8-K12B WHITING PETROLEUM CORP --12-31 false 0001255474 0001255474 2020-09-01 2020-09-01

 

 

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):

  September 1, 2020

 

 

 

LOGO

WHITING PETROLEUM CORPORATION

(Exact name of registrant as specified in its charter)

 

 

 

Delaware   001-31899   20-0098515

(State or other jurisdiction

of incorporation)

 

(Commission

File Number)

 

(IRS Employer

Identification No.)

 

1700 Lincoln Street, Suite 4700

Denver, Colorado

80203-4547
(Address of principal executive offices)   (Zip Code)

(303) 837-1661

(Registrant’s telephone number, including area code)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

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

 

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

 

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

 

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

Securities registered pursuant to Section 12(b) of the Act:

 

Title of Each Class

 

Trading

Symbol(s)

 

Name of each exchange

on which registered

Common Stock, $0.001 par value   WLL   New York Stock Exchange

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company  ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

 

 

 


Explanatory Note:

As previously reported, on April 1, 2020, Whiting Petroleum Corporation (“Legacy Whiting”) and certain of its subsidiaries (together with Legacy Whiting, the “Company”) commenced voluntary cases (the “Chapter 11 Cases”) under chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the Southern District of Texas (the “Bankruptcy Court”). The Company’s Chapter 11 Cases were jointly administered under the caption In re Whiting Petroleum Corporation, et al., Case No. 20-32021. On June 30, 2020, the Company filed the Joint Chapter 11 Plan of Reorganization of Whiting Petroleum Corporation and its Debtor Affiliates (as amended, modified or supplemented from time to time, the “Plan”).

On August 14, 2020, the Bankruptcy Court entered an order (the “Confirmation Order”) confirming the Plan. The Plan is attached to the Confirmation Order as Exhibit A. The Plan and the Confirmation Order were previously filed as Exhibits 2 and 99 to Legacy Whiting’s Current Report on Form 8-K, filed with the U.S. Securities and Exchange Commission (the “Commission”) on August 17, 2020 and are hereby incorporated by reference as Exhibits 2 and 99.1 to this Current Report on Form 8-K (this “Current Report”).

On September 1, 2020 (the “Effective Date”), the Plan became effective in accordance with its terms and the Company emerged from chapter 11. As part of the transactions undertaken pursuant to the Plan, Legacy Whiting’s Existing Common Stock (as defined below) outstanding prior to the Effective Date was cancelled and exchanged for the New Common Stock (as defined below). As a result, effective as of the Effective Date, Whiting Petroleum Corporation, as reorganized pursuant to the Plan (“Whiting”), became the successor reporting company to Legacy Whiting under the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

This Current Report on Form 8-K is being filed by Whiting as the initial report of Whiting to the Commission and as notice that the Company is the successor issuer to Legacy Whiting under the Exchange Act. Whiting is thereby deemed subject to the informational requirements of the Exchange Act, and the rules and regulations promulgated thereunder, and in accordance therewith will file reports and other information with the SEC. The first periodic report to be filed by Whiting with the Commission will be its Quarterly Report on Form 10-Q for the quarter ended September 30, 2020.

 

Item 1.01.

Entry into a Material Definitive Agreement.

Reserve Based Revolving Credit Facility

On the Effective Date, pursuant to the terms of the Plan, Whiting, as parent guarantor, and Whiting Oil and Gas Corporation (“Whiting Oil and Gas”), as borrower, entered into a credit agreement (the “Credit Agreement”) with the lenders party thereto (the “Lenders”), JPMorgan Chase Bank, N.A., as administrative agent (in such capacity, the “Agent”), and JPMorgan Chase Bank, N.A., Bank of America, N.A., Wells Fargo Securities LLC and Capital One, National Association as joint lead arrangers and joint bookrunners providing for a reserve-based credit facility (the “Exit Credit Facility”) with initial aggregate commitments in the amount of $750.0 million, with the ability to increase the aggregate commitments by up to an additional $750.0 million, subject to certain conditions. The initial Borrowing Base is $750 million until the next scheduled redetermination. The Borrowing Base will be redetermined semiannually on or around April 1st and October 1st, with one interim “wildcard” redetermination available between scheduled redeterminations. The initial availability under the Exit Credit Facility is $324.67 million on the Effective Date before giving effect to any outstanding letters of credit on such date.

The Exit Credit Facility provides for a $50.0 million sublimit of the aggregate commitments that is available for the issuance of letters of credit. The Exit Credit Facility bears interest either at a rate equal to (a) LIBOR plus an applicable margin that varies from 2.75% to 3.75% per annum or (b) a base rate plus an applicable margin that varies from 1.75% to 2.75% per annum. The Exit Credit Facility matures on April 1, 2024.

Whiting is required to pay a commitment fee of 0.50% per annum on the average daily unused portion of the current aggregate commitments under the Exit Credit Facility. Whiting is also required to pay customary letter of credit and fronting fees.


The Credit Agreement requires Whiting to maintain a leverage ratio of less than or equal to 3.50 to 1.00.

The Credit Agreement also contains customary affirmative and negative covenants, including, among other things, as to compliance with laws (including environmental laws and anti-corruption laws), delivery of quarterly and annual financial statements, conduct of business, maintenance of property, maintenance of insurance, restrictions on the incurrence of liens, indebtedness, asset dispositions, fundamental changes, restricted payments, and other customary covenants.

Additionally, the Credit Agreement contains customary events of default and remedies for credit facilities of this nature. If Whiting does not comply with the financial and other covenants in Credit Agreement, the Lenders may, subject to customary cure rights, require immediate payment of all amounts outstanding under the Credit Agreement and any outstanding unfunded commitments may be terminated. The foregoing description of the Credit Agreement is qualified in its entirety by reference to the full text of the Credit Agreement, a copy of which is attached hereto as Exhibit 10.1 and is incorporated herein by reference.    

Guarantee and Security of the Credit Facilities

The obligations under the Exit Credit Facility are guaranteed by Whiting and certain of Whiting’s subsidiaries (collectively, the “Guarantors”) and secured by substantially all of their assets. On the Effective Date, the Guarantors entered into a guaranty and collateral agreement in favor of the Agent, for the benefit of the secured parties thereunder, pursuant to which the Guarantors guaranteed the payment and performance of all indebtedness and liabilities arising pursuant to, or in connection with, the Credit Agreement and granted a first lien security interest in all of the collateral described therein.

Warrant Agreements

On the Effective Date and pursuant to the Plan, Whiting entered into (i) a Warrant Agreement (the “Series A Warrant Agreement”) with Computershare Inc. and Computershare Trust Company, N.A., as warrant agent (collectively, the “Warrant Agent”), which provides for Whiting’s issuance of up to an aggregate of 4,837,821 Series A warrants (the “Series A Warrants”) to purchase outstanding common stock, par value $0.001 per share, of Whiting, as reorganized pursuant to and under the Plan (the “New Common Stock”) to former holders of Existing Common Stock (as defined below) on the Effective Date in accordance with the terms of the Plan, the Confirmation Order and the Series A Warrant Agreement and (ii) a Warrant Agreement (the “Series B Warrant Agreement” together with the Series A Warrant Agreement, the “Warrant Agreements”) with the Warrant Agent, which provides for Whiting’s issuance of up to an aggregate of 2,418,910 Series B warrants (the “Series B Warrants” together with the Series A Warrants, the “Warrants”) to purchase New Common Stock to former holders of Existing Common Stock on the Effective Date in accordance with the terms of the Plan, the Confirmation Order and the Series B Warrant Agreement.

The Series A Warrants are exercisable from the date of issuance until 5:00 p.m., New York time, on the fourth anniversary of the Effective Date, at which time, all unexercised Series A Warrants will expire, and the rights of the holders of such Series A Warrants to purchase New Common Stock will terminate. The Series A Warrants are initially exercisable for one share of New Common Stock per Series A Warrant at an initial exercise price of $73.44 per Series A Warrant (the “Series A Exercise Price”).

The Series B Warrants are exercisable from the date of issuance until 5:00 p.m., New York time, on the fifth anniversary of the Effective Date, at which time, all unexercised Series B Warrants will expire, and the rights of the holders of such Series B Warrants to purchase New Common Stock will terminate. The Series B Warrants are initially exercisable for one share of New Common Stock per Series B Warrant at an initial exercise price of $83.45 per Series B Warrant (the “Series B Exercise Price” together with the Series A Exercise Price, the “Exercise Prices”).

Pursuant to the Warrant Agreements, no holder of a Warrant, by virtue of holding or having a beneficial interest in a Warrant, will have the right to vote, receive dividends, receive notice as stockholders with respect to any meeting of stockholders for the election of Whiting’s directors or any other matter, or exercise any rights whatsoever as a stockholder of Whiting unless, until and only to the extent such holders become holders of record of shares of New Common Stock issued upon settlement of Warrants.

 

3


The number of shares of New Common Stock for which a Warrant is exercisable, and the Exercise Prices, are subject to adjustment from time to time upon the occurrence of certain events, including: (1) stock splits, reverse stock splits or stock dividends to holders of New Common Stock or (2) a reclassification in respect of New Common Stock.

The foregoing description of the Warrants Agreements is qualified in its entirety by reference to the full text of the Warrant Agreements, which are attached hereto as Exhibit 10.2 and Exhibit 10.3, respectively, and are incorporated by herein by reference.    

 

Item 1.02.

Termination of a Material Definitive Agreement.

Equity Interests

In accordance with the Plan, all agreements, instruments and other documents evidencing, relating to or otherwise connected with any of Legacy Whiting’s equity interests outstanding prior to the Effective Date were cancelled and all such equity interests have no further force or effect after the Effective Date. Pursuant to the Plan, the holders of Legacy Whiting’s existing common stock, par value $0.001 (the “Existing Common Stock”), outstanding prior to the Effective Date received (i) their proportionate distribution of 3% of the New Common Stock of Whiting (subject to dilution by the Warrants and the MIP (as defined herein)), (ii) their proportionate distribution of Series A Warrants to acquire the New Common Stock. and (iii) their proportionate distribution of Series B Warrants to acquire the New Common Stock.

Additionally, on the Effective Date, the Section 382 Rights Agreement (the “Rights Agreement”), dated as of March 27, 2020, between Legacy Whiting and Computershare Trust Company, N.A., as rights agent, was terminated, and as a result of the termination, the Rights (as defined in the Rights Agreement) that were issued pursuant to the Rights Agreement are no longer outstanding.

Debt Securities

In accordance with the Plan, on the Effective Date, all outstanding obligations under the following notes issued by Legacy Whiting and the related registration rights were cancelled and the indentures governing such obligations were cancelled, except to the limited extent expressly set forth in the Plan:

 

   

1.25% Convertible Senior Notes due 2020 (the “2020 Notes”) issued pursuant to the Indenture (“2020 Indenture”), dated March 27, 2015, among Legacy Whiting, the guarantors party thereto and The Bank of New York Mellon Trust Company, N.A., as trustee (the “Trustee”) as supplemented by the Tripartite Agreement, dated as of June 25, 2020, by and among Legacy Whiting, the Trustee and Delaware Trust Company (“Delaware Trust”), whereby the Trustee resigned and Delaware Trust became the successor trustee under the 2020 Indenture;

 

   

the 5.75% Senior Notes due 2021 (the “2021 Notes”) issued pursuant to the Indenture, dated September 12, 2013 (the “Base Indenture”), among Legacy Whiting, Whiting Oil and Gas and the Trustee, as supplemented by the Second Supplemental Indenture, dated September 12, 2013, among Legacy Whiting, Whiting Oil and Gas and the Trustee, as amended;

 

   

the 6.25% Senior Notes due 2023 (the “2023 Notes”) issued pursuant to the Base Indenture, as supplemented by the Fourth Supplemental Indenture, dated March 27, 2015, among Legacy Whiting, the guarantors party thereto and the Trustee; and

 

   

the 6.625% Senior Notes due 2026 (together with the 2020 Notes, the 2021 Notes and the 2023 Notes, the “Senior Unsecured Notes”) issued pursuant to the Base Indenture, as supplemented by the Fifth Supplemental Indenture, dated December 27, 2017, among Legacy Whiting, the guarantors party thereto and the Trustee.

In accordance with the Plan, the holders of the Senior Unsecured Notes received (and holders of other general unsecured claims in Class 5 will receive) their proportionate distribution of 97% of the New Common Stock of Whiting (subject to dilution by the Warrants and the MIP (as defined herein)). 3,070,201 shares of New Common Stock are being reserved for potential future distribution to certain Class 5 general unsecured claimants whose claims values are currently pending resolution in the Bankruptcy Court.

 

4


RBL Facility

Pursuant to the Plan, on the Effective Date, the Seventh Amended and Restated Credit Agreement, dated as of April 12, 2018, among Legacy Whiting, as parent guarantor, Whiting Oil and Gas, as borrower, the lenders party thereto, JPMorgan Chase Bank, N.A., as administrative agent and the various other agents party thereto (the “RBL Facility”), was cancelled and the holders of claims under the RBL Facility had such obligations refinanced through the Exit Credit Facility on the Effective Date. On the Effective Date, all liens and security interests granted to secure such obligations were automatically terminated and are of no further force and effect.

 

Item 2.03.

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

On the Effective Date, the Company entered into certain direct financial obligations under the Credit Agreement. The description of the Credit Agreement set forth in Item 1.01 of this Current Report is incorporated herein by reference.

 

Item 3.02.

Unregistered Sales of Equity Securities.

On the Effective Date, pursuant to the Plan:

 

   

36,817,630 shares of New Common Stock were issued pro rata to holders of the Senior Unsecured Notes and 3,070,201 shares of New Common Stock are being reserved for potential future distribution to certain Class 5 general unsecured claimants whose claims values are currently pending resolution in the Bankruptcy Court; and

 

   

1,233,580 shares of New Common Stock, 4,837,387 Series A Warrants to purchase 4,837,387 shares of New Common Stock and 2,418,840 Series B Warrants to purchase 2,418,840 shares of New Common Stock were issued pro rata to holders of the Existing Common Stock.

As of the Effective Date, there were 38,051,210 shares of New Common Stock issued and outstanding.

Shares of Legacy Whiting’s existing equity interests, including the Existing Common Stock, were converted into New Common Stock, Series A Warrants and Series B Warrants at effective exchange ratios of 0.0133557960, 0.0523756707 and 0.0261878353, respectively, per share of Existing Common Stock or existing equity interest.

The New Common Stock and Warrants were issued pursuant to the Plan and were issued pursuant to the exemption from the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”), under Section 1145 of the Bankruptcy Code.

 

Item 3.03.

Material Modifications to Rights of Security Holders.

As provided in the Plan, all notes, equity, agreements, instruments, certificates and other documents evidencing any claim against or interest in the Company were cancelled on the Effective Date and the obligations of the Company thereunder or in any way related thereto were fully released. The securities to be cancelled on the Effective Date include all of the Existing Common Stock and the Senior Unsecured Notes. For further information, see the Explanatory Note and Items 1.02 and 5.03 of this Current Report, which are incorporated herein by reference.

 

Item 5.01.

Changes in Control of Registrant.

As previously disclosed, on the Effective Date, all of the Existing Common Stock and the Senior Unsecured Notes were cancelled, and Whiting issued approximately 3% of the New Common Stock to holders of the Existing Common Stock and approximately 97% of the New Common Stock to holders of the Senior Unsecured Notes and the holders of other general unsecured claims in Class 5 pursuant to the Plan, whose shares are being reserved for potential future

 

5


distribution to such Class 5 general unsecured claimants whose claim values are currently pending in the Bankruptcy Court. For further information, see Items 1.02, 3.02 and 5.02 of this Current Report, which are 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 of Directors

In accordance with the Plan, Bradley J. Holly, James E. Catlin, Thomas L. Aller, Lyne B. Andrich, Philip E. Doty, Michael G. Hutchinson, Carin S. Knickel and Michael B. Walen resigned from Whiting’s board of directors (the “Board”) on the Effective Date. There were no known disagreements between such directors and Whiting which led to their respective resignations from the Board.

Appointment of Directors

As of the Effective Date, by operation of and in accordance with the Plan, the following individuals were appointed to the Board: Janet L. Carrig, Susan M. Cunningham, Paul J. Korus, Kevin S. McCarthy, Daniel J. Rice IV and Anne Taylor. On September 1, 2020, in connection with Lynn A. Peterson’s appointment as Chief Executive Officer of Whiting (as described below), the Board also appointed Lynn A. Peterson to the Board. The Board consists of a single class of directors with the initial term of office to expire at the 2021 annual meeting of stockholders and then at the next succeeding annual meeting of stockholders thereafter or the date on which the successor of such director is elected.

On September 1, 2020, the Board appointed directors to committees of the Board as follows:

 

   

Audit Committee: Mr. Korus (Chair), Ms. Cunningham and Mr. Rice

 

   

Compensation Committee: Ms. Taylor (Chair), Mr. McCarthy and Mr. Rice

 

   

Nominating and Governance Committee: Ms. Carrig (Chair), Mr. Korus and Mr. McCarthy

 

   

Sustainability Committee: Ms. Cunningham (Chair), Ms. Carrig, Ms. Taylor and Mr. Peterson

All non-employee directors will participate in Whiting’s standard non-employee director compensation arrangements (on a pro-rated basis for their period of service in their first year as a director). Each non-employee director will receive a cash payment of $80,000 per annum, payable in substantially equal quarterly installments. Non-employee members of Board committees will receive additional cash payments per annum as follows: Audit Committee Chair - $25,000; other committee chairs - $10,000; non-chair Audit Committee members - $10,000; and non-chair other committee members - $5,000. The independent Chairman of the Board, Mr. McCarthy, will also receive an additional cash payments of $100,000 per annum. Each non-employee directors’ equity award will be granted within 60 days of the Effective Date with a grant date value of $165,000. In connection with their appointment, Ms. Carrig, Ms. Cunningham, Mr. Korus, Mr. McCarthy, Mr. Rice and Dr. Taylor will be entering into the Company’s Indemnification Agreement, a form of which was filed as Exhibit 10.10 to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2008.

There is no other arrangement or understanding between Ms. Carrig, Ms. Cunningham, Mr. Korus, Mr. McCarthy, Mr. Rice and Dr. Taylor and any other persons pursuant to which he or she was appointed as a member of the Board. Ms. Carrig, Ms. Cunningham, Mr. Korus, Mr. McCarthy, Mr. Rice and Dr. Taylor do not have any family relationship with any director or executive officer of the Company. There is no relationship between Ms. Carrig, Ms. Cunningham, Mr. Korus, and Mr. McCarthy, Mr. Rice and Dr. Taylor and the Company that would require disclosure pursuant to Item 404(a) of Regulation S-K.

 

6


Incentive Plan

Effective as of the Effective Date, the Board adopted the 2020 Equity Incentive Plan (the “MIP”). A description of the material provisions of the MIP is contained in Legacy Whiting’s Current Report on Form 8-K filed with the Commission on August 17, 2020, which description is incorporated by reference herein. The foregoing description of the MIP is qualified in its entirety by reference to the full text of the MIP, a copy of which is attached hereto as Exhibit 10.4 and is incorporated herein by reference.

Resignation of Officers, Appointment of New Officers and Employment Agreements

Appointment of Chief Executive Officer

As previously disclosed, on August 13, 2020, Bradley J. Holly, the current Chairman of the Board, President and Chief Executive Officer of Legacy Whiting, notified Legacy Whiting of his intent to resign from his positions with Legacy Whiting effective upon the Effective Date. On September 1, 2020, the Board acted to elect Lynn A. Peterson as Chief Executive Officer of Whiting and as a member of the Board effective upon the Effective Date. There are no arrangements or understandings between Mr. Peterson and any other persons pursuant to which he was appointed as a member of the Board or as Chief Executive Officer of the Company. Mr. Peterson does not have any family relationship with any director or executive officer of the Company. There is no relationship between Mr. Peterson and the Company that would require disclosure pursuant to Item 404(a) of Regulation S-K.

Mr. Peterson, age 67, most recently served as Chief Executive Officer and Chairman of SRC Energy, Inc. from June 2015 until its combination with PDC Energy, Inc. in January 2020. Prior to SRC Energy, Mr. Peterson was co-founder, Chief Executive Officer and Chairman of Kodiak Oil & Gas Corp. before its combination with Legacy Whiting in December 2014. Mr. Peterson also served as a director of Legacy Whiting from December 2014 to June 2015 and has served as directors of PDC Energy since January 2020 and Denbury Resources since June 2017. Mr. Peterson began his career in accounting and auditor roles at Ernst & Young and holds a Bachelor of Science in Accounting from the University of Northern Colorado.

In connection with his appointment, Mr. Peterson will be entering into the Company’s Indemnification Agreement, a form of which was filed as Exhibit 10.10 to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2008.

Resignation of Chief Financial Officer; Appointment of New Chief Financial Officer

On September 1, 2020, Correne S. Loeffler, the current Chief Financial Officer of Whiting, notified Whiting of her intent to resign from her position with Whiting effective upon the Effective Date. On September 1, 2020, the Board acted to elect James P. Henderson as Chief Financial Officer of Whiting effective as of the Effective Date.

Mr. Henderson, age 55, most recently served as Chief Financial Officer of SRC Energy, Inc. from August 2015 until its combination with PDC Energy, Inc. in January 2020. Prior to SRC Energy, Mr. Henderson served as Chief Financial Officer of Kodiak Oil & Gas Corp. before its combination with Legacy Whiting in December 2014. Mr. Henderson holds a Bachelor’s degree in Accounting from Texas Tech University and a Master of Business Administration degree from Regis University.

In connection with his appointment, Mr. Henderson will be entering into the Company’s Indemnification Agreement, a form of which was filed as Exhibit 10.10 to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2008.

On September 1, 2020, Whiting and Ms. Loeffler entered into an amendment (the “Amendment”) to Ms. Loeffler’s employment agreement dated August 1, 2019 and as amended August 24, 2018 (the “Existing Employment Agreement”) effective as of the Effective Date. The Amendment provides that in exchange for a general release of claims Ms. Loeffler may have against Whiting and its affiliates and her agreement to provide consulting services for a transition period following the Effective Date, Whiting will provide Ms. Loeffler with severance pay and benefits consistent with those provided for in the Existing Employment Agreement, reimbursement of attorneys’ fees incurred in connection with the review of the amendment and an aggregate of $68,250 as payment for consulting services during the transition period. In addition, the Amendment provides that Ms. Loeffler will no longer be entitled to (i) any

 

7


severance pay and benefits provided for under Section 5.d. of the Existing Employment Agreement or any other payment or benefits in connection with a Change of Control (as defined in the Existing Employment Agreement), (ii) any equity or equity-based compensation (or acceleration thereof) in connection with her separation from service or as a result of Whiting’s emergence from the Chapter 11 Cases or (iii) any bonus payment for 2020 or otherwise. In the event Ms. Loeffler fails to honor all of the terms and conditions of the Amendment and the continuing obligations set forth in the Existing Employment Agreement, which include confidentiality, noncompete and non-solicit obligations, Ms. Loeffler would be required to repay the severance payments.

The foregoing description of the Amendment is qualified in its entirety by reference to the full text of the Amendment, a copy of which is attached hereto as Exhibit 10.7 and is incorporated herein by reference.

Employment Agreements of Chief Executive Officer, Chief Financial Officer and Chief Operating Officer

The Company entered into executive employment and severance agreements with each of Mr. Peterson (the “CEO Employment Agreement”), Mr. Henderson (the “CFO Employment Agreement”) and Mr. Rimer (the “COO Employment Agreement”, and together with the CEO Employment Agreement and the CFO Employment Agreement, the “Employment Agreements”), each effective on September 1, 2020. The Employment Agreements have a two year term and renew automatically for successive one year terms unless either party provides written notice to the other party at least 180 days prior to the end of a term. The Employment Agreements for Mr. Peterson, Henderson and Rimer (each, an “Executive”) provide for a base salary of $650,000, $425,000 and $450,000, respectively and eligibility to participate in employee benefit plans that the Company generally provides to its senior executives. The Employment Agreements provide that the Executives will be eligible to participate in the Company’s annual bonus plan with a threshold bonus of 25% of base salary, target bonus of 75% of base salary and a maximum bonus of 150% of base salary based upon achievement of the performance goals under such plan (except that in the case of Mr. Rimer, he will not be eligible to participate in such annual bonus plan until 2021). The Employment Agreements provide for an initial grant of restricted stock units with a grant date fair value of $650,000 and $371,875 for Mr. Peterson and Henderson, respectively, to be granted within 45 days after the Effective Date. Such initial grant vests ratably on the first, second and third year anniversaries of the Effective Date, subject to continued employment. The Employment Agreements also provide for grants of long-term incentive awards with a grant date fair value of $1,950,000, $1,115,625 and $1,181,250 to Mr. Peterson, Henderson and Rimer, respectively, in early 2021. Fifty percent of such award will vest ratably on the first, second and third year anniversaries of the grant date and fifty percent will vest based on achievement of performance objectives, in each case, subject to continued employment. The Employment Agreements also provide for a special one-time equity grant of 94,500, 46,300 and 49,100 restricted stock units for Mr. Peterson, Henderson and Rimer, respectively, to be granted within 45 days after the Effective Date. Fifty percent of the special equity award will vest if the daily volume weighted average price (“VWAP”) exceeds $32.57 per share for 20 consecutive trading days, an additional 25% will vest if the daily VWAP exceeds $48.86 per share for 20 consecutive trading days and the final 25% will vest if the daily VWAP exceeds $65.14 per share for 20 consecutive trading days. The special equity award will vest only if the Executive is employed by the Company during the 20 day period when the daily VWAP equals or exceeds the targets outlined above (provided, however, that vesting will occur if the Executive is terminated without cause or resigns for good reason (a “qualifying termination”) within 3 months prior to achieving such targets). Cause and good reason are defined in the Employment Agreements.

Under the terms of the Employment Agreements, the Executives are entitled to certain severance payments and other benefits upon a qualifying termination of employment. If the Executive’s employment is terminated without cause or for good reason prior to the end of the employment term or due to the Company’s notice of non-renewal, the Executive will be entitled to a severance benefit equal to the sum of the Executive’s base salary and annual bonus (equal to 75% of base salary), payable in equal installments over the 12 month period following the date of termination. If such qualifying termination occurs within 3 months prior to or 12 months following a change of control, the Executive will receive an additional severance payment equal to the sum of the Executive’s base salary and target annual bonus, payable in a lump sum on the 60th day following such termination (provided that if such termination occurs prior to a change of control, then payment shall be made on or within 60 days following the change of control). Additionally, until the earlier of 18 months following a qualified termination or such time as the Executive has obtained new employment and is covered by benefits at least equal in value, the Executive will continue to be covered, at the expense of the Company, by the same or equivalent medical, dental and vision coverage as the Executive received prior to termination. During the first 6 months following such termination, the Executive will pay the Company for any life insurance coverage that provides a benefit in excess of $50,000 under a group term life insurance policy. After the

 

8


end of such 6 month period, the Company will make a cash payment to the Executive equal to the aggregate premiums paid by the Executive for such coverage, and thereafter such coverage will be provided at the Company’s expense for the remainder of the period. The Executive’s right to receive severance payments and benefits is conditioned upon the Executive’s continued compliance with any post-employment obligations and execution and non-revocation of a general release of claims. The Employment Agreements also provide that the Executive is subject to a customary confidentiality covenant and non-disparagement covenant and, for one year following termination of employment (or two years if the termination is after a change of control), customary covenants not to solicit or compete with the Company’s business in its material plays or fields.

