iv) such deletions or modifications of representations, warranties and covenants as are customary with respect to security documents establishing Liens securing publicly traded debt securities and (c) that at no time shall there be any Grantor that is an obligor in respect of the Subordinated Obligations that is not also an obligor in respect of the Priority Lien Obligations.

Section 2.07 No Duties of Priority Lien Agent . The Subordinated Collateral Trustee, for itself and on behalf of each Subordinated Secured Party, acknowledges and agrees that neither the Priority Lien Agent nor any other Priority Lien Secured Party shall have any duties or other obligations to any such Subordinated Secured Party with respect to any Collateral, other than to transfer to the Subordinated Collateral Trustee any remaining Collateral and any proceeds of the sale or other Disposition of any such Collateral remaining in its possession following the associated Discharge of Priority Lien Obligations, in each case without representation or warranty on the part of the Priority Lien Agent or any Priority Lien Secured Party. In furtherance of the foregoing, each Subordinated Secured Party acknowledges and agrees that until the Discharge of Priority Lien Obligations (subject to the terms of Section 3.02 , including the rights of the Subordinated Secured Parties following the expiration of any applicable Standstill Period), the Priority Lien Agent shall be entitled, for the benefit of the Priority Lien Secured Parties, to sell, transfer or otherwise Dispose of or deal with such Collateral, as provided herein and in the Priority Lien Documents, without regard to any Subordinated Lien or any rights to which the Subordinated Collateral Trustee or any Subordinated Secured Party would otherwise be entitled as a result of such Subordinated Lien. Without limiting the foregoing, each Subordinated Secured Party agrees that neither the Priority Lien Agent nor any other Priority Lien Secured Party shall have any duty or obligation first to marshal or realize upon any type of Collateral, or to sell, Dispose of or otherwise liquidate all or any portion of such Collateral, in any manner that would maximize the return to the Subordinated Secured Parties, notwithstanding that the order and timing of any such realization, sale, Disposition or liquidation may affect the amount of proceeds actually received by the Subordinated Secured Parties from such realization, sale, Disposition or liquidation. Each of the Subordinated Secured Parties waives any claim such Subordinated Secured Party may now or hereafter have against the Priority Lien Agent or any other Priority Lien Secured Party arising out of any actions which the Priority Lien Agent or the Priority Lien Secured Parties take or omit to take (including actions with respect to the creation, perfection or continuation of Liens on any Collateral, actions with respect to the foreclosure upon, sale, release or depreciation of, or failure to realize upon, any of the Collateral, and actions with respect to the collection of any claim for all or any part of the Priority Lien Obligations from any account debtor, guarantor or any other party) in accordance with this Agreement and the Priority Lien Documents or the valuation, use, protection or release of any security for the Priority Lien Obligations.

ARTICLE III

ENFORCEMENT RIGHTS; PURCHASE OPTION

Section 3.01 Limitation on Enforcement Action . Prior to the Discharge of Priority Lien Obligations, the Subordinated Collateral Trustee, for itself and on behalf of each Subordinated Secured Party hereby agrees that, subject to Section 3.05(b) and Section 4.07 , none of the Subordinated Collateral Trustee, Subordinated Noteholder or any other Subordinated Secured Party shall take any Enforcement Action or commence or join in any judicial or nonjudicial foreclosure proceedings with respect to, seek to have a trustee, receiver, liquidator or similar official appointed for or over, attempt any action to take possession of, exercise any right, remedy or power with respect to, or otherwise take any action to enforce its interest in or realize upon, or take any other action available to it in respect of, any Subordinated Debt or Collateral under any Subordinated Security Document, applicable law or otherwise (including but not limited to any right of setoff), it being agreed that only the Priority Lien Agent, acting in accordance with the applicable Priority Lien Documents, shall have the exclusive right (and whether or not any Insolvency

 

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or Liquidation Proceeding has been commenced), to take any such actions or exercise any such remedies with respect to Collateral, in each case, without any consultation with or the consent of the Subordinated Collateral Trustee or any other Subordinated Secured Party. In exercising rights and remedies with respect to the Collateral, the Priority Lien Agent and the other Priority Lien Secured Parties may enforce the provisions of the Priority Lien Documents and exercise remedies thereunder, all in such order and in such manner as they may determine in their sole discretion and regardless of whether such exercise and enforcement is adverse to the interest of any Subordinated Secured Party. Such exercise and enforcement shall include the rights of an agent appointed by them to Dispose of Collateral upon foreclosure, to incur expenses in connection with any such Disposition and to exercise all the rights and remedies of a secured creditor under the Uniform Commercial Code, the Bankruptcy Code or any other Bankruptcy Law. Without limiting the generality of the foregoing, the Priority Lien Agent will have the exclusive right to deal with that portion of the Collateral consisting of deposit accounts and securities accounts (collectively “ Accounts ”), including exercising rights under control agreements with respect to such Accounts. The Subordinated Collateral Trustee, for itself and on behalf of the other Subordinated Secured Parties, hereby acknowledges and agrees that no covenant, agreement or restriction contained in any Subordinated Security Document or any other Subordinated Document, shall be deemed to restrict in any way the rights and remedies of the Priority Lien Agent or the other Priority Lien Secured Parties with respect to the Collateral as set forth in this Agreement. Notwithstanding the foregoing, subject to Section 3.05 , the Subordinated Collateral Trustee, on behalf of the Subordinated Secured Parties, may, but will have no obligation to, take all such actions (not adverse to the Priority Liens or the rights of the Priority Lien Agent and the Priority Lien Secured Parties) it deems necessary to perfect or continue the perfection of the Subordinated Liens in the Collateral or to create, preserve or protect (but not enforce) the Subordinated Liens in the Collateral. Nothing herein shall limit the right or ability of the Subordinated Secured Parties to (i) purchase (by credit bid or otherwise) all or any portion of the Collateral in connection with any enforcement of remedies by the Priority Lien Agent to the extent that, and so long as, the Priority Lien Secured Parties receive payment in full in cash of all Priority Lien Obligations after giving effect thereto, (ii) file a proof of claim with respect to the Subordinated Obligations or (iii) as provided in Section 4.07 .

Section 3.02 Standstill Period; Permitted Enforcement Action . Prior to the Discharge of Priority Lien Obligations and notwithstanding the foregoing Section 3.01 , both before and during an Insolvency or Liquidation Proceeding: after a period of 270 days has elapsed (which period will be tolled during any period in which the Priority Lien Agent is not entitled, on behalf of the Priority Lien Secured Parties, to enforce or exercise any rights or remedies with respect to any Collateral as a result of (A) any injunction issued by a court of competent jurisdiction or (B) the automatic stay or any other stay in any Insolvency or Liquidation Proceeding) since the date on which the Subordinated Collateral Trustee has delivered to the Priority Lien Agent written notice of the acceleration of any Subordinated Debt (the “ Standstill Period ”), the Subordinated Collateral Trustee and the other Subordinated Secured Parties may enforce or exercise any rights or remedies with respect to any Collateral; provided , however that notwithstanding the expiration of the Standstill Period or anything in the Subordinated Collateral Trust Agreement to the contrary, in no event may the Subordinated Collateral Trustee or any other Subordinated Secured Party enforce or exercise any rights or remedies with respect to any Collateral, or commence, join with any Person at any time in commencing, or petition for or vote in favor of any resolution for, any such action or proceeding, if the Priority Lien Agent on behalf of the Priority Lien Secured Parties or any other Priority Lien Secured Party shall have (A) commenced, and shall be diligently pursuing (or shall have sought or requested relief from, or modification of, the automatic stay or any other stay or other prohibition in any Insolvency or Liquidation Proceeding to enable the commencement and pursuit thereof), the enforcement or exercise of any rights or remedies with respect to the Collateral or any such action or proceeding or (B) given prompt written notice to the Subordinated Representatives by the Priority Lien Agent of its intention to commence any such proceeding described in the preceding clause (A).

 

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Section 3.03 Insurance . Unless and until the Discharge of Priority Lien Obligations has occurred (subject to the terms of Section 3.02 , including the rights of the Subordinated Secured Parties following expiration of any applicable Standstill Period), the Priority Lien Agent shall have the sole and exclusive right, subject to the rights of the Grantors under the Priority Lien Documents, to adjust and settle claims in respect of Collateral under any insurance policy in the event of any loss thereunder and to approve any award granted in any condemnation or similar proceeding (or any deed in lieu of condemnation) affecting the Collateral. Unless and until the Discharge of Priority Lien Obligations has occurred, and subject to the rights of the Grantors under the Priority Lien Documents, all proceeds of any such policy and any such award (or any payments with respect to a deed in lieu of condemnation) in respect to the Collateral shall be paid to the Priority Lien Agent pursuant to the terms of the Priority Lien Documents (including for purposes of cash collateralization of commitments, letters of credit and Hedging Obligations). If the Subordinated Collateral Trustee or any Subordinated Secured Party shall, at any time prior to the Discharge of Priority Lien Obligations, receive any proceeds of any such insurance policy or any such award or payment in contravention of the foregoing, it shall pay such proceeds over to the Priority Lien Agent. In addition, if by virtue of being named as an additional insured or loss payee of any insurance policy of any Grantor covering any of the Collateral, the Subordinated Collateral Trustee, or any other Subordinated Secured Party shall have the right to adjust or settle any claim under any such insurance policy, then unless and until the Discharge of Priority Lien Obligations has occurred, the Subordinated Collateral Trustee and any such Subordinated Secured Party shall follow the instructions of the Priority Lien Agent, or of the Grantors under the Priority Lien Documents to the extent the Priority Lien Documents grant such Grantors the right to adjust or settle such claims, with respect to such adjustment or settlement (subject to the terms of Section 3.02 , including the rights of the Subordinated Secured Parties following expiration of any applicable Standstill Period).

Section 3.04 Notification of Release of Collateral . Each of the Priority Lien Agent and the Subordinated Collateral Trustee shall give the other Secured Debt Representatives prompt written notice of the Disposition by it of, and Release by it of the Lien on, any Collateral. Such notice shall describe in reasonable detail the subject Collateral, the parties involved in such Disposition or Release, the place, time, manner and method thereof, and the consideration, if any, received therefor; provided , however , that the failure to give any such notice shall not in and of itself in any way impair the effectiveness of any such Disposition or Release.

Section 3.05 No Interference; Payment Over .

(a) No Interference . The Subordinated Collateral Trustee, for itself and on behalf of each Subordinated Secured Party, agrees that each Subordinated Secured Party (i) will not take or cause to be taken any action the purpose or effect of which is, or could be, to make any Subordinated Lien pari passu with, or to give such Subordinated Secured Party any preference or priority relative to, any Priority Lien with respect to the Collateral or any part thereof, (ii) will not challenge or question in any proceeding the validity or enforceability of any Priority Lien Obligations or Priority Lien Document, or the validity, attachment, perfection or priority of any Priority Lien, or the validity or enforceability of the priorities, rights or duties established by the provisions of this Agreement, (iii) will not take or cause to be taken any action the purpose or effect of which is, or could be, to interfere, hinder or delay, in any manner, whether by judicial proceedings or otherwise, any sale, transfer or other Disposition of the Collateral by any Priority Lien Secured Party or the Priority Lien Agent acting on their behalf, (iv) shall have no right to (A) direct the Priority Lien Agent or any other Priority Lien Secured Party to exercise any right, remedy or power with respect to any Collateral or (B) consent to the exercise by the Priority Lien Agent or any other Priority Lien Secured Party of any right, remedy or power with respect to any Collateral, (v) will not institute any suit or assert in any suit or Insolvency or Liquidation Proceeding any claim against the Priority Lien Agent or other Priority Lien Secured Party seeking damages from or other relief by way of specific performance, instructions or otherwise with respect to, and neither the Priority

 

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Lien Agent nor any other Priority Lien Secured Party shall be liable for, any action taken or omitted to be taken by the Priority Lien Agent or other Priority Lien Secured Party with respect to any Priority Lien Collateral, (vi) prior to the Discharge of Priority Lien Obligations will not seek, and hereby waives any right, to have any Collateral or any part thereof marshaled upon any foreclosure or other Disposition of such Collateral, (vii) will not attempt, directly or indirectly, whether by judicial proceedings or otherwise, to challenge the enforceability of any provision of this Agreement, (viii) will not object to forbearance by the Priority Lien Agent or any Priority Lien Secured Party, and (ix) prior to the Discharge of Priority Lien Obligations will not assert, and hereby waives, to the fullest extent permitted by law, any right to demand, request, plead or otherwise assert or claim the benefit of any marshalling, appraisal, valuation or other similar right that may be available under applicable law with respect to the Collateral or any similar rights a junior secured creditor may have under applicable law.

(b) Payment Over . The Subordinated Collateral Trustee, for itself and on behalf of each other Subordinated Secured Party hereby agrees that if any Subordinated Secured Party shall obtain possession of any Collateral or shall realize any proceeds or payment in respect of any Collateral, pursuant to the exercise of any rights or remedies with respect to the Collateral under any Subordinated Security Document or by the exercise of any rights available to it under applicable law or in any Insolvency or Liquidation Proceeding, to the extent permitted hereunder, at any time prior to the Discharge of Priority Lien Obligations secured, or intended to be secured, by such Collateral, then it shall hold such Collateral, proceeds or payment in trust for the Priority Lien Agent and the other Priority Lien Secured Parties and transfer such Collateral, proceeds or payment, as the case may be, to the Priority Lien Agent as promptly as practicable. Furthermore, the Subordinated Collateral Trustee shall, at the Grantors’ expense, promptly send written notice to the Priority Lien Agent upon receipt of such Collateral, proceeds or payment by it or the Subordinated Notes Trustee or, to the extent it has knowledge, by any other Subordinated Secured Party and if directed by the Priority Lien Agent within five (5) days after receipt by the Priority Lien Agent of such written notice, the applicable Subordinated Secured Party shall deliver such Collateral, proceeds or payment to the Priority Lien Agent in the same form as received, with any necessary endorsements, or as court of competent jurisdiction may otherwise direct. The Priority Lien Agent is hereby authorized to make any such endorsements as agent for the Subordinated Collateral Trustee or any other Subordinated Secured Party. The Subordinated Collateral Trustee, for itself and on behalf of each other Subordinated Secured Party, agrees that if, at any time, it obtains written notice that all or part of any payment with respect to any Priority Lien Obligations previously made shall be rescinded for any reason whatsoever, it will promptly pay over to the Priority Lien Agent any payment received by it and then in its possession or under its direct control in respect of any such Priority Lien Collateral and shall promptly turn any such Collateral then held by it over to the Priority Lien Agent, and the provisions set forth in this Agreement will be reinstated as if such payment had not been made, until the Discharge of Priority Lien Obligations. All Subordinated Liens will remain attached to and enforceable against all proceeds so held or remitted, subject to the priorities set forth in this Agreement. Anything contained herein to the contrary notwithstanding, this Section 3.05(b) shall not apply to any proceeds of Collateral realized in a transaction not prohibited by the Priority Lien Documents and as to which the possession or receipt thereof by the Subordinated Collateral Trustee or any other Subordinated Secured Party is otherwise permitted by the Priority Lien Documents.

Section 3.06 Purchase Option .

(a) Notwithstanding anything in this Agreement to the contrary, on or at any time after (i) the commencement of an Insolvency or Liquidation Proceeding or (ii) the acceleration of the Priority Lien Obligations, holders of the Subordinated Debt and each of their respective designated Affiliates (the “ Subordinated Purchasers ”) will have the right, at their sole option and election (but will not be obligated), at any time upon prior written notice to the Priority Lien Agent, to purchase from the Priority Lien Secured Parties (x) all (but not less than all) Priority Lien Obligations (including unfunded

 

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commitments) and (y) any loans provided by any of the Priority Lien Secured Parties in connection with a DIP Financing that are outstanding on the date of such purchase. Promptly following the receipt of such notice, the Priority Lien Agent will deliver to the Subordinated Collateral Trustee a statement of the amount of Priority Lien Debt, other Priority Lien Obligations and DIP Financing provided by any of the Priority Lien Secured Parties, if any, then outstanding and the amount of the cash collateral requested by the Priority Lien Agent to be delivered pursuant to Section 3.06(b)(ii) below. The right to purchase provided for in this Section 3.06 will expire unless, within 10 Business Days after the receipt by the Subordinated Collateral Trustee of such notice from the Priority Lien Agent, the Subordinated Purchasers deliver to the Priority Lien Agent an irrevocable commitment of the Subordinated Purchasers to purchase (x) all (but not less than all) of the Priority Lien Obligations (including unfunded commitments) and (y) any loans provided by any of the Priority Lien Secured Parties in connection with a DIP Financing and to otherwise complete such purchase on the terms set forth under this Section 3.06 .

(b) On the date specified by the Subordinated Purchasers in such irrevocable commitment (which shall not be less than five Business Days nor more than 20 Business Days, after the receipt by the Priority Lien Agent of such irrevocable commitment), the Priority Lien Secured Parties shall sell to the Subordinated Purchasers (x) all (but not less than all) Priority Lien Obligations (including unfunded commitments) and (y) any loans provided by any of the Priority Lien Secured Parties in connection with a DIP Financing that are outstanding on the date of such sale, subject to any required approval of any Governmental Authority then in effect, if any, and only if on the date of such sale, the Priority Lien Agent receives the following:

(i) payment, as the purchase price for all Priority Lien Obligations sold in such sale, of an amount equal to the full amount of (x) all Priority Lien Obligations (other than outstanding letters of credit as referred to in clause (ii)  below) and (y) loans provided by any of the Priority Lien Secured Parties in connection with a DIP Financing then outstanding (including principal, interest, fees, reasonable attorneys’ fees and legal expenses, but excluding contingent indemnification obligations for which no claim or demand for payment has been made at or prior to such time); provided that in the case of Hedging Obligations that constitute Priority Lien Obligations the Subordinated Purchasers shall cause the applicable agreements governing such Hedging Obligations to be assigned and novated or, if such agreements have been terminated, such purchase price shall include an amount equal to the sum of any unpaid amounts then due in respect of such Hedging Obligations, calculated using the methodology provided for under the applicable Hedging Obligation (e.g., loss, market quotations or close-out amount) and after giving effect to any netting arrangements;

(ii) a cash collateral deposit in such amount as the Priority Lien Agent determines is reasonably necessary to secure the payment of any outstanding letters of credit constituting Priority Lien Obligations that may become due and payable after such sale (but not in any event in an amount greater than one hundred five percent (105%) of the amount then reasonably estimated by the Priority Lien Agent to be the aggregate outstanding amount of such letters of credit at such time), which cash collateral shall be (A) held by the Priority Lien Agent as security solely to reimburse the issuers of such letters of credit that become due and payable after such sale and any fees and expenses incurred in connection with such letters of credit and (B) returned to the Subordinated Purchasers (except as may otherwise be required by applicable law or any order of any court or other Governmental Authority) promptly after the expiration or termination from time to time of all payment contingencies affecting such letters of credit; and

(iii) any agreements, documents or instruments which the Priority Lien Agent may reasonably request pursuant to which the Subordinated Purchasers in such sale expressly assume and adopt all of the obligations of the Priority Lien Agent and the Priority Lien Secured Parties under the Priority Lien Documents and in connection with loans provided by any of the Priority Lien Secured

 

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Parties in connection with a DIP Financing on and after the date of the purchase and sale and the Subordinated Notes Trustee (or any other representative appointed by the holders of a majority in aggregate principal amount of the Subordinated Indenture Notes then outstanding) becomes a successor agent thereunder.

(c) Such purchase of the Priority Lien Obligations (including unfunded commitments) and any loans provided by any of the Priority Lien Secured Parties in connection with a DIP Financing shall be made on a pro rata basis among the Subordinated Purchasers giving notice to the Priority Lien Agent of their interest to exercise the purchase option hereunder according to each such Subordinated Purchaser’s portion of the Subordinated Debt outstanding on the date of purchase or such portion as such Subordinated Purchasers may otherwise agree among themselves. Such purchase price and cash collateral shall be remitted by wire transfer in federal funds to such bank account of the Priority Lien Agent as the Priority Lien Agent may designate in writing to the Subordinated Purchasers for such purpose. Interest shall be calculated to but excluding the Business Day on which such sale occurs if the amounts so paid by the Subordinated Purchasers to the bank account designated by the Priority Lien Agent are received in such bank account prior to 12:00 noon, New York City time, and interest shall be calculated to and including such Business Day if the amounts so paid by the Subordinated Purchasers to the bank account designated by the Priority Lien Agent are received in such bank account later than 12:00 noon, New York City time.

(d) Such sale shall be expressly made without representation or warranty of any kind by the Priority Lien Secured Parties as to the Priority Lien Obligations, the Collateral or otherwise and without recourse to any Priority Lien Secured Party, except that the Priority Lien Secured Parties shall represent and warrant severally as to the Priority Lien Obligations (including unfunded commitments) and any loans provided by any of the Priority Lien Secured Parties in connection with a DIP Financing then owing to it: (i) that such applicable Priority Lien Secured Party owns such Priority Lien Obligations (including unfunded commitments) and any loans provided by any of the Priority Lien Secured Parties in connection with a DIP Financing; and (ii) that such applicable Priority Lien Secured Party has the necessary corporate or other governing authority to assign such interests.

(e) After such sale becomes effective, the outstanding letters of credit will remain enforceable against the issuers thereof and will remain secured by the Priority Liens upon the Collateral in accordance with the applicable provisions of the Priority Lien Documents as in effect at the time of such sale, and the issuers of letters of credit will remain entitled to the benefit of the Priority Liens upon the Collateral and sharing rights in the proceeds thereof in accordance with the provisions of the Priority Lien Documents as in effect at the time of such sale, as fully as if the sale of the Priority Lien Debt had not been made, but only the Person or successor agent to whom the Priority Liens are transferred in such sale will have the right to foreclose upon or otherwise enforce the Priority Liens and only the Subordinated Purchasers in the sale will have the right to direct such Person or successor as to matters relating to the foreclosure or other enforcement of the Priority Liens.

ARTICLE IV

OTHER AGREEMENTS

Section 4.01 Release of Liens; Automatic Release of Subordinated Liens . (a) Prior to the Discharge of Priority Lien Obligations, the Subordinated Collateral Trustee, for itself and on behalf of each other Subordinated Secured Party, agrees that, in the event the Priority Lien Secured Parties release their Lien on any Collateral, the Subordinated Lien on such Collateral shall terminate and be released automatically and without further action if (i) such sale, transfer or other disposition of Collateral is effectuated in compliance with the Subordinated Notes Indenture, (ii) such release is effected in connection with the Priority Lien Collateral Agent’s foreclosure upon, or other exercise of rights or

 

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remedies with respect to, such Collateral, or (iii) such release is effected in connection with a sale or other Disposition of any Collateral (or any portion thereof) under Section 363 of the Bankruptcy Code or any other provision of the Bankruptcy Code if the Priority Lien Secured Parties shall have consented to such sale or Disposition of such Collateral; provided that, in the case of each of clauses (i) , (ii)  and (iii) , the Subordinated Liens on such Collateral shall attach to (and shall remain subject and subordinate to all Priority Liens securing Priority Lien Obligations) any proceeds of a sale, transfer or other Disposition of Collateral not paid to the Priority Lien Secured Parties or that remain after the Discharge of Priority Lien Obligations.

(b) The Subordinated Collateral Trustee agrees to execute and deliver (at the sole cost and expense of the Grantors) all such releases and other instruments as shall reasonably be requested by the Priority Lien Agent to evidence and confirm any release of Collateral provided for in this Section 4.01 .

Section 4.02 Certain Agreements With Respect to Insolvency or Liquidation Proceedings . (a) The parties hereto acknowledge that this Agreement is a “subordination agreement” under Section 510(a) of the Bankruptcy Code and shall continue in full force and effect, notwithstanding the commencement of any Insolvency or Liquidation Proceeding by or against SandRidge or any subsidiary of SandRidge. All references in this Agreement to SandRidge or any subsidiary of SandRidge or any other Grantor will include such Person or Persons as a debtor-in-possession and any receiver or trustee for such Person or Persons in an Insolvency or Liquidation Proceeding.

(b) If SandRidge or any of its subsidiaries shall become subject to any Insolvency or Liquidation Proceeding and shall, as debtor(s)-in-possession, or if any receiver or trustee for such Person or Persons shall, move for approval of financing (“ DIP Financing ”) to be provided by one or more lenders (the “ DIP Lenders ”) under Section 364 of the Bankruptcy Code or the use of cash collateral under Section 363 of the Bankruptcy Code, the Subordinated Collateral Trustee, for itself and on behalf of each Subordinated Secured Party, agrees that neither it nor any other Subordinated Secured Party will raise any objection, contest or oppose, and each Subordinated Secured Party will waive any claim such Person may now or hereafter have, to any such financing or to the Liens on the Collateral securing the same (“ DIP Financing Liens ”), or to any use, sale or lease of cash collateral that constitutes Collateral or to any grant of administrative expense priority under Section 364 of the Bankruptcy Code, unless the Priority Lien Agent or the Priority Lien Secured Parties oppose or object to such DIP Financing or such DIP Financing Liens or such use of cash collateral. To the extent such DIP Financing Liens are senior to, or rank pari passu with, the Priority Liens, the Subordinated Collateral Trustee will, for itself and on behalf of the other Subordinated Secured Parties, subordinate the Subordinated Liens on the Collateral to the Priority Liens and to such DIP Financing Liens, so long as the Subordinated Collateral Trustee, on behalf of the Subordinated Secured Parties, retains Liens on all the Collateral, including proceeds thereof arising after the commencement of any Insolvency or Liquidation Proceeding, with the same priority relative to the Priority Liens as existed prior to the commencement of the case under the Bankruptcy Code.

(c) Prior to the Discharge of Priority Lien Obligations, without the consent of the Priority Lien Agent, in the Priority Lien Agent’s sole discretion, the Subordinated Collateral Trustee, for itself and on behalf of each Subordinated Secured Party agrees not to propose, support or enter into any DIP Financing.

(d) The Subordinated Collateral Trustee, for itself and on behalf of each Subordinated Secured Party, agrees that it will not object to, oppose or contest (or join with or support any third party objecting to, opposing or contesting) a sale or other Disposition, a motion to sell or Dispose or the bidding procedure for such sale or Disposition of any Collateral (or any portion thereof) under Section 363 of the Bankruptcy Code or any other provision of the Bankruptcy Code if the Priority

 

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Lien Secured Parties shall have consented to such sale or Disposition, such motion to sell or Dispose or such bidding procedure for such sale or Disposition of such Collateral and all Priority Liens and Subordinated Liens will attach to the proceeds of the sale in the same respective priorities as set forth in this Agreement.

(e) The Subordinated Collateral Trustee, for itself and on behalf of each other Subordinated Secured Party, waives any claim that may be had against the Priority Lien Agent or any other Priority Lien Secured Party arising out of any DIP Financing Liens (that is granted in a manner that is consistent with this Agreement) or administrative expense priority under Section 364 of the Bankruptcy Code.

(f) The Subordinated Collateral Trustee, for itself and on behalf of each other Subordinated Secured Party, agrees that neither the Subordinated Collateral Trustee nor any other Subordinated Secured Party, will file or prosecute in any Insolvency or Liquidation Proceeding any motion for adequate protection (or any comparable request for relief) based upon their interest in the Collateral, nor object to, oppose or contest (or join with or support any third party objecting to, opposing or contesting) (i) any request by the Priority Lien Agent or any other Priority Lien Secured Party for adequate protection or (ii) any objection by the Priority Lien Agent or any other Priority Lien Secured Party to any motion, relief, action or proceeding based on the Priority Lien Agent or Priority Lien Secured Parties claiming a lack of adequate protection, except that the Subordinated Secured Parties may:

(A) freely seek and obtain relief granting adequate protection in the form of a replacement lien co-extensive in all respects with, but subordinated (as set forth in Section 2.01) to, and with the same relative priority to the Priority Liens as existed prior to the commencement of the Insolvency or Liquidation Proceeding, all Liens granted in the Insolvency or Liquidation Proceeding to, or for the benefit of, the Priority Lien Secured Parties; and

(B) freely seek and obtain any relief upon a motion for adequate protection (or any comparable relief), without any condition or restriction whatsoever, at any time after the Discharge of Priority Lien Obligations.

(g) The Subordinated Collateral Trustee, for itself and on behalf of each of the Subordinated Secured Parties, waives any claim it or any other Subordinated Secured Party may now or hereafter have against the Priority Lien Agent or any other Priority Lien Secured Party (or their representatives) arising out of any election by the Priority Lien Agent or any Priority Lien Secured Parties, in any proceeding instituted under the Bankruptcy Code, or the application of Section 1111(b) of the Bankruptcy Code.

(h) The Subordinated Collateral Trustee, for itself and on behalf of each other Subordinated Secured Party, agrees that in any Insolvency or Liquidation Proceeding, neither the Subordinated Collateral Trustee nor any other Subordinated Secured Party shall support or vote to accept any plan of reorganization or disclosure statement of SandRidge or any other Grantor unless such plan is supported by each class under such plan of Priority Lien Secured Parties in accordance with Section 1126(c) of the Bankruptcy Code or otherwise provides for the payment in full in cash of all Priority Lien Obligations (including all post-petition interest approved by the bankruptcy court, fees and expenses and cash collateralization of all letters of credit) on the effective date of such plan of reorganization.

(i) The Subordinated Collateral Trustee, for itself and on behalf of each other Subordinated Secured Party, agrees that neither the Subordinated Collateral Trustee nor any other Subordinated Secured Party shall seek relief, pursuant to Section 362(d) of the Bankruptcy Code or otherwise, from the automatic stay of Section 362(a) of the Bankruptcy Code or from any other stay in any Insolvency or Liquidation Proceeding in respect of the Collateral without the prior written consent of the Priority Lien Agent.

 

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(j) The Subordinated Collateral Trustee, for itself and on behalf of each other Subordinated Secured Party, agrees that neither the Subordinated Collateral Trustee nor any other Subordinated Secured Party shall oppose or seek to challenge any claim by the Priority Lien Agent or any other Priority Lien Secured Party for allowance or payment in any Insolvency or Liquidation Proceeding of Priority Lien Obligations consisting of post-petition interest, fees or expenses or cash collateralization of all letters of credit to the extent of the value of the Priority Liens (it being understood that such value will be determined without regard to the existence of the Subordinated Liens on the Collateral). Neither Priority Lien Agent nor any other Priority Lien Secured Party shall oppose or seek to challenge any claim by the Subordinated Collateral Trustee or any other Subordinated Secured Party for allowance or payment in any Insolvency or Liquidation Proceeding of Subordinated Obligations consisting of post-petition interest, fees or expenses to the extent of the value of the Subordinated Liens on the Collateral; provided that if the Priority Lien Agent or any other Priority Lien Secured Party shall have made any such claim, such claim (i) shall have been approved or (ii) will be approved contemporaneously with the approval of any such claim by the Subordinated Collateral Trustee or any Subordinated Secured Party.

(k) Without the express written consent of the Priority Lien Agent, none of the Subordinated Collateral Trustee or any other Subordinated Secured Party shall (or shall join with or support any third party in opposing, objecting to or contesting, as the case may be), in any Insolvency or Liquidation Proceeding involving any Grantor, (i) oppose, object to or contest the determination of the extent of any Liens held by any of Priority Lien Secured Party or the value of any claims of any such holder under Section 506(a) of the Bankruptcy Code or (ii) oppose, object to or contest the payment to the Priority Lien Secured Party of interest, fees or expenses under Section 506(b) of the Bankruptcy Code.

(l) Notwithstanding anything to the contrary contained herein, if in any Insolvency or Liquidation Proceeding a determination is made that any Lien encumbering any Collateral is not enforceable for any reason, then the Subordinated Collateral Trustee for itself and on behalf of each other Subordinated Secured Party, agrees that, any distribution or recovery they may receive in respect of any Collateral shall be segregated and held in trust and forthwith paid over to the Priority Lien Agent for the benefit of the Priority Lien Secured Parties in the same form as received without recourse, representation or warranty (other than a representation of the Subordinated Collateral Trustee that it has not otherwise sold, assigned, transferred or pledged any right, title or interest in and to such distribution or recovery) but with any necessary endorsements or as a court of competent jurisdiction may otherwise direct. The Subordinated Collateral Trustee, for itself and on behalf of each other Subordinated Secured Party, hereby appoints the Priority Lien Agent, and any officer or agent of the Priority Lien Agent, with full power of substitution, the attorney-in-fact of each Subordinated Secured Party for the limited purpose of carrying out the provisions of this Section 4.02(l) and taking any action and executing any instrument that the Priority Lien Agent may deem necessary or advisable to accomplish the purposes of this Section 4.02(l) , which appointment is irrevocable and coupled with an interest.

(m) The Subordinated Collateral Trustee, for itself and on behalf of each other Subordinated Secured Party, hereby agrees that the Priority Lien Agent shall have the exclusive right to credit bid the Priority Lien Obligations and further that none of the Subordinated Collateral Trustee or, any other Subordinated Secured Party shall (or shall join with or support any third party in opposing, objecting to or contesting, as the case may be) oppose, object to or contest such credit bid by the Priority Lien Agent.

(n) Without the consent of the Priority Lien Agent in its sole discretion, the Subordinated Collateral Trustee, for itself and on behalf of each other Subordinated Secured Party, agrees it will not file an involuntary bankruptcy claim or seek the appointment of an examiner or a trustee for SandRidge or any of its subsidiaries.

 

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(o) The Subordinated Collateral Trustee, for itself and on behalf of each other Subordinated Secured Party, waives any right to assert or enforce any claim under Section 506(c) or 552 of the Bankruptcy Code as against any Priority Lien Secured Party or any of the Collateral, except as expressly permitted by this Agreement.

Section 4.03 Reinstatement . If any Priority Lien Secured Party is required in any Insolvency or Liquidation Proceeding or otherwise to turn over or otherwise pay to the estate of any Grantor any amount (a “ Recovery ”) for any reason whatsoever, then the Priority Lien Obligations shall be reinstated to the extent of such Recovery and the Priority Lien Secured Parties shall be entitled to a reinstatement of Priority Lien Obligations with respect to all such recovered amounts. The Subordinated Collateral Trustee, for itself and on behalf of each other Subordinated Secured Party, agrees that if, at any time, a Subordinated Secured Party receives notice of any Recovery, the Subordinated Collateral Trustee or any other Subordinated Secured Party shall promptly pay over to the Priority Lien Agent any payment received by it and then in its possession or under its control in respect of any Collateral subject to any Priority Lien securing such Priority Lien Obligations and shall promptly turn any Collateral subject to any such Priority Lien then held by it over to the Priority Lien Agent, and the provisions set forth in this Agreement shall be reinstated as if such payment had not been made. If this Agreement shall have been terminated prior to any such Recovery, this Agreement shall be reinstated in full force and effect, and such prior termination shall not diminish, release, discharge, impair or otherwise affect the obligations of the parties hereto from such date of reinstatement. Any amounts received by the Subordinated Collateral Trustee or any other Subordinated Secured Party and then in its possession or under its control on account of the Subordinated Obligations after the termination of this Agreement shall, in the event of a reinstatement of this Agreement pursuant to this Section 4.03 , be held in trust for and paid over to the Priority Lien Agent for the benefit of the Priority Lien Secured Parties for application to the reinstated Priority Lien Obligations until the discharge thereof. This Section 4.03 shall survive termination of this Agreement.

Section 4.04 Refinancings; Additional Priority Lien Debt; Additional Subordinated Debt .

(a) The Priority Lien Obligations and the Subordinated Obligations may be Replaced, by any Priority Substitute Credit Facility or Subordinated Substitute Facility, as the case may be, in each case, without notice to, or the consent of any Secured Party, all without affecting the Lien priorities provided for herein or the other provisions hereof; provided , that (i) the Priority Lien Agent and the Subordinated Collateral Trustee shall receive on or prior to incurrence of a Priority Substitute Credit Facility or Subordinated Substitute Facility (A) an Officer’s Certificate from SandRidge stating that (I) the incurrence thereof is permitted by each applicable Secured Debt Document to be incurred and (II) the requirements of Section 4.06 have been satisfied, and (B) a Priority Confirmation Joinder from the holders or lenders of any indebtedness that Replaces the Priority Lien Obligations or the Subordinated Obligations (or an authorized agent, trustee or other representative on their behalf), and (ii) on or before the date of such incurrence, such Priority Substitute Credit Facility or Subordinated Substitute Facility is designated by SandRidge, in an Officer’s Certificate delivered to the Priority Lien Agent and the Subordinated Collateral Trustee, as “Priority Lien Debt” or “Subordinated Debt”, as applicable, for the purposes of the Secured Debt Documents and this Agreement; provided that no Series of Secured Debt may be designated as more than one of Priority Lien Debt or Subordinated Debt.

(b) SandRidge will be permitted to designate as an additional holder of Priority Lien Obligations or Subordinated Obligations hereunder each Person who is, or who becomes, the registered holder of Priority Lien Debt or Subordinated Debt, as applicable, incurred by SandRidge after the date of

 

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this Agreement in accordance with the terms of all applicable Secured Debt Documents. SandRidge may effect such designation by delivering to the Priority Lien Agent and the Subordinated Collateral Trustee, each of the following:

(i) an Officer’s Certificate stating that SandRidge intends to incur (A) Additional Priority Lien Obligations which will be Priority Lien Debt, (B) Additional Subordinated Obligations which will be Subordinated Debt, which in each case, will be permitted by each applicable Secured Debt Document to be incurred and secured by a Priority Lien or Subordinated Lien;

(ii) an authorized agent, trustee or other representative on behalf of the holders or lenders of any Additional Priority Lien Obligations or Additional Subordinated Obligations, as applicable, must be designated as an additional holder of Secured Obligations hereunder and must, prior to such designation, sign and deliver on behalf of the holders or lenders of such Additional Priority Lien Obligations or Additional Subordinated Obligations, as applicable, a Priority Confirmation Joinder, and, to the extent necessary or appropriate to facilitate such transaction, a new intercreditor agreement substantially similar to this Agreement, as in effect on the date hereof; and

(iii) evidence that SandRidge has duly authorized, executed (if applicable) and recorded (or caused to be recorded) in each appropriate governmental office all relevant filings and recordations deemed necessary by SandRidge and the holder of such Additional Priority Lien Obligations, or Additional Subordinated Obligations, as applicable, or its Secured Debt Representative, to ensure that the Additional Priority Lien Obligations or Additional Subordinated Obligations are secured by the Collateral in accordance with the Priority Lien Security Documents or Subordinated Security Documents, as applicable ( provided that such filings and recordings may be authorized, executed and recorded following any incurrence on a post-closing basis if permitted by the Priority Lien Representative or Subordinated Representative for such Additional Priority Lien Obligations or Additional Subordinated Obligations, as applicable).

(c) SandRidge will be permitted to incur Subordinated Liens with respect to the Subordinated Obligations to the extent such Subordinated Obligations are permitted to be secured by the Priority Credit Agreement, the other Priority Lien Documents, the Subordinated Notes Indenture and the other Subordinated Documents in connection with a Springing Event. Any Subordinated Debt with respect to which such Springing Event applies may be secured by a Subordinated Lien under and pursuant to the Subordinated Security Documents provided the Subordinated Collateral Trustee, acting for itself and on behalf of the Subordinated Secured Parties, becomes a party to this Agreement by satisfying the conditions set forth in clauses (i)  and (ii)  of the immediately succeeding paragraph.

In order for the Subordinated Collateral Trustee to become a party to this Agreement,

(i) the Priority Lien Agent and the Subordinated Collateral Trustee shall have executed and delivered a Priority Confirmation Joinder pursuant to which (a) such Subordinated Collateral Trustee becomes a Secured Debt Representative hereunder and (b) the Subordinated Secured Debt and the related Subordinated Secured Parties become subject hereto and bound hereby;

(ii) SandRidge shall have delivered to the Priority Lien Agent and the Subordinated Collateral Trustee (A) true and complete copies of each Subordinated Secured Document and (B) an Officer’s Certificate certifying such copies as being true and correct and identifying the obligations to be designated as Subordinated Secured Obligations and the initial aggregate principal amount thereof; and

 

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(iii) without limiting Section 4.06 , the Subordinated Secured Documents relating to such Subordinated Secured Debt shall provide, in a manner satisfactory to the Priority Lien Agent, that each Subordinated Secured Party shall be subject to and bound by the provisions of this Agreement in its capacity as a holder of such Subordinated Secured Debt.

Notwithstanding the foregoing, nothing in this Agreement will be construed to allow SandRidge or any other Grantor to incur additional indebtedness unless otherwise permitted by the terms of each applicable Secured Debt Document.

Each of the then-exiting Priority Lien Agent and the Subordinated Collateral Trustee shall be authorized to execute and deliver such documents and agreements (including amendments or supplements to this Agreement) as such holders, lenders, agent, trustee or other representative may reasonably request to give effect to any such Replacement or any incurrence of Additional Priority Lien Obligations, Additional Subordinated Obligations, it being understood that the Priority Lien Agent and the Subordinated Collateral Trustee or (if permitted by the terms of the applicable Secured Debt Documents) the Grantors, without the consent of any other Secured Party or (in the case of the Grantors) one or more Secured Debt Representatives, may amend, supplement, modify or restate this Agreement to the extent necessary or appropriate to facilitate such amendments or supplements to effect such Replacement or incurrence all at the expense of the Grantors. Upon the consummation of such Replacement or incurrence and the execution and delivery of the documents and agreements contemplated in the preceding sentence, the holders or lenders of such indebtedness and any authorized agent, trustee or other representative thereof shall be entitled to the benefits of this Agreement.

Section 4.05 Amendments to Subordinated Documents . Prior to the Discharge of Priority Lien Obligations, without the prior written consent of the Priority Lien Agent, no Subordinated Document may be amended, supplemented, restated or otherwise modified and/or refinanced or entered into to the extent such amendment, supplement, restatement or modification and/or refinancing, or the terms of any new Subordinated Document would (i) adversely affect the lien priority rights of the Priority Lien Secured Parties or the rights of the Priority Lien Secured Parties to receive payments owing pursuant to the Priority Lien Documents, (ii) except as otherwise provided for in this Agreement, add any Liens securing the Collateral granted under the Subordinated Security Documents, if any, (iii) confer any additional rights on the Subordinated Collateral Trustee or any other Subordinated Secured Party, if any, in a manner adverse to the Priority Lien Secured Parties, or (iv) contravene the provisions of this Agreement or the Priority Lien Documents.

Section 4.06 Legends . Each of

(a) the Priority Lien Agent acknowledges with respect to the (i) Priority Credit Agreement and the Credit Agreement Security Documents and (ii) the Additional Priority Lien Debt Facility and the Additional Priority Lien Security Documents, if any, and

(b) the Subordinated Collateral Trustee acknowledges with respect to (i) the Subordinated Notes Indenture and the Indenture Subordinated Security Documents, and (ii) the Additional Subordinated Debt Facility and the Additional Subordinated Security Documents, if any, that

the Grantors shall cause the Subordinated Notes Indenture, the Additional Subordinated Debt Facility (if any), the Subordinated Documents (other than control agreements to which both the Priority Lien Agent and the Subordinated Collateral Trustee are parties) and each associated Security Document (other than control agreements to which both the Priority Lien Agent and the Subordinated Collateral Trustee are parties) granting any security interest in the Collateral to contain the appropriate legend set forth on Annex I .

 

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Section 4.07 Subordinated Secured Parties Rights as Unsecured Creditors; Judgment Lien Creditor . Both before and during an Insolvency or Liquidation Proceeding, any of the Subordinated Secured Parties may take any actions and exercise any and all rights that would be available to a holder of unsecured claims so long as such action or exercise of rights is permitted hereunder by such party acting in its capacity as a Subordinated Secured Party; provided , however , that the Subordinated Secured Parties may not take any of the actions prohibited by Section 3.05(a) or Section 4.02 or any other provisions in this Agreement, nor may any of the Subordinated Secured Parties take any action as an unsecured creditor which such party is not permitted to take hereunder as a secured Subordinated Secured Party; provided , further , that in the event that any of the Subordinated Secured Parties becomes a judgment lien creditor in respect of any Collateral as a result of its enforcement of its rights as an unsecured creditor with respect to the Subordinated Obligations such judgment lien shall be subject to the terms of this Agreement for all purposes (including in relation to the Priority Lien Obligations) as the Subordinated Secured Parties are subject to this Agreement.

Section 4.08 Postponement of Subrogation . The Subordinated Collateral Trustee, for itself and on behalf of each other Subordinated Secured Party, hereby agrees that no payment or distribution to any Priority Lien Secured Party pursuant to the provisions of this Agreement shall entitle any Subordinated Secured Party to exercise any rights of subrogation in respect thereof until the Discharge of Priority Lien Obligations shall have occurred. Following the Discharge of Priority Lien Obligations, but subject to the reinstatement as provided in Section 4.03 , each Priority Lien Secured Party will execute such documents, agreements, and instruments as any Subordinated Secured Party may reasonably request to evidence the transfer by subrogation to any such Person of an interest in the Priority Lien Obligations resulting from payments or distributions to such Priority Lien Secured Party by such Person, so long as all costs and expenses (including all reasonable legal fees and disbursements) incurred in connection therewith by such Priority Lien Secured Party are paid by such Person upon request for payment thereof.

Section 4.09 Acknowledgment by the Secured Debt Representatives . Each of the Priority Lien Agent, for itself and on behalf of the other Priority Lien Secured Parties, and the Subordinated Collateral Trustee, for itself and on behalf of the other Subordinated Secured Parties, hereby acknowledges that this Agreement is a material inducement to enter into a business relationship, that each has relied on this Agreement to enter into the Priority Credit Agreement and the Subordinated Notes Indenture, as applicable, and all documentation related thereto, and that each will continue to rely on this Agreement in their related future dealings.

ARTICLE V

GRATUITOUS BAILMENT FOR PERFECTION OF CERTAIN SECURITY INTERESTS

Section 5.01 General . Prior to the Discharge of Priority Lien Obligations, the Priority Lien Agent agrees that if it shall at any time hold a Priority Lien on any Collateral that can be perfected by the possession or control of such Collateral or of any Account in which such Collateral is held, and if such Collateral or any such Account is in fact in the possession or under the control of the Priority Lien Agent, the Priority Lien Agent will serve as gratuitous bailee for the Subordinated Collateral Trustee for the sole purpose of perfecting the Subordinated Lien of the Subordinated Collateral Trustee on such Collateral. It is agreed that the obligations of the Priority Lien Agent and the rights of the Subordinated Collateral Trustee and the other Subordinated Secured Parties in connection with any such bailment arrangement will be in all respects subject to the provisions of Article II . Notwithstanding anything to the contrary herein, the Priority Lien Agent will be deemed to make no representation as to the adequacy of the steps taken by it to perfect the Subordinated Lien on any such

 

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Collateral and shall have no responsibility, duty, obligation or liability to the Subordinated Collateral Trustee, any other Subordinated Secured Party or any other Person for such perfection or failure to perfect, it being understood that the sole purpose of this Article is to enable the Subordinated Secured Parties to obtain a perfected Subordinated Lien in such Collateral to the extent, if any, that such perfection results from the possession or control of such Collateral or any such Account by the Priority Lien Agent. The Priority Lien Agent acting pursuant to this Section 5.01 shall not have by reason of the Priority Lien Security Documents, the Subordinated Security Documents, this Agreement or any other document or theory, a fiduciary relationship in respect of any Priority Lien Secured Party, the Subordinated Collateral Trustee or any Subordinated Secured Party. Subject to Section 4.03 , from and after the Discharge of Priority Lien Obligations, the Priority Lien Agent shall take all such actions in its power as shall reasonably be requested by the Grantors or the Subordinated Collateral Trustee (at the sole cost and expense of the Grantors) to transfer possession or control of such Collateral or any such Account (in each case to the extent the Subordinated Collateral Trustee has a Lien on such Collateral or Account after giving effect to any prior or concurrent releases of Liens) to the Subordinated Collateral Trustee for the benefit of all Subordinated Secured Parties.

Section 5.02 Deposit Accounts . Prior to the Discharge of Priority Lien Obligations, to the extent that any Account is under the control of the Priority Lien Agent at any time, the Priority Lien Agent will act as gratuitous bailee for the Subordinated Collateral Trustee for the purpose of perfecting the Liens of the Subordinated Secured Parties in such Accounts and the cash and other assets therein as provided in Section 5.01 (but will have no duty, responsibility or obligation to the Subordinated Secured Parties (including, without limitation, any duty, responsibility or obligation as to the maintenance of such control, the effect of such arrangement or the establishment of such perfection) except as set forth in the last sentence of this Section 5.02(a)) . Unless the Subordinated Liens on such Collateral shall have been or concurrently are released, after the occurrence of Discharge of Priority Lien Obligations, the Priority Lien Agent shall, at the request of the Subordinated Collateral Trustee, cooperate with the Grantors and the Subordinated Collateral Trustee (at the expense of the Grantors) in permitting control of any other Accounts to be transferred to the Subordinated Collateral Trustee (or for other arrangements with respect to each such Accounts satisfactory to the Subordinated Collateral Trustee to be made).

ARTICLE VI

APPLICATION OF PROCEEDS; DETERMINATION OF AMOUNTS

Section 6.01 Application of Proceeds . Prior to the Discharge of Priority Lien Obligations, and regardless of whether an Insolvency or Liquidation Proceeding has been commenced, Collateral or Proceeds received in connection with the enforcement or exercise of any rights or remedies with respect to any portion of the Collateral will be applied:

(a) first , to the payment in full in cash of all Priority Lien Obligations,

(b) second , to the payment in full in cash of all Subordinated Obligations, and

(c) third , to SandRidge or as otherwise required by applicable law.

Section 6.02 Determination of Amounts . Whenever a Secured Debt Representative shall be required, in connection with the exercise of its rights or the performance of its obligations hereunder, to determine the existence or amount of any Priority Lien Obligations (or the existence of any commitment to extend credit that would constitute Priority Lien Obligations) or Subordinated Obligations, or the existence of any Lien securing any such obligations, or the Collateral subject to any such Lien, it may request that such information be furnished to it in writing by the other Secured Debt Representatives and shall be entitled to make such determination on the basis of the information so furnished; provided , however , that if a Secured Debt Representative shall fail or refuse reasonably promptly to provide the requested information, the requesting Secured Debt Representative shall be entitled to make any such determination by such method as it may, in the exercise of its good faith judgment, determine, including by reliance upon a certificate of SandRidge. Each Secured Debt Representative may rely conclusively,

 

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and shall be fully protected in so relying, on any determination made by it in accordance with the provisions of the preceding sentence (or as otherwise directed by a court of competent jurisdiction) and shall have no liability to SandRidge or any of their subsidiaries, any Secured Party or any other Person as a result of such determination.

ARTICLE VII

NO RELIANCE; NO LIABILITY; OBLIGATIONS ABSOLUTE; CONSENT OF GRANTORS; ETC.

Section 7.01 No Reliance; Information . The Priority Lien Secured Parties and the Subordinated Secured Parties shall have no duty to disclose to any Subordinated Secured Party or to any Priority Lien Secured Party, as the case may be, any information relating to SandRidge or any of the other Grantors, or any other circumstance bearing upon the risk of non-payment of any of the Priority Lien Obligations or the Subordinated Obligations, as the case may be, that is known or becomes known to any of them or any of their Affiliates. In the event any Priority Lien Secured Party or any Subordinated Secured Party, in its sole discretion, undertakes at any time or from time to time to provide any such information to, any Subordinated Secured Party or any Priority Lien Secured Party, as the case may be, it shall be under no obligation (a) to make, and shall not make or be deemed to have made, any express or implied representation or warranty, including with respect to the accuracy, completeness, truthfulness or validity of the information so provided, (b) to provide any additional information or to provide any such information on any subsequent occasion or (c) to undertake any investigation.

Section 7.02 No Warranties or Liability .

(a) The Priority Lien Agent, for itself and on behalf of the other Priority Lien Secured Parties, acknowledges and agrees that, except for the representations and warranties set forth in Article VIII , neither the Subordinated Collateral Trustee nor any other Subordinated Secured Party has made any express or implied representation or warranty, including with respect to the execution, validity, legality, completeness, collectability or enforceability of any of the Subordinated Documents, the ownership of any Collateral or the perfection or priority of any Liens thereon.

(b) The Subordinated Collateral Trustee, for itself and on behalf of the other Subordinated Secured Parties, acknowledges and agrees that, except for the representations and warranties set forth in Article VIII , neither the Priority Lien Agent nor any other Priority Lien Secured Party has made any express or implied representation or warranty, including with respect to the execution, validity, legality, completeness, collectability or enforceability of any of the Priority Lien Documents, the ownership of any Collateral or the perfection or priority of any Liens thereon.

(c) (i) The Priority Lien Agent and the other Priority Lien Secured Parties shall have no express or implied duty to the Subordinated Collateral Trustee or any other Subordinated Secured Party, and (ii) the Subordinated Collateral Trustee and the other Subordinated Secured Parties shall have no express or implied duty to the Priority Lien Agent or any other Priority Lien Secured Party, in each case to act or refrain from acting in a manner which allows, or results in, the occurrence or continuance of a default or an event of default under any Priority Lien Document and any Subordinated (other than, in each case, this Agreement), regardless of any knowledge thereof which they may have or be charged with.

(d) The Subordinated Collateral Trustee, for itself and on behalf of each other Subordinated Secured Party, hereby waives any claim that may be had against the Priority Lien Agent or any other Priority Lien Secured Party arising out of any actions which the Priority Lien Agent or such Priority Lien Secured Party takes or omits to take (including actions with respect to the creation,

 

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perfection or continuation of Liens on any Collateral, actions with respect to the foreclosure upon, sale, release or depreciation of, or failure to realize upon, any Collateral, and actions with respect to the collection of any claim for all or only part of the Priority Lien Obligations from any account debtor, guarantor or any other party) in accordance with this Agreement and the Priority Lien Documents or the valuation, use, protection or release of any security for such Priority Lien Obligations.

Section 7.03 Obligations Absolute . The Lien priorities provided for herein and the respective rights, interests, agreements and obligations hereunder of the Priority Lien Agent and the other Priority Lien Secured Parties and the Subordinated Collateral Trustee and the other Subordinated Secured Parties shall remain in full force and effect irrespective of:

(a) any lack of validity or enforceability of any Secured Debt Document;

(b) any change in the time, place or manner of payment of, or in any other term of (including the Replacing of), all or any portion of the Priority Lien Obligations, it being specifically acknowledged that a portion of the Priority Lien Obligations consists or may consist of indebtedness that is revolving in nature, and the amount thereof that may be outstanding at any time or from time to time may be increased or reduced and subsequently reborrowed;

(c) any amendment, waiver or other modification, whether by course of conduct or otherwise, of any Secured Debt Document;

(d) the securing of any Priority Lien Obligations or Subordinated Obligations or with any additional collateral or guarantees, or any exchange, release, voiding, avoidance or non-perfection of any security interest in any Collateral or any other collateral or any release of any guarantee securing any Priority Lien Obligations or Subordinated Obligations;

(e) the commencement of any Insolvency or Liquidation Proceeding in respect of SandRidge or any other Grantor; or

(f) any other circumstances that otherwise might constitute a defense available to, or a discharge of, SandRidge or any other Grantor in respect of the Priority Lien Obligations or the Subordinated Obligations.

Section 7.04 Grantors Consent . Each Grantor hereby consents to the provisions of this Agreement and the intercreditor arrangements provided for herein and agrees that the obligations of the Grantors under the Secured Debt Documents will in no way be diminished or otherwise affected by such provisions or arrangements (except as expressly provided herein).

ARTICLE VIII

REPRESENTATIONS AND WARRANTIES

Section 8.01 Representations and Warranties of Each Party . Each party hereto represents and warrants to the other parties hereto as follows:

(a) Such party is duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization and has all requisite power and authority to enter into and perform its obligations under this Agreement.

(b) This Agreement has been duly executed and delivered by such party.

 

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(c) The execution, delivery and performance by such party of this Agreement (i) do not require any consent or approval of, registration or filing with or any other action by any Governmental Authority of which the failure to obtain could reasonably be expected to have a Material Adverse Effect (as defined in the Priority Credit Agreement), (ii) will not violate any applicable law or regulation or any order of any Governmental Authority or any indenture, agreement or other instrument binding upon such party which could reasonably be expected to have a Material Adverse Effect and (iii) will not violate the charter, by-laws or other organizational documents of such party.

Section 8.02 Representations and Warranties of Each Representative . Each of the Priority Lien Agent and the Subordinated Collateral Trustee represents and warrants to the other parties hereto that it is authorized under the Priority Credit Agreement and the Subordinated Collateral Trust Agreement, as the case may be, to enter into this Agreement.

ARTICLE IX

MISCELLANEOUS

Section 9.01 Notices . All notices and other communications provided for herein shall be in writing and shall be delivered by hand or overnight courier service, mailed by certified or registered mail or sent by telecopy, as follows:

(a) if to the Original Priority Lien Agent, to it at:

Royal Bank of Canada

20 King Street West, 4 th Floor

Toronto, Ontario M5K 1C4

Fax: 416.842.4023

Attention: manager Agency Services

(b) if to the Original Subordinated Collateral Trustee, to it at:

Wilmington Trust, National Association

15950 North Dallas Parkway, Suite 550

Dallas, Texas 75248

Attention: SandRidge Notes Administrator

(c) if to any other Secured Debt Representative, to such address as specified in the Priority Confirmation Joinder.

Any party hereto may change its address or facsimile 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 (if a Business Day) and on the next Business Day thereafter (in all other cases) if delivered by hand or overnight courier service or sent by telecopy or on the date five Business Days after dispatch by certified or registered mail if mailed, in each case delivered, sent or mailed (properly addressed) to such party as provided in this Section 9.01 or in accordance with the latest unrevoked direction from such party given in accordance with this Section 9.01 . As agreed to in writing among SandRidge, the Priority Lien Agent and the Subordinated Collateral Trustee from time to time, notices and other communications may also be delivered by e-mail to the e-mail address of a representative of the applicable person provided from time to time by such person.

 

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Section 9.02 Waivers; Amendment . (a) No failure or delay on the part of any party hereto in exercising any right or power hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such right or power, or any abandonment or discontinuance of steps to enforce such a right or power, preclude any other or further exercise thereof or the exercise of any other right or power. The rights and remedies of the parties hereto 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 consent to any departure by any party therefrom shall in any event be effective unless the same shall be permitted by paragraph (b)  of this Section 9.02 , and then such waiver or consent shall be effective only in the specific instance and for the purpose for which given. No notice or demand on any party hereto in any case shall entitle such party to any other or further notice or demand in similar or other circumstances.

(b) Neither this Agreement nor any provision hereof may be terminated, waived, amended or modified except pursuant to an agreement or agreements in writing entered into by each Secured Debt Representative; provided , however , that this Agreement may be amended from time to time as provided in Section 4.04 . Any amendment of this Agreement that is proposed to be effected without the consent of a Secured Debt Representative as permitted by the proviso to the preceding sentence shall be submitted to such Secured Debt Representative for its review at least 5 Business Days prior to the proposed effectiveness of such amendment.

Section 9.03 Actions Upon Breach; Specific Performance . (a) Prior to the Discharge of Priority Lien Obligations, if any Subordinated Secured Party, contrary to this Agreement, commences or participates in any action or proceeding against any Grantor or the Collateral, such Grantor, with the prior written consent of the Priority Lien Agent, may interpose as a defense or dilatory plea the making of this Agreement, and any Priority Lien Secured Party may intervene and interpose such defense or plea in its or their name or in the name of such Grantor.

(b) Prior to the Discharge of Priority Lien Obligations, should any Subordinated Secured Party, contrary to this Agreement, in any way take, attempt to or threaten to take any action with respect to the Collateral (including any attempt to realize upon or enforce any remedy with respect to this Agreement), or take any other action in violation of this Agreement or fail to take any action required by this Agreement, the Priority Lien Agent or any other Priority Lien Secured Party (in its own name or in the name of the relevant Grantor) or the relevant Grantor, with the prior written consent of the Priority Lien Agent, (A) may obtain relief against such Subordinated Secured Party, by injunction, specific performance and/or other appropriate equitable relief, it being understood and agreed by the Subordinated Collateral Trustee on behalf of each Subordinated Secured Party that (I) the Priority Lien Secured Parties’ damages from its actions may at that time be difficult to ascertain and may be irreparable, and (II) each Subordinated Secured Party waives any defense that the Grantors and/or the Priority Lien Secured Parties cannot demonstrate damage and/or be made whole by the awarding of damages, and (B) shall be entitled to damages, as well as reimbursement for all reasonable and documented costs and expenses incurred in connection with any action to enforce the provisions of this Agreement, from such Subordinated Secured Party.

Section 9.04 Parties in Interest . This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns, as well as the other Secured Parties, all of whom are intended to be bound by, and to be third party beneficiaries of, this Agreement.

Section 9.05 Survival of Agreement . All covenants, agreements, representations and warranties made by any party in this Agreement shall be considered to have been relied upon by the other parties hereto and shall survive the execution and delivery of this Agreement.

 

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Section 9.06 Counterparts . This Agreement may be executed in counterparts, each of which shall constitute an original but all of which when taken together shall constitute a single contract. Delivery of an executed signature page to this Agreement by facsimile transmission shall be as effective as delivery of a manually signed counterpart of this Agreement.

Section 9.07 Severability . Any provision of this Agreement 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; and the invalidity of a particular provision in a particular jurisdiction shall not invalidate such provision in any other jurisdiction. The parties shall endeavor in good-faith negotiations to replace the invalid, illegal or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the invalid, illegal or unenforceable provisions.

Section 9.08 Governing Law; Jurisdiction; Consent to Service of Process . (a) THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

(b) Each party hereto hereby irrevocably and unconditionally submits, for itself and its property, to the nonexclusive jurisdiction of the Supreme Court of the State of New York sitting in New York County and of the United States District Court of the Southern District of New York, and any appellate court from any thereof, in any action or proceeding arising out of or relating to this Agreement, or for recognition or enforcement of any judgment, and each of the parties hereto hereby irrevocably and unconditionally agrees that all claims in respect of any such action or proceeding may be heard and determined in such New York State court or, to the extent permitted by law, in such federal court. 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. Nothing in this Agreement shall affect any right that any party hereto may otherwise have to bring any action or proceeding relating to this Agreement in the courts of any jurisdiction.

(c) Each party hereto hereby irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so, any objection which it may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Agreement in any court referred to in paragraph (b)  of this Section 9.08 . Each of the parties hereto hereby irrevocably waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court.

(d) Each party to this Agreement irrevocably consents to service of process in the manner provided for notices in Section 9.01 . Nothing in this Agreement will affect the right of any party to this Agreement to serve process in any other manner permitted by law.

Section 9.09 WAIVER OF JURY TRIAL . EACH PARTY HERETO 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. EACH PARTY HERETO (A) 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 (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

 

36


Section 9.10 Headings . Article, Section and Annex headings used herein are for convenience of reference only, are not part of this Agreement and are not to affect the construction of, or to be taken into consideration in interpreting, this Agreement.

Section 9.11 Conflicts . In the event of any conflict or inconsistency between the provisions of this Agreement and the provisions of any Secured Debt Documents, the provisions of this Agreement shall control.

Section 9.12 Provisions Solely to Define Relative Rights . The provisions of this Agreement are and are intended solely for the purpose of defining the distinct and separate relative rights of the Priority Lien Secured Parties and the Subordinated Secured Parties. None of SandRidge, any other Grantor or any other creditor thereof shall have any rights or obligations hereunder, except as expressly provided in this Agreement ( provided that nothing in this Agreement (other than Sections 4.01 , 4.02 , 4.04 , or 4.05) is intended to or will amend, waive or otherwise modify the provisions of the Priority Credit Agreement or the Subordinated Notes Indenture, as applicable), and except as expressly provided in this Agreement neither SandRidge nor any other Grantor may rely on the terms hereof (other than Sections 4.01 , 4.02 , 4.04 , or 4.05 , Article VII and Article IX) . Nothing in this Agreement is intended to or shall impair the obligations of SandRidge or any other Grantor, which are absolute and unconditional, to pay the Obligations under the Secured Debt Documents as and when the same shall become due and payable in accordance with their terms. Notwithstanding anything to the contrary herein or in any Secured Debt Document, the Grantors shall not be required to act or refrain from acting pursuant to this Agreement, any Priority Lien Document or any Subordinated Document with respect to any Collateral in any manner that would cause a default under any Priority Lien Document.

Section 9.13 Certain Terms Concerning the Subordinated Collateral Trustee . The Subordinated Collateral Trustee is executing and delivering this Agreement solely in its capacity as such and pursuant to direction set forth in the Subordinated Collateral Trust Agreement; and in so doing, the Subordinated Collateral Trustee shall not be responsible for the terms or sufficiency of this Agreement for any purpose. The Subordinated Collateral Trustee shall have no duties or obligations under or pursuant to this Agreement other than such duties and obligations as may be expressly set forth in this Agreement as duties and obligations on its part to be performed or observed. In entering into this Agreement, or in taking (or forbearing from) any action under or pursuant to the Agreement, the Subordinated Collateral Trustee shall have and be protected by all of the rights, immunities, indemnities and other protections granted to it under the Subordinated Notes Indenture and the other Subordinated Documents (including without limitation Article 5 and Section 7.8 of the Subordinated Collateral Trust Agreement).

Section 9.14 Certain Terms Concerning the Priority Lien Agent and the Subordinated Collateral Trustee . None of the Priority Lien Agent or the Subordinated Collateral Trustee shall have any liability or responsibility for the actions or omissions of any other Secured Party, or for any other Secured Party’s compliance with (or failure to comply with) the terms of this Agreement. None of the Priority Lien Agent or the Subordinated Collateral Trustee shall have individual liability to any Person if it shall mistakenly pay over or distribute to any Secured Party (or SandRidge) any amounts in violation of the terms of this Agreement, so long as the Priority Lien Agent or the Subordinated Collateral Trustee, as the case may be, is acting in good faith. Each party hereto hereby acknowledges and agrees that each of the Priority Lien Agent and the Subordinated Collateral Trustee is entering into this Agreement solely in its capacity under the Priority Lien Documents and the Subordinated Documents, respectively, and not in its individual capacity. (a) The Priority Lien Agent shall not be deemed to owe any fiduciary duty to the Subordinated Collateral Trustee or any other Subordinated Representative or any other Subordinated Secured Party; and (b) the Subordinated Collateral Trustee shall not be deemed to owe any fiduciary duty to the Priority Lien Agent or any other Priority Lien Secured Party.

 

37


Section 9.15 Authorization of Secured Agents . By accepting the benefits of this Agreement and the other Priority Lien Security Documents, each Priority Lien Secured Party authorizes the Priority Lien Agent to enter into this Agreement and to act on its behalf as collateral agent hereunder and in connection herewith. By accepting the benefits of this Agreement and the other Subordinated Security Documents, each Subordinated Secured Party authorizes the Subordinated Collateral Trustee to enter into this Agreement and to act on its behalf as collateral agent hereunder and in connection herewith.

Section 9.16 Further Assurances . Each of the Priority Lien Agent, for itself and on behalf of the other Priority Lien Secured Party, the Subordinated Collateral Trustee, for itself and on behalf of the other Subordinated Secured Parties, and each Grantor party hereto, for itself and on behalf of its subsidiaries, agrees that it will execute, or will cause to be executed, any and all further documents, agreements and instruments, and take all such further actions, as may be required under any applicable law, or which the Priority Lien Agent or the Subordinated Collateral Trustee may reasonably request, to effectuate the terms of this Agreement, including the relative Lien priorities provided for herein, all at the Grantor’s sole cost and expense.

Section 9.17 Relationship of Secured Parties . Nothing set forth herein shall create or evidence a joint venture, partnership or an agency or fiduciary relationship among the Secured Parties. None of the Secured Parties nor any of their respective directors, officers, agents or employees shall be responsible to any other Secured Party or to any other Person for any Grantor’s solvency, financial condition or ability to repay the Priority Lien Obligations or the Subordinated Obligations, or for statements of any Grantor, oral or written, or for the validity, sufficiency or enforceability of the Priority Lien Documents or the Subordinated Documents, or any security interests granted by any Grantor to any Secured Party in connection therewith. Each Secured Party has entered into its respective financing agreements with the Grantors based upon its own independent investigation, and none of the Priority Lien Agent or the Subordinated Collateral Trustee makes any warranty or representation to the other Secured Debt Representatives or the Secured Parties for which it acts as agent nor does it rely upon any representation of the other agents or the Secured Parties for which it acts as agent with respect to matters identified or referred to in this Agreement.

Section 9.18 Springing Event .

(a) Within five Business Days of the Springing Event, the Company shall, or cause the Subordinated Representative to, deliver a written notice (the “ Springing Event Notice ”) of the Springing Event to all holders, or lenders, of the relevant Subordinated Obligations. The Springing Event Notice shall (i) provide reasonable background on the facts and circumstances of the Specified Litigation Event, (ii) inform such holders or lenders that the Springing Event has occurred and (iii) to the extent applicable, request that each of the holders, or lenders, of such Subordinated Obligations notify the Company of the number of shares of common stock held by such holder or lender.

(b) Upon the occurrence of a Springing Event, and from time to time thereafter, including, without limitation, upon any increase in the obligations of the Company under the relevant Subordinated Debt Documents and guarantee obligations of any subsidiary of the Company providing a guarantee of the relevant Subordinated Debt pursuant to Section 9.18(c) , the Company shall take such actions as are necessary and as the Subordinated Debt Representative or the holders or lenders in respect of the relevant Subordinated Debt Obligations may request, including delivery of financing statements and other security documents, authorization documents and opinions of counsel, to ensure and confirm that the obligations of the Company under the relevant Subordinated Debt Documents and guarantee obligations of any subsidiary of the Company providing a guarantee of the relevant Subordinated Debt will be secured by a perfected Subordinated Lien on the Collateral junior only to the Liens securing the Priority Credit Agreement.

 

38


(c) Immediately upon receiving sufficient notices from the holders or lenders of Subordinated Obligations on or after the date of the Specified Litigation Event that such holders or lenders own the greater of (x) at least 8,483,489 shares of common stock of the Company or (y) at least a majority of the aggregate number of shares of common stock outstanding as of the date of delivery of a Springing Event Notice in the aggregate (whether in response to the Springing Event Notice or otherwise), the amount of the obligations of the Company under the relevant Subordinated Debt Documents and guarantee obligations of any subsidiary of the Company providing a guarantee of the relevant Subordinated Debt shall be increased from $100,000,000 in aggregate principal amount of such obligations to the full outstanding principal amount of such obligations (including any additional principal amount).

[SIGNATURES BEGIN NEXT PAGE]

 

39


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

 

ROYAL BANK OF CANADA , as Priority Lien
Agent
By:  

/s/ Susan Khokher

Name:   Susan Khokher
Title:   Manager

Signature Page

Intercreditor and Subordination Agreement


WILMINGTON TRUST, NATIONAL ASSOCIATION,
as Subordinated Collateral Trustee
By:  

/s/ Shawn Goffinet

Name:   Shawn Goffinet
Title:   Assistant Vice President

Signature Page

Intercreditor and Subordination Agreement


ACKNOWLEDGED AND AGREED AS OF THE DATE FIRST ABOVE WRITTEN:
SANDRIDGE ENERGY, INC.
By:  

/s/ Julian Bott

Name:   Julian Bott
Title:   Executive Vice President and Chief Financial Officer
SANDRIDGE HOLDINGS, INC.
SANDRIDGE EXPLORATION AND PRODUCTION, LLC
SANDRIDGE MIDSTREAM, INC.
SANDRIDGE OPERATING COMPANY
INTEGRA ENERGY, L.L.C.
LARIAT SERVICES, INC.
By:  

/s/ Julian Bott

Name:   Julian Bott
Title:   Executive Vice President and Chief Financial Officer

Signature Page

Intercreditor and Subordination Agreement


ANNEX I

Provision for the Subordinated Notes Indenture, any Additional Subordinated Debt Facility and the Subordinated Documents

Reference is made to the Intercreditor and Subordination Agreement, dated as of October 4, 2016, between Royal Bank of Canada, as Priority Lien Agent (as defined therein), and Wilmington Trust, National Association, as Subordinated Collateral Trustee (as defined therein) and acknowledged and agreed by SandRidge Energy, Inc. and certain of its subsidiaries (as amended, supplemented, amended and restated or otherwise modified and in effect from time to time, the “ Intercreditor Agreement ”). Each holder of Subordinated Obligations (as defined therein), by its acceptance of such Subordinated Obligations i) consents to the subordination of Liens provided for in the Intercreditor Agreement, ii) agrees that it will be bound by, and will take no actions contrary to, the provisions of the Intercreditor Agreement and iii) authorizes and instructs the Subordinated Collateral Trustee (as defined therein) on behalf of each Subordinated Secured Party (as defined therein) to enter into the Intercreditor Agreement as Subordinated Collateral Trustee on behalf of such Subordinated Secured Parties. The foregoing provisions are intended as an inducement to the lenders under the Priority Lien Documents (as defined in the Intercreditor Agreement) to extend credit to SandRidge Energy, Inc. and such lenders are intended third party beneficiaries of such provisions and the provisions of the Intercreditor Agreement.

Provision for all Subordinated Security Documents

Reference is made to the Intercreditor and Subordination Agreement, dated as of October 4, 2016, between Royal Bank of Canada, as Priority Lien Agent (as defined therein), and Wilmington Trust, National Association, as Subordinated Collateral Trustee (as defined therein) and acknowledged and agreed by SandRidge Energy, Inc. and certain of its subsidiaries (as amended, supplemented, amended and restated or otherwise modified and in effect from time to time, the “ Intercreditor Agreement ”). Each Person that is secured hereunder, by accepting the benefits of the security provided hereby, (i) consents (or is deemed to consent), to the subordination of Liens provided for in the Intercreditor Agreement, (ii) agrees (or is deemed to agree) that it will be bound by, and will take no actions contrary to, the provisions of the Intercreditor Agreement, (iii) authorizes (or is deemed to authorize) the Subordinated Collateral Trustee (as defined in the Intercreditor Agreement) on behalf of such Person to enter into, and perform under, the Intercreditor Agreement and (iv) acknowledges (or is deemed to acknowledge) that a copy of the Intercreditor Agreement was delivered, or made available, to such Person.

Notwithstanding any other provision contained herein, this Agreement, the Liens created hereby and the rights, remedies, duties and obligations provided for herein are subject in all respects to the provisions of the Intercreditor Agreement and, to the extent provided therein, the applicable Security Documents (as defined in the Intercreditor Agreement). In the event of any conflict or inconsistency between the provisions of this Agreement and the Intercreditor Agreement, the provisions of the Intercreditor Agreement shall control.

 

Annex I-1


EXHIBIT A

to Intercreditor Agreement

[FORM OF]

PRIORITY CONFIRMATION JOINDER

Reference is made to the Intercreditor Agreement, dated as of October 4, 2016 (as amended, supplemented, amended and restated or otherwise modified and in effect from time to time, the “ Intercreditor Agreement ”) between Royal Bank of Canada, as Priority Lien Agent for the Priority Lien Secured Parties (as defined therein), and Wilmington Trust, National Association, as Subordinated Collateral Trustee for the Subordinated Secured Parties (as defined therein) and acknowledged and agreed by SandRidge Energy, Inc. and certain of its subsidiaries.

Capitalized terms used but not otherwise defined herein shall have the meaning set forth in the Intercreditor Agreement. This Priority Confirmation Joinder is being executed and delivered pursuant to Section 4.04 [(a)][(b)][(c)] of the Intercreditor Agreement as a condition precedent to the debt for which the undersigned is acting as representative being entitled to the rights and obligations of being [Additional [Priority Lien/Subordinated] Obligations] under the Intercreditor Agreement.

1. Joinder . The undersigned, [                    ], a [                    ], (the “ New Representative ”) as [trustee] [collateral trustee] [administrative agent] [collateral agent] under that certain [ describe applicable indenture, credit agreement or other document governing the Additional Priority Lien or Subordinated Obligations ] hereby:

(a) represents that the New Representative has been authorized to become a party to the Intercreditor Agreement on behalf of the [Priority Lien Secured Parties under a Priority Substitute Credit Facility] [Additional Priority Lien Secured Parties under an Additional Priority Lien Debt Facility] [Indenture Subordinated Secured Parties under the Subordinated Substitute Facility] [Additional Subordinated Secured Parties under the Additional Subordinated Debt Facility] as [a Priority Lien Agent under a Priority Substitute Credit Facility] [a Subordinated Collateral Trustee under a Subordinated Substitute Facility] [Secured Debt Representative] [Priority Lien Representative] [Subordinated Representative] under the Intercreditor Agreement for all purposes thereof on the terms set forth therein, and to be bound by the terms of the Intercreditor Agreement as fully as if the undersigned had executed and delivered the Intercreditor Agreement as of the date thereof; and

(b) agrees that its address for receiving notices pursuant to the Intercreditor Agreement shall be as follows:

[Address];

2. Priority Confirmation .

[ Option A: to be used if additional debt constitutes a Series of Priority Lien Debt ] The undersigned New Representative, on behalf of itself and each holder of Obligations in respect of the Series of Priority Lien Debt [that constitutes a Priority Lien Substitute Facility] for which the undersigned is acting as [Priority Lien Representative] [Priority Lien Agent] hereby agrees, for the benefit of all Secured Parties and each future Secured Debt Representative, and as a condition to being treated as Secured Obligations under the Intercreditor Agreement, that:

(a) all Priority Lien Obligations will be and are secured in accordance with the Priority Lien Intercreditor Agreement by all Priority Liens at any time granted by SandRidge or any other Grantor to secure any Obligations in respect of such Series of Priority Lien Debt, whether or not upon property otherwise constituting Collateral for such Series of Priority Lien Debt;

 

Exhibit A - 1


(b) the New Representative and each holder of Obligations in respect of the Series of Priority Lien Debt for which the undersigned is acting as [Priority Lien Representative] are bound by the provisions of the Intercreditor Agreement, including the provisions relating to the ranking of Priority Liens and Subordinated Liens and the order of application of proceeds from enforcement of Priority Liens and Subordinated Liens; and

(c) the New Representative and each holder of Obligations in respect of the Series of Priority Lien Debt for which the undersigned is acting as [Priority Lien Representative] appoints the Priority Lien Agent and consents to the terms of the Intercreditor Agreement and the performance by the Priority Lien Agent of, and directs the Priority Lien Agent to perform, its obligations under the Intercreditor Agreement and the Priority Lien Intercreditor Agreement, together with all such powers as are reasonably incidental thereto. [or]

[ Option B: to be used if additional debt constitutes a Series of Subordinated Debt ] The undersigned New Representative, on behalf of itself and each holder of Obligations in respect of the Series of Subordinated Debt [that constitutes Subordinated Substitute Facility] for which the undersigned is acting as [Subordinated Representative] [Subordinated Collateral Trustee] hereby agrees, for the benefit of all Secured Parties and each future Secured Debt Representative, and as a condition to being treated as Secured Obligations under the Intercreditor Agreement, that:

(a) all Subordinated Obligations will be and are secured equally and ratably by all Subordinated Liens at any time granted by SandRidge or any other Grantor to secure any Obligations in respect of such Series of Subordinated Debt, whether or not upon property otherwise constituting Collateral for such Series of Subordinated Debt;

(b) the New Representative and each holder of Obligations in respect of the Series of Subordinated Debt for which the undersigned is acting as [Subordinated Representative] are bound by the provisions of the Intercreditor Agreement, including the provisions relating to the ranking of Priority Liens and Subordinated Liens and the order of application of proceeds from enforcement of Priority Liens and Subordinated Liens; and

(c) the New Representative and each holder of Obligations in respect of the Series of Subordinated Debt for which the undersigned is acting as [Subordinated Representative] appoints the Subordinated Collateral Trustee and consents to the terms of the Intercreditor Agreement and the performance by the Second Lien Collateral Trustee of, and directs the Subordinated Collateral Trustee to perform, its obligations under the Intercreditor Agreement and the Subordinated Collateral Trust Agreement, together with all such powers as are reasonably incidental thereto. [or]

3. Full Force and Effect of Intercreditor Agreement . Except as expressly supplemented hereby, the Intercreditor Agreement shall remain in full force and effect.

4. Governing Law and Miscellaneous Provisions . The provisions of Article IX of the Intercreditor Agreement will apply with like effect to this Priority Confirmation Joinder.

5. Expenses . SandRidge agree to reimburse each Secured Debt Representative for its reasonable fees and expenses in connection with this Priority Confirmation Joinder, including the reasonable fees, other charges and disbursements of counsel.

 

Exhibit A - 2


IN WITNESS WHEREOF, the parties hereto have caused this Priority Confirmation Joinder to be executed by their respective officers or representatives as of [                    , 20    ].

 

[insert name of New Representative]
By:  

 

Name:  

 

Title:  

 

The Priority Lien Agent hereby acknowledges receipt of this Priority Confirmation Joinder [and agrees to act as Priority Lien Agent for the New Representative and the holders of the Obligations represented thereby]:

 

 

as Priority Lien Agent
By:  

 

Name:  

 

Title:  

 

The Subordinated Collateral Trustee hereby acknowledges receipt of this Priority Confirmation Joinder [and agrees to act as Subordinated Collateral Trustee for the New Representative and the holders of the Obligations represented thereby]:

 

 

as Subordinated Collateral Trustee
By:  

 

Name:  

 

Title:  

 

 

Exhibit A - 3


Acknowledged and Agreed to by:
SANDRIDGE ENERGY, INC.
By:  

 

Name:  

 

Title:  

 

 

Exhibit A - 4


EXHIBIT B

to Intercreditor Agreement

SECURITY DOCUMENTS

PART A.

List of Credit Agreement Security Documents

 

1. Security Agreement, dated as of October 4, 2016 among SandRidge Energy, Inc., each of the other Grantors party thereto, and the Priority Lien Agent as Administrative Agent for the Priority Lien Secured Parties.

 

2. Each mortgage and deed of trust entered into as of October 4, 2016 and thereafter, assigned to the Priority Lien Agent or executed and delivered by SandRidge Energy, Inc. or any other Grantor creating (or purporting to create) a Lien upon Collateral in favor of the Priority Lien Agent, to secure the Priority Lien Obligations, except to the extent released by the Priority Lien Agent in accordance with this Agreement and the Priority Lien Security Documents.

 

3. Each UCC Financing Statement filed in connection with the documents listed in items 1 and 2 of this Part A.

PART B.

List of Indenture Subordinated Lien Security Documents

 

1. Security Agreement, dated as of [●] among SandRidge Energy, Inc., each of the other Grantors party thereto, and the Subordinated Collateral Trustee for the Subordinated Secured Parties.

 

2. Each mortgage and deed of trust entered into as of [●] and thereafter, assigned to the Subordinated Collateral Trustee or executed and delivered by SandRidge Energy, Inc. or any other Grantor creating (or purporting to create) a Lien upon Collateral in favor of the Subordinated Collateral Trustee, to secure the Subordinated Obligations, except to the extent released by the Subordinated Collateral Trustee in accordance with this Agreement and the Subordinated Security Documents.

 

3. Each UCC Financing Statement filed in connection with the documents listed in items 1 and 2 of this Part A.

 

Exhibit B - 1

Exhibit 10.5

COLLATERAL TRUST AGREEMENT

dated as of October 4, 2016

among

SANDRIDGE ENERGY, INC.,

as the Company,

the Guarantors from time to time party hereto,

WILMINGTON TRUST, NATIONAL ASSOCIATION,

as Trustee under the Indenture,

the other Parity Lien Representatives from time to time party hereto

and

WILMINGTON TRUST, NATIONAL ASSOCIATION,

as Collateral Trustee


Table of Contents

 

ARTICLE 1   DEFINITIONS; PRINCIPLES OF CONSTRUCTION      1   
Section 1.1   Defined Terms      1   
Section 1.2   Rules of Interpretation      7   
ARTICLE 2   THE TRUST ESTATE      8   
Section 2.1   Declaration of Trust      8   
Section 2.2   Collateral Shared Equally and Ratably      8   
Section 2.3   Similar Collateral and Agreements      9   
ARTICLE 3   OBLIGATIONS AND POWERS OF COLLATERAL TRUSTEE      9   
Section 3.1   Appointment and Undertaking of the Collateral Trustee      9   
Section 3.2   Release or Subordination of Liens      10   
Section 3.3   Enforcement of Liens      10   
Section 3.4   Application of Proceeds      10   
Section 3.5   Powers of the Collateral Trustee      11   
Section 3.6   Documents and Communications      11   
Section 3.7   For Sole and Exclusive Benefit of Holders of Parity Lien Obligations      11   
Section 3.8   Additional Parity Lien Debt      12   
ARTICLE 4   OBLIGATIONS ENFORCEABLE BY THE COMPANY AND THE OTHER GRANTORS      13   
Section 4.1   Release of Liens on Collateral      13   
Section 4.2   Delivery of Copies to Parity Lien Representatives      15   
Section 4.3   Collateral Trustee not Required to Serve, File or Record      15   
Section 4.4   Release of Liens in Respect of Notes      15   
Section 4.5   Release of Liens in Respect of any Series of Parity Lien Debt other than the Notes      15   
ARTICLE 5   IMMUNITIES OF THE COLLATERAL TRUSTEE      15   
Section 5.1   No Implied Duty      15   
Section 5.2   Appointment of Agents and Advisors      16   
Section 5.3   Other Agreements      16   
Section 5.4   Solicitation of Instructions      16   
Section 5.5   Limitation of Liability      16   
Section 5.6   Documents in Satisfactory Form      16   
Section 5.7   Entitled to Rely      16   
Section 5.8   Parity Lien Debt Default      17   
Section 5.9   Actions by Collateral Trustee      17   
Section 5.10   Security or Indemnity in favor of the Collateral Trustee      17   
Section 5.11   Rights of the Collateral Trustee      17   
Section 5.12   Limitations on Duty of Collateral Trustee in Respect of Collateral      17   
Section 5.13   Assumption of Rights, Not Assumption of Duties      18   
Section 5.14   No Liability for Clean Up of Hazardous Materials      18   
Section 5.15   Other Relationships with the Company or Guarantors      18   
ARTICLE 6   RESIGNATION AND REMOVAL OF THE COLLATERAL TRUSTEE      19   
Section 6.1   Resignation or Removal of Collateral Trustee      19   

 

i


Section 6.2   Appointment of Successor Collateral Trustee      19   
Section 6.3   Succession      20   
Section 6.4   Merger, Conversion or Consolidation of Collateral Trustee      20   
Section 6.5   Concerning the Collateral Trustee and the Parity Lien Representatives      20   
ARTICLE 7   MISCELLANEOUS PROVISIONS      21   
Section 7.1   Amendment      21   
Section 7.2   Voting      22   
Section 7.3   Further Assurances      23   
Section 7.4   Successors and Assigns      23   
Section 7.5   Delay and Waiver      23   
Section 7.6   Notices      24   
Section 7.7   Entire Agreement      24   
Section 7.8   Compensation; Expenses      24   
Section 7.9   Indemnity      25   
Section 7.10   Severability      26   
Section 7.11   Headings      26   
Section 7.12   Obligations Secured      26   
Section 7.13   Governing Law      26   
Section 7.14   Consent to Jurisdiction      26   
Section 7.15   Waiver of Jury Trial      27   
Section 7.16   Counterparts, Electronic Signatures      27   
Section 7.17   Effectiveness      27   
Section 7.18   Grantors and Additional Grantors      27   
Section 7.19   Insolvency      27   
Section 7.20   Rights and Immunities of Parity Lien Representatives      27   
Section 7.21   Intercreditor Agreement      28   
Section 7.22   Force Majeure      28   
Section 7.23   Representations and Warranties      28   
Exhibit A   Form of Additional Parity Lien Debt Certificate      A-1   
Exhibit B   Form of Collateral Trust Joinder — Additional Debt      B-1   

Exhibit C

Exhibit D

 

Form of Collateral Trust Joinder — Additional Grantor

Form of Collateral Trust Amendment - Trust Estate upon Springing Event

    

 

C-1

D-1

  

  

 

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This Collateral Trust Agreement (as amended, supplemented, amended and restated or otherwise modified form time to time in accordance with Sections 2.4 and 7.1 hereof, this “ Agreement ”) is dated as of October 4, 2016 and is by and among SandRidge Energy, Inc. (the “ Company ”), the Guarantors from time to time party hereto, Wilmington Trust, National Association, as Trustee (as defined below), the other Parity Lien Representatives from time to time party hereto and Wilmington Trust, National Association, as Collateral Trustee (in such capacity and together with its successors in such capacity, the “ Collateral Trustee ”).

RECITALS

The Company issued 0.00% Convertible Senior Subordinated Notes due 2020 (the “ Notes ”) in an aggregate principal amount of $281,780,873 pursuant to an Indenture dated as of October 4, 2016 (as amended, supplemented, amended and restated or otherwise modified and in effect from time to time, the “ Indenture ”) among the Company, the Guarantors and Wilmington Trust, National Association, as trustee (in such capacity and together with its successors in such capacity, the “ Trustee ”).

The Company and the Guarantors intend to secure their Obligations under the Indenture upon the occurrence of a Springing Event (as defined in the Indenture), any future Parity Lien Debt and any other Parity Lien Obligations, with Liens on all present and future Collateral to the extent that such Liens have been provided for in the applicable Parity Lien Security Documents.

This Agreement sets forth the terms on which each Parity Lien Secured Party (other than the Collateral Trustee) has appointed the Collateral Trustee to act as the collateral trustee for the present and future holders of the Parity Lien Obligations to receive, hold, maintain, administer and distribute the Collateral at any time delivered to the Collateral Trustee or the subject of the Parity Lien Security Documents, and to enforce the Parity Lien Security Documents and all interests, rights, powers and remedies of the Collateral Trustee with respect thereto or thereunder and the proceeds thereof.

Capitalized terms used in this Agreement have the meanings assigned to them above or in Article 1 below.

AGREEMENT

In consideration of the premises and the mutual agreements herein set forth, the receipt and sufficiency of which are hereby acknowledged, the parties to this Agreement hereby agree as follows:

ARTICLE 1

DEFINITIONS; PRINCIPLES OF CONSTRUCTION

Section 1.1.    Defined Terms. Defined Terms. The following terms will have the following meanings:

Act of Parity Lien Debtholders ” means, as to any matter at any time, a direction in writing delivered to the Collateral Trustee by or with the written consent of the holders of Parity Lien Debt representing the Required Parity Lien Debtholders, which, upon request of the Collateral Trustee, shall be accompanied by indemnity or security satisfactory to the Collateral Trustee for any losses, liabilities or expenses that may be incurred in connection with such direction.

Additional Parity Lien Debt ” has the meaning set forth in Section 3.8(b) .

Additional Parity Lien Debt Certificate ” means a notice in substantially the form of Exhibit A.

Additional Secured Debt Designation ” means the written agreement of the holders of any Series of Parity Lien Debt or their Parity Lien Representative, as set forth in the indenture, credit agreement or other agreement governing such Series of Parity Lien Debt, for the benefit of each existing and future holder of Priority Lien Debt, the Priority Lien Collateral Agent and each existing and future holder of Priority Liens:

(1)    that all Parity Lien Obligations will be and are secured equally and ratably by all Parity Liens at any time granted by the Company or any Guarantor to secure any Obligations in respect of such Series of Parity Lien Debt, whether or not upon property otherwise constituting collateral for such Series of Parity Lien Debt, and that all such Parity Liens will be enforceable by the Collateral Trustee for the benefit of all holders of Parity Lien Obligations equally and ratably;


(2)    that the holders of Obligations in respect of such Series of Parity Lien Debt are bound by the provisions of this Agreement and the Intercreditor Agreement, including the provisions relating to the ranking of Parity Liens and the order of application of proceeds from the enforcement of Parity Liens; and

(3)    consenting to and directing the Collateral Trustee to perform its obligations under this Agreement, the Intercreditor Agreement and the Parity Lien Security Documents.

Affiliate ” means, with respect to any specified Person: (1) any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person; (2) any other Person that owns, directly or indirectly, 10% or more of the Voting Stock of such specified Person (or any of such specified Person’s direct or indirect parent’s Voting Stock); or (3) any other Person 10% or more of the Voting Stock of which is beneficially owned or held directly or indirectly by such specified Person. For the purposes of this definition, “control” when used with respect to any specified Person means the power to direct the management and policies of such Person, directly or indirectly, whether through ownership of voting securities, by contract or otherwise; and the terms “controlling” and “controlled” have meanings correlative to the foregoing.

Agreement ” has the meaning set forth in the preamble.

Business Day ” means any day other than a Saturday, Sunday or other day on which commercial banks are authorized by law to close, or are in fact closed, in New York City or in the city where the corporate trust office of the Trustee specified in the Indenture is located.

Capital Stock ” of any Person means any and all shares, units, interests, participations, rights in or other equivalents (however designated) of such Person’s capital stock, other equity interests whether now outstanding or issued after the date hereof, partnership interests (whether general or limited), limited liability company interests, any other interest or participation that confers on a Person the right to receive a share of the profits and losses of, or distributions of assets of, the issuing Person, including any Preferred Stock, and any rights (other than debt securities or other Indebtedness convertible into Capital Stock), warrants or options exchangeable for or convertible into such Capital Stock.

Collateral ” means all properties and assets of the Company and the Guarantors now owned or at any time hereafter acquired in which Liens have been granted, or purported to be granted, to the Collateral Trustee to secure any or all of the Parity Lien Obligations, and from and after the time the Collateral Trustee is required to release its Liens pursuant to Section 3.2 upon any properties or assets, shall exclude such properties or assets; provided that if such Liens are required to be released as a result of the sale, transfer or other disposition of any properties or assets of the Company or any Guarantor, such assets or properties will cease to be excluded from the Collateral if the Company or any Guarantor thereafter acquires or reacquires such assets or properties.

Collateral Trustee ” has the meaning set forth in the preamble.

Collateral Trust Account ” means that certain account established at Wilmington Trust, National Association by the Company to hold $100.00 in trust for purpose of establishing the Trust Estate.

Collateral Trust Joinder ” means (i) with respect to the provisions of this Agreement relating to any Additional Parity Lien Debt, an agreement substantially in the form of Exhibit B , and (ii) with respect to the provisions of this Agreement relating to the addition of additional Grantors, an agreement substantially in the form of Exhibit C .

Company ” has the meaning set forth in the preamble.

Credit Facility ” means one or more debt facilities (including, without limitation, the Priority Credit Agreement), commercial paper facilities or other debt instruments, indentures or agreements providing for revolving credit loans, term loans, receivables financings (including through the sale of receivables to the lenders or to special purpose entities formed to borrow from the lenders against such receivables), letters of credit, capital markets financings and/or private placements

 

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involving bonds or other debt securities, or other debt obligations, in each case, as amended, restated, modified, renewed, refunded, restructured, supplemented, replaced or refinanced from time to time in whole or in part from time to time, including without limitation any amendment increasing the amount of Indebtedness incurred or available to be borrowed thereunder, extending the maturity of any Indebtedness incurred thereunder or contemplated thereby or deleting, adding or substituting one or more parties thereto (whether or not such added or substituted parties are banks or other institutional lenders).

Grantor ” means each of and “ Grantors ” means, collectively, the Company and the Guarantors and any other Person (if any) that at any time provides collateral security for any Parity Lien Obligations.

Guarantee ” means any obligation, contingent or otherwise, of any Person directly or indirectly guaranteeing any Indebtedness or other obligation of any other Person and, without limiting the generality of the foregoing, any obligation, direct or indirect, contingent or otherwise, of such Person (i) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or other obligation of such other Person (whether arising by virtue of partnership arrangements, or by agreement to keep well, to purchase assets, goods, securities or services, to take-or-pay, or to maintain financial statement conditions or otherwise) or (ii) entered into for purposes of assuring in any other manner the obligee of such Indebtedness or other obligation of the payment thereof or to protect such obligee against loss in respect thereof, in whole or in part; provided that the term “Guarantee” does not include endorsements for collection or deposit in the ordinary course of business. The term “Guarantee” used as a verb has a corresponding meaning.

Guarantor ” means each Subsidiary of the Company who has Guaranteed payment of any Parity Lien Obligations, and their respective successors and assigns, in each case until their respective Guarantee of all Parity Lien Obligations is released in accordance with the terms of the applicable Parity Lien Documents.

Indebtedness ” has the meaning assigned to such term in the Indenture or to such term or other similar term in any applicable Parity Lien Document.

Indemnified Liabilities ” means any and all liabilities (including all environmental liabilities), obligations, losses, damages, penalties, actions, judgments, suits, costs, taxes, expenses or disbursements of any kind or nature whatsoever with respect to the execution, delivery, performance, administration or enforcement of this Agreement or any of the other Parity Lien Security Documents, including any of the foregoing relating to the use of proceeds of any Parity Lien Debt or the violation of, noncompliance with or liability under, any law (including environmental laws) applicable to or enforceable against the Company, any Subsidiary of the Company or any Guarantor or any of the Collateral and all reasonable costs and expenses (including reasonable fees and expenses of legal counsel selected by the Indemnitee) incurred by any Indemnitee in connection with any claim, action, investigation or proceeding in any respect relating to any of the foregoing, whether or not suit is brought.

Indemnitee ” has the meaning set forth in Section 7.9(a).

Indenture ” has the meaning set forth in the recitals.

Insolvency or Liquidation Proceeding ” means:

(1)    any case commenced by or against the Company or any Guarantor under Title 11, U.S. Code or any similar federal or state law for the relief of debtors, any other proceeding for the reorganization, recapitalization or adjustment or marshalling of the assets or liabilities of the Company or any Guarantor, any receivership or assignment for the benefit of creditors relating to the Company or any Guarantor or any similar case or proceeding relative to the Company or any Guarantor or its creditors, as such, in each case whether or not voluntary;

(2)    any liquidation, dissolution, marshalling of assets or liabilities or other winding up of or relating to the Company or any Guarantor, in each case whether or not voluntary and whether or not involving bankruptcy or insolvency; or

(3)    any other proceeding of any type or nature in which substantially all claims of creditors of the Company or any Guarantor are determined and any payment or distribution is or may be made on account of such claims.

 

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Intercreditor Agreement ” means that certain Intercreditor and Subordination Agreement, dated as of October 4, 2016, among the Company, the Guarantors, the Collateral Trustee, on behalf of itself and the holders of the Notes and any other Parity Lien Obligations, the Priority Lien Collateral Agent, and the other parties from time to time party thereto, as the same may be amended, restated, supplemented or otherwise modified or replaced from time to time.

Lien ” has the meaning set forth in (a) the Priority Credit Agreement, or if applicable, any Priority Lien Document or (b) if no Priority Lien Documents are in effect as of the date hereof, the Priority Credit Agreement, or if applicable, any Priority Lien Document as in effect immediately prior to the discharge of all Priority Lien Obligations.

Mortgage ” has the meaning set forth in Section 3.8(d)(1) .

Mortgaged Property ” has the meaning set forth in Section 3.8(d)(1) .

Notes ” has the meaning set forth in the recitals.

Note Documents ” means the Indenture, the Notes, the Guarantees thereof, the Intercreditor Agreement and the Notes Security Documents.

Notes Security Agreement ” means the Security Agreement, to be entered into after the occurrence of the Springing Event, among the Company, the Guarantors party thereto and the Collateral Trustee, on behalf of itself and the holders of the Notes, as the same may be amended, supplemented or otherwise modified or replaced from time to time.

Notes Security Documents ” means this Agreement, each Collateral Trust Joinder, the Notes Security Agreement and all security agreements, pledge agreements, hypothecs, collateral assignments, Mortgages, deeds of trust, deeds to secure debt, collateral agency agreements, debentures, control agreements or other grants or transfers for security executed and delivered by the Company or any Guarantor creating (or purporting to create) a Parity Lien upon Collateral in favor of the Collateral Trustee (including, without limitation, the financing statements under the Uniform Commercial Code of the relevant state), in each case, as amended, modified, renewed, restated or replaced, in whole or in part, from time to time, in accordance with its terms and Section 7.1 .

Obligations ” means any principal (including reimbursement obligations with respect to letters of credit whether or not drawn), interest (including, to the extent legally permitted, all interest accrued thereon after the commencement of any Insolvency or Liquidation Proceeding at the rate, including any applicable post-default rate, specified in the Parity Lien Documents, even if such interest is not enforceable, allowable or allowed as a claim in such proceeding), premium (if any), fees, indemnifications, reimbursements, expenses and other liabilities payable under the documentation governing any Indebtedness.

Officers’ Certificate ” means a certificate with respect to compliance with a condition or covenant provided for in this Agreement, signed on behalf of the Company by two officers of the Company, one of whom must be the principal executive officer, the principal financial officer, the treasurer or the principal accounting officer of the Company, including:

(a)    a statement that the Person making such certificate has read such covenant or condition;

(b)    a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate are based;

(c)    a statement that, in the opinion of such Person, he or she has made such examination or investigation as is necessary to enable him or her to express an informed opinion as to whether or not such covenant or condition has been satisfied; and

(d)    a statement as to whether or not, in the opinion of such Person, such condition or covenant has been satisfied.

 

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Parity Lien ” means a Lien granted by the Company or any Grantor in favor of the Collateral Trustee pursuant to a Parity Lien Security Document, at any time, upon any property of the Company or such Grantor to secure Parity Lien Obligations.

Parity Lien Debt ” means:

(1)    the Notes and Guarantees thereof; and

(2)    any other Indebtedness (other than intercompany indebtedness owing to the Company or its Subsidiaries) of the Company or any Guarantor that is secured equally and ratably with the Notes by a Parity Lien that was permitted to be incurred and so secured under each applicable Secured Debt Document; provided that in the case of any Indebtedness referred to in clause (2) of this definition, that:

(a)    on or before the date on which such Indebtedness is incurred by the Company or any Guarantor, such Indebtedness is designated by the Company, in an Additional Parity Lien Debt Certificate executed and delivered in accordance with Section 3.8(b) , as “Parity Lien Debt” for the purposes of the Indenture and this Agreement; provided, further , that no such Indebtedness may be designated as both Parity Lien Debt and Priority Lien Debt;

(b)    such Indebtedness is governed by an indenture, credit agreement or other agreement that includes an Additional Secured Debt Designation and, in each case, the Parity Lien Representative of such Parity Lien Debt shall have executed a joinder to the Intercreditor Agreement in the form provided therein; and

(c)    all other requirements set forth in Section 3.8 have been complied with.

Parity Lien Debt Default ” means any “Event of Default” as defined in the Indenture, or any similar event or condition set forth in any other Parity Lien Document that causes, or permits holders of the applicable Series of Parity Lien Debt outstanding thereunder (with or without the giving of notice or lapse of time, or both, and whether or not notice has been given or time has lapsed) to cause, the Parity Lien Debt outstanding thereunder to become immediately due and payable.

Parity Lien Documents ” means, collectively, the Note Documents and any additional indenture, supplemental indenture, credit agreement or other agreement governing each other Series of Parity Lien Debt and the Parity Lien Security Documents.

Parity Lien Obligations ” means Parity Lien Debt and all other Obligations in respect thereof.

Parity Lien Representative ” means:

(1)    in the case of the Notes, the Trustee; or

(2)    in the case of any other Series of Parity Lien Debt, the trustee, agent or representative of the holders of such Series of Parity Lien Debt who (A) is appointed to act for the holders of such Series of Parity Lien Debt (for purposes related to the administration of the Parity Lien Security Documents) pursuant to the indenture, credit agreement or other agreement governing such Series of Parity Lien Debt, together with its successors in such capacity, and (B) has become a party to this Agreement by executing a Collateral Trust Joinder.

Parity Lien Secured Parties ” has the meaning assigned to the term “Subordinated Secured Parties” in the Intercreditor Agreement.