The foregoing description of the Employment Agreements is qualified in its entirety by reference to the full text of the Employment Agreements, copies of which are attached hereto as Exhibits 10.5, 10.6 and 10.8 and are incorporated herein by reference.

 

Item 5.03.

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

On the Effective Date, pursuant to the Plan, Whiting filed the Amended and Restated Certificate of Incorporation (the “Certificate of Incorporation”) with the Delaware secretary of state. Also on the Effective Date, in accordance with the Plan, Whiting adopted the Second Amended and Restated Bylaws (the “Bylaws”).

Pursuant to the Certificate of Incorporation, the authorized capital stock of Whiting consists of 500,000,000 shares of New Common Stock and 50,000,000 shares of preferred stock, par value $0.001 per share.

Each holder of shares of New Common Stock, as such, shall be entitled to one vote for each share of New Common Stock held of record by such holder on all matters on which stockholders generally are entitled to vote. Except as otherwise required by law or provided in the Certificate of Incorporation, at any annual or special meeting of stockholders the New Common Stock shall have the exclusive right to vote for the election of directors and on all other matters properly submitted to a vote of the stockholders.

Subject to the rights of any then-outstanding shares of preferred stock, the holders of New Common Stock may receive such dividends as the Board may declare in its discretion out of legally available funds. Holders of New Common Stock will share equally in Whiting’s assets upon liquidation after payment or provision for all liabilities and any preferential liquidation rights of any preferred stock then outstanding. Shares of New Common Stock are not subject to any redemption provisions and are not convertible into any of Whiting’s other securities.

Preferred Stock

Shares of preferred stock may be issued in one or more series from time to time, with each such series to consist of such number of shares and to have such voting powers, full or limited, or no voting powers, and such designations, preferences and relative, participating, optional or other special rights, and the qualifications, limitations or restrictions thereof, as shall be stated in the resolution or resolutions providing for the issuance of such series adopted by the Board.

It is not possible to state the actual effect of the issuance of any shares of preferred stock upon the rights of holders of our common stock until the Board determines the specific rights of the holders of the preferred stock. However, these effects might include:

 

   

restricting dividends on the common stock;

 

   

diluting the voting power of the common stock;

 

   

impairing the liquidation rights of the common stock; and

 

   

delaying or preventing a change in control of our company.

 

9


Anti-Takeover Provisions

Some provisions of Delaware law, the Certificate of Incorporation and the Bylaws summarized below could make certain change of control transactions more difficult, including acquisitions of Whiting by means of a tender offer, proxy contest or otherwise, as well as removal of the incumbent directors. These provisions may have the effect of preventing changes in management. It is possible that these provisions would make it more difficult to accomplish or deter transactions that a stockholder might consider in his or her best interest, including those attempts that might result in a premium over the market price for the New Common Stock.

Business Combinations under Delaware Law

Whiting is subject to the provisions of Section 203 of the Delaware General Corporation Law (“DGCL”). In general, the statute prohibits a publicly held Delaware corporation from engaging in a “business combination” with an “interested stockholder” for a period of three years after the date of the transaction in which the person became an interested stockholder, unless the business combination or the transaction by which the person became an interested stockholder is approved by the corporation’s board of directors and/or stockholders in a prescribed manner or the person owns at least 85% of the corporation’s outstanding voting stock after giving effect to the transaction in which the person became an interested stockholder. The term “business combination” includes mergers, asset sales and other transactions resulting in a financial benefit to the interested stockholder. Subject to certain exceptions, an “interested stockholder” is a person who, together with affiliates and associates, owns, or within three years did own, 15% or more of the corporation’s voting stock. A Delaware corporation may “opt out” from the application of Section 203 through a provision in its certificate of incorporation or by-laws. Whiting has not “opted out” from the application of Section 203.

Number and Election of Directors

The Board shall consist of not less than one nor more than twelve members, the exact number of which shall be determined from time to time exclusively by resolution adopted by the Board.

Calling of Special Meeting of Stockholders

The Bylaws provide that special meetings of stockholders may be called only by (i) the chairman of the Board, (ii) the President, (iii) a majority of the Board or (iii) the secretary of Whiting upon the delivery of a written request to Whiting by the holders who own at least 25% of the outstanding shares of New Common Stock and have owned such shares for at least 365 consecutive days prior to such determination date in the manner provided in the Bylaws.

Amendments to the Bylaws

The Bylaws may be amended or repealed or new bylaws may be adopted (i) by action of the majority of the Board or (ii) without action of the Board, by the affirmative vote of the holders of a majority of the voting power of all outstanding shares of New Common Stock entitled to vote generally in the election of directors.

Other Limitations on Stockholder Actions

Advance notice is required for stockholders to nominate directors or to submit proposals for consideration at meetings of stockholders. These procedures provide that notice of stockholder proposals must be timely given in writing to the corporate secretary prior to the meeting at which the action is to be taken. Generally, to be timely, notice must be received at the principal executive offices not less than 90 days nor more than 120 days prior to the anniversary of the immediately preceding annual meeting of stockholders. The Bylaws specify in detail the requirements as to form and content of all stockholder notices. These requirements may preclude stockholders from bringing matters before the stockholders at an annual or special meeting. The Bylaws also describe certain criteria for when stockholder-requested meetings need not be held.

Directors may be removed from office at any time by the affirmative vote of holders of at least a majority of the outstanding shares of New Common Stock entitled generally to vote in the election of directors.

 

10


Newly Created Directorships and Vacancies on the Board

Under the Bylaws, any newly created directorships resulting from any increase in the number of directors and any vacancies on the Board for any reason may be filled solely by a majority vote of the directors then in office, even if less than a quorum, or by a sole remaining director (and not by stockholders).

No Cumulative Voting

The Certificate of Incorporation provides that there will be no cumulative voting in the election of directors.

Authorized but Unissued Shares

Under Delaware law, Whiting’s authorized but unissued shares of New Common Stock are available for future issuance without stockholder approval. Whiting may use these additional shares of New Common Stock for a variety of corporate purposes, including future public offerings to raise additional capital, acquisitions and employee benefit plans. The existence of authorized but unissued shares of New Common Stock could render more difficult or discourage an attempt to obtain control of Whiting by means of a proxy contest, tender offer, merger or otherwise.

Exclusive Forum

The Certificate of Incorporation provides that, unless Whiting consents in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware (the “Court of Chancery”) (or, if and only if the Court of Chancery of the State of Delaware does not have jurisdiction, a state court located within the State of Delaware (or, if no state court located within the State of Delaware has jurisdiction, the federal district court for the District of Delaware)) will be the sole and exclusive forum for (i) any derivative action or proceeding brought on Whiting’s behalf, (ii) any action asserting a claim of breach of a fiduciary duty owed by any current or former directors, officers, other employees or stockholders to Whiting or to the stockholders, (iii) any action asserting a claim arising pursuant to any provision of the DGCL, the Certificate of Incorporation or the Bylaws (as each may be amended from time to time) or as to which the DGCL confers jurisdiction on the Court of Chancery, (iv) any action asserting a claim governed by the internal affairs doctrine or (v) any action asserting an “internal corporate claim” as that term is defined in Section 115 of the DGCL.

The Certificate of Incorporation provides that, unless Whiting consents in writing to the selection of an alternative forum, the federal district courts of the United States will be the sole and exclusive forum for any action brought under the Securities Act.

The foregoing descriptions of the Certificate of Incorporation and Bylaws is qualified in its entirety by reference to the full text of the applicable employment agreement, a copy of which is attached hereto as Exhibits 3.1 and 3.2 and are incorporated herein by reference.

Forward-Looking Statements

This Current Report on Form 8-K contains certain statements that Whiting believes to be “forward-looking statements” within the meaning of Section 27A of the Securities Act and Section 21E of the Securities Exchange Act of 1934, as amended. All statements other than historical facts, including, without limitation, statements regarding our future financial position, business strategy, projected revenues, earnings, costs, capital expenditures and debt levels, and plans and objectives of management for future operations, are forward-looking statements. Such forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those expressed in, or implied by, such statements. These risks and uncertainties include, but are not limited to: the effects of the Chapter 11 Cases on the Company’s liquidity or results of operations or business prospects; the effects of the Chapter 11 Cases on the Company’s business and the interests of various constituents; declines in, or extended periods of low, oil, NGL or natural gas prices; Whiting’s level of success in exploration, development and production activities; the ability to generate sufficient cash flows from operations to meet the internally funded portion of Whiting’s capital expenditures budget; the ability to obtain external capital to finance exploration and development operations; Whiting’s inability to access oil and gas markets due to market conditions or operational impediments, including any court rulings which may result in the inability to transport oil on the Dakota Access Pipeline; the impact of negative shifts in investor sentiment towards the oil and gas industry; impacts resulting from the allocation of resources among

 

11


Whiting’s strategic opportunities; the geographic concentration of Whiting’s operations; impacts to financial statements as a result of impairment write-downs and other cash and noncash charges; federal and state initiatives relating to the regulation of hydraulic fracturing and air emissions; revisions to reserve estimates as a result of changes in commodity prices, regulation and other factors; inaccuracies of Whiting’s reserve estimates or assumptions underlying them; the timing of exploration and development expenditures; risks relating to decreases in Whiting’s credit rating; market availability of, and risks associated with, transport of oil and gas; the ability to successfully complete asset dispositions and the risks related thereto; the ability to drill producing wells on undeveloped acreage prior to its lease expiration; shortages of or delays in obtaining qualified personnel or equipment, including drilling rigs and completion services; weakened differentials impacting the price Whiting receives for oil and natural gas; risks relating to any unforeseen liabilities; the impacts of hedging on Whiting’s results of operations; adverse weather conditions that may negatively impact development or production activities; uninsured or underinsured losses resulting from Whiting’s oil and gas operations; lack of control over non-operated properties; failure of Whiting’s properties to yield oil or gas in commercially viable quantities; the impact and costs of compliance with laws and regulations governing Whiting’s oil and gas operations; the potential impact of changes in laws that could have a negative effect on the oil and gas industry; impacts of local regulations, climate change issues, negative public perception of Whiting’s industry and corporate governance standards; the ability to replace Whiting’s oil and natural gas reserves; negative impacts from litigation and legal proceedings; risks related to Whiting’s level of indebtedness, ability to comply with debt covenants and periodic redeterminations of the borrowing base under Whiting’s Credit Agreement and Whiting’s ability to generate sufficient cash flow from operations to service its indebtedness; unforeseen underperformance of or liabilities associated with acquired properties or other strategic partnerships or investments; competition in the oil and gas industry; any loss of Whiting’s senior management or technical personnel; cybersecurity attacks or failures of Whiting’s telecommunication and other information technology infrastructure; and other risks described under the caption “Risk Factors” in Item 1A of Whiting’s Annual Report on Form 10-K for the period ended December 31, 2019 and its subsequent reports on Form 10-Q. Whiting assumes no obligation, and disclaims any duty, to update the forward-looking statements in this Current Report on Form 8-K.

 

Item 7.01

Regulation FD Disclosure.

On the Effective Date, the Company issued a press release announcing its emergence from the Chapter 11 Cases and the Company posted to its website an emergence presentation. Copies of the press release and emergence presentation have been furnished as Exhibits 99.2 and 99.3, respectively, to, and incorporated by reference into, this Current Report.

The information contained in Item 7.01 shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, and shall not be deemed to be incorporated by reference into any of the Company’s filings under the Securities Act of 1933 or the Exchange Act, whether made before or after the date hereof and regardless of any general incorporation language in such filings, except to the extent expressly set forth by specific reference in such a filing. The filing of Item 7.01 of this Current Report on Form 8-K (including the exhibit hereto or any information included herein or therein) shall not be deemed an admission as to the materiality of any information herein that is required to be disclosed solely by reason of Regulation FD.

 

Item 9.01.

Financial Statements and Exhibits

 

  (a)

Financial Statements of Businesses Acquired. Not Applicable.

 

  (b)

Pro Forma Financial Information. Not Applicable.

 

  (c)

Shell Company Transactions. Not Applicable.

 

12


  (d)

Exhibits:

 

     (2)   Joint Chapter 11 Plan of Reorganization of Whiting Petroleum Corporation and its Debtor Affiliates (incorporated by reference to Exhibit A of the Order Confirming the Amended Joint Chapter 11 Plan of Reorganization, filed as Exhibit 2 to Whiting’s Current Report on Form 8-K filed on August 17, 2020)
  (3.1)   Amended and Restated Certificate of Incorporation of Whiting Petroleum Corporation.
  (3.2)   Second Amended and Restated Bylaws of Whiting Petroleum Corporation.
     (4)   Specimen Common Stock Certificate.
(10.1)   Credit Agreement dated as of September 1, 2020, by and among Whiting Petroleum Corporation, as borrower, and JPMorgan Chase Bank, N.A., as administrative agent, and JPMorgan Chase Bank, N.A., Bank of America, N.A., Wells Fargo Securities LLC and Capital One, National Association, and the lenders and other parties party thereto.
(10.2)   Series A Warrant Agreement dated as of September 1, 2020, by and among Whiting Petroleum Corporation, Computershare Inc. and Computershare Trust Company, N.A.
(10.3)   Series B Warrant Agreement dated as of September 1, 2020, by and among Whiting Petroleum Corporation, Computershare Inc. and Computershare Trust Company, N.A.
(10.4)   Whiting Petroleum Corporation 2020 Equity Incentive Plan.
(10.5)   Employment Agreement, by and between Whiting Petroleum Corporation and Lynn A. Peterson, dated September 1, 2020.
(10.6)   Employment Agreement, by and between Whiting Petroleum Corporation and James P. Henderson, dated September 1, 2020.
(10.7)   Amendment to Employment Agreement, by and between Whiting Petroleum Corporation and Correne S. Loeffler, dated September 1, 2020.
(10.8)   Employment Agreement, by and between Whiting Petroleum Corporation and Charles J. Rimer, dated September 1, 2020.
(99.1)   Order Confirming Joint Chapter 11 Plan of Reorganization of Whiting Petroleum Corporation (incorporated by reference to Exhibit 99 to Whiting Petroleum Corporation’s Current Report on Form 8-K filed on August 17, 2020).
(99.2)   Press Release, dated September 1, 2020.
(99.3)   Emergence Presentation, dated September 2020.

 

13


WHITING PETROLEUM CORPORATION

FORM 8-K

EXHIBIT INDEX

 

Exhibit
Number

 

Description

     (2)   Joint Chapter 11 Plan of Reorganization of Whiting Petroleum Corporation and its Debtor Affiliates (incorporated by reference to Exhibit A of the Order Confirming the Joint Chapter 11 Plan of Reorganization, filed as Exhibit 2 to Whiting’s Current Report on Form 8-K filed on August 17, 2020)
  (3.1)   Amended and Restated Certificate of Incorporation of Whiting Petroleum Corporation.
  (3.2)   Second Amended and Restated Bylaws of Whiting Petroleum Corporation.
     (4)   Specimen Common Stock Certificate.
(10.1)*   Credit Agreement dated as of September 1, 2020, by and among Whiting Petroleum Corporation, as borrower, and JPMorgan Chase Bank, N.A., as administrative agent, and JPMorgan Chase Bank, N.A., Bank of America, N.A., Wells Fargo Securities LLC and Capital One, National Association, and the lenders and other parties party thereto.
(10.2)   Series A Warrant Agreement dated as of September 1, 2020, by and among Whiting Petroleum Corporation, Computershare Inc. and Computershare Trust Company, N.A.
(10.3)   Series B Warrant Agreement dated as of September 1, 2020, by and among Whiting Petroleum Corporation, Computershare Inc. and Computershare Trust Company, N.A.
(10.4)   Whiting Petroleum Corporation 2020 Equity Incentive Plan.
(10.5)   Employment Agreement, by and between Whiting Petroleum Corporation and Lynn A. Peterson, dated September 1, 2020.
(10.6)   Employment Agreement, by and between Whiting Petroleum Corporation and James P. Henderson, dated September 1, 2020.
(10.7)   Amendment to Employment Agreement, by and between Whiting Petroleum Corporation and Correne S. Loeffler, dated September 1, 2020.
(10.8)   Employment Agreement, by and between Whiting Petroleum Corporation and Charles J. Rimer, dated September 1, 2020.
(99.1)   Order Confirming Joint Chapter 11 Plan of Reorganization of Whiting Petroleum Corporation (incorporated by reference to Exhibit 99 to Whiting Petroleum Corporation’s Current Report on Form 8-K filed on August 17, 2020).
(99.2)   Press Release, dated September 1, 2020.
(99.3)   Emergence Presentation, dated September 2020.
(104)   Cover Page Interactive Data File (embedded within the Inline XBRL document).

 

*

Certain schedules and similar attachments have been omitted. The Company agrees to furnish a supplemental copy of any omitted schedule or attachment to the SEC upon request.


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.

Dated: September 1, 2020

 

WHITING PETROLEUM CORPORATION
By:  

/s/ Bruce R. DeBoer

Name:   Bruce R. DeBoer
Title:   Chief Administrative Officer, General Counsel and Secretary

Exhibit 3.1

AMENDED AND RESTATED

CERTIFICATE OF INCORPORATION

OF

WHITING PETROLEUM CORPORATION

Pursuant to Sections 242, 245 and 303 of the

Delaware General Corporation Law

Whiting Petroleum Corporation, (the “Corporation”), a corporation organized and existing under the General Corporation Law of the State of Delaware (the “DGCL”), does hereby certify as follows:

(1)    The name of the Corporation is Whiting Petroleum Corporation. The Corporation was originally incorporated under the name Whiting Petroleum Holdings, Inc. The original certificate of incorporation of the Corporation was filed with the office of the Secretary of State of the State of Delaware on the 18th day of July, 2003 (the “Original Certificate”).

(2)    The Original Certificate was subsequently restated by the filing of the Restated Certificate of Incorporation with the office of the Secretary of State of the State of Delaware on November 8, 2017 (as restated, the “Existing Certificate”).

(3)    This Amended and Restated Certificate of Incorporation (this “Certificate”), which amends and restates in their entirety the provisions of the Existing Certificate, was duly adopted, without the need for approval by the Board of Directors of the Corporation or the stockholders of the Corporation, in accordance with Sections 242, 245 and 303 of the DGCL and in accordance with that certain Joint Chapter 11 Plan of Reorganization of Whiting Petroleum Corporation and its debtor affiliates approved by order of the United States Bankruptcy Court for the Southern District of Texas in In re: Whiting Petroleum Corporation, et al., Case No. 20-32021, under Chapter 11 of the United States Bankruptcy Code (11 U.S.C. §§ 101- 1330), as amended.

(4)    The text of the Existing Certificate is hereby amended and restated in its entirety to read as follows:

FIRST:    Name. The name of the Corporation is Whiting Petroleum Corporation (the “Corporation”).

SECOND:    Agent for Service. The address of the registered office of the Corporation in the State of Delaware shall be at 1209 Orange Street, City of Wilmington, County of New Castle; and the name of its registered agent at such address shall be Corporation Trust Company.

THIRD:    Purpose. The purpose of the Corporation is to engage in any lawful act or activity for which a corporation may be organized under the DGCL.


FOURTH:    Capital Stock.

(a)    Authorized Capital Stock. The total number of shares of stock which the Corporation shall have authority to issue is 550,000,000 shares of capital stock, consisting of (i) 500,000,000 shares of common stock, each having a par value of $0.001 per share, (the “Common Stock”), and (ii) 50,000,000 shares of preferred stock, each having a par value of $0.001 per share (the “Preferred Stock”).

(b)    Common Stock. The powers, preferences and rights, and the qualifications, limitations and restrictions, of each class of the Common Stock are as follows:

(1)    No Cumulative Voting. The holders of shares of Common Stock shall not have cumulative voting rights.

(2)    Dividends; Stock Splits. Subject to the rights of the holders of Preferred Stock, and subject to any other provisions of this Certificate, as it may be amended from time to time, holders of shares of Common Stock shall be entitled to receive such dividends and other distributions in cash, stock or property of the Corporation when, as and if declared thereon by the Board of Directors of the Corporation (the “Board of Directors”) from time to time out of assets or funds of the Corporation legally available therefor.

(3)    Liquidation, Dissolution, etc. In the event of any liquidation, dissolution or winding up (either voluntary or involuntary) of the Corporation, the holders of shares of Common Stock shall be entitled to receive the assets and funds of the Corporation available for distribution after payments to creditors and to the holders of any Preferred Stock of the Corporation that may at the time be outstanding, in proportion to the number of shares held by them, respectively.

(4)    Merger, etc. In the event of a merger or consolidation of the Corporation with or into another entity (whether or not the Corporation is the surviving entity), the holders of each share of Common Stock shall be entitled to receive the same per share consideration on a per share basis.

(5)    No Preemptive or Subscription Rights. No holder of shares of Common Stock shall be entitled to preemptive or subscription rights.

(c)    Preferred Stock. The Board of Directors is hereby expressly authorized to provide for the issuance of all or any shares of the Preferred Stock in one or more classes or series, and to fix for each such class or series such voting powers, full or limited, or no voting powers, and such designations, preferences and relative, participating, optional or other special rights and such qualifications, limitations or restrictions thereof, as shall be stated and expressed in the resolution or resolutions adopted by the Board of Directors providing for the issuance of such class or series, including, without limitation, the authority to provide that any such class or series may be (i) subject to redemption at such time or times and at such price or prices; (ii) entitled to receive dividends (which may be cumulative or non-cumulative) at such rates (which may be fixed or variable), on such conditions, and at such times, and payable in preference to, or in such relation to, the dividends payable on any other class or classes or any other series; (iii) entitled to such rights upon the dissolution of, or upon any distribution of the assets of, the Corporation; or (iv) convertible into, or exchangeable for, shares of any other class or classes of stock, or of any other series of the same or any other class or classes of stock, of the Corporation at such price or prices or at such rates of exchange and with such adjustments; all as may be stated in such resolution or resolutions.

 

2


(d)    Non-Voting Equity. The Corporation shall not issue nonvoting equity securities to the extent prohibited by Section 1123(a)(6) of the Bankruptcy Code; provided, however, that the foregoing restriction shall (i) have no further force and effect beyond that required under Section 1123(a)(6) of the Bankruptcy Code, (ii) only have such force and effect for so long as Section 1123(a)(6) of the Bankruptcy Code is in effect and applicable to the Corporation and (iii) in all events may be amended or eliminated in accordance with applicable law as from time to time may be in effect.

(e)    Power to Sell and Purchase Shares. Subject to the requirements of applicable law, the Corporation shall have the power to issue and sell all or any part of any shares of any class of stock herein or hereafter authorized to such persons, and for such consideration, as the Board of Directors shall from time to time, in its discretion, determine, whether or not greater consideration could be received upon the issue or sale of the same number of shares of another class, and as otherwise permitted by law. Subject to the requirements of applicable law, the Corporation shall have the power to purchase any shares of any class of stock herein or hereafter authorized from such persons, and for such consideration, as the Board of Directors shall from time to time, in its discretion, determine, whether or not less consideration could be paid upon the purchase of the same number of shares of another class, and as otherwise permitted by law.

FIFTH:    Directors. The following provisions are inserted for the management of the business and the conduct of the affairs of the Corporation, and for further definition, limitation and regulation of the powers of the Corporation and of its directors and stockholders:

(a)    Business and Affairs of the Corporation. The business and affairs of the Corporation shall be managed by or under the direction of the Board of Directors.

(b)    Number of Directors. The number of directors of the Corporation shall be as from time to time fixed by, or in the manner provided in, the by-laws of the Corporation (as in effect from time to time, the “By-Laws”).

(c)    Term. The directors shall consist of a single class, with the initial term of office to expire at the 2021 annual meeting of stockholders, which shall be held no later than September 1, 2021, and each director shall hold office until his or her successor shall be duly elected and qualified, subject, however, to prior death, resignation, retirement, disqualification or removal from office. At each annual meeting of stockholders, directors elected to succeed those directors whose terms then expire shall be elected for a term of office to expire at the next succeeding annual meeting of stockholders after their election, with each director to hold office until his or her successor shall be duly elected and qualified, subject, however, to prior death, resignation, retirement, disqualification or removal from office.

(d)    Vacancies; Removal. Subject to the rights of the holders of Preferred Stock, any vacancy on the Board of Directors that results from an increase in the number of directors and any other vacancy occurring on the Board of Directors may be filled only by a majority of the

 

3


Board of Directors then in office, even if less than a quorum, or by a sole remaining director. Any director elected to fill a vacancy shall hold office until the next annual meeting of the stockholders and until his or her successor shall be duly elected and qualified, or until his or her earlier death, resignation, retirement, disqualification or removal from office. Subject to the rights, if any, of the holders of shares of Preferred Stock then outstanding, any or all of the directors of the Corporation may be removed from office at any time, with or without cause, by the affirmative vote of the holders of at least a majority of the voting power of the Corporation’s then outstanding capital stock entitled to vote generally in the election of directors. Notwithstanding the foregoing, whenever the holders of any one or more classes or series of Preferred Stock issued by the Corporation shall have the right, voting separately by class or series, to elect directors at an annual or special meeting of stockholders, the election, term of office, filling of vacancies and other features of such directorships shall be governed by the terms of this Certificate applicable thereto.

(e)    Power of the Directors. In addition to the powers and authority hereinbefore or by statute expressly conferred upon them, the directors are hereby empowered to exercise all such powers and do all such acts and things as may be exercised or done by the Corporation, subject, nevertheless, to the provisions of the DGCL, this Certificate, and the By-Laws; provided, however, that no By-Laws hereafter adopted, nor any alteration or amendment thereto or repeal thereof, shall invalidate any prior act of the directors which would have been valid if such By-Laws had not been adopted, altered, amended or repealed.

SIXTH:    Director Liability. No director shall be personally liable to the Corporation or any of its stockholders for monetary damages for breach of fiduciary duty as a director, except to the extent such exemption from liability or limitation thereof is not permitted under the DGCL as the same exists or may hereafter be amended. If the DGCL is amended hereafter to authorize the further elimination or limitation of the liability of directors, then the liability of a director of the Corporation shall be eliminated or limited to the fullest extent authorized by the DGCL, as so amended. Any repeal or modification of this Article SIXTH shall not adversely affect any right or protection of a director of the Corporation existing at the time of such repeal or modification with respect to acts or omissions occurring prior to such repeal or modification.

SEVENTH:    Indemnification. The Corporation shall indemnify its directors and officers to the fullest extent authorized or permitted by law, as now or hereafter in effect, and such right to indemnification shall continue as to a person who has ceased to be a director or officer of the Corporation and shall inure to the benefit of his or her heirs, executors and personal and legal representatives; provided, however, that, except for proceedings to enforce rights to indemnification, the Corporation shall not be obligated to indemnify any director or officer (or his or her heirs, executors or personal or legal representatives) in connection with a proceeding (or part thereof) initiated by such person unless such proceeding (or part thereof) was authorized or consented to by the Board of Directors. The right to indemnification conferred by this Article SEVENTH shall include the right to be paid by the Corporation the expenses incurred in defending or otherwise participating in any proceeding in advance of its final disposition.