Parity Lien Security Documents ” means this Agreement, each Collateral Trust Joinder, the Indenture (insofar as the same grants a Lien on the Collateral), the Notes Security Documents, and all other security agreements, pledge agreements, collateral assignments, mortgages, deeds of trust, collateral agency agreements, control agreements or other grants or transfers for security executed and delivered by the Company or any Guarantor creating (or purporting to create) a Lien upon Collateral in favor of the Collateral Trustee, for the benefit of any of the Parity Lien Secured Parties, in each case, as amended, modified, renewed, restated or replaced, in whole or in part, from time to time, in accordance with its terms and Section 7.1 .

 

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Person ” means an individual, a corporation, a partnership, a limited liability company, an association, a trust or any other entity, including a government or political subdivision or an agency or instrumentality thereof.

Preferred Stock ” means, with respect to any Person, any Capital Stock of any class or classes (however designated) which is preferred as to the payment of dividends or distributions, or as to the distribution of assets upon any voluntary or involuntary liquidation or dissolution of such Person, over the Capital Stock of any other class in such Person.

Priority Credit Agreement ” has the meaning set forth in the Intercreditor Agreement.

Priority Credit Agreement Agent ” means, at any time, the Person serving at such time as the “Agent” or “Administrative Agent” under the Priority Credit Agreement or any other representative then most recently designated in accordance with the applicable provisions of the Priority Credit Agreement, together with its successors in such capacity.

Priority Lien ” has the meaning assigned to such term in the Intercreditor Agreement.

Priority Lien Collateral Agent ” means Royal Bank of Canada, as agent under the Priority Credit Agreement and any successor thereof in such capacity under the Priority Credit Agreement, or if the Priority Credit Agreement ceases to exist, the collateral agent or other representative of lenders or holders of Priority Lien Obligations designated pursuant to the terms of the Priority Lien Documents pursuant to which such Priority Lien Obligations were issued and the Intercreditor Agreement.

Priority Lien Debt ” has the meaning assigned to such term in the Intercreditor Agreement.

Priority Lien Documents ” has the meaning assigned to such term in the Intercreditor Agreement.

Priority Lien Obligation s” has the meaning assigned to such term in the Intercreditor Agreement.

Priority Lien Representative ” means (1) the Priority Credit Agreement Agent or (2) in the case of any other Series of Priority Lien Debt, the Trustee, agent or representative of the holders of such Series of Priority Lien Debt who maintains the transfer register for such Series of Priority Lien Debt and is appointed as a representative of the Priority Lien Debt (for purposes related to the administration of the Security Documents) pursuant to the Priority Credit Agreement or other agreement governing such Series of Priority Lien Debt.

Reaffirmation Agreement ” means an agreement reaffirming the security interests granted to the Collateral Trustee in substantially the form attached as Exhibit 1 to Exhibit A of this Agreement

Required Parity Lien Debtholders ” means, at any time, the holders of a majority in aggregate principal amount of all Parity Lien Debt then outstanding, calculated in accordance with the provisions of Section 7.2 . For purposes of this definition, Parity Lien Debt registered in the name of, or beneficially owned by, the Company or any Affiliate of the Company will be deemed not to be outstanding.

Responsible Officer ” means, when used with respect to the Collateral Trustee, any officer within the corporate trust department of the Collateral Trustee, including any vice president, assistant vice president, assistant secretary, assistant treasurer, trust officer or any other officer of the Collateral Trustee who customarily performs functions similar to those performed by the Persons who at the time shall be such officers, respectively, or to whom any corporate trust matter is referred because of such person’s knowledge of and familiarity with the particular subject and who shall have direct responsibility for the administration of this Agreement.

Secured Debt ” means Priority Lien Debt and Parity Lien Debt.

Secured Debt Document ” means the Priority Lien Documents and the Parity Lien Documents.

 

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Series of Parity Lien Debt ” means, severally, the Notes and each other issue or series of Parity Lien Debt for which a single transfer register is maintained.

Series of Priority Lien Debt ” means, severally, the Indebtedness outstanding under the Priority Credit Agreement and any other Credit Facility that constitutes Priority Lien Debt.

Springing Event ” shall have the meaning set forth in the Indenture.

Subsidiary ” of a Person means:

(1)    any corporation more than 50% of the outstanding voting power of the Voting Stock of which is owned or controlled, directly or indirectly, by such Person or by one or more other Subsidiaries of such Person, or by such Person and one or more other Subsidiaries thereof, or

(2)    any limited partnership of which such Person or any Subsidiary of such Person is a general partner, or

(3)    any other Person in which such Person, or one or more other Subsidiaries of such Person, or such Person and one or more other Subsidiaries, directly or indirectly, has more than 50% of the outstanding Capital Stock or has the power, by contract or otherwise, to direct or cause the direction of the policies, management and affairs thereof.

Title Datedown Product ” has the meaning set forth in Section 3.8(d)(3) .

Trustee ” has the meaning set forth in the recitals.

Trust Estate ” has the meaning set forth in Section 2.1 .

UCC ” means the Uniform Commercial Code as in effect from time to time in the State of New York or any other applicable jurisdiction.

Voting Stock ” of a Person means Capital Stock of such Person of the class or classes pursuant to which the holders thereof have the general voting power under ordinary circumstances to elect at least a majority of the board of directors, managers or trustees of such Person (irrespective of whether or not at the time Capital Stock of any other class or classes shall have or might have voting power by reason of the happening of any contingency).

Section 1.2.     Rules of Interpretation .

(a)    All capitalized terms used in this Agreement and not otherwise defined herein have the meanings assigned to them in the Indenture.

(b)    Unless otherwise indicated, any reference to any agreement or instrument will be deemed to include a reference to that agreement or instrument as assigned, amended, supplemented, amended and restated, or otherwise modified and in effect from time to time or replaced in accordance with the terms of this Agreement.

(c)    The use in this Agreement or any of the other Parity Lien Security Documents of the word “include” or “including,” when following any general statement, term or matter, will not be construed to limit such statement, term or matter to the specific items or matters set forth immediately following such word or to similar items or matters, whether or not non-limiting language (such as “without limitation” or “but not limited to” or words of similar import) is used with reference thereto, but will be deemed to refer to all other items or matters that fall within the broadest possible scope of such general statement, term or matter. The word “will” shall be construed to have the same meaning and effect as the word “shall.”

(d)    References to “Sections,” “clauses,” “recitals” and the “preamble” will be to Sections, clauses, recitals and the preamble, respectively, of this Agreement unless otherwise specifically provided. References to “Articles” will be to Articles of this Agreement unless otherwise specifically provided. References to “Exhibits” will be to Exhibits to this Agreement unless otherwise specifically provided.

 

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(e)    Notwithstanding anything to the contrary in this Agreement, any references contained herein to any section, clause, paragraph, definition or other provision of the Indenture (including any definition contained therein) shall be deemed to be a reference to such section, clause, paragraph, definition or other provision of the Indenture as in effect on the date of this Agreement; provided that any reference to any such section, clause, paragraph or other provision shall refer to such section, clause, paragraph or other provision of the Indenture (including any definition contained therein) as amended or modified from time to time if such amendment or modification has been made in accordance with the Indenture. Unless otherwise set forth herein, references to principal amount shall include, without duplication, any reimbursement obligations with respect to a letter of credit and the face amount of any outstanding letter of credit (whether or not such amount is, at the time of determination, drawn or available to be drawn).

This Agreement and the other Parity Lien Security Documents will be construed without regard to the identity of the party who drafted it and as though the parties participated equally in drafting it. Consequently, each of the parties acknowledges and agrees that any rule of construction that a document is to be construed against the drafting party will not be applicable either to this Agreement or the other Parity Lien Security Documents.

ARTICLE 2

THE TRUST ESTATE

Section 2.1.     Declaration of Trust .

To establish the trust relationship and in consideration of the premises and the mutual agreements set forth herein, each of the Grantors hereby confirms the grant of Liens in favor of the Collateral Trustee, and the Collateral Trustee hereby accepts and agrees to hold, in trust under this Agreement for the benefit of all current and future Parity Lien Secured Parties, all of such Grantor’s right, title and interest in, to and under the Collateral Trust Account and all cash and non-cash proceeds thereof (collectively, the “ Trust Estate ”).

The Collateral Trustee and its successors and assigns under this Agreement will hold the Trust Estate in trust for the benefit solely and exclusively of all current and future Parity Lien Secured Parties as security for the payment of all present and future Parity Lien Obligations.

Notwithstanding the foregoing, if at any time:

(1)    all Liens securing the Parity Lien Obligations have been released as provided in Section 4.1 ;

(2)    the Collateral Trustee holds no other property in trust as part of the Trust Estate;

(3)    no monetary obligation (other than indemnification and other contingent obligations not then due and payable and letters of credit that have been cash collateralized at the lower of (A) 105% of the aggregate undrawn amount and (B) the percentage of the aggregate undrawn amount required for release of Liens under the terms of the applicable Parity Lien Documents) is outstanding and payable under this Agreement to the Collateral Trustee or any of its co-trustees or agents (whether in an individual or representative capacity); and

(4)    the Company delivers to the Collateral Trustee an Officers’ Certificate stating that all Parity Liens of the Collateral Trustee have been released in compliance with all applicable provisions of the Parity Lien Documents and that the Grantors are not required by any Parity Lien Document to grant any Parity Lien upon any property, then the Trust Estate arising hereunder will terminate, except that all provisions set forth in Sections 7.8 and 7.9 that are enforceable by the Collateral Trustee or any of its co-trustees or agents (whether in an individual or representative capacity) will remain enforceable in accordance with their terms.

The parties further declare and covenant that the Trust Estate will be held and distributed by the Collateral Trustee subject to the further agreements herein.

Section 2.2.     Collateral Shared Equally and Ratably . The parties to this Agreement agree that the payment and satisfaction of all of the Parity Lien Obligations will be secured equally and ratably by the Parity Lien established in favor of the Collateral Trustee for the benefit of the Parity Lien Secured Parties, notwithstanding the time of incurrence of any Parity Lien Obligations or time or method of creation or perfection of any Parity Liens securing such Parity Lien Obligations.

 

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Section 2.3.     Similar Collateral and Agreements . The parties to this Agreement agree that it is their intention that the Parity Liens be identical. In furtherance of the foregoing, the parties hereto agree that the Parity Lien Security Documents (other than the Notes Security Documents) shall be in all material respects the same forms of documents as the respective Notes Security Documents creating Liens on the Collateral.

Section 2.4.     Amendment of Trust Estate upon Springing Event. The parties to this Agreement agree that upon the occurrence of the Springing Event, the Collateral Trustee shall enter into an amendment to this Agreement in substantially the form of Exhibit D among the Collateral Trustee, the Company, the Trustee and the Guarantors to amend the Trust Estate described in Section 2.1 of this Agreement. Furthermore, the parties to this Agreement agree that the Collateral Trustee shall enter into any other amendments that are necessary to reflect the occurrence of the Springing Event in accordance with the terms of the Indenture and the Notes Security Documents.

ARTICLE 3

OBLIGATIONS AND POWERS OF COLLATERAL TRUSTEE

Section 3.1.     Appointment and Undertaking of the Collateral Trustee .

(a)    Each Parity Lien Secured Party (other than the Collateral Trustee) acting through its respective Parity Lien Representative hereby appoints the Collateral Trustee to serve as collateral trustee hereunder on the terms and conditions set forth herein. Subject to, and in accordance with, this Agreement, the Collateral Trustee will, as collateral trustee, for the benefit solely and exclusively of the present and future Parity Lien Secured Parties:

(1)    accept, enter into, hold, maintain, administer and enforce all Parity Lien Security Documents, including all Collateral subject thereto, and all Liens created thereunder, perform its obligations hereunder and under the Parity Lien Security Documents and protect, exercise and enforce the interests, rights, powers and remedies granted or available to it under, pursuant to or in connection with the Parity Lien Security Documents;

(2)    take all lawful and commercially reasonable actions permitted under the Parity Lien Security Documents that it may deem necessary or advisable to protect or preserve its interest in the Collateral subject thereto and such interests, rights, powers and remedies;

(3)    deliver and receive notices pursuant to this Agreement and the Parity Lien Security Documents;

(4)    sell, assign, collect, assemble, foreclose on, institute legal proceedings with respect to, or otherwise exercise or enforce the rights and remedies of a secured party (including a mortgagee, trust deed beneficiary and insurance beneficiary or loss payee) with respect to the Collateral under the Parity Lien Security Documents and its other interests, rights, powers and remedies;

(5)    remit as provided in Section 3.4 all cash proceeds received by the Collateral Trustee from the collection, foreclosure or enforcement of its interest in the Collateral under the Parity Lien Security Documents or any of its other interests, rights, powers or remedies;

(6)    execute and deliver amendments to the Parity Lien Security Documents as from time to time authorized pursuant to Sections 2.4 and 7.1 accompanied by an Officers’ Certificate to the effect that the amendment was permitted under Section 2.4 or 7.1 , as applicable ;

(7)    release or subordinate any Lien granted to it by any Parity Lien Security Document upon any Collateral if and as required by Section 3.2 ; and

(8)    enter into on the date hereof and perform its obligations and protect, exercise and enforce its interest, rights, powers and remedies under the Intercreditor Agreement.

 

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(b)    Each party to this Agreement acknowledges and consents to the undertaking of the Collateral Trustee set forth in Section 3.1(a) and agrees to each of the other provisions of this Agreement applicable to the Collateral Trustee.

(c)    Notwithstanding anything to the contrary contained in this Agreement (except for the last sentence of Section 3.3), the Collateral Trustee will not commence any exercise of remedies or any foreclosure actions or otherwise take any action or proceeding against any of the Collateral unless and until it shall have been directed by written notice of an Act of Parity Lien Debtholders and then only in accordance with the provisions of this Agreement and the Intercreditor Agreement.

(d)    Notwithstanding anything to the contrary contained in this Agreement, neither the Company nor any of its Affiliates may serve as Collateral Trustee.

Section 3.2.     Release or Subordination of Liens . The Collateral Trustee will not release or subordinate any Lien of the Collateral Trustee or consent to the release or subordination of any Lien of the Collateral Trustee, except:

(a)    as directed by an Act of Parity Lien Debtholders accompanied by an Officers’ Certificate to the effect that the release or subordination was permitted by each applicable Parity Lien Document and otherwise setting forth the requirements of Section 4.1(b)(1) and 4.1(b)(2) ;

(b)    as required by Article 4 ;

(c)    to release or subordinate Liens on Collateral to the extent permitted by each applicable Parity Lien Document; provided that the Collateral Trustee receives an Officers’ Certificate confirming the foregoing;

(d)    as ordered pursuant to applicable law under a final and nonappealable order or judgment of a court of competent jurisdiction; or

(e)    for the subordination of the Trust Estate and the Parity Liens to the extent required by the Intercreditor Agreement; provided that the Collateral Trustee receives an Officers’ Certificate confirming the foregoing.

Section 3.3.     Enforcement of Liens . If the Collateral Trustee at any time receives written notice from a Parity Lien Representative stating that any event has occurred that constitutes a default under any Parity Lien Document entitling the Collateral Trustee to foreclose upon, collect or otherwise enforce its Liens under the Parity Lien Security Documents, the Collateral Trustee will promptly deliver written notice thereof to each Parity Lien Representative. Thereafter, the Collateral Trustee may await direction by an Act of Parity Lien Debtholders and, subject to the terms of the Intercreditor Agreement, will act, or decline to act, as directed by an Act of Parity Lien Debtholders, in the exercise and enforcement of the Collateral Trustee’s interests, rights, powers and remedies in respect of the Collateral or under the Parity Lien Security Documents or applicable law and, following the initiation of such exercise of remedies, the Collateral Trustee will act, or decline to act, with respect to the manner of such exercise of remedies as directed by an Act of Parity Lien Debtholders. Prior to the occurrence of a Springing Event, the Collateral Trustee shall be entitled to foreclose on the Collateral Account and the Trust Estate at the direction of the Trustee, notwithstanding the fact that the Parity Lien Security Documents may not yet have been executed.

Section 3.4.     Application of Proceeds .

(a)    Subject to the terms of the Intercreditor Agreement, the Collateral Trustee will apply the proceeds of any collection, sale, foreclosure or other realization upon, or exercise of any right or remedy with respect to, any Collateral and the proceeds of any title insurance or other insurance policy required under any Parity Lien Document or otherwise covering the Collateral, and any condemnation proceeds with respect to the Collateral, in the following order of application:

FIRST, to the payment of all amounts payable under this Agreement on account of the Collateral Trustee’s and/or the Trustee’s fees and any costs, expenses, reasonable legal fees or other liabilities of any kind incurred by the Collateral Trustee or any co-trustee or agent of the Collateral Trustee in connection with any Parity Lien Document (including, but not limited to, indemnification obligations);

 

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SECOND, to the respective Parity Lien Representatives equally and ratably for application to the payment of all outstanding Parity Lien Debt and any other Parity Lien Obligations that are then due and payable in such order as may be provided in the Parity Lien Documents in an amount sufficient to pay in full in cash all outstanding Parity Lien Debt and all other Parity Lien Obligations that are then due and payable (including, to the extent legally permitted, all interest accrued thereon after the commencement of any Insolvency or Liquidation Proceeding at the rate, including any applicable post-default rate, specified in the Parity Lien Documents, even if such interest is not enforceable, allowable or allowed as a claim in such proceeding but excluding contingent indemnity obligations for which no claim has been made), and including the discharge or cash collateralization (at the lower of (1) 105% of the aggregate undrawn amount and (2) the percentage of the aggregate undrawn amount required for release of Liens under the terms of the applicable Parity Lien Document) of all outstanding letters of credit, if any, constituting Parity Lien Debt; and

THIRD, any surplus remaining after the payment in full in cash of the amounts described in the preceding clauses will be paid to the Company or the applicable Guarantor, as the case may be, and as directed in writing by the Company, its successors or assigns, or as a court of competent jurisdiction may direct.

(b)    This Section 3.4 is intended for the benefit of, and will be enforceable as a third party beneficiary by, each present and future holder of Parity Lien Obligations, each present and future Parity Lien Representative and the Collateral Trustee as holder of Parity Liens. The Parity Lien Representative of each future Series of Parity Lien Debt will be required to deliver to the Collateral Trustee a Collateral Trust Joinder and an Additional Secured Debt Designation as provided in Section 3.8 at the time of incurrence of such Series of Parity Lien Debt.

(c)    In connection with the application of proceeds pursuant to Section 3.4(a) , except as otherwise directed by an Act of Parity Lien Debtholders, the Collateral Trustee may (but shall not be obligated to) sell any non-cash proceeds for cash prior to the application of the proceeds thereof.

(d)    In making the determinations and allocations in accordance with Section 3.4(a) , the Collateral Trustee may conclusively rely upon information supplied by the relevant Parity Lien Representative as to the amounts of unpaid principal and interest and other amounts outstanding with respect to its respective Parity Lien Debt and any other Parity Lien Obligations.

Section 3.5.     Powers of the Collateral Trustee .

(a)    The Collateral Trustee is irrevocably authorized and empowered to enter into and perform its obligations and protect, perfect, exercise and enforce its interest, rights, powers and remedies under the Parity Lien Security Documents and applicable law and in equity and to act as set forth in this Article 3 or, subject to the other provisions of this Agreement, as requested in any lawful directions given to it from time to time in respect of any matter by an Act of Parity Lien Debtholders.

(b)    No Parity Lien Representative or holder of Parity Lien Obligations (other than the Collateral Trustee) will have any liability whatsoever for any act or omission of the Collateral Trustee, and the Collateral Trustee will have no liability whatsoever for any act or omission of any Parity Lien Representative or any holder of Parity Lien Obligations.

Section 3.6.     Documents and Communications . The Collateral Trustee will permit each Parity Lien Representative and each holder of Parity Lien Obligations upon reasonable written notice and at reasonable times from time to time to inspect and copy, at the cost and expense of the party requesting such copies, any and all Parity Lien Security Documents and other documents, notices, certificates, instructions or communications received by the Collateral Trustee in its capacity as such.

Section 3.7.     For Sole and Exclusive Benefit of Holders of Parity Lien Obligations . The Collateral Trustee will accept, hold, administer and enforce all Liens on the Collateral at any time transferred or delivered to it and all other interests, rights, powers and remedies at any time granted to or enforceable by the Collateral Trustee and all other property of the Trust Estate solely and exclusively for the benefit of the present and future holders of present and future Parity Lien Obligations, and will distribute all proceeds received by it in realization thereon or from enforcement thereof solely and exclusively pursuant to the provisions of Section 3.4 .

 

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Section 3.8.     Additional Parity Lien Debt .

(a)    The Collateral Trustee will, as collateral trustee hereunder, perform its undertakings set forth in Section 3.1(a) with respect to any Parity Lien Obligations constituting a Series of Parity Lien Debt that is issued or incurred after the date hereof; provided that:

(1)    such Parity Lien Obligations are identified as Parity Lien Debt in accordance with the procedures set forth in Section 3.8(b) ; and

(2)    the designated Parity Lien Representative identified pursuant to Section 3.8(b) signs a Collateral Trust Joinder and an Additional Secured Debt Designation and delivers the same to the Collateral Trustee.

(b)    The Company will be permitted to designate as an additional holder of Parity Lien Debt hereunder each Person who is, or who becomes, the registered holder of Parity Lien Debt incurred by the Company or any Guarantor after the date of this Agreement in accordance with the terms of all applicable Parity Lien Documents. The Company may only effect such designation by delivering to the Collateral Trustee an (i) Officers’ Certificate stating that the incurrence of such Additional Parity Lien Debt (as defined below) is authorized and permitted by the Parity Lien Documents and (ii) Additional Parity Lien Debt Certificate that:

(1)    states that the Company or applicable Grantor intends to incur additional Parity Lien Debt (“ Additional Parity Lien Debt ”) that is permitted by each applicable Parity Lien Document to be secured with a Parity Lien equally and ratably with all previously existing and future Parity Lien Debt;

(2)    specifies the name, address and contact information of the Parity Lien Representative for such series of Additional Parity Lien Debt for purposes of Section 7.6 ;

(3)    attaches as Exhibit 1 to such Additional Parity Lien Debt Certificate a Reaffirmation Agreement in substantially the form attached as Exhibit 1 to Exhibit A of this Agreement, which Reaffirmation Agreement has been duly executed by the Company and each Guarantor; and

(4)    states that the Company has caused a copy of the Additional Parity Lien Debt Certificate and the related Collateral Trust Joinder to be delivered to each then existing Parity Lien Representative.

Although the Company shall be required to deliver a copy of each Additional Parity Lien Debt Certificate, each Collateral Trust Joinder and each Additional Secured Debt Designation to each then existing Parity Lien Representative, the failure to so deliver a copy of the Additional Parity Lien Debt Certificate, Collateral Trust Joinder and/or Additional Secured Debt Designation to any then existing Parity Lien Representative shall not affect the status of such debt as Additional Parity Lien Debt if the other requirements of this Section 3.8 are complied with. Each of the Collateral Trustee and the other then existing Parity Lien Representatives shall have the right to request that the Company provide a legal opinion or opinions of counsel (subject to customary assumptions and qualifications) as to the Additional Parity Lien Debt being secured by a valid and perfected security interest in the Collateral; provided that (i) such legal opinion or opinions need not address any collateral of a type not previously covered by any legal opinion delivered by or on behalf of the Company and (ii) nothing shall preclude such legal opinion or opinions from being delivered on a post-closing basis after the incurrence of such Additional Parity Lien Debt if permitted by the Parity Lien Representative for such Additional Parity Lien Debt. Notwithstanding the foregoing, nothing in this Agreement will be construed to allow the Company or any Guarantor to incur additional Indebtedness unless otherwise permitted by the terms of all applicable Parity Lien Documents.

(c)    With respect to any Parity Lien Obligations constituting a Series of Parity Lien Debt that is issued or incurred after the date hereof, the Company and each of the Guarantors agrees to take such actions (if any) as may from time to time reasonably be requested by the Collateral Trustee, any Parity Lien Representative or any Act of Parity Lien Debtholders, and enter into such technical amendments, modifications and/or supplements to the then existing Guarantees and Parity Lien Security Documents (or execute and deliver such additional Parity Lien Security Documents) as may from time to time be reasonably requested by such Persons (including as contemplated by Section 3.8(d) below), to ensure that the Additional Parity Lien Debt is secured by, and entitled to the benefits of, the Parity Lien Security Documents, and each Parity Lien Secured Party (by its acceptance of the benefits hereof) hereby agrees to, and authorizes the Collateral Trustee to enter into,

 

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any such technical amendments, modifications and/or supplements (and additional Parity Lien Security Documents). The Company and each Guarantor hereby further agree that, if there are any recording, filing or other similar fees payable in connection with any of the actions to be taken pursuant to this Section 3.8(c) or Section 3.8(d) , all such amounts shall be paid by, and shall be for the account of, the Company and the respective Guarantors, on a joint and several basis.

(d)    Without limitation of the foregoing, upon reasonable request of the Collateral Trustee, any Parity Lien Representative or any Act of Parity Lien Debtholders, each Grantor agrees to take the following actions with respect to any real property Collateral (including Oil and Gas Properties) with respect to all Additional Parity Lien Debt (it being understood that any such actions may be taken following the incurrence of any such Additional Parity Lien Debt on a post-closing basis if permitted by the Parity Lien Representative for such Additional Parity Lien Debt):

(1)    each applicable Grantor shall enter into, and deliver to the Collateral Trustee a mortgage modification or new mortgage, debenture, hypothec, deed of trust, deed to secure Indebtedness or similar document, instrument or agreement with regard to each real property subject to a mortgage, debenture, hypothec, deed of trust, deed to secure Indebtedness or similar document, instrument or agreement (each such mortgage, debenture, hypothec, deed of trust, deed to secure Indebtedness or similar document, instrument or agreement a “ Mortgage ” and each such property a “ Mortgaged Property ”), in proper form for recording in all applicable jurisdictions, in a form reasonably satisfactory to the Collateral Trustee;

(2)    each applicable Grantor will cause to be delivered to the Collateral Trustee a local counsel opinion (subject to customary assumptions and qualifications) to the effect that the Collateral Trustee has a valid and perfected Lien with respect to each such Mortgaged Property; and

(3)    each applicable Grantor will cause a title company to have delivered to the Collateral Trustee an endorsement to each title insurance policy for any real property Collateral (excluding Oil and Gas Properties), if any, then in effect for the benefit of the Parity Lien Secured Parties, date down(s) or other evidence (which may include a new title insurance policy) (each such delivery, a “ Title Datedown Product ”), in each case insuring that (i) the priority of the Liens of the applicable Mortgage(s) as security for the Parity Lien Obligations has not changed and, if a new Mortgage is entered into, that the Lien of such new Mortgage securing the Parity Lien Debt then being incurred shall have the same priority as any existing Mortgage securing then existing Parity Lien Obligations, (ii) since the later of the original date of such title insurance policy and the date of the Title Datedown Product delivered most recently prior to (and not in connection with) such additional Indebtedness, there has been no change in the condition of title and (iii) there are no intervening liens or encumbrances which may then or thereafter take priority over the Lien of the applicable Mortgage(s), in each case other than with respect to Liens permitted by each Parity Lien Document.

The Company will deliver an Officers’ Certificate to the Collateral Trustee confirming that the foregoing conditions have been satisfied.

Section 3.9.     Duties Prior to Springing Event . Notwithstanding anything in this Agreement to the contrary, prior to the occurrence of a Springing Event, the Collateral Trustee’s sole duties shall be to (1) hold the Trust Estate in trust for the benefit of itself and the other Parity Lien Secured Parties, (2) enter into the Intercreditor Agreement and (3) exercise remedies as and when provided by the last sentence of Section 3.3.

ARTICLE 4

OBLIGATIONS ENFORCEABLE BY THE COMPANY AND THE OTHER GRANTORS

Section 4.1.     Release of Liens on Collateral .

(a)    The Collateral Trustee’s Liens upon the Collateral will be automatically released:

(1)    in whole, upon (A) payment in full in cash and discharge of all outstanding Parity Lien Debt and all other Parity Lien Obligations that are outstanding, due and payable at the time all of the Parity Lien Debt is paid

 

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in full in cash and discharged (other than contingent indemnity obligations for which no claim has been made), (B) termination or expiration of all commitments to extend credit under all Parity Lien Documents and (C) the cancellation or termination or cash collateralization (at the lower of (1) 105% of the aggregate undrawn amount and (2) the percentage of the aggregate undrawn amount required for release of Liens under the terms of the applicable Parity Lien Documents) of all outstanding letters of credit issued pursuant to any Parity Lien Documents;

(2)    as to any Collateral of a Guarantor that is (A) released as a Guarantor under each Parity Lien Document and (B) is not obligated (as primary obligor or guarantor) with respect to any other Parity Lien Obligations and so long as the respective release does not violate the terms of any Parity Lien Document which then remains in effect;

(3)    as to any Collateral of the Company or a Guarantor that is sold, transferred or otherwise disposed of by the Company or any Guarantor to a Person that is not (either before or after such sale, transfer or disposition) the Company or a Subsidiary of the Company and is permitted by all of the other Parity Lien Documents, at the time of such sale, transfer or other disposition or to the extent of the interest sold, transferred or otherwise disposed of; provided that the Collateral Trustee’s Liens upon the Collateral will not be released if the sale or other disposition is subject to Article 11 of the Indenture;

(4)    as to a release of less than all or substantially all of the Collateral, if consent to the release of all Parity Liens on such Collateral has been given by an Act of Parity Lien Debtholders;

(5)    in whole, if the Liens on such Collateral have been released in accordance with the terms of each Series of Parity Lien Debt;

(6)    as to a release of all or substantially all of the Collateral, if (A) consent to the release of that Collateral has been given by the requisite percentage or number of holders of each Series of Parity Lien Debt at the time outstanding as provided for in the applicable Parity Lien Documents and (B) the Company has delivered an Officers’ Certificate to the Collateral Trustee certifying that all such necessary consents have been obtained; or

(7)    if and to the extent, and in the manner, required by Section 4.01(a) of the Intercreditor Agreement.

(b)    The Collateral Trustee agrees for the benefit of the Company and the other Grantors that if the Collateral Trustee at any time receives:

(1)    an Officers’ Certificate (which the Collateral Trustee shall be entitled to rely upon) stating that (A) the signing officer has read Article 4 of this Agreement and understands the provisions and the definitions relating hereto, (B) such officer has made such examination or investigation as is necessary to enable him or her to express an informed opinion as to whether or not the conditions precedent in this Agreement, the Intercreditor Agreement and all other Parity Lien Documents, if any, relating to the release of the Collateral have been complied with, (C) in the opinion of such officer, such conditions precedent, if any, have been complied with and (D) such release of Collateral did not violate the terms of any applicable Parity Lien Document; and

(2)    the proposed instrument or instruments releasing such Lien as to such property in recordable form, if applicable;

then, promptly following receipt by the Collateral Trustee of the items required by this Section 4.1(b) , upon request of the Company, the Collateral Trustee will execute (with such acknowledgements and/or notarizations as are required) and deliver evidence of such release to the Company or other applicable Grantor; provided that, in the case of a release of Liens under Section 4.1(a)(7) , the Collateral Trustee shall execute and deliver such proposed instruments releasing its Liens contemporaneously with the execution and delivery of such similar instruments by the Priority Lien Collateral Agent in accordance with the terms of the Intercreditor Agreement.

(c)    The Collateral Trustee hereby agrees that:

 

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(1)    in the case of any release pursuant to Section 4.1(a)(3) , if the terms of any such sale, transfer or other disposition require the payment of the purchase price to be contemporaneous with the delivery of the applicable release, then, subject to the Intercreditor Agreement and at the written request of and at the expense of the Company or other applicable Grantor, the Collateral Trustee will either (A) be present at and deliver the release at the closing of such transaction or (B) deliver the release under customary escrow arrangements that permit such contemporaneous payment and delivery of the release; and

(2)    at any time when a Parity Lien Debt Default has occurred and is continuing, within three Business Days of the receipt by a Responsible Officer of any Act of Parity Lien Debtholders pursuant to Section 4.1(a)(4) , the Collateral Trustee will deliver a copy of such Act of Parity Lien Debtholders to each Parity Lien Representative.

Section 4.2.     Delivery of Copies to Parity Lien Representatives . The Company will deliver to each Parity Lien Representative a copy of each Officers’ Certificate delivered to the Collateral Trustee pursuant to Section 4.1(b) , together with copies of all documents delivered to the Collateral Trustee with such Officers’ Certificate. The Parity Lien Representatives will not be obligated to take notice thereof or to act thereon. Each Parity Lien Representative shall, within three Business Days of the receipt by it of the Officers’ Certificate and proposed release instrument(s) delivered to the Collateral Trustee pursuant to Section 4.1(b) , deliver a copy of such notice to each registered holder of the Series of Parity Lien Debt for which it acts as Parity Lien Representative.

Section 4.3.     Collateral Trustee not Required to Serve, File or Record . Subject to Section 3.2 , the Collateral Trustee is not required to serve, file, register or record any instrument releasing or subordinating its Liens on any Collateral; provided that if the Company or any other Grantor shall make a written demand for a termination statement under Section 9-513(c) of the UCC, the Collateral Trustee shall comply with the written request of the Company or Grantor to comply with the requirements of such UCC provision (at the sole cost and expense of the Company or such Grantor and which written request must be accompanied by an Officers’ Certificate relating to the same); provided, further , that the Collateral Trustee must first confirm with the Parity Lien Representatives that the requirements of such UCC provisions have been satisfied.

Section 4.4.     Release of Liens in Respect of Notes . In addition to any release pursuant to Section 4.1 hereof, the Collateral Trustee’s Parity Liens will no longer secure the Notes outstanding under the Indenture or any other Obligations under the Note Documents, and the right of the holders of the Obligations under the Indenture to the benefits and proceeds of the Collateral Trustee’s Parity Liens on the Collateral will terminate and be discharged as provided for in Section 15.03 of the Indenture.

Section 4.5.     Release of Liens in Respect of any Series of Parity Lien Debt other than the Notes . In addition to any release pursuant to Section 4.1 hereof, as to any Series of Parity Lien Debt other than the Notes, the Collateral Trustee’s Parity Lien will no longer secure such Series of Parity Lien Debt if such Parity Lien Debt has been paid in full, all commitments to extend credit in respect of such Series of Parity Lien Debt have been terminated and all other Parity Lien Obligations related thereto that are outstanding and unpaid at the time such Series of Parity Lien Debt is paid are also paid in full, or if otherwise released by the terms of such Parity Lien Debt or the Intercreditor Agreement.

ARTICLE 5

IMMUNITIES OF THE COLLATERAL TRUSTEE

Section 5.1.     No Implied Duty . The Collateral Trustee will not have any fiduciary duties nor will it have responsibilities or obligations other than those expressly assumed by it in this Agreement, the other Parity Lien Security Documents and the Intercreditor Agreement. No implied covenants, functions, responsibilities, duties, obligations or liabilities shall be read into this Agreement, the other Parity Lien Documents or the Intercreditor Agreement, or otherwise exist against the Collateral Trustee. Without limiting the generality of the foregoing sentences, the use of the term “trustee” in this Agreement with reference to the Collateral Trustee is not intended to connote any fiduciary or other implied (or express) obligations arising under agency doctrine of any applicable law. Instead, such term is used merely as a matter of market custom, and is intended to create or reflect only an administrative relationship between independent contracting parties. The Collateral Trustee will not be required to take any action that is contrary to applicable law or any provision of this Agreement, the other Parity Lien Security Documents or the Intercreditor Agreement.

 

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Section 5.2.     Appointment of Agents and Advisors . The Collateral Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through agents, attorneys, accountants, appraisers or other experts or advisors selected by it in good faith as it may reasonably require and will not be responsible for any misconduct or negligence on the part of any of them.

Section 5.3.     Other Agreements . The Collateral Trustee has accepted its appointment as collateral trustee hereunder and is bound by the Parity Lien Security Documents executed by the Collateral Trustee as of the date of this Agreement, and the Collateral Trustee shall at the request of the Company (in the form of an Officers’ Certificate) execute the Notes Security Agreement and each additional Parity Lien Security Documents delivered to it after the date of this Agreement (including to secure Obligations arising under Additional Parity Lien Debt to the extent such Obligations are permitted to be incurred and secured under the Parity Lien Documents); provided that such additional Parity Lien Security Documents do not adversely affect the rights, privileges, benefits and immunities of the Collateral Trustee or conflict with the terms of the Intercreditor Agreement. The Collateral Trustee will not otherwise be bound by, or be held obligated by, the provisions of any credit agreement, indenture or other agreement governing Parity Lien Debt (other than this Agreement and the other Parity Lien Security Documents to which it is a party).

Section 5.4.     Solicitation of Instructions .

(a)    The Collateral Trustee may at any time solicit written confirmatory instructions, in the form of an Act of Parity Lien Debtholders, an Officers’ Certificate, a legal opinion from counsel to the Company or an order of a court of competent jurisdiction, as to any action that it may be requested or required to take, or that it may propose to take, in the performance of any of its obligations under this Agreement or the other Parity Lien Security Documents, and the Collateral Trustee will not be liable for any action it takes or omits to take in good faith in reliance on any such certificate, opinion or order. In the absence of bad faith on its part, the Collateral Trustee may rely, and will be protected in acting or refraining from acting, upon any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, other evidence of indebtedness or other paper or document believed by it to be genuine and to have been signed or presented by the proper Person. The Collateral Trustee need not investigate any fact or matter stated in the document, but, in the case of any document which is specifically required to be furnished to the Collateral Trustee pursuant to any provision hereof, the Collateral Trustee shall examine the document to determine whether it conforms to the requirements of this Indenture (but need not confirm or investigate the accuracy of mathematical calculations or other facts stated therein).

(b)    No written direction given to the Collateral Trustee by an Act of Parity Lien Debtholders that in the sole judgment of the Collateral Trustee imposes, purports to impose or might reasonably be expected to impose upon the Collateral Trustee any obligation or liability not set forth in or arising under this Agreement and the other Parity Lien Security Documents will be binding upon the Collateral Trustee unless the Collateral Trustee elects, at its sole option, to accept such direction.

(c)    The Collateral Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Agreement at the request, order or direction of the Required Parity Lien Debtholders pursuant to the provisions of this Agreement, unless such holders shall have furnished to the Collateral Trustee security or indemnity satisfactory to it against the costs, expenses and liabilities which may be incurred therein or thereby.

Section 5.5.     Limitation of Liability . The Collateral Trustee will not be responsible or liable for any action taken or omitted to be taken by it hereunder or under any other Parity Lien Security Document, except as determined by a court of competent jurisdiction in a final, nonappealable judgment to have resulted from the Collateral Trustee’s gross negligence or willful misconduct.

Section 5.6.     Documents in Satisfactory Form . The Collateral Trustee will be entitled to require that all agreements, certificates, opinions, instruments and other documents at any time submitted to it, including those expressly provided for in this Agreement, be delivered to it in a form and with substantive provisions reasonably satisfactory to it. The Collateral Trustee (i) makes no representation as to the validity or adequacy of any Parity Lien Document and (ii) is not responsible for any statement in any Parity Lien Document other than any representations and warranties made by it.

Section 5.7.     Entitled to Rely . The Collateral Trustee may seek and rely upon, and shall be fully protected in relying upon, any judicial order or judgment, upon any advice, opinion or statement of legal counsel, independent consultants

 

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and other experts selected by it in good faith and upon any certification, instruction, notice or other writing delivered to it by the Company or any Guarantor in compliance with the provisions of this Agreement or delivered to it by any Parity Lien Representative as to the holders of Parity Lien Obligations for whom it acts, without being required to determine the authenticity thereof or the correctness of any fact stated therein or the propriety or validity of service thereof. The Collateral Trustee may act in reliance upon any instrument comporting with the provisions of this Agreement or any signature believed by it in good faith to be genuine and may assume that any Person purporting to give notice or receipt or advice or make any statement or execute any document in connection with the provisions hereof or the other Parity Lien Security Documents has been duly authorized to do so. To the extent an Officers’ Certificate or opinion of counsel is required or permitted under this Agreement to be delivered to the Collateral Trustee in respect of any matter, the Collateral Trustee may rely conclusively on an Officers’ Certificate or opinion of counsel as to such matter and such Officers’ Certificate or opinion of counsel shall be full warranty and protection to the Collateral Trustee for any action taken, suffered or omitted by it under the provisions of this Agreement and the other Parity Lien Security Documents. The Collateral Trustee (a) shall not be responsible to any Parity Lien Secured Party for any recitals, statements, information, representations or warranties of any other Person contained herein, in the Parity Lien Documents or in any document, certificate or other writing delivered in connection herewith or therewith or for the execution, effectiveness, genuineness, validity, enforceability, collectability, priority of sufficiency of this Agreement, the Parity Lien Documents or the financial condition of the Company, the Guarantors or any of them and (b) shall not be required to ascertain or inquire as to the performance or observation of any of the terms, covenants or conditions of this Agreement or any Parity Lien Document.

Section 5.8.     Parity Lien Debt Default . The Collateral Trustee will not be required to inquire as to the occurrence or absence of any Parity Lien Debt Default and will not be affected by or required to act upon any notice or knowledge as to the occurrence of any Parity Lien Debt Default unless and until it is directed by an Act of Parity Lien Debtholders.

Section 5.9.     Actions by Collateral Trustee . As to any matter not expressly provided for by this Agreement or the other Parity Lien Security Documents, the Collateral Trustee will act or refrain from acting as directed by an Act of Parity Lien Debtholders and will be fully protected if it does so, and any action taken, suffered or omitted pursuant to hereto or thereto shall be binding on the holders of Parity Lien Obligations. The Collateral Trustee shall not be liable for any action it takes or omits to take in good faith in accordance with any Act of Parity Lien Debtholders.

Section 5.10.     Security or Indemnity in favor of the Collateral Trustee . The Collateral Trustee will not be required to advance or expend any funds or otherwise incur any financial liability in the performance of its duties or the exercise of its powers or rights hereunder unless it has been provided with security or indemnity satisfactory to it against any and all loss, liability or expense which may be incurred by it by reason of taking or continuing to take such action.

Section 5.11.     Rights of the Collateral Trustee . In the event of any conflict between any terms and provisions set forth in this Agreement and those set forth in any other Parity Lien Security Document, the terms and provisions of this Agreement shall supersede and control the terms and provisions of such other Parity Lien Security Document. In the event there is any bona fide, good faith disagreement between the other parties to this Agreement or any of the other Parity Lien Security Documents resulting in adverse claims being made in connection with Collateral held by the Collateral Trustee and the terms of this Agreement or any of the other Parity Lien Security Documents do not unambiguously mandate the action the Collateral Trustee is to take or not to take in connection therewith under the circumstances then existing, or the Collateral Trustee is in doubt as to what action it is required to take or not to take hereunder or under the other Parity Lien Security Documents, it will be entitled to refrain from taking any action (and will incur no liability for doing so) until directed otherwise in writing by a request signed jointly by the parties hereto entitled to give such direction or by order of a court of competent jurisdiction.

Section 5.12.     Limitations on Duty of Collateral Trustee in Respect of Collateral .

(a)    Beyond the exercise of reasonable care in the custody of Collateral in its possession, the Collateral Trustee will have no duty as to any Collateral in its possession or control or in the possession or control of any agent or bailee or any income thereon or as to preservation of rights against prior parties or any other rights pertaining thereto and the Collateral Trustee will not be responsible for filing any financing or continuation statements or recording any documents or instruments in any public office at any time or times or otherwise perfecting or maintaining the perfection of any Liens on the Collateral; provided that, notwithstanding the foregoing, the Collateral Trustee will execute, file or record UCC-3 continuation statements and other documents and instruments to preserve, protect or perfect the security interests granted to the Collateral

 

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Trustee (subject to the priorities set forth herein) if it shall receive a specific written request to execute, file or record the particular continuation statement or other specific document or instrument by any Parity Lien Representative, along with drafts of such UCC-3 continuation statements or other documents or instruments in recordable form (it being understood that the Trustee shall have no duty to make such request). The Collateral Trustee shall deliver to each other Parity Lien Representative a copy of any such written request. The Collateral Trustee will be deemed to have exercised reasonable care in the custody of the Collateral in its possession if the Collateral is accorded treatment substantially equal to that which it accords its own property, and the Collateral Trustee will not be liable or responsible for any loss or diminution in the value of any of the Collateral by reason of the act or omission of any carrier, forwarding agency or other agent or bailee selected by the Collateral Trustee in good faith.

(b)    Except as provided in Section 5.12(a) , the Collateral Trustee will not be responsible for the existence, genuineness or value of any of the Collateral or for the validity, perfection, priority or enforceability of the Liens in any of the Collateral, for the validity or sufficiency of the Collateral or any agreement or assignment contained therein, for the validity of the title of any Grantor to the Collateral, for insuring the Collateral or for the payment of taxes, charges, assessments or Liens upon the Collateral or otherwise as to the maintenance of the Collateral. The Collateral Trustee hereby disclaims any representation or warranty to the current and future holders of the Parity Lien Obligations concerning the perfection of the security interests granted to it or in the value of any Collateral. The Collateral Trustee shall not be under any obligation to the Trustee or any holder of Parity Lien Debt to ascertain or to inquire as to the observance or performance of any of the agreements contained in, or conditions of, this or any other Parity Lien Security Document or the Intercreditor Agreement or to inspect the properties, books or records of the Company or any Guarantor.

Section 5.13.     Assumption of Rights, Not Assumption of Duties . Notwithstanding anything to the contrary contained herein:

(1)    each of the parties thereto will remain liable under each of the Parity Lien Security Documents (other than this Agreement) to the extent set forth therein to perform all of their respective duties and obligations thereunder to the same extent as if this Agreement had not be executed;

(2)    the exercise by the Collateral Trustee of any of its rights, remedies or powers hereunder will not release such parties from any of their respective duties or obligations under the other Parity Lien Security Documents; and

(3)    the Collateral Trustee will not be obligated to perform any of the obligations or duties of the Company or any Grantor.

Section 5.14.     No Liability for Clean Up of Hazardous Materials . In the event that the Collateral Trustee is required to acquire title to an asset for any reason, or take any managerial action of any kind in regard thereto, in order to carry out any fiduciary or trust obligation for the benefit of another, which in the Collateral Trustee’s sole discretion may cause the Collateral Trustee to be considered an “owner or operator” under any environmental laws or otherwise cause the Collateral Trustee to incur, or be exposed to, any environmental liability or any liability under any other federal, state or local law, the Collateral Trustee reserves the right, instead of taking such action, either to resign as Collateral Trustee or to arrange for the transfer of the title or control of the asset to a court appointed receiver. The Collateral Trustee will not be liable to any Person for any environmental liability or any environmental claims or contribution actions under any federal, state or local law, rule or regulation by reason of the Collateral Trustee’s actions and conduct as authorized, empowered and directed hereunder or relating to any kind of discharge or release or threatened discharge or release of any hazardous materials into the environment.

Section 5.15.     Other Relationships with the Company or Guarantors . Wilmington Trust, National Association and its Affiliates (and any successor Collateral Trustee and its Affiliates) may make loans to, issue letters of credit for the account of, accept deposits from, acquire equity interests in and generally engage in any kind of banking, trust, financial advisory, underwriting or other business with the Company or any Guarantor and its Affiliates as though it was not the Collateral Trustee hereunder and without notice to or consent of the Trustee. The Trustee and the holders of the Parity Lien Obligations acknowledge that, pursuant to such activities, Wilmington Trust, National Association or its Affiliates (and any successor Collateral Trustee and its Affiliates) may receive information regarding the Company or any Guarantor or its Affiliates (including information that may be subject to confidentiality obligations in favor of the Company, such Guarantor or such Affiliate) and acknowledge that the Collateral Trustee shall not be under any obligation to provide such information to the Trustee or the holders of the Parity Lien Obligations. Nothing herein shall impose or imply any obligation on the part of Wilmington Trust, National Association (or any successor Collateral Trustee) to advance funds.

 

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Section 5.16.     No Liability for Interest . The Collateral Trustee shall not be liable for interest or investment income on any money or securities received by it, except as the Collateral Trustee may agree in writing with the Company.

Section 5.17.     Non-Reliance on Collateral Trustee .

(a)    The Collateral Trustee shall not be required to keep itself informed as to the performance or observance by the Company or Guarantors of any of its obligations under this Agreement, any Parity Lien Document or any other document referred to or provided for herein or therein. Except for notices, reports and other documents and information expressly required to be furnished to any Parity Lien Secured Party by the Collateral Trustee hereunder, the Collateral Trustee shall have no duty or responsibility to provide any Parity Lien Secured Party with any credit or other information concerning the affairs, financial condition or business of the Company or any Guarantor that may come into the possession of the Collateral Trustee or any of its Affiliates.

(b)    Each Parity Lien Representative, on behalf of itself and each Parity Lien Secured Party it represents, acknowledges that such Parity Lien Secured Parties have, independently and without reliance on any other Parity Lien Representative or the Collateral Trustee, and based on documents and information deemed by them appropriate, made their own credit analysis and decision to enter into the Parity Lien Documents to which they are party or by which they are bound, this Agreement and the transactions contemplated hereby and thereby, and they will continue to make their own credit decisions in taking or not taking any action under the Parity Lien Documents or this Agreement (it being understood that neither the Trustee nor Collateral Trustee has made and neither has a duty to make any such credit analysis).

ARTICLE 6

RESIGNATION AND REMOVAL OF THE COLLATERAL TRUSTEE

Section 6.1.     Resignation or Removal of Collateral Trustee . Subject to the appointment of a successor Collateral Trustee as provided in Section 6.2 and the acceptance of such appointment by the successor Collateral Trustee:

(a)    the Collateral Trustee may resign at any time by giving not less than 30 days’ notice of resignation to each Parity Lien Representative and the Company; and

(b)    the Collateral Trustee may be removed at any time, with or without cause, by an Act of Parity Lien Debtholders by giving not less than 30 days’ notice to the Collateral Trustee.

Section 6.2.     Appointment of Successor Collateral Trustee . Upon any such resignation or removal, a successor Collateral Trustee may be appointed by an Act of Parity Lien Debtholders. If no successor Collateral Trustee has been so appointed and accepted such appointment within 30 days after the predecessor Collateral Trustee gave notice of resignation or was removed, the retiring Collateral Trustee may (at the expense of the Company), at its option, appoint a successor Collateral Trustee, or petition a court of competent jurisdiction for appointment of a successor Collateral Trustee, which must be a bank or trust company:

(1)    authorized to exercise corporate trust powers; and

(2)    having a combined capital and surplus of at least $250,000,000.

The Collateral Trustee will fulfill its obligations hereunder until a successor Collateral Trustee meeting the requirements of this Section 6.2 has accepted its appointment as Collateral Trustee and the provisions of Section 6.3 have been satisfied.

 

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Section 6.3.     Succession . When the Person so appointed as successor Collateral Trustee accepts such appointment:

(1)    such Person will succeed to and become vested with all the rights, powers, privileges and duties of the predecessor Collateral Trustee, and the predecessor Collateral Trustee will be discharged from its duties and obligations hereunder; and

(2)    the predecessor Collateral Trustee will (at the expense of the Company) promptly transfer all Liens and collateral security and other property of the Trust Estate within its possession or control to the possession or control of the successor Collateral Trustee and will execute instruments and assignments as may be reasonably requested by the successor Collateral Trustee to transfer to the successor Collateral Trustee all Liens, interests, rights, powers and remedies of the predecessor Collateral Trustee in respect of the Parity Lien Security Documents or the Trust Estate.

Thereafter the predecessor Collateral Trustee will remain entitled to enforce the immunities granted to it in Article 5 and the provisions of Sections 7.8 and 7.9 , and said provisions will survive termination of this Agreement for the benefit of the predecessor of the Collateral Trustee.

Section 6.4.     Merger, Conversion or Consolidation of Collateral Trustee . Any Person into which the Collateral Trustee may be merged or converted or with which it may be consolidated, or any Person resulting from any merger, conversion or consolidation to which the Collateral Trustee shall be a party, or any Person succeeding to the business of the Collateral Trustee shall be the successor of the Collateral Trustee pursuant to Section 6.3 , provided that (i) without the execution or filing of any paper with any party hereto or any further act on the part of any of the parties hereto, except where an instrument of transfer or assignment is required by law to effect such succession, anything herein to the contrary notwithstanding, such Person satisfies the eligibility requirements specified in clauses (1) and (2) of Section 6.2 and (ii) prior to any such merger, conversion or consolidation, the Collateral Trustee shall have notified the Company and each Parity Lien Representative thereof in writing.

Section 6.5.     Concerning the Collateral Trustee and the Parity Lien Representatives .

(a)    Notwithstanding anything contained herein to the contrary, it is expressly understood and agreed by the parties hereto that this Agreement has been signed by each Parity Lien Representative not in its individual capacity or personally but solely in its capacity as trustee, representative or agent for the benefit of the related holders of the applicable Series of Parity Lien Debt in the exercise of the powers and authority conferred and vested in it under the related Parity Lien Documents, and in no event shall such Parity Lien Representative, in its individual capacity, have any liability for the representations, warranties, covenants, agreements or other obligations of any other party under this Agreement, any Parity Lien Document or in any of the certificates, reports, documents, data notices or agreements delivered by such other party pursuant hereto or thereto.

(b)    Notwithstanding anything contained herein to the contrary, it is expressly understood and agreed by the parties hereto that this Agreement has been signed by Wilmington Trust, National Association, not in its individual capacity or personally but solely in its capacity as Collateral Trustee, and in no event shall Wilmington Trust, National Association, in its individual capacity, have any liability for the representations, warranties, covenants, agreements or other obligations of any other party under this Agreement, any Parity Lien Document or in any of the certificates, reports, documents, data notices or agreements delivered by such other party pursuant hereto or thereto.

(c)    Notwithstanding anything contained herein to the contrary, it is expressly understood and agreed by the parties hereto that this Agreement has been signed by Wilmington Trust, National Association not in its individual capacity or personally but solely in its capacity as Trustee, and in no event shall Wilmington Trust, National Association or any other Parity Lien Representative, in its individual capacity, have any liability for the representations, warranties, covenants, agreements or other obligations of any other party under this Agreement, any Parity Lien Document or in any of the certificates, reports, documents, data notices or agreements delivered by such other party pursuant hereto or thereto.

(d)    In entering into this Agreement, the Collateral Trustee shall be entitled to the benefit of every provision of the Indenture relating to the rights, exculpations or conduct of, affecting the liability of or otherwise affording protection to the “Collateral Trustee” thereunder. In no event will the Collateral Trustee be liable for any act or omission on the part of the Grantors or any Parity Lien Representative. In entering into this Agreement, the Trustee shall be entitled to the benefit of every provision of the Indenture relating to the rights, exculpations or conduct of, affecting the liability of or otherwise affording protection to the “Trustee” thereunder. In no event will the Trustee be liable for any act or omission on the part of the Grantors or any other Parity Lien Representative.

 

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(e)    Except as otherwise set forth herein, neither the Collateral Trustee nor any Parity Lien Representative shall be required to exercise any discretion or take any action, but shall be required to act or refrain from acting (and shall be fully protected in so acting or refraining from acting) solely upon the instructions of the applicable Required Parity Lien Debtholders as provided in the Indenture or the related Parity Lien Document; provided that neither the Collateral Trustee nor any Parity Lien Representative shall be required to take any action that (i) it in good faith believes exposes it to personal liability unless it receives an indemnification satisfactory to it from the applicable holders of the Parity Lien Obligations with respect to such action or (ii) is contrary to this Agreement, the Intercreditor Agreement or applicable law.

ARTICLE 7

MISCELLANEOUS PROVISIONS

Section 7.1.     Amendment .

(a)    Except as provided in the Intercreditor Agreement and Section 2.4, no amendment or supplement to the provisions of any Parity Lien Security Document will be effective without the approval of the Collateral Trustee acting as directed by an Act of Parity Lien Debtholders, except that:

(1)    any amendment or supplement that has the effect solely of:

(A)    adding or maintaining Collateral, securing additional Parity Lien Debt that was otherwise permitted by the terms of the Parity Lien Documents to be secured by the Collateral or preserving, perfecting or establishing the Liens thereon or the rights of the Collateral Trustee therein; or

(B)    providing for the assumption of the Company or any Guarantor’s obligations under any Parity Lien Document in the case of a merger or consolidation or sale of all or substantially all of the properties or assets of the Company or such Guarantor to the extent permitted by the terms of the Indenture and the other Parity Lien Documents, as applicable;

will become effective when executed and delivered by the Company or any other applicable Grantor party thereto and, if required for effectiveness pursuant to its terms, the Collateral Trustee;

(2)    no amendment or supplement that reduces, impairs or adversely affects the right of any holder of Parity Lien Obligations:

(A)    to vote its outstanding Parity Lien Debt as to any matter described as subject to an Act of Parity Lien Debtholders or direction by the Required Parity Lien Debtholders (or amends the provisions of this clause (2) or the definition of “ Act of Parity Lien Debtholders ” or “ Required Parity Lien Debtholders ”),

(B)    to share in the order of application described in Section 3.4 in the proceeds of enforcement of or realization on any Collateral; or

(C)    to require that Liens securing Parity Lien Obligations be released only as set forth in the provisions described in Sections 4.1 , 4.4 or 4.5 ,

will become effective without the consent of the requisite percentage or number of holders of each Series of Parity Lien Debt adversely affected thereby under the applicable Parity Lien Document; and

(3)    no amendment or supplement that imposes any obligation upon the Collateral Trustee or any Parity Lien Representative or adversely affects the rights of the Collateral Trustee or any Parity Lien Representative, respectively, in its individual capacity as such will become effective without the consent of the Collateral Trustee or such Parity Lien Representative, respectively.

 

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Any amendment or supplement to the provisions of the Parity Lien Security Documents that releases Collateral will be effective only in accordance with the requirements set forth in the applicable Parity Lien Document referenced in Section 4.1 hereof. Any amendment or supplement that results in the Collateral Trustee’s Liens upon the Collateral no longer securing the Notes and the other Obligations under the Indenture and other Note Documents may only be effected in accordance with Section 4.4 hereof.

(b)    Notwithstanding anything to the contrary contained in Section 7.1(a) but subject to Sections 7.1(a)(2) and 7.1(a)(3):

(1)    any mortgage or other Parity Lien Security Document may be amended or supplemented with the approval of the Collateral Trustee acting as directed in writing by the Required Parity Lien Debtholders, unless such amendment or supplement would not be permitted under the terms of this Agreement, the Intercreditor Agreement or any Priority Lien Documents;

(2)    any amendment or waiver of, or any consent under, any provision of any security document that secures Priority Lien Obligations will apply automatically to any comparable provision of any comparable Parity Lien Security Document without the consent of or notice to any holder of Parity Lien Obligations and without any action by the Company or any Guarantor, the Collateral Trustee or any holder of Notes or other Parity Lien Obligations; and

(3)    any mortgage or other Parity Lien Security Document may be amended or supplemented with the approval of the Collateral Trustee (but without the consent of or notice to any holder of Parity Lien Obligations and without any action by any holder of Notes or other Parity Lien Obligations) (i) to cure any ambiguity, defect or inconsistency, or (ii) to make other changes that do not have an adverse effect on the validity of the Lien created thereby.

(c)    The Collateral Trustee will not enter into any amendment or supplement unless it has received an Officers’ Certificate to the effect that such amendment or supplement will not result in a breach of any provision or covenant contained in this Agreement, the Intercreditor Agreement or any of the Parity Lien Documents. Prior to executing any amendment or supplement pursuant to this Section 7.1 , the Collateral Trustee will be entitled to receive an opinion of counsel of the Company to the effect that the execution of such document is authorized or permitted hereunder, and with respect to amendments adding Collateral, an opinion of counsel of the Company addressing customary creation and perfection, and if such additional Collateral consists of equity interests of any Person which equity interests constitute certificated securities, priority matters with respect to such additional Collateral (which opinion may be subject to customary assumptions and qualifications).

Section 7.2.     Voting . In connection with any matter under this Agreement requiring a vote of holders of Parity Lien Debt, each Series of Parity Lien Debt will cast its votes in accordance with the Parity Lien Documents governing such Series of Parity Lien Debt. The amount of Parity Lien Debt to be voted by a Series of Parity Lien Debt will equal (1) the aggregate principal amount of Parity Lien Debt held by such Series of Parity Lien Debt (including outstanding letters of credit whether or not then available or drawn), plus (2) other than in connection with an exercise of remedies, the aggregate unfunded commitments to extend credit which, when funded, would constitute Indebtedness of such Series of Parity Lien Debt (to the extent such unfunded commitments have not been terminated by the holders of such Series of Parity Lien Debt). Following and in accordance with the outcome of the applicable vote under its Parity Lien Documents, the Parity Lien Representative of each Series of Parity Lien Debt will vote the total amount of Parity Lien Debt under that Series of Parity Lien Debt as a block in respect of any vote under this Agreement. In connection with this Section 7.2, the Collateral Trustee may conclusively rely upon information supplied by the relevant Parity Lien Representative as to the amounts of Parity Lien Debt held by each Series of Parity Lien Debt.

 

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Section 7.3.     Further Assurances .

(a)    The Company and each of the Guarantors will do or cause to be done all acts and things that may be required, or that the Collateral Trustee from time to time may reasonably request, to assure and confirm that the Collateral Trustee holds, for the benefit of the holders of Parity Lien Obligations, duly created and enforceable and perfected Liens upon the Collateral (including any property or assets that are acquired or otherwise become, or are required by any Parity Lien Document to become, Collateral after the date hereof), in each case, as contemplated by, and with the Lien priority required under, the Parity Lien Documents and in connection with any merger, consolidation or sale of assets of the Company or any Guarantor, the property and assets of the Person which is consolidated or merged with or into the Company or any Guarantor, to the extent that they are property or assets of the types which would constitute Collateral under the security documents, shall be treated as after-acquired property and the Company or such Guarantor shall take such action as may be necessary to cause such property and assets to be made subject to the Parity Liens, in the manner and to the extent required under the Parity Lien Documents.

(b)    Upon the reasonable request of the Collateral Trustee or any Parity Lien Representative at any time and from time to time, the Company and each of the Guarantors will promptly execute, acknowledge and deliver such security documents, instruments, certificates, notices and other documents, and take such other actions as may be required, or that the Collateral Trustee may reasonably request, to create, perfect, protect, assure or enforce the Liens and benefits intended to be conferred, in each case as contemplated by the Parity Lien Documents for the benefit of holders of Parity Lien Obligations; provided that no such security document, instrument or other document shall be materially more burdensome upon the Company and the Guarantors than the Parity Lien Document executed and delivered (or required to be executed and delivered promptly after the date hereof) by the Company and the Guarantors in connection with the issuance of the Notes on or about the date hereof.

(c)    From and after the date hereof, the Company shall, or shall cause the applicable Guarantor to, deliver such documents and takes such actions as are required by Article 15 of the Indenture.

(d)    Upon the request of the Collateral Trustee, the Company and the Guarantors will permit the Collateral Trustee or any of its agents or representatives, at reasonable times and intervals upon reasonable prior notice, to visit their offices and sites and inspect any of the Collateral and to discuss matters relating to the Collateral with their respective officers and independent public accountants. The Company and the Guarantors shall, at any reasonable time and from time to time upon reasonable prior notice, permit the Collateral Trustee or any of its agents or representatives to examine and make copies of and abstracts from the records and books of account of the Company and the Guarantors and their Subsidiaries, all at the Company’s expense.

Section 7.4.     Successors and Assigns .

(a)    Except as provided in Section 5.2 and 6.1 through 6.4 , the Collateral Trustee may not, in its capacity as such, delegate any of its duties or assign any of its rights hereunder, and any attempted delegation or assignment of any such duties or rights will be null and void. All obligations of the Collateral Trustee hereunder will inure to the sole and exclusive benefit of, and be enforceable by, each Parity Lien Representative and each present and future holder of Parity Lien Obligations, each of whom will be entitled to enforce this Agreement as a third-party beneficiary hereof, and all of their respective successors and assigns.

(b)    Neither the Company nor any Guarantor may delegate any of its duties or assign any of its rights hereunder, and any attempted delegation or assignment of any such duties or rights will be null and void. All obligations of the Company and the Guarantors hereunder will inure to the sole and exclusive benefit of, and be enforceable by, the Collateral Trustee, each Parity Lien Representative and each present and future holder of Parity Lien Obligations, each of whom will be entitled to enforce this Agreement as a third-party beneficiary hereof, and all of their respective successors and assigns.

Section 7.5.     Delay and Waiver . No failure to exercise, no course of dealing with respect to the exercise of, and no delay in exercising, any right, power or remedy arising under this Agreement or any of the other Parity Lien Security Documents will impair any such right, power or remedy or operate as a waiver thereof. No single or partial exercise of any such right, power or remedy will preclude any other or future exercise thereof or the exercise of any other right, power or remedy. The remedies herein are cumulative and are not exclusive of any remedies provided by law.

 

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Section 7.6.     Notices . Any communications, including notices and instructions, between the parties hereto or notices provided herein to be given may be given to the following addresses:

 

If to the Collateral Trustee:   

Wilmington Trust, National Association

Global Capital Markets

15950 N, Dallas Parkway, Suite 550

Dallas, Texas 75248

Telephone: 972-383-3156

Facsimile: 888-316-6238

Attention: SandRidge Energy Administrator

If to the Company or any other Grantor:   

SandRidge Energy, Inc.

123 Robert S. Kerr Avenue

Oklahoma City, Oklahoma 73102

Facsimile: 405-429-5983

Attention: General Counsel

If to the Trustee:   

Wilmington Trust, National Association

Global Capital Markets

15950 N. Dallas Parkway, Suite 550

Dallas, Texas 75248

Telephone: 972-383-3156

Facsimile: 888-316-6238

Attention: SandRidge Energy Administrator

and if to any other Parity Lien Representative, to such address as it may specify by written notice to the parties named above.

All notices and communications will be mailed by first class mail, certified or registered, return receipt requested, by overnight air courier guaranteeing next day delivery, or delivered by facsimile to the relevant address or number set forth above or, as to holders of Parity Lien Debt, its address shown on the register kept by the office or agency where the relevant Parity Lien Debt may be presented for registration of transfer or for exchange. Failure to mail or delivery by facsimile a notice or communication to a holder of Parity Lien Debt or any defect in it will not affect its sufficiency with respect to other holders of Parity Lien Debt.

If a notice or communication is mailed or delivered by facsimile in the manner provided above within the time prescribed, it is duly given, whether or not the addressee receives it; provided that notices to the Collateral Trustee shall be deemed given upon actual receipt by a Responsible Officer of the Collateral Trustee.

Section 7.7.     Entire Agreement . This Agreement states the complete agreement of the parties relating to the undertaking of the Collateral Trustee set forth herein and supersedes all oral negotiations and prior writings in respect of such undertaking.

Section 7.8.     Compensation; Expenses . The Grantors jointly and severally agree to pay, promptly upon demand:

(1)    such compensation to the Collateral Trustee and its agents as the Company and the Collateral Trustee may agree in writing from time to time;

(2)    all reasonable costs and expenses incurred by the Collateral Trustee and its agents in the preparation, execution, delivery, filing, recordation, administration or enforcement of this Agreement or any other Parity Lien Security Document or any consent, amendment, waiver or other modification relating hereto or thereto;

 

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(3)    all reasonable fees, expenses and disbursements of legal counsel and any auditors, accountants, consultants or appraisers or other professional advisors and agents engaged by the Collateral Trustee or any Parity Lien Representative incurred in connection with the negotiation, preparation, closing, administration, performance or enforcement of this Agreement and the other Parity Lien Security Documents or any consent, amendment, waiver or other modification relating hereto or thereto and any other document or matter requested by the Company or any Guarantor;

(4)    all reasonable costs and expenses incurred by the Collateral Trustee and its agents in creating, perfecting, preserving, releasing or enforcing the Collateral Trustee’s Liens on the Collateral, including filing and recording fees, expenses and taxes, stamp or documentary taxes, search fees, and title insurance premiums;

(5)    all other reasonable costs and expenses incurred by the Collateral Trustee and its agents in connection with the negotiation, preparation and execution of the Parity Lien Security Documents and any consents, amendments, waivers or other modifications thereto and the transactions contemplated thereby or the exercise of rights or performance of obligations by the Collateral Trustee thereunder; and

(6)    after the occurrence of any Parity Lien Debt Default, all costs and expenses incurred by the Collateral Trustee, its agents and any Parity Lien Representative in connection with the preservation, collection, foreclosure or enforcement of the Collateral subject to the Parity Lien Security Documents or any interest, right, power or remedy of the Collateral Trustee or in connection with the collection or enforcement of any of the Parity Lien Obligations or the proof, protection, administration or resolution of any claim based upon the Parity Lien Obligations in any Insolvency or Liquidation Proceeding, including all fees and disbursements of attorneys, accountants, auditors, consultants, appraisers and other professionals engaged by the Collateral Trustee, its agents or the Parity Lien Representatives.

The agreements in this Section 7.8 will survive repayment of all other Parity Lien Obligations and the removal or resignation of the Collateral Trustee and termination of this Agreement.

Section 7.9.     Indemnity .

(a)    The Grantors jointly and severally agree to defend, indemnify, pay and hold harmless the Collateral Trustee, each Parity Lien Representative, each holder of Parity Lien Obligations and each of their respective Affiliates and each and all of their directors, officers, partners, trustees, employees, attorneys and agents, and (in each case) their respective heirs, representatives, successors and assigns (each of the foregoing, an “ Indemnitee ”) from and against any and all Indemnified Liabilities; provided that no Indemnitee will be entitled to indemnification hereunder with respect to any Indemnified Liability to the extent such Indemnified Liability is found by a final and nonappealable decision of a court of competent jurisdiction to have resulted from the gross negligence or willful misconduct of such Indemnitee. THIS INDEMNITY COVERS ORDINARY NEGLIGENCE OF ANY OF THE FOREGOING PARTIES.

(b)    All amounts due under this Section 7.9 will be payable within 10 days upon written demand.

(c)    To the extent that the undertakings to defend, indemnify, pay and hold harmless set forth in Section 7.9(a) may be unenforceable in whole or in part because they violate any law or public policy, each of the Grantors will contribute the maximum portion that it is permitted to pay and satisfy under applicable law to the payment and satisfaction of all Indemnified Liabilities incurred by Indemnitees or any of them.

(d)    No Grantor will ever assert any claim against any Indemnitee, on any theory of liability, for any lost profits or special, indirect or consequential damages or (to the fullest extent a claim for punitive damages may lawfully be waived) any punitive damages arising out of, in connection with, or as a result of, this Agreement or any other Parity Lien Document or any agreement or instrument or transaction contemplated hereby or relating in any respect to any Indemnified Liability, and each of the Grantors hereby forever waives, releases and agrees not to sue upon any claim for any such lost profits or special, indirect, consequential or (to the fullest extent lawful) punitive damages, whether or not accrued and whether or not known or suspected to exist in its favor.

 

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(e)    Without limiting the agreements set forth in Section 7.9(d) above, in no event shall the Collateral Trustee be responsible or liable to any person for lost profits or special, indirect or consequential damages or (to the fullest extent a claim for punitive damages may lawfully be waived) any punitive damages arising out of, in connection with, or as a result of this Agreement or any other Parity Lien Document or any agreement or instrument or transaction contemplated hereby.

(f)    The agreements in this Section 7.9 will survive repayment of all other Parity Lien Obligations and the removal or resignation of the Collateral Trustee and termination of this Agreement.

Section 7.10.     Severability . If any provision of this Agreement is invalid, illegal or unenforceable in any respect or in any jurisdiction, the validity, legality and enforceability of such provision in all other respects and of all remaining provisions, and of such provision in all other jurisdictions, will not in any way be affected or impaired thereby.

Section 7.11.     Headings . Section headings herein have been inserted for convenience of reference only, are not to be considered a part of this Agreement and will in no way modify or restrict any of the terms or provisions hereof.

Section 7.12.     Obligations Secured . All obligations of the Grantors set forth in or arising under this Agreement will be Parity Lien Obligations and are secured by all Liens granted by the Parity Lien Security Documents.

Section 7.13.     Governing Law . THIS AGREEMENT SHALL BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO ANY CONFLICT OF LAW PRINCIPLES (BUT GIVING EFFECT TO SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATION LAW).

Section 7.14.     Consent to Jurisdiction . All judicial proceedings brought against any party hereto arising out of or relating to this Agreement or any of the other Parity Lien Security Documents may be brought in any state or federal court of competent jurisdiction in the State, County and City of New York. By executing and delivering this Agreement, each party hereto irrevocably:

(1)    submits, for itself and its property, to the nonexclusive jurisdiction of the Supreme Court of the State of New York sitting in New York County and of the United States District Court of the Southern District of New York, and any appellate court from any thereof, in any action or proceeding arising out of or relating to this Agreement, or for recognition or enforcement of any judgment, and each of the parties hereto hereby irrevocably and unconditionally agrees that all claims in respect of any such action or proceeding may be heard and determined in such New York State court or, to the extent permitted by law, in such federal court. 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. Nothing in this Agreement shall affect any right that any party hereto may otherwise have to bring any action or proceeding relating to this Agreement in the courts of any jurisdiction;

(2)    waives, to the fullest extent it may legally and effectively do so, any objection which it may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Agreement in any court referred to in paragraph (1) of this Section 7.14 , and waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court;

(3)    agrees that service of all process in any such proceeding in any such court may be made by registered or certified mail, return receipt requested, to such party at its address provided in accordance with Section 7.6 ;

(4)    agrees that service as provided in clause (3) above is sufficient to confer personal jurisdiction over such party in any such proceeding in any such court and otherwise constitutes effective and binding service in every respect; and

(5)    agrees each party hereto retains the right to serve process in any other manner permitted by law or to bring proceedings against any party in the courts of any other jurisdiction.

 

26


Section 7.15.     Waiver of Jury Trial . EACH PARTY TO THIS AGREEMENT WAIVES TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW ITS RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING UNDER THIS AGREEMENT OR ANY OF THE OTHER PARITY LIEN SECURITY DOCUMENTS OR ANY DEALINGS BETWEEN THEM RELATING TO THE SUBJECT MATTER OF THIS AGREEMENT OR THE INTENTS AND PURPOSES OF THE OTHER PARITY LIEN SECURITY DOCUMENTS. THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL-ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT MATTER OF THIS AGREEMENT AND THE OTHER PARITY LIEN SECURITY DOCUMENTS, INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS. EACH PARTY TO THIS AGREEMENT ACKNOWLEDGES THAT THIS WAIVER IS A MATERIAL INDUCEMENT TO ENTER INTO A BUSINESS RELATIONSHIP, THAT EACH PARTY HERETO HAS ALREADY RELIED ON THIS WAIVER IN ENTERING INTO THIS AGREEMENT, AND THAT EACH PARTY HERETO WILL CONTINUE TO RELY ON THIS WAIVER IN ITS RELATED FUTURE DEALINGS. EACH PARTY HERETO FURTHER WARRANTS AND REPRESENTS THAT IT HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL AND THAT IT KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING (OTHER THAN BY A MUTUAL WRITTEN WAIVER SPECIFICALLY REFERRING TO THIS SECTION 7.15 AND EXECUTED BY EACH OF THE PARTIES HERETO), AND THIS WAIVER WILL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS OF OR TO THIS AGREEMENT OR ANY OF THE OTHER PARITY LIEN SECURITY DOCUMENTS OR TO ANY OTHER DOCUMENTS OR AGREEMENTS RELATING THERETO. IN THE EVENT OF LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.

Section 7.16.     Counterparts, Electronic Signatures . This Agreement may be executed in any number of counterparts (including by facsimile), each of which when so executed and delivered will be deemed an original, but all such counterparts together will constitute but one and the same instrument. The parties hereto may sign this Agreement and any Collateral Trust Joinder and transmit the executed copy by electronic means, including facsimile or noneditable *.pdf files. The electronic copy of the executed Agreement and any Collateral Trust Joinder is and shall be deemed an original signature.

Section 7.17.     Effectiveness . This Agreement will become effective upon the execution of a counterpart hereof by each of the parties hereto and receipt by each party of written notification of such execution and written or telephonic authorization of delivery thereof.

Section 7.18.     Grantors and Additional Grantors . Each Grantor represents and warrants that it has duly executed and delivered this Agreement. The Company will cause each Person that hereafter becomes a Grantor or is required by any Parity Lien Document to become a party to this Agreement to become a party to this Agreement, for all purposes of this Agreement, by causing such Person to execute and deliver to the Collateral Trustee a Collateral Trust Joinder, whereupon such Person will be bound by the terms hereof to the same extent as if it had executed and delivered this Agreement as of the date hereof. The Company shall promptly provide each Parity Lien Representative with a copy of each Collateral Trust Joinder executed and delivered pursuant to this Section 7.18 ; provided that the failure to so deliver a copy of the Collateral Trust Joinder to any then existing Parity Lien Representative shall not affect the inclusion of such Person as a Grantor if the other requirements of this Section 7.18 are complied with.

Section 7.19.     Insolvency . This Agreement will be applicable both before and after the commencement of any Insolvency or Liquidation Proceeding by or against any Grantor. The relative rights, as provided for in this Agreement, will continue after the commencement of any such Insolvency or Liquidation Proceeding on the same basis as prior to the date of the commencement of any such case, as provided in this Agreement.

Section 7.20.     Rights and Immunities of Parity Lien Representatives . The Trustee and the Collateral Trustee will be entitled, to the extent applicable to such entity, to all of the rights, protections, immunities and indemnities set forth in the Indenture and any future Parity Lien Representative will be entitled to all of the rights, protections, immunities and indemnities set forth in the credit agreement, indenture or other agreement governing the applicable Parity Lien Debt with respect to which such Person will act as representative, in each case as if specifically set forth herein. In no event will any Parity Lien Representative be liable for any act or omission on the part of the Grantors or the Collateral Trustee hereunder.

 

27


Section 7.21.     Intercreditor Agreement . Each Person that is secured hereunder, by accepting the benefits of the security provided hereby, (i) consents (or is deemed to consent), to the subordination of Liens in favor of the Collateral Trustee as provided for in the Intercreditor Agreement, (ii) agrees (or is deemed to agree) that it will be bound by, and will take no actions contrary to, the provisions of the Intercreditor Agreement, (iii) authorizes (or is deemed to authorize) and instructs (or is deemed to instruct) the Collateral Trustee on behalf of such Person to enter into, and perform under, the Intercreditor Agreement as “Subordinated Collateral Trustee” (as defined in the Intercreditor Agreement). The Collateral Trustee agrees to enter into any amendments or joinders to the Intercreditor Agreement, without the consent of any Holder or the Trustee, to add additional Indebtedness as Priority Lien Debt or Parity Lien Debt (to the extent permitted to be incurred and secured by the applicable Secured Debt Documents) and add other parties (or any authorized agent or trustee therefor) holding such Indebtedness thereto and to establish that the Lien on any Collateral securing such Indebtedness ranks equally with the Liens on such Collateral securing the other Priority Lien Debt or Parity Lien Debt, as applicable, then outstanding. The foregoing provisions are intended as an inducement to the lenders under the Priority Credit Agreement to extend credit to the Company, as the borrower under the Priority Credit Agreement, and such lenders are intended third party beneficiaries of this provision and the provisions of the Intercreditor Agreement. Notwithstanding anything to the contrary contained herein, to the extent that any Lien on any Collateral is perfected by the possession or control of such Collateral or of any account in which such Collateral is held, and if such Collateral or any such account is in fact in the possession or under the control of the Priority Lien Representative, or of agents or bailees of the Priority Lien Representative, the perfection actions and related deliverables described in this Agreement or the other Parity Lien Security Documents shall not be required.

Section 7.22.     Force Majeure . The Collateral Trustee shall not be liable for delays or failures in performance resulting from acts of God, strikes, lockouts, riots, acts of war, epidemics, governmental regulations superimposed after the fact, fire, communication line failures, computer viruses, power failures, earthquakes or other disasters or similar acts beyond its control.

Section 7.23.     Representations and Warranties . The Collateral Trustee, the Company, each Guarantor and each Parity Lien Representative represents and warrants to the others as of the date hereof (or, in the case of any Parity Lien Representative that becomes a party hereto after the date hereof, on the date that it becomes party hereto), that: (a) neither the execution and delivery of this Agreement nor its performance of or compliance with the terms and provisions hereof will conflict with, or result in a breach of the terms, conditions, or provisions of, or constitute a default under, any other agreement to which it is now subject; (b) it has all requisite authority to execute, delivery and perform its obligations under this Agreement; and (c) this Agreement constitutes its legal, valid and binding obligation, enforceable against it in accordance with its terms, subject only to applicable bankruptcy, insolvency or similar laws and general principles of equity.

Section 7.24.     Incorporation by Reference . Article 15 of the Indenture is hereby incorporated by reference into this Agreement as if the provisions thereof were fully set forth herein.

Section 7.25.     Additional Persons Bound Hereby . Each Parity Lien Secured Party (other than the Parity Lien Representative) and each holder of any Parity Lien Debt (other than the Parity Lien Representative) agrees, by virtue of becoming a Parity Lien Secured Party or a holder of any Parity Lien Debt, as applicable, that it shall be bound by the terms of this Agreement as if it were a party hereto.

 

28


IN WITNESS WHEREOF, the parties hereto have caused this Collateral Trust Agreement to be executed by their respective officers or representatives as of the day and year first above written.

 

COMPANY:     SANDRIDGE ENERGY INC.
    By:  

/s/ Julian Bott

    Name:   Julian Bott
    Title:   Executive Vice President and Chief Financial Officer
GUARANTORS:    

SANDRIDGE OPERATING COMPANY

INTEGRA ENERGY, L.L.C.

SANDRIDGE HOLDINGS, INC.

LARIAT SERVICES, INC.

SANDRIDGE EXPLORATION AND PRODUCTION, LLC

SANDRIDGE MIDSTREAM, INC.

    By:  

/s/ Julian Bott

    Name:   Julian Bott
    Title:   Executive Vice President and Chief Financial Officer

[Signature Page to Collateral Trust Agreement]


WILMINGTON TRUST, NATIONAL ASSOCIATION , as

Trustee under the Indenture
By:  

/s/ Shawn Goffinet

Name:   Shawn Goffinet
Title:   Assistant Vice President

WILMINGTON TRUST, NATIONAL ASSOCIATION , as

Collateral Trustee
By:  

/s/ Shawn Goffinet

Name:   Shawn Goffinet
Title:   Assistant Vice President

[Signature Page to Collateral Trust Agreement]


EXHIBIT A

FORM OF

ADDITIONAL PARITY LIEN DEBT CERTIFICATE

Reference is made to the Collateral Trust Agreement, dated as of [●] (as amended, supplemented, amended and restated or otherwise modified and in effect from time to time, the “ Collateral Trust Agreement ”), among SandRidge Energy, Inc., a Delaware corporation (the “ Company ”), the Guarantors from time to time party thereto, Wilmington Trust, National Association, as Trustee under the Indenture (as defined therein), the other Parity Lien Representatives from time to time party thereto and Wilmington Trust, National Association, as Collateral Trustee. Capitalized terms used but not otherwise defined herein have the meanings assigned to them in the Collateral Trust Agreement. This Additional Parity Lien Debt Certificate is being executed and delivered in order to designate additional secured debt as Parity Lien Debt entitled to the benefit of the Collateral Trust Agreement.

The undersigned, the duly appointed [ specify title ] of the Company hereby certifies on behalf of [ the Company or applicable Grantor ] that:

(A)    [ the Company or applicable Grantor ] intends to incur additional Parity Lien Debt (“ Additional Parity Lien Debt ”) which will be permitted by each applicable Parity Lien Document to be secured by a Parity Lien equally and ratably with all previously existing and future Parity Lien Debt;

(B)    the name and address of the Parity Lien Debt Representative for the Additional Parity Lien Debt for purposes of Section 7.6 of the Collateral Trust Agreement is:

 

 

 

 
 

 

 
 

Telephone:

 

 

   
 

Fax:

 

 

   

(C)    Attached as Exhibit 1 hereto is a Reaffirmation Agreement duly executed by the Company and each Guarantor, and

(D)    the Company has caused a copy of this Additional Parity Lien Debt Certificate and the related Collateral Trust Joinder to be delivered to each existing Parity Lien Representative.

 

A-1


IN WITNESS WHEREOF, the Company has caused this Additional Parity Lien Debt Certificate to be duly executed by the undersigned officer as of                 , 20    .

SANDRIDGE ENERGY INC.

By:  

 

Name:  

 

Title:  

 

ACKNOWLEDGEMENT OF RECEIPT

The undersigned, the duly appointed Collateral Trustee under the Collateral Trust Agreement, hereby acknowledges receipt of an executed copy of this Additional Parity Lien Debt Certificate.

WILMINGTON TRUST, NATIONAL ASSOCIATION , as

Collateral Trustee
By:  

 

Name:  

 

Title:  

 

 

A-2


EXHIBIT 1 TO ADDITIONAL PARITY LIEN DEBT CERTIFICATE

FORM OF

REAFFIRMATION AGREEMENT

, 20

Reference is made to the Collateral Trust Agreement, dated as of [●] (as amended, supplemented, amended and restated or otherwise modified and in effect from time to time, the “ Collateral Trust Agreement ”), among SandRidge Energy, Inc., a Delaware corporation (the “ Company ”), the Guarantors from time to time party thereto, Wilmington Trust, National Association, as Trustee under the Indenture (as defined therein), the other Parity Lien Representatives from time to time party thereto and Wilmington Trust, National Association, as Collateral Trustee. Capitalized terms used but not otherwise defined herein have the meanings assigned to them in the Collateral Trust Agreement. This Reaffirmation Agreement is being executed and delivered as of                 , 20     in connection with an Additional Parity Lien Debt Certificate of even date herewith which Additional Parity Lien Debt Certificate has designated additional Parity Lien Debt entitled to the benefit of the Collateral Trust Agreement.

Each of the undersigned hereby consents to the designation of additional secured debt as Parity Lien Debt as set forth in the Additional Parity Lien Debt Certificate of even date herewith and hereby confirms its respective guarantees, pledges, grants of security interests and other obligations, as applicable, under and subject to the terms of each of the Parity Lien Documents to which it is party, and agrees that, notwithstanding the designation of such additional indebtedness or any of the transactions contemplated thereby, such guarantees, pledges, grants of security interests and other obligations, and the terms of each Parity Lien Document to which it is a party, shall continue to be in full force and effect.

Governing Law and Miscellaneous Provisions . The provisions of Article 7 of the Collateral Trust Agreement will apply with like effect to this Reaffirmation Agreement.

IN WITNESS WHEREOF, each of the undersigned has caused this Reaffirmation Agreement to be duly executed as of the date written above.

[ names of the Company and Guarantors ]

 

Name:  

 

Title:  

 

 

A-3


EXHIBIT B

FORM OF

COLLATERAL TRUST JOINDER – ADDITIONAL DEBT

Reference is made to the Collateral Trust Agreement, dated as of [●] (as amended, supplemented, amended and restated or otherwise modified and in effect from time to time, the “ Collateral Trust Agreement ”), among SandRidge Energy, Inc., a Delaware corporation (the “ Company ”), the Guarantors from time to time party thereto, Wilmington Trust, National Association, as Trustee under the Indenture (as defined therein), the other Parity Lien Representatives from time to time party thereto and Wilmington Trust, National Association, as Collateral Trustee. Capitalized terms used but not otherwise defined herein have the meanings assigned to them in the Collateral Trust Agreement. This Collateral Trust Joinder is being executed and delivered pursuant to Section 3.8 of the Collateral Trust Agreement as a condition precedent to the debt for which the undersigned is acting as agent being entitled to the benefits of being additional Parity Lien Debt under the Collateral Trust Agreement.

1.    Joinder. The undersigned,                  a                 , (the “ New Representative ”) as [ trustee , administrative agent ] under that certain [ described applicable indenture, credit agreement or other document governing the additional secured debt ] hereby agrees to become party as a Parity Lien Representative under the Collateral Trust Agreement for all purposes thereof on the terms set forth therein, and to be bound by the terms of the Collateral Trust Agreement as fully as if the undersigned had executed and delivered the Collateral Trust Agreement as of the date thereof.

[1][2.]     Additional Secured Debt Designation

The undersigned, on behalf of itself and each holder of Obligations in respect of the Series of Parity Lien Debt for which the undersigned is acting as Parity Lien Representative hereby agrees, for the enforceable benefit of each existing and future holder of Priority Lien Obligations, the Priority Lien Collateral Agent, all holders of each current and future Series of Parity Lien Debt, each other current and future Parity Lien Representative and each current and future holder of Parity Lien Obligations and as a condition to being treated as Parity Lien Debt under the Collateral Trust Agreement that:

(a)    all Parity Lien Obligations will be and are secured equally and ratably by all Parity Liens at any time granted by the Company or any other Grantor to secure any Obligations in respect of any Series of Parity Lien Debt, whether or not upon property otherwise constituting collateral for such Series of Parity Lien Debt, and that all such Parity Liens will be enforceable by the Collateral Trustee for the benefit of all holders of Parity Lien Obligations equally and ratably;

(b)    the undersigned and each holder of Obligations in respect of the Series of Parity Lien Debt for which the undersigned is acting as Parity Lien Representative are bound by the provisions of the Collateral Trust Agreement and the Intercreditor Agreement, including the provisions relating to the ranking of Parity Liens and the order of application of proceeds from the enforcement of Parity Liens; and

(c)    the Collateral Trustee shall perform its obligations under the Collateral Trust Agreement, the other Parity Lien Security Documents and the Intercreditor Agreement.

3.     Governing Law and Miscellaneous Provisions . The provisions of Article 7 of the Collateral Trust Agreement will apply with like effect to this Collateral Trust Joinder.

IN WITNESS WHEREOF, the parties hereto have caused this Collateral Trust Joinder to be executed by their respective officers or representatives as of                 , 20    .

[ insert name of the new representative or the Trustee ]

 

Name:  

 

Title:  

 

 

B-1


The Collateral Trustee hereby acknowledges receipt of this Collateral Trust Joinder and agrees to act as Collateral Trustee for the [ New Representative ][ Trustee ] and the holders of the Obligations represented thereby:

WILMINGTON TRUST, NATIONAL ASSOCIATION , as

Collateral Trustee
By:  

 

Name:  

 

Title:  

 

 

B-2


EXHIBIT C

FORM OF

COLLATERAL TRUST JOINDER – ADDITIONAL GRANTOR

Reference is made to the Collateral Trust Agreement, dated as of [●] (as amended, supplemented, amended and restated or otherwise modified and in effect from time to time, the “ Collateral Trust Agreement ”), among SandRidge Energy, Inc., a Delaware corporation (the “ Company ”), the Guarantors from time to time party thereto, Wilmington Trust, National Association, as Trustee under the Indenture (as defined therein), the other Parity Lien Representatives from time to time party thereto and Wilmington Trust, National Association, as Collateral Trustee. Capitalized terms used but not otherwise defined herein have the meanings assigned to them in the Collateral Trust Agreement. This Collateral Trust Joinder is being executed and delivered pursuant to Section 7.18 of the Collateral Trust Agreement.

1.     Joinder . The undersigned,                 , a                 , hereby agrees to become party as a Grantor under the Collateral Trust Agreement for all purposes thereof on the terms set forth therein, and to be bound by the terms of the Collateral Trust Agreement as fully as if the undersigned had executed and delivered the Collateral Trust Agreement as of the date thereof.

2.     Governing Law and Miscellaneous Provisions . The provisions of Article 7 of the Collateral Trust Agreement will apply with like effect to this Collateral Trust Joinder.

IN WITNESS WHEREOF, the parties hereto have caused this Collateral Trust Joinder to be executed by their respective officers or representatives as of                 , 20    .

[                                                         ]

By:  

 

Name:  

 

Title:  

 

The Collateral Trustee hereby acknowledges receipt of this Collateral Trust Joinder and agrees to act as Collateral Trustee with respect to the Collateral pledged by the new Grantor:

WILMINGTON TRUST, NATIONAL ASSOCIATION , as

Collateral Trustee
By:  

 

Name:  

 

Title:  

 

 

C-1


EXHIBIT D

FORM OF

COLLATERAL TRUST AMENDMENT – TRUST ESTATE UPON SPRINGING EVENT

Reference is made to the Collateral Trust Agreement, dated as of October 4, 2016 (as amended, supplemented, amended and restated or otherwise modified and in effect from time to time, the “ Collateral Trust Agreement ”), among SandRidge Energy, Inc., a Delaware corporation (the “ Company ”), the Guarantors from time to time party thereto, Wilmington Trust, National Association, as Trustee under the Indenture (as defined therein), the other Parity Lien Representatives from time to time party thereto and Wilmington Trust, National Association, as Collateral Trustee. Capitalized terms used but not otherwise defined herein have the meanings assigned to them in the Collateral Trust Agreement. This Collateral Trust Amendment is being executed and delivered pursuant to Section 2.4 of the Collateral Trust Agreement.

1.     Amendment . The undersigned hereby agrees to amend and restate Section 2.1 of the Collateral Trust Agreement in its entirety to read as follows:

To secure the payment of the Parity Lien Obligations and in consideration of the premises and the mutual agreements set forth herein, each of the Grantors hereby confirms the grant of Liens in favor of the Collateral Trustee, and the Collateral Trustee hereby accepts and agrees to hold, in trust under this Agreement for the benefit of all current and future Parity Lien Secured Parties, all of such Grantor’s right, title and interest in, to and under all Collateral and all Liens now or hereafter granted to the Collateral Trustee by each Grantor under any Parity Lien Security Document for the benefit of the Parity Lien Secured Parties, together with all of the Collateral Trustee’s right, title and interest in, to and under the Parity Lien Security Documents, and all interests, rights, powers and remedies of the Collateral Trustee thereunder or in respect thereof and all cash and non-cash proceeds thereof (collectively, the “ Trust Estate ”).

2.     Governing Law and Miscellaneous Provisions . The provisions of Article 7 of the Collateral Trust Agreement will apply with like effect to this Collateral Trust Amendment.

 

D-1


IN WITNESS WHEREOF, the parties hereto have caused this Collateral Trust Agreement to be executed by their respective officers or representatives as of the day and year first above written.

 

COMPANY:     SANDRIDGE ENERGY INC.
    By:  

 

    Name:   Julian Bott
    Title:   Executive Vice President and Chief Financial Officer
GUARANTORS:    

SANDRIDGE OPERATING COMPANY

INTEGRA ENERGY, L.L.C.

SANDRIDGE HOLDINGS, INC.

LARIAT SERVICES, INC.

SANDRIDGE EXPLORATION AND PRODUCTION, LLC

SANDRIDGE MIDSTREAM, INC.

    By:  

 

    Name:   Julian Bott
    Title:   Executive Vice President and Chief Financial Officer

       WILMINGTON TRUST, NATIONAL ASSOCIATION , as

 Trustee under the Indenture
 By:  

 

 Name:  
 Title:  

        WILMINGTON TRUST, NATIONAL ASSOCIATION , as

 Collateral Trustee
 By:  

 

 Name:  
 Title:  

 

D-2

Exhibit 10.6

WARRANT AGREEMENT

dated as of October 4, 2016

between

SANDRIDGE ENERGY, INC.

and

AMERICAN STOCK TRANSFER & TRUST COMPANY, LLC,

as Warrant Agent


TABLE OF CONTENTS

 

 

 

         P AGE  
ARTICLE 1   
D EFINITIONS   

Section 1.01.

 

Certain Definitions

     3   
ARTICLE 2   
I SSUANCE , E XECUTION AND T RANSFER OF W ARRANTS   

Section 2.01.

 

Issuance of Warrants

     10   

Section 2.02.

 

Execution and Authentication of Warrants

     10   

Section 2.03.

 

Form of Warrant Certificates

     11   

Section 2.04.

 

Transfer Restrictions

     11   

Section 2.05.

 

Transfer, Exchange and Substitution

     11   

Section 2.06.

 

Global Warrants

     12   

Section 2.07.

 

Surrender of Warrant Certificates

     13   
ARTICLE 3   
E XERCISE AND S ETTLEMENT OF W ARRANTS   

Section 3.01.

 

Exercise of Warrants

     14   

Section 3.02.

 

Procedure for Exercise

     14   

Section 3.03.

 

Automatic Exercise

     15   

Section 3.04.

 

Settlement of Warrants

     16   

Section 3.05.

 

Delivery of Common Stock

     16   

Section 3.06.

 

No Fractional Shares to Be Issued

     18   

Section 3.07.

 

Acquisition of Warrants by Company

     18   

Section 3.08.

 

Certain Calculations

     18   

Section 3.09.

 

Validity of Exercise

     18   
ARTICLE 4   
A DJUSTMENTS   

Section 4.01.

 

Adjustments to Exercise Price

     19   

Section 4.02.

 

Adjustments to Warrant Share Number

     24   

Section 4.03.

 

Certain Distributions of Rights and Warrants; Shareholder Rights Plan

     24   

Section 4.04.

 

Discretionary Adjustments

     26   

Section 4.05.

 

Restrictions on Adjustments

     26   

Section 4.06.

 

Deferral of Adjustments

     27   

Section 4.07.

 

Reclassifications and Other Changes

     27   

Section 4.08.

 

Consolidation, Merger and Sale of Assets

     28   

Section 4.09.

 

Common Stock Outstanding

     29   

Section 4.10.

 

Covenant to Reserve Shares for Issuance on Exercise

     29   

Section 4.11.

 

Calculations Final

     30   

Section 4.12.

 

Notice of Adjustments

     30   

Section 4.13.

 

Statements on Warrants

     30   


ARTICLE 5   
O THER P ROVISIONS R ELATING TO R IGHTS OF W ARRANTHOLDERS   

Section 5.01.

 

No Rights as Stockholders

     31   

Section 5.02.

 

Mutilated or Missing Warrant Certificates

     31   

Section 5.03.

 

Modification and Waiver

     31   

Section 5.04.

 

Rights of Action

     32   

Section 5.05.

 

No Redemption

     32   
ARTICLE 6   
C ONCERNING THE W ARRANT A GENT AND OTHER M ATTERS   

Section 6.01.

 

Payment of Certain Taxes

     33   

Section 6.02.

 

Change of Warrant Agent

     33   

Section 6.03.

 

Compensation; Further Assurances

     35   

Section 6.04.

 

Reliance on Counsel

     35   

Section 6.05.

 

Proof of Actions Taken

     35   

Section 6.06.

 

Correctness of Statements

     35   

Section 6.07.

 

Validity of Agreement

     35   

Section 6.08.

 

Use of Agents

     36   

Section 6.09.

 

Liability of Warrant Agent

     36   

Section 6.10.

 

Legal Proceedings

     36   

Section 6.11.

 

Other Transactions in Securities of the Company

     36   

Section 6.12.

 

Actions as Agent

     36   

Section 6.13.

 

Appointment and Acceptance of Agency

     37   

Section 6.14.

 

Successors and Assigns

     37   

Section 6.15.

 

Notices

     37   

Section 6.16.

 

Applicable Law

     38   

Section 6.17.

 

Benefit of this Warrant Agreement

     39   

Section 6.18.

 

Registered Warrantholders

     39   

Section 6.19.

 

Inspection of this Warrant Agreement

     39   

Section 6.20.

 

Headings

     39   

Section 6.21.

 

Counterparts

     39   

Section 6.22.

 

Termination

     40   

Section 6.23.

 

Severability

     40   

Section 6.24.

 

Entire Agreement

     40   

Section 6.25.

 

Force Majeure

     40   

Section 6.26.

 

Proceedings by Holders; Specific Performance

     40   

EXHIBIT A

 

FORM OF GLOBAL WARRANT LEGEND

     A-1   

EXHIBIT B-1

 

FORM OF SERIES A WARRANT CERTIFICATE

     B-1-1   

EXHIBIT B-2

 

FORM OF SERIES B WARRANT CERTIFICATE

     B-2-1   

EXHIBIT C

 

FORM OF COMMON STOCK REQUISITION ORDER

     C-1   

 

2


WARRANT AGREEMENT

This Warrant Agreement (“ Warrant Agreement ”) dated as of October 4, 2016 is between SandRidge Energy, Inc., a Delaware corporation (the “ Company ”), and American Stock Transfer & Trust Company, LLC, as warrant agent (the “ Warrant Agent ”).

WITNESSETH THAT:

WHEREAS, pursuant to the terms and conditions of the Plan of Reorganization, dated May 18, 2016, as the same may be amended, modified or restated from time to time (the “ Plan ”) relating to the reorganization under Chapter 11 of Title 11 of the United States Code (the “ Bankruptcy Code ”) of the Company and certain of its direct and indirect subsidiaries, the Holders of General Unsecured Claims (as defined in the Plan) other than Holders of Unsecured Trade Claims (as defined in the Plan), if any, that elect to receive cash pursuant to the Plan (the “ Initial Warrantholders ”) are to be issued (i) Series A Warrants, exercisable until the Expiration Date, to purchase up to an aggregate of 4,913,251 shares (the “ Initial Series A Warrant Shares ”) of Common Stock at the Series A Exercise Price specified herein and (ii) Series B Warrants, exercisable until the Expiration Date, to purchase up to an aggregate of 2,068,690 shares (the “ Initial Series B Warrant Shares ”) of Common Stock at the Series B Exercise Price specified herein;

WHEREAS, the Warrants have the terms and conditions set forth in this Warrant Agreement (including the Exhibits hereto);

WHEREAS, the Company desires that the Warrant Agent act on behalf of the Company, and the Warrant Agent is willing to act, in connection with the issuance, exchange, transfer, substitution and exercise of Warrants; and

WHEREAS, the Warrants and the underlying shares of Common Stock are being offered and sold in reliance on the exemption from the registration requirements of the Securities Act of 1933, as amended (the “ Securities Act ”), and any applicable state securities or “blue sky” laws afforded by Section 1145 of the Bankruptcy Code.

NOW THEREFORE in consideration of the mutual agreements herein contained, the Company and the Warrant Agent agree as follows:

ARTICLE 1

D EFINITIONS

Section 1.01. Certain Definitions . (a) As used in this Warrant Agreement, the following terms shall have their respective meanings set forth below:

$ ” refers to such coin or currency of the United States as at any time of payment is legal tender for the payment of public and private debts.

Affiliate ” shall mean, with respect to any specified Person, any other Person that directly, or indirectly through one or more intermediaries, controls, is controlled by,

 

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or is under common control with, such first specified Person. For the purposes of this definition, “control” when used with respect to any Person means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise, and the terms “controlling” and “controlled” have meanings correlative to the foregoing.

Affiliated Entity ” means any Person (a) who is an Affiliate of the Company, (b) who is an officer, director, employee, partner or member of the Company or any Affiliate of the Company, or (c) a majority of which Person’s total outstanding equity, upon consummation of such transaction, is held by Persons who are equityholders in the Company immediately prior to the consummation of such transaction.

Authentication Order ” means a Company Order for authentication and delivery of Warrants.

Board of Directors ” means the board of directors of the Company or any committee of such board of directors duly authorized to exercise the power of such board of directors with respect to the matters provided for in this Warrant Agreement as to which the board of directors is authorized or required to act.

Business Day ” means any day other than a Saturday or Sunday or other than a day on which banking institutions in New York City, New York are authorized or obligated by law or executive order to close.

Capital Stock ” means, for any entity, any and all shares, interests, rights to purchase, warrants, options, participations or other equivalents of or interests in (however designated) stock issued by that entity.

Certificated Warrant ” means a Warrant represented by a Warrant Certificate, in definitive, fully registered form, that is not a Global Warrant.

Close of Business ” means 5:00 p.m., New York City time.

Closing Date ” means the date hereof.

Common Stock ” means the common stock, par value $0.001 per share, of the Company at the date of this Warrant Agreement, subject to Section 4.07.

Company Order ” means a written order signed in the name of the Company by its Chief Executive Officer, President or Chief Financial Officer, and delivered to the Warrant Agent.

Deemed Liquidation Date ” means the date on which a Deemed Liquidation Event occurs.