The Corporation may, to the extent authorized from time to time by the Board of Directors, provide rights to indemnification and to the advancement of expenses to employees and agents of the Corporation similar to those conferred in this Article SEVENTH to directors and officers of the Corporation.

 

4


The rights to indemnification and to the advance of expenses conferred in this Article SEVENTH shall not be exclusive of any other right which any person may have or hereafter acquire under this Certificate, the By-Laws, any statute, agreement, vote of stockholders or disinterested directors or otherwise.

Any repeal or modification of this Article SEVENTH shall not adversely affect any rights to indemnification and to the advancement of expenses of a director or officer of the Corporation existing at the time of such repeal or modification with respect to any acts or omissions occurring prior to such repeal or modification.

EIGHTH:    Special Stockholder Meetings. Unless otherwise required by law, special meetings of stockholders, for any purpose or purposes, may be called only by (a) the Chairman of the Board of Directors, if there be one, (b) the President, (c) a majority of the entire Board of Directors or (d) the Secretary of the Corporation at the written request of a stockholder of record in accordance with the requirements and procedures provided in the By-Laws. At any special meeting of stockholders, only such business shall be conducted or considered as shall have been properly brought before the meeting pursuant to the Corporation’s notice of meeting. As used in this Certificate, the term “entire Board of Directors” means the total number of directors which the Corporation would have if there were no vacancies.

NINTH:    No Action by Written Consent. Any action required or permitted to be taken by the stockholders of the Corporation must be effected at a duly called annual or special meeting of stockholders of the Corporation, and the ability of the stockholders to consent in writing to the taking of any action is hereby specifically denied.

TENTH:    Place of Stockholder Meetings and Corporate Books. Meetings of stockholders may be held within or without the State of Delaware, as the By-Laws may provide. The books of the Corporation may be kept (subject to any provision contained in the DGCL) outside the State of Delaware at such place or places as may be designated from time to time by the Board of Directors or in the By-Laws.

ELEVENTH:    Amendment of By-Laws. In furtherance and not in limitation of the powers conferred upon it by the laws of the State of Delaware, the Board of Directors shall have the power to adopt, amend, alter or repeal the By-Laws. The affirmative vote of at least a majority of the entire Board of Directors shall be required to adopt, amend, alter or repeal the By-Laws. The By-Laws also may be adopted, amended, altered or repealed by the affirmative vote of the holders of at least a majority of the voting power of the shares entitled to vote at an election of directors.

TWELFTH:    Amendment of Certificate of Incorporation. The Corporation reserves the right to amend, alter, change or repeal any provision contained in this Certificate in the manner now or hereafter prescribed in this Certificate, the By-Laws or the DGCL, and all rights herein conferred upon stockholders are granted subject to such reservation; provided, however, that, notwithstanding any other provision of this Certificate (and in addition to any other vote that

 

5


may be required by law), the affirmative vote of the holders of at least a majority of the voting power of the shares entitled to vote at an election of directors shall be required to amend, alter, change or repeal, or to adopt any provisions as part of this Certificate inconsistent with the purpose and intent of Articles FIFTH, SIXTH, EIGHTH, NINTH and ELEVENTH of this Certificate or this Article TWELFTH.

THIRTEENTH:    Severability. If any provision or provisions of this Certificate shall be held to be invalid, illegal or unenforceable as applied to any circumstance for any reason whatsoever: (i) the validity, legality and enforceability of such provisions in any other circumstance and of the remaining provisions of this Certificate (including, without limitation, each portion of any paragraph of this Certificate containing any such provision held to be invalid, illegal or unenforceable that is not itself held to be invalid, illegal or unenforceable) shall not, to the fullest extent permitted by applicable law, in any way be affected or impaired thereby and (ii) to the fullest extent permitted by applicable law, the provisions of this Certificate (including, without limitation, each such portion of any paragraph of this Certificate containing any such provision held to be invalid, illegal or unenforceable) shall be construed so as to permit the Corporation to protect its directors, officers, employees and agents from personal liability in respect of their good faith service to or for the benefit of the Corporation to the fullest extent permitted by law.

FOURTEENTH:    Exclusive Forum.

(a)    Unless the Corporation consents in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware (or, if and only if the Court of Chancery of the State of Delaware does not have jurisdiction, a state court located within the State of Delaware (or, if no state court located within the State of Delaware has jurisdiction, the federal district court for the District of Delaware)) shall be the sole and exclusive forum for: (i) any derivative action or proceeding brought on behalf of the Corporation; (ii) any action asserting a claim of breach of a fiduciary duty owed by any current or former director or officer or other employee of the Corporation to the Corporation or the Corporation’s stockholders, including a claim alleging the aiding and abetting of such a breach of fiduciary duty; (iii) any action asserting a claim against the Corporation or any current or former director or officer or other employee of the Corporation arising pursuant to any provision of the DGCL or this Certificate or the By-Laws (as either may be amended from time to time); (iv) any action asserting a claim related to or involving the Corporation that is governed by the internal affairs doctrine; or (v) any action asserting an “internal corporate claim” as that term is defined in Section 115 of the DGCL. For the avoidance of doubt, this Article FOURTEENTH(a) shall not apply to any action or proceeding asserting a claim under the Securities Act of 1933, as amended (the “Securities Act”), and/or the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

(b)    Unless the Corporation consents in writing to the selection of an alternative forum, the federal district courts of the United States of America shall be the exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act.

(c)    To the fullest extent permitted by applicable law, any person or entity purchasing or otherwise acquiring or holding any interest in any security of the Corporation shall be deemed to have notice of and consented to this Article FOURTEENTH.

*    *    *    *    *

 

6


IN WITNESS WHEREOF, the Corporation has caused this Amended and Restated Certificate of Incorporation to be executed on its behalf this 1st day of September, 2020.

 

WHITING PETROLEUM CORPORATION
By:  

/s/ Bruce R. DeBoer

Name:   Bruce R. DeBoer
Title:   Chief Administrative Officer, General Counsel and Secretary

[Signature Page to Amended and Restated Certificate of Incorporation]

Exhibit 3.2

SECOND AMENDED AND RESTATED

BY-LAWS

OF

WHITING PETROLEUM CORPORATION

ARTICLE I

OFFICES

Section 1.    Registered Office. The registered office of Whiting Petroleum Corporation (the “Corporation”) in the State of Delaware shall be located at such place as the board of directors of the Corporation (the “Board of Directors”) may from time to time determine or as the business of the Corporation may require. The registered office and/or registered agent of the Corporation may be changed from time to time by action of the Board of Directors.

Section 2.    Other Offices. The Corporation may also have offices at such other places both within and without the State of Delaware as the Board of Directors may from time to time determine or as the business of the Corporation may require.

ARTICLE II

MEETINGS OF STOCKHOLDERS

Section 1.    Place of Meetings. Meetings of the stockholders for the election of directors or for any other purpose shall be held at such time and place, either within or without the State of Delaware as shall be designated from time to time by the Board of Directors. The Board of Directors may, in its sole discretion, determine that a meeting of the stockholders shall not be held at any place, but may instead be held solely by means of remote communication in the manner authorized by the General Corporation Law of the State of Delaware (the “DGCL”).

Section 2.    Annual Meetings. The annual meeting of the stockholders (each, an “Annual Meeting”) shall be held each year on such date and at such time as shall be designated from time to time by the Board of Directors. At the Annual Meeting, the stockholders shall elect directors of the Corporation and may transact any other proper business brought in accordance with Section 14 of this Article II. Any previously scheduled Annual Meeting may be postponed by resolution of the Board of Directors upon public notice given prior to the date previously scheduled for such Annual Meeting.

Section 3.    Special Meetings.

(a)    Unless otherwise required by law or by the certificate of incorporation of the Corporation, as amended and restated from time to time (the “Certificate of Incorporation”), a special meeting of the stockholders (a “Special Meeting”), for any purpose or purposes, may be called only by (i) the Chairman of the Board, if there be one, (ii) the President, (iii) a majority of the entire Board of Directors or (iv) the Secretary of the Corporation at the written request of a stockholder of record who (x) owns, or is acting on behalf of one or more beneficial owners who own as of the record date fixed in accordance with this Section 3 to determine who may deliver a written request to call such Special Meeting, capital stock representing at least twenty-five percent


(25%) of all outstanding shares of capital stock of the Corporation entitled to vote generally in the election of directors (the “Special Meeting Request Required Shares”), and (y) have owned the Special Meeting Request Required Shares for at least 365 consecutive days prior to such record date and continue to own the Special Meeting Request Required Shares at all times between such record date and the date of the applicable meeting of the stockholders. For purposes of this Section 3, a record or beneficial owner shall be deemed to “own” shares of capital stock of the Corporation that such record or beneficial owner would be deemed to own in accordance with Section 15(c)(iv) (without giving effect to any reference to Eligible Holder contained therein). Special Meetings (including those called by the Secretary following receipt of a written request or requests from stockholders holding the Special Meeting Request Required Shares in accordance with clause (iv) of the first sentence of this Section 3(a)) shall be held on such date, at such time, and at such place (if any) within or without the State of Delaware as shall be designated by the Board of Directors and stated in the Corporation’s notice of the meeting. In the case of a Special Meeting called by the Secretary following receipt of a written request or requests from stockholders holding the Special Meeting Request Required Shares in accordance with clause (iv) of the first sentence of this Section 3(a), the date of such Special Meeting, as fixed by the Board of Directors in accordance with this Section 3(a), shall not be fewer than thirty nor more than one hundred and twenty days after the date a request or requests from stockholders holding the Special Meeting Request Required Shares have been received by the Secretary of the Corporation in accordance with this Section 3 (or, in the case of any litigation related to the validity of the requests for a Special Meeting, one hundred and twenty days after the resolution of such litigation).

(b)    Any record stockholder may, by written notice to the Secretary in accordance with Section 14(c)(v), demand that the Board of Directors fix a record date to determine the record stockholders who are entitled to deliver a written request to call a Special Meeting (such record date, the “Ownership Record Date”). A written demand to fix an Ownership Record Date shall include all of the information set forth in Section 3(d). The Board of Directors may fix the Ownership Record Date within ten days of the Secretary’s receipt of a valid demand to fix the Ownership Record Date. The Ownership Record Date shall not precede, and shall not be more than ten days after, the date upon which the resolution fixing the Ownership Record Date is adopted by the Board of Directors. If an Ownership Record Date is not fixed by the Board of Directors within the period set forth above, the Ownership Record Date shall be the date that the first written request to call a Special Meeting in accordance with the requirements of this Section 3(b) is received by the Secretary.

(c)    If a record stockholder is the nominee for more than one beneficial owner of stock, the record stockholder may deliver a written request to call a Special Meeting solely with respect to the capital stock of the Corporation beneficially owned by the beneficial owner who is directing the record stockholder to sign such written request.

(d)    Each written request to call a Special Meeting shall be delivered to the Secretary of the Corporation in accordance with Section 14(c)(v) and shall include the following: (i) the signature of the record stockholder submitting such request and the date such request was signed, (ii) the text of each business proposal desired to be submitted for stockholder approval at the Special Meeting, and (iii) as to the beneficial owner, if any, directing such record stockholder to sign the written request and as to such record stockholder (unless such record stockholder is

 

2


acting solely as a nominee for a beneficial owner) (each such beneficial owner and each record stockholder who is not acting solely as a nominee, a “Disclosing Party”):

(i)    all of the information required to be disclosed pursuant to Section 14(a) (for proposals of business other than nomination of persons for election to the Board of Directors) and Section 14(b) (for nominations of persons for election to the Board of Directors) (which information shall be supplemented by delivery to the Secretary) by each Disclosing Party, (a) not later than five days after the record date for determining the record stockholders entitled to notice of the Special Meeting (such record date, the “Meeting Record Date”), as of the Meeting Record Date and (b) not later than the fifth day before the Special Meeting, as of the date that is ten days prior to the Special Meeting or any adjournment or postponement thereof;

(ii)    with respect to each business proposal to be submitted for stockholder approval at the Special Meeting, a statement whether any Disclosing Party (a) will deliver a proxy statement and form of proxy to holders of at least the percentage of voting power of all of the outstanding shares of capital stock of the Corporation entitled to vote generally in the election of directors required under applicable law, rule or regulation to carry such proposal and/or (b) otherwise will solicit proxies from stockholders in support of such proposal;

(iii)    any additional information reasonably requested by the Board of Directors.

Each time the Disclosing Party’s ownership of outstanding shares of capital stock of the Corporation entitled to vote generally in the election of directors decreases following the delivery of the foregoing information to the Secretary, such Disclosing Party shall notify the Corporation of such decreased ownership position, together with any information reasonably requested by the Board of Directors to verify such position, within five days of such decrease or as of the fifth day before the Special Meeting, whichever is earlier.

(e)    The determination of the validity of a written request to call a Special Meeting shall be made by the Board of Directors, which determination shall be conclusive and binding on the Corporation and the stockholders. Notwithstanding anything to the contrary herein, the Corporation shall not accept, and shall consider ineffective, a written request to call a Special Meeting pursuant to Section 3(a):

(i)    that does not comply with the provisions of this Section 3;

(ii)    that relates to an item of business that is not a proper subject for stockholder action under applicable law, rule or regulation;

(iii)    if such written request is delivered between the time beginning on the sixty first day after the earliest date of signature on a written request to call a Special Meeting, that has been delivered to the Secretary, relating to an identical or substantially similar item (as determined by the Board of Directors, a “Similar Item”), other than the election or removal of directors, and ending on the one year anniversary of such earliest date;

(iv)    if a Similar Item will be submitted for stockholder approval at any stockholder meeting to be held on or before the one hundred and twentieth day after the Secretary

 

3


receives such written request or if a Similar Item has been presented at any meeting of the stockholders held within one hundred and twenty days prior to receipt by the Secretary of such written request (for purposes of this clause (iv), the election of directors shall be deemed to be a Similar Item with respect to all items of business involving the election or removal of directors, changing the size of the Board of Directors and the filling of vacancies or newly created directorships resulting from any increase in the authorized number of directors); or

(v)    if such written request is delivered between the time beginning on the one hundred and twentieth day prior to the date of the next annual meeting and ending on the date of the next annual meeting.

Except as otherwise provided by law, in the case of a written request to call a Special Meeting, the Chairman of the Board shall have the power and duty (i) to determine whether any business proposed to be brought before the Special Meeting was proposed in accordance with the procedures set forth in this Section 3 and (ii) if any proposed business was not proposed in compliance with this Section 3 or the stated business to be brought before the Special Meeting is not a proper subject for stockholder action under applicable law, to declare that such nomination shall be disregarded or that such proposed business shall not be transacted.

(f)    Revocations.

(i)    A record stockholder who submitted a request to call a Special Meeting may revoke such request to call a Special Meeting at any time before the Special Meeting by sending written notice to the Secretary of the Corporation.

(ii)    All written requests for a Special Meeting shall be deemed revoked:

(A)    upon the first date that, after giving effect to revocation(s) and notices of ownership position decreases, the aggregate capital stock of the Corporation ownership position of all the Disclosing Parties listed on the unrevoked written requests decreases to a number of shares of capital stock of the Corporation less than the Special Meeting Request Required Shares;

(B)    if any Disclosing Party who has provided a statement described in Section 3(d)(ii) does not act in accordance with the representations set forth therein;

(C)    if any Disclosing Party does not provide the supplemental information required by 3(d)(iii) or by the final sentence of Section 3(d); or

(D)    if none of the stockholders who submitted a request to call a Special Meeting, or their qualified representatives, appear at the Special Meeting to present the matters to be presented for consideration that were specified in the request to call such Special Meeting, the Corporation need not present such matters for a vote at such Special Meeting, notwithstanding that proxies in respect of such matter may have been received by the Corporation.

(iii)    If a deemed revocation of all written requests to call a Special Meeting has occurred after the Special Meeting has been called by the Secretary, the Board of Directors shall have the discretion to determine whether to proceed with the Special Meeting.

 

4


(g)    The Board of Directors may submit its own proposal or proposals for consideration at a Special Meeting called at the request of one or more stockholders.

(h)    At a Special Meeting, only such business shall be conducted as shall be have been properly brought before the meeting pursuant to the Corporation’s notice of meeting. To be properly brought before a Special Meeting, proposals of business must be (1) specified in the Corporation’s notice of meeting (or any supplement thereto) given by or at the direction of the Board of Directors, (2) otherwise properly brought before the Special Meeting, by or at the direction of the Board of Directors or (3) specified in the Corporation’s notice of meeting (or any supplement thereto) given by the Corporation pursuant to a valid stockholder request in accordance with this Section 3, it being understood that business transacted at such Special Meeting shall be limited to the matters stated in such valid stockholder request; provided, that nothing herein shall prohibit the Board of Directors from submitting its own proposal or proposals for consideration at a Special Meeting called at the request of one or more stockholders.

(i)    Nominations of individuals for election to the Board of Directors may be made at a Special Meeting at which directors are to be elected pursuant to the Corporation’s notice of meeting (a) by or at the direction of the Board of Directors or (b) provided that the Board of Directors has determined that directors shall be elected at such meeting, by any stockholder of the Corporation who (i) is a stockholder of record at the time of giving of notice of such Special Meeting and at the time of the Special Meeting, (ii) is entitled to vote at the meeting, and (iii) complies with the procedures set forth in these By-laws as to such nomination. Subject to Section 14 of these By-Laws, this Section 3 shall be the exclusive means for a stockholder to make nominations or other business proposals (other than matters properly brought under Rule 14a-8 under the Exchange Act and included in the Corporation’s notice of meeting (or any supplement thereto given by or at the direction of the Board of Directors)) before a Special Meeting.

Section 4.    Notice. Whenever stockholders are required or permitted to take any action at a meeting, a written notice of the meeting, shall be given, which notice shall state the place, if any, date and hour of the meeting, the means of remote communications, if any, by which stockholders and proxyholders may be deemed to be present in person and vote at such meeting, and, in the case of a Special Meeting, the purpose or purposes for which the meeting is called. Unless otherwise required by law, the written notice of any meeting shall be given not less than ten nor more than sixty days before the date of the meeting to each stockholder entitled to vote at such meeting. If mailed, such notice shall be deemed to be delivered when deposited in the United States mail with postage thereon prepaid, addressed to the stockholder at such person’s address as it appears on the records of the Corporation. Without limiting the manner by which notice otherwise may be given to stockholders, any notice to stockholders may be given by electronic transmission in the manner provided by Section 232 of the DGCL.

Section 5.    Adjournments. Any meeting of the stockholders may be adjourned from time to time to reconvene at the same or some other place, and notice need not be given of any such adjourned meeting if the time and place, if any, thereof and the means of remote communication, if any, by which stockholders and proxyholders may be deemed to be present in person and vote at such adjourned meeting are announced at the meeting at which the adjournment is taken; provided, however, that, if the adjournment is for more than thirty days, or if, after the adjournment, a new record date is fixed for the adjourned meeting, notice of the adjourned meeting

 

5


in accordance with the requirements of Section 4 of this Article II shall be given to each stockholder of record entitled to vote at the meeting. At the adjourned meeting, the Corporation may transact any business which might have been transacted at the original meeting. The chairman of any meeting of the stockholders may adjourn the meeting from time to time, whether or not there is a quorum present or represented.

Section 6.    Quorum. Unless otherwise required by applicable law or the Certificate of Incorporation, the holders of a majority of the Corporation’s capital stock issued and outstanding and entitled to vote thereat, present in person or represented by proxy, shall constitute a quorum at all meetings of the stockholders for the transaction of business. A quorum, once established, shall not be broken by the withdrawal of enough votes to leave less than a quorum. If, however, such quorum shall not be present or represented at any meeting of the stockholders, the stockholders entitled to vote thereat, present in person or represented by proxy, shall have power to adjourn the meeting from time to time, in the manner provided in Section 5 of this Article II, until a quorum shall be present or represented.

Section 7.    Voting. Unless otherwise required by law, the Certificate of Incorporation or these By-Laws, any question brought before any meeting of the stockholders, other than the election of directors, shall be decided by the affirmative vote of the holders of a majority of the total number of votes of the Corporation’s capital stock represented in person or by proxy and entitled to vote thereat, voting as a single class. Notwithstanding the foregoing sentence and subject to the Certificate of Incorporation, all elections of directors shall be determined by a plurality of the votes cast in respect of the shares present in person or represented by proxy at the meeting and entitled to vote on the election of directors. Unless otherwise provided in the Certificate of Incorporation, and subject to Section 10 of this Article II, each stockholder represented in person or by proxy at a meeting of the stockholders shall be entitled to cast one vote for each share of the capital stock entitled to vote thereat held by such stockholder. Such votes may be cast in person or by proxy as provided in Section 8 of this Article II but no proxy shall be voted on or after three years from its date, unless such proxy provides for a longer period. The Board of Directors, in its discretion, or the officer of the Corporation presiding at a meeting of the stockholders, in such officer’s discretion, may require that any votes cast at such meeting shall be cast by written ballot.

Section 8.    Proxies. Each stockholder entitled to vote at a meeting of the stockholders may authorize another person or persons to act for such stockholder as proxy, but no such proxy shall be voted upon after three years from its date, unless such proxy provides for a longer period. Without limiting the manner in which a stockholder may authorize another person or persons to act for such stockholder as proxy, the following shall constitute a valid means by which a stockholder may grant such authority:

(a)    A stockholder may execute a writing authorizing another person or persons to act for such stockholder as proxy. Execution may be accomplished by the stockholder or such stockholder’s authorized officer, director, employee or agent signing such writing or causing such person’s signature to be affixed to such writing by any reasonable means, including, but not limited to, by facsimile signature.

 

6


(b)    A stockholder may authorize another person or persons to act for such stockholder as proxy by transmitting or authorizing the transmission of a telegram, cablegram or other means of electronic transmission to the person who will be the holder of the proxy or to a proxy solicitation firm, proxy support service organization or like agent duly authorized by the person who will be the holder of the proxy to receive such transmission, provided that any such telegram, cablegram or other means of electronic transmission must either set forth or be submitted with information from which it can be determined that the telegram, cablegram or other electronic transmission was authorized by the stockholder. If it is determined that such telegrams, cablegrams or other electronic transmissions are valid, the inspectors, or if there are no inspectors, such other persons making that determination shall specify the information on which they relied.

Any copy, facsimile telecommunication or other reliable reproduction of the writing or transmission authorizing another person or persons to act as proxy for a stockholder may be substituted or used in lieu of the original writing or transmission for any and all purposes for which the original writing or transmission could be used; provided, however, that such copy, facsimile telecommunication or other reproduction shall be a complete reproduction of the entire original writing or transmission.

Section 9.    List of Stockholders Entitled to Vote. The officer of the Corporation who has charge of the stock ledger of the Corporation shall prepare and make, at least ten days before every meeting of the stockholders, a complete list of the stockholders entitled to vote at the meeting, arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten days prior to the meeting (a) on a reasonably accessible electronic network, provided that the information required to gain access to such list is provided with the notice of the meeting, or (b) at the principal place of business of the Corporation. In the event that the Corporation determines to make the list available on an electronic network, the Corporation may take reasonable steps to ensure that such information is available only to stockholders of the Corporation. If the meeting is to be held at a place, then the list shall be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any stockholder of the Corporation who is present. If the meeting is to be held solely by means of remote communication then the list shall also be open to the examination of any stockholder during the whole time of the meeting on a reasonably accessible electronic network, and the information required to access such list shall be provided with the notice of the meeting.

Section 10.    Record Date. In order that the Corporation may determine the stockholders entitled to notice of or to vote at any meeting of the stockholders or any adjournment thereof, the Board of Directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the Board of Directors, and which record date shall not be more than sixty nor less than ten days before the date of such meeting. If no record date is fixed by the Board of Directors, the record date for determining stockholders entitled to notice of or to vote at a meeting of the stockholders shall be at the close of business on the day next preceding the date on which notice is given, or, if notice is waived, at the close of business on the next preceding the day on which the meeting is held. A determination of stockholders of record entitled to notice of or to vote at a meeting of the stockholders shall apply to any adjournment of the meeting; provided, however, that the Board of Directors may fix a new record date for the adjourned meeting.

 

7


Section 11.    Stock Ledger. The stock ledger of the Corporation shall be the only evidence as to who are the stockholders entitled to examine the stock ledger, the list required by Section 9 of this Article II or the books of the Corporation, or to vote in person or by proxy at any meeting of the stockholders.

Section 12.    Conduct of Meetings. The Board of Directors may adopt by resolution such rules and regulations for the conduct of any meeting of the stockholders as it shall deem appropriate. Except to the extent inconsistent with such rules and regulations as adopted by the Board of Directors, the chairman of any meeting of the stockholders shall have the right and authority to prescribe such rules, regulations and procedures and to do all such acts as, in the judgment of such chairman, are appropriate for the proper conduct of the meeting. Such rules, regulations or procedures, whether adopted by the Board of Directors or prescribed by the chairman of the meeting, may include, without limitation, the following: (a) the establishment of an agenda or order of business for the meeting; (b) the determination of when the polls shall open and close for any given matter to be voted on at the meeting; (c) rules and procedures for maintaining order at the meeting and the safety of those present; (d) limitations on attendance at or participation in the meeting to stockholders of record of the Corporation, their duly authorized and constituted proxies or such other persons as the chairman of the meeting shall determine; (e) restrictions on entry to the meeting after the time fixed for the commencement thereof; (f) limitations on the time allotted to questions or comments by participants; (e) limitations on the time allotted to questions or comments by participants; (f) the adoption of procedures (if any) requiring attendees to provide the Corporation advance notice of their intent to attend the meeting; and (g) restrictions on the use of cell phones, audio or video recording devices and similar devices at the meeting. The chairman of the meeting’s rulings on procedural matters shall be final. The chairman of the meeting may adjourn or recess any meeting of the stockholders whether pursuant to Section 6 of this Article II or otherwise, and notice of such adjournment or recess need be given only if required by law.

Section 13.    Inspectors of Election. In advance of any meeting of the stockholders, the Board of Directors, by resolution, the Chairman of the Board or the President shall appoint one or more inspectors to act at the meeting and make a written report thereof. One or more persons may be designated as alternate inspectors to replace any inspector who fails to act. If no inspector or alternate is able to act at a meeting of the stockholders, the chairman of the meeting shall appoint one or more inspectors to act at the meeting. Unless otherwise required by applicable law, inspectors may be officers, employees or agents of the Corporation. Each inspector, before entering upon the discharge of the duties of inspector, shall take and sign an oath faithfully to execute the duties of inspector with strict impartiality and according to the best of such inspector’s ability. The inspector shall have the duties prescribed by law and shall take charge of the polls and, when the vote is completed, shall make a certificate of the result of the vote taken and such other facts as may be required by applicable law.

 

8


Section 14.    Notice of Stockholder Nominations and Other Business.

(a)    Other Business.

(i)    The proposal of business other than a nomination of a director or directors (it being understood that nominations of directors shall be governed by Section 14(b) and Section 15) to be considered by the stockholders may be made at an Annual Meeting or Special Meeting only (A) pursuant to the Corporation’s notice of meeting (or any supplement thereto) given by or at the direction of the Board of Directors (or any duly authorized committee thereof), (B) by or at the direction of the Board of Directors (or any duly authorized committee thereof) or (C) by any stockholder of the Corporation who (I) is a stockholder of record at the time of giving of notice provided for in this Section 14(a), on the record date for the determination of stockholders entitled to vote at such Annual Meeting or Special Meeting and at the time of the Annual Meeting or Special Meeting, (II) is entitled to vote with respect to such other business at the Annual Meeting or Special Meeting and (III) complies with the notice procedures set forth in this Section 14(a) as to such other business. The preceding clause (C) shall be the exclusive means for a stockholder to submit other business (other than matters properly brought under Rule 14a-8 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and included in the Corporation’s notice of meeting) before an Annual Meeting or Special Meeting.

(ii)    For any business other than a nomination of a director or directors to be properly brought before an Annual Meeting by a stockholder pursuant to Section 14(a)(i)(C), the stockholder must have given timely notice thereof in proper written form to the Secretary of the Corporation in accordance with Section 14(c)(v) and such other business must otherwise be a proper matter for stockholder action. To be timely, a stockholder’s notice shall be delivered to the Secretary not earlier than the Close of Business on the 120th day and not later than the Close of Business on the 90th day prior to the date of the first anniversary of the preceding year’s Annual Meeting; provided, however, that in the event that the date of the Annual Meeting is more than 30 days before or more than 70 days after such anniversary date, or if no Annual Meeting was held in the preceding year, notice by the stockholder to be timely must be so delivered not earlier than the Close of Business on the 120th day prior to the date of such Annual Meeting and not later than the Close of Business on the later of the 90th day prior to the date of such Annual Meeting or, if the first public announcement of the date of such Annual Meeting is less than 100 days prior to the date of such Annual Meeting, the 10th day following the day on which public announcement of the date of such Annual Meeting is first made by the Corporation. In no event shall any adjournment or postponement of an Annual Meeting or the announcement thereof commence a new time period for the giving of a stockholder’s notice as described above. To be in proper form, a stockholder’s notice to the Secretary must set forth: (A) as to each matter such stockholder proposes to bring before the Annual Meeting, (I) a brief description of the business desired to be brought before the Annual Meeting, the reasons for conducting such business at the Annual Meeting and the text, if any, of the proposal or business (including the text of any resolutions proposed for consideration and, in the event that such business includes a proposal to amend these By-Laws, the language of the proposed amendment) and (II) a description of all agreements, arrangements and understandings between such stockholder (the “Noticing Stockholder”) and the beneficial owner, if any, on whose behalf the proposal is made (collectively with the Noticing Stockholder, the “Holders” and each, a “Holder”) and any Stockholder Associated Person (as defined below) and any other person or persons (including their names) in connection with the proposal of such business by such Holder and any material interest of each Holder and Stockholder Associated Person in such business; and (B) as to each Holder, (I) the name and address as they appear on the Corporation’s books of each Holder and the name and address of any Stockholder Associated Person, (II) the Share Information (as defined below), (III) a representation by the

 

9


Noticing Stockholder that such stockholder is a holder of record of shares of the Corporation entitled to vote at such Annual Meeting with respect to such other business, will continue to be a holder of record of shares of the Corporation entitled to vote at such Annual Meeting with respect to such other business through the date of such Annual Meeting and intends to appear in person or by proxy at the Annual Meeting to bring such other business before the Annual Meeting, (IV) a representation whether any Holder and/or any Stockholder Associated Person intends or is part of a group which intends (a) to deliver a proxy statement and/or form of proxy to holders of at least the percentage of the Corporation’s outstanding capital stock required to approve or adopt the proposal and/or (b) otherwise to solicit proxies from stockholders in support of such proposal, (V) any other information relating to each Holder that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for the proposal pursuant to Section 14 of the Exchange Act and the rules and regulations promulgated thereunder, and (VI) a representation as to the accuracy of the information set forth in the notice.

(iii)    Only such other business shall be conducted at an Annual Meeting as shall have been brought before the meeting by the Board of Directors or in accordance with the procedures set forth in this Section 14(a). Except as otherwise provided by law, the Certificate of Incorporation or these By-Laws, the chairman of the meeting shall have the power and duty to determine whether any business proposed to be brought before the meeting was proposed in accordance with the procedures set forth in this Section 14(a) and, if any proposed business is not in compliance with this Section 14(a), to declare that such defective proposal shall be disregarded and that such proposed business shall not be transacted.

(b)    Nominations of Directors.

(i)    Nominations of persons for election to the Board of Directors may be made at any Annual Meeting or at a Special Meeting at which the Board of Directors has determined that directors are to be elected pursuant to the Corporation’s notice of meeting, only (A) by or at the direction of the Board of Directors (or any duly authorized committee thereof), (B) by any stockholder of the Corporation who (I) is a stockholder of record at the time of giving of notice provided for in this Section 14(b), on the record date for the determination of stockholders entitled to vote at such Annual Meeting or Special Meeting and at the time of the Annual Meeting or Special Meeting, (II) is entitled to vote with respect to such nomination at the Annual Meeting or Special Meeting and (III) complies with the notice procedures set forth in this Section 14(b) as to such nomination or (C) by any stockholder of the Corporation who is eligible under, and complies with the notice procedures set forth in, Section 15 as to such nomination. The preceding clauses (B) and (C) shall be the exclusive means for a stockholder to make nominations before an Annual Meeting or Special Meeting.

(ii)    For any nominations to be properly brought before an Annual Meeting or a Special Meeting by a stockholder pursuant to Section 14(b)(i)(B), the stockholder must have given timely notice thereof in proper written form to the Secretary of the Corporation in accordance with Section 14(c)(v). To be timely, a stockholder’s notice shall be delivered to the Secretary (A) in the case of an Annual Meeting, not earlier than the Close of Business on the 120th day and not later than the Close of Business on the 90th day prior to the date of the first anniversary of the preceding year’s Annual Meeting; provided, however, that in the event that the date of the Annual Meeting is more than 30 days before or more than 70 days after such anniversary date, or if no Annual

 

10


Meeting was held in the preceding year, notice by the stockholder to be timely must be so delivered not earlier than the Close of Business on the 120th day prior to the date of such Annual Meeting and not later than the Close of Business on the later of the 90th day prior to the date of such Annual Meeting or, if the first public announcement of the date of such Annual Meeting is less than 100 days prior to the date of such Annual Meeting, the 10th day following the day on which public announcement of the date of such Annual Meeting is first made by the Corporation; and (B) in the case of a Special Meeting called for the purpose of electing one or more directors to the Board of Directors, not earlier than the close of business on the 120th day prior to the date of such Special Meeting and not later than the close of business on the later of the 90th day prior to the date of such Special Meeting or, if the first public announcement of the date of such Special Meeting is less than 100 days prior to the date of such Special Meeting, the 10th day following the day on which public announcement is first made of the date of the Special Meeting and of the nominees proposed by the Board of Directors to be elected at such meeting. In no event shall any adjournment or postponement of an Annual Meeting or Special Meeting or the announcement thereof commence a new time period for the giving of a stockholder’s notice as described above. For the avoidance of doubt, a stockholder shall not be entitled to make additional or substitute nominations following the expiration of the time periods set forth in these By-Laws. To be in proper form, a stockholder’s notice to the Secretary must set forth: (A) as to each person whom the Noticing Stockholder proposes to nominate for election or reelection as a director (I) the name, age, business address and residence address of such person, (II) the principal occupation or employment of such person (present and for the past five years), (III) the ownership information specified in Section 14(b)(ii)(B)(II) for such person and any member of the immediate family of such person, or any affiliate or associate of such person, or any person acting in concert therewith, (IV) all information relating to such person that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for election of directors in a contested election pursuant to Section 14 of the Exchange Act and the rules and regulations promulgated thereunder (including such person’s written consent to being named in the proxy statement as a nominee and to serving as a director if elected) and (V) a complete and accurate description of all direct and indirect compensation and other material monetary agreements, arrangements and understandings (whether written or oral) during the past three years, and any other material relationships, between or among the Holders and/or any Stockholder Associated Person, on the one hand, and each proposed nominee and any member of the immediate family of such proposed nominee, and his or her respective affiliates and associates, or others acting in concert therewith, on the other hand, including, without limitation all biographical and related party transaction and other information that would be required to be disclosed pursuant to the federal and state securities laws, including information that would be required to be disclosed pursuant to Rule 404 promulgated under Regulation S-K if any Holder and/or any Stockholder Associated Person were the “registrant” for purposes of such rule and the nominee were a director or executive officer of such registrant; (B) as to the Holders (I) the name and address as they appear on the Corporation’s books of each Holder and the name and address of any Stockholder Associated Person, (II) the Share Information (as defined below), (III) a representation by the Noticing Stockholder that such stockholder is a holder of record of shares of the Corporation entitled to vote at such Annual Meeting or Special Meeting with respect to such nomination, will continue to be a holder of record of shares of the Corporation entitled to vote at such Annual Meeting or Special Meeting with respect to such nomination through the date of such Annual Meeting or Special Meeting and intends to appear in person or by proxy at the Annual

 

11


Meeting or Special Meeting to nominate the persons named in such stockholder’s notice, (IV) a representation whether any Holder and/or any Stockholder Associated Person intends or is part of a group which intends (a) to deliver a proxy statement and/or form of proxy to holders of at least the percentage of the Corporation’s outstanding capital stock required to elect any nominee and/or (b) otherwise to solicit proxies from stockholders in support of any such nomination, (V) any other information relating to each Holder that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for the election of directors in a contested election pursuant to Section 14 of the Exchange Act and the rules and regulations promulgated thereunder, and (VI) a representation as to the accuracy of the information set forth in the notice; and (C) with respect to each nominee for election or reelection to the Board, include a completed and signed questionnaire, representation and agreement and any and all other information required by Section 14(b)(iii). The Corporation may also, as a condition to any such nomination being deemed properly brought before an Annual Meeting or Special Meeting, require any Holder or proposed nominee to deliver to the Secretary, within five Business Days of any such request, such other information as may reasonably be requested by the Corporation, including such other information as may be reasonably required by the Board, in its sole discretion, to determine (x) the eligibility of such proposed nominee to serve as a director of the Corporation, (y) whether such nominee qualifies as an “independent director” or “audit committee financial expert” under applicable law, securities exchange rule or regulation, or any publicly disclosed corporate governance guideline or committee charter of the Corporation and (z) such other information that the Board determines, in its sole discretion, could be material to a reasonable stockholder’s understanding of the independence, or lack thereof, of such nominee.

(iii)    To be eligible to be a nominee for election or reelection as a director of the Corporation pursuant to this Section 14(b), a proposed nominee must deliver in writing (in accordance with the time periods prescribed for delivery of notice under this Section 14(b)(iii)) to the Secretary (i) a written questionnaire with respect to the background and qualification of such person and the background of any other person or entity on whose behalf the nomination is being made (which questionnaire shall be provided by the Secretary upon written request of any stockholder of record identified by name within two Business Days of such written request) and (ii) a written representation and agreement (in the form provided by the Secretary upon written request of any stockholder of record identified by name within two Business Days of such request) that such person (A) is not and will not become a party to (1) any agreement, arrangement or understanding (whether written or oral) with, and has not given any commitment or assurance to, any person or entity as to how such person, if elected as a director of the Corporation, will act or vote on any issue or question (a “Voting Commitment”) that has not been disclosed to the Corporation or (2) any Voting Commitment that could limit or interfere with such person’s ability to comply, if elected as a director of the Corporation, with such person’s fiduciary duties under applicable law, (B) is not and will not become a party to any agreement, arrangement or understanding with any person or entity other than the Corporation with respect to any direct or indirect compensation, reimbursement or indemnification in connection with service or action as a director that has not been disclosed therein, (C) in such person’s individual capacity and on behalf of any person or entity on whose behalf the nomination is being made, would be in compliance, if elected as a director of the Corporation, and will comply with all applicable rules of the exchanges upon which the securities of the Corporation are listed and all applicable publicly disclosed corporate governance, conflict of interest, confidentiality and stock ownership and trading policies and guidelines of the Corporation and (D) in such person’s individual capacity and on behalf of any Holder on whose behalf the nomination is being made, intends to serve a full term if elected as a director of the Corporation.

 

12


(iv)    Only such persons who are nominated by the Board of Directors or in accordance with the procedures set forth in this Section 14(b) or Section 15 shall be eligible to be elected as directors at an Annual Meeting or Special Meeting. Except as otherwise provided by law, the Certificate of Incorporation or these By-Laws, the chairman of the meeting shall have the power and duty to determine whether a nomination proposed to be brought before the meeting was made in accordance with the procedures set forth in this Section 14(b) or Section 15 and, if any proposed nomination is not in compliance with this Section 14(b) or Section 15, as the case may be, to declare that such defective nomination shall be disregarded.

(v)    Notwithstanding anything in the second sentence of Section 14(b)(ii) to the contrary, in the event that the number of directors to be elected to the Board of Directors is increased and there is no public announcement by the Corporation naming all of the nominees for director or specifying the size of the increased Board of Directors at least 100 days prior to the first anniversary of the preceding year’s Annual Meeting, a stockholder’s notice required by this Section 14(b) shall also be considered timely, but only with respect to nominees for any new positions created by such increase, if it shall be delivered to the Secretary not later than the Close of Business on the 10th day following the day on which such public announcement is first made by the Corporation.

(c)    General.

(i)    For purposes of this Section 14, “Share Information” shall mean (A) the class or series and number of shares of the Corporation that are, directly or indirectly, owned beneficially and/or of record by each Holder giving the notice under Section 14(a)(ii) or Section 14(b)(ii), as the case may be, and any Stockholder Associated Person (provided, however, that for purposes of this Section 14(c)(i), any such person shall in all events be deemed to beneficially own any shares of the Corporation as to which such person has a right to acquire beneficial ownership of at any time in the future), (B) any option, warrant, convertible security, stock appreciation right, or similar right with an exercise or conversion privilege or a settlement payment or mechanism at a price related to any class or series of shares of the Corporation or with a value derived in whole or in part from the value of any class or series of shares of the Corporation or any derivative or synthetic arrangement having characteristics of a long position in any class or series of shares of the Corporation, whether or not such instrument or right shall be subject to settlement in the underlying class or series of capital stock of the Corporation or otherwise (a “Derivative Instrument”) directly or indirectly owned beneficially by each Holder and any Stockholder Associated Person and any other direct or indirect opportunity to profit or share in any profit derived from any increase or decrease in the value of shares of the Corporation, (C) any proxy, contract, arrangement, understanding, or relationship pursuant to which each Holder and any Stockholder Associated Person has a right to vote or has granted a right to vote any shares of any security of the Corporation, (D) any short interest held by each Holder any Stockholder Associated Person presently or within the last 12 months in any security of the Corporation (for purposes of this Section 14 a person shall be deemed to have a “short interest” in a security if such person, directly or indirectly, through any contract, arrangement, understanding, relationship or otherwise, has the opportunity to profit or share in any profit derived from any decrease in the value of the

 

13


subject security), (E) any rights to dividends on the shares of the Corporation owned beneficially by each Holder and any Stockholder Associated Person that are separated or separable from the underlying shares of the Corporation, (F) any proportionate interest in shares of the Corporation or Derivative Instruments held, directly or indirectly, by a general or limited partnership or any limited liability company or similar entity in which any Holder and any Stockholder Associated Person is a general partner or, directly or indirectly, beneficially owns an interest in a general partner or is the manager or managing member or, directly or indirectly, beneficially owns any interest in the manager or managing member of a limited liability company or similar entity and (G) any performance-related fees (other than an asset-based fee) that each Holder and any Stockholder Associated Person is entitled to based on any increase or decrease in the value of shares of the Corporation or Derivative Instruments, if any, as of the date of such notice.

(ii)    For purposes of this Section 14, “public announcement” shall mean disclosure in a press release reported by a national news service or in a document publicly filed by the Corporation with the Securities and Exchange Commission (“SEC”) pursuant to Section 13, 14 or 15(d) of the Exchange Act and the rules and regulations promulgated thereunder.

(iii)    For purposes of this Section 14, “Business Day” shall mean each Monday, Tuesday, Wednesday, Thursday and Friday that is not a day on which banking institutions in Denver, Colorado or New York, NY are authorized or obligated by law or executive order to close.

(iv)    For purposes of this Section 14, “Close of Business” shall mean 5:00 p.m. local time at the principal executive offices of the Corporation, and if an applicable deadline falls on the Close of Business on a day that is not a Business Day, then the applicable deadline shall be deemed to be the Close of Business on the immediately preceding Business Day.

(v)    For purposes of this Section 14 and Section 3 and Section 15 of this Article II, delivery of any notice or materials by a stockholder as required under this Section 14 shall be made by both (A) hand delivery, overnight courier service, or by certified or registered mail, return receipt required, in each case, to the Secretary at the principal executive offices of the Corporation, and (B) electronic mail to the Secretary at notices@whiting.com or such other email address for the Secretary as may be specified in the Corporation’s proxy statement for the Annual Meeting immediately preceding such delivery of notice or materials.

(vi)    For purposes of this Section 14, “Stockholder Associated Person” shall mean as to any Holder (A) any person acting in concert with such Holder, (B) any person controlling, controlled by or under common control with such Holder or any of their respective affiliates and associates, or person acting in concert therewith and (C) any member of the immediate family of such Holder or an affiliate or associate of such Holder.

(vii)    For purposes of this Section 14, “affiliate(s)” and “associate(s)” shall have the meanings attributed to such terms in Rule 12b-2 under the Exchange Act and the rules and regulations promulgated thereunder.

(viii)    A Noticing Stockholder shall further update and supplement its notice of any nomination or other business proposed to be brought before a meeting, if necessary, so that the information provided or required to be provided in such notice pursuant to this Section 14 shall

 

14


be true and correct (A) as of the record date for the meeting and (B) as of the date that is ten Business Days prior to the meeting or any adjournment, recess, rescheduling or postponement thereof. Such update and supplement shall be delivered to the Secretary not later than three Business Days after the later of the record date or the date notice of the record date is first publicly announced (in the case of the update and supplement required to be made as of the record date for the meeting) and not later than seven Business Days prior to the date for the meeting, if practicable (or, if not practicable, on the first practicable date prior to the meeting), or any adjournment, recess, rescheduling or postponement thereof (in the case of the update and supplement required to be made as of ten Business Days prior to the meeting or any adjournment, recess, rescheduling or postponement thereof).

(ix)    Notwithstanding the foregoing provisions of this Section 14, unless otherwise required by law, if the Noticing Stockholder (or a qualified representative thereof) does not appear at the Annual Meeting or Special Meeting to present a nomination or proposed business, such nomination shall be disregarded and such proposed business shall not be transacted, notwithstanding that proxies in respect of such vote may have been received by the Corporation.

(x)    Notwithstanding the foregoing provisions of this Section 14, a stockholder shall also comply with all applicable requirements of the Exchange Act and the rules and regulations thereunder with respect to the matters set forth in this Section 14; provided, however, that any references in this Section 14 to the Exchange Act or the rules promulgated thereunder are not intended to and shall not limit the requirements applicable to nominations or proposals as to any other business to be considered pursuant to Section 14(a)(i)(C) or Section 14(b)(i)(B). Nothing in this Section 14 shall be deemed to affect any rights of stockholders to request inclusion of proposals in the Corporation’s proxy statement pursuant to Rule 14a-8 under the Exchange Act.

Section 15.    Stockholder Nominations Included in the Corporation’s Proxy Materials.

(a)    Inclusion of Nominee in Proxy Statement. Subject to the provisions of this Section 15, if expressly requested in the relevant Nomination Notice (as defined below), the Corporation shall include in its proxy statement for any Annual Meeting:

(i)    the name of any person nominated for election (the “Nominee”) to the Board of Directors, which shall also be included on the Corporation’s form of proxy and ballot for the relevant Annual Meeting, by any Eligible Holder (as defined below) or group of up to 25 Eligible Holders that has (individually and collectively, in the case of a group) satisfied, as determined by the Board of Directors or its designee, acting in good faith, all applicable conditions and complied with all applicable procedures set forth in this Section 15 (such Eligible Holder or group of Eligible Holders being a “Nominating Stockholder”);

(ii)    disclosure about the Nominee and the Nominating Stockholder required under SEC rules or any other applicable law, rule or regulation to be included in the proxy statement; and

(iii)    any statement included by the Nominating Stockholder in the Nomination Notice for inclusion in the proxy statement in support of the Nominee’s election to the Board of Directors (subject, without limitation, to Section 15(e)(ii)), if such statement does not exceed 500 words.

 

15


Notwithstanding anything herein to the contrary, the Corporation may solicit stockholders against any Nominee and include in its proxy statement for any Annual Meeting any other information that the Corporation or the Board of Directors determines, in their discretion, to include in the proxy statement relating to the nomination of the Nominee, including without limitation any statement in opposition to the nomination and any of the information provided pursuant to this Section 15.

(b)    Maximum Number of Nominees.

(i)    The Corporation shall not be required to include in the proxy statement for an Annual Meeting more Nominees than that number of directors constituting 25% of the total number of directors of the Corporation on the last day on which a Nomination Notice may be submitted pursuant to Section 15(d) (the “Final Nomination Date”), rounded down to the nearest whole number (the “Maximum Number”). The Maximum Number for a particular Annual Meeting shall be reduced by (A) Nominees nominated by a Nominating Stockholder for that Annual Meeting whose nomination is subsequently withdrawn after the Nominating Stockholder is notified by the Corporation that the Nominees will be included in the Corporation’s proxy statement and proxy card for the Annual Meeting, (B) Nominees nominated by a Nominating Stockholder for such Annual Meeting pursuant to this Section 15 that the Board of Directors itself decides to nominate for election at such Annual Meeting, (C) the number of directors in office as of the Final Nomination Date who had been Nominees nominated by a Nominating Stockholder with respect to any Annual Meetings or Special Meetings in the preceding two years (including any Nominee who had been counted at any such Annual Meeting pursuant to the immediately preceding clause (B)) and (1) if Section 1 of Article III provides for a classified Board of Directors, whose term as a director extends past such Annual Meeting or (2) if Section 1 of Article III provides for annual elections of the entire Board of Directors, whose reelection at the upcoming Annual Meeting is being recommended by the Board of Directors, (D) any director candidate for which the Corporation shall have received one or more valid stockholder notices (whether or not subsequently withdrawn) nominating such person for election to the Board of Directors pursuant to Section 14(b), other than any such director referred to in this clause (D) who at the time of such Annual Meeting will have served as a director continuously, as a nominee of the Board of Directors, for at least two annual terms, but only to the extent the Maximum Number after such reduction with respect to this clause (D) equals one, and, without duplication, (E) the number of incumbent directors who are not Stockholder Nominees and who will be included in the Corporation’s proxy materials with respect to such Annual Meeting as an unopposed (by the Board of Directors) nominee pursuant to any agreement, arrangement or other understanding between the Corporation and any stockholder or group of stockholders. If one or more vacancies for any reason occurs on the Board of Directors after the Final Nomination Date but before the date of the Annual Meeting and the Board of Directors resolves to reduce the size of the Board of Directors in connection with the occurrence of the vacancy or vacancies, then the Maximum Number shall be calculated based on the number of directors in office as so reduced.

(ii)    Any Nominating Holder submitting more than one Nominee pursuant to this Section 15 for an Annual Meeting shall rank such Nominees based on the order in which the

 

16


Nominating Holder desires such Nominees to be selected for inclusion in the Corporation’s proxy statement for such Annual Meeting if the number of Nominees pursuant to this Section 15 exceeds the Maximum Number. If the number of Nominees pursuant to this Section 15 for any Annual Meeting exceeds the Maximum Number, then the highest ranking Nominee who meets the requirements of this Section 15 from each Nominating Holder will be selected for inclusion in the Corporation’s proxy statement until the Maximum Number is reached, going in order of the amount (largest to smallest) of the shares of common stock of the Corporation disclosed as owned in each Nominating Stockholder’s Nomination Notice.

(iii)    If, after the Final Nomination Date, (A) the Corporation is notified, or the Board of Directors or its designee, acting in good faith, determines that (1) a Nominating Stockholder has failed to satisfy or to continue to satisfy the eligibility requirements described in Section 15(c), (2) any of the representations and warranties made in the Nomination Notice cease to be true and accurate in all material respects (or omit a material fact necessary to make the statements therein not misleading) or (3) any material violation or breach occurs of the obligations, agreements, representations or warranties of the Nominating Stockholder or the Nominee under this Section 15, (B) a Nominating Stockholder or any qualified representative thereof does not appear at the Annual Meeting to present any nomination submitted pursuant to this Section 15, or the Nominating Stockholder withdraws its nomination, or (C) a Nominee becomes ineligible for inclusion in the Corporation’s proxy statement pursuant to this Section 15 or dies, becomes disabled or is otherwise disqualified from being nominated for election or serving as a director of the Corporation or is unwilling or unable to serve as a director of the Corporation, in each case as determined by the Board of Directors or its designee, acting in good faith, whether before or after the Corporation’s definitive proxy statement for such Annual Meeting is made available to stockholders, then the nomination of the Nominating Stockholder or such Nominee, as the case may be, shall be disregarded and no vote on such Nominee will occur (notwithstanding that proxies in respect of such vote may have been received by the Corporation), the Nominating Stockholder may not cure in any way any defect preventing the nomination of the Nominee, and the Corporation (1) may omit from its proxy statement and any ballot or form of proxy the disregarded Nominee and any information concerning such Nominee (including a Nominating Stockholder’s statement in support) or any successor or replacement nominee proposed by the Nominating Stockholder or by any other Nominating Stockholder and (2) may otherwise communicate to its stockholders, including without limitation by amending or supplementing its proxy statement or ballot or form of proxy, that the Nominee will not be included as a Nominee in the proxy statement or on any ballot or form of proxy and will not be voted on at the Annual Meeting.

(c)    Eligibility of Nominating Stockholder.

(i)    An “Eligible Holder” is a person who has either (A) been a record holder of the shares of the Corporation’s common stock used to satisfy the eligibility requirements in this Section 15(c) continuously for the three-year period specified in Section 15(c)(ii) or (B) provides to the Secretary of the Corporation, within the time period referred to in Section 15(d), evidence of continuous ownership of such shares for such three-year period from one or more securities intermediaries in a form and in substance that the Board of Directors or its designee, acting in good faith, determines would be deemed acceptable for purposes of a stockholder proposal under Rule 14a-8(b)(2) under the Exchange Act (or any successor rule).

 

17


(ii)    An Eligible Holder or group of up to 25 Eligible Holders may submit a nomination in accordance with this Section 15 only if the person or group (in the aggregate) has continuously owned at least the Minimum Number (as defined below) of shares of the Corporation’s common stock throughout the three-year period preceding and including the date of submission of the Nomination Notice and continues to own at least the Minimum Number through the date of the Annual Meeting. For purposes of such limitation, two or more funds that are (A) under common management and investment control, (B) under common management and funded primarily by the same employer, or (C) a “group of investment companies,” as such term is defined in Section 12(d)(1)(G)(ii) of the Investment Company Act of 1940, as amended, shall be treated as one Eligible Holder if such Eligible Holder shall provide together with the Nomination Notice documentation reasonably satisfactory to the Corporation that demonstrates that such funds meet one of the forgoing standards. For the avoidance of doubt, in the event of a nomination by a group of Eligible Holders, any and all requirements and obligations applicable to an individual Eligible Holder that are set forth in this Section 15, including the minimum holding period, shall apply to each member of such group; provided, however, that the Minimum Number shall apply to the ownership of the group in the aggregate, and a breach of any obligation, agreement, representation or warranty under this Section 15 by any member of a group shall be deemed a breach by the Nominating Stockholder. If any stockholder withdraws from a group of Eligible Holders at any time prior to the Annual Meeting, then the group of Eligible Stockholders shall only be deemed to own the shares held by the remaining members of the group and if, as a result of such withdrawal, the Nominating Stockholder no longer owns the Minimum Number of shares of the Corporation’s common stock, then the nomination shall be disregarded as provided in Section 15(b)(iii).