Deemed Liquidation Event ” means: (i) the effective time of (A) any recapitalization, reclassification or change of the Common Stock (other than changes resulting from a subdivision or combination) as a result of which the Common Stock

 

4


would be converted into, or exchanged for, stock, other securities, other property or assets, (B) any share exchange, consolidation or merger of the Company pursuant to which the Common Stock will be converted into cash, securities or other property or assets or (C) any sale, lease or other transfer in one transaction or a series of transactions of all or substantially all of the consolidated assets of the Company and its subsidiaries, taken as a whole, to any Person other than one of the Company’s Wholly Owned Subsidiaries; or (ii) the stockholders of the Company approve any plan or proposal for the liquidation or dissolution of the Company; provided, however , that neither (I) a transaction described in clause (i) with an Affiliated Entity nor (II) a transaction described in clause (i)(A) in which the holders of all classes of the Company’s Voting Stock immediately prior to such transaction own, directly or indirectly, more than 50% of all classes of Voting Stock of the continuing or surviving corporation or transferee or the parent thereof immediately after such transaction in substantially the same proportions as such ownership immediately prior to such transaction, shall be a Deemed Liquidation Event.

Depositary ” means The Depository Trust Company, its nominees, and their respective successors.

Exchange Act ” means the Securities Exchange Act of 1934, as amended.

Ex-Date ” means, in connection with any dividend, issuance or distribution, the first date on which the shares of Common Stock trade on the applicable exchange or in the applicable market, regular way, without the right to receive such dividend, issuance or distribution.

Exercise Notice ” means, for any Warrant, the exercise notice set forth on the reverse of the Warrant Certificate, substantially in the form set forth in Exhibit B-1 or B-2, as applicable, hereto.

Exercise Price ” means (i) for the Series A Warrants, the Series A Exercise Price and (ii) for the Series B Warrants, the Series B Exercise Price.

Expiration Date ” means, for any Warrant, October 4, 2022, regardless of whether such date is a Trading Day.

Fair Market Value ” means, as of a specified date, the per-share price of the Common Stock determined as follows: (i) if the Common Stock is listed on a National Securities Exchange, the VWAP of one share of Common Stock for the thirty (30) Trading Days ending on, and including, the specified date; (ii) if the Common Stock is not then listed on a National Securities Exchange, the VWAP of the Common Stock on the principal over-the-counter quotation system on which such Common Stock trades, measured over the immediately preceding thirty (30) Trading Days in which such Common Stock traded with a minimum volume of 7,500 shares of the Common Stock on each such Trading Day (and such preceding Trading Days need not be consecutive); or (iii) in all other cases, the price reflected in the most recent third-party valuation provided to the Company by a valuation firm or financial advisor retained by the Company (e.g.

 

5


for valuing stock awards); provided that if such valuation is more than six months old or no such valuation has been provided, the Board of Directors shall determine the Fair Market Value in good faith on the basis of such factors as it reasonably determines to be appropriate, including, if the Board of Directors so elects, upon the written advice of a valuation firm or financial advisor; provided further , that if the Board of Directors determines in good faith that the application of clauses (i) and (ii) would result in a VWAP based on the trading prices of thinly-traded Common Stock such that the price resulting therefrom may not represent an accurate measurement of the Fair Market Value of such Common Stock, the Board of Directors at its election may apply the provisions of clause (iii) in lieu of the applicable clauses (i) and (ii) with respect to the determination of the Fair Market Value of such Common Stock. Such determination by the Board of Directors shall be conclusive, final and binding on the Company and the Warrantholders absent manifest error.

If during a period applicable for calculating Fair Market Value, an issuance, distribution, subdivision, combination, or other transaction or event occurs that requires an adjustment to the applicable Exercise Price or Warrant Share Number for each Warrant pursuant to Article 4 hereof, the Fair Market Value shall be calculated for such period in a manner determined by the Company in good faith to appropriately reflect the impact of such issuance, distribution, subdivision, combination, or other transaction or event on the price of the Common Stock during such period.

Full Physical Settlement ” means the settlement method pursuant to which if the Common Stock is not listed on a National Securities Exchange as of the applicable Exercise Date, an exercising Warrantholder shall be entitled to receive from the Company, for each Warrant exercised, a number of shares of Common Stock equal to the Full Physical Settlement Amount in exchange for payment by the Warrantholder of the applicable Exercise Price; provided that any election for Full Physical Settlement shall be invalid if Section 1145 of the Bankruptcy Code does not apply to the Warrants and the shares of Common Stock underlying the Warrants.

Full Physical Settlement Amount ” means, for each Warrant exercised as to which Full Physical Settlement is applicable, the Warrant Share Number for such Warrant as of the Exercise Date.

Global Warrant ” means a Warrant in the form of a permanent global Warrant Certificate, in definitive, fully registered form.

Global Warrant Legend ” means the legend set forth in Section 2.06(a).

National Securities Exchange ” means The New York Stock Exchange, the NASDAQ Global Market, the NASDAQ Global Select Market or another U.S. national securities exchange.

Net Share Settlement ” means the settlement method pursuant to which an exercising Warrantholder shall be entitled to receive from the Company, for each Warrant exercised, a number of shares of Common Stock equal to the Net Share Amount without any payment therefor.

 

6


Number of Warrants ” means, for a Warrant Certificate, the “Number of Warrants” specified on the face of such Warrant Certificate (or, in the case of a Global Warrant, on Schedule A to such Warrant Certificate).

Officer’s Certificate ” means a certificate signed by the Company’s Chief Executive Officer, President or Chief Financial Officer.

Open of Business ” means 9:00 a.m., New York City time.

Person ” means an individual, partnership, firm, corporation, limited liability company, business trust, joint stock company, trust, unincorporated association, joint venture, governmental authority or other entity of whatever nature.

Record Date ” means, with respect to any dividend, distribution or other transaction or event in which the holders of Common Stock have the right to receive any cash, securities or other property or in which Common Stock (or other applicable security) is exchanged for or converted into any combination of cash, securities or other property, the date fixed for determination of holders of Common Stock entitled to receive such cash, securities or other property (whether such date is fixed by the Board of Directors or by statute, contract or otherwise).

Series A Exercise Price ” means, as of the date hereof, $41.34 per warrant, subject to adjustment pursuant to Article 4.

Series A Warrant ” means a warrant of the Company exercisable for one share of Common Stock at the Series A Exercise Price as provided herein, and issued pursuant to this Warrant Agreement with the terms, conditions and rights set forth in this Warrant Agreement.

Series B Exercise Price ” means, as of the date hereof, $42.03 per warrant, subject to adjustment pursuant to Article 4.

Series B Warrant ” means a warrant of the Company exercisable for one share of Common Stock at the Series B Exercise Price as provided herein, and issued pursuant to this Warrant Agreement with the terms, conditions and rights set forth in this Warrant Agreement.

Settlement Date ” means, in respect of a Warrant that is exercised hereunder, the third Trading Day immediately following the Exercise Date for such Warrant.

subsidiary ” means, with respect to any Person, any corporation, association, partnership or other business entity of which more than 50% of the total voting power of shares of Capital Stock or other interests (including partnership interests) entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers, general partners or trustees thereof is at the time owned or controlled, directly or indirectly, by (i) such Person; (ii) such Person and one or more subsidiaries of such Person; or (iii) one or more subsidiaries of such Person.

 

7


Trading Day ” means (i) if the applicable security is listed on a National Securities Exchange, a day on which trades may be made thereon or (ii) if the applicable security is not listed on a National Securities Exchange, a day on which the principal over-the-counter quotation system on which such security trades is open for business or (iii) if the applicable security is not so listed or traded, any Business Day.

Trading Day Closing Sale Price ” means, as of a specified date, (i) the last reported per-share sale price of a share of Common Stock (or such other Capital Stock or equity interest pursuant to Section 4.01(c)) on such date (or, if no last reported sale price is reported, the average of the bid and ask prices or, if more than one in either case, the average of the average bid and the average ask prices on such date) as reported on a National Securities Exchange, or if the Common Stock or such other security is not listed on a National Securities Exchange, as reported by the principal over-the-counter quotation system on which the Common Stock or such other security is then listed or quoted; or (ii) if the Common Stock (or such other Capital Stock or equity interest pursuant to Section 4.01(c)) is not so listed or quoted, the price for such security reflected in the most recent third-party valuation provided to the Company by a valuation firm or financial advisor retained by the Company; provided that if such valuation is more than six months old or no such valuation has been provided, the Board of Directors shall determine the Trading Day Closing Sale Price in good faith on the basis of such factors as it reasonably determines to be appropriate, including, if the Board of Directors so elects, upon the written advice of a valuation firm or financial advisor. Such determination by the Board of Directors shall be conclusive, final and binding on the Company and the Warrantholders absent manifest error.

If during a period applicable for calculating the Trading Day Closing Sale Price, an issuance, distribution, subdivision, combination or other transaction or event occurs that requires an adjustment to the applicable Exercise Price or Warrant Share Number for each Warrant pursuant to Article 4 hereof, the Trading Day Closing Sale Price shall be calculated for such period in a manner determined by the Company in good faith to appropriately reflect the impact of such issuance, distribution, subdivision, combination or other transaction or event on the price of the Common Stock (or such other Capital Stock or equity interest pursuant to Section 4.01(c)) during such period.

Voting Stock ” means Capital Stock having the right to vote for the election of directors under ordinary circumstances.

VWAP ” means the volume-weighted average price, which shall be determined without regard to after-hours trading or any other trading outside of the regular trading session trading hours.

Warrant ” means a Series A Warrant or a Series B Warrant, as applicable.

 

8


Warrant Certificate ” means any certificate representing Warrants satisfying the requirements set forth in Section 2.03, including the Global Warrants.

Warrant Share Number ” means the number of shares of Common Stock into which each Warrant is exercisable. The initial Warrant Share Number is one, subject to adjustment pursuant to Article 4.

Warrantholder ” means each Person in whose name Warrants are registered in the Warrant Register.

Wholly Owned Subsidiaries ” means, with respect to any Person, any subsidiary of such Person, except that, solely for purposes of this definition, the reference to “more than 50%” in the definition of “subsidiary” shall be deemed replaced by a reference to “100%”.

(b) Each of the following terms is defined in the Section set forth opposite such term:

 

Term

  

Section

Adjustment Event    Section 4.06
Agent Members    Section 2.06(b)
Automatic Exercise Time    Section 3.03(a)
Bankruptcy Code    Recitals
Company    Recitals
Determination Date    Section 4.06
Exercise Date    Section 3.02(b)
Fundamental Change    Section 4.07
Funds    Section 2.01
Funds Account    Section 2.01
Initial Series A Warrant Shares    Recitals
Initial Series B Warrant Shares    Recitals
Initial Warrantholders    Recitals
Net Share Amount    Section 3.04
Offer Expiration Date    Section 4.01(d)
Plan    Recitals
Reference Property    Section 4.07
Securities Act    Recitals
Successor Entity    Section 4.08
Trigger Event    Section 4.03
Valuation Period    Section 4.01(c)
Warrant Agent    Recitals
Warrant Agreement    Recitals
Warrant Register    Section 2.05

 

9


ARTICLE 2

I SSUANCE , E XECUTION AND T RANSFER OF W ARRANTS

Section 2.01. Issuance of Warrants . (a) The Company shall execute and deliver to the Warrant Agent, for authentication and delivery to the Depositary, or its custodian, for crediting to the accounts of its participants for the benefit of the Initial Warrantholders pursuant to the procedures of the Depositary on the Closing Date, (i) one or more Global Warrants in substantially the form set forth in Exhibit B-1 hereto, together with an Authentication Order with respect thereto, evidencing an initial aggregate Number of Warrants equal to the number of Initial Series A Warrant Shares and (ii) one or more Global Warrants in substantially the forms set forth in Exhibit B-2 hereto, together with an Authentication Order with respect thereto, evidencing an initial aggregate Number of Warrants equal to the number of Initial Series B Warrant Shares. On the Closing Date, the Warrant Agent shall, upon receipt of such Global Warrants and Authentication Orders, authenticate and deliver such Global Warrants to the Depositary, or its custodian, for crediting to the accounts of its participants for the benefit of the Initial Warrantholders pursuant to the procedures of the Depositary in accordance with Section 2.02 and register such Global Warrants in accordance with Section 2.05.

(b) Except as set forth in Section 2.05, Section 5.02 and Article 4, the Global Warrants delivered to the Depositary (or a nominee thereof) on the Closing Date shall be the only Warrants issued or outstanding under this Warrant Agreement.

(c) All Warrants issued under this Warrant Agreement shall in all respects be equally and ratably entitled to the benefits hereof, without preference, priority, or distinction on account of the actual time of the issuance and authentication or any other terms thereof.

Section 2.02. Execution and Authentication of Warrants . (a) Warrants shall be executed on behalf of the Company by the Chief Executive Officer, President or Chief Financial Officer of the Company. The signature of any of these officers on Warrants may be manual or facsimile. Typographical and other minor errors or defects in any such signature shall not affect the validity or enforceability of any Warrant that has been duly authenticated and delivered by the Warrant Agent.

(b) Warrants bearing the manual or facsimile signatures of individuals, each of whom was, at the time he or she signed such Warrant or his or her facsimile signature was affixed to such Warrant, as the case may be, a proper officer of the Company, shall bind the Company, notwithstanding that such individuals or any of them have ceased to hold such offices prior to the authentication and delivery of such Warrants or did not hold such offices at the date of such Warrants.

(c) No Warrant shall be entitled to any benefit under this Warrant Agreement or be valid or obligatory for any purpose unless there appears on such Warrant a certificate of authentication substantially in the form provided for herein executed by the Warrant Agent by manual or facsimile signature, and such certificate upon any Warrant shall be conclusive evidence, and the only evidence, that such Warrant has been duly authenticated and delivered hereunder.

 

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Section 2.03. Form of Warrant Certificates . Each Warrant Certificate shall be in substantially the forms set forth in Exhibits B-1 and B-2 hereto, as applicable, and shall have such insertions as are appropriate or required by this Warrant Agreement and may have such letters, numbers or other marks of identification and such legends and endorsements, stamped, printed, lithographed or engraved thereon, as the Company may deem appropriate and as are not inconsistent with the provisions of this Warrant Agreement, such as may be required to comply with this Warrant Agreement, any law or any rule of any securities exchange on which Warrants may be listed, and such as may be necessary to conform to customary usage.

Section 2.04. Transfer Restrictions . The Warrants and the underlying shares of Common Stock are being offered and sold pursuant to an exemption from the registration requirements of Section 5 of the Securities Act provided by Section 1145 of the Bankruptcy Code, and to the extent that any Warrantholder or beneficial owner of a Warrant is an “underwriter” as defined in Section 1145(b)(1) of the Bankruptcy Code, such Warrantholder or beneficial owner, as applicable, may not be able to sell or transfer any Warrants in the absence of an effective registration statement under the Securities Act or an exemption from registration thereunder. By accepting a transfer of a Warrant, the Warrantholder or beneficial owner, as applicable, acknowledges the restrictions set forth herein.

Section 2.05. Transfer, Exchange and Substitution . (a) Warrants shall be issued in registered form only. The Company shall cause to be kept at the office of the Warrant Agent, and the Warrant Agent shall maintain, a register (the “ Warrant Register ”) in which, subject to such reasonable regulations as the Company may prescribe, the Company shall provide for the registration of Warrants and transfers, exchanges or substitutions of Warrants as herein provided. All Warrants issued upon any registration of transfer or exchange of or substitution for Warrants shall be valid obligations of the Company, evidencing the same obligations, and entitled to the same benefits under this Warrant Agreement, as Warrants surrendered for such registration of transfer, exchange or substitution.

(b) A Warrantholder may transfer a Warrant only upon surrender of such Warrant for registration of transfer. Warrants may be presented for registration of transfer and exchange at the offices of the Warrant Agent with a written instruction of transfer in form satisfactory to the Warrant Agent, duly executed by such Warrantholder or by such Warrantholder’s attorney, duly authorized in writing. No such transfer shall be effected until, and the transferee shall succeed to the rights of a Warrantholder only upon, final acceptance and registration of the transfer in the Warrant Register by the Warrant Agent. Prior to the registration of any transfer of a Warrant by a Warrantholder as provided herein, the Company, the Warrant Agent, and any agent of the Company or the Warrant Agent may treat the Person in whose name Warrants are registered as the owner thereof for all purposes and as the Person entitled to exercise the rights represented thereby, any notice to the contrary notwithstanding.

 

11


(c) Every Warrant presented or surrendered for registration of transfer or for exchange or substitution shall (if so required by the Company or the Warrant Agent) be duly endorsed, or be accompanied by a duly executed instrument of transfer in form reasonably satisfactory to the Company and the Warrant Agent, by the holder thereof or such Warrantholder’s attorney duly authorized in writing.

(d) When Warrants are presented to the Warrant Agent with a request to register the transfer of, or to exchange or substitute, such Warrants, the Warrant Agent shall register the transfer or make the exchange or substitution as requested if its requirements for such transactions and any applicable requirements hereunder are satisfied. To permit registrations of transfers, exchanges and substitutions, the Company shall execute Warrant Certificates at the Warrant Agent’s request and the Warrant Agent shall countersign and deliver such Warrant Certificates. No service charge shall be made for any registration of transfer or exchange of or substitution for Warrants, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed on the registered holder in connection with any such exchange or registration of transfer of Warrants.

(e) A Certificated Warrant may be exchanged at the option of the holder or holders thereof, when presented or surrendered in accordance with this Warrant Agreement, for another Warrant Certificate or other Warrant Certificates of like tenor and representing in the aggregate a like Number of Warrants. If less than all Warrants represented by a Certificated Warrant are transferred, exchanged or substituted in accordance with this Warrant Agreement, the Warrant Certificate shall be surrendered to the Warrant Agent and a new Warrant Certificate for a Number of Warrants equal to the Warrants represented by such Warrant Certificate that were not transferred, exchanged or substituted, registered in such name or names as may be directed in writing by the surrendering Warrantholder, shall be executed by the Company and delivered to the Warrant Agent and the Warrant Agent shall countersign such new Warrant Certificate and shall deliver such new Warrant Certificate to the Person or Persons entitled to receive the same.

Section 2.06. Global Warrants . (a) Any Global Warrant shall bear the legend substantially in the form set forth in Exhibit A hereto (the “ Global Warrant Legend ”).

(b) So long as a Global Warrant is registered in the name of the Depositary or its nominee, members of, or participants in, the Depositary (“ Agent Members ”) shall have no rights under this Warrant Agreement with respect to the Global Warrant held on their behalf by the Depositary or the Warrant Agent as its custodian, and the Depositary may be treated by the Company, the Warrant Agent and any agent of the Company or the Warrant Agent as the absolute owner of such Global Warrant for all purposes. Accordingly, any such owner’s beneficial interest in such Global Warrant will be shown only on, and the transfer of such interest shall be effected only through, records maintained by the Depositary or its nominee or its Agent Members, and neither the Company nor the Warrant Agent shall have any responsibility with respect to such records maintained by the Depositary or its nominee or its Agent Members. Notwithstanding the foregoing, nothing herein shall prevent the Company, the Warrant

 

12


Agent or any agent of the Company or the Warrant Agent from giving effect to any written certification, proxy or other authorization furnished by the Depositary or impair, as between the Depositary and its Agent Members, the operation of customary practices governing the exercise of the rights of a Warrantholder.

(c) Any holder of a Global Warrant registered in the name of the Depositary or its nominee shall, by acceptance of such Global Warrant, agree that transfers of beneficial interests in such Global Warrant may be effected only through a book-entry system maintained by the holder of such Global Warrant (or its agent), and that ownership of a beneficial interest in Warrants represented thereby shall be required to be reflected in book-entry form.

(d) Transfers of a Global Warrant registered in the name of the Depositary or its nominee shall be limited to transfers in whole, and not in part, to the Company, the Depositary, their successors, and their respective nominees. Interests of beneficial owners in a Global Warrant registered in the name of the Depositary or its nominee shall be transferred in accordance with the rules and procedures of the Depositary.

(e) A Global Warrant registered in the name of the Depositary or its nominee shall be exchanged for Certificated Warrants only if the Depositary (i) has notified the Company that it is unwilling or unable to continue as or ceases to be a clearing agency registered under Section 17A of the Exchange Act and (ii) a successor to the Depositary registered as a clearing agency under Section 17A of the Exchange Act is not able to be appointed by the Company within 90 days or the Depositary is at any time unwilling or unable to continue as Depositary and a successor to the Depositary is not able to be appointed by the Company within 90 days. In any such event, a Global Warrant registered in the name of the Depositary or its nominee shall be surrendered to the Warrant Agent for cancellation, and the Company shall execute, and the Warrant Agent shall countersign and deliver, to each beneficial owner identified by the Depositary, in exchange for such beneficial owner’s beneficial interest in such Global Warrant, Certificated Warrants representing, in the aggregate, the Number of Warrants theretofore represented by such Global Warrant with respect to such beneficial owner’s respective beneficial interest. Any Certificated Warrant delivered in exchange for an interest in a Global Warrant pursuant to this Section 2.06(e) shall not bear the Global Warrant Legend. Interests in the Global Warrant may not be exchanged for Certificated Warrants other than as provided in this Section 2.06(e).

(f) The holder of a Global Warrant registered in the name of the Depositary or its nominee may grant proxies and otherwise authorize any Person, including Agent Members and Persons that may hold interests through Agent Members, to take any action which a Warrantholder is entitled to take under this Warrant Agreement or the Warrant.

Section 2.07. Surrender of Warrant Certificates . Any Warrant Certificate surrendered for registration of transfer, exchange, substitution or exercise of Warrants represented thereby shall, if surrendered to the Company, be delivered to the Warrant Agent, and all Warrant Certificates surrendered or so delivered to the Warrant Agent shall be promptly cancelled by the Warrant Agent and shall not be reissued by the

 

13


Company and, except as provided in this Article 2 in case of an exchange, transfer or substitution, or Article 3 in case of the exercise of less than all Warrants represented thereby, or Section 5.02 in case of mutilation, no Warrant Certificate shall be issued hereunder in lieu thereof. The Warrant Agent shall deliver to the Company from time to time or otherwise dispose of such cancelled Warrant Certificates as the Company may direct.

ARTICLE 3

E XERCISE AND S ETTLEMENT OF W ARRANTS

Section 3.01. Exercise of Warrants . At any time prior to the Close of Business on the Expiration Date, an individual Warrantholder shall be entitled to exercise, in accordance with this Article 3, the full Number of Warrants represented by any Warrant Certificate then registered in such individual Warrantholder’s name or any portion thereof. Any Warrants not exercised prior to such time shall expire unexercised.

Section 3.02. Procedure for Exercise . (a) To exercise a Warrant (i) in the case of a Certificated Warrant, the Warrantholder must surrender the Warrant Certificate evidencing such Warrant at the principal office of the Warrant Agent (or successor Warrant Agent), with the Exercise Notice set forth on the reverse of the Warrant Certificate duly completed and executed, together with payment of any applicable transfer taxes as set forth in Section 6.01(b), or (ii) in the case of a Global Warrant, the Warrantholder must comply with the procedures established by the Depositary for the exercise of Warrants. If the Common Stock is not listed on a National Securities Exchange on the applicable Exercise Date and Full Physical Settlement is elected, the Warrantholder shall pay the applicable Exercise Price for each Warrant to be exercised, together with any payment of applicable transfer taxes as set forth in Section 6.01(b), by federal wire or other immediately available funds payable to the order of the Company to the account maintained by the Warrant Agent in its name as agent for the Company or, in respect of a Global Warrant, otherwise in accordance with the applicable procedures of the Depositary. The Warrant Agent shall provide an exercising Warrantholder, upon request, with the appropriate payment instructions.

(b) The date on which (i) a Warrantholder complies with the requirements for exercise set forth in this Section 3.02 in respect of a Warrant or (ii) the Automatic Exercise Time for any automatic exercise set forth in Section 3.03 in respect of a Warrant occurs is the “ Exercise Date ” for such Warrant. However, if such date is not a Trading Day or the Warrantholder satisfies such requirements after the Close of Business on a Trading Day, then the Exercise Date shall be the immediately succeeding Trading Day.

(c) The Company shall assist and cooperate with any Warrantholder required to make any governmental filings or obtain any governmental approvals prior to or in connection with any exercise of a Warrant (including, without limitation, making any filings required to be made by the Company), and any exercise of a Warrant may be made contingent upon the making of any such filing and the receipt of any such approval.

 

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(d) All funds received by the Warrant Agent under this Agreement that are to be distributed or applied by the Warrant Agent in the performance of services in accordance with this Agreement (the “ Funds ”) shall be held by the Warrant Agent as agent for the Company and deposited in one or more bank accounts to be maintained by the Warrant Agent in its name as agent for the Company (the “ Funds Account ”). Until paid pursuant to the terms of this Agreement, the Warrant Agent will hold the Funds through the Funds Account in deposit accounts of commercial banks with Tier 1 capital exceeding $1 billion or with an average rating above investment grade by S&P (LT Local Issuer Credit Rating), Moody’s (Long Term Rating) and Fitch Ratings, Inc. (LT Issuer Default Rating), each as reported by Bloomberg Finance L.P. The Warrant Agent shall have no responsibility or liability for any diminution of the Funds that may result from any deposit made by the Warrant Agent in accordance with this paragraph, including any losses resulting from a default by any bank, financial institution or other third party. The Warrant Agent may from time to time receive interest, dividends or other earnings in connection with such deposits. The Warrant Agent shall not be obligated to pay such interest, dividends or earnings to the Company, any Warrantholder or any other party.

(e) The Warrant Agent shall forward funds deposited in the Funds Account in a given month by the fifth Business Day of the following month by wire transfer to an account designated by the Company. Notwithstanding the foregoing, in the event such received funds equal or exceed $5,000, all such accumulated funds shall be delivered within five (5) Business Days after reaching such $5,000 threshold.

Section 3.03. Automatic Exercise . (a) Notwithstanding any other provision of this Warrant Agreement, in the case of a Deemed Liquidation Event, all Warrants outstanding as of the Close of Business on the Trading Day immediately preceding the Deemed Liquidation Date (the “ Automatic Exercise Time ”) shall be deemed exercised (even if not surrendered) as of the Automatic Exercise Time and settled as set forth in Section 3.04 below. For the avoidance of doubt, no Warrant shall remain outstanding or exercisable after the Automatic Exercise Time and each Person in whose name any shares of Common Stock are issued as a result of this Section 3.03 shall for all purposes be deemed to have become the holder of record of such shares as of the Automatic Exercise Time.

(b) The Company shall promptly notify the Warrantholders and the Warrant Agent of any automatic exercise pursuant to this Section 3.03 and the number of shares of Common Stock, if any, issuable to each Warrantholder as a result of such automatic exercise.

 

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Section 3.04. Settlement of Warrants .

(a) Unless the Common Stock is not listed on a National Securities Exchange on the applicable Exercise Date and the Warrantholder elects for Full Physical Settlement, Net Share Settlement shall apply to each Warrant upon exercise of such Warrant. For any Warrants exercised or deemed exercised hereunder to which Net Share Settlement applies, on the Settlement Date for such Warrants, the Company shall cause to be delivered to the Warrantholder, together with cash in lieu of any fractional shares as provided in Section 3.06, a number of shares of Common Stock (which in no event will be less than zero) (the “ Net Share Amount ”) equal to:

 

N =   (S × W) (A – B)   
  A   

 

where:
N    =    the number of shares of Common Stock to be issued to the Warrantholder, rounded down to the nearest whole share with cash paid in lieu of any fractional shares pursuant to Section 3.06;
W    =    the number of Warrants being exercised;
S    =    the Warrant Share Number as of the Exercise Date;
A    =    the Fair Market Value of one share of Common Stock as of the Exercise Date; and
B    =    the applicable Exercise Price as of the Exercise Date.

(b) If Full Physical Settlement applies to the exercise of a Warrant, upon the proper and valid exercise thereof by a Warrantholder and payment of the applicable Exercise Price as of the Exercise Date therefor, the Company shall cause to be delivered to the exercising Warrantholder the Full Physical Settlement Amount for such Warrant.

(c) If there is a dispute as to the determination of the applicable Exercise Price or the calculation of the number of shares of Common Stock to be delivered to an exercising Warrantholder, the Company shall cause to be promptly delivered to the exercising Warrantholder the number of shares of Common Stock that are not in dispute.

(d) Any cash to be paid to the Warrantholders hereunder shall be delivered to the Warrant Agent no later than the Business Day immediately preceding the date such consideration is required to be delivered to the Warrantholders.

Section 3.05. Delivery of Common Stock . (a) In connection with the delivery of shares of Common Stock to an exercising Warrantholder pursuant to Section 3.04, the Warrant Agent shall:

(i) examine the Exercise Notices and all other documents delivered to it by or on behalf of Warrantholders as contemplated hereunder to ascertain whether or not, on their face, such Exercise Notices and any such other documents have been executed and completed in accordance with their terms and the terms hereof;

(ii) where an Exercise Notice or any other document appears on its face to have been improperly completed or executed or some other irregularity in connection with the exercise of the Warrants exists, the Warrant Agent shall endeavor to inform the appropriate parties (including the Person submitting the instrument) of the need for fulfillment of all requirements, specifying those requirements which appear to be unfulfilled, so that the Warrant may be properly exercised;

 

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(iii) inform the Company of and cooperate with and assist the Company in resolving any reconciliation problems between Exercise Notices received and delivery of Warrants to the Warrant Agent’s account;

(iv) inform the Company of (A) the receipt of Exercise Notices and the number of Warrants exercised in accordance with the terms and conditions of this Warrant Agreement, (B) the number of shares of Common Stock underlying the Warrants which were exercised, (C) the instructions with respect to issuance of such shares of Common Stock, subject, in the case of exercise of a Global Warrant, to the timely receipt from the Depositary of the necessary information, (D) the number of Persons who will become holders of record of the Company (who were not previously holders of record) as a result of receiving such shares of Common Stock upon exercise of the Warrants and (E) such other information as the Company shall reasonably require; and (x) if such shares of Common Stock are in book-entry form at the Depositary, the Company shall (or shall cause the transfer agent to) deliver such shares of Common Stock by electronic transfer to such Warrantholder’s account, or any other account as such Warrantholder may designate, at the Depositary or at an Agent Member, or (y) if such shares of Common Stock are not in book-entry form at the Depositary, the Company shall (or shall cause the transfer agent to) deliver to or upon the order of such Warrantholder a certificate or certificates, in each case for the number of full shares of Common Stock to which such Warrantholder is entitled, registered in such name or names as may be directed by such Warrantholder;

(v) deliver cash, as has been provided to the Warrant Agent by the Company, to such Warrantholder in respect of any fractional shares, as provided in Section 3.06;

(vi) promptly deposit in the Funds Account all Funds received in payment of the applicable Exercise Price in connection with Full Physical Settlement of any Warrants;

(vii) if the Number of Warrants represented by a Warrant Certificate shall not have been exercised in full, (A) in the case of a Certificated Warrant, deliver a new Warrant Certificate or (B) in the case of a Global Warrant, make the appropriate adjustments in Schedule A of such Global Warrant, in each case, countersigned by the Warrant Agent, for the balance of the number of Warrants represented by the surrendered Global Warrant or Warrant Certificate; and

(viii) provide to the Company, upon the Company’s request, the number of Warrants previously exercised, the number of shares of Common Stock issued and/or the amount of cash paid in lieu of any fractional share in connection with such exercises and the number of remaining outstanding Warrants.

 

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(b) Each Person in whose name any shares of Common Stock are issued shall for all purposes be deemed to have become the holder of record of such shares as of the Close of Business on the Exercise Date. However, if any such date is a date when the stock transfer books of the Company are closed, such Person shall be deemed to have become the holder of such shares at the Close of Business on the next succeeding date on which the stock transfer books are open.

(c) Promptly after the Warrant Agent shall have taken the action required above (or at such later time as may be mutually agreeable to the Company and the Warrant Agent), the Warrant Agent shall account to the Company with respect to any Warrants exercised.

Section 3.06. No Fractional Shares to Be Issued . (a) Notwithstanding anything to the contrary in this Warrant Agreement, the Company shall not be required to issue any fraction of a share of Common Stock upon exercise of any Warrants.

(b) If any fraction of a share of Common Stock would, except for the provisions of this Section 3.06, be issuable on the exercise of any Warrant or Warrants, the Company shall pay the Warrantholder cash in lieu of such fractional shares valued at the Fair Market Value as of the Exercise Date. However, if more than one Warrant shall be exercised hereunder at one time by the same Warrantholder, the number of full shares which shall be issuable upon exercise thereof shall be computed on the basis of all Warrants so exercised.

(c) The beneficial owners of the Warrants and the Warrantholders, by their acceptance hereof, expressly agree to receive cash in lieu of any fraction of a share of Common Stock or a stock certificate representing a fraction of a share of Common Stock.

Section 3.07. Acquisition of Warrants by Company . The Company shall have the right, except as limited by law, to purchase or otherwise to acquire Warrants (including by cash-settled swaps or other derivatives) at such times, in such manner and for such consideration as it may deem appropriate and shall have agreed with the holder of such Warrants.

Section 3.08. Certain Calculations . The Company shall be responsible for performing all calculations required in connection with the exercise and settlement of the Warrants and the payment or delivery, as the case may be, of cash and/or Common Stock as described in this Article 3.

Section 3.09. Validity of Exercise . All questions as to the validity, form and sufficiency (including time of receipt) of any exercised Warrant, Exercise Notice or the Warrant Certificate evidencing any exercised Warrant will be determined by the Company in its sole discretion, which determination shall be final and binding absent any manifest error. The Company reserves the right to reject any and all 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. Such determination by the Company shall be final and binding on the Warrantholders, absent manifest error. Moreover, the Company reserves the absolute right to waive any of the conditions to the exercise of Warrants or defects in the exercise thereof with regard to any particular exercise of Warrants.

 

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ARTICLE 4

A DJUSTMENTS

Section 4.01. Adjustments to Exercise Price . The applicable Exercise Price for the Warrants shall be subject to adjustment (without duplication) upon the occurrence of any of the following events:

(a) The issuance of shares of Common Stock as a dividend or distribution on shares of the Common Stock, or a subdivision, combination, split or reclassification of Common Stock (excluding any dividend, distribution or issuance covered by Section 4.07) into a greater or smaller number of shares of Common Stock, in which event the applicable Exercise Price shall be adjusted based on the following formula:

 

EP 1 = EP 0 ×   OS 0   
  OS 1   

where:

 

EP 0    =    the applicable Exercise Price in effect immediately prior to the Open of Business on the Ex-Date for such dividend or distribution, or immediately prior to the Open of Business on the effective date for such subdivision, combination, split or reclassification, as the case may be;
EP 1    =    the applicable Exercise Price in effect immediately after the Open of Business on the Ex-Date for such dividend or distribution, or immediately after the Open of Business on the effective date for such subdivision, combination, split or reclassification, as the case may be;
OS 0    =    the number of shares of Common Stock outstanding immediately prior to the Open of Business on the Ex-Date for such dividend or distribution, or immediately prior to the Open of Business on the effective date for such subdivision, combination, split or reclassification, as the case may be; and
OS 1    =    the number of shares of Common Stock that would be outstanding immediately after giving effect to such dividend, distribution, subdivision, combination, split or reclassification.

Such adjustment shall become effective immediately after the Open of Business on the Ex-Date for such dividend or distribution, or immediately after the Open of Business on the effective date for such subdivision, combination, split or reclassification, as the case may be. If any dividend or distribution or subdivision or combination of the type described in this Section 4.01(a) is declared or announced but not so paid or made, the applicable Exercise Price shall again be adjusted to the applicable Exercise Price that would then be in effect if such dividend or distribution, or subdivision, combination, split or reclassification had not been declared or announced, as the case may be.

 

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(b) The issuance to all or substantially all holders of Common Stock of rights, options or warrants entitling them for a period expiring 45 calendar days or less from the date of announcement of such issuance to subscribe for or purchase shares of Common Stock at a price per share that is less than the average of the Trading Day Closing Sale Prices of Common Stock for the ten (10) consecutive Trading Day period ending on, and including, the Trading Day immediately preceding the date of announcement of such issuance, in which event the applicable Exercise Price will be adjusted based on the following formula:

 

EP 1 = EP 0 ×    OS 0  + Y  
  OS 0 + X  

where:

 

EP 0    =    the applicable Exercise Price in effect immediately prior to the Open of Business on the Ex-Date for such issuance;
EP 1    =    the applicable Exercise Price in effect immediately after the Open of Business on the Ex-Date for such issuance;
OS 0    =    the number of shares of Common Stock outstanding immediately prior to the Open of Business on the Ex-Date for such issuance;
X    =    the total number of shares of Common Stock issuable pursuant to such rights, options or warrants; and
Y    =    the number of shares of Common Stock equal to the aggregate price payable to exercise such rights, options or warrants, divided by the average of the Trading Day Closing Sale Prices of Common Stock for the ten (10) consecutive Trading Day period ending on, and including, the Trading Day immediately preceding the date of announcement of such issuance.

Any such adjustment shall be made successively whenever any such rights, options or warrants are issued and shall become effective immediately after the Open of Business on the Ex-Date for such issuance. In the event that the issuance of any such rights, options or warrants is announced but such rights, options or warrants are not so issued, the applicable Exercise Price shall again be adjusted to be the applicable Exercise Price that would then be in effect if the Ex-Date for such issuance had not occurred. To the extent that any such rights, options or warrants are not exercised prior to their expiration or shares of Common Stock are otherwise not delivered pursuant to such rights, options or warrants, upon the expiration, termination or maturity of such rights, options or warrants, the applicable Exercise Price shall be readjusted to the applicable Exercise Price that would then be in effect had the adjustments made upon the issuance of such rights, options or warrants been made on the basis of the delivery of only the number of shares of Common Stock actually delivered. In determining the aggregate

 

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price payable for such shares of Common Stock, there shall be taken into account any consideration received for such rights, options or warrants, as well as any consideration received in connection with the exercise or conversion thereof, and the value of such consideration, if other than cash, shall be determined in good faith by the Board of Directors.

(c) The dividend or distribution to all or substantially all holders of Common Stock of (i) shares of the Company’s Capital Stock (other than Common Stock), (ii) evidences of the Company’s indebtedness, (iii) other assets or property of the Company, (iv) rights, options or warrants to purchase the Company’s securities or (v) cash (excluding any dividend, distribution or issuance covered by clauses (a) or (b) above or Section 4.07 below), in which event the applicable Exercise Price will be adjusted based on the following formula:

 

EP 1 = EP 0 ×    SP 0 – FMV  
        SP 0  

where:

 

EP 0    =    the applicable Exercise Price in effect immediately prior to the Open of Business on the Ex-Date for such dividend or distribution;
EP 1    =    the applicable Exercise Price in effect immediately after the Open of Business on the Ex-Date for such dividend or distribution;
SP 0    =    the average of the Trading Day Closing Sale Prices of Common Stock for the ten (10) consecutive Trading Day period ending on, and including, the Trading Day immediately preceding the Ex-Date for such dividend or distribution; and
FMV    =    the fair market value (as determined in good faith by the Board of Directors), on the Ex-Date for such dividend or distribution, of the shares of Capital Stock, evidences of indebtedness, other assets or property or rights, options or warrants so distributed or the amount of cash expressed as an amount per share of outstanding Common Stock.

Such adjustment shall become effective immediately after the Open of Business on the Ex-Date for such dividend or distribution. In the event that such dividend or distribution is declared or announced but not so paid or made, the applicable Exercise Price shall again be adjusted to be the applicable Exercise Price which would then be in effect if such distribution had not been declared or announced.

 

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However, notwithstanding the above, if the transaction that gives rise to an adjustment pursuant to this clause (c) is one pursuant to which the payment of a dividend or other distribution on Common Stock consists of shares of Capital Stock of, or similar equity interests in, a subsidiary of the Company or other business unit of the Company (i.e., a spin-off) that are, or, when issued, will be, traded or quoted on a National Securities Exchange, then the applicable Exercise Price will instead be adjusted based on the following formula:

 

EP 1 = EP 0 ×    MP 0  
  MP 0 + FMV  

where:

 

EP 0    =    the applicable Exercise Price in effect immediately prior to the end of the Valuation Period;
EP 1    =    the applicable Exercise Price in effect immediately after the end of the Valuation Period;
FMV    =    the average of the Trading Day Closing Sale Prices of the Capital Stock or similar equity interests distributed to holders of Common Stock applicable to one share of Common Stock for the first ten (10) consecutive Trading Day period commencing after, and including, the Ex-Date for such dividend or distribution (the “ Valuation Period ”); and
MP 0    =    the average of the Trading Day Closing Sale Prices of Common Stock over the Valuation Period.

Such adjustment shall become effective immediately after the Close of Business on the last Trading Day of the Valuation Period; provided that in respect of any exercise of Warrants, if the relevant Exercise Date occurs during the Valuation Period, references to “ten” or “10” in the preceding paragraph shall be deemed to be replaced with such lesser number of Trading Days as have elapsed between the Ex-Date for such dividend or distribution and the Exercise Date in determining the applicable Exercise Price. In the event that such dividend or distribution is declared or announced but not so paid or made, the applicable Exercise Price shall again be adjusted to be the applicable Exercise Price which would then be in effect if such distribution had not been declared or announced.

(d) The payment by the Company or any of its subsidiaries in respect of a tender or exchange offer for the Common Stock, to the extent that the cash and value of any other consideration included in the payment per share of the Common Stock exceeds the average of the Trading Day Closing Sale Prices of the Common Stock over the ten (10) consecutive Trading Day period commencing on, and including, the Trading Day next succeeding the last date on which tenders or exchanges may be made pursuant to such tender or exchange offer (such last date, the “ Offer Expiration Date ”), in which event the applicable Exercise Price will be adjusted based on the following formula:

 

EP 1 = EP 0 ×    SP × OS 0  
  AC + (SP × OS 1 )  

where:

 

EP 0    =    the applicable Exercise Price in effect immediately prior to the Close of Business on the 10th Trading Day immediately following, and including, the Trading Day next succeeding the Offer Expiration Date;

 

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EP 1    =    the applicable Exercise Price in effect immediately after the Close of Business on the 10th Trading Day immediately following, and including, the Trading Day next succeeding the Offer Expiration Date;
AC    =    the aggregate cash and fair market value (as determined in good faith by the Board of Directors) of any other consideration paid or payable for shares of Common Stock purchased in such tender offer or exchange offer;
OS 0    =    the number of shares of Common Stock outstanding immediately prior to the Offer Expiration Date (prior to giving effect to the purchase of all shares of Common Stock accepted for purchase or exchange in such tender offer or exchange offer and excluding any treasury shares);
OS 1    =    the number of shares of Common Stock outstanding immediately after the Offer Expiration Date (after giving effect to the purchase of all shares of Common Stock accepted for purchase or exchange in such tender offer or exchange offer and excluding any treasury shares);
SP    =    the average of the Trading Day Closing Sale Prices of Common Stock for the ten (10) consecutive Trading Day period commencing on, and including, the Trading Day next succeeding the Offer Expiration Date.

Such adjustment shall become effective immediately after the Close of Business on the 10th Trading Day immediately following, and including, the Trading Day next succeeding the Offer Expiration Date; provided that in respect of any exercise of Warrants, if the relevant Exercise Date occurs during the ten (10) consecutive Trading Day period commencing on, and including, the Trading Day next succeeding the Offer Expiration Date, references to “ten”, “10” or “10th” in the preceding paragraph shall be deemed replaced with such lesser number of Trading Days as have elapsed between the Offer Expiration Date and the Exercise Date in determining the applicable Exercise Price. In the event that the Company or a subsidiary of the Company is obligated to purchase shares of Common Stock pursuant to any such tender offer or exchange offer, but the Company or such subsidiary is permanently prevented by applicable law from effecting all or any such purchases, or all or any portion of such purchases are rescinded, then the applicable Exercise Price shall again be adjusted to be the applicable Exercise Price which would then be in effect if such tender offer or exchange offer had been made only in respect of the purchases actually effected.

(e) For the purposes of Section 4.01(a), (b) and (c), any dividend or distribution to which Section 4.01(c) is applicable that also includes shares of Common Stock, or rights, options or warrants to subscribe for or purchase shares of Common Stock (or both), shall be deemed instead to be (i) a dividend or distribution of the indebtedness,

 

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assets or property, cash or shares of Capital Stock other than such shares of Common Stock or rights, options or warrants (and any Exercise Price adjustment required by Section 4.01(c) with respect to such dividend or distribution shall be made in respect of such dividend or distribution (without regard to the parenthetical in Section 4.01(c) that begins with the word “excluding”)) immediately followed by (ii) a dividend or distribution of such shares of Common Stock or such rights, options or warrants (and any further Exercise Price adjustment required by Section 4.01 with respect to such dividend or distribution shall then be made), except, for purposes of such adjustment, any shares of Common Stock included in such dividend or distribution shall not be deemed “outstanding immediately prior to the Open of Business on the Ex-Date.”

(f) Notwithstanding this Section 4.01 or any other provision of this Warrant Agreement or the Warrants, if an Exercise Price adjustment becomes effective on any Ex-Date and a Warrantholder that has exercised its Warrants on or after such Ex-Date and on or prior to the related Record Date would be treated as the record holder of the shares of Common Stock as of the related Exercise Date as described under Section 3.05(b) based on an adjusted Exercise Price for such Ex-Date, then, notwithstanding the Exercise Price adjustment provisions in this Section 4.01, the Exercise Price adjustment relating to such Ex-Date shall not be made for such exercising Warrantholder. Instead, such Warrantholder shall be treated as if such Warrantholder were the record owner of the shares of Common Stock on an unadjusted basis and participate in the related dividend, distribution or other event giving rise to such adjustment.

(g) For the avoidance of doubt, for the purpose of this Article 4, “all holders of Common Stock” shall exclude any shares of Common Stock held in treasury by the Company.

Section 4.02. Adjustments to Warrant Share Number . Concurrently with any adjustment to the applicable Exercise Price under Section 4.01, the Warrant Share Number for each Warrant will be adjusted such that the Warrant Share Number for each such Warrant in effect immediately following the effectiveness of such adjustment will be equal to the Warrant Share Number for each such Warrant in effect immediately prior to such adjustment, multiplied by a fraction, (a) the numerator of which is the applicable Exercise Price in effect immediately prior to such adjustment and (b) the denominator of which is the applicable Exercise Price in effect immediately following such adjustment.

Section 4.03. Certain Distributions of Rights and Warrants; Shareholder Rights Plan . (a) Rights, options or warrants distributed by the Company to all holders of Common Stock (including under any shareholder rights plan in existence on October 4, 2016 or thereafter put into effect) entitling the holders thereof to subscribe for or purchase shares of the Company’s Capital Stock (either initially or under certain circumstances), which rights, options or warrants, until the occurrence of a specified event or events (a “ Trigger Event ”):

(i) are deemed to be transferred with such shares of Common Stock;

(ii) are not exercisable; and

(iii) are also issued in respect of future issuances of Common Stock,

 

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shall be deemed not to have been distributed for purposes of Section 4.01 (and no adjustment to the applicable Exercise Price or the Warrant Share Number under Section 4.01 will be made) until the occurrence of the earliest Trigger Event, whereupon such rights, options and warrants shall be deemed to have been distributed and an appropriate adjustment (if any is required) to the applicable Exercise Price and the Warrant Share Number shall be made under this Section 4.01 (subject in all respects to Section 4.03(d)).

(b) If any such right or warrant is subject to events, upon the occurrence of which such rights, options or warrants become exercisable to purchase different securities, evidences of indebtedness or other assets, then the date of the occurrence of any and each such event shall be deemed to be the date of distribution and Ex-Date with respect to new rights, options or warrants with such rights (subject in all respects to Section 4.03(d)).

(c) In addition, except as set forth in Section 4.03(d), in the event of any distribution (or deemed distribution) of rights, options or warrants, or any Trigger Event or other event (of the type described in Section 4.03(b)) with respect thereto that was counted for purposes of calculating a distribution amount for which an adjustment to the applicable Exercise Price and the Warrant Share Number under Article 4 was made (including any adjustment contemplated in Section 4.03(d)):

(i) in the case of any such rights, options or warrants that shall all have been redeemed or repurchased without exercise by the holders thereof, the applicable Exercise Price and the Warrant Share Number shall be readjusted upon such final redemption or repurchase as if such rights, options or warrants had not been issued, and shall be again readjusted to give effect to such distribution (or deemed distribution) or Trigger Event, as the case may be, as though it were a cash distribution, equal to the per share redemption or repurchase price received by a holder or holders of Common Stock with respect to such rights, options or warrants (assuming such holder had retained such rights, options or warrants), made to all holders of Common Stock as of the date of such redemption or repurchase; and

(ii) in the case of such rights, options or warrants that shall have expired or been terminated without exercise by the holders thereof, the applicable Exercise Price and the Warrant Share Number shall be readjusted as if such rights, options and warrants had not been issued.

(d) If a Company shareholders rights plan under which any rights are issued provides that each share of Common Stock issued upon exercise of Warrants at any time prior to the distribution of separate certificates representing such rights shall be entitled to receive such rights, prior to the separation of such rights from the Common Stock, the applicable Exercise Price and the Warrant Share Number shall not be adjusted pursuant to Section 4.01. If, however, prior to any exercise of a Warrant, such rights have separated from the Common Stock, the applicable Exercise Price and the Warrant Share

 

25


Number shall be adjusted at the time of separation as if the Company had made a distribution to all holders of Common Stock, the Company’s Capital Stock, evidences of the Company’s indebtedness, certain rights, options or warrants to purchase the Company’s securities or other of the Company’s assets as described in Section 4.01(c), subject to readjustment in the event of the expiration, termination or redemption of such rights.

Section 4.04. Discretionary Adjustments . The Company may from time to time, to the extent permitted by law and subject to applicable rules of any exchange on which any of the Company’s securities are then listed, decrease the applicable Exercise Price and/or increase the Warrant Share Number by any amount for any period of at least twenty (20) days. In that case, the Company shall give the Warrantholders at least fifteen (15) days’ prior notice in accordance with Section 6.15 of such increase or decrease, and such notice shall state the decreased Exercise Price and/or increased Warrant Share Number for each Warrant and the period during which the decrease and/or increase will be in effect. The Company may make such decreases in the applicable Exercise Price and/or increases in the Warrant Share Number for each Warrant, in addition to those set forth in this Article 4, as the Company’s Board of Directors deems advisable, including to avoid or diminish any income tax to holders of the Common Stock resulting from any dividend or distribution of stock (or rights to acquire stock) or from any event treated as such for income tax purposes.

Section 4.05. Restrictions on Adjustments . (a) Except in accordance with Section 4.01 or Section 4.07, the applicable Exercise Price and the Warrant Share Number for any Warrant will not be adjusted for the issuance of Common Stock or any securities convertible into or exchangeable for Common Stock or carrying the right to purchase any of the foregoing, including, without limitation:

(i) in the case of a Deemed Liquidation Event;

(ii) upon the issuance of any other securities by the Company on or after the Closing Date not contemplated by the Plan or upon the issuance of shares of Common Stock upon the exercise of such securities;

(iii) upon the issuance of any shares of Common Stock or other securities or any payments pursuant to the Employee Incentive Plan (as defined in the Plan) or any other equity incentive plan of the Company;

(iv) upon the issuance of any shares of Common Stock pursuant to the exercise of the Warrants;

(v) upon the issuance of any shares of Common Stock or other securities of the Company in connection with a business acquisition transaction; or

(vi) for a change in the par value of the Common Stock.

 

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(b) Before taking any action that would cause an adjustment reducing the Exercise Price below the then par value of any of the shares of Common Stock into which the Warrants are exercisable, the Company will take any corporate action that may be necessary in order that the Company may validly and legally issue fully paid and non-assessable shares of such Common Stock at such adjusted Exercise Price.

(c) No adjustment shall be made to the Exercise Price or the Warrant Share Number for any Warrant for any of the transactions described in Section 4.01 if the Company makes provisions for Warrantholders to participate in any such transaction without exercising their Warrants on the same basis as holders of Common Stock and with notice that the Board of Directors determines in good faith to be fair and appropriate.