(iii)    The “Minimum Number” of shares of the Corporation’s common stock means 3% of the number of outstanding shares of the Corporation’s common stock as of the most recent date for which such amount is given in any filing by the Corporation with the SEC prior to the submission of the Nomination Notice.

(iv)    For purposes of this Section 15, an Eligible Holder “owns” only those outstanding shares of common stock of the Corporation as to which the Eligible Holder possesses both:

(A)    the full voting and investment rights pertaining to such shares; and

(B)    the full economic interest in (including the opportunity for profit and risk of loss on) such shares;

provided that the number of shares calculated in accordance with clauses (A) and (B) shall not include any shares (1) sold by such Eligible Holder or any of its affiliates in any transaction that has not been settled or closed, (2) borrowed by such Eligible Holder or any of its affiliates for any purpose or purchased by such Eligible Holder or any of its affiliates pursuant to an agreement to resell or (3) subject to any option, warrant, forward contract, swap, contract of sale, other derivative or similar instrument or agreement entered into by such Eligible Holder or any of its affiliates, whether any such instrument or agreement is to be settled with shares or with cash based on the notional amount or value of outstanding shares of common stock of the Corporation, in any such case which instrument or agreement has, or is intended to have, the purpose or effect of (x) reducing in any manner, to any extent or at any time in the future, such Eligible Holder’s or any

 

18


of its affiliates’ full right to vote or direct the voting of any such shares and/or (y) hedging, offsetting, or altering to any degree gain or loss arising from maintaining the full economic ownership of such shares by such Eligible Holder or any of its affiliates. An Eligible Holder “owns” shares held in the name of a nominee or other intermediary so long as the Eligible Holder retains the right to instruct how the shares are voted with respect to the election of directors and possesses the full economic interest in the shares. An Eligible Holder’s ownership of shares shall be deemed to continue during any period in which the Eligible Holder has delegated any voting power by means of a proxy, power of attorney or other similar instrument or arrangement that is revocable at any time by the Eligible Holder. An Eligible Holder’s ownership of shares shall be deemed to continue during any period in which the Eligible Holder has loaned such shares provided that the Eligible Holder has the power to recall such loaned shares on five business days’ notice, recalls such loaned shares upon being notified by the Corporation that any of the Eligible Holder’s Nominees will be included in the Corporation’s proxy statement and proxy card for the Annual Meeting (subject to the provisions of this Section 15) and holds such shares through the date of the Annual Meeting. The terms “owned,” “owning,” “ownership” and other variations of the word “own” shall have correlative meanings. Whether outstanding shares of the Corporation are “owned” for these purposes shall be determined by the Board. For purposes of this Section 15, the term “affiliate” or “affiliates” shall have the meaning ascribed thereto under the General Rules and Regulations under the Exchange Act.

(v)    No person shall be permitted to be in more than one group constituting a Nominating Stockholder, and if any person appears as a member of more than one group, then it shall be deemed to be a member of the group that has the largest amount of shares of common stock of the Corporation disclosed as owned in the Nomination Notice.

(d)    Nomination Notice. To nominate a Nominee for purposes of this Section 15, the Nominating Stockholder must have given timely notice thereof in proper written form to the Secretary of the Corporation in accordance with Section 14(c)(v). To be timely, a Nominating Stockholder’s notice shall be delivered to the Secretary at the principal executive offices of the Corporation not less than 120 days nor more than 150 days prior to the first annual anniversary of the date set forth in the Corporation’s proxy statement for the immediately preceding Annual Meeting as the date on which the Corporation first made available to its stockholders definitive proxy materials for the immediately preceding Annual Meeting; provided, however, that if the date for which the Annual Meeting is called is more than 30 days before or more than 30 days after the first annual anniversary of the immediately preceding Annual Meeting, then notice by the Nominating Stockholder to be timely must be received by the Secretary by the later of the close of business on the date that is 180 days prior to the date of such Annual Meeting or the 10th day following the day on which public announcement of such Annual Meeting is first made by the Corporation. In no event shall any adjournment or postponement of any Annual Meeting or the announcement thereof commence a new time period for the giving of a Nomination Notice. To be in proper written form, a Nominating Stockholder’s notice to the Secretary for purposes of this Section 15 shall include all of the following information and documents (collectively, the “Nomination Notice”):

(i)    A Schedule 14N (or any successor form) relating to the Nominee, completed and filed with the SEC by the Nominating Stockholder as applicable, in accordance with SEC rules;

 

19


(ii)    A written notice of the nomination of such Nominee that includes the following additional information, agreements, representations and warranties by the Nominating Stockholder (including each group member):

(A)    the information and representations that would be required to be set forth in a stockholder’s notice of a nomination for the election of directors pursuant to Section 14(b);

(B)    the details of any relationship that existed within the past three years and that would have been described pursuant to Item 6(e) of Schedule 14N (or any successor item) if it existed on the date of submission of the Schedule 14N;

(C)    a representation and warranty that the shares of common stock of the Corporation owned by the Nominating Stockholder were acquired in the ordinary course of business and not with the intent or objective to influence or change control of the Corporation and that neither the Nominating Stockholder, the Nominee(s) nor their respective affiliates and associates is holding any securities of the Corporation for the purpose or effect of changing control of the Corporation or to gain a number of seats on the Board of Directors that exceeds the maximum number of nominees that stockholders may nominate pursuant to this Section 15;

(D)    a representation and warranty that the Nominating Stockholder satisfies the eligibility requirements set forth in Section 15(c) and has provided evidence of ownership to the extent required by Section 15(c)(i);

(E)    a representation and warranty that the Nominating Stockholder will continue to satisfy the eligibility requirements described in Section 15(c) through the date of the Annual Meeting;

(F)    a representation and warranty that the Nominating Stockholder has not nominated and will not nominate for election to the Board of Directors at the Annual Meeting any person other than the Nominees it is nominating pursuant to this Section 15;

(G)    a representation and warranty as to the Nominating Stockholder’s intentions with respect to continuing to own the Minimum Number of shares of common stock of the Corporation for at least one year following the Annual Meeting;

(H)    a representation and warranty that the Nominating Stockholder will not engage in, and will not be a “participant” in another person’s, “solicitation” within the meaning of Rule 14a-1(l) (without reference to the exception in Rule 14a-1(l)(2)(iv)) (or any successor rules) under the Exchange Act with respect to the Annual Meeting, other than with respect to its Nominees or any nominees of the Board of Directors;

(I)    a representation and warranty that the Nominating Stockholder will not use any proxy card other than the Corporation’s proxy card in soliciting stockholders in connection with the election of a Nominee at the Annual Meeting;

(J)    a representation and warranty that the Nominee’s nomination for election to the Board of Directors or, if elected, Board membership would not violate applicable state or federal law or the rules of any stock exchange on which the Corporation’s securities are traded;

 

20


(K)    a representation and warranty that the Nominee (1) qualifies as independent under the rules of any stock exchange on which the Corporation’s securities are traded, (2) meets the audit committee and compensation committee independence requirements under the rules of any stock exchange on which the Corporation’s securities are traded, (3) is a “non-employee director” for the purposes of Rule 16b-3 under the Exchange Act (or any successor rule), (4) is an “outside director” for the purposes of Section 162(m) of the Internal Revenue Code (or any successor provision), (5) meets the director qualifications set forth in Section 6 of Article III, and (6) is not and has not been subject to any event specified in Rule 506(d)(1) of Regulation D (or any successor rule) under the Securities Act of 1933, as amended (the “Securities Act”), or Item 401(f) of Regulation S-K (or any successor rule) under the Exchange Act, without reference to whether the event is material to an evaluation of the ability or integrity of the Nominee;

(L)    details of any position of the Nominee as an officer or director of any competitor of the Corporation (that is, any entity whose principal business is the exploration, development, acquisition and/or production of oil, natural gas liquids and/or natural gas), within the three years preceding the submission of the Nomination Notice;

(M)    if desired, a statement for inclusion in the proxy statement in support of the Nominee’s election to the Board of Directors, provided that such statement shall not exceed 500 words and shall fully comply with Section 14 of the Exchange Act and the rules and regulations thereunder, including Rule 14a-9; and

(N)    in the case of a nomination by a group, the designation by all group members of one group member for purposes of receiving communications, notices and inquiries from the Corporation and that is authorized to act on behalf of all group members with respect to matters relating to the nomination, including withdrawal of the nomination.

(iii)    An executed agreement, in a form deemed satisfactory by the Board of Directors or its designee, acting in good faith, pursuant to which the Nominating Stockholder (including each group member) agrees:

(A)    to comply with all applicable laws, rules and regulations in connection with the nomination, solicitation and election;

(B)    to file any written solicitation or other written communication with the Corporation’s stockholders relating to one or more of the Corporation’s directors or director nominees or any Nominee with the SEC, regardless of whether any such filing is required under rule or regulation or whether any exemption from filing is available for such materials under any rule or regulation;

(C)    to assume all liability (jointly and severally by all group members in the case of a nomination by a group) stemming from any action, suit or proceeding concerning any actual or alleged legal or regulatory violation arising out of any communication by the Nominating Stockholder, its affiliates and associates or their respective agents and representatives with the Corporation, its stockholders or any other person in connection with the nomination or election of

 

21


directors, including without limitation the Nomination Notice, or out of the facts, statements or other information that the Nominating Stockholder or its Nominees provided to the Corporation in connection with the inclusion of such Nominees in the Corporation’s proxy statement;

(D)    to indemnify and hold harmless (jointly with all other group members, in the case of a group member) the Corporation and each of its directors, officers and employees individually against any liability, loss, damages, expenses or other costs (including attorneys’ fees) incurred in connection with any threatened or pending action, suit or proceeding, whether legal, administrative or investigative, against the Corporation or any of its directors, officers or employees arising out of or relating to any nomination submitted by the Nominating Stockholder pursuant to this Section 15 or a failure or alleged failure of the Nominating Stockholder to comply with, or any breach or alleged breach of, its obligations, agreements or representations under this Section 15; and

(E)    in the event that any information included in the Nomination Notice, or any other communication by the Nominating Stockholder (including with respect to any group member) with the Corporation, its stockholders or any other person in connection with the nomination or election ceases to be true and accurate in all material respects or omits a material fact necessary to make the statements made not misleading or that the Nominating Stockholder (including any group member) has failed to continue to satisfy the eligibility requirements described in Section 15(c), to promptly (and in any event within 48 hours of discovering such misstatement, omission or failure) notify the Corporation and any other recipient of such communication of the misstatement or omission in such previously provided information and of the information that is required to correct the misstatement or omission and/or notify the Corporation of the failure to continue to satisfy the eligibility requirements described in Section 15(c), as the case may be.

(iv)    An executed agreement, in a form deemed satisfactory by the Board of Directors or its designee, acting in good faith, by the Nominee:

(A)    to make such other acknowledgments, enter into such agreements and provide such other information as the Board of Directors requires of all directors, including promptly completing the Corporation’s director questionnaire;

(B)    that the Nominee has read and agrees, if elected as a director of the Corporation, to sign and adhere to the Corporation’s corporate governance guidelines and codes of ethics and any other Corporation policies and guidelines applicable to directors; and

(C)    that the Nominee is not and will not become a party to (1) any compensatory, payment, reimbursement, indemnification or other financial agreement, arrangement or understanding with any person or entity in connection with service or action as a director of the Corporation that has not been disclosed to the Corporation, (2) any agreement, arrangement or understanding with any person or entity as to how the Nominee would vote or act on any issue or question as a director (a “Voting Commitment”) that has not been disclosed to the Corporation or (3) any Voting Commitment that could limit or interfere with the Nominee’s ability to comply, if elected as a director of the Corporation, with his or her fiduciary duties under applicable law.

 

22


The information and documents required by this Section 15(d) shall be (i) provided with respect to and executed by each group member in the case of information applicable to group members and (ii) provided with respect to the persons specified in Instruction 1 to Items 6(c) and (d) of Schedule 14N (or any successor item) in the case of a Nominating Stockholder or group member that is an entity. The Nomination Notice shall be deemed submitted on the date on which all the information and documents referred to in this Section 15(d) (other than such information and documents contemplated to be provided after the date the Nomination Notice is provided) have been delivered to or, if sent by mail, received by the Secretary of the Corporation.

(e)    Exceptions.

(i)    Notwithstanding anything to the contrary contained in this Section 15, the Corporation may omit from its proxy statement and any ballot or form of proxy any Nominee and any information concerning such Nominee (including a Nominating Stockholder’s statement in support), and no vote on such Nominee will occur (notwithstanding that proxies in respect of such vote may have been received by the Corporation), and the Nominating Stockholder may not, after the Final Nomination Date, cure in any way any defect preventing the nomination of the Nominee, if:

(A)    the Board of Directors or its designee, acting in good faith, determines that such Nominee’s nomination or election to the Board of Directors would result in the Corporation violating or failing to be in compliance with these By-Laws, the Certificate of Incorporation or any applicable law, rule or regulation to which the Corporation is subject, including any rules or regulations of any stock exchange on which the Corporation’s securities are traded;

(B)    the Nominee was nominated for election to the Board of Directors pursuant to this Section 15 at one of the Corporation’s two preceding Annual Meetings and either (i) withdrew or became ineligible or unavailable for election at any such Annual Meeting or (ii) received a vote of less than 25% of the shares of common stock of the Corporation entitled to vote for such Nominee; or

(C)    the Nominee has been, within the past three years, an officer or director of a competitor, as defined for purposes of Section 8 of the Clayton Antitrust Act of 1914, as amended.

(ii)    Notwithstanding anything to the contrary contained in this Section 15, the Corporation may omit from its proxy statement, or may supplement or correct, any information, including all or any portion of the statement in support of the Nominee included in the Nomination Notice, if the Board of Directors or its designee, acting in good faith, determines that:

(A)    such information is not true in all material respects or omits a material statement necessary to make the statements made not misleading;

(B)    such information directly or indirectly impugns character, integrity or personal reputation of, or directly or indirectly makes charges concerning improper, illegal or immoral conduct or associations, without factual foundation, with respect to, any person; or

 

23


(C)    the inclusion of such information in the proxy statement would otherwise violate SEC rules or any other applicable law, rule or regulation.

Section 16.    Exclusive Forum.

(a)    Unless the Corporation consents in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware (or, if and only if the Court of Chancery of the State of Delaware does not have jurisdiction, a state court located within the State of Delaware (or, if no state court located within the State of Delaware has jurisdiction, the federal district court for the District of Delaware)) shall be the sole and exclusive forum for: (i) any derivative action or proceeding brought on behalf of the Corporation; (ii) any action asserting a claim of breach of a fiduciary duty owed by any current or former director or officer or other employee of the Corporation to the Corporation or the Corporation’s stockholders, including a claim alleging the aiding and abetting of such a breach of fiduciary duty; (iii) any action against the Corporation or any current or former director or officer or other employee of the Corporation asserting a claim arising pursuant to any provision of the DGCL or the Certificate of Incorporation or these By-Laws (as either may be amended from time to time); (iv) any action asserting a claim related to or involving the Corporation that is governed by the internal affairs doctrine or (v) any action asserting an “internal corporate claim” as that term is defined in Section 115 of the DGCL. For the avoidance of doubt, this Section 16(a) shall not apply to any action or proceeding asserting a claim under the Securities Act and/or the Exchange Act.

(b)    Unless the Corporation consents in writing to the selection of an alternative forum, the federal district courts of the United States of America shall be the exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act.

(c)    To the fullest extent permitted by applicable law, any person or entity purchasing or otherwise acquiring or holding any interest in any security of the Corporation shall be deemed to have notice of and consented to this Section 16.

ARTICLE III

DIRECTORS

Section 1.    Number and Election of Directors. The entire Board of Directors shall consist of not less than one nor more than twelve members, the exact number of which shall be determined from time to time exclusively by resolution adopted by the Board of Directors. Except as provided in Section 2 of this Article III, directors shall be elected by the stockholders at the Annual Meetings, the term of each director shall be as set forth in the Certificate of Incorporation, and each director so elected shall hold office until such director’s successor is duly elected and qualified, or until such director’s death, or until such director’s earlier resignation, retirement, disqualification or removal. Directors need not be stockholders.

Section 2.    Vacancies. Unless otherwise required by law or the Certificate of Incorporation, vacancies arising through death, resignation, retirement, disqualification or removal, an increase in the number of directors or otherwise may be filled only by a majority of the directors then in office, though less than a quorum, or by a sole remaining director, and the directors so chosen shall hold office until the next Annual Meeting and until their successors are duly elected and qualified, or until their earlier death, resignation, retirement, disqualification or removal.

 

24


Section 3.    Duties and Powers. The business and affairs of the Corporation shall be managed by or under the direction of the Board of Directors which may exercise all such powers of the Corporation and do all such lawful acts and things as are not by statute or by the Certificate of Incorporation or by these By-Laws required to be exercised or done by the stockholders.

Section 4.    Meetings. The Board of Directors may hold meetings, both regular and special, either within or without the State of Delaware. Regular meetings of the Board of Directors may be held without notice at such time and at such place as may from time to time be determined by the Board of Directors. Special meetings of the Board of Directors (a) may be called by the Chairman of the Board, if there be one, or the President (if the President is a director of the Corporation) and (b) shall be called by the Chairman of the Board, if there be one, the President (if the President is a director of the Corporation) or the Secretary on the written request of a majority of the directors then in office (or the sole director if there be one director then in office). Notice thereof stating the place, date and hour of the meeting shall be given to each director either by mail not less than forty-eight hours before the date of the meeting, by telephone or telegram or electronic means on twenty-four hours’ notice, or on such shorter notice as the person or persons calling such meeting may deem necessary or appropriate in the circumstances. If the Secretary shall fail or refuse to give such notice, then the notice may be given by the officer who called the meeting or the directors who requested the meeting. Any and all business that may be transacted at a regular meeting of the Board of Directors may be transacted at a special meeting. Except as may be otherwise expressly provided by applicable law, the Certificate of Incorporation or these By-Laws, neither the business to be transacted at, nor the purpose of, any special meeting need be specified in the notice or waiver of notice of such meeting. A special meeting may be held at any time without notice if all the directors are present or if those not present waive notice of the meeting.

Section 5.    Organization. The Board of Directors shall annually choose, from among them, a Chairman of the Board, who shall serve as such until a successor is elected. The Chairman of the Board must be a director, but need not be an employee or officer of the Corporation, and may not be the President or Chief Executive Officer. The Chairman of the Board shall preside at all meetings of the stockholders and of the Board of Directors. The Chairman of the Board shall perform such other duties and shall have such authority as are specified in these By-Laws and as the Board of Directors may from time to time assign to him or her. At each meeting of the Board of Directors, the Chairman of the Board, or, in his or her absence, a director chosen by a majority of the directors present, shall act as chairman. The Secretary of the Corporation shall act as secretary at each meeting of the Board of Directors. In case the Secretary shall be absent from any meeting of the Board of Directors, an Assistant Secretary shall perform the duties of secretary at such meeting; and in the absence from any such meeting of the Secretary and all the Assistant Secretaries, the chairman of the meeting may appoint any person to act as secretary of the meeting.

Section 6.    Term, Resignation and Removal of Directors. Any director of the Corporation may resign at any time, by giving notice in writing or by electronic transmission to the Chairman of the Board, the President or the Secretary of the Corporation. Such resignation

 

25


shall take effect at the time therein specified or, if no time is specified, immediately; and, unless otherwise specified in such notice, the acceptance of such resignation shall not be necessary to make it effective. If any director of the Corporation experiences a material change in employment status (including termination of employment, retirement or a material decrease in job responsibilities) from that when the director was most recently elected to the Board of Directors, then such director shall be deemed to have automatically tendered his or her resignation as a director of the Corporation, which may be accepted by the remainder of the Board of Directors, in its sole discretion, and, if so accepted, shall be effective as of such acceptance. Except as otherwise required by applicable law, any director or the entire Board of Directors may be removed from office at any time, with or without cause, by the affirmative vote of the holders of at least a majority in voting power of the issued and outstanding capital stock of the Corporation entitled to vote in the election of directors.

Section 7.    Quorum. Except as otherwise required by law or the Certificate of Incorporation, at all meetings of the Board of Directors, a majority of the entire Board of Directors shall constitute a quorum for the transaction of business and the act of a majority of the directors present at any meeting at which there is a quorum shall be the act of the Board of Directors. If a quorum shall not be present at any meeting of the Board of Directors, the directors present thereat may adjourn the meeting from time to time, without notice other than announcement at the meeting of the time and place of the adjourned meeting, until a quorum shall be present.

Section 8.    Actions of the Board by Written Consent. Unless otherwise provided in the Certificate of Incorporation or these By-Laws, any action required or permitted to be taken at any meeting of the Board of Directors, or of any committee thereof, may be taken without a meeting, if all the members of the Board of Directors or committee, as the case may be, consent thereto in writing or by electronic transmission, and the writing or writings or electronic transmission or transmissions are filed with the minutes of proceedings of the Board of Directors or committee. Such filing shall be in paper form if the minutes are maintained in paper form and shall be in electronic form if the minutes are maintained in electronic form.

Section 9.    Meetings by Means of Conference Telephone. Unless otherwise provided in the Certificate of Incorporation or these By-Laws, members of the Board of Directors, or any committee thereof, may participate in a meeting of the Board of Directors or such committee by means of a conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and participation in a meeting pursuant to this Section 9 shall constitute presence in person at such meeting.

Section 10.    Committees. The Board of Directors may designate one or more committees, each committee to consist of one or more of the directors of the Corporation. The Board of Directors may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of any such committee. In the absence or disqualification of a member of a committee, and in the absence of a designation by the Board of Directors of an alternate member to replace the absent or disqualified member, the member or members thereof present at any meeting and not disqualified from voting, whether or not such member or members constitute a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in the place of any absent or disqualified member. Any committee, to the extent permitted by law and provided in the resolution establishing such

 

26


committee, shall have and may exercise all the powers and authority of the Board of Directors in the management of the business and affairs of the Corporation. Each committee shall keep regular minutes and report to the Board of Directors when required. The Board of Directors shall have the power at any time to fill vacancies in, to change the membership of, or to dissolve any such committee. Unless the Board of Directors otherwise provides, the time, date and place of each committee meeting, if any, shall be determined by each committee. Notice of each committee meeting shall be given in the manner provided in Section 4 of Article III. Neither the business to be transacted at, nor the purpose of, any committee meeting need be specified in the notice or waiver of notice of such meeting. At any meeting of a committee, a majority of the number of members of the committee (but not including any alternate member, unless such alternate member has replaced any absent or disqualified member at the time of, or in connection with, such meeting) shall constitute a quorum for the transaction of business. The act of a majority of the members present at any meeting at which a quorum is present shall be the act of the committee, except as otherwise specifically provided by applicable law, the Certificate of Incorporation, these By-Laws or the Board of Directors. If a quorum is not present at a meeting of a committee, the members present may adjourn the meeting from time to time, without notice other than an announcement at the meeting, until a quorum is present. Unless the Board of Directors otherwise provides and except as provided in these By-Laws, each committee designated by the Board of Directors may make, alter, amend and repeal rules for the conduct of its business.

Section 11.    Compensation. The directors may be paid their expenses, if any, of attendance at each meeting of the Board of Directors and may be paid a fixed sum for attendance at each meeting of the Board of Directors or a stated salary for service as director, payable in cash or securities. No such payment shall preclude any director from serving the Corporation in any other capacity and receiving compensation therefor. Members of special or standing committees may be allowed like compensation for attending committee meetings.

Section 12.    Interested Directors. No contract or transaction between the Corporation and one or more of its directors or officers, or between the Corporation and any other corporation, partnership, association, or other organization in which one or more of its directors or officers are directors or officers or have a financial interest, shall be void or voidable solely for this reason, or solely because the director or officer is present at or participates in the meeting of the Board of Directors or committee thereof which authorizes the contract or transaction, or solely because the director or officer’s vote is counted for such purpose if (a) the material facts as to the director or officer’s relationship or interest and as to the contract or transaction are disclosed or are known to the Board of Directors or the committee, and the Board of Directors or committee in good faith authorizes the contract or transaction by the affirmative votes of a majority of the disinterested directors, even though the disinterested directors be less than a quorum; or (b) the material facts as to the director or officer’s relationship or interest and as to the contract or transaction are disclosed or are known to the stockholders entitled to vote thereon, and the contract or transaction is specifically approved in good faith by vote of the stockholders; or (c) the contract or transaction is fair as to the Corporation as of the time it is authorized, approved or ratified by the Board of Directors, a committee thereof or the stockholders. Common or interested directors may be counted in determining the presence of a quorum at a meeting of the Board of Directors or of a committee which authorizes the contract or transaction.

 

27


ARTICLE IV

OFFICERS

Section 1.    General. The officers of the Corporation shall be chosen by the Board of Directors and shall include a President, a Secretary and a Treasurer. The Board of Directors, in its discretion, also may choose one or more Vice Presidents, Assistant Secretaries, Assistant Treasurers and other officers and, if the Chairman of the Board chosen pursuant to these By-Laws is an employee of the Corporation, choose such person as an officer with the title Executive Chairman of the Board. Any number of offices may be held by the same person, unless otherwise prohibited by law or the Certificate of Incorporation or these By-Laws. The officers of the Corporation need not be stockholders of the Corporation nor, except in the case of any Executive Chairman of the Board, need such officers be directors of the Corporation.

Section 2.    Election. The Board of Directors, at its first meeting held after each Annual Meeting, shall elect the officers of the Corporation who shall hold their offices for such terms and shall exercise such powers and perform such duties as shall be determined from time to time by the Board of Directors; and all officers of the Corporation shall hold office until their successors are chosen and qualified, or until their earlier death, resignation, retirement, disqualification or removal. Any officer elected by the Board of Directors may be removed at any time by the affirmative vote of the Board of Directors. Any vacancy occurring in any office of the Corporation shall be filled by the Board of Directors.

Section 3.    Voting Securities Owned by the Corporation. Powers of attorney, proxies, waivers of notice of meeting, consents and other instruments relating to securities owned by the Corporation may be executed in the name of and on behalf of the Corporation by the President or any Vice President or any other officer authorized to do so by the Board of Directors and any such officer may, in the name of and on behalf of the Corporation, take all such action as any such officer may deem advisable to vote in person or by proxy at any meeting of security holders of any corporation in which the Corporation may own securities and at any such meeting shall possess and may exercise any and all rights and power incident to the ownership of such securities and which, as the owner thereof, the Corporation might have exercised and possessed if present. The Board of Directors may, by resolution, from time to time confer like powers upon any other person or persons.

Section 4.    Executive Chairman of the Board. Except where by law the signature of the President is required, any Executive Chairman of the Board shall possess the same power as the President to sign all contracts, certificates and other instruments of the Corporation which may be authorized by the Board of Directors. Any Executive Chairman of the Board shall also perform such other duties and may exercise such other powers as may from time to time be assigned by these By-Laws or by the Board of Directors.