(d) No adjustment shall be made to the applicable Exercise Price, nor will any corresponding adjustment be made to the Warrant Share Number for any Warrant, unless the adjustment would result in a change of at least 1% of the applicable Exercise Price; provided that any adjustments that are less than 1% of the applicable Exercise Price shall be carried forward and such carried forward adjustments, regardless of whether the aggregate adjustment is less than 1% of the applicable Exercise Price, shall be made (i) immediately prior to the time of any exercise and (ii) five (5) Business Days prior to the Expiration Date, unless, in each case, such adjustment has already been made.

(e) If the Company takes a record of the holders of Common Stock for the purpose of entitling them to receive a dividend or other distribution, and thereafter (and before the dividend or distribution has been paid or delivered to stockholders) legally abandons its plan to pay or deliver such dividend or distribution, then thereafter no adjustment to the applicable Exercise Price or the Warrant Share Number for any Warrant then in effect shall be required by reason of the taking of such record.

Section 4.06. Deferral of Adjustments . In any case in which Section 4.01 provides that an adjustment shall become effective immediately after (a) the Open of Business on the Ex-Date for an event or (b) the effective date (in the case of a subdivision or combination of the Common Stock) (each a “ Determination Date ”), the Company may elect to defer, until the later of the date the adjustment to the applicable Exercise Price and Warrant Share Number for each Warrant can be definitively determined and the occurrence of the applicable Adjustment Event (as hereinafter defined), (i) issuing to the Warrantholder of any Warrant exercised after such Determination Date and before the occurrence of such Adjustment Event, the additional shares of Common Stock or other securities or assets issuable upon such exercise by reason of the adjustment required by such Adjustment Event over and above the Common Stock issuable upon such exercise before giving effect to such adjustment and (ii) paying to such Warrantholder any amount in cash in lieu of any fractional share of Common Stock pursuant to Section 3.06. For the purposes of this Section 4.06, the term “ Adjustment Event ” shall mean in any case referred to in clause (a) or clause (b) hereof, the occurrence of such event.

Section 4.07. Reclassifications and Other Changes . (a) Subject to Section 3.03, on and after the effective time of any consolidation, merger, reclassification, exchange,

 

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substitution, sale, lease or other transfer to a third party of the consolidated assets of the Company substantially as an entirety or other event in which the previously outstanding shares of Common Stock shall be cancelled, reclassified or converted or changed into or exchanged for securities or other property (including cash) or any combination thereof, in each case that is not a Deemed Liquidation Event (a “ Fundamental Change ”), a Warrantholder shall be entitled to receive, upon exercise of such Warrant, the amount and kind of securities and property that a holder of Common Stock would have been entitled to receive (the “ Reference Property ”) as a result of such Fundamental Change if it held a number of shares of Common Stock equal to the number of shares of Common Stock that such Warrantholder would have received if such Warrant had been exercised immediately prior to such Fundamental Change. In the event holders of Common Stock have the opportunity to elect the form of consideration to be received in a Fundamental Change, the Reference Property into which the Warrants shall be exercisable from and after the effective time of such Fundamental Change shall be deemed to be the weighted average of the types and amounts of consideration received by the holders of Common Stock in such Fundamental Change.

(b) In the event of a Fundamental Change, the Company or the Successor Entity shall promptly execute an amendment to this Warrant Agreement providing that the Warrants shall be exercisable for the amount and kind of Reference Property as a result of such Fundamental Change. Any such amendment to this Warrant Agreement shall provide for adjustments which shall be as nearly equivalent as may be practicable to the adjustments provided for in this Article 4. If the Reference Property includes shares of stock or securities issued by a Person other than the Company or the Successor Entity, such other Person shall also execute such amendment to the Warrant Agreement. In the event the Company or the Successor Entity shall execute an amendment to this Warrant Agreement pursuant to this Section 4.07, the Company or the Successor Entity shall promptly file with the Warrant Agent an Officer’s Certificate briefly stating the reasons therefor, the amount and kind of Reference Property issuable upon exercise of the Warrants, any adjustment to be made with respect thereto and that all conditions precedent have been complied with. The Company or the Successor Entity shall cause notice of such Fundamental Change and the execution of such amendment to be mailed to each Warrantholder, at its address appearing on the Warrant Register, within 20 Business Days after execution thereof. Failure to deliver such notice shall not affect the legality or validity of such amendment.

(c) The above provisions of this Section 4.07 shall similarly apply to successive consolidations, mergers, reclassifications, exchanges, substitutions, sales, leases or other transfers or other events.

(d) If this Section 4.07 applies to any event or occurrence, no other provision of this Article 4 with respect to anti-dilution adjustments (which for the avoidance of doubt, does not include the covenant set forth in Section 4.08) shall apply to such event or occurrence.

Section 4.08. Consolidation, Merger and Sale of Assets . The Company may, without the consent of the Warrantholders, consolidate with, merge into or sell, lease or

 

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otherwise transfer in one transaction or a series of related transactions the consolidated assets of the Company and its subsidiaries substantially as an entirety to any corporation, limited liability company, partnership or trust organized under the laws of the United States or any of its political subdivisions (a “ Successor Entity ”); provided that, in each case that is not a Deemed Liquidation Event and the Company will not be the continuing Person:

(a) the Successor Entity shall assume all of the Company’s obligations under this Warrant Agreement (which must first be amended pursuant to Section 4.07 if applicable in connection with a Fundamental Change) and the Warrants and shall provide written notice of such assumption to the Warrant Agent promptly following the consummation of such transaction; and

(b) upon any such assumption pursuant to (a) above by the Successor Entity, such Successor Entity shall succeed to and be substituted for the Company with the same effect as if it had been named herein as the Company. Such Successor Entity thereupon may cause to be signed, and may issue any or all of the Warrant Certificates issuable pursuant to this Warrant Agreement which theretofore shall not have been signed by the Company; and, upon the order of such Successor Entity, instead of the Company, and subject to all the terms, conditions and limitations in this Warrant Agreement prescribed, the Warrant Agent shall authenticate and deliver, as applicable, any Warrant Certificates that previously shall have been signed and delivered by the officers of the Company to the Warrant Agent for authentication, and any Warrant Certificates which such Successor Entity thereafter shall cause to be signed and delivered to the Warrant Agent for such purpose.

Section 4.09. Common Stock Outstanding . For the purposes of this Article 4, the number of shares of Common Stock at any time outstanding shall not include shares held, directly or indirectly, by the Company.

Section 4.10. Covenant to Reserve Shares for Issuance on Exercise . (a) The Board of Directors has authorized and reserved for issuance and will at all times keep reserved for issuance such maximum number of shares of Common Stock as will be issuable upon the exercise of all outstanding Warrants from time to time. The Company covenants that all shares of Common Stock that shall be so issuable shall be duly and validly issued, fully paid and non-assessable and will be free from preemptive rights, all taxes, liens and charges in respect of the issue thereof (other than taxes in respect of any transfer occurring contemporaneously or otherwise specified herein).

(b) The Company agrees to authorize and direct its current and future transfer agents for the Common Stock to reserve for issuance the number of shares of Common Stock specified in this Section 4.10 and shall take all action required to increase the authorized number of shares of Common Stock if at any time there shall be insufficient authorized but unissued shares of Common Stock to permit such reservation or to permit the exercise of a Warrant. The Company shall instruct the transfer agent to deliver to the Warrant Agent, upon written request from the Warrant Agent substantially in the form of Exhibit C (or as separately agreed between the Warrant Agent and the transfer agent),

 

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stock certificates (or beneficial interests therein) required to honor outstanding Warrants upon exercise thereof in accordance with the terms of this Warrant Agreement. The Company shall pay to the Warrant Agent, as agent for the Warrantholders, any cash that may be payable as provided in this Article 4. Promptly after the Expiration Date, the Warrant Agent shall certify to the Company the aggregate number of Warrants then outstanding, and thereafter no shares shall be required to be reserved in respect of such Warrants.

Section 4.11. Calculations Final . The Company shall be responsible for making all calculations called for under this Warrant Agreement. These calculations include, but are not limited to, the Exercise Date, the Trading Day Closing Sale Price, the Fair Market Value, the applicable Exercise Price, the Warrant Share Number for each Warrant and the number of shares of Common Stock, cash or other property, if any, to be issued upon exercise of any Warrants. The Company shall make the foregoing calculations in good faith and, absent manifest error, the Company’s calculations shall be final and binding on Warrantholders. The Company shall provide a schedule of the Company’s calculations to the Warrant Agent, and the Warrant Agent is entitled to rely upon the accuracy of the Company’s calculations without independent verification.

Section 4.12. Notice of Adjustments . Whenever the applicable Exercise Price or the Warrant Share Number for each Warrant is to be adjusted or readjusted, the Company shall promptly notify, or cause to be notified, to Warrantholders a notice of the adjustment or readjustment pursuant to Section 6.15. The Company shall file with the Warrant Agent such notice and an Officer’s Certificate briefly stating the facts requiring the adjustment and the manner of computing it. As provided in Section 6.05, the Warrant Agent shall be entitled to rely on such Officer’s Certificate and shall be under no duty or responsibility with respect to any such Officer’s Certificate, except to exhibit the same from time to time to any Warrantholder desiring an inspection thereof during reasonable business hours.

Section 4.13. Statements on Warrants .

(a) The form of Warrant Certificate need not be changed because of any adjustment made pursuant to this Article 4, and Warrant Certificates issued after such adjustment may state the same information as are stated in the Warrant Certificates initially issued pursuant to this Warrant Agreement. However, the Company may at any time in its sole discretion (which shall be conclusive) make any change in the form of Warrant Certificate that it may deem appropriate and that does not affect the interest of the Warrantholders in any material respect; and any Warrant Certificates thereafter issued or countersigned, whether in exchange or substitution for an outstanding Warrant Certificate or otherwise, may be in the form as so changed.

(b) In the case of Global Warrant Certificates, other than notation of any applicable increase or decrease in the Number of Warrants on Schedule A of each Global Warrant Certificate, the form of each Global Warrant Certificate need not be changed because of any adjustment or readjustment made pursuant to this Article 4, and Global Warrant Certificates issued after such adjustment or readjustment may state the same information as are stated in the Global Warrant Certificates initially issued pursuant to this Warrant Agreement.

 

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ARTICLE 5

O THER P ROVISIONS R ELATING TO R IGHTS OF W ARRANTHOLDERS

Section 5.01. No Rights as Stockholders . Warrantholders shall not be entitled, by virtue of holding Warrants, to vote, to consent, to receive dividends, to receive notice as stockholders with respect to any meeting of stockholders for the election of the Company’s directors or any other matter, or to exercise any rights whatsoever as the Company’s stockholders unless, until and only to the extent such holders become holders of record of shares of Common Stock issuable upon exercise of the Warrants.

Section 5.02. Mutilated or Missing Warrant Certificates . If any Warrant at any time is mutilated, defaced, lost, destroyed or stolen, then on the terms set forth in this Warrant Agreement, such Warrant may be replaced at the cost of the Company at the office of the Warrant Agent. The applicant for a new Warrant shall, in the case of any mutilated or defaced Warrant, surrender such Warrant to the Warrant Agent and, in the case of any lost, destroyed or stolen Warrant, furnish evidence satisfactory to the Company of such loss, destruction or theft, and, in each case, furnish evidence satisfactory to the Company of the ownership and authenticity of the Warrant together with such indemnity as the Company may require. Any such new Warrant Certificate shall constitute an original contractual obligation of the Company, whether or not the allegedly lost, stolen, mutilated or destroyed Warrant Certificate shall be at any time enforceable by anyone. An applicant for such a substitute Warrant Certificate shall also comply with such other reasonable regulations as the Company or the Warrant Agent may prescribe. All Warrant Certificates shall be held and owned upon the express condition that the foregoing provisions are exclusive with respect to the substitution for lost, stolen, mutilated or destroyed Warrant Certificates, and shall preclude any and all other rights or remedies notwithstanding any law or statute existing or hereafter enacted to the contrary with respect to the substitution for and replacement of negotiable instruments or other securities without their surrender.

Section 5.03. Modification and Waiver . (a) This Warrant Agreement may be modified or amended by the Company and the Warrant Agent, without the consent of the holder of any Warrant, for the purposes of (i) curing any ambiguity or correcting or supplementing any defective provision contained in this Warrant Agreement, (ii) to add or modify any other provisions in regard to matters or questions arising in this Warrant Agreement which the Company and the Warrant Agent may deem necessary or desirable or (iii) effecting any amendment hereto required by Section 4.07 or providing for the assumption of the Company’s obligations pursuant to Section 4.08; provided that, in each case, any such modification or amendment does not adversely affect the interests of the Warrantholders in any material respect.

(b) Modifications and amendments to this Warrant Agreement or to the terms and conditions of Warrants may also be made by the Company and the Warrant Agent, and noncompliance with any provision of the Warrant Agreement or Warrants may be waived, with the written consent of the Warrantholders of Warrants representing a majority of the aggregate number of Warrants at the time outstanding.

 

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(c) However, no such modification, amendment or waiver may, without the written consent or the affirmative vote of:

(i) each Warrantholder affected:

(A) change the Expiration Date; or

(B) increase the applicable Exercise Price or decrease the Number of Warrants or the Warrant Share Number (except as set forth in Article 4); or

(ii) Warrantholders holding at least a majority of the outstanding Warrants affected:

(A) impair the right to institute suit for the enforcement of any delivery with respect to the exercise and settlement of any Warrant;

(B) except as otherwise permitted by this Warrant Agreement, impair or adversely affect the exercise rights of Warrantholders, including any change to the calculation or delivery of the Net Share Amount or Full Physical Settlement Amount;

(C) reduce the percentage of Warrants outstanding necessary to modify or amend this Warrant Agreement or to waive any past default; or

(D) reduce the percentage in Warrants outstanding required for any other waiver under this Warrant Agreement.

Section 5.04. Rights of Action . All rights of action against the Company in respect of this Warrant Agreement are vested in the Warrantholders, and any Warrantholder, without the consent of the Warrant Agent or any other Warrantholder, may, in such Warrantholder’s own behalf and for such Warrantholder’s own benefit, enforce and may institute and maintain any suit, action or proceeding against the Company suitable to enforce, or otherwise in respect of, such Warrantholder’s right to exercise such Warrantholder’s Warrants in the manner provided in this Warrant Agreement.

Section 5.05. No Redemption . The Warrants shall not be subject to redemption by the Company or any other Person.

 

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ARTICLE 6

C ONCERNING THE W ARRANT A GENT AND OTHER M ATTERS

Section 6.01. Payment of Certain Taxes . (a) The Company shall pay any and all documentary, stamp or other similar issue or transfer taxes that may be payable upon the initial issuance of the Warrants hereunder.

(b) The Company shall pay any and all documentary, stamp or other similar issue or transfer taxes that may be payable upon the issuance of Common Stock upon the exercise of Warrants hereunder and the issuance of stock certificates in respect thereof in the respective names of, or in such names as may be directed by, the exercising Warrantholders; provided , however , that the Company shall not be required to pay any tax that may be payable in respect of any transfer involved in the issuance and delivery of any such stock certificate, any Warrant Certificates or other securities in a name other than that of the registered holder of the Warrant Certificate surrendered upon exercise of the Warrant, and the Company shall not be required to issue or deliver such certificates or other securities unless and until the Person or Persons other than the registered holder(s) requesting the issuance thereof shall have paid to the Company the amount of such tax or shall have established to the reasonable satisfaction of the Company that such tax has been paid.

Section 6.02. Change of Warrant Agent . (a) The Warrant Agent, or any successor to it hereafter appointed, may resign its duties and be discharged from all further duties and liabilities hereunder (except for liability arising as a result of the Warrant Agent’s own gross negligence, willful misconduct or bad faith) after giving 60 days’ notice in writing to the Company, except that such shorter notice may be given as the Company shall, in writing, accept as sufficient. If the office of the Warrant Agent becomes vacant by resignation or incapacity to act or otherwise, the Company shall appoint in writing a successor Warrant Agent in place of the Warrant Agent. If the Company shall fail to make such appointment within a period of 60 days after it has been notified in writing of such resignation or incapacity by the resigning or incapacitated Warrant Agent or by any Warrantholder (who shall, with such notice, submit his Warrant Certificate for inspection by the Company), then the holder of any Warrants may apply to any court of competent jurisdiction for the appointment of a successor 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.

(b) The Warrant Agent may be removed by the Company at any time upon 30 days’ written notice to the Warrant Agent; provided , however , that the Company shall not remove the Warrant Agent until a successor Warrant Agent meeting the qualifications hereof shall have been appointed, subject to Section 6.02(a).

(c) Any successor Warrant Agent appointed as provided in this Section 6.02 shall be a corporation or banking association organized, in good standing and doing business under the laws of the United States of America or any state thereof or the District of Columbia, and authorized under such laws to exercise corporate trust powers and subject to supervision or examination by Federal or state authority and having a

 

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combined capital and surplus of not less than $50,000,000. The combined capital and surplus of any such successor Warrant Agent shall be deemed to be the combined capital and surplus as set forth in the most recent report of its condition published prior to its appointment; provided that such reports are published at least annually pursuant to law or to the requirements of a Federal or state supervising or examining authority. After acceptance in writing of such appointment by the successor Warrant Agent, such successor Warrant Agent shall be vested with all the authority, powers, rights, immunities, duties and obligations of its predecessor Warrant Agent with like effect as if originally named as Warrant Agent hereunder, without any further act or deed; but if for any reason it becomes necessary or appropriate, the predecessor Warrant Agent shall execute and deliver, at the expense of the Company, an instrument transferring to such successor Warrant Agent all the authority, powers and rights of such predecessor Warrant Agent hereunder; and upon request of any successor Warrant Agent, the Company shall make, execute, acknowledge and deliver any and all instruments in writing to more fully and effectually vest in and conform to such successor Warrant Agent all such authority, powers, rights, immunities, duties and obligations. Upon assumption by a successor Warrant Agent of the duties and responsibilities hereunder, the predecessor Warrant Agent shall deliver and transfer, at the expense of the Company, to the successor Warrant Agent any property at the time held by it hereunder. As soon as practicable after such appointment, the Company shall give notice thereof to the predecessor Warrant Agent, the Warrantholders and each transfer agent for the shares of its Common Stock. Failure to give such notice, or any defect therein, shall not affect the validity of the appointment of the successor Warrant Agent.

(d) Any entity into which the Warrant Agent may be merged or with which it may be consolidated, or any corporation resulting from any merger or consolidation to which the Warrant Agent shall be a party, or any Person succeeding to all or substantially all of the corporate trust or agency business of the Warrant Agent, shall be the successor Warrant Agent under this Warrant Agreement without any further act on the part of any of the parties hereto; provided that such entity would be eligible for appointment as a successor Warrant Agent under Section 6.02(c). In case at the time such successor to the Warrant Agent shall succeed to the agency created by this Warrant Agreement, any of the Warrant 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 deliver such Warrant Certificates so countersigned, and in case 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 Warrant Certificates shall have the full force provided in the Warrant Certificates and in this Warrant Agreement.

(e) In case at any time the name of the Warrant Agent shall be changed and at such time any of the Warrant Certificates shall have been countersigned but not delivered, the Warrant Agent may adopt the countersignatures under its prior name and deliver such Warrant Certificates so countersigned; and in case at that time any of the Warrant Certificates shall not have been countersigned, the Warrant Agent may countersign such Warrant Certificates either in its prior name or in its changed name; and in all such cases such Warrant Certificates shall have the full force provided in the Warrant Certificates and in this Warrant Agreement.

 

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Section 6.03. Compensation; Further Assurances . The Company agrees that it will (a) pay the Warrant Agent reasonable compensation for its services as Warrant Agent hereunder and, except as otherwise expressly provided, will pay or reimburse the Warrant Agent upon written demand for all reasonable expenses, disbursements and advances incurred or made by the Warrant Agent in accordance with any of the provisions of this Warrant Agreement (including the reasonable compensation, expenses and disbursements of its agents and counsel) except any such expense, disbursement or advance as may arise from its or any of their gross negligence, willful misconduct or bad faith, and (b) perform, execute, acknowledge and deliver or cause to be performed, executed, acknowledged and delivered all such further and other acts, instruments and assurances as may reasonably be required by the Warrant Agent for the carrying out or performing of the provisions of this Warrant Agreement.

Section 6.04. Reliance on Counsel . The Warrant Agent may consult with legal counsel (who may be legal counsel for the Company), and the opinion of such counsel shall be full and complete authorization and protection to the Warrant Agent as to any action taken or omitted by it in good faith and in accordance with such opinion or advice.

Section 6.05. Proof of Actions Taken . Whenever in the performance of its duties under this Warrant Agreement the Warrant Agent shall deem it necessary or desirable that any matter be proved or established by the Company prior to taking or suffering or omitting any action hereunder, such matter (unless other evidence in respect thereof be herein specifically prescribed) may, in the absence of bad faith on the part of the Warrant Agent, be deemed to be conclusively proved and established by an Officer’s Certificate delivered to the Warrant Agent; and such Officer’s Certificate shall, in the absence of bad faith on the part of the Warrant Agent, be full warrant to the Warrant Agent for any action taken, suffered or omitted in good faith by it under the provisions of this Warrant Agreement in reliance upon such certificate; but in its discretion the Warrant Agent may in lieu thereof accept other evidence of such fact or matter or may require such further or additional evidence as to it may seem reasonable.

Section 6.06. Correctness of Statements . The Warrant Agent shall not be liable for or by reason of any of the statements of fact or recitals contained in this Warrant Agreement or in the Warrant Certificates (except its countersignature thereof and to the extent such statements describe actions taken or to be taken by the Warrant Agent) or be required to verify the same, and all such statements and recitals are and shall be deemed to have been made by the Company only.

Section 6.07. Validity of Agreement . The Warrant Agent shall not be under any responsibility in respect of the validity of this Warrant Agreement or the execution and delivery hereof (except the due authorization to execute this Warrant Agreement and the due execution and delivery hereof by the Warrant Agent) or in respect of the validity or execution of any Warrant Certificates (except its countersignature thereof); nor shall it be responsible for any breach by the Company of any covenant or condition contained in this Warrant Agreement or in any Warrant Certificate.

 

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Section 6.08. Use of Agents . The Warrant Agent may execute and exercise any of the rights or powers hereby vested in it or perform any duty hereunder either itself or by or through its attorneys or agents, provided that the Warrant Agent shall remain responsible for the activities or omissions of any such attorney or agent and commercially reasonable care has been exercised in the appointment and continued employment of such attorney or agent.

Section 6.09. Liability of Warrant Agent . The Warrant Agent shall incur no liability or responsibility, except to the extent such liability arises from the Warrant Agent’s gross negligence, willful misconduct or bad faith, to the Company or to any Warrantholder for any action taken in reliance on any notice, resolution, waiver, consent, order, certificate, or other paper, document or instrument reasonably believed by it to be genuine and to have been signed, sent or presented by the proper party or parties. The Company agrees to indemnify the Warrant Agent and save it harmless against any and all losses, expenses and liabilities, including judgments, costs and reasonable counsel fees, for anything done or omitted in good faith by the Warrant Agent in the execution of this Warrant Agreement or otherwise arising in connection with this Warrant Agreement, except as a result of the Warrant Agent’s gross negligence or willful misconduct or bad faith.

Section 6.10. Legal Proceedings . The Warrant Agent shall promptly notify the Company in writing of any claim made or action, suit or legal proceeding instituted against it arising out of or in connection with this Warrant Agreement.

Section 6.11. Other Transactions in Securities of the Company . The Warrant Agent in its individual or any other capacity may become the owner of Warrants or other securities of the Company, or become pecuniarily interested in any transaction in which the Company may be interested, or contract with or lend money to the Company or otherwise act as fully and freely as though it were not Warrant Agent under this Warrant Agreement. Nothing herein shall preclude the Warrant Agent from acting in any other capacity for the Company or for any other legal entity.

Section 6.12. Actions as Agent . The Warrant Agent shall act hereunder solely as agent and not in a ministerial or fiduciary capacity, and its duties shall be determined solely by the provisions hereof. The duties and obligations of the Warrant Agent shall be determined solely by the express provisions of the Warrant Agreement. No implied covenants or obligations shall be read into the Warrant Agreement against the Warrant Agent. No provision of the Warrant Agreement shall require the Warrant Agent to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder, or in the exercise of any of its rights or powers, if it shall have reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it.

 

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Section 6.13. Appointment and Acceptance of Agency . The Company hereby appoints the Warrant Agent to act as agent for the Company in accordance with the instructions set forth in this Warrant Agreement, and the Warrant Agent hereby accepts the agency established by this Warrant Agreement and agrees to perform the same upon the terms and conditions herein set forth.

Section 6.14. Successors and Assigns . All the covenants and provisions of this Warrant Agreement by or for the benefit of the Company or the Warrant Agent shall bind and inure to the benefit of their respective successors and assigns hereunder.

Section 6.15. Notices .

(a) Any notice or demand authorized by this Warrant Agreement to be given or made by the Warrant Agent or by any Warrantholder to or on the Company shall be sufficiently given or made if sent electronically in PDF format or by mail first-class, postage prepaid, addressed (until another address is filed in writing by the Company with the Warrant Agent), as follows:

SandRidge Energy, Inc.

123 Robert S. Kerr Avenue

Oklahoma City, OK 73102

Attention: Philip Warman

Telephone: (405) 429-6136

Facsimile: (405) 429-6267

E-mail: pwarman@sandridgeenergy.com

with a copy to:

Kirkland & Ellis LLP

600 Travis Street, Suite 3300

Houston, Texas 77002

Attention: Matthew R. Pacey, P.C.

Telephone: (713) 835-3786

Facsimile: (713) 835-3601

E-mail: matt.pacey@kirkland.com

Any notice or demand authorized by this Warrant Agreement to be given or made by any Warrantholder or by the Company to or on the Warrant Agent shall be sufficiently given or made if sent electronically in PDF format or by mail first-class, postage prepaid, addressed (until another address is filed in writing by the Warrant Agent with the Company), as follows:

American Stock Transfer & Trust Company, LLC

6201 15th Avenue

Brooklyn, New York 11219

Attention: Reorganization Group

Re: SandRidge Energy, Inc. Warrant Agreement

Telephone: (781) 921-8200

E-mail: ReorgWarrants@amstock.com

 

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Unless the Warrant is a Global Warrant, any notice or communication shall be sufficiently given or made if sent electronically in PDF format or mailed to the Warrantholder by first-class mail, postage prepaid to the last address of such Warrantholder as it shall appear on the Warrant Register. Any notice to the owners of a beneficial interest in a Global Warrant may be distributed by electronic transmission through the Depositary in accordance with the procedures of the Depositary, and such notice shall be deemed to be effective at the time of dispatch to the Depositary.

(b) In case the Company commences action:

(i) that would require an adjustment in the applicable Exercise Price pursuant to Section 4.01;

(ii) to effect any consolidation, merger, reclassification, exchange, substitution or other event in which the previously outstanding shares of Common Stock shall be cancelled, reclassified or converted or changed into or exchanged for securities or other property (including cash) or any combination thereof; or

(iii) to effect the voluntary or involuntary dissolution, liquidation or winding-up of the Company;

then, and in each such case (unless notice of such event is otherwise required pursuant to another provision of this Warrant Agreement), the Company shall cause to be filed with the Warrant Agent and shall deliver to each Warrantholder, in accordance with Section 6.15(a) (which may be through the procedures of the Depositary), (A) in the case of an action described in clause (i) above, at least 10 days prior to the applicable date hereinafter specified or (B) in the case of an action described in clause (ii) or (iii) above, at least 20 days prior to the applicable date hereinafter specified, in each case, a notice stating: (1) the date on which a record is to be taken for the purpose of such action by the Company or, if a record is not to be taken, the date as of which the holders of Common Stock of record are to be determined for the purposes of such action by the Company, or (2) the date on which such event specified in clause (ii) or (iii) is expected to become effective or occur, and the date as of which it is expected that holders of Common Stock of record shall be entitled to exchange their Common Stock for securities or other property deliverable upon such event; provided that, notwithstanding the foregoing, in each case notice need not be provided in advance of public communication to holders of the Common Stock of any of the foregoing events. Failure to give such notice, or any defect therein, shall not affect the legality or validity of such action by the Company.

Section 6.16. Applicable Law . The validity, interpretation and performance of this Warrant Agreement and of the Warrant Certificates shall be governed by the law of the State of New York without giving effect to the principles of conflicts of laws thereof. Each of the parties hereto irrevocably consents to the non-exclusive jurisdiction of the courts of the State of New York or the courts of the United States located in the Borough

 

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of Manhattan, New York City, New York in connection with any action, suit or legal proceeding arising out of or relating to this Warrant Agreement. Each of the parties hereto irrevocably and unconditionally waives, to the fullest extent permitted by law, any objection which it may now or hereafter have to the laying of venue of any of the aforesaid actions, suits or proceedings arising out of or in connection with this Warrant Agreement or any Warrant Certificate brought in the courts of the State of New York or the courts of the United States located in the Borough of Manhattan, New York City, New York and hereby further irrevocably and unconditionally waives and agrees not to plead or claim in any such court that any such action, suit or proceeding brought in any such court has been brought in an inconvenient forum.

Section 6.17. Benefit of this Warrant Agreement . Nothing in this Warrant Agreement expressed and nothing that may be implied from any of the provisions hereof is intended, or shall be construed, to confer upon, or give to, any Person or corporation other than the parties hereto and the Warrantholders any right, remedy or claim under or by reason of this Warrant Agreement or of any covenant, condition, stipulation, promise or agreement hereof, and all covenants, conditions, stipulations, promises and agreements in this Warrant Agreement contained shall be for the sole and exclusive benefit of the parties hereto and their successors and of the Warrantholders.

Section 6.18. Registered Warrantholders . Prior to due presentment for registration of transfer, the Company and the Warrant Agent may deem and treat the Person in whose name any Warrants are registered in the Warrant Register as the absolute owner thereof for all purposes whatever (notwithstanding any notation of ownership or other writing thereon made by anyone other than the Company or the Warrant Agent) and neither the Company nor the Warrant Agent shall be affected by any notice to the contrary or be bound to recognize any equitable or other claim to or interest in any Warrants on the part of any other Person and shall not be liable for any registration of transfer of Warrants that are registered or to be registered in the name of a fiduciary or the nominee of a fiduciary unless made with actual knowledge that a fiduciary or nominee is committing a breach of trust in requesting such registration of transfer or with such knowledge of such facts that its participation therein amounts to bad faith.

Section 6.19. Inspection of this Warrant Agreement . A copy of this Warrant Agreement shall be available at all reasonable times for inspection by any registered Warrantholder at the principal office of the Warrant Agent (or successor Warrant Agent). The Warrant Agent may require any such holder to submit his Warrant Certificate for inspection by it before allowing such holder to inspect a copy of this Warrant Agreement.

Section 6.20. Headings . The Article and Section headings herein are for convenience only and are not a part of this Warrant Agreement and shall not affect the interpretation thereof.

Section 6.21. Counterparts . This Warrant Agreement may be executed in any number of counterparts on separate counterparts, each of which so executed shall be deemed to be an original, but all such counterparts shall together constitute one and the same instrument. The exchange of copies of this Warrant Agreement and of signature

 

39


pages by e-mail or PDF transmission shall constitute effective execution and delivery of this Warrant Agreement as to the parties hereto and may be used in lieu of the original Warrant Agreement for all purposes. Signatures of the parties hereto transmitted by e-mail or PDF shall be deemed to be their original signatures for all purposes.

Section 6.22. Termination . This Warrant Agreement shall terminate at the Expiration Date (or Close of Business on the Settlement Date for any Warrants exercised on or prior to the Expiration Date to the extent the Company shall have performed all of its obligations in respect thereof and solely as to such Warrants). Notwithstanding the foregoing, this Warrant Agreement will terminate on such earlier date on which all outstanding Warrants have been exercised and the Company shall have performed all of its obligations in respect thereof. All provisions regarding indemnification, warranty, liability and limits thereon shall survive the termination or expiration of this Warrant Agreement.

Section 6.23. Severability . Wherever possible, each provision of this Warrant Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Warrant Agreement shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Warrant Agreement.

Section 6.24. Entire Agreement . This Warrant Agreement and the Warrant Certificates constitute the entire agreement of the Company, the Warrant Agent and the Warrantholders with respect to the subject matter hereof and supersede all prior agreements and undertakings, both written and oral, among the Company, the Warrant Agent and the Warrantholders with respect to the subject matter hereof.

Section 6.25. Force Majeure . Notwithstanding anything to the contrary contained herein, no party shall be liable for any delays or failures in performance resulting from acts beyond its reasonable control including, without limitation, acts of God, terrorist acts, shortage of supply, breakdowns or malfunctions, interruptions or malfunction of computer facilities, or loss of data due to power failures or mechanical difficulties with information storage or retrieval systems, labor difficulties, war, or civil unrest.

Section 6.26. Proceedings by Holders; Specific Performance . Each holder of a Warrant shall have the right to receive delivery of any consideration due upon exercise of such Warrant, on or after the respective due dates provided for in such Warrant or in this Warrant Agreement, or to institute suit for the enforcement of any such delivery. Any Person having rights under any provision of this Warrant Agreement shall be entitled to enforce such rights specifically, to recover damages caused by reason of any breach of any provision of this Warrant Agreement and to exercise all other rights existing in their favor. The parties hereto agree and acknowledge that money damages would not be an adequate remedy for any breach of the provisions of this Warrant Agreement and that any party may in its sole discretion apply to any court of law or equity of competent jurisdiction for specific performance and/or injunctive relief (without posting any bond or

 

40


other security) in order to enforce or prevent violation of the provisions of this Warrant Agreement and shall not be required to prove irreparable injury to such party or that such party does not have an adequate remedy at law with respect to any breach of this Warrant Agreement (each of which elements the parties admit). The parties hereto further agree and acknowledge that each and every obligation applicable to it contained in this Warrant Agreement shall be specifically enforceable against it and hereby waives and agrees not to assert any defenses against an action for specific performance of their respective obligations hereunder. All rights and remedies existing under this Warrant Agreement are cumulative to, and not exclusive of, any rights or remedies available under this Warrant Agreement or otherwise.

 

41


IN WITNESS WHEREOF, this Warrant Agreement has been duly executed by the parties hereto as of the day and year first above written.

 

SANDRIDGE ENERGY, INC.
By:  

/s/ Julian Bott

  Name:   Julian Bott
  Title:   Executive Vice President and Chief Financial Officer
AMERICAN STOCK TRANSFER & TRUST COMPANY, LLC , as Warrant Agent
By:  

/s/ Paula Caroppoli

  Name:   Paula Caroppoli
  Title:   Senior Vice President

 

[ Signature Page to Warrant Agreement ]


EXHIBIT A

FORM OF GLOBAL WARRANT LEGEND 1

UNLESS THIS GLOBAL WARRANT IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (“ DTC ”), TO SANDRIDGE ENERGY, INC., A DELAWARE CORPORATION, THE CUSTODIAN OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

TRANSFER OF THIS GLOBAL WARRANT SHALL BE LIMITED TO TRANSFERS IN WHOLE, AND NOT IN PART, TO THE COMPANY, DTC, THEIR SUCCESSORS AND THEIR RESPECTIVE NOMINEES.

 

 

1   Insert for Global Warrant.

 

A-1


EXHIBIT B-1

FORM OF SERIES A WARRANT CERTIFICATE

[FACE]

SANDRIDGE ENERGY, INC.

Series A Warrants

 

No.             

CUSIP No. 80007P 117

NUMBER OF WARRANTS: Initially, 4,913,251 Warrants, subject to adjustment as described in the Warrant Agreement dated as of October 4, 2016 between SANDRIDGE ENERGY, INC., a Delaware corporation, and AMERICAN STOCK TRANSFER & TRUST COMPANY, LLC, as Warrant Agent (as may be further amended or supplemented from time to time in accordance with its terms, the “ Warrant Agreement ”), each of which is initially exercisable for one share of Common Stock, subject to adjustment as described in the Warrant Agreement.

SERIES A EXERCISE PRICE: Initially, $41.34 per Warrant, subject to adjustment as described in the Warrant Agreement.

FORM OF SETTLEMENT:

Full Physical Settlement : If the Common Stock is not listed on a National Securities Exchange on the applicable Exercise Date and Full Physical Settlement is elected, the Company shall deliver, against payment of the Exercise Price therefor, a number of shares of Common Stock equal to the Full Physical Settlement Amount as described in the Warrant Agreement.

Net Share Settlement : If Net Share Settlement is elected, the Warrantholder shall be entitled to receive, without any payment therefor, a number of shares of Common Stock equal to the Net Share Amount as described in the Warrant Agreement.

DATES OF EXERCISE: At any time, and from time to time, prior to 5:00 p.m., New York City time, on the Expiration Date, the Warrantholder shall be entitled to exercise all Warrants then represented hereby and outstanding or any portion thereof.

PROCEDURE FOR EXERCISE: Warrants may be exercised by (a) in the case of a Certificated Warrant, surrendering the Warrant Certificate evidencing such Warrant at the principal office of the Warrant Agent (or successor Warrant Agent), with the Exercise Notice set forth on the reverse of the Warrant Certificate duly completed and executed, together with any applicable transfer taxes, or (b) in the case of a Global Warrant, complying with the procedures established by the Depositary for the exercise of Warrants.

EXPIRATION DATE: October 4, 2022.

 

B-1-1


This Warrant Certificate certifies that [CEDE & CO.] 2 [                      ] 3 , or its registered assigns, is the Warrantholder of the Number of Warrants (the “ Warrants ”) specified above[, as modified in Schedule A hereto,] 4 (such number subject to adjustment from time to time as described in the Warrant Agreement).

In connection with the exercise of any Warrants: (a) in the case of Net Share Settlement, (i) the Company shall determine the Net Share Amount for each Warrant, and (ii) the Company shall, or shall cause the Warrant Agent to, deliver to the exercising Warrantholder, on the applicable Settlement Date, for each Warrant exercised, a number of shares of Common Stock equal to the relevant Net Share Amount, together with cash in lieu of any fractional shares as described in the Warrant Agreement; and (b) in the case of Full Physical Settlement, the Company shall, or shall cause the Warrant Agent to, deliver to the exercising Warrantholder, on the applicable Settlement Date, against payment of the applicable Exercise Price for each Warrant exercised, the Full Physical Settlement Amount as described in the Warrant Agreement.

Prior to the relevant Exercise Date as described more fully in the Warrant Agreement, Warrants will not entitle the Warrantholder to any of the rights of the holders of shares of Common Stock.

Reference is hereby made to the further provisions of this Warrant Certificate set forth on the reverse hereof, and such further provisions shall for all purposes have the same effect as though fully set forth in this place.

This Warrant Certificate shall not be valid unless countersigned by the Warrant Agent.

In the event of any inconsistency between the Warrant Agreement and this Warrant Certificate, the Warrant Agreement shall govern.

 

 

2   Insert for Global Warrant.
3   Insert for Certificated Warrant.
4   Insert for Global Warrant.

 

B-1-2


IN WITNESS WHEREOF, SandRidge Energy, Inc. has caused this instrument to be duly executed.

 

Dated:                                                                           

 

SANDRIDGE ENERGY, INC.
By:  

 

  Name:
  Title:

 

B-1-3


Certificate of Authentication

These are the Warrants referred to in the above-mentioned Warrant Agreement.

Countersigned as of the date above written:

 

AMERICAN STOCK TRANSFER & TRUST COMPANY, LLC , as Warrant Agent
By:  

 

  Authorized Officer
 
 

 

B-1-4


[FORM OF REVERSE OF WARRANT CERTIFICATE]

SANDRIDGE ENERGY, INC.

Series A Warrants

The Warrants evidenced by this Warrant Certificate are part of a duly authorized issue of Warrants issued by the Company pursuant to the Warrant Agreement, dated as of October 4, 2016 (as may be further amended or supplemented from time to time in accordance with its terms, the “ Warrant Agreement ”), between the Company and American Stock Transfer & Trust Company, LLC (the “ Warrant Agent ”), and are subject to the terms and provisions contained in the Warrant Agreement, to all of which terms and provisions each Warrantholder consents by acceptance of this Warrant Certificate or a beneficial interest herein. Without limiting the foregoing, all capitalized terms used herein and not otherwise defined shall have the meanings set forth in the Warrant Agreement. A copy of the Warrant Agreement is on file at the Warrant Agent’s Office.

The Warrant Agreement and the terms of the Warrants are subject to amendment as provided in the Warrant Agreement.

This Warrant Certificate shall be governed by, and interpreted in accordance with, the laws of the State of New York without regard to the conflicts of laws principles thereof.

 

B-1-5


[To be attached if Warrant is a Certificated Warrant]

Exercise Notice

Series A Warrants

American Stock Transfer & Trust Company, LLC

6201 15th Avenue

Brooklyn, New York 11219

Attention: Reorganization Group

Re: SandRidge Energy, Inc. Warrant Agreement

The undersigned (the “ Registered Warrantholder ”) hereby irrevocably exercises                      Warrants (the “ Exercised Warrants ”) and delivers to you herewith a Warrant Certificate or Warrant Certificates, registered in the Registered Warrantholder’s name, representing a Number of Warrants at least equal to the number of Exercised Warrants, pursuant to the following settlement method (check one):

 

  Net Share Settlement

 

  Full Physical Settlement

(Full Physical Settlement may only be elected if the Common Stock is not listed on a National Securities Exchange as of the Exercise Date)

If Full Physical Settlement is elected, the undersigned shall tender payment of the aggregate Exercise Price of $          in immediately available funds in accordance with instructions received from the Warrant Agent.

The Registered Warrantholder hereby directs the Warrant Agent to:

(a) deliver the Full Physical Settlement Amount or Net Share Amount, as applicable, for each of the Exercised Warrants as follows:

                                                                                                                                                                                                      ; and

(b) if the number of Exercised Warrants is less than the Number of Warrants represented by the enclosed Warrant Certificates, to deliver a Warrant Certificate representing the unexercised Warrants to:

 

                                                                                                                                                                                                     

 

B-1-6


Dated:  

 

   

 

      (Registered Warrantholder)
      By:  

 

        Authorized Signature
        Address:
        Telephone:

 

B-1-7


[To Be Attached if Warrant is a Global Warrant]

SCHEDULE A

SCHEDULE OF INCREASES OR DECREASES IN WARRANTS

Series A Warrants

The initial Number of Warrants represented by this Global Warrant is 4,913,251. In accordance with the Warrant Agreement, dated as of October 4, 2016, between the Company and American Stock Transfer & Trust Company, LLC, as Warrant Agent, the following increases or decreases in the Number of Warrants represented by this certificate have been made:

 

Date

 

Amount of increase

in Number of

Warrants evidenced

by this Global

Warrant

 

Amount of decrease

in Number of

Warrants

evidenced by this

Global

Warrant

   Number of
Warrants
evidenced by this
Global Warrant
following

such decrease or
increase
     Signature of
authorized
signatory
 
         
         
         

 

B-1-8


[To Be Attached if Warrant is a Global Warrant or Certificated Warrant]

FORM OF ASSIGNMENT

Series A Warrants

FOR VALUE RECEIVED, the undersigned assigns and transfers the Warrant(s) represented by this Certificate to:

 

                                                                 
Name, Address and Zip Code of Assignee
and irrevocably appoints  

 

  Name of Agent

as its agent to transfer this Warrant Certificate on the books of the Warrant Agent.

[Signature page follows]

 

B-1-9


Dated:  

 

   

 

      Name of Transferee
      By:  

 

        Name:
        Title:

(Sign exactly as your name appears on the other side of this Certificate)

NOTICE: The signature(s) should be guaranteed by an eligible guarantor institution (banks, stockbrokers, savings and loan associations and credit unions with membership in an approved signature guarantee medallion program), pursuant to Rule 17Ad-15 promulgated under the Securities Exchange Act of 1934, as amended.

 

B-1-10


EXHIBIT B-2

FORM OF SERIES B WARRANT CERTIFICATE

[FACE]

SANDRIDGE ENERGY, INC.

Series B Warrants

 

No.             

CUSIP No. 80007P 125

NUMBER OF WARRANTS: Initially, 2,068,690 Warrants, subject to adjustment as described in the Warrant Agreement dated as of October 4, 2016 between SANDRIDGE ENERGY, INC., a Delaware corporation, and AMERICAN STOCK TRANSFER & TRUST COMPANY, LLC, as Warrant Agent (as may be further amended or supplemented from time to time in accordance with its terms, the “ Warrant Agreement ”), each of which is initially exercisable for one share of Common Stock, subject to adjustment as described in the Warrant Agreement.

SERIES B EXERCISE PRICE: Initially, $42.03 per Warrant, subject to adjustment as described in the Warrant Agreement.

FORM OF SETTLEMENT:

Full Physical Settlement : If the Common Stock is not listed on a National Securities Exchange on the applicable Exercise Date and Full Physical Settlement is elected, the Company shall deliver, against payment of the Exercise Price therefor, a number of shares of Common Stock equal to the Full Physical Settlement Amount as described in the Warrant Agreement.

Net Share Settlement : If Net Share Settlement is elected, the Warrantholder shall be entitled to receive, without any payment therefor, a number of shares of Common Stock equal to the Net Share Amount as described in the Warrant Agreement.

DATES OF EXERCISE: At any time, and from time to time, prior to 5:00 p.m., New York City time, on the Expiration Date, the Warrantholder shall be entitled to exercise all Warrants then represented hereby and outstanding or any portion thereof.

PROCEDURE FOR EXERCISE: Warrants may be exercised by (a) in the case of a Certificated Warrant, surrendering the Warrant Certificate evidencing such Warrant at the principal office of the Warrant Agent (or successor Warrant Agent), with the Exercise Notice set forth on the reverse of the Warrant Certificate duly completed and executed, together with any applicable transfer taxes, or (b) in the case of a Global Warrant, complying with the procedures established by the Depositary for the exercise of Warrants.

 

B-2-1


EXPIRATION DATE: October 4, 2022.

This Warrant Certificate certifies that [CEDE & CO.] 5 [                      ] 6 , or its registered assigns, is the Warrantholder of the Number of Warrants (the “ Warrants ”) specified above[, as modified in Schedule A hereto,] 7 (such number subject to adjustment from time to time as described in the Warrant Agreement).

In connection with the exercise of any Warrants: (a) in the case of Net Share Settlement, (i) the Company shall determine the Net Share Amount for each Warrant, and (ii) the Company shall, or shall cause the Warrant Agent to, deliver to the exercising Warrantholder, on the applicable Settlement Date, for each Warrant exercised, a number of shares of Common Stock equal to the relevant Net Share Amount, together with cash in lieu of any fractional shares as described in the Warrant Agreement; and (b) in the case of Full Physical Settlement, the Company shall, or shall cause the Warrant Agent to, deliver to the exercising Warrantholder, on the applicable Settlement Date, against payment of the applicable Exercise Price for each Warrant exercised, the Full Physical Settlement Amount as described in the Warrant Agreement.

Prior to the relevant Exercise Date as described more fully in the Warrant Agreement, Warrants will not entitle the Warrantholder to any of the rights of the holders of shares of Common Stock.

Reference is hereby made to the further provisions of this Warrant Certificate set forth on the reverse hereof, and such further provisions shall for all purposes have the same effect as though fully set forth in this place.

This Warrant Certificate shall not be valid unless countersigned by the Warrant Agent.

In the event of any inconsistency between the Warrant Agreement and this Warrant Certificate, the Warrant Agreement shall govern.

 

 

5   Insert for Global Warrant.
6   Insert for Certificated Warrant.
7   Insert for Global Warrant.

 

B-2-2


IN WITNESS WHEREOF, SandRidge Energy, Inc. has caused this instrument to be duly executed.

 

Dated:                                                                           

 

SANDRIDGE ENERGY, INC.
By:  

 

  Name:
  Title:

 

B-2-3


Certificate of Authentication

These are the Warrants referred to in the above-mentioned Warrant Agreement.

Countersigned as of the date above written:

 

AMERICAN STOCK TRANSFER & TRUST COMPANY, LLC , as Warrant Agent
By:  

 

  Authorized Officer

 

B-2-4


[FORM OF REVERSE OF WARRANT CERTIFICATE]

SANDRIDGE ENERGY, INC.

Series B Warrants

The Warrants evidenced by this Warrant Certificate are part of a duly authorized issue of Warrants issued by the Company pursuant to the Warrant Agreement, dated as of October 4, 2016 (as may be further amended or supplemented from time to time in accordance with its terms, the “ Warrant Agreement ”), between the Company and American Stock Transfer & Trust Company, LLC (the “ Warrant Agent ”), and are subject to the terms and provisions contained in the Warrant Agreement, to all of which terms and provisions each Warrantholder consents by acceptance of this Warrant Certificate or a beneficial interest herein. Without limiting the foregoing, all capitalized terms used herein and not otherwise defined shall have the meanings set forth in the Warrant Agreement. A copy of the Warrant Agreement is on file at the Warrant Agent’s Office.

The Warrant Agreement and the terms of the Warrants are subject to amendment as provided in the Warrant Agreement.

This Warrant Certificate shall be governed by, and interpreted in accordance with, the laws of the State of New York without regard to the conflicts of laws principles thereof.

 

B-2-5


[To be attached if Warrant is a Certificated Warrant]

Exercise Notice

Series B Warrants

American Stock Transfer & Trust Company, LLC

6201 15th Avenue

Brooklyn, New York 11219

Attention: Reorganization Group

Re: SandRidge Energy, Inc. Warrant Agreement

The undersigned (the “ Registered Warrantholder ”) hereby irrevocably exercises                      Warrants (the “ Exercised Warrants ”) and delivers to you herewith a Warrant Certificate or Warrant Certificates, registered in the Registered Warrantholder’s name, representing a Number of Warrants at least equal to the number of Exercised Warrants, pursuant to the following settlement method (check one):

 

  Net Share Settlement

 

  Full Physical Settlement

(Full Physical Settlement may only be elected if the Common Stock is not listed on a National Securities Exchange as of the Exercise Date)

If Full Physical Settlement is elected, the undersigned shall tender payment of the aggregate Exercise Price of $          in immediately available funds in accordance with instructions received from the Warrant Agent.

The Registered Warrantholder hereby directs the Warrant Agent to:

(a) deliver the Full Physical Settlement Amount or Net Share Amount, as applicable, for each of the Exercised Warrants as follows:

                                                                                                                                                                                         ; and

(b) if the number of Exercised Warrants is less than the Number of Warrants represented by the enclosed Warrant Certificates, to deliver a Warrant Certificate representing the unexercised Warrants to:

 

                                                                                                                                                                                        

 

B-2-6


Dated:  

 

   

 

      (Registered Warrantholder)
      By:  

 

        Authorized Signature
        Address:
        Telephone:

 

B-2-7


[To Be Attached if Warrant is a Global Warrant]

SCHEDULE A

SCHEDULE OF INCREASES OR DECREASES IN WARRANTS

Series B Warrants

The initial Number of Warrants represented by this Global Warrant is 2,068,690. In accordance with the Warrant Agreement, dated as of October 4, 2016, between the Company and American Stock Transfer & Trust Company, LLC, as Warrant Agent, the following increases or decreases in the Number of Warrants represented by this certificate have been made:

 

Date

 

Amount of increase

in Number of

Warrants evidenced

by this Global

Warrant

 

Amount of decrease

in Number of

Warrants

evidenced by this

Global

Warrant

   Number of
Warrants
evidenced by this
Global Warrant
following

such decrease or
increase
   Signature of
authorized
signatory

 

B-2-8


[To Be Attached if Warrant is a Global Warrant or Certificated Warrant]

FORM OF ASSIGNMENT

Series B Warrants

FOR VALUE RECEIVED, the undersigned assigns and transfers the Warrant(s) represented by this Certificate to:

 

                                                                 
Name, Address and Zip Code of Assignee
and irrevocably appoints  

 

 

Name of Agent

as its agent to transfer this Warrant Certificate on the books of the Warrant Agent.

[Signature page follows]

 

B-2-9


Dated:    

 

   

 

        Name of Transferee
        By:  

 

          Name:
          Title:

(Sign exactly as your name appears on the other side of this Certificate)

NOTICE: The signature(s) should be guaranteed by an eligible guarantor institution (banks, stockbrokers, savings and loan associations and credit unions with membership in an approved signature guarantee medallion program), pursuant to Rule 17Ad-15 promulgated under the Securities Exchange Act of 1934, as amended.