Section 5.    President. The President shall, subject to the control of the Board of Directors, have general supervision of the business of the Corporation and shall see that all orders and resolutions of the Board of Directors are carried into effect. The President shall execute all bonds, mortgages, contracts and other instruments of the Corporation except where required or permitted by law to be otherwise signed and executed and except that the other officers of the

 

28


Corporation may sign and execute documents when so authorized by these By-Laws, the Board of Directors or the President. In the absence or disability of the Chairman of the Board, or if there be none, the President shall preside at all meetings of the stockholders and, provided the President is also a director, the Board of Directors. If the Board of Directors shall so designate, the President shall be the Chief Executive Officer of the Corporation. The President shall also perform such other duties and may exercise such other powers as may from time to time be assigned to such officer by these By-Laws or by the Board of Directors.

Section 6.    Vice Presidents. At the request of the President or in the President’s absence or in the event of the President’s inability or refusal to act, the Vice President, or the Vice Presidents if there is more than one (in the order designated by the Board of Directors), shall perform the duties of the President, and when so acting, shall have all the powers of and be subject to all the restrictions upon the President. Each Vice President shall perform such other duties and have such other powers as the Board of Directors from time to time may prescribe. If there be no Vice President, the Board of Directors shall designate the officer of the Corporation who, in the absence of the President or in the event of the inability or refusal of the President to act, shall perform the duties of the President, and when so acting, shall have all the powers of and be subject to all the restrictions upon the President.

Section 7.    Secretary. The Secretary shall attend all meetings of the Board of Directors and all meetings of stockholders and record all the proceedings thereat in a book or books to be kept for that purpose; the Secretary shall also perform like duties for committees of the Board of Directors when required. The Secretary shall give, or cause to be given, notice of all meetings of the stockholders and special meetings of the Board of Directors, and shall perform such other duties as may be prescribed by the Board of Directors, the Chairman of the Board or the President, under whose supervision the Secretary shall be. If the Secretary shall be unable or shall refuse to cause to be given notice of all meetings of the stockholders and special meetings of the Board of Directors, and if there be no Assistant Secretary, then either the Board of Directors or the President may choose another officer to cause such notice to be given. The Secretary shall see that all books, reports, statements, certificates and other documents and records required by law to be kept or filed are properly kept or filed, as the case may be.

Section 8.    Treasurer. The Treasurer shall have the custody of the corporate funds and securities and shall keep full and accurate accounts of receipts and disbursements in books belonging to the Corporation and shall deposit all moneys and other valuable effects in the name and to the credit of the Corporation in such depositories as may be designated by the Board of Directors. The Treasurer shall disburse the funds of the Corporation as may be ordered by the Board of Directors, taking proper vouchers for such disbursements, and shall render to the President and the Board of Directors, at its regular meetings, or when the Board of Directors so requires, an account of all transactions as Treasurer and of the financial condition of the Corporation. If required by the Board of Directors, the Treasurer shall give the Corporation a bond in such sum and with such surety or sureties as shall be satisfactory to the Board of Directors for the faithful performance of the duties of the office of the Treasurer and for the restoration to the Corporation, in case of the Treasurer’s death, resignation, retirement, disqualification or removal from office, of all books, papers, vouchers, money and other property of whatever kind in the Treasurer’s possession or under the Treasurer’s control belonging to the Corporation.

 

29


Section 9.    Assistant Secretaries. Assistant Secretaries, if there be any, shall perform such duties and have such powers as from time to time may be assigned to them by the Board of Directors, the President, any Vice President, if there be one, or the Secretary, and in the absence of the Secretary or in the event of the Secretary’s disability or refusal to act, shall perform the duties of the Secretary, and when so acting, shall have all the powers of and be subject to all the restrictions upon the Secretary.

Section 10.    Assistant Treasurers. Assistant Treasurers, if there be any, shall perform such duties and have such powers as from time to time may be assigned to them by the Board of Directors, the President, any Vice President, if there be one, or the Treasurer, and in the absence of the Treasurer or in the event of the Treasurer’s disability or refusal to act, shall perform the duties of the Treasurer, and when so acting, shall have all the powers of and be subject to all the restrictions upon the Treasurer. If required by the Board of Directors, an Assistant Treasurer shall give the Corporation a bond in such sum and with such surety or sureties as shall be satisfactory to the Board of Directors for the faithful performance of the duties of the office of Assistant Treasurer and for the restoration to the Corporation, in case of the Assistant Treasurer’s death, resignation, retirement, disqualification or removal from office, of all books, papers, vouchers, money and other property of whatever kind in the Assistant Treasurer’s possession or under the Assistant Treasurer’s control belonging to the Corporation.

Section 11.    Other Officers. Such other officers as the Board of Directors may choose shall perform such duties and have such powers as from time to time may be assigned to them by the Board of Directors. The Board of Directors may delegate to any other officer of the Corporation the power to choose such other officers and to prescribe their respective duties and powers.

ARTICLE V

STOCK

Section 1.    Form of Certificates. Every holder of stock in the Corporation shall be entitled to have a certificate signed by, or in the name of the Corporation (a) by the President or a Vice President and (b) by the Treasurer or an Assistant Treasurer, or the Secretary or an Assistant Secretary of the Corporation, certifying the number of shares owned by such stockholder in the Corporation.

Section 2.    Signatures. Any or all of the signatures on a certificate may be a facsimile. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the Corporation with the same effect as if such person were such officer, transfer agent or registrar at the date of issue.

Section 3.    Lost Certificates. The Board of Directors may direct a new certificate to be issued in place of any certificate theretofore issued by the Corporation alleged to have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the person claiming the certificate of stock to be lost, stolen or destroyed. When authorizing such issue of a new certificate, the Board of Directors may, in its discretion and as a condition precedent to the issuance thereof, require the owner of such lost, stolen or destroyed certificate, or the owner’s legal representative,

 

30


to advertise the same in such manner as the Board of Directors shall require and/or to give the Corporation a bond in such sum as it may direct as indemnity against any claim that may be made against the Corporation with respect to the certificate alleged to have been lost, stolen or destroyed or the issuance of such new certificate.

Section 4.    Transfers. Stock of the Corporation shall be transferable in the manner prescribed by applicable law and in these By-Laws. Transfers of stock shall be made on the books of the Corporation only by the person named in the certificate or by such person’s attorney lawfully constituted in writing and upon the surrender of the certificate therefor, properly endorsed for transfer and payment of all necessary transfer taxes; provided however, that such surrender and endorsement or payment of taxes shall not be required in any case in which the officers of the corporation shall determine to waive such requirement. Every certificate exchanged, returned or surrendered to the Corporation shall be marked “cancelled” with the date of cancellation, by the Secretary of the Corporation or the transfer agent thereof. No transfer of stock shall be valid as against the Corporation for any purpose until it shall have been entered in the stock records of the Corporation by an entry showing from and to whom transferred.

Section 5.    Dividend Record Date. In order that the Corporation may determine the stockholders entitled to receive payment of any dividend or other distribution or allotment of any rights or the stockholders entitled to exercise any rights in respect of any change, conversion or exchange of stock, or for the purpose of any other lawful action, the Board of Directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted, and which record date shall be not more than sixty days prior to such action. If no record date is fixed, the record date for determining stockholders for any such purpose shall be at the close of business on the day on which the Board of Directors adopts the resolution relating thereto.

Section 6.    Record Owners. The Corporation shall be entitled to recognize the exclusive right of a person registered on its books as the owner of shares to receive dividends, and to vote as such owner, and to hold liable for calls and assessments a person registered on its books as the owner of shares, and shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise required by law.

Section 7.    Transfer and Registry Agents. The Corporation may from time to time maintain one or more transfer offices or agencies and registry offices or agencies at such place or places as may be determined from time to time by the Board of Directors.

ARTICLE VI

NOTICES

Section 1.    Notices. Whenever written notice is required by law, the Certificate of Incorporation or these By-Laws, to be given to any director, member of a committee or stockholder, such notice may be given by mail, addressed to such director, member of a committee or stockholder, at such person’s address as it appears on the records of the Corporation, with postage thereon prepaid, and such notice shall be deemed to be given at the time when the same

 

31


shall be deposited in the United States mail. Without limiting the manner by which notice otherwise may be given effectively to stockholders, any notice to stockholders given by the Corporation under applicable law, the Certificate of Incorporation or these By-Laws shall be effective if given by a form of electronic transmission if consented to by the stockholder to whom the notice is given. Any such consent shall be revocable by the stockholder by written notice to the Corporation. Any such consent shall be deemed to be revoked if (a) the Corporation is unable to deliver by electronic transmission two consecutive notices by the Corporation in accordance with such consent and (b) such inability becomes known to the Secretary or Assistant Secretary of the Corporation or to the transfer agent, or other person responsible for the giving of notice; provided, however, that the inadvertent failure to treat such inability as a revocation shall not invalidate any meeting or other action. Notice given by electronic transmission, as described above, shall be deemed given: (a) if by facsimile telecommunication, when directed to a number at which the stockholder has consented to receive notice; (b) if by electronic mail, when directed to an electronic mail, at which the stockholder has consented to receive notice; (c) if by a posting on an electronic network, together with separate notice to the stockholder of such specific posting, upon the later of (i) such posting and (ii) the giving of such separate notice; and (d) if by any other form of electronic transmission, when directed to the stockholder. Notice to directors or committee members may also be given personally by telegram, telex or cable or by means of electronic transmission.

Section 2.    Waivers of Notice. Whenever any notice is required by applicable law, the Certificate of Incorporation or these By-Laws, to be given to any director, member of a committee or stockholder, a waiver thereof in writing, signed by the person or persons entitled to notice, or a waiver by electronic transmission, by the person or persons entitled to said notice, whether before or after the time stated therein, shall be deemed equivalent thereto. Attendance of a person at a meeting, present in person or represented by proxy, shall constitute a waiver of notice of such meeting, except where the person attends the meeting for the express purpose of objecting at the beginning of the meeting to the transaction of any business because the meeting is not lawfully called or convened. Neither the business to be transacted at, nor the purpose of, any Annual Meeting or Special Meeting or any regular or special meeting of the Board of Directors or committee of the Board of Directors need be specified in any written waiver of notice unless so required by law, the Certificate of Incorporation or these By-Laws.

ARTICLE VII

GENERAL PROVISIONS

Section 1.    Dividends. Dividends upon the capital stock of the Corporation, subject to the requirements of the DGCL and the provisions of the Certificate of Incorporation, if any, may be declared by the Board of Directors at any regular or special meeting of the Board of Directors (or any action by written consent in lieu thereof in accordance with Section 8 of Article III hereof), and may be paid in cash, in property, or in shares of the Corporation’s capital stock. Before payment of any dividend, there may be set aside out of any funds of the Corporation available for dividends such sum or sums as the Board of Directors from time to time, in its absolute discretion, deems proper as a reserve or reserves to meet contingencies, or for purchasing any of the shares of capital stock, warrants, rights, options, bond, debentures, notes, scrip or other securities or evidences of indebtedness of the Corporation, or for equalizing dividends, or for repairing or maintaining any property of the Corporation, or for any proper purpose, and the Board of Directors may modify or abolish any such reserve.

 

32


Section 2.    Disbursements. All checks or demands for money and notes of the Corporation shall be signed by such officer or officers or such other person or persons as the Board of Directors may from time to time designate.

Section 3.    Fiscal Year. The fiscal year of the Corporation shall be fixed by resolution of the Board of Directors.

Section 4.    Corporate Seal. The Corporation shall not be required to have a corporate seal.

Section 5.    Section Headings. Section headings in these By-Laws are for convenience of reference only and shall not be given any substantive effect in limiting or otherwise construing any provision herein.

Section 6.    Inconsistent Provisions. In the event that any provision of these By-Laws is or becomes inconsistent with any provision of the Certificate of Incorporation, the DGCL or any other applicable law, such provision of these By-Laws shall not be given any effect to the extent of such inconsistency but shall otherwise be given full force and effect.

Section 7.    Audits of Books and Accounts. The Corporation’s books and accounts shall be audited at such times and by such auditors as shall be specified and designated by the Board of Directors.

ARTICLE VIII

INDEMNIFICATION

Section 1.    Power to Indemnify in Actions, Suits or Proceedings other than Those by or in the Right of the Corporation. Subject to Section 3 of this Article VIII, the Corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the Corporation) by reason of the fact that such person is or was a director or officer of the Corporation, or is or was a director or officer of the Corporation serving at the request of the Corporation as a director or officer, employee or agent of another corporation, partnership, joint venture, trust, employee benefit plan or other enterprise, against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by such person in connection with such action, suit or proceeding if such person acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests of the Corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe such person’s conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith and in a manner which such person reasonably believed to be in or not opposed to the best interests of the Corporation, and, with respect to any criminal action or proceeding, had reasonable cause to believe that such person’s conduct was unlawful.

 

33


Section 2.    Power to Indemnify in Actions, Suits or Proceedings by or in the Right of the Corporation. Subject to Section 3 of this Article VIII, the Corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the Corporation to procure a judgment in its favor by reason of the fact that such person is or was a director or officer of the Corporation, or is or was a director or officer of the Corporation serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust, employee benefit plan or other enterprise against expenses (including attorneys’ fees) actually and reasonably incurred by such person in connection with the defense or settlement of such action or suit if such person acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests of the Corporation; except that no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable to the Corporation unless and only to the extent that the Court of Chancery of the State of Delaware or the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all of the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which the Court of Chancery or such other court shall deem proper.

Section 3.    Authorization of Indemnification. Any indemnification under this Article VIII (unless ordered by a court) shall be made by the Corporation only as authorized in the specific case upon a determination that indemnification of the present or former director or officer is proper in the circumstances because such person has met the applicable standard of conduct set forth in Section 1 or Section 2 of this Article VIII, as the case may be. Such determination shall be made, with respect to a person who is a director or officer at the time of such determination, (a) by a majority vote of the directors who are not parties to such action, suit or proceeding, even though less than a quorum, or (b) by a committee of such directors designated by a majority vote of such directors, even though less than a quorum, or (c) if there are no such directors, or if such directors so direct, by independent legal counsel in a written opinion or (d) by the stockholders. Such determination shall be made, with respect to former directors and officers, by any person or persons having the authority to act on the matter on behalf of the Corporation. To the extent, however, that a present or former director or officer of the Corporation has been successful on the merits or otherwise in defense of any action, suit or proceeding described above, or in defense of any claim, issue or matter therein, such person shall be indemnified against expenses (including attorneys’ fees) actually and reasonably incurred by such person in connection therewith, without the necessity of authorization in the specific case.

Section 4.    Good Faith Defined. For purposes of any determination under Section 3 of this Article VIII, a person shall be deemed to have acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests of the Corporation, or, with respect to any criminal action or proceeding, to have had no reasonable cause to believe such person’s conduct was unlawful, if such person’s action is based on the records or books of account of the Corporation or another enterprise, or on information supplied to such person by the officers of the Corporation or another enterprise in the course of their duties, or on the advice of legal counsel for the Corporation or another enterprise or on information or records given or reports made to the Corporation or another enterprise by an independent certified public accountant or by an appraiser or other expert selected with reasonable care by the Corporation or another enterprise. The provisions of this Section 4 shall not be deemed to be exclusive or to limit in any way the circumstances in which a person may be deemed to have met the applicable standard of conduct set forth in Section 1 or Section 2 of this Article VIII, as the case may be.

 

34


Section 5.    Indemnification by a Court. Notwithstanding any contrary determination in the specific case under Section 3 of this Article VIII, and notwithstanding the absence of any determination thereunder, any director or officer may apply to the Court of Chancery of the State of Delaware or any other court of competent jurisdiction in the State of Delaware for indemnification to the extent otherwise permissible under Sections 1 and 2 of this Article VIII. The basis of such indemnification by a court shall be a determination by such court that indemnification of the director or officer is proper in the circumstances because such person has met the applicable standards of conduct set forth in Section 1 or Section 2 of this Article VIII, as the case may be. Neither a contrary determination in the specific case under Section 3 of this Article VIII nor the absence of any determination thereunder shall be a defense to such application or create a presumption that the director or officer seeking indemnification has not met any applicable standard of conduct. Notice of any application for indemnification pursuant to this Section 5 shall be given to the Corporation promptly upon the filing of such application. If successful, in whole or in part, the director or officer seeking indemnification shall also be entitled to be paid the expense of prosecuting such application.

Section 6.    Expenses Payable in Advance. Expenses incurred by a director or officer in defending any civil, criminal, administrative or investigative action, suit or proceeding shall be paid by the Corporation in advance of the final disposition of such action, suit or proceeding upon receipt of an undertaking by or on behalf of such director or officer to repay such amount if it shall ultimately be determined that such person is not entitled to be indemnified by the Corporation as authorized in this Article VIII. Such expenses (including attorneys’ fees) incurred by former directors and officers or other employees and agents may be so paid upon such terms and conditions, if any, as the Corporation deems appropriate.

Section 7.    Nonexclusivity of Indemnification and Advancement of Expenses. The indemnification and advancement of expenses provided by or granted pursuant to this Article VIII shall not be deemed exclusive of any other rights to which those seeking indemnification or advancement of expenses may be entitled under the Certificate of Incorporation, any By-Law, agreement, vote of stockholders or disinterested directors or otherwise, both as to action in such person’s official capacity and as to action in another capacity while holding such office, it being the policy of the Corporation that indemnification of the persons specified in Section 1 and Section 2 of this Article VIII shall be made to the fullest extent permitted by law. The provisions of this Article VIII shall not be deemed to preclude the indemnification of any person who is not specified in Section 1 or Section 2 of this Article VIII but whom the Corporation has the power or obligation to indemnify under the provisions of the DGCL, or otherwise.

Section 8.    Insurance. The Corporation may purchase and maintain insurance on behalf of any person who is or was a director or officer of the Corporation, or is or was a director or officer of the Corporation serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust, employee benefit plan or other enterprise against any liability asserted against such person and incurred by such person in any such capacity, or arising out of such person’s status as such, whether or not the Corporation would have the power or the obligation to indemnify such person against such liability under the provisions of this Article VIII.

 

35


Section 9.    Certain Definitions. For purposes of this Article VIII, references to “the Corporation” shall include, in addition to the resulting corporation, any constituent corporation (including any constituent of a constituent) absorbed in a consolidation or merger which, if its separate existence had continued, would have had power and authority to indemnify its directors or officers, so that any person who is or was a director or officer of such constituent corporation, or is or was a director or officer of such constituent corporation serving at the request of such constituent corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust, employee benefit plan or other enterprise, shall stand in the same position under the provisions of this Article VIII with respect to the resulting or surviving corporation as such person would have with respect to such constituent corporation if its separate existence had continued. The term “another enterprise” as used in this Article VIII shall mean any other corporation or any partnership, joint venture, trust, employee benefit plan or other enterprise of which such person is or was serving at the request of the Corporation as a director, officer, employee or agent. For purposes of this Article VIII, references to “fines” shall include any excise taxes assessed on a person with respect to an employee benefit plan; and 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 or officer with respect to an employee benefit plan, its participants or beneficiaries; and a person who acted in good faith and in a manner such person reasonably believed to be in the interest of the participants and beneficiaries of an employee benefit plan shall be deemed to have acted in a manner “not opposed to the best interests of the Corporation” as referred to in this Article VIII.

Section 10.    Survival of Indemnification and Advancement of Expenses. The indemnification and advancement of expenses provided by, or granted pursuant to, this Article VIII shall, unless otherwise provided when authorized or ratified, continue as to a person who has ceased to be a director or officer and shall inure to the benefit of the heirs, executors and administrators of such a person.

Section 11.    Limitation on Indemnification. Notwithstanding anything contained in this Article VIII to the contrary, except for proceedings to enforce rights to indemnification (which shall be governed by Section 5 of this Article VIII), the Corporation shall not be obligated to indemnify any director or officer (or his or her heirs, executors or personal or legal representatives) or advance expenses in connection with a proceeding (or part thereof) initiated by such person unless such proceeding (or part thereof) was authorized or consented to by the Board of Directors.

Section 12.    Indemnification of Employees and Agents. The Corporation may, to the extent authorized from time to time by the Board of Directors, provide rights to indemnification and to the advancement of expenses to employees and agents of the Corporation similar to those conferred in this Article VIII to directors and officers of the Corporation.

Section 13.    Contractual Nature of Article VIII; Repeal or Limitation of Rights. This Article VIII shall be deemed to be a contract between the Corporation and each director or officer of the Corporation and any repeal or other limitation of this Article VIII or any repeal or limitation of Section 145 of the DGCL or any other applicable law shall not limit any rights of

 

36


indemnification or advancement of expenses under this Article VIII then existing or arising out of events, acts or omissions occurring prior to such repeal or limitation, including, without limitation, the right to indemnification or advancement of expenses under this Article VIII for actions, suits or proceedings commenced after such repeal or limitation to enforce this Article VIII with regard to acts, omissions or events arising prior to such repeal or limitation. If Section 145 of the DGCL is amended to permit or require the Corporation to provide broader indemnification rights than this Article VIII permits or requires, then this Article VIII shall be automatically amended and deemed to incorporate such broader indemnification rights.

Section 14.    Severability. If any provision of these By-Laws shall be deemed invalid, illegal or inoperative, or if a court of competent jurisdiction determines that any of the provisions of these By-Laws contravene public policy, then these By-Laws shall be construed so that the remaining provisions shall not be affected, but shall remain in full force and effect, and any such provisions which are invalid, illegal or inoperative or which contravene public policy shall be deemed, without further action or deed by or on behalf of the Corporation, to be modified, amended and/or limited, but only to the extent necessary to render the same valid and enforceable; it being understood that it is the Corporation’s intention to provide the directors and officers of the Corporation with the broadest possible protection against personal liability allowable under Section 145 of the DGCL.

ARTICLE IX

AMENDMENTS

Section 1.    Amendments. In furtherance and not in limitation of the powers conferred upon it by the laws of the State of Delaware, the Board of Directors shall have the power to adopt, amend, alter or repeal these By-Laws. The affirmative vote of at least a majority of the entire Board of Directors shall be required to adopt, amend, alter or repeal these By-Laws. These By-Laws also may be adopted, amended, altered or repealed by the affirmative vote of the holders of at a majority of the voting power of the shares entitled to vote at an election of directors.

Section 2.    Entire Board of Directors. As used in this Article IX and in these By-Laws generally, the term “entire Board of Directors” means the total number of directors which the Corporation would have if there were no vacancies.

ARTICLE X

EMERGENCY BY-LAWS

Section 1.    Emergency By-Laws.

(a)    During periods of emergency resulting from an attack on the United States or on a locality in which the Corporation conducts its business or customarily holds meetings of its Board of Directors or its stockholders, or during any nuclear or atomic disaster, or during the existence of any emergency, catastrophe, as referred to in Section 110 of the DGCL or other similar emergency condition, and a quorum of the Board of Directors cannot readily be convened, the provisions of this Article X shall apply.

 

37


(b)    Whenever, during such emergency and as a result thereof, a quorum of the Board of Directors or a standing or special committee thereof cannot readily be convened for action, a meeting of such Board of Directors or committee thereof may be called by any officer of the Corporation or director by a notice of the time and place given only to such of the directors as it may be feasible to reach at the time and by such means as may be feasible at the time, including publications or radio. Three directors in attendance at the meeting shall constitute a quorum; provided, however, that the officers of the Corporation or other persons present who have been designated on a list approved by the Board of Directors before the emergency, all in such order of priority and subject to such conditions and for such period of time as may be provided in the resolution approving such list, or in the absence of such a resolution, the officers of the Corporation who are present, in order of rank, and within the same rank in order of seniority, shall to the extent required to provide a quorum be deemed directors for such meeting.

(c)    The Board of Directors, both before or during any such emergency, may provide and modify lines of succession in the event that during such emergency any or all officers or agents of the Corporation shall for any reason be rendered incapable of discharging their duties.

(d)    The Board of Directors, both before or during any such emergency, may, effective as of the emergency, change the principal executive office or designate several alternative principal executive offices or regional offices or authorize the officers of the Corporation so to do.

(e)    No director or officer or employee of the Corporation acting in accordance with this Article XI shall be liable for any act or failure to act, except for willful misconduct.

(f)    To the extent that it considers it practical to do so, the Board of Directors shall manage the business of the Corporation during an emergency in a manner that is consistent with the Certificate and these By-Laws. It is recognized, however, that in an emergency it may not always be practical to act in this manner and this Article X is intended to and does hereby empower the Board of Directors with the maximum authority possible under the DGCL, and all other applicable law, to conduct the interim management of the affairs of the Corporation in an emergency in what it considers to be the best interests of the Corporation.

(g)    This Article X shall continue to apply until such time following the emergency when it is feasible for at least a majority of the directors of the Corporation immediately prior to the emergency to resume management of the business of the Corporation.

(h)    To the extent not inconsistent with this Article X, all other Articles of these By-Laws shall remain in effect during any emergency described in this Article X and, upon termination of the emergency (to be determined by the Board of Directors in its sole discretion), the provisions of this Article X shall cease to be operative.

* * *

Last amended as of September 1, 2020.

 

38

Exhibit 4

 

LOGO


 

WHITING PETROLEUM CORPORATION

 

   

 

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

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

 

    

The Corporation will furnish without charge to each stockholder upon request a copy of the full text of the powers, designations, preferences and relative, participating, optional or other special rights of the shares of each class of stock (and any series thereof) authorized to be issued by the Corporation and the qualifications, limitations or restrictions of such preferences and/or rights, all as set forth in the Corporation’s Restated Certificate of Incorporation and any amendments thereto filed with the Secretary of State of the State of Delaware.

 

  PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNEE
FOR VALUE RECEIVED,                                                   hereby sell, assign and transfer unto       

 

 

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

    

    

    

  Shares
of the common stock represented by the within Certificate, and do hereby irrevocably constitute and appoint  

 

  Attorney
to transfer the said stock on the books of the within-named Corporation with full power of substitution in the premises.  

 

Dated:                                                                             20                                 

Signature(s) Guaranteed: Medallion Guarantee Stamp

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.

      
Signature:                                                                                                               
      
Signature:                                                                                                                    
 

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.

    
      

 

LOGO

Exhibit 10.1

Execution Version

 

 

 

CREDIT AGREEMENT

dated as of September 1, 2020,

among

WHITING PETROLEUM CORPORATION,

as Parent Guarantor,

WHITING OIL AND GAS CORPORATION,

as Borrower,

JPMORGAN CHASE BANK, N.A.,

as Administrative Agent,

and

The Lenders and Other Parties Party Hereto

 

 

JPMORGAN CHASE BANK, N.A.,

BANK OF AMERICA, N.A.,

WELLS FARGO SECURITIES LLC

and

CAPITAL ONE, NATIONAL ASSOCIATION

as Joint Lead Arrangers and Joint Bookrunners

 

 

 


TABLE OF CONTENTS

 

          Page  
   ARTICLE I   
   DEFINITIONS AND ACCOUNTING MATTERS   

Section 1.01

  

Terms Defined Above

     1

Section 1.02

  

Certain Defined Terms

     1

Section 1.03

  

Types of Loans and Borrowings

     39

Section 1.04

  

Terms Generally; Rules of Construction

     39

Section 1.05

  

Accounting Terms and Determinations; GAAP

     40

Section 1.06

  

Interest Rates; LIBO Rate Notification

     40

Section 1.07

  

Letter of Credit Amounts

     41

Section 1.08

  

Divisions

     41
   ARTICLE II   
   THE CREDITS   

Section 2.01

  

Commitments

     41

Section 2.02

  

Loans and Borrowings

     41

Section 2.03

  

Requests for Borrowings

     42

Section 2.04

  

Interest Elections

     43

Section 2.05

  

Funding of Borrowings

     44

Section 2.06

  

Increase, Reduction and Termination of Total Commitment

     45

Section 2.07

  

Borrowing Base

     48

Section 2.08

  

Letters of Credit

     51
   ARTICLE III   
PAYMENTS OF PRINCIPAL AND INTEREST; PREPAYMENTS; FEES   

Section 3.01

  

Repayment of Loans

     56

Section 3.02

  

Interest

     56

Section 3.03

  

Alternate Rate of Interest

     57

Section 3.04

  

Prepayments

     58

Section 3.05

  

Fees

     61
   ARTICLE IV   
   PAYMENTS; PRO RATA TREATMENT; SHARING OF SET-OFFS   

Section 4.01

  

Payments Generally; Pro Rata Treatment; Sharing of Set-offs

     61

Section 4.02

  

Presumption of Payment by the Borrower

     62

Section 4.03

  

Deductions by the Administrative Agent

     63

Section 4.04

  

Collection of Proceeds of Production

     63

Section 4.05

  

Defaulting Lenders

     64
   ARTICLE V   
INCREASED COSTS; BREAK FUNDING PAYMENTS; TAXES; ILLEGALITY   

Section 5.01

  

Increased Costs

     66

Section 5.02

  

Break Funding Payments

     67

Section 5.03

  

Taxes

     67

Section 5.04

  

Mitigation Obligations; Designation of Different Lending Office

     71

Section 5.05

  

Replacement of Lenders

     71

Section 5.06

  

Illegality

     72

 

i


   ARTICLE VI   
   CONDITIONS PRECEDENT   

Section 6.01

  

Effective Date

     72

Section 6.02

  

Each Credit Event

     77
   ARTICLE VII   
   REPRESENTATIONS AND WARRANTIES   

Section 7.01

  

Organization; Powers

     77

Section 7.02

  

Authority; Enforceability

     77

Section 7.03

  

Approvals; No Conflicts

     78

Section 7.04

  

Financial Condition; No Material Adverse Effect

     78

Section 7.05

  

Litigation

     79

Section 7.06

  

Environmental Matters

     79

Section 7.07

  

Compliance with Laws and Agreements; No Defaults

     80

Section 7.08

  

Investment Company Act

     80

Section 7.09

  

Taxes

     80

Section 7.10

  

ERISA

     81

Section 7.11

  

Disclosure; No Material Misstatements

     81

Section 7.12

  

Insurance

     82

Section 7.13

  

Restriction on Liens

     82

Section 7.14

  

Subsidiaries

     82

Section 7.15

  

Location of Business and Offices

     82

Section 7.16

  

Properties; Titles, Etc

     83

Section 7.17

  

Maintenance of Properties

     83

Section 7.18

  

Gas Imbalances, Prepayments

     83

Section 7.19

  

Marketing of Production

     84

Section 7.20

  

Swap Agreements and Qualified ECP Counterparty

     84

Section 7.21

  

Use of Loans and Letters of Credit

     84

Section 7.22

  

Solvency

     84

Section 7.23

  

Anti-Corruption Laws and Sanctions

     85

Section 7.24

  

Affected Financial Institutions

     85

Section 7.25

  

Security Instruments

     85
   ARTICLE VIII   
   AFFIRMATIVE COVENANTS   

Section 8.01

  

Financial Statements; Other Information

     85

Section 8.02

  

Notices of Material Events

     89

Section 8.03

  

Existence; Conduct of Business

     90

Section 8.04

  

Payment of Obligations

     90

Section 8.05

  

Performance of Obligations under Loan Documents

     90

Section 8.06

  

Operation and Maintenance of Properties

     90

Section 8.07

  

Insurance

     91

Section 8.08

  

Books and Records; Inspection Rights

     91

Section 8.09

  

Compliance with Laws

     91

Section 8.10

  

Environmental Matters

     91

Section 8.11

  

Further Assurances

     92

Section 8.12

  

Reserve Reports

     93

Section 8.13

  

Title Information

     94

Section 8.14

  

Additional Collateral; Additional Guarantors

     95

Section 8.15

  

Unrestricted Subsidiaries

     96

Section 8.16

  

Commodity Exchange Act Keepwell Provisions

     96

 

ii


Section 8.17

  

ERISA Compliance

     96

Section 8.18

  

Use of Proceeds and Letters of Credit

     96

Section 8.19

  

Deposit Accounts, Commodities Accounts and Securities Accounts; Location of Proceeds of Loans

     97

Section 8.20

  

Swap Agreements

     97

Section 8.21

  

Post-Effective Date Covenants

     98
   ARTICLE IX   
   NEGATIVE COVENANTS   

Section 9.01

  

Financial Covenants

     98

Section 9.02

  

Indebtedness

     98

Section 9.03

  

Liens

     99

Section 9.04

  

Restricted Payments and Payments in Respect of Certain Indebtedness

     100

Section 9.05

  

Investments, Loans and Advances

     101

Section 9.06

  

Nature of Business; International Operations

     102

Section 9.07

  

ERISA Compliance

     103

Section 9.08

  

Sale or Discount of Notes or Receivables

     103

Section 9.09

  

Mergers, Etc

     103

Section 9.10

  

Sale of Properties and Liquidation of Swap Agreements

     104

Section 9.11

  

Transactions with Affiliates

     105

Section 9.12

  

Subsidiaries

     105

Section 9.13

  

Negative Pledge Agreements; Subsidiary Dividend Restrictions

     106

Section 9.14

  

Designation and Conversion of Restricted and Unrestricted Subsidiaries

     106

Section 9.15

  

Non-Qualified ECP Counterparties

     107

Section 9.16

  

Modifications to Debt Documents

     107

Section 9.17

  

Swap Agreements

     107
   ARTICLE X   
   EVENTS OF DEFAULT; REMEDIES   

Section 10.01

  

Events of Default

     109

Section 10.02

  

Remedies

     110
   ARTICLE XI   
   THE AGENT   

Section 11.01

  

Authorization and Action

     112

Section 11.02

  

Administrative Agent’s Reliance, Limitation of Liability, Etc

     114

Section 11.03

  

Posting of Communications

     115

Section 11.04

  

The Administrative Agent Individually

     116

Section 11.05

  

Successor Administrative Agent

     117

Section 11.06

  

Acknowledgements of Lenders and Issuing Banks

     117

Section 11.07

  

Collateral Matters

     118

Section 11.08

  

Credit Bidding

     119

Section 11.09

  

Certain ERISA Matters

     120
   ARTICLE XII   
   MISCELLANEOUS   

Section 12.01

  

Notices

     121

Section 12.02

  

Waivers; Amendments

     122

Section 12.03

  

Expenses, Indemnity; Damage Waiver

     124

Section 12.04

  

Successors and Assigns; No Third Party Beneficiaries

     127

Section 12.05

  

Survival; Revival; Reinstatement

     130

Section 12.06

  

Counterparts; Integration; Effectiveness

     131

 

iii


Section 12.07

  

Severability

     132

Section 12.08

  

Right of Setoff

     132

Section 12.09

  

GOVERNING LAW; JURISDICTION; CONSENT TO SERVICE OF PROCESS

     132

Section 12.10

  

Headings

     133

Section 12.11

  

Confidentiality

     133

Section 12.12

  

Interest Rate Limitation

     134

Section 12.13

  

EXCULPATION PROVISIONS

     135

Section 12.14

  

Collateral Matters; Swap Agreements; Treasury Management Agreements

     135

Section 12.15

  

USA Patriot Act Notice

     135

Section 12.16

  

No Advisory or Fiduciary Responsibility

     136

Section 12.17

  

Acknowledgement and Consent to Bail-In of Affected Financial Institutions

     136

Section 12.18

  

Acknowledgement Regarding any Supported QFCs

     137

Annexes, Exhibits and Schedules

 

Annex I    Commitments
Exhibit A    Form of Note
Exhibit B    Form of Borrowing Request
Exhibit C    Form of Interest Election Request
Exhibit D    Form of Compliance Certificate
Exhibit E    Security Instruments as of the Effective Date
Exhibit F    Form of Assignment and Assumption
Exhibit G-1    Form of U.S. Tax Compliance Certificate (Foreign Lenders; not partnerships)
Exhibit G-2    Form of U.S. Tax Compliance Certificate (Foreign Participants; not partnerships)
Exhibit G-3    Form of U.S. Tax Compliance Certificate (Foreign Participants; partnerships)
Exhibit G-4    Form of U.S. Tax Compliance Certificate (Foreign Lenders; partnerships)
Exhibit H    Form of Commitment Increase Certificate
Exhibit I    Form of Additional Lender Certificate
Exhibit J    Form of Solvency Certificate
Exhibit K    Form of Perfection Certificate
Exhibit L    Plan of Reorganization
Schedule 1.02(e)    Existing Letters of Credit
Schedule 1.02(e)(i)    Existing Secured Swap Agreements
Schedule 1.02(l)    LC Issuance Limit
Schedule 7.04(c)    Financial Condition; No Material Adverse Change
Schedule 7.05    Litigation
Schedule 7.06    Environmental Matters
Schedule 7.14    Subsidiaries and Unrestricted Subsidiaries
Schedule 7.18    Gas Imbalances; Take or Pay; Other Prepayments
Schedule 7.19    Marketing Agreements

Schedule 7.20

Schedule 9.02

  

Swap Agreements

Existing Indebtedness

Schedule 9.05    Existing Investments
Schedule 9.05(j)    Restructuring Transactions
Schedule 12.01    Notices

 

iv


THIS CREDIT AGREEMENT dated as of September 1, 2020, is among WHITING OIL AND GAS CORPORATION, a Delaware corporation (the “Borrower”); WHITING PETROLEUM CORPORATION, a Delaware corporation (the “Parent Guarantor”); each of the Lenders from time to time party hereto; and JPMORGAN CHASE BANK, N.A., as administrative agent for the Lenders (in such capacity, together with its successors in such capacity, the “Administrative Agent”).

RECITALS

A.    Reference is made to that certain Seventh Amended and Restated Credit Agreement, dated as of April 12, 2018, among the Parent Guarantor, as parent guarantor, the Borrower, as borrower, JPMorgan Chase Bank, N.A., as administrative agent, and the lenders and other parties from time to time party thereto (as amended, amended and restated, supplemented, restated or otherwise modified prior to the date hereof, the “Pre-Petition Credit Agreement”).

B.    On April 1, 2020 (the “Petition Date”), the Parent Guarantor, the Borrower and their respective Subsidiaries (collectively, the “Debtors”) filed voluntary petitions to commence pre-arranged cases (the “Chapter 11 Cases”) under 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”) and continued in the possession of their assets and in the management of their businesses pursuant to Sections 1107 and 1108 of the Bankruptcy Code.

C.    On July 1, 2020, the Debtors filed the Joint Plan of Reorganization of Whiting Petroleum Corporation and Its Debtor Affiliates (the “Plan of Reorganization”) in the Chapter 11 Cases and the accompanying Disclosure Statement (as defined in the Plan of Reorganization). On July 18, 2020, the Debtors filed the Plan Supplement for the Plan of Reorganization.

D.    On August 14, 2020, the Bankruptcy Court entered the Confirmation Order confirming the Plan of Reorganization.

E.    The Borrower has requested that the Lenders provide certain revolving loans to and extensions of credit on behalf of the Borrower and that the Issuing Banks provide Letters of Credit.

F.    The Lenders have indicated their willingness to lend and to participate in Letters of Credit and the Issuing Banks have indicated their willingness to issue Letters of Credit, in each case subject to the terms and conditions of this Agreement.

NOW, THEREFORE, in consideration of the foregoing recitals, of the representations, warranties, covenants and agreements contained herein, and other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto agree as follows:

ARTICLE I

DEFINITIONS AND ACCOUNTING MATTERS

Section 1.01    Terms Defined Above. As used in this Agreement, each term defined above has the meaning indicated above.

Section 1.02    Certain Defined Terms. As used in this Agreement, the following terms have the meanings specified below:

ABR”, when used in reference to any Loan or Borrowing, refers to whether such Loan, or the Loans comprising such Borrowing, are bearing interest at a rate determined by reference to the Alternate Base Rate.


Account Control Agreement” means a control agreement, in form and substance reasonably satisfactory to the Administrative Agent, which grants the Administrative Agent “control” as defined in the UCC in effect in the applicable jurisdiction over any Deposit Account, Securities Account or Commodities Account maintained by any Credit Party, in each case, among the Administrative Agent, the applicable Credit Party and the applicable financial institution at which such Deposit Account, Securities Account or Commodities Account is maintained.

Act” has the meaning assigned to such term in Section 12.15.

Administrative Agent” has the meaning set forth in the preamble hereto.

Additional Lender” has the meaning given to such term in Section 2.06(c)(i).

Additional Lender Certificate” has the meaning given to such term in Section 2.06(c)(ii)(K).

Additional Oil and Gas Assets” means (a) Oil and Gas Properties, (b) gathering systems and other improvements, infrastructure, equipment and fixtures used in connection with the exploration, exploitation, development, or operation of Oil and Gas Properties or the production, treatment, handling, gathering, transportation, processing, and disposition of hydrocarbons and associated products, (c) Investments in joint ventures that own any assets described in clauses (a) or (b) to the extent permitted by Section 9.05(h), and (d) Equity Interests acquired from third parties in Persons that own any assets described in clauses (a) or (b) and that are Guarantors or become Guarantors as provided in Section 8.14.

Adjusted LIBO Rate” means, with respect to any Eurodollar Borrowing for any Interest Period, an interest rate per annum (rounded upwards, if necessary, to the next 1/16 of 1%) equal to the LIBO Rate for such Interest Period multiplied by the Statutory Reserve Rate.

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

Affected Financial Institution” means (a) any EEA Financial Institution or (b) any UK Financial Institution.

Affected Loans” has the meaning assigned to such term in Section 5.06.

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

Agents” means, collectively, the Administrative Agent and, as the context requires, any syndication agents or documentation agents hereunder that may from time to time be designated by the Administrative Agent and the Borrower.

Agreement” means this Credit Agreement, as the same may from time to time be amended, modified, supplemented or restated.

 

2


Alternate Base Rate” means, for any day, a rate per annum equal to the greatest of (a) the Prime Rate in effect on such day, (b) the NYFRB Rate in effect on such day plus 12 of 1% and (c) the Adjusted LIBO Rate for a one (1) month Interest Period beginning on such day (or if such day is not a Business Day, the immediately preceding Business Day) plus 1.00%; provided that for the purpose of this definition, the Adjusted LIBO Rate for any day shall be based on the LIBO Screen Rate (or if the LIBO Screen Rate is not available for such one month Interest Period, the Interpolated Rate) at approximately 11:00 a.m. London time on such day. Any change in the Alternate Base Rate due to a change in the Prime Rate, the NYFRB Rate or the Adjusted LIBO Rate shall be effective from and including the effective date of such change in the Prime Rate, the NYFRB Rate or the Adjusted LIBO Rate, respectively. If the Alternate Base Rate is being used as an alternate rate of interest pursuant to Section 3.03 (for the avoidance of doubt, only until any amendment has become effective pursuant to Section 3.03(b)), then the Alternate Base Rate shall be the greater of clauses (a) and (b) above and shall be determined without reference to clause (c) above. If the Alternate Base Rate as determined pursuant to the foregoing would be less than 2.00%, such rate shall be deemed to be 2.00% for purposes of this Agreement.

Ancillary Document” has the meaning assigned to such term in Section 12.06(c).

Anti-Corruption Laws” means all state or federal laws, rules, and regulations applicable to the Parent Guarantor, the Borrower or any of its Affiliates from time to time concerning or relating to money-laundering, bribery or corruption, including the FCPA.

Applicable Margin” means, for any day, with respect to any ABR Loan or Eurodollar Loan, as the case may be, the rate per annum set forth in the Loan Limit Utilization Grid below based upon the Loan Limit Utilization Percentage then in effect:

 

Loan Limit Utilization Grid

 

Loan Limit Utilization Percentage

     £25    

>25

£50


   

>50

£75


   

>75

£90


    >90

Eurodollar Loans

     2.75     3.00     3.25     3.50     3.75

ABR Loans

     1.75     2.00     2.25     2.50     2.75

Each change in the Applicable Margin shall apply during the period commencing on the effective date of such change and ending on the date immediately preceding the effective date of the next such change, provided, however, that if the Borrower fails to timely deliver a Reserve Report pursuant to Section 8.12(a), the “Applicable Margin” means the rate per annum set forth on the grid when the Loan Limit Utilization Percentage is at its highest level (it being understood and agreed that upon delivery of the Reserve Report, such Applicable Margin shall be automatically adjusted to the rate per annum corresponding to the appropriate Loan Limit Utilization Percentage level based on such Reserve Report).

Applicable Percentage” means, with respect to any Lender, the percentage obtained by dividing (a) such Lender’s Commitment at such time by (b) the amount of the Total Commitment at such time; provided that at any time when the Total Commitment shall have been terminated, each Lender’s Applicable Percentage shall be the percentage obtained by dividing (i) such Lender’s Revolving Credit Exposure at such time by (ii) the aggregate Revolving Credit Exposures of all Lenders at such time.

Approved Counterparty” means (a) any Lender or any Affiliate of a Lender, (b) any counterparty to an Existing Secured Swap Agreement and (c) any other Person if such Person or its credit support provider has a long term senior unsecured debt rating of BBB+ (or its equivalent) or higher by S&P and Baa1 (or its equivalent) or higher by Moody’s at the time such Person entered into the applicable Swap Agreement.

 

3


Approved Electronic Platform” has the meaning assigned to such term in Section 11.03.

Approved Fund” means any Person (other than a natural person) that is engaged in making, purchasing, holding or investing in bank loans and similar extensions of credit in the ordinary course of its business and that is administered or managed by a Lender, an Affiliate of a Lender or an entity or an Affiliate of an entity that administers or manages a Lender.

Approved Petroleum Engineers” means (a) Netherland, Sewell & Associates, Inc., (b) Ryder Scott Company Petroleum Consultants, L.P., (c) Cawley, Gillespie & Associates, Inc. or (d) any other independent petroleum engineers selected by Borrower and reasonably acceptable to the Administrative Agent.

Arrangers” means, collectively, JPMorgan Chase Bank, N.A., Bank of America, N.A., Wells Fargo Securities LLC and Capital One, National Association in their capacities as joint lead arrangers and joint bookrunners hereunder.

ASC” means the Financial Accounting Standards Board Accounting Standards Codification, as in effect from time to time.

Assignment and Assumption” means an assignment and assumption entered into by a Lender and an assignee (with the consent of any party whose consent is required by Section 12.04(b)), and accepted by the Administrative Agent, in the form of Exhibit F or any other form approved by the Administrative Agent.

Availability” means, as of any date, an amount equal to the difference between (a) the Loan Limit and (b) the total Revolving Credit Exposures of all Lenders.

Availability Period” means the period from and including the Effective Date to but excluding the Termination Date.

Bail-In Action” means the exercise of any Write-Down and Conversion Powers by the applicable Resolution Authority in respect of any liability of an Affected Financial Institution.

Bail-In Legislation” means (a) with respect to any EEA Member Country implementing Article 55 of Directive 2014/59/EU of the European Parliament and of the Council of the European Union, the implementing law, regulation rule or requirement for such EEA Member Country from time to time which is described in the EU Bail-In Legislation Schedule and (b) with respect to the United Kingdom, Part I of the United Kingdom Banking Act 2009 (as amended from time to time) and any other law, regulation or rule applicable in the United Kingdom relating to the resolution of unsound or failing banks, investment firms or other financial institutions or their affiliates (other than through liquidation, administration or other insolvency proceedings).

Bank Price Deck” means the Administrative Agent’s most recent internal price deck on a forward curve basis for each of oil, natural gas and other Hydrocarbons, as applicable, furnished to the Borrower by the Administrative Agent from time to time in accordance with the terms of this Agreement.

Bankruptcy Code” has the meaning assigned to such term in the recitals hereto.

Bankruptcy Court” has the meaning assigned to such term in the recitals hereto.

Bankruptcy Event” means, with respect to any Person, such Person becomes the subject of a voluntary or involuntary bankruptcy or insolvency proceeding, or has had a receiver, conservator, trustee,

 

4


administrator, custodian, assignee for the benefit of creditors or similar Person charged with the reorganization or liquidation of its business appointed for it, or, in the good faith determination of the Administrative Agent, has taken any action in furtherance of, or indicating its consent to, approval of, or acquiescence in, any such proceeding or appointment or has had any order for relief in such proceeding entered in respect thereof; provided that a Bankruptcy Event shall not result solely by virtue of any ownership interest, or the acquisition of any ownership interest, in such Person by a Governmental Authority or instrumentality thereof, unless such ownership interest results in or provides such Person with immunity from the jurisdiction of courts within the United States or from the enforcement of judgments or writs of attachment on its assets or permits such Person (or such Governmental Authority or instrumentality) to reject, repudiate, disavow or disaffirm any contracts or agreements made by such Person.

Benchmark Replacement means the sum of: (a) the alternate benchmark rate (which may be a SOFR-Based Rate) that has been selected by the Administrative Agent and the Borrower giving due consideration to (i) any selection or recommendation of a replacement rate or the mechanism for determining such a rate by the Relevant Governmental Body or (ii) any evolving or then-prevailing market convention for determining a rate of interest as a replacement to the LIBO Rate for U.S. dollar-denominated syndicated credit facilities and (b) the Benchmark Replacement Adjustment; provided that, if the Benchmark Replacement as so determined would be less than 1.00%, the Benchmark Replacement will be deemed to be 1.00% for the purposes of this Agreement.

Benchmark Replacement Adjustment means the spread adjustment, or method for calculating or determining such spread adjustment, (which may be a positive or negative value or zero) that has been selected by the Administrative Agent and the Borrower giving due consideration to (a) any selection or recommendation of a spread adjustment, or method for calculating or determining such spread adjustment, for the replacement of the LIBO Rate with the applicable Unadjusted Benchmark Replacement by the Relevant Governmental Body and/or (b) any evolving or then-prevailing market convention for determining a spread adjustment, or method for calculating or determining such spread adjustment, for the replacement of the LIBO Rate with the applicable Unadjusted Benchmark Replacement for U.S. dollar-denominated syndicated credit facilities at such time.

Benchmark Replacement Conforming Changes” means, with respect to any Benchmark Replacement, any technical, administrative or operational changes (including changes to the definition of “ABR,” the definition of “Interest Period,” timing and frequency of determining rates and making payments of interest and other administrative matters) that the Administrative Agent decides may be appropriate to reflect the adoption and implementation of such Benchmark Replacement and to permit the administration thereof by the Administrative Agent in a manner substantially consistent with market practice (or, if the Administrative Agent decides that adoption of any portion of such market practice is not administratively feasible or if the Administrative Agent determines that no market practice for the administration of the Benchmark Replacement exists, in such other manner of administration as the Administrative Agent decides is reasonably necessary in connection with the administration of this Agreement).

Benchmark Replacement Date” means the earlier to occur of the following events with respect to the LIBO Rate:

(a)    in the case of clause (a) or (b) of the definition of “Benchmark Transition Event,” the later of (i) the date of the public statement or publication of information referenced therein and (ii) the date on which the administrator of the LIBO Screen Rate permanently or indefinitely ceases to provide the LIBO Screen Rate; or

(b)    in the case of clause (c) of the definition of “Benchmark Transition Event,” the date of the public statement or publication of information referenced therein.

 

5


Benchmark Transition Event means the occurrence of one or more of the following events with respect to the LIBO Rate:

(a)    a public statement or publication of information by or on behalf of the administrator of the LIBO Screen Rate announcing that such administrator has ceased or will cease to provide the LIBO Screen Rate, permanently or indefinitely, provided that, at the time of such statement or publication, there is no successor administrator that will continue to provide the LIBO Screen Rate;

(b)    a public statement or publication of information by the regulatory supervisor for the administrator of the LIBO Screen Rate, the U.S. Federal Reserve System, an insolvency official with jurisdiction over the administrator for the LIBO Screen Rate, a resolution authority with jurisdiction over the administrator for the LIBO Screen Rate or a court or an entity with similar insolvency or resolution authority over the administrator for the LIBO Screen Rate, in each case which states that the administrator of the LIBO Screen Rate has ceased or will cease to provide the LIBO Screen Rate permanently or indefinitely, provided that, at the time of such statement or publication, there is no successor administrator that will continue to provide the LIBO Screen Rate; and/or

(c)    a public statement or publication of information by the regulatory supervisor for the administrator of the LIBO Screen Rate announcing that the LIBO Screen Rate is no longer representative.

Benchmark Transition Start Date” means (a) in the case of a Benchmark Transition Event, the earlier of (i) the applicable Benchmark Replacement Date and (ii) if such Benchmark Transition Event is a public statement or publication of information of a prospective event, the 90th day prior to the expected date of such event as of such public statement or publication of information (or if the expected date of such prospective event is fewer than 90 days after such statement or publication, the date of such statement or publication) and (b) in the case of an Early Opt-in Election, the date specified by the Administrative Agent or the Required Lenders, as applicable, by notice to the Borrower, the Administrative Agent (in the case of such notice by the Required Lenders) and the Lenders.

Benchmark Unavailability Period” means, if a Benchmark Transition Event and its related Benchmark Replacement Date have occurred with respect to the LIBO Rate and solely to the extent that the LIBO Rate has not been replaced with a Benchmark Replacement, the period (a) beginning at the time that such Benchmark Replacement Date has occurred if, at such time, no Benchmark Replacement has replaced the LIBO Rate for all purposes hereunder in accordance with Section 3.03 and (b) ending at the time that a Benchmark Replacement has replaced the LIBO Rate for all purposes hereunder pursuant to Section 3.03.

Beneficial Ownership Certification” means a certification regarding beneficial ownership or control as required by the Beneficial Ownership Regulation.

Beneficial Ownership Regulation” means 31 C.F.R. § 1010.230.

Benefit Plan” means any of (a) an “employee benefit plan” (as defined in ERISA) that is subject to Title I of ERISA, (b) a “plan” as defined in and subject to Section 4975 of the Code or (c) any Person whose assets include (for purposes of ERISA Section 3(42) or otherwise for purposes of Title I of ERISA or Section 4975 of the Code) the assets of any such “employee benefit plan” or “plan”.

BHC Act Affiliate” of a party means an ‘affiliate’ (as such term is defined under, and interpreted in accordance with, 12 U.S.C. 1841(k)) of such party.

 

6


Board” means the Board of Governors of the Federal Reserve System of the United States of America or any successor Governmental Authority.

Borrower” has the meaning assigned to such term in the preamble hereto.

Borrowing” means Loans of the same Type, made, converted or continued on the same date and, in the case of Eurodollar Loans, as to which a single Interest Period is in effect.