 

B-2-10


EXHIBIT C

FORM OF COMMON STOCK REQUISITION ORDER

[ Date ]

Via Facsimile [                      ]

SandRidge Energy, Inc.

123 Robert S. Kerr Avenue

Oklahoma City, Oklahoma 73102

Re: DWAC Issuance

Control No.

Ladies and Gentlemen:

You are hereby authorized to issue and deliver the shares of Common Stock as indicated below via DWAC. The shares are being issued to cover the exercise of Warrants under the Warrant Agreement, dated as of October 4, 2016, between the Company and American Stock Transfer & Trust Company, LLC, as Warrant Agent (as may be further amended or supplemented from time to time in accordance with its terms, the “ Warrant Agreement ”). Defined terms used but not defined herein have the meaning assigned to them in the Warrant Agreement.

 

Number of Shares:  

 

 
 

 

  Original Issue or  
 

 

  Transfer from Treasury Account  
Broker Name:  

 

 
Broker’s DTC Number:  

 

 
Contact and Phone:  

 

 

 

C-1


The Broker will initiate the DWAC transaction on (date).

 

Sincerely,

 

AMERICAN STOCK TRANSFER & TRUST COMPANY, LLC , as Warrant Agent

By:  

 

  Name:
  Title:

 

cc: [ Insert name ] via facsimile [ insert fax number ]

Broker

 

C-2

Exhibit 10.8

 

SANDRIDGE ENERGY, INC.

 

 

2016 OMNIBUS INCENTIVE PLAN

 

 

ARTICLE I

PURPOSE

The purpose of this SandRidge Energy, Inc. 2016 Omnibus Incentive Plan is to enhance the profitability and value of the Company for the benefit of its stockholders by enabling the Company to offer Eligible Individuals cash and stock-based incentives in order to attract, retain and reward such individuals and strengthen the mutuality of interests between such individuals and the Company’s stockholders. The Plan is effective as of the date set forth in Article XIV.

ARTICLE II

DEFINITIONS

For purposes of the Plan, the following terms shall have the following meanings:

2.1      Affiliate means each of the following: (a) any Subsidiary; (b) any Parent; (c) any corporation, trade or business (including, without limitation, a partnership or limited liability company) that is directly or indirectly controlled 50% or more (whether by ownership of stock, assets or an equivalent ownership interest or voting interest) by the Company or one of its Affiliates; (d) any trade or business (including, without limitation, a partnership or limited liability company) that directly or indirectly controls 50% or more (whether by ownership of stock, assets or an equivalent ownership interest or voting interest) of the Company; and (e) any other entity in which the Company or any of its Affiliates has a material equity interest and which is designated as an “Affiliate” by resolution of the Committee; provided that, unless otherwise determined by the Committee, the Common Stock subject to any Option constitutes “service recipient stock” for purposes of Section 409A of the Code or otherwise does not subject the Option to Section 409A of the Code.

2.2      Award means any award under the Plan of any Stock Option, Restricted Stock Award, Performance Award, Other Stock-Based Award or Other Cash-Based Award. All Awards shall be granted by, confirmed by, and subject to the terms of, an Award Agreement issued by the Company.

2.3      Award Agreement means the written or electronic agreement setting forth the terms and conditions applicable to an Award.

2.4      Board means the Board of Directors of the Company.

2.5      Cause means, unless otherwise determined by the Committee in the applicable Award Agreement, with respect to a Participant’s Termination of Employment or Termination of Consultancy, the following: (a) in the case where there is no employment agreement, consulting


agreement, change in control agreement or similar agreement in effect between the Company or an Affiliate and the Participant at the time of the grant of the Award (or where there is such an agreement but it does not define “cause” (or words of like import)), termination due to a Participant’s: (i) willful and continued failure to perform Participant’s duties with the Company; (ii) willful and continued failure to follow and comply with the written policies of the Company as in effect from time to time; (iii) willful commission of an act of fraud or dishonesty resulting in economic or financial injury to the Company; (iv) willful engagement in illegal conduct or gross misconduct; (v) willful breach of any agreement with the Company or an Affiliate; or (vi) indictment for, conviction of, or a plea of guilty or nolo contendere to any felony or other crime involving moral turpitude. No act or failure to act will be treated as willful if it is done, or omitted to be done, by the Participant in good faith and with a good faith belief that such act or omission was in the best interests of the Company; or (b) in the case where there is an employment agreement, consulting agreement, change in control agreement or similar agreement in effect between the Company or an Affiliate and the Participant at the time of the grant of the Award that defines “cause” (or words of like import), “cause” as defined under such agreement; provided, however, that with regard to any agreement under which the definition of “cause” only applies on occurrence of a change in control, such definition of “cause” shall not apply until a change in control actually takes place and then only with regard to a termination thereafter. With respect to a Participant’s Termination of Directorship, “cause” means an act or failure to act that constitutes cause for removal of a director under applicable Delaware law.

2.6      Change in Control has the meaning set forth in Section 10.2.

2.7      Change in Control Price has the meaning set forth in Section 10.1.

2.8      Code means the Internal Revenue Code of 1986, as amended. Any reference to any section of the Code shall also be a reference to any successor provision and any Treasury Regulation and other official guidance and regulations promulgated thereunder.

2.9      Committee means any committee of the Board duly authorized by the Board to administer the Plan. If no committee is duly authorized by the Board to administer the Plan, the term “Committee” shall be deemed to refer to the Board for all purposes under the Plan.

2.10      Common Stock means the common stock, $0.01 par value per share, of the Company.

2.11      Company means SandRidge Energy, Inc., a Delaware corporation, and its successors by operation of law.

2.12      Consultant means any natural person who is an advisor or consultant to the Company or its Affiliates.

2.13      Disability means, unless otherwise determined by the Committee in the applicable Award Agreement, with respect to a Participant’s Termination, a permanent and total disability as defined in Section 22(e)(3) of the Code. The Committee shall determine when a Disability has occurred. Notwithstanding the foregoing, for Awards that are subject to Section 409A of the Code, Disability shall mean that a Participant is disabled under Section 409A(a)(2)(C)(i) or (ii) of the Code.

 

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2.14      Effective Date means the effective date of the Plan as defined in Article XIV.

2.15      Eligible Employees means each employee of the Company or an Affiliate.

2.16      Eligible Individual means an Eligible Employee, Non-Employee Director or Consultant who is designated by the Committee in its discretion as eligible to receive Awards subject to the conditions set forth herein.

2.17      Exchange Act means the Securities Exchange Act of 1934, as amended. Reference to a specific section of the Exchange Act or regulation thereunder shall include such section or regulation, any valid regulation or interpretation promulgated under such section, and any comparable provision of any future legislation or regulation amending, supplementing or superseding such section or regulation.

2.18      Fair Market Value means, for purposes of the Plan, unless otherwise provided in an Award Agreement or as required by any applicable provision of the Code or any regulations issued thereunder, as of any date and except as provided below: (a) if the Common Stock is traded, listed or otherwise reported or quoted on a national securities exchange, the last sales price reported for the Common Stock on the applicable date on the principal national securities exchange in the United States on which it is then traded, listed or otherwise reported or quoted; or (b) if the Common Stock is not traded, listed or otherwise reported or quoted on a national securities exchange, the Committee shall determine in good faith the Fair Market Value in whatever manner it considers appropriate, taking into account the requirements of Section 409A of the Code and any other applicable laws, rules or regulations. For purposes of the grant of any Award, the applicable date shall be the trading day immediately prior to the date on which the Award is granted. For purposes of the exercise of any Award, the applicable date shall be the date a notice of exercise is received by the Committee or, if not a day on which the applicable market is open, the next day that it is open.

2.19      Family Member means “family member” as defined in Section A.1.(a)(5) of the general instructions of Form S-8 of the United States Securities and Exchange Commission.

2.20      Good Reason means, unless otherwise determined by the Committee in the applicable Award Agreement, the following: (a) in the case where there is no employment agreement, consulting agreement, change in control agreement or similar agreement in effect between the Company or an Affiliate and the Participant at the time of the grant of the Award (or where there is such an agreement but it does not define “good reason” (or words of like import)), the occurrence, without the Participant’s consent, of either of the following events: (i) any material diminution of the Participant’s title, duties, responsibilities or authorities; or (ii) any breach by the Company or the employing Affiliate, as applicable, of any of its material obligations to the Participant. Prior to resigning for Good Reason, the Participant shall give written notice to the Company or the employing Affiliate, as applicable, of the facts and circumstances claimed to provide a basis for such resignation not more than sixty (60) days following the Participant’s knowledge of such facts and circumstances, and the Company or the employing Affiliate, as applicable, shall have ten (10) business days after receipt of such notice to cure (and if so cured, the Participant shall not be permitted to resign for Good Reason in respect thereof) and the Participant shall resign within ten (10) business days following the Company’s or the employing

 

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Affiliate’s, as applicable, failure to cure; or (b) in the case where there is an employment agreement, consulting agreement, change in control agreement or similar agreement in effect between the Company or an Affiliate and the Participant at the time of the grant of the Award that defines “good reason” (or words of like import), “good reason” as defined under such agreement; provided, however, that with regard to any agreement under which the definition of “good reason” only applies on occurrence of a change in control, such definition of “good reason” shall not apply until a change in control actually takes place and then only with regard to a termination thereafter.

2.21      Incentive Stock Option means any Stock Option awarded to an Eligible Employee of the Company, its Subsidiaries and its Parents (if any) under the Plan intended to be and designated as an “Incentive Stock Option” within the meaning of Section 422 of the Code.

2.22      Lead Underwriter has the meaning set forth in Section 13.19.

2.23      Lock-Up Period has the meaning set forth in Section 13.19.

2.24      Non-Employee Director means a director or a member of the Board of the Company or any Affiliate who is not a then current employee of the Company or any Affiliate.

2.25      Non-Qualified Stock Option means any Stock Option awarded under the Plan that is not an Incentive Stock Option.

2.26      Other Cash-Based Award means an Award granted pursuant to Section 9.3 of the Plan and payable in cash at such time or times and subject to such terms and conditions as determined by the Committee in its sole discretion.

2.27      Other Stock-Based Award means an Award under Article IX of the Plan that is valued in whole or in part by reference to, or is payable in or otherwise based on, Common Stock, including, without limitation, an Award valued by reference to an Affiliate.

2.28      Parent means any parent corporation of the Company within the meaning of Section 424(e) of the Code.

2.29      Participant means an Eligible Individual to whom an Award has been granted pursuant to the Plan.

2.30      Performance Award means an Award granted to a Participant pursuant to Article VIII hereof contingent upon achieving certain Performance Goals.

2.31      Performance Goals means goals established by the Committee as contingencies for Awards to vest and/or become exercisable or distributable based on one or more of the performance goals set forth in Exhibit A hereto.

2.32      Performance Period means the designated period during which the Performance Goals must be satisfied with respect to the Award to which the Performance Goals relate.

 

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2.33      Plan means this SandRidge Energy, Inc. 2016 Omnibus Incentive Plan, as amended from time to time.

2.34      Proceeding has the meaning set forth in Section 13.8.

2.35      Reorganization has the meaning set forth in Section 4.2(b)(ii).

2.36      Restricted Stock means an Award of shares of Common Stock under the Plan that is subject to restrictions under Article VII.

2.37      Restriction Period has the meaning set forth in Section 7.3(a) with respect to Restricted Stock.

2.38      Rule 16b-3 means Rule 16b-3 under Section 16(b) of the Exchange Act as then in effect or any successor provision.

2.39      Section 162(m) of the Code means the exception for performance-based compensation under Section 162(m) of the Code and any applicable Treasury Regulations thereunder.

2.40      Section 409A of the Code means the nonqualified deferred compensation rules under Section 409A of the Code and any applicable Treasury Regulations and other official guidance thereunder.

2.41      Securities Act means the Securities Act of 1933, as amended and all rules and regulations promulgated thereunder. Reference to a specific section of the Securities Act or regulation thereunder shall include such section or regulation, any valid regulation or interpretation promulgated under such section, and any comparable provision of any future legislation or regulation amending, supplementing or superseding such section or regulation.

2.42      Stock Option or Option means any option to purchase shares of Common Stock granted to Eligible Individuals granted pursuant to Article VI.

2.43      Subsidiary means any subsidiary corporation of the Company within the meaning of Section 424(f) of the Code.

2.44      Ten Percent Stockholder means a person owning stock possessing more than ten percent (10%) of the total combined voting power of all classes of stock of the Company, its Subsidiaries or its Parent.

2.45      Termination means a Termination of Consultancy, Termination of Directorship or Termination of Employment, as applicable.

2.46      Termination of Consultancy means: (a) that the Consultant is no longer acting as a consultant to the Company or any of its Affiliates; or (b) when an entity (other than the Company) that is retaining a Participant as a Consultant ceases to be an Affiliate, unless the Participant otherwise is, or thereupon becomes, a Consultant to the Company or another Affiliate at the time the entity ceases to be an Affiliate. In the event that a Consultant becomes an Eligible

 

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Employee or a Non-Employee Director upon the termination of such Consultant’s consultancy, unless otherwise determined by the Committee, in its sole discretion, no Termination of Consultancy shall be deemed to occur until such time as such Consultant is no longer a Consultant, an Eligible Employee or a Non-Employee Director. Notwithstanding the foregoing, the Committee may otherwise define Termination of Consultancy in the Award Agreement or, if no rights of a Participant are reduced, may otherwise define Termination of Consultancy thereafter, provided that any such change to the definition of the term “ Termination of Consultancy ” does not subject the applicable Award to Section 409A of the Code.

2.47      Termination of Directorship means: (a) that the Non-Employee Director has ceased to be a director of the Company or any of its Affiliates; or (b) when an entity (other than the Company) for which the Participant is serving as a Non-Employee Director ceases to be an Affiliate, unless the Participant otherwise is, or thereupon becomes, a Non-Employee Director of the Company or another Affiliate at the time the entity ceases to be an Affiliate.In the event that a Non-Employee Director becomes an Eligible Employee or a Consultant upon the termination of such Non-Employee Director’s directorship, unless otherwise determined by the Committee, in its sole discretion, such Non-Employee Director’s ceasing to be a director of the Company or an Affiliate shall not be treated as a Termination of Directorship, unless and until the Participant has a Termination of Employment or Termination of Consultancy, as the case may be.

2.48      Termination of Employment means: (a) a termination of employment (for reasons other than a military or personal leave of absence granted by the Company) of a Participant from the Company and all of its Affiliates; or (b) when an entity (other than the Company) which is employing a Participant ceases to be an Affiliate, unless the Participant otherwise is, or thereupon becomes, employed by the Company or another Affiliate at the time the entity ceases to be an Affiliate. In the event that an Eligible Employee becomes a Consultant or a Non-Employee Director upon the termination of such Eligible Employee’s employment, unless otherwise determined by the Committee, in its sole discretion, no Termination of Employment shall be deemed to occur until such time as such Eligible Employee is no longer an Eligible Employee, a Consultant or a Non-Employee Director. Notwithstanding the foregoing, the Committee may otherwise define Termination of Employment in the Award Agreement or, if no rights of a Participant are reduced, may otherwise define Termination of Employment thereafter, provided that any such change to the definition of the term “ Termination of Employment ” does not subject the applicable Award to Section 409A of the Code.

2.49      Transfer means: (a) when used as a noun, any direct or indirect transfer, sale, assignment, pledge, hypothecation, encumbrance or other disposition (including the issuance of equity in any entity), whether for value or no value and whether voluntary or involuntary (including by operation of law), and (b) when used as a verb, to directly or indirectly transfer, sell, assign, pledge, encumber, charge, hypothecate or otherwise dispose of (including the issuance of equity in any entity) whether for value or for no value and whether voluntarily or involuntarily (including by operation of law). “ Transferred ” and “ Transferable ” shall have a correlative meaning.

 

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ARTICLE III

ADMINISTRATION

3.1      The Committee . The Plan shall be administered and interpreted by the Committee. Each member of the Committee shall qualify as (a) a “non-employee director” under Rule 16b-3, (b) an “outside director” under Section 162(m) of the Code and (c) an “independent director” under the rules of any national securities exchange or national securities association, as applicable. If it is later determined that one or more members of the Committee do not so qualify, actions taken by the Committee prior to such determination shall be valid despite such failure to qualify.

3.2      Grants of Awards . The Committee shall have full authority to grant, pursuant to the terms of the Plan, to Eligible Individuals: (i) Stock Options, (ii) Restricted Stock, (iii) Performance Awards; (iv) Other Stock-Based Awards; and (v) Other Cash-Based Awards. In particular, the Committee shall have the authority:

(a)    to select the Eligible Individuals to whom Awards may from time to time be granted hereunder;

(b)    to determine whether and to what extent Awards, or any combination thereof, are to be granted hereunder to one or more Eligible Individuals;

(c)    to determine the number of shares of Common Stock to be covered by each Award granted hereunder;

(d)    to determine the terms and conditions, not inconsistent with the terms of the Plan, of any Award granted hereunder (including, but not limited to, the exercise or purchase price (if any), any restriction or limitation, any vesting schedule or acceleration thereof, or any forfeiture restrictions or waiver thereof, regarding any Award and the shares of Common Stock relating thereto, based on such factors, if any, as the Committee shall determine, in its sole discretion);

(e)    to determine the amount of cash to be covered by each Award granted hereunder;

(f)    to determine whether, to what extent and under what circumstances grants of Options and other Awards under the Plan are to operate on a tandem basis and/or in conjunction with or apart from other awards made by the Company outside of the Plan;

(g)    to determine whether and under what circumstances a Stock Option may be settled in cash, Common Stock and/or Restricted Stock under Section 6.4(d);

(h)    to determine whether a Stock Option is an Incentive Stock Option or Non-Qualified Stock Option;

(i)    to impose a “blackout” period during which Options may not be exercised;

 

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(j)    to determine whether to require a Participant, as a condition of the granting of any Award, to not sell or otherwise dispose of shares of Common Stock acquired pursuant to the exercise of an Award for a period of time as determined by the Committee, in its sole discretion, following the date of the acquisition of such Award;

(k)    to modify, extend or renew an Award, subject to Article XI and Section 6.4(l), provided, however, that such action does not subject the Award to Section 409A of the Code without the consent of the Participant; and

(l)    solely to the extent permitted by applicable law, to determine whether, to what extent and under what circumstances to provide loans (which may be on a recourse basis and shall bear interest at the rate the Committee shall provide) to Participants in order to exercise Options under the Plan.

For the sake of clarity and to the extent permitted by applicable law, the Board or the Committee may delegate to an officer of the Company the authority to make Awards hereunder.

3.3      Guidelines . Subject to Article XI hereof, the Committee shall have the authority to adopt, alter and repeal such administrative rules, guidelines and practices governing the Plan and perform all acts, including the delegation of its responsibilities (to the extent permitted by applicable law and applicable stock exchange rules), as it shall, from time to time, deem advisable; to construe and interpret the terms and provisions of the Plan and any Award issued under the Plan (and any Award Agreements relating thereto); and to otherwise supervise the administration of the Plan. The Committee may correct any defect, supply any omission or reconcile any inconsistency in the Plan or in any agreement relating thereto in the manner and to the extent it shall deem necessary to effectuate the purpose and intent of the Plan. The Committee may adopt special guidelines and provisions for persons who are residing in or employed in, or subject to, the taxes of, any domestic or foreign jurisdictions to comply with applicable tax and securities laws of such domestic or foreign jurisdictions. Notwithstanding the foregoing, no action of the Committee under this Section 3.3 shall impair the rights of any Participant without the Participant’s consent. To the extent applicable, the Plan is intended to comply with the applicable requirements of Rule 16b-3, and with respect to Awards intended to be “performance-based,” the applicable provisions of Section 162(m) of the Code, and the Plan shall be limited, construed and interpreted in a manner so as to comply therewith.

3.4      Decisions Final . Any decision, interpretation or other action made or taken in good faith by or at the direction of the Company, the Board or the Committee (or any of its members) arising out of or in connection with the Plan shall be within the absolute discretion of all and each of them, as the case may be, and shall be final, binding and conclusive on the Company and all employees and Participants and their respective heirs, executors, administrators, successors and assigns.

3.5      Delegations and Designations/Liability .

(a)    The Committee may designate employees of the Company and professional advisors to assist the Committee in the administration of the Plan and (to the extent permitted by applicable law and applicable exchange rules) may grant authority to officers to grant Awards and/or execute agreements or other documents on behalf of the Committee.

 

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(b)    The Committee may employ such legal counsel, consultants and agents as it may deem desirable for the administration of the Plan and may rely upon any opinion received from any such counsel or consultant and any computation received from any such consultant or agent. Expenses incurred by the Committee or the Board in the engagement of any such counsel, consultant or agent shall be paid by the Company. The Committee, its members and any person designated or granted authority pursuant to sub-section (a) above shall not be liable for any action or determination made in good faith with respect to the Plan. To the maximum extent permitted by applicable law, no officer or employee of the Company or its Affiliates or member or former member of the Committee or of the Board shall be liable for any action or determination made in good faith with respect to the Plan or any Award granted under it.

ARTICLE IV

SHARE LIMITATION

4.1      Shares . (a) The aggregate number of shares of Common Stock that may be issued or used for reference purposes or with respect to which Awards may be granted under the Plan shall not exceed 4,597,163 shares (subject to any increase or decrease pursuant to Section 4.2) (the “ Share Reserve ”), which may be either authorized and unissued Common Stock or Common Stock held in or acquired for the treasury of the Company or both. The maximum number of shares of Common Stock with respect to which Incentive Stock Options may be granted under the Plan shall be equal to the Share Reserve. If any Option or Other Stock-Based Award granted under the Plan expires, terminates or is canceled for any reason without having been exercised in full, the number of shares of Common Stock underlying any unexercised Award shall again be available for the purpose of Awards under the Plan. If any shares of Restricted Stock, Performance Awards or Other Stock-Based Awards denominated in shares of Common Stock awarded under the Plan to a Participant are forfeited for any reason, including in connection with the satisfaction of minimum withholding tax obligations as described in Section 13.4 below, the number of forfeited shares of Restricted Stock, Performance Awards or Other Stock-Based Awards denominated in shares of Common Stock shall again be available for purposes of Awards under the Plan. Any Award under the Plan settled in cash shall not be counted against the foregoing maximum share limitation. The maximum grant date fair value of all Awards granted to any director during any calendar year shall not exceed $750,000.

(b)     Individual Participant Limitations . To the extent required by Section 162(m) of the Code for Awards under the Plan to qualify as “performance-based compensation,” the following individual Participant limitations shall apply:

(i)    The maximum number of shares of Common Stock subject to any Award of Stock Options, or shares of Restricted Stock, or Other Stock-Based Awards for which the grant of such Award or the lapse of the relevant Restriction Period is subject to the attainment of Performance Goals in accordance with Section 7.3(a)(ii) which may be granted under the Plan during any fiscal year of the Company to any Participant shall be 500,000 shares per type of Award (which shall be subject to increase or decrease pursuant to Section 4.2), provided that the maximum number of shares of Common Stock for all such types of Awards to any Participant does not exceed 500,000 shares (which shall be subject to increase or decrease pursuant to Section 4.2) during any fiscal year of the Company.

 

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(ii)    There are no annual individual share limitations applicable to Participants on Restricted Stock or Other Stock-Based Awards for which the grant, vesting or payment (as applicable) of any such Award is not subject to the attainment of Performance Goals.

(iii)    The maximum number of shares of Common Stock subject to any Performance Award that may be granted under the Plan during any fiscal year of the Company to any Participant shall be 500,000 shares (which shall be subject to any further increase or decrease pursuant to Section 4.2) with respect to any fiscal year of the Company.

(iv)    The maximum value of a cash payment made under a Performance Award which may be granted under the Plan with respect to any fiscal year of the Company to any Participant shall be $2,000,000, if the Performance Period is limited to a single fiscal year, and $6,000,000, if the Performance Period spans multiple fiscal years.

(v)    The individual Participant limitations set forth in this Section 4.1(b) (other than Section 4.1(b)(iii)) shall be cumulative; that is, to the extent that shares of Common Stock for which Awards are permitted to be granted to a Participant during a fiscal year are not covered by an Award to such Participant in a fiscal year, the number of shares of Common Stock available for Awards to such Participant shall automatically increase in the subsequent fiscal years during the term of the Plan until used.

4.2      Changes .

(a)    The existence of the Plan and the Awards granted hereunder shall not affect in any way the right or power of the Board or the stockholders of the Company to make or authorize (i) any adjustment, recapitalization, reorganization or other change in the Company’s capital structure or its business, (ii) any merger or consolidation of the Company or any Affiliate, (iii) any issuance of bonds, debentures, preferred or prior preference stock ahead of or affecting the Common Stock, (iv) the dissolution or liquidation of the Company or any Affiliate, (v) any sale or transfer of all or part of the assets or business of the Company or any Affiliate or (vi) any other corporate act or proceeding.

(b)    Subject to the provisions of Section 10.1:

(i)    If the Company at any time subdivides (by any split, recapitalization or otherwise) the outstanding Common Stock into a greater number of shares of Common Stock, or combines (by reverse split, combination or otherwise) its outstanding Common Stock into a lesser number of shares of Common Stock, then the respective exercise prices for outstanding Awards that provide for a Participant elected exercise and the number of shares of Common Stock covered by outstanding Awards shall be appropriately adjusted by the Committee to prevent dilution or enlargement of the rights granted to, or available for, Participants under the Plan.

(ii)    Excepting transactions covered by Section 4.2(b)(i), if the Company effects any merger, consolidation, statutory exchange, spin-off, reorganization, sale or

 

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transfer of all or substantially all the Company’s assets or business, or other corporate transaction or event in such a manner that the Company’s outstanding shares of Common Stock are converted into the right to receive (or the holders of Common Stock are entitled to receive in exchange therefor), either immediately or upon liquidation of the Company, securities or other property of the Company or other entity (each, a Reorganization ), then, subject to the provisions of Section 10.1, (A) the aggregate number or kind of securities that thereafter may be issued under the Plan, (B) the number or kind of securities or other property (including cash) to be issued pursuant to Awards granted under the Plan (including as a result of the assumption of the Plan and the obligations hereunder by a successor entity, as applicable), or (C) the purchase price thereof, shall be appropriately adjusted by the Committee to prevent dilution or enlargement of the rights granted to, or available for, Participants under the Plan.

(iii)    If there shall occur any change in the capital structure of the Company other than those covered by Section 4.2(b)(i) or 4.2(b)(ii), including by reason of any extraordinary dividend (whether cash or equity), any conversion, any adjustment, any issuance of any class of securities convertible or exercisable into, or exercisable for, any class of equity securities of the Company, then the Committee shall adjust any Award and make such other adjustments to the Plan to prevent dilution or enlargement of the rights granted to, or available for, Participants under the Plan.

(iv)    Any such adjustment determined by the Committee pursuant to this Section 4.2(b) shall be final, binding and conclusive on the Company and all Participants and their respective heirs, executors, administrators, successors and permitted assigns. Any adjustment to, or assumption or substitution of, an Award under this Section 4.2(b) shall be intended to comply with the requirements of Section 409A of the Code and Treasury Regulation §1.424-1 (and any amendments thereto), to the extent applicable. Except as expressly provided in this Section 4.2 or in the applicable Award Agreement, a Participant shall have no additional rights under the Plan by reason of any transaction or event described in this Section 4.2.

(v)    Fractional shares of Common Stock resulting from any adjustment in Awards pursuant to Section 4.2(a) or this Section 4.2(b) shall be aggregated until, and eliminated at, the time of exercise or payment by rounding-down for fractions less than one-half and rounding-up for fractions equal to or greater than one-half. No cash settlements shall be required with respect to fractional shares eliminated by rounding. Notice of any adjustment shall be given by the Committee to each Participant whose Award has been adjusted and such adjustment (whether or not such notice is given) shall be effective and binding for all purposes of the Plan.

4.3      Minimum Purchase Price . Notwithstanding any provision of the Plan to the contrary, if authorized but previously unissued shares of Common Stock are issued under the Plan, such shares shall not be issued for a consideration that is less than as permitted under applicable law.

 

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ARTICLE V

ELIGIBILITY

5.1      General Eligibility . All current and prospective Eligible Individuals are eligible to be granted Awards. Eligibility for the grant of Awards and actual participation in the Plan shall be determined by the Committee in its sole discretion.

5.2      Incentive Stock Options . Notwithstanding the foregoing, only Eligible Employees of the Company, its Subsidiaries and its Parent (if any) are eligible to be granted Incentive Stock Options under the Plan. Eligibility for the grant of an Incentive Stock Option and actual participation in the Plan shall be determined by the Committee in its sole discretion.

5.3      General Requirement . The vesting and exercise of Awards granted to a prospective Eligible Individual are conditioned upon such individual actually becoming an Eligible Employee, Consultant or Non-Employee Director, respectively.

ARTICLE VI

STOCK OPTIONS

6.1      Options . Stock Options may be granted alone or in addition to other Awards granted under the Plan. Each Stock Option granted under the Plan shall be of one of two types: (a) an Incentive Stock Option or (b) a Non-Qualified Stock Option.

6.2      Grants . The Committee shall have the authority to grant to any Eligible Employee one or more Incentive Stock Options, Non-Qualified Stock Options, or both types of Stock Options, in each case, pursuant to an Award Agreement. The Committee shall have the authority to grant any Consultant or Non-Employee Director one or more Non-Qualified Stock Options. To the extent that any Stock Option does not qualify as an Incentive Stock Option (whether because of its provisions or the time or manner of its exercise or otherwise), such Stock Option or the portion thereof which does not so qualify shall constitute a separate Non-Qualified Stock Option.

6.3      Incentive Stock Options . Notwithstanding anything in the Plan to the contrary, no term of the Plan relating to Incentive Stock Options shall be interpreted, amended or altered, nor shall any discretion or authority granted under the Plan be so exercised, so as to disqualify the Plan under Section 422 of the Code, or, without the consent of the Participants affected, to disqualify any Incentive Stock Option under such Section 422.

6.4      Terms of Options . Options granted under the Plan shall be subject to the following terms and conditions and shall be in such form and contain such additional terms and conditions, not inconsistent with the terms of the Plan, as the Committee shall deem desirable, including those set forth in an Award Agreement:

(a)     Exercise Price . The exercise price per share of Common Stock subject to a Stock Option shall be determined by the Committee at the time of grant, provided that the per share exercise price of a Stock Option shall not be less than 100% (or, in the case of an Incentive Stock Option granted to a Ten Percent Stockholder, 110%) of the Fair Market Value of the Common Stock at the time of grant.

 

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(b)     Stock Option Term . The term of each Stock Option shall be fixed by the Committee, provided that no Stock Option shall be exercisable more than 10 years after the date the Option is granted; and provided further that the term of an Incentive Stock Option granted to a Ten Percent Stockholder shall not exceed five years.

(c)     Exercisability . Unless otherwise provided by the Committee in accordance with the provisions of this Section 6.4, Stock Options granted under the Plan shall be exercisable at such time or times and subject to such terms and conditions as shall be determined by the Committee at the time of grant. If the Committee provides, in its discretion, that any Stock Option is exercisable subject to certain limitations (including, without limitation, that such Stock Option is exercisable only in installments or within certain time periods), the Committee may waive such limitations on the exercisability at any time at or after the time of grant in whole or in part (including, without limitation, waiver of the installment exercise provisions or acceleration of the time at which such Stock Option may be exercised), based on such factors, if any, as the Committee shall determine, in its sole discretion.

(d)     Method of Exercise . Subject to whatever installment exercise and waiting period provisions apply under Section 6.4(c), to the extent vested, Stock Options may be exercised in whole or in part at any time during the Option term, by giving written notice of exercise to the Company (or to its agent specifically designated for such purpose) specifying the number of shares of Common Stock to be purchased (which notice may be provided in an electronic form to the extent acceptable to the Committee and the Company). Such notice shall be accompanied by payment in full of the purchase price as follows: (i) in cash or by check, bank draft or money order payable to the order of the Company; (ii) solely to the extent permitted by applicable law, if the Common Stock is traded on a national securities exchange, and the Committee authorizes, through a procedure whereby the Participant delivers irrevocable instructions to a broker reasonably acceptable to the Committee to deliver promptly to the Company shares of Common Stock with an aggregate value equal to the purchase price; (iii) by having the Company withhold shares of Common Stock issuable upon exercise of the Stock Option; or (iv) on such other terms and conditions as may be acceptable to the Committee (including, without limitation, with the consent of the Committee, by payment in full or in part in the form of Common Stock owned by the Participant, based on the Fair Market Value of the Common Stock on the payment date as determined by the Committee). No shares of Common Stock shall be issued until payment therefor, as provided herein, has been made or provided for.

(e)     Non-Transferability of Options . No Stock Option shall be Transferable by the Participant other than by will or by the laws of descent and distribution, and all Stock Options shall be exercisable, during the Participant’s lifetime, only by the Participant. Notwithstanding the foregoing, the Committee may determine, in its sole discretion, at the time of grant or thereafter that a Non-Qualified Stock Option that is otherwise not Transferable pursuant to this Section is Transferable to a Family Member in whole or in part and in such circumstances, and under such conditions, as specified by the Committee. A Non-Qualified Stock Option that is Transferred to a Family Member pursuant to the preceding sentence (i) may not be subsequently Transferred other than by will or by the laws of descent and distribution; (ii) remains subject to the terms of the Plan and the applicable Award Agreement; and (iii) may be exercised by such Family Member. Any shares of Common Stock acquired upon the exercise of a Non-Qualified Stock Option by a permissible transferee of a Non-Qualified Stock Option or a permissible transferee pursuant to a Transfer after the exercise of the Non-Qualified Stock Option shall be subject to the terms of the Plan and the applicable Award Agreement.

 

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(f)     Termination by Death or Disability . Unless otherwise determined by the Committee at the time of grant, or if no rights of the Participant are reduced, thereafter, if a Participant’s Termination is by reason of death or Disability, all Stock Options that are held by such Participant that are vested and exercisable at the time of the Participant’s Termination may be exercised by the Participant (or in the case of the Participant’s death, by the legal representative of the Participant’s estate) at any time within a period of one (1) year from the date of such Termination, but in no event beyond the expiration of the stated term of such Stock Options; provided, however, that, in the event of a Participant’s Termination by reason of Disability, if the Participant dies within such exercise period, all unexercised Stock Options held by such Participant shall thereafter be exercisable, to the extent to which they were exercisable at the time of death, for a period of one (1) year from the date of such death, but in no event beyond the expiration of the stated term of such Stock Options.

(g)     Involuntary Termination Without Cause . Unless otherwise determined by the Committee at the time of grant, or if no rights of the Participant are reduced, thereafter, if a Participant’s Termination is by involuntary termination by the Company without Cause, all Stock Options that are held by such Participant that are vested and exercisable at the time of the Participant’s Termination may be exercised by the Participant at any time within a period of ninety (90) days from the date of such Termination, but in no event beyond the expiration of the stated term of such Stock Options.

(h)     Voluntary Resignation . Unless otherwise determined by the Committee at the time of grant, or if no rights of the Participant are reduced, thereafter, if a Participant’s Termination is voluntary (other than a voluntary termination described in Section 6.4(i)(y) hereof), all Stock Options that are held by such Participant that are vested and exercisable at the time of the Participant’s Termination may be exercised by the Participant at any time within a period of thirty (30) days from the date of such Termination, but in no event beyond the expiration of the stated term of such Stock Options.

(i)     Termination for Cause . Unless otherwise determined by the Committee at the time of grant, or if no rights of the Participant are reduced, thereafter, if a Participant’s Termination (x) is for Cause or (y) is a voluntary Termination (as provided in Section 6.4(h)) after the occurrence of an event that would be grounds for a Termination for Cause, all Stock Options, whether vested or not vested, that are held by such Participant shall thereupon terminate and expire as of the date of such Termination.

(j)     Unvested Stock Options . Unless otherwise determined by the Committee at the time of grant, or if no rights of the Participant are reduced, thereafter, Stock Options that are not vested as of the date of a Participant’s Termination for any reason shall terminate and expire as of the date of such Termination.

(k)     Incentive Stock Option Limitations . To the extent that the aggregate Fair Market Value (determined as of the time of grant) of the Common Stock with respect to which Incentive Stock Options are exercisable for the first time by an Eligible Employee during any

 

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calendar year under the Plan and/or any other stock option plan of the Company, any Subsidiary or any Parent exceeds $100,000, such Options shall be treated as Non-Qualified Stock Options.In addition, if an Eligible Employee does not remain employed by the Company, any Subsidiary or any Parent at all times from the time an Incentive Stock Option is granted until three months prior to the date of exercise thereof (or such other period as required by applicable law), such Stock Option shall be treated as a Non-Qualified Stock Option. Should any provision of the Plan not be necessary in order for the Stock Options to qualify as Incentive Stock Options, or should any additional provisions be required, the Committee may amend the Plan accordingly, without the necessity of obtaining the approval of the stockholders of the Company.

(l)     Form, Modification, Extension and Renewal of Stock Options . Subject to the terms and conditions and within the limitations of the Plan, including those set forth in the following sentence, Stock Options shall be evidenced by such form of agreement or grant as is approved by the Committee, and the Committee may (i) modify, extend or renew outstanding Stock Options granted under the Plan ( provided that the rights of a Participant are not reduced without such Participant’s consent and provided , further , that such action does not subject the Stock Options to Section 409A of the Code without the consent of the Participant), and (ii) accept the surrender of outstanding Stock Options (to the extent not theretofore exercised) and authorize the granting of new Stock Options or other Awards in substitution therefor (to the extent not theretofore exercised). Notwithstanding the foregoing, except in connection with a corporate transaction involving the Company in accordance with Section 4.2 (including, without limitation, any stock dividend, stock split, extraordinary cash dividend, recapitalization, reorganization, merger, consolidation, split-up, spin-off, combination, or exchange of shares), an outstanding Stock Option may not be modified to reduce the exercise price thereof nor may a new Stock Option at a lower price be substituted for a surrendered Stock Option, unless such action is approved by the stockholders of the Company.

(m)     Early Exercise . The Committee may provide that a Stock Option include a provision whereby the Participant may elect at any time before the Participant’s Termination to exercise the Stock Option as to any part or all of the shares of Common Stock subject to the Stock Option prior to the full vesting of the Stock Option, and such shares shall be subject to the provisions of Article VII and be treated as Restricted Stock, which will remain subject to the original vesting schedule applicable to the predecessor Stock Option. Unvested shares of Common Stock so purchased may be subject to a repurchase option in favor of the Company or to any other restriction the Committee determines to be appropriate.

(n)     Other Terms and Conditions . The Committee may include a provision in an Award Agreement providing for the automatic exercise of a Non-Qualified Stock Option on a cashless basis on the last day of the term of such Option if the Participant has failed to exercise the Non-Qualified Stock Option as of such date, with respect to which the Fair Market Value of the shares of Common Stock underlying the Non-Qualified Stock Option exceeds the exercise price of such Non-Qualified Stock Option on the date of expiration of such Option, subject to Section 13.4. Stock Options may contain such other provisions, which shall not be inconsistent with any of the terms of the Plan, as the Committee shall deem appropriate. The recipient of a Stock Option under this Article VI shall not be entitled to receive, currently or on a deferred basis, dividends or dividend equivalents in respect of the number of shares of Common Stock covered by the Stock Option. The Company will evidence each Participant’s ownership of Common Stock

 

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issued upon exercise of a Stock Option pursuant to a designated system, such as book entries by the transfer agent; if a stock certificate for such shares of Common Stock is issued, it will be substantially in the form set forth in Section 7.2(c).

ARTICLE VII

RESTRICTED STOCK

7.1      Awards of Restricted Stock . Shares of Restricted Stock may be issued either alone or in addition to other Awards granted under the Plan. The Committee shall determine the Eligible Individuals, to whom, and the time or times at which, grants of Restricted Stock shall be made, the number of shares to be awarded, the price (if any) to be paid by the Participant (subject to Section 7.2), the time or times within which such Awards may be subject to forfeiture, the vesting schedule and rights to acceleration thereof, and all other terms and conditions of the Awards.

The Committee may condition the grant or vesting of Restricted Stock upon the attainment of specified performance targets (including, the Performance Goals) or such other factor as the Committee may determine in its sole discretion, including to comply with the requirements of Section 162(m) of the Code.

7.2      Awards and Certificates . If required by the Award Agreement, Eligible Individuals selected to receive Restricted Stock shall not have any right with respect to such Award, unless and until such Participant has complied with all of the applicable terms and conditions of such Award. Further, such Award shall be subject to the following conditions:

(a)     Purchase Price . The purchase price of Restricted Stock shall be fixed by the Committee. Subject to Section 4.3, the purchase price for shares of Restricted Stock may be zero to the extent permitted by applicable law, and, to the extent not so permitted, such purchase price may not be less than par value.

(b)     Acceptance . Awards of Restricted Stock must be accepted within a period of 60 days (or such shorter period as the Committee may specify at grant) after the grant date, by the Participant executing the Restricted Stock Award Agreement (if required by the Committee) and paying whatever price (if any) the Committee has designated thereunder.

(c)     Legend . The Company will evidence each Participant’s ownership of Restricted Stock pursuant to a designated system, such as book entries by the transfer agent. If a stock certificate for such shares of Restricted Stock is issued, such certificate shall be registered in the name of such Participant, and shall, in addition to such legends required by applicable securities laws, bear an appropriate legend referring to the terms, conditions, and restrictions applicable to such Award, substantially in the following form:

“The anticipation, alienation, attachment, sale, transfer, assignment, pledge, encumbrance or charge of the shares of stock represented hereby are subject to the terms and conditions (including forfeiture) of the SandRidge Energy, Inc. (the “ Company ”) 2016 Omnibus Incentive Plan (the “ Plan ”) and an Agreement entered into between the registered owner and the Company dated                 . Copies of such Plan and Agreement are on file at the principal office of the Company.”

 

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(d)     Custody . If stock certificates are issued in respect of shares of Restricted Stock, the Committee may require that any stock certificates evidencing such shares be held in custody by the Company until the restrictions thereon shall have lapsed, and that, as a condition of any grant of Restricted Stock, the Participant shall have delivered a duly signed stock power or other instruments of assignment (including a power of attorney), each endorsed in blank with a guarantee of signature if deemed necessary or appropriate by the Company, which would permit transfer to the Company of all or a portion of the shares subject to the Restricted Stock Award in the event that such Award is forfeited in whole or part or otherwise transferred to the Company.

7.3      Restrictions and Conditions . The shares of Restricted Stock awarded pursuant to the Plan shall be subject to the following restrictions and conditions:

(a)     Restriction Period . (i) The Participant shall not be permitted to Transfer shares of Restricted Stock awarded under the Plan during the period or periods set by the Committee (the “ Restriction Period ”) commencing on the date of such Award, as set forth in the Restricted Stock Award Agreement and such agreement shall set forth a vesting schedule and any event that would accelerate vesting of the shares of Restricted Stock. Within these limits, based on service, attainment of Performance Goals pursuant to Section 7.3(a)(ii) and/or such other factors or criteria as the Committee may determine in its sole discretion, the Committee may condition the grant or provide for the lapse of such restrictions in installments in whole or in part, or may accelerate the vesting of all or any part of any Restricted Stock Award and/or waive the deferral limitations for all or any part of any Restricted Stock Award.

(ii)    If the grant of shares of Restricted Stock or the lapse of restrictions is based on the attainment of Performance Goals, the Committee shall establish the objective Performance Goals and the applicable vesting percentage of the Restricted Stock applicable to each Participant or class of Participants in writing prior to the beginning of the applicable fiscal year or at such later date as otherwise determined by the Committee and while the outcome of the Performance Goals are substantially uncertain. Such Performance Goals may incorporate provisions for disregarding (or adjusting for) changes in accounting methods, corporate transactions (including, without limitation, dispositions and acquisitions) and other similar type events or circumstances. With regard to a Restricted Stock Award that is intended to comply with Section 162(m) of the Code, to the extent that any such provision would create impermissible discretion under Section 162(m) of the Code or otherwise violate Section 162(m) of the Code, such provision shall be of no force or effect.

(b)     Rights as a Stockholder . Except as provided in Section 7.3(a) and this Section 7.3(b) or as otherwise determined by the Committee in an Award Agreement, the Participant shall have, with respect to the shares of Restricted Stock, all of the rights of a holder of shares of Common Stock of the Company, including, without limitation, the right to receive dividends (the payment of which may be deferred until, and conditioned upon, the expiration of the applicable Restriction Period, as determined in the Committee’s sole discretion), the right to vote such shares and, subject to and conditioned upon the full vesting of shares of Restricted Stock, the right to tender such shares.

 

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(c)     Termination . Unless otherwise determined by the Committee at grant or, if no rights of the Participant are reduced, thereafter, subject to the applicable provisions of the Award Agreement and the Plan, upon a Participant’s Termination for any reason during the relevant Restriction Period, all Restricted Stock still subject to restriction will be forfeited in accordance with the terms and conditions established by the Committee at grant or thereafter.

(d)     Lapse of Restrictions . If and when the Restriction Period expires without a prior forfeiture of the shares of Restricted Stock, such earned shares (and to the extent ownership of such shares is evidenced by stock certificates, the stock certificates for such shares) shall be delivered to the Participant. All legends shall be removed from said certificates at the time of delivery to the Participant, except as otherwise required by applicable law or other limitations imposed by the Committee.

ARTICLE VIII

PERFORMANCE AWARDS

8.1      Performance Awards . The Committee may grant a Performance Award to a Participant payable upon the attainment of specific Performance Goals. The Committee may grant Performance Awards that are intended to qualify as “performance-based compensation” under Section 162(m) of the Code, as well as Performance Awards that are not intended to qualify as “performance-based compensation” under Section 162(m) of the Code. If the Performance Award is payable in shares of Restricted Stock, such shares shall be transferable to the Participant only upon attainment of the relevant Performance Goal in accordance with Article VII. If the Performance Award is payable in cash, it may be paid upon the attainment of the relevant Performance Goals either in cash or in shares of Restricted Stock (based on the then current Fair Market Value of such shares), as determined by the Committee, in its sole and absolute discretion. Each Performance Award shall be evidenced by an Award Agreement in such form that is not inconsistent with the Plan and that the Committee may from time to time approve. With respect to Performance Awards that are intended to qualify as “performance-based compensation” under Section 162(m) of the Code, the Committee shall condition the right to payment of any Performance Award upon the attainment of objective Performance Goals established pursuant to Section 8.2(c).

8.2      Terms and Conditions . Performance Awards awarded pursuant to this Article VIII shall be subject to the following terms and conditions:

(a)     Earning of Performance Award . At the expiration of the applicable Performance Period, the Committee shall determine the extent to which the Performance Goals established pursuant to Section 8.2(c) are achieved and the percentage of each Performance Award that has been earned.

(b)     Non-Transferability . Subject to the applicable provisions of the Award Agreement and the Plan, Performance Awards may not be Transferred during the Performance Period.

(c)     Objective Performance Goals, Formulae or Standards . With respect to Performance Awards that are intended to qualify as “performance-based compensation” under

 

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Section 162(m) of the Code, the Committee shall establish the objective Performance Goals for the earning of Performance Awards based on a Performance Period applicable to each Participant or class of Participants in writing prior to the beginning of the applicable Performance Period or at such later date as permitted under Section 162(m) of the Code and while the outcome of the Performance Goals are substantially uncertain. Such Performance Goals may incorporate, if and only to the extent permitted under Section 162(m) of the Code, provisions for disregarding (or adjusting for) changes in accounting methods, corporate transactions (including, without limitation, dispositions and acquisitions) and other similar type events or circumstances. To the extent that any such provision would create impermissible discretion under Section 162(m) of the Code or otherwise violate Section 162(m) of the Code, such provision shall be of no force or effect, with respect to Performance Awards that are intended to qualify as “performance-based compensation” under Section 162(m) of the Code.

(d)     Dividends . To the extent determined by the Committee, Participants shall be entitled to receive an amount equal to the dividends paid on the number of shares of Common Stock covered by the Performance Award; provided that the Committee may, in its sole discretion, provide for either of the following at the time of grant: (i) dividends or dividend equivalents will be paid as accrued but will be subject to the same vesting terms and conditions as the underlying Performance Award; or (ii) payment of dividends or dividend equivalents shall be deferred until, and conditioned upon, settlement of the underlying Performance Award.

(e)     Payment . Following the Committee’s determination in accordance with Section 8.2(a), the Company shall settle Performance Awards, in such form (including, without limitation, in shares of Common Stock or in cash) as determined by the Committee, in an amount equal to such Participant’s earned Performance Awards. Notwithstanding the foregoing, the Committee may, in its sole discretion, award an amount less than the earned Performance Awards and/or subject the payment of all or part of any Performance Award to additional vesting, forfeiture and deferral conditions as it deems appropriate.

(f)     Termination . Subject to the applicable provisions of the Award Agreement and the Plan, upon a Participant’s Termination for any reason during the Performance Period for a given Performance Award, the Performance Award in question will vest or be forfeited in accordance with the terms and conditions established by the Committee at grant.

(g)     Accelerated Vesting . Based on service, performance and/or such other factors or criteria, if any, as the Committee may determine, the Committee may, at or after grant, accelerate the vesting of all or any part of any Performance Award.

ARTICLE IX

OTHER STOCK-BASED AND CASH-BASED AWARDS

9.1      Other Stock-Based Awards . The Committee is authorized to grant to Eligible Individuals Other Stock-Based Awards that are payable in, valued in whole or in part by reference to, or otherwise based on or related to shares of Common Stock, including but not limited to, shares of Common Stock awarded purely as a bonus and not subject to restrictions or conditions, shares of Common Stock in payment of the amounts due under an incentive or performance plan sponsored or maintained by the Company or an Affiliate, stock equivalent units, restricted stock

 

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units, and Awards valued by reference to book value of shares of Common Stock. Other Stock-Based Awards may be granted either alone or in addition to or in tandem with other Awards granted under the Plan.

Subject to the provisions of the Plan, the Committee shall have authority to determine the Eligible Individuals, to whom, and the time or times at which, such Awards shall be made, the number of shares of Common Stock to be awarded pursuant to such Awards, and all other conditions of the Awards. The Committee may also provide for the grant of Common Stock under such Awards upon the completion of a specified Performance Period.

The Committee may condition the grant or vesting of Other Stock-Based Awards upon the attainment of specified Performance Goals as the Committee may determine, in its sole discretion; provided that to the extent that such Other Stock-Based Awards are intended to comply with Section 162(m) of the Code, the Committee shall establish the objective Performance Goals for the grant or vesting of such Other Stock-Based Awards based on a Performance Period applicable to each Participant or class of Participants in writing prior to the beginning of the applicable Performance Period or at such later date as permitted under Section 162(m) of the Code and while the outcome of the Performance Goals are substantially uncertain. Such Performance Goals may incorporate, if and only to the extent permitted under Section 162(m) of the Code, provisions for disregarding (or adjusting for) changes in accounting methods, corporate transactions (including, without limitation, dispositions and acquisitions) and other similar type events or circumstances. To the extent that any such provision would create impermissible discretion under Section 162(m) of the Code or otherwise violate Section 162(m) of the Code, such provision shall be of no force or effect, with respect to Performance Awards that are intended to qualify as “performance-based compensation” under Section 162(m) of the Code.

9.2      Terms and Conditions . Other Stock-Based Awards made pursuant to this Article IX shall be subject to the following terms and conditions:

(a)     Non-Transferability . Subject to the applicable provisions of the Award Agreement and the Plan, shares of Common Stock subject to Awards made under this Article IX may not be Transferred prior to the date on which the shares are issued, or, if later, the date on which any applicable restriction, performance or deferral period lapses.

(b)     Dividends . To the extent determined by the Committee, Participants shall be entitled to receive an amount equal to the dividends paid on the number of shares of Common Stock covered by Awards made under this Article IX; provided that the Committee may, in its sole discretion, provide for either of the following at the time of grant: (i) dividends or dividend equivalents will be paid as accrued but will be subject to the same vesting terms and conditions as the underlying Award; or (ii) payment of dividends or dividend equivalents shall be deferred until, and conditioned upon, settlement of the underlying Award.

(c)     Vesting . Any Award under this Article IX and any Common Stock covered by any such Award shall vest or be forfeited to the extent so provided in the Award Agreement, as determined by the Committee, in its sole discretion.

 

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(d)     Price . Common Stock issued on a bonus basis under this Article IX may be issued for no cash consideration. Common Stock purchased pursuant to a purchase right awarded under this Article IX shall be priced, as determined by the Committee in its sole discretion.

9.3      Other Cash-Based Awards . The Committee may from time to time grant Other Cash-Based Awards to Eligible Individuals in such amounts, on such terms and conditions, and for such consideration, including no consideration or such minimum consideration as may be required by applicable law, as it shall determine in its sole discretion. Other Cash-Based Awards may be granted subject to the satisfaction of vesting conditions or may be awarded purely as a bonus and not subject to restrictions or conditions, and if subject to vesting conditions, the Committee may accelerate the vesting of such Awards at any time in its sole discretion. The grant of an Other Cash-Based Award shall not require a segregation of any of the Company’s assets for satisfaction of the Company’s payment obligation thereunder.

ARTICLE X

CHANGE IN CONTROL PROVISIONS

10.1      Benefits . In the event of a Change in Control of the Company (as defined below), and except as otherwise provided by the Committee in an Award Agreement, a Participant’s unvested Awards shall not vest automatically and a Participant’s Awards shall be treated in accordance with one or more of the following methods as determined by the Committee:

(a)    Awards, whether or not then vested, shall be continued, assumed, or have new rights substituted therefor, as determined by the Committee in a manner consistent with the requirements of Section 409A of the Code, and restrictions to which shares of Restricted Stock or any other Award granted prior to the Change in Control are subject shall not lapse upon a Change in Control and the Restricted Stock or other Award shall, where appropriate in the sole discretion of the Committee, receive the same distribution as other Common Stock on such terms as determined by the Committee; provided that the Committee may decide to award additional Restricted Stock or other Awards in lieu of any cash distribution. Notwithstanding anything to the contrary herein, for purposes of Incentive Stock Options, any assumed or substituted Stock Option shall comply with the requirements of Treasury Regulation Section 1.424-1 (and any amendment thereto).

(b)    The Committee, in its sole discretion, may provide for the purchase of any Awards by the Company or an Affiliate for an amount of cash equal to the excess (if any) of the Change in Control Price (as defined below) of the shares of Common Stock covered by such Awards, over the aggregate exercise price of such Awards. For purposes hereof, “ Change in Control Price ” shall mean the highest price per share of Common Stock paid in any transaction related to a Change in Control of the Company.

(c)    The Committee may, in its sole discretion, terminate all outstanding and unexercised Stock Options or any Other Stock-Based Award that provides for a Participant elected exercise, effective as of the date of the Change in Control, by delivering notice of termination to each Participant at least twenty (20) days prior to the date of consummation of the Change in Control, in which case during the period from the date on which such notice of termination is delivered to the consummation of the Change in Control, each such Participant shall

 

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have the right to exercise in full all of such Participant’s Awards that are then outstanding (without regard to any limitations on exercisability otherwise contained in the Award Agreements), but any such exercise shall be contingent on the occurrence of the Change in Control, and, provided that, if the Change in Control does not take place within a specified period after giving such notice for any reason whatsoever, the notice and exercise pursuant thereto shall be null and void.

(d)    The Committee may, in its sole discretion, make any other determination as to the treatment of Awards in connection with such Change in Control as the Committee may determine. Any escrow, holdback, earnout or similar provisions in the definitive agreement(s) relating to such transaction may apply to any payment to the holders of Awards to the same extent and in the same manner as such provisions apply to the holders of shares of Common Stock.

Notwithstanding any other provision herein to the contrary, the Committee may, in its sole discretion, provide for accelerated vesting or lapse of restrictions, of an Award at any time.

10.2      Change in Control . Unless otherwise determined by the Committee in the applicable Award Agreement or other written agreement with a Participant approved by the Committee, a “Change in Control” shall be deemed to occur if:

(a)    any “person,” as such term is used in Sections 13(d) and 14(d) of the Exchange Act (other than the Company, any trustee or other fiduciary holding securities under any employee benefit plan of the Company, or any company owned, directly or indirectly, by the stockholders of the Company in substantially the same proportions as their ownership of Common Stock of the Company), becoming the beneficial owner (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing 50% or more of the combined voting power of the Company’s then outstanding securities;

(b)    during any period of 24 consecutive calendar months, individuals who were directors of the Company on the first day of such period (the “ Incumbent Directors ”) cease for any reason to constitute a majority of the Board; provided , however , that any individual becoming a director subsequent to the first day of such period whose election, or nomination for election, by the Company’s stockholders was approved by a vote of at least two-thirds of the Incumbent Directors will be considered as though such individual were an Incumbent Director, but excluding, for purposes of this proviso, any such individual whose initial assumption of office occurs as a result of an actual or threatened proxy contest with respect to election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a “person” (as used in Section 13(d) of the Exchange Act), in each case, other than the Board, which individual, for the avoidance of doubt, shall not be deemed to be an Incumbent Director for purposes of this Section 10.2(b), regardless of whether such individual was approved by a vote of at least two-thirds of the Incumbent Directors;

(c)    consummation of a reorganization, merger, consolidation or other business combination (any of the foregoing, a “ Business Combination ”) of the Company or any direct or indirect subsidiary of the Company with any other corporation, in any case with respect to which the Company voting securities outstanding immediately prior to such Business Combination do not, immediately following such Business Combination, continue to represent (either by

 

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remaining outstanding or being converted into voting securities of the Company or any ultimate parent thereof) more than 50% of the then outstanding voting securities entitled to vote generally in the election of directors of the Company (or its successor) or any ultimate parent thereof after the Business Combination; or

(d)    a complete liquidation or dissolution of the Company or the consummation of a sale or disposition by the Company of all or substantially all of the Company’s assets other than the sale or disposition of all or substantially all of the assets of the Company to a person or persons who beneficially own, directly or indirectly, 50% or more of the combined voting power of the outstanding voting securities of the Company at the time of the sale.

Notwithstanding the foregoing, with respect to any Award that is characterized as “nonqualified deferred compensation” within the meaning of Section 409A of the Code, an event shall not be considered to be a Change in Control under the Plan for purposes of payment of such Award unless such event is also a “change in ownership,” a “change in effective control” or a “change in the ownership of a substantial portion of the assets” of the Company within the meaning of Section 409A of the Code.

ARTICLE XI

TERMINATION OR AMENDMENT OF PLAN

Notwithstanding any other provision of the Plan, the Board may at any time, and from time to time, amend, in whole or in part, any or all of the provisions of the Plan (including any amendment deemed necessary to ensure that the Company may comply with any regulatory requirement referred to in Article XIII or Section 409A of the Code), or suspend or terminate it entirely, retroactively or otherwise; provided, however, that, unless otherwise required by law or specifically provided herein, the rights of a Participant with respect to Awards granted prior to such amendment, suspension or termination, may not be impaired without the consent of such Participant, including as set forth in Section 6.3. Notwithstanding anything herein to the contrary, the Board may amend the Plan or any Award Agreement at any time without a Participant’s consent to comply with applicable law, including Section 409A of the Code. The Committee may amend the terms of any Award theretofore granted, prospectively or retroactively, but, subject to Article IV or as otherwise specifically provided herein, no such amendment or other action by the Committee shall impair the rights of any holder without the holder’s consent.

ARTICLE XII

UNFUNDED STATUS OF PLAN

The Plan is intended to constitute an “unfunded” plan for incentive and deferred compensation. With respect to any payment as to which a Participant has a fixed and vested interest but which are not yet made to a Participant by the Company, nothing contained herein shall give any such Participant any right that is greater than those of a general unsecured creditor of the Company.

 

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ARTICLE XIII

GENERAL PROVISIONS

13.1      Legend . The Committee may require each person receiving shares of Common Stock pursuant to a Stock Option or other Award under the Plan to represent to and agree with the Company in writing that the Participant is acquiring the shares without a view to distribution thereof. In addition to any legend required by the Plan, the certificates for such shares (if any) may include any legend that the Committee deems appropriate to reflect any restrictions on Transfer. All certificates for shares of Common Stock (to the extent such shares are certificated) delivered under the Plan shall be subject to such stop transfer orders and other restrictions as the Committee may deem advisable under the rules, regulations and other requirements of the Securities and Exchange Commission, any stock exchange upon which the Common Stock is then listed or any national securities exchange system or over-the-counter market upon whose system the Common Stock is then quoted, any applicable federal or state securities law, and any applicable corporate law, and the Committee may cause a legend or legends to be put on any such certificates to make appropriate reference to such restrictions.

13.2      Other Plans . Nothing contained in the Plan shall prevent the Board from adopting other or additional compensation arrangements, subject to stockholder approval if such approval is required, and such arrangements may be either generally applicable or applicable only in specific cases.

13.3      No Right to Employment/Directorship/Consultancy . Neither the Plan nor the grant of any Option or other Award hereunder shall give any Participant or other employee, Consultant or Non-Employee Director any right with respect to continuance of employment, consultancy or directorship by the Company or any Affiliate, nor shall the Plan nor the grant of any Option or other Award hereunder limit in any way the right of the Company or any Affiliate by which an employee is employed or a Consultant or Non-Employee Director is retained to terminate such employment, consultancy or directorship at any time.

13.4      Withholding of Taxes . The Company shall have the right to deduct from any payment to be made pursuant to the Plan, or to otherwise require, prior to the issuance or delivery of shares of Common Stock or the payment of any cash hereunder, payment by the Participant of, any federal, state or local taxes required by law to be withheld. Upon the vesting of Restricted Stock (or other Award that is taxable upon vesting), or upon making an election under Section 83(b) of the Code, a Participant shall pay all required withholding to the Company. Any minimum statutorily required withholding obligation with regard to any Participant may be satisfied, subject to the consent of the Committee, by reducing the number of shares of Common Stock otherwise deliverable or by delivering shares of Common Stock already owned. Any fraction of a share of Common Stock required to satisfy such tax obligations shall be disregarded and the amount due in respect of such fraction of a share shall be paid instead in cash by the Participant.

13.5      No Assignment of Benefits . No Award or other benefit payable under the Plan shall, except as otherwise specifically provided by law or permitted by the Committee, be Transferable in any manner, and any attempt to Transfer any such benefit shall be void, and any such benefit shall not in any manner be liable for or subject to the debts, contracts, liabilities, engagements or torts of any person who shall be entitled to such benefit, nor shall it be subject to attachment or legal process for or against such person.

 

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13.6      Listing and Other Conditions .

(a)    Unless otherwise determined by the Committee, as long as the Common Stock is listed on a national securities exchange, system sponsored by a national securities association or recognized over-the-counter market, the issuance of shares of Common Stock pursuant to an Award shall be conditioned upon such shares being listed on such exchange, system or market. The Company shall have no obligation to issue such shares unless and until such shares are so listed, and the right to exercise any Option or other Award with respect to such shares shall be suspended until such listing has been effected.

(b)    If at any time counsel to the Company shall be of the opinion that any sale or delivery of shares of Common Stock pursuant to an Option or other Award is or may in the circumstances be unlawful or result in the imposition of excise taxes on the Company under the statutes, rules or regulations of any applicable jurisdiction, the Company shall have no obligation to make such sale or delivery, or to make any application or to effect or to maintain any qualification or registration under the Securities Act or otherwise, with respect to shares of Common Stock or Awards, and the right to exercise any Option or other Award shall be suspended until, in the opinion of said counsel, such sale or delivery shall be lawful or will not result in the imposition of excise taxes on the Company.

(c)    Upon termination of any period of suspension under this Section 13.6, any Award affected by such suspension which shall not then have expired or terminated shall be reinstated as to all shares available before such suspension and as to shares which would otherwise have become available during the period of such suspension, but no such suspension shall extend the term of any Award.

(d)    A Participant shall be required to supply the Company with certificates, representations and information that the Company requests and otherwise cooperate with the Company in obtaining any listing, registration, qualification, exemption, consent or approval the Company deems necessary or appropriate.

13.7      Governing Law . The Plan and actions taken in connection herewith shall be governed and construed in accordance with the laws of the State of Delaware (regardless of the law that might otherwise govern under applicable Delaware principles of conflict of laws).

13.8      Jurisdiction; Waiver of Jury Trial . Any suit, action or proceeding with respect to the Plan or any Award Agreement, or any judgment entered by any court of competent jurisdiction in respect of any thereof, shall be resolved only in the courts of the State of Delaware or the United States District Court for the District of Delaware and the appellate courts having jurisdiction of appeals in such courts. In that context, and without limiting the generality of the foregoing, the Company and each Participant shall irrevocably and unconditionally (a) submit in any proceeding relating to the Plan or any Award Agreement, or for the recognition and enforcement of any judgment in respect thereof (a “ Proceeding ”), to the exclusive jurisdiction of the courts of the State of Delaware, the court of the United States of America for the District of

 

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Delaware, and appellate courts having jurisdiction of appeals from any of the foregoing, and agree that all claims in respect of any such Proceeding shall be heard and determined in such Delaware State court or, to the extent permitted by law, in such federal court, (b) consent that any such Proceeding may and shall be brought in such courts and waives any objection that the Company and each Participant may now or thereafter have to the venue or jurisdiction of any such Proceeding in any such court or that such Proceeding was brought in an inconvenient court and agree not to plead or claim the same, (c) waive all right to trial by jury in any Proceeding (whether based on contract, tort or otherwise) arising out of or relating to the Plan or any Award Agreement, (d) agree that service of process in any such Proceeding may be effected by mailing a copy of such process by registered or certified mail (or any substantially similar form of mail), postage prepaid, to such party, in the case of a Participant, at the Participant’s address shown in the books and records of the Company or, in the case of the Company, at the Company’s principal offices, attention General Counsel, and (e) agree that nothing in the Plan shall affect the right to effect service of process in any other manner permitted by the laws of the State of Delaware.

13.9      Construction . Wherever any words are used in the Plan or an Award Agreement in the masculine gender they shall be construed as though they were also used in the feminine gender in all cases where they would so apply, and wherever words are used herein in the singular form they shall be construed as though they were also used in the plural form in all cases where they would so apply.

13.10      Other Benefits . No Award granted or paid out under the Plan shall be deemed compensation for purposes of computing benefits under any retirement plan of the Company or its Affiliates nor affect any benefit under any other benefit plan now or subsequently in effect under which the availability or amount of benefits is related to the level of compensation.

13.11      Costs . The Company shall bear all expenses associated with administering the Plan, including expenses of issuing Common Stock pursuant to Awards hereunder.

13.12      No Right to Same Benefits . The provisions of Awards need not be the same with respect to each Participant, and such Awards to individual Participants need not be the same in subsequent years.

13.13      Death/Disability . The Committee may in its discretion require the transferee of a Participant to supply it with written notice of the Participant’s death or Disability and to supply it with a copy of the will (in the case of the Participant’s death) or such other evidence as the Committee deems necessary to establish the validity of the transfer of an Award. The Committee may also require that the agreement of the transferee to be bound by all of the terms and conditions of the Plan and the applicable Award Agreement.

13.14      Section 16(b) of the Exchange Act . All elections and transactions under the Plan by persons subject to Section 16 of the Exchange Act involving shares of Common Stock are intended to comply with any applicable exemptive condition under Rule 16b-3. The Committee may establish and adopt written administrative guidelines, designed to facilitate compliance with Section 16(b) of the Exchange Act, as it may deem necessary or proper for the administration and operation of the Plan and the transaction of business thereunder.

 

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13.15      Section 409A of the Code . The Plan is intended to comply with the applicable requirements of Section 409A of the Code and shall be limited, construed and interpreted in accordance with such intent. To the extent that any Award is subject to Section 409A of the Code, it shall be paid in a manner that will comply with Section 409A of the Code, including proposed, temporary or final regulations or any other guidance issued by the Secretary of the Treasury and the Internal Revenue Service with respect thereto. Notwithstanding anything herein to the contrary, any provision in the Plan that is inconsistent with Section 409A of the Code shall be deemed to be amended to comply with Section 409A of the Code and to the extent such provision cannot be amended to comply therewith, such provision shall be null and void. The Company shall have no liability to a Participant, or any other party, if an Award that is intended to be exempt from, or compliant with, Section 409A of the Code is not so exempt or compliant or for any action taken by the Committee or the Company and, in the event that any amount or benefit under the Plan becomes subject to penalties under Section 409A of the Code, responsibility for payment of such penalties shall rest solely with the affected Participants and not with the Company. Notwithstanding any contrary provision in the Plan or Award Agreement, any payment(s) of “nonqualified deferred compensation” (within the meaning of Section 409A of the Code) that are otherwise required to be made under the Plan to a “specified employee” (as defined under Section 409A of the Code) as a result of such employee’s separation from service (other than a payment that is not subject to Section 409A of the Code) shall be delayed for the first six (6) months following such separation from service (or, if earlier, the date of death of the specified employee) and shall instead be paid (in a manner set forth in the Award Agreement) upon expiration of such delay period.

13.16      Successors and Assigns . The Plan and any applicable Award Agreement(s) shall be binding on all successors and permitted assigns of a Participant, including, without limitation, the estate of such Participant and the executor, administrator or trustee of such estate.

13.17      Severability of Provisions . If any provision of the Plan or any Award Agreement shall be held invalid or unenforceable, such invalidity or unenforceability shall not affect any other provisions hereof, and the Plan and/or Award Agreement shall be construed and enforced as if such provisions had not been included.

13.18      Payments to Minors, Etc . Any benefit payable to or for the benefit of a minor, an incompetent person or other person incapable of receipt thereof shall be deemed paid when paid to such person’s guardian or to the party providing or reasonably appearing to provide for the care of such person, and such payment shall fully discharge the Committee, the Board, the Company, its Affiliates and their officers, directors/managers, employees, agents and representatives with respect thereto.

13.19      Lock-Up Agreement . As a condition to the grant of an Award, if requested by the Company and the lead underwriter of any public offering of Common Stock (the “ Lead Underwriter ), a Participant shall irrevocably agree not to sell, contract to sell, grant any option to purchase, transfer the economic risk of ownership in, make any short sale of, pledge or otherwise transfer or dispose of, any interest in any Common Stock or any securities convertible into, derivative of, or exchangeable or exercisable for, or any other rights to purchase or acquire Common Stock (except Common Stock included in such public offering or acquired on the public market after such offering) during such period of time following the effective date of a registration

 

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statement of the Company filed under the Securities Act that the Lead Underwriter shall specify (the “ Lock   -Up Period ”).The Participant shall further agree to sign such documents as may be requested by the Lead Underwriter to effect the foregoing and agree that the Company may impose stop-transfer instructions with respect to Common Stock acquired pursuant to an Award until the end of such Lock-Up Period.

13.20      Headings and Captions . The headings and captions herein are provided for reference and convenience only, shall not be considered part of the Plan, and shall not be employed in the construction of the Plan.

13.21      Section 162(m) of the Code . Notwithstanding any other provision of the Plan to the contrary, the provisions of the Plan requiring compliance with Section 162(m) of the Code shall not apply to Awards granted under the Plan that are not intended to qualify as “performance-based compensation” under Section 162(m) of the Code.

13.22      Company Recoupment of Awards . A Participant’s rights with respect to any Award hereunder shall in all events be subject to (i) any right that the Company may have under any Company recoupment policy or other agreement or arrangement with a Participant, or (ii) any right or obligation that the Company may have regarding the clawback of “incentive-based compensation” under Section 10D of the Exchange Act and any applicable rules and regulations promulgated thereunder from time to time by the U.S. Securities and Exchange Commission.

ARTICLE XIV

EFFECTIVE DATE OF PLAN

The Plan shall become effective upon its adoption by the Board.

ARTICLE XV

TERM OF PLAN

No Award shall be granted pursuant to the Plan on or after the tenth anniversary of the earlier of the date that the Plan is adopted or the date of stockholder approval, but Awards granted prior to such tenth anniversary may extend beyond that date; provided that no Award (other than a Stock Option) that is intended to be “performance-based compensation” under Section 162(m) of the Code shall be granted on or after the fifth anniversary of the stockholder approval of the Plan unless the Performance Goals are re-approved (or other designated Performance Goals are approved) by the stockholders no later than the first stockholder meeting that occurs in the fifth year following the year in which stockholders approve the Performance Goals. For purposes of the Plan, approval by the bankruptcy court shall serve as stockholder approval, unless otherwise prohibited by law.

ARTICLE XVI

NAME OF PLAN

The Plan shall be known as the “SandRidge Energy, Inc. 2016 Omnibus Incentive Plan.”

 

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EXHIBIT A

PERFORMANCE GOALS

To the extent permitted under Section 162(m) of the Code, performance goals established for purposes of Awards intended to be “performance-based compensation” under Section 162(m) of the Code, shall be based on the attainment of certain target levels of, or a specified increase or decrease (as applicable) in one or more of the following:

 

  Production growth;

 

  Reserve growth;

 

  Reserve replacement;

 

  Lease operating expense;

 

  Revenue growth;

 

  Finding/development costs;

 

  Net sales;

 

  Operating income;

 

  Pre- or after-tax income;

 

  Operating profit minus capital charges;

 

  Cash flow, including operating cash flow, free cash flow, cash flow return on equity and cash flow return on investment;

 

  Net income;

 

  Earnings per share;

 

  Earnings before interest and taxes;

 

  Earnings before interest, taxes, depreciation and/or amortization;

 

  Return on equity;

 

  Return on invested capital;

 

  Return on assets;

 

  Economic value added (or an equivalent measure);

 

  Share price performance;

 

  Total stockholder return;

 

  Improvement in or achievement of expense levels;

 

  Improvement in or achievement of working capital levels;

 

  Innovation as measured by a percentage of sales of new products;

 

  Market share;

 

  Productivity ratios;

 

  Completion and/or integration of acquisitions of businesses or companies;

 

  Completion of divestitures and asset sales; and

 

  Any combination of any of the foregoing business criteria.

With respect to Awards that are intended to qualify as “performance-based compensation” under Section 162(m) of the Code, to the extent permitted under Section 162(m) of the Code, the Committee may, in its sole discretion, also exclude, or adjust to reflect, the impact of an event or occurrence that the Committee determines should be appropriately excluded or adjusted, including:

 

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(a)    restructurings, discontinued operations, extraordinary items or events, and other unusual or non-recurring charges as described in Accounting Standards Codification 225-20, “Extraordinary and Unusual Items,” and/or management’s discussion and analysis of financial condition and results of operations appearing or incorporated by reference in the Company’s Form 10-K for the applicable year;

(b)    an event either not directly related to the operations of the Company or not within the reasonable control of the Company’s management;

(c)    a change in tax law or accounting standards required by generally accepted accounting principles; or

(d)    a decision to accelerate or defer capital expenditures or expenses contrary to the timing reflected in the Company’s annual financial plan.

Performance goals may also be based upon individual participant performance goals, as determined by the Committee, in its sole discretion. In addition, Awards that are not intended to qualify as “performance-based compensation” under Section 162(m) of the Code may be based on the performance goals set forth herein or on such other performance goals as determined by the Committee in its sole discretion or without regard to any performance goals.

In addition, such performance goals may be based upon the attainment of specified levels of Company (or subsidiary, division, other operational unit, administrative department or product category of the Company) performance under one or more of the measures described above relative to the performance of one or more other companies or one or more groups of companies (e.g. an index). With respect to Awards that are intended to qualify as “performance-based compensation” under Section 162(m) of the Code, to the extent permitted under Section 162(m) of the Code, but only to the extent permitted under Section 162(m) of the Code (including, without limitation, compliance with any requirements for stockholder approval), the Committee may also:

(a)    designate additional business criteria on which the performance goals may be based; or

(b)    adjust, modify or amend the aforementioned business criteria.

 

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Exhibit 10.9

FORM OF

INDEMNIFICATION AGREEMENT

THIS AGREEMENT is effective October [      ], 2016, between SandRidge Energy, Inc., a Delaware corporation (the “Corporation”), and the undersigned director or officer of the Corporation (“Indemnitee”).

WHEREAS, the Corporation has adopted Bylaws (as the same may be amended from time to time, the “Bylaws”) providing for indemnification of the Corporation’s directors and officers; and

WHEREAS, the Bylaws and the Delaware General Corporation Law (the “DGCL”) contemplate that contracts and insurance policies may be entered into with respect to indemnification of directors and officers; and

WHEREAS, there are questions concerning the adequacy and reliability of the protection which might be afforded to directors and officers from acquisition of policies of Directors and Officers Liability Insurance (“D&O Insurance”), covering certain liabilities which might be incurred by directors and officers in the performance of their services to the Corporation; and

WHEREAS, it is reasonable, prudent and necessary for the Corporation to obligate itself contractually to indemnify Indemnitee so that he will serve or continue to serve the Corporation free from undue concern that he will not be adequately protected.

NOW, THEREFORE, in consideration of the premises and the covenants contained herein, the Corporation and Indemnitee do hereby covenant and agree as follows:

1. Definitions. As used in this Agreement:

(a) The term “Proceeding” shall include any threatened, pending or completed action, suit, claim, inquiry or proceeding, whether brought by or in the right of the Corporation or otherwise and whether of a civil, criminal, administrative, arbitrative or investigative nature, in which Indemnitee is or is reasonably expected to be involved as a party, as a witness or otherwise, by reason of the fact that Indemnitee is or was a director or officer of the Corporation, by reason of any action taken by him or of any inaction on his part while acting as a director or officer of the Corporation or by reason of the fact that he is or was serving at the request of the Corporation as a director, officer, trustee, employee or agent of another corporation, partnership, joint venture, trust, limited liability company or other enterprise; in each case whether or not he is acting or serving in any such capacity at the time any liability or expense is incurred for which indemnification or reimbursement can be provided under this Agreement; provided that any such action, suit, claim, inquiry or proceeding which is brought by Indemnitee against the Corporation or directors or officers of the Corporation, other than an action brought by Indemnitee to enforce his rights under this Agreement, shall not be deemed a Proceeding without prior approval by a majority of the Board of Directors of the Corporation.

(b) The term “Expenses” shall include, without limitation, any judgments, fines and penalties against Indemnitee in connection with a Proceeding; amounts paid by Indemnitee in settlement of a Proceeding pursuant to this Agreement; and all attorneys’ fees and disbursements, accountants’ fees, private investigation fees and disbursements, retainers, court costs, transcript


costs, fees of experts, fees and expenses of witnesses, travel expenses, duplicating costs, printing and binding costs, telephone charges, postage, delivery service fees, and all other disbursements, or expenses, reasonably incurred by or for Indemnitee in connection with prosecuting, defending, preparing to prosecute or defend, investigating, being or preparing to be a witness in a Proceeding or establishing Indemnitee’s right of entitlement to indemnification for any of the foregoing.

(c) References to Indemnitee’s being or acting as “a director or officer of the Corporation” or “serving at the request of the Corporation as a director, officer, trustee, employee or agent of another corporation, partnership, joint venture, trust, limited liability company or other enterprise” shall include in each case service to or actions taken while a director, officer, trustee, employee or agent of any subsidiary of the Corporation or while serving as a member of a committee of the Board of Directors of the Corporation.

(d) References to “other enterprise” shall include employee benefit plans; references to “fines” shall include any excise tax assessed with respect to any employee benefit plan; references to “serving at the request of the Corporation” shall include any service as a director, officer, employee or agent of the Corporation which imposes duties on, or involves services by, such director, officer, trustee, employee or agent with respect to an employee benefit plan, its participants or beneficiaries; and a person who acted in good faith and in a manner he reasonably believed to be in the interests of the participants and beneficiaries of an employee benefit plan shall be deemed to have acted in a manner “not opposed to the best interest of the Corporation” as referred to in this Agreement.

(e) The term “substantiating documentation” shall mean copies of bills or invoices for costs incurred by or for Indemnitee, or copies of court or agency orders or decrees or settlement agreements, as the case may be, accompanied by a sworn statement from Indemnitee that such bills, invoices, court or agency orders or decrees or settlement agreements, represent costs or liabilities meeting the definition of “Expenses” herein.

(f) The terms “he” and “his” have been used for convenience and mean “she” and “her” if Indemnitee is a female.

2. Indemnity of Director or Officer. The Corporation hereby agrees to hold harmless and indemnify Indemnitee against Expenses to the fullest extent authorized or permitted by law (including the applicable provisions of the DGCL). The phrase “to the fullest extent permitted by law” shall include, but not be limited to (a) to the fullest extent permitted by any provision of the DGCL that authorizes or permits additional indemnification by agreement, or the corresponding provision of any amendment to or replacement of the DGCL and (b) to the fullest extent authorized or permitted by any amendments to or replacements of the DGCL adopted after the date of this Agreement that increase the extent to which a corporation may indemnify its officers and directors. Any amendment, alteration or repeal of the DGCL that adversely affects any right of Indemnitee shall be prospective only and shall not limit or eliminate any such right with respect to any Proceeding involving any occurrence or alleged occurrence of any action or omission to act that took place prior to such amendment or repeal.

 

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3. Additional Indemnity. The Corporation hereby further agrees to hold harmless and indemnify Indemnitee against Expenses incurred by reason of the fact that Indemnitee is or was a director, officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, trustee, employee or agent of another corporation, partnership, joint venture, trust, limited liability company or other enterprise, but only if Indemnitee acted in good faith and, in the case of conduct in his official capacity, in a manner he reasonably believed to be in the best interests of the Corporation and, in all other cases, not opposed to the best interests of the Corporation. Additionally, in the case of a criminal proceeding, Indemnitee must have had no reasonable cause to believe that his conduct was unlawful. The termination of any Proceeding by judgment, order of the court, settlement, conviction or upon a plea of nolo contendere, or its equivalent, shall not, of itself, create a presumption that Indemnitee did not act in good faith and in a manner which he reasonably believed to be in or not opposed to the best interest of the Corporation, and with respect to any criminal Proceeding, that Indemnitee had reasonable cause to believe that his conduct was unlawful.

4. Contribution. If the indemnification provided under Section 2 or Section 3 is unavailable by reason of a court decision finding that Indemnitee is not eligible to receive indemnification for Expenses incurred by Indemnitee under this Agreement, based on grounds other than any of those set forth in Section 15, then, in respect of any Proceeding in which the Corporation is jointly liable with Indemnitee (or would be if joined in such Proceeding), the Corporation shall contribute to the amount of Expenses actually and reasonably incurred and paid or payable by Indemnitee in such proportion as is appropriate to reflect (i) the relative benefits received by the Corporation on one hand and Indemnitee on the other from the transaction from which such Proceeding arose and (ii) the relative fault of the Corporation on the one hand and of Indemnitee on the other in connection with the events that resulted in such Expenses as well as any other relevant equitable considerations. The relative fault of the Corporation on the one hand and of Indemnitee on the other shall be determined by reference to, among other things, the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent the circumstances resulting in such Expenses. The Corporation agrees that it would not be just and equitable if contribution pursuant to this Section 4 were determined by pro rata allocation or any other method of allocation that does not take into account of the foregoing equitable considerations.

5. Choice of Counsel. Each Indemnitee that is an Outside Director or Other Indemnitee, together with the other Indemnitees who are designated in the same group, shall be entitled to employ, and be reimbursed for the fees and disbursements of, separate counsel to represent the Outside Directors or the Other Indemnitees, as the case may be, in connection with any Proceeding. For purposes of this Agreement, an Indemnitee shall be designated as (i) an “Outside Director” if such Indemnitee is a director and not an officer of the Corporation or (ii) an “Other Indemnitee” if such Indemnitee is not an Outside Director. The principal counsel for Outside Directors (“Outside Director Counsel”) shall be determined by majority vote of the Outside Directors and the Principal Counsel for the Other Indemnitees (“Other Indemnitee Counsel”) shall be determined by majority vote of the Other Indemnitees, in each case subject to the consent of the Corporation (not to be unreasonably withheld or delayed). The obligation of the Corporation to reimburse Indemnitee for the fees and disbursements of counsel hereunder

 

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shall not extend to the fees and disbursements of any counsel employed by Indemnitee other than Outside Director Counsel or Other Indemnitee Counsel, as the case may be, unless Indemnitee has interests that are different from those of the other Indemnitees or defenses available to him that are in addition to or different from those of the other Indemnitees such that Outside Director Counsel or Other Indemnitee Counsel, as the case may be, would have an actual, apparent or potential conflict of interest in representing Indemnitee.

6. Advances of Expenses. Expenses (other than judgments, penalties, fines and settlements) incurred by Indemnitee shall be paid by the Corporation, in advance of the final disposition of the Proceeding, within 20 calendar days after receipt of Indemnitee’s written request accompanied by substantiating documentation and Indemnitee’s written affirmation that he has met the standard of conduct for indemnification and a written undertaking to repay such amount to the extent it is ultimately determined that indemnitee is not entitled to indemnification. No objections based on or involving the question whether such charges meet the definition of “Expenses,” including any question regarding the reasonableness of such Expenses, shall be grounds for failure to advance such amount to Indemnitee, or to reimburse such Indemnitee for, the amount claimed within such 20-day period, and the undertaking of Indemnitee set forth in Section 8 hereof to repay any such amount to the extent it is ultimately determined that Indemnitee is not entitled to indemnification shall be deemed to include an undertaking to repay any such amounts determined not to have met such definition.

7. Right of Indemnitee to Indemnification Upon Application; Procedure Upon Application. Unless otherwise ordered by a court of competent jurisdiction, any indemnification under this Agreement, other than advances pursuant to Section 6 hereof, shall be made as soon as practicable after receipt by the Corporation of the written request of Indemnitee, accompanied by substantiating documentation, upon a determination by (a) a majority vote of the directors who are not or were not parties to such Proceeding even though less than a quorum, (b) a committee of the Board of Directors designated by majority vote of the Board of Directors, even though less than a quorum, (c) if there are no such directors, or if such directors so direct, independent legal counsel in a written opinion or (d) the stockholders, that the indemnification of the Indemnitee is proper in the circumstances because the Indemnitee has met the relevant standards for indemnification set forth in Section 3 hereof.

The right to indemnification or advances as provided by this Agreement shall be enforceable by Indemnitee in any court of competent jurisdiction. The burden of proving that indemnification is not appropriate shall be on the Corporation. Neither the failure of the Corporation (including its Board of Directors, any committee thereof, independent legal counsel or its stockholders) to have made a determination prior to the commencement of such action that indemnification is proper in the circumstances because Indemnitee has met the applicable standards of conduct, nor an actual determination by the Corporation (including its Board of Directors, any committee thereof, independent legal counsel or its stockholders) that Indemnitee has not met such applicable standard of conduct, shall be a defense to the action or create a presumption that Indemnitee has not met the applicable standard of conduct.

8. Undertaking by Indemnitee. Indemnitee hereby undertakes to repay to the Corporation (a) any advances of Expenses pursuant to Section 6 hereof and (b) any judgments,

 

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penalties, fines and settlements paid to or on behalf of Indemnitee hereunder, in each case to the extent that it is ultimately determined that Indemnitee is not entitled to indemnification. As a condition to the advancement of such Expenses or the payment of such judgments, penalties, fines and settlements, Indemnitee shall, at the request of the Corporation, execute an acknowledgment that such Expenses or such judgments, penalties, fines and settlements, as the case may be, are delivered pursuant and are subject to the provisions of this Agreement.

9. Indemnification Hereunder Not Exclusive. The indemnification and advancement of expenses provided by this Agreement shall not be deemed exclusive of any other rights to which Indemnitee may be entitled under the Certificate of Incorporation of the Corporation, the Bylaws, the DGCL, any D&O Insurance, any agreement, or otherwise, both as to action in his official capacity and as to action in another capacity while holding such office of the Corporation; provided, however, that this Agreement supersedes all prior written indemnification agreements between the Corporation (or any predecessor thereof) and Indemnitee with respect to the subject matter hereof. However, Indemnitee shall reimburse the Corporation for amounts paid to him pursuant to such other rights to the extent such payments duplicate any payments received pursuant to this Agreement.

10. Continuation of Indemnity. All agreements and obligations of the Corporation contained herein shall continue during the period Indemnitee is a director or officer of the Corporation (or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust, limited liability company or other enterprise) and shall continue thereafter so long as Indemnitee shall be subject to any possible Proceeding (notwithstanding the fact that Indemnitee has ceased to serve the Corporation).

11. Partial Indemnification. If Indemnitee is entitled under any provision of this Agreement to indemnification by the Corporation for a portion of Expenses, but not, however, for the total amount thereof, the Corporation shall nevertheless indemnify Indemnitee for the portion of such Expenses to which Indemnitee is entitled.

12. Settlement of Claims. The Corporation shall not be liable to indemnify Indemnitee under this Agreement for any amounts paid in settlement of any Proceeding effected without the Corporation’s prior written consent. The Corporation shall not settle any Proceeding in any manner which would impose any penalty or limitation on Indemnitee without Indemnitee’s prior written consent. Neither the Corporation nor Indemnitee will unreasonably withhold or delay their consent to any proposed settlement. The Corporation shall not be liable to indemnify Indemnitee under this Agreement with regard to any judicial award if the Corporation was not given a reasonable and timely opportunity, at its expense, to participate in the defense of such action.

13. Acknowledgements.

(a) Corporation Acknowledgement . The Corporation expressly confirms and agrees that it has entered into this Agreement and assumed the obligations imposed on the Corporation hereby in order to induce Indemnitee to serve or to continue to serve as a director or officer of the Corporation, and acknowledges that Indemnitee is relying upon this Agreement in agreeing to serve or in continuing to serve as a director or officer of the Corporation.

 

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(b) Mutual Acknowledgment . Both the Corporation and Indemnitee acknowledge that in certain instances, Federal law or public policy may override applicable state law and prohibit the Corporation from indemnifying its directors and officers under this Agreement or otherwise. For example, the Corporation and Indemnitee acknowledge that the Securities and Exchange Commission (the “SEC”) has taken the position that indemnification is not permissible for liabilities arising under certain federal securities laws, and federal legislation prohibits indemnification for certain ERISA violations. Indemnitee understands and acknowledges that the Corporation has undertaken or may be required in the future to undertake with the SEC to submit the question of indemnification to a court in certain circumstances for a determination of the Corporation’s right under public policy to indemnify Indemnitee.

14. Enforcement. In the event Indemnitee is required to bring any action or other proceeding to enforce rights or to collect moneys due under this Agreement and is successful in such action, the Corporation shall reimburse Indemnitee for all of Indemnitee’s Expenses in bringing and pursuing such action.

15. Exceptions. Any other provision herein to the contrary notwithstanding, the Corporation shall not be obligated pursuant to the terms of this Agreement:

(a) No Entitlement to Indemnification . To indemnify Indemnitee for any expenses incurred by Indemnitee with respect to any proceeding instituted by Indemnitee to enforce or interpret this Agreement, if a court of competent jurisdiction determines that Indemnitee was not entitled to indemnification hereunder;

(b) Insured Claims . To indemnify Indemnitee for Expenses or liabilities of any type whatsoever (including, but not limited to, judgments, fines, ERISA excise taxes or penalties, and amounts paid in settlement) to the extent such Expenses or liabilities have been paid directly to Indemnitee by an insurance carrier under a D&O Insurance policy maintained by the Corporation;

(c) Remuneration in Violation of Law . To indemnify Indemnitee in respect of remuneration paid to Indemnitee if it shall be determined by a final judgment or other final adjudication that such remuneration was in violation of law;

(d) Indemnification Unlawful . To indemnify Indemnitee if a final decision by a court having jurisdiction in the matter shall determine that such indemnification is not lawful;

(e) Misconduct, Etc . To indemnify Indemnitee on account of Indemnitee’s conduct which is finally adjudged to have been knowingly fraudulent or deliberately dishonest or to constitute intentional misconduct, a knowing violation of law, a violation of Section 174 of the DGCL or a transaction from which Indemnitee derived an improper personal benefit;

(f) Breach of Duty . To indemnify Indemnitee on account of Indemnitee’s conduct which is the subject of any Proceeding brought by the Corporation and approved by a majority of the Board of Directors which alleges willful misappropriation of corporate assets by Indemnitee,

 

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disclosure of confidential information in violation of Indemnitee’s fiduciary or contractual obligations to the Corporation, or any other willful and deliberate breach in bad faith of Indemnitee’s duty to the Corporation or its stockholders; or

(g) Claims Under Section 16(b) . To indemnify Indemnitee for expenses or the payment of profits arising from the purchase and sale by Indemnitee of securities in violation of Section 16(b) of the Securities Exchange Act of 1934, as amended, or any similar successor statute.

(h) Derivative Claims . To indemnify Indemnitee for Expenses actually and reasonably incurred by Indemnitee in connection with a Proceeding by or in the right of the Corporation if such Indemnitee has been adjudged to be liable to the Corporation unless (and only to the extent) that the Delaware Court of Chancery or the court in which such Proceeding was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such Expenses which the Delaware Court of Chancery or such other court shall deem proper.

16. Severability. If any provision of this Agreement shall be held to be invalid, illegal or unenforceable (a) the validity, legality and enforceability of the remaining provisions of this Agreement shall not be in any way affected or impaired thereby, and (b) to the fullest extent possible, the provisions of this Agreement shall be construed so as to give effect to the intent manifested by the provision held invalid, illegal or unenforceable. Each section of this Agreement is a separate and independent portion of this Agreement. If the indemnification to which Indemnitee is entitled with respect to any aspect of any claim varies between two or more sections of this Agreement, that section providing the most comprehensive indemnification shall apply.

17. Miscellaneous.

(a) Governing Law . This Agreement and all acts and transactions pursuant hereto and the rights and obligations of the parties hereto shall be governed, construed and interpreted in accordance with the laws of the State of Delaware, without giving effect to principles of conflict of law.

(b) Entire Agreement; Enforcement of Rights . This Agreement sets forth the entire agreement and understanding of the parties relating to the subject matter herein and merges all prior discussions between them. No modification of or amendment to this Agreement, nor any waiver of any rights under this Agreement, shall be effective unless in writing signed by the parties to this Agreement. The failure by either party to enforce any rights under this Agreement shall not be construed as a waiver of any rights of such party.

(c) Construction . This Agreement is the result of negotiations between and has been reviewed by each of the parties hereto and their respective counsel, if any; accordingly, this Agreement shall be deemed to be the product of all of the parties hereto, and no ambiguity shall be construed in favor of or against any one of the parties hereto.

 

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(d) 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 (i) when delivered personally to the recipient, (ii) when sent to the recipient by telecopy (receipt electronically confirmed by sender’s telecopy machine) if during normal business hours of the recipient, otherwise on the next business day, (iii) one business day after the date when sent to the recipient by reputable overnight courier service (charges prepaid), or (iv) five business days after the date when mailed to the recipient by certified or registered mail, return receipt requested and postage prepaid. Such notices, demands and other communications shall be sent to the parties at the addresses indicated on the signature page hereto, or to such other address as any party hereto may, from time to time, designate in writing delivered pursuant to the terms of this Section 17(d).

(e) Counterparts . This Agreement may be executed in two or more counterparts, each of which shall be deemed an original and all of which together shall constitute one instrument.

(f) Successors and Assigns . This Agreement shall be binding upon the Corporation and its successors and assigns and shall inure to the benefit of Indemnitee and Indemnitee’s heirs, legal representatives and assigns.

(g) Subrogation . In the event of payment under this Agreement, the Corporation shall be subrogated to the extent of such payment to all of the rights of recovery of Indemnitee, who shall execute all documents required and shall do all acts that may be necessary to secure such rights and to enable the Corporation to effectively bring suit to enforce such rights.

 

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement on and as of the day and year first above written.

 

SANDRIDGE ENERGY, INC.

By:

  

 

Name: Philip T. Warman
Title:  Sr. Vice President & General Counsel
Address:    123 Robert S. Kerr Avenue
   Oklahoma City, Oklahoma 73102

 

INDEMNITEE:

 

[Name]

 

Address:    123 Robert S. Kerr Avenue
   Oklahoma City, Oklahoma 73102

 

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Exhibit 99.1

SandRidge Energy Emerges from Reorganization with Approximately $525 Million of Liquidity

$3.7 Billion of Debt Eliminated

Relisted on New York Stock Exchange and Resumed Trading Under Ticker “SD”

OKLAHOMA CITY, October 4, 2016 /PRNewswire/ — SandRidge Energy, Inc. (“SandRidge” or the “Company”) (NYSE:SD) today announced it has emerged from Chapter 11, having satisfied all the necessary provisions of its Plan of Reorganization (the “Plan”). SandRidge received approval to relist on the New York Stock Exchange in conjunction with its emergence and resumed trading of newly issued common stock on October 4, 2016, under the ticker symbol “SD”.

Combining its unrestricted cash balance with the availability under its first lien credit facility following emergence, SandRidge exits its restructuring with approximately $525 million in total liquidity.

New Capital Structure Summary

SandRidge’s new capital structure consists of a $425 million first lien revolving credit facility (“RBL”) (maturing in 2020) and approximately $282 million in mandatorily convertible notes, bearing no interest and converting at any time at the option of the holders or mandatorily at the earlier of certain events or four years from the effective date of the Plan. As previously disclosed, SandRidge’s pre-petition second lien secured and general unsecured claim holders receive 100% of the newly issued common equity in the reorganized company. A summary of the Company’s new capital structure is presented below:

Unrestricted Cash

 

    $100 million pro forma for emergence payments (including expected post-emergence repayment of RBL)

New Revolving Credit Facility

 

    $425 million borrowing base

 

    Undrawn (after expected post-emergence repayment with cash on hand) 1

 

    No financial covenants or borrowing base redeterminations for two years

 

    LIBOR (100 bps floor) + 475 bps rate

Mandatorily Convertible Notes

 

    $281,780,873 in principal amount of 0.00% Convertible Senior Subordinated Notes due 2020 (the “Convertible Notes”) which gives effect to the election of certain holders to receive common stock on the effective date instead of the Convertible Notes

 

    Initially convertible at the option of the holder based on an initial conversion rate of 0.05330841 shares of the Company’s common stock per $1.00 principal amount or 15,021,291 shares, subject to customary anti-dilution adjustments

 

    The Convertible Notes will mature and mandatorily convert into the Company’s common stock on October 4, 2020. In addition, the Company is required to convert all outstanding Convertible Notes upon certain events.

 

    No interest

 

    Upon the occurrence of certain events, including any acceleration, repayment or prepayment of the Convertible Notes (including any optional redemption), the Company will be required to pay a make-whole amount of $0.783478 (the “Make-Whole Amount”) for each $1.00 in principal amount. The conversion rate will be automatically adjusted such that the Convertible Notes convert into the same percentage of common stock before and after such event.


Building Note

 

    $35 million note secured by mortgages on the Company’s headquarters facility and certain other non-oil and gas real property, with interest payable in kind through the earlier of August 4, 2020 or events related to the refinancing or repayment of the New First Lien Exit Facility

Common Equity

 

    19,371,229 shares of common stock issued at emergence, including 971,231 shares issued and outstanding to give effect to the election of certain holders to receive common stock on the effective date instead of the Convertible Notes

Warrants

 

    4,913,251 warrants to purchase common stock at $41.34 strike price expiring on October 4, 2022

 

    2,068,690 warrants to purchase common stock at $42.03 strike price expiring on October 4, 2022

 

1) Excludes approximately $10 million of letters of credit


Pro Forma Capital Structure Details

In accordance with the Plan, approximately $3.7 billion in pre-petition funded debt has been eliminated, in large part, through the equitization of debt. Details of the Company’s pro forma capital structure and liquidity are outlined here below:

 

Pro Forma Capital Structure after Emergence 

 

Debt at Principal Value

   $ Millions  
   as of Jun 30, 2016      Restructuring    

Pro Forma

as of Oct 4, 2016

 

Building Note 1

   $ —         $ 35      $ 35   

8.75% Second Lien Secured Notes due 2020

     1,328         (1,328     —     

Unsecured Notes:

       

8.75% Senior Unsecured Notes due 2020

   $ 396       $ (396   $ —     

7.50% Senior Unsecured Notes due 2021

     758         (758     —     

8.125% Senior Unsecured Notes due 2022

     528         (528     —     

7.50% Senior Unsecured Notes due 2023

     544         (544     —     
  

 

 

    

 

 

   

 

 

 

Sub-Total Unsecured Notes

   $ 2,225       $ (2,225   $ —     

Unsecured Convertible Notes:

       

8.125% Senior Unsecured Convertible Notes due 2022

   $ 41       $ (41   $ —     

7.50% Senior Unsecured Convertible Notes due 2023

     47         (47     —     

Total Debt (Excl. RBL) 2

   $ 3,641       $ (3,606   $ 35   

0.00% Convertible Senior Subordinated Notes Due 2020 3

   $ —         $ 282      $ 282   
  

 

 

    

 

 

   

 

 

 

Total Debt (Excl. RBL) and Mandatorily Convertible Notes and Building Note

   $ 3,641       $ (3,324   $ 317   

Liquidity

       

RBL Borrowing Base 4

   $ 500       $ (75   $ 425   

RBL Available

     —           425        425   

Cash

     634         (534     100   

Total Liquidity

   $ 634       $ (109   $ 525   

 

1) Secured by mortgages on the Company’s headquarters facility and certain other non-oil and gas real property
2) $3.7 billion of total debt reduction includes $89 million of accrued interest not presented above net of new $35 million Building Note and $10 million of cash consideration
3) Make-Whole Amount applicable if note accelerated following an event of default or redeemed at the option of the Company
4) Excludes approximately $10 million of letters of credit

New Board of Directors

Pursuant to the Plan, SandRidge has appointed a new Board of Directors effective today. The new Board of Directors consists of five members including: James Bennett, Michael Bennett, John Genova, William (Bill) Griffin, and David Kornder.


Listing on the NYSE

In connection with its emergence, SandRidge also received approval from the New York Stock Exchange (“NYSE”) for its common stock to be listed for trading on the NYSE. The common stock began trading on the NYSE on October 4, 2016. The trading symbol for the common stock is “SD,” which is the same trading symbol used for the Company’s common stock when it previously was listed on the NYSE. In connection its application to list on the NYSE, the Company relied on adjustments to its historical financial data, which were included in its application and are available to public upon request.

Details of the restructuring, the securities issued pursuant to the Plan and the debt and other agreements entered into as part of the Plan will be provided in a Form 8-K and other filings filed or to be filed with the Security and Exchange Commission. You can get these documents for free by visiting EDGAR at the SEC website at www.sec.gov.

In addition, court filings and other documents related to the restructuring are available on a separate website administered by the Company’s claims agent, Prime Clerk, at https://cases.primeclerk.com/sandridge .

About SandRidge Energy, Inc.

SandRidge Energy, Inc. is an oil and natural gas exploration and production company headquartered in Oklahoma City, Oklahoma with its principal focus on developing high-return, growth-oriented projects in the U.S. Mid-Continent and Niobrara Shale.

For further information, please contact:

Duane M. Grubert

EVP – Investor Relations and Strategy

SandRidge Energy, Inc.

123 Robert S. Kerr Avenue

Oklahoma City, OK 73102-6406

(405) 429-5515


Forward-Looking Statements

In this press release, all statements that are not purely historical facts are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements may be identified by the words “believe,” “expect,” “anticipate,” “project,” “plan,” “estimate,” “intend,” “potential” and other similar expressions. Forward-looking statements are based on currently available business, economic, financial and other information and reflect management’s current beliefs, expectations and views with respect to future developments and their potential effects on SandRidge. Actual results could vary materially depending on risks and uncertainties that may affect SandRidge and its business. SandRidge’s actual actions and results may differ materially from what is expressed or implied by these statements due to a variety of factors, including (a) the ability of SandRidge to perform well and compete effectively upon its emergence from bankruptcy, (b) the impact of restrictions in SandRidge ‘s exit financing on its ability to make capital investments and pursue strategic growth opportunities, (c) the ability of SandRidge to continue to attract and retain qualified employees following emergence, and (d) other risks and uncertainties listed from time to time in SandRidge’s filings with the Securities and Exchange Commission. SandRidge assumes no obligation to update any forward-looking statement made in this press release to reflect subsequent events or circumstances or actual outcomes.