Borrowing Base” means at any time an amount equal to the amount determined in accordance with Section 2.07, as the same may be redetermined or adjusted from time to time pursuant to the Borrowing Base Adjustment Provisions. As of the Effective Date, the Borrowing Base shall be $750,000,000.

Borrowing Base Adjustment Provisions” means, collectively, Section 2.07(e), Section 2.07(f), Section 2.07(g), Section 2.07(h) and any other provision which adjusts (as opposed to redetermines) the amount of the Borrowing Base, as applicable.

Borrowing Base Deficiency” occurs if at any time aggregate Revolving Credit Exposures exceed the Borrowing Base. The amount of any Borrowing Base Deficiency at the time in question is the amount (if any) by which the aggregate Revolving Credit Exposures exceed the Borrowing Base then in effect.

Borrowing Base Property” means, at any time, any Oil and Gas Property of the Borrower and the Guarantors to which Proved Reserves were attributed in the Reserve Report most recently delivered to the Administrative Agent pursuant to Section 8.12.

Borrowing Base Value” means, with respect to any Oil and Gas Property or any Swap Agreement in respect of commodities, the value attributed thereto by the Administrative Agent for the purpose of determining the Borrowing Base.

Borrowing Request” means a request by the Borrower, substantially in the form of Exhibit B or any other form approved by the Administrative Agent, for a Borrowing in accordance with Section 2.03.

Business Day” means any day that is not a Saturday, Sunday or other day on which commercial banks in New York City are authorized or required by law to remain closed, and if such day relates to a Borrowing or continuation of, a payment or prepayment of principal of or interest on, or a conversion of or into, or the Interest Period for, a Eurodollar Loan or a notice by the Borrower with respect to any such Borrowing or continuation, payment, prepayment, conversion or Interest Period, any day which is also a day on which banks are open for dealings in dollar deposits in the London interbank market.

Capital Leases” means, in respect of any Person, all leases which shall have been, or should have been, in accordance with GAAP as in effect prior to the adoption of ASU No. 2016-02 “Leases (Topic 842)” and ASU No. 2018-11 “Leases (Topic 842)”, recorded as finance or capital leases on the balance sheet of the Person liable (whether contingent or otherwise) for the payment of rent thereunder. Notwithstanding the foregoing, any lease that would not have been recorded as a Capital Lease if it had been entered into prior to the adoption of ASU No. 2016-02 “Leases (Topic 842)” and ASU No. 2018-11 “Leases (Topic 842)” shall not be a Capital Lease whether or not so designated in accordance with GAAP as in effect at the time of the execution of such lease.

Cash Collateral” has the meaning assigned such term in Section 2.08(j)(ii).

Cash Collateralize” means to pledge and deposit with or deliver to the Administrative Agent (as a first priority, perfected security interest), for the benefit of the Issuing Bank and the Lenders, cash or Cash Equivalents, at a location and pursuant to documentation in form and substance reasonably satisfactory to the Administrative Agent. “Cash Collateralized”, “Cash Collateralizing” and “Cash Collateralization” have correlative meanings.

 

7


Cash Equivalents” means:

(a)    direct obligations of the United States or any agency thereof, or obligations guaranteed by the United States or any agency thereof, in each case maturing within one (1) year from the date of acquisition thereof.

(b)    commercial paper maturing within one (1) year from the date of acquisition thereof rated in the highest grade by S&P or Moody’s.

(c)    demand deposits, and time deposits maturing within one (1) year from the date of creation thereof, with, or issued by any Lender or any office located in the United States of any other bank or trust company which is organized under the laws of the United States or any state thereof, has capital, surplus and undivided profits aggregating at least $100,000,000 (as of the date of such bank or trust company’s most recent financial reports) and has a short term deposit rating of at least A2 or P2, as such rating is set forth from time to time, by S&P or Moody’s, respectively; and

(d)    shares of any SEC registered 2a-7 money market fund that has net assets of at least $500,000,000 and the highest rating obtainable from either Moody’s or S&P.

Casualty Event” means any loss, casualty or other insured damage to, or any nationalization, taking under power of eminent domain or by condemnation or similar proceeding of, any Property of the Parent Guarantor or any of its Restricted Subsidiaries.

CFTC Hedging Obligation” means any Obligation in respect of any agreement, contract, confirmation or transaction that constitutes a “swap” within the meaning of section 1a(47) of the Commodity Exchange Act.

Change in Control” means:

(a)    any Person, entity or “group” (within the meaning of Section 13(d) or 14(d) of the Exchange Act), other than the Permitted Investors, shall at any time have acquired direct or indirect beneficial ownership of voting power of the outstanding Equity Interests of the Parent Guarantor having more than the greater of (i) 50% of the ordinary voting power for the election of directors of the Parent Guarantor and (ii) the percentage of the ordinary voting power for the election of directors of the Parent Guarantor owned in the aggregate, directly or indirectly, beneficially, by the Permitted Investors;

(b)    occupation of a majority of the seats (other than vacant seats) on the board of directors of the Parent Guarantor by Persons who were not (i) directors of the Parent Guarantor on the Effective Date, (ii) nominated or appointed by the board of directors of the Parent Guarantor or (iii) approved by the board of directors of the Parent Guarantor as director candidates prior to their election;

(c)    a “Change in Control” (as defined in the documentation for any Material Indebtedness) (or any other defined term describing a similar event or having a similar purpose or meaning) shall have occurred and as a result thereof the maturity of such Material Indebtedness is accelerated, the obligor on such Material Indebtedness is obligated to offer to Redeem such Material Indebtedness, or the obligee on such Material Indebtedness shall otherwise have the right to require the obligor thereon to Redeem such Material Indebtedness; or

 

8


(d)    the Parent Guarantor shall at any time cease to directly own 100% of the outstanding Equity Interests in the Borrower.

As used in this definition, “beneficial ownership” (which may be direct or indirect) has the meaning provided in Rules 13(d)-3 and 13(d)-5 under the Exchange Act.

Change in Law” means the occurrence after the date of this Agreement of (a) the adoption of or taking effect of any law, rule, regulation or treaty, (b) any change in any law, rule, regulation or treaty or in the administration, interpretation, implementation or application thereof by any Governmental Authority or (c) compliance by any Lender or Issuing Bank (or, for purposes of Section 5.01(b), by any lending office of such Lender or by such Lender’s or Issuing Bank’s holding company, if any) with any request, guideline or directive (whether or not having the force of law) of any Governmental Authority made or issued after the date of this Agreement; provided that, notwithstanding anything herein to the contrary, (x) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, guidelines or directives thereunder or issued in connection therewith or in the implementation thereof and (y) all requests, rules, guidelines or directives promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United States 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, issued or implemented.

Chapter 11 Cases” has the meaning assigned to such term in the recitals hereto.

Code” means the Internal Revenue Code of 1986, as amended from time to time, and any successor statute.

Collateral” has the meaning provided for such term or such similar term in each of the Security Instruments; provided that with respect to real property that is subject to mortgages, “Collateral” shall also mean “Mortgaged Properties”.

Collateral Account” has the meaning assigned such term in Section 2.08(j)(ii).

Commitment” means, (a) with respect to each Lender that is a Lender on the Effective Date, the amount set forth opposite such Lender’s name on Annex I as such Lender’s “Commitment” and (b) in the case of any Lender that becomes a Lender after the Effective Date, the amount specified as such Lender’s “Commitment” in the Assignment and Assumption pursuant to which such Lender assumed a portion of the Total Commitment, in each case, as the same may be changed from time to time pursuant to the terms of this Agreement.

Commitment Fee Rate” means, for any day, a rate equal to 0.50% per annum.

Commitment Increase Certificate” has the meaning assigned to such term in Section 2.06(c)(ii)(J).

Commodities Account” shall have the meaning set forth in Article 9 of 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, and the rules and regulations promulgated thereunder, and the application or official interpretation of any thereof.

Communications” means, collectively, any notice, demand, communication, information, document or other material provided by or on behalf of the Borrower or any Guarantor, including Company Materials, pursuant to any Loan Document or the transactions contemplated therein which is distributed by the Administrative Agent, any Lender or any Issuing Bank by means of electronic communications pursuant to this Agreement, including through an Approved Electronic Platform.

 

9


Company Materials” has the meaning assigned such term in Section 8.01.

Compounded SOFR” means the compounded average of SOFRs for the applicable Corresponding Tenor, with the rate, or methodology for this rate, and conventions for this rate (which may include compounding in arrears with a lookback and/or suspension period as a mechanism to determine the interest amount payable prior to the end of each Interest Period) being established by the Administrative Agent in accordance with the rate, or methodology for this rate, and conventions for this rate selected or recommended by the Relevant Governmental Body for determining compounded SOFR; provided that if, and to the extent that, the Administrative Agent determines in its reasonable discretion that Compounded SOFR cannot be determined in such manner, then the rate, or methodology for this rate, and conventions for this rate that the Administrative Agent determines are substantially consistent with at least five (5) currently outstanding dollar-denominated syndicated credit facilities at such time (as a result of amendment or as originally executed) that are publicly available for review.

Confirmation Order” means the order of the Bankruptcy Court dated August 14, 2020, Docket No. 733, confirming the Plan of Reorganization, which order inter alia authorized and approved the Debtors’ entry into and performance under this Agreement.

Connection Income Taxes” means Other Connection Taxes that are imposed on or measured by net income (however denominated) or that are franchise Taxes or branch profits Taxes.

Consolidated Cash Balance” means, as of any date of determination, the positive difference, if any, between (a) the aggregate amount of cash and Cash Equivalents, in each case, held or owned by (either directly or indirectly), credited to the account of or that would otherwise be required to be reflected as an asset on the balance sheet of, the Parent Guarantor and its Restricted Subsidiaries as of such date and (b) all Excluded Cash of the Parent Guarantor and its Restricted Subsidiaries as of such date.

Consolidated Interest Expense” means, for any period, the total consolidated interest expense of the Parent Guarantor and its Consolidated Restricted Subsidiaries for such period determined on a consolidated basis in accordance with GAAP plus (without duplication) to the extent not already included in such total consolidated interest expense:

(a)    imputed interest on Indebtedness attributable to Capital Leases and sale and leaseback transactions of the Parent Guarantor or any of its Consolidated Restricted Subsidiaries for such period;

(b)    commissions, discounts and other fees and charges owed by the Parent Guarantor or any of its Consolidated Restricted Subsidiaries with respect to letters of credit securing financial obligations and bankers’ acceptances for such period;

(c)    amortization of debt issuance costs, debt discount or premium and other financing fees and expenses incurred by the Parent Guarantor or any of its Consolidated Restricted Subsidiaries for such period;

(d)    the interest portion of any deferred payment obligations of the Parent Guarantor or any of its Consolidated Restricted Subsidiaries for such period; and

 

10


(e)    all cash interest paid in connection with Indebtedness permitted hereunder to the extent that such payments are not accounted for as interest expense pursuant to ASC 470-60 or another applicable codification.

Consolidated Net Debt” means, at any date, the positive remainder (if any) of (a) Consolidated Total Debt minus (b) unrestricted cash and Cash Equivalents of the Parent Guarantor and its Consolidated Restricted Subsidiaries that would appear on a consolidated balance sheet on such date in an aggregate amount not to exceed the Excess Cash Threshold; provided that cash and Cash Equivalents that would appear as “restricted” on a consolidated balance sheet solely because such cash or Cash Equivalents are subject to an Account Control Agreement in favor of the Administrative Agent shall be deemed to be unrestricted and unencumbered for purposes hereof.

Consolidated Net Income” means with respect to the Parent Guarantor and its Consolidated Restricted Subsidiaries, for any period, the net income (loss) of the Parent Guarantor and its Consolidated Restricted Subsidiaries for such period determined on a consolidated basis in accordance with GAAP; provided that there shall be excluded from such net income (to the extent otherwise included therein) the following (without duplication): (a) the net income of any Person (including any Unrestricted Subsidiary) in which the Parent Guarantor or any Consolidated Restricted Subsidiary has an interest (which interest does not cause the net income of such other Person to be consolidated with the net income of the Parent Guarantor and its Consolidated Restricted Subsidiaries in accordance with GAAP), except to the extent of the amount of dividends or distributions actually paid in cash during such period by such other Person to the Parent Guarantor or to a Consolidated Restricted Subsidiary, as the case may be; (b) the net income (but not loss) during such period of any Consolidated Restricted Subsidiary to the extent that the declaration or payment of cash dividends or similar cash distributions or transfers or loans by that Consolidated Restricted Subsidiary is not at the time permitted by operation of the terms of its charter or any agreement, instrument or Governmental Requirement applicable to such Consolidated Restricted Subsidiary or is otherwise restricted or prohibited, in each case determined in accordance with GAAP; (c) the net income (or loss) of any Person acquired in a pooling-of-interests transaction for any period prior to the date of such transaction; (d) and extraordinary gains or losses during such period; (e) any non-cash gains or losses or positive or negative adjustments under ASC 815 (and any statements replacing, modifying or superseding such statement) as the result of changes in the fair market value of derivatives; (f) any gains or losses attributable to writeups or writedowns of assets, including ceiling test writedowns, and (g) any non-cash compensation charge arising from any grant or vesting of stock, stock options or other equity-based awards.

Consolidated Net Leverage Ratio” means, as of any date of calculation, the ratio of (a) Consolidated Net Debt as of such date to (b) EBITDAX for the Rolling Period ending on such date.

Consolidated Restricted Subsidiaries” means each Restricted Subsidiary (whether now existing or hereafter created or acquired) the financial statements of which shall be (or should have been) consolidated with the financial statements of the Parent Guarantor in accordance with GAAP.

Consolidated Total Debt” means, at any date, the principal amount of all Indebtedness (without duplication) of the Parent Guarantor and its Consolidated Restricted Subsidiaries (a) described in clauses (a), (b), (c) or (d) of the definition herein of “Indebtedness”, other than Indebtedness with respect to letters of credit to the extent such letters of credit have not been drawn, (b) described in clause (f) of the definition herein of “Indebtedness” to the extent such Liens secure Indebtedness of others of the type described in clauses (a), (b), (c) or (d) of the definition herein of “Indebtedness” and (c) described in clause (g) of the definition herein of “Indebtedness” to the extent such Indebtedness is comprised of guaranty obligations in respect of Indebtedness of others of the type described in clauses (a), (b), (c) or (d) of the definition herein of “Indebtedness.”

 

11


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.

Corresponding Tenor” with respect to a Benchmark Replacement means a tenor (including overnight) having approximately the same length (disregarding business day adjustment) as the applicable tenor for the applicable Interest Period with respect to the then-current benchmark rate.

Covered Entity” means any of the following:

(a)    a “covered entity” as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 252.82(b);

(b)    a “covered bank” as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 47.3(b); or

(c)    a “covered FSI” as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 382.2(b).

Covered Party” has the meaning set forth in Section 12.18.

Credit Parties” means, collectively, the Borrower and the Guarantors and each, individually, a “Credit Party”.

Current Assets” means, as of any date of determination, without duplication, the sum of all amounts that would, in accordance with GAAP, be set forth opposite the caption “total current assets” (or any like caption) on a consolidated balance sheet of the Parent Guarantor and its Restricted Subsidiaries at such date, plus the Availability as of such date, but excluding all non-cash assets under Accounting Standards Codification Topic No. 815.

Current Liabilities” means, as of any date of determination, without duplication, the sum of all amounts that would, in accordance with GAAP, be set forth opposite the caption “total current liabilities” (or any like caption) on a consolidated balance sheet of the Parent Guarantor and its Restricted Subsidiaries on such date, but excluding (a) all non-cash obligations under Accounting Standards Codification Topic No. 815, (b) the current portion of the then outstanding aggregate principal amount of the Loans under this Agreement, (c) without duplication of amounts described in clause (b), the current portion of any long-term Indebtedness of the Parent Guarantor or any of its Restricted Subsidiaries and (d) any ad valorem tax liabilities owed by the Parent Guarantor or any of its Restricted Subsidiaries.

Current Ratio” means, for any date of determination, the ratio of (a) Current Assets as of such date to (b) Current Liabilities as of such date.

Debtors” has the meaning assigned to such term in the recitals hereto.

Default” means any event or condition which constitutes an Event of Default or which upon notice, lapse of time or both would, unless cured or waived, become an Event of Default.

Default Right” has the meaning assigned to that term in, and shall be interpreted in accordance with, 12 C.F.R. §§ 252.81, 47.2 or 382.1, as applicable.

 

12


Defaulting Lender” means any Lender that (a) has failed, within two (2) Business Days of the date required to be funded or paid, to (i) fund all or any portion of its Loans, (ii) fund all or any portion of its participations in Letters of Credit or (iii) pay over to any Credit Party any other amount required to be paid by it hereunder, unless, in the case of clause (i) above, such Lender notifies the Administrative Agent in writing that such failure is the result of such Lender’s good faith determination that a condition precedent to funding (specifically identified and including the particular default, if any) has not been satisfied, (b) has notified the Borrower or any Credit Party in writing, or has made a public statement to the effect, that it does not intend or expect to comply with any of its funding obligations under this Agreement (unless such writing or public statement indicates that such position is based on such Lender’s good faith determination that a condition precedent (specifically identified and including the particular default, if any) to funding a Loan under this Agreement cannot be satisfied) or generally under other agreements in which it commits to extend credit, (c) has failed, within three (3) Business Days after request by a Credit Party, acting in good faith, to provide a certification in writing from an authorized officer of such Lender that it will comply with its obligations (and is financially able to meet such obligations as of the date of certification) to fund prospective Loans and participations in then outstanding Letters of Credit under this Agreement; provided that such Lender shall cease to be a Defaulting Lender pursuant to this clause (c) upon such Credit Party’s receipt of such certification in form and substance satisfactory to it and the Administrative Agent, or (d) has, or has a Lender Parent that has, become the subject of (A) a Bankruptcy Event or (B) a Bail-In Action.

Deficiency Date” has the meaning assigned to such term in Section 3.04(c)(ii).

Deposit Account” shall have the meaning set forth in Article 9 of the UCC.

Disqualified Capital Stock” means any Equity Interest that, by its terms (or by the terms of any security into which it is convertible or for which it is exchangeable) or upon the happening of any event, matures or is mandatorily redeemable for any consideration other than other Equity Interests (which would not constitute Disqualified Capital Stock), pursuant to a sinking fund obligation or otherwise, or is convertible or exchangeable for Indebtedness or redeemable for any consideration other than other Equity Interests (which would not constitute Disqualified Capital Stock) at the option of the holder thereof, in whole or in part (but if in part only with respect to such amount that meets the criteria set forth in this definition), on or prior to the date that is one year after the Maturity Date.

Disregarded Entity” means an entity that, pursuant to Treas. Reg. § 301.7701-2(c)(2), is disregarded for U.S. federal income Tax purposes as an entity separate from its owner.

Distributable Free Cash Flow” means, as of any time of determination, an amount equal to (a) Free Cash Flow as of the last day of the most recently ended Rolling Period for which financial statements have been delivered pursuant to Section 8.01(a) or (b), as applicable (the “Specified Rolling Period”) minus (b) the aggregate amount of the Free Cash Flow Utilizations that have occurred during the period beginning on the first day of the applicable Specified Rolling Period and ending at the time of determination. For the avoidance of doubt, any amount deducted in calculating Distributable Free Cash Flow as of any time of determination shall be without duplication of amounts deducted in calculating Free Cash Flow for purposes of such calculation of Distributable Free Cash Flow.

dollars” or “$” refers to lawful money of the United States of America.

Domestic Subsidiary” means each Subsidiary that is not a Foreign Subsidiary.

Domestic Wholly-Owned Subsidiary” means each Wholly-Owned Subsidiary that is a Domestic Subsidiary.

 

13


E&P Subsidiary” has the meaning assigned to such term in Section 9.10.

Early Opt-in Election means, with respect to the LIBO Rate, the occurrence of:

(a)    (i) a determination by the Administrative Agent or (ii) a notification by the Required Lenders to the Administrative Agent (with a copy to the Borrower) that the Required Lenders have determined that U.S. dollar denominated syndicated credit facilities being executed at such time, or that include language similar to that contained in Section 3.03 are being executed or amended, as applicable, to incorporate or adopt a new benchmark interest rate to replace the LIBO Rate, and

(b)    (i) the election by the Administrative Agent or (ii) the election by the Required Lenders to declare that an Early Opt-in Election with respect to such rate has occurred and the provision, as applicable, by the Administrative Agent of written notice of such election to the Borrower and the Lenders or by the Required Lenders of written notice of such election to the Administrative Agent.

EBITDAX” means, for any period, Consolidated Net Income for such period plus the following expenses or charges to the extent deducted in calculating such Consolidated Net Income: (a) the sum of (i) Consolidated Interest Expense, (ii) Taxes imposed on or measured by income (however denominated) and franchise Taxes paid or accrued, (iii) depreciation, (iv) depletion, (v) amortization, (vi) exploration and abandonment expenses, (vii) transaction costs, expenses and charges with respect to the acquisition or disposition of Oil and Gas Properties, not to exceed $25,000,000 in any fiscal year, (viii) losses from sales or other dispositions of assets (other than Hydrocarbons produced in the ordinary course of business) and other extraordinary, unusual or non-recurring losses, (ix) all other noncash charges, (x) costs, expenses, accruals, reserves and charges with respect to senior management changes and office closure, consolidation and relocation, including but not limited to, severance payments, recruiting, signing and retention costs and redundancy costs and (xi) any fees, expenses and other transaction costs (whether or not such transactions were consummated) which are incurred through March 31, 2021 in connection with fresh start accounting, the Chapter 11 Cases, the Transactions, the Plan of Reorganization, the transactions contemplated thereby and any other reorganization items and restructuring costs, minus (b) (i) gains from sales or other dispositions of assets (other than Hydrocarbons produced in the ordinary course of business) and other extraordinary or non-recurring gains and (ii) all noncash income added to Consolidated Net Income (including cancellation of indebtedness income to the extent included in Consolidated Net Income), excluding any noncash gains that represent the reversal of an accrual or reserve for any anticipated cash charges in any prior period (other than any such accrual or reserve that has been added back to Consolidated Net Income in calculating EBITDAX in accordance with this definition).

For the purposes of calculating EBITDAX for any Rolling Period (other than, for the avoidance of doubt, for purposes of calculating EBITDAX in respect of Free Cash Flow), if at any time during such Rolling Period the Parent Guarantor or any Consolidated Restricted Subsidiary shall have made any Material Disposition or Material Acquisition, Consolidated Net Income and EBITDAX for such period shall be calculated after giving pro forma effect thereto as if such Material Disposition or Material Acquisition had occurred on the first day of such Rolling Period; provided that the calculations of such pro forma adjustments are acceptable to the Administrative Agent in its reasonable discretion.

For purposes of calculating EBITDAX for the fiscal quarters of the Borrower ending December 31, 2020, March 31, 2021 and June 30, 2021, (a) EBITDAX for the Rolling Period ending December 31, 2020 shall be an amount equal EBITDAX for the fiscal quarter ending on such date multiplied by 4, (b) EBITDAX for the Rolling Period ending March 31, 2021 shall be an amount equal to EBITDAX for the two fiscal quarter period ending on such date multiplied by 2 and, (c) EBITDAX for the Rolling Period ending June 30, 2021 shall be an amount equal to EBITDAX for the three-fiscal-quarter period ending on such date multiplied by 4/3. For the avoidance of doubt, each fiscal quarter thereafter, EBITDAX shall be equal to EBITDAX for any Rolling Period then ending.

 

14


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.

Effective Date” means the date on which the conditions specified in Section 6.01 are satisfied (or waived in accordance with Section 12.02).

Effective Date EBITDAX” means an amount equal to the Parent Guarantor’s twelve-month projected EBITDAX set forth in the projections most recently delivered by the Parent Guarantor to the Administrative Agent prior to the Effective Date, it being understood and agreed that such projections (a) shall be substantially consistent with the projections set forth in the Disclosure Statement, (b) shall be updated solely to reflect then-current strip prices at the time such projections are delivered and (c) shall otherwise be in form and substance reasonably acceptable to the Administrative Agent.

Electronic Signature” means an electronic sound, symbol, or process attached to, or associated with, a contract or other record and adopted by a Person with the intent to sign, authenticate or accept such contract or record.

Engineering Reports” has the meaning assigned to such term in Section 2.07(c)(i).

Environmental Laws” means any and all Governmental Requirements pertaining in any way to public health (regarding human exposure to Hazardous Materials), protection of the environment, the preservation or reclamation of natural resources, or the management, Release or threatened Release of any Hazardous Materials, in effect in any and all jurisdictions in which the Parent Guarantor or any Restricted Subsidiary is conducting, or at any time has conducted, business, or where any Property of the Parent Guarantor or any Restricted Subsidiary is located, including the Oil Pollution Act of 1990, as amended, the Clean Air Act, as amended, the Comprehensive Environmental, Response, Compensation, and Liability Act of 1980 (“CERCLA”), as amended, the Federal Water Pollution Control Act, as amended, the Occupational Safety and Health Act of 1970, as amended (regarding Hazardous Materials), the Resource Conservation and Recovery Act of 1976 (“RCRA”), as amended, the Safe Drinking Water Act, as amended, the Toxic Substances Control Act, as amended, the Superfund Amendments and Reauthorization Act of 1986, as amended, the Hazardous Materials Transportation Act, as amended, and other analogous environmental conservation or protection state and local Governmental Requirements.

Environmental Permit” means any permit, registration, license, approval, consent, exemption, variance, or other authorization required under or issued pursuant to applicable Environmental Laws.

 

15


Equity Interests” means shares of capital stock, partnership interests, membership interests in a limited liability company, beneficial interests in a trust or other equity ownership interests in a Person, and any warrants, options or other rights entitling the holder thereof to purchase or acquire any such Equity Interest.

ERISA” means the Employee Retirement Income Security Act of 1974, as amended from time to time, and the rules and regulations promulgated thereunder, and any successor statute.

ERISA Affiliate” means each trade or business (whether or not incorporated) that together with Parent Guarantor, the Borrower or a Subsidiary is a “single employer” within the meaning of section 4001(b)(1) of ERISA or subsections (b) or (c) of section 414 of the Code (or subsections (m) or (o) of section 414 of the Code with respect to a Plan that is subject to the minimum funding requirements of section 412 of the Code).

ERISA Event” means (a) a reportable event, as defined in section 4043 of ERISA or the regulations issued thereunder with respect to a Plan (other than an event for which the 30-day notice period is waived under applicable regulations or otherwise); (b) a withdrawal by Parent Guarantor, the Borrower, a Subsidiary or an ERISA Affiliate from a 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 withdrawal, within the meaning of section 4203 of ERISA, or a or partial withdrawal, within the meaning of section 4205 of ERISA, by Parent Guarantor, a Subsidiary or any ERISA Affiliate from a Multiemployer Plan; (d) the filing of a notice of intent to terminate, the treatment of a Plan or Multiemployer Plan amendment as termination under section 4041 or 4041A of ERISA or the commencement of proceedings by the PBGC to terminate a Plan; or (e) an event or condition which constitutes grounds under section 4042 of ERISA for termination of, or the appointment of a trustee to administer, any Plan.

EU Bail-In Legislation Schedule” means the EU Bail-In Legislation Schedule published by the Loan Market Association (or any successor person), as in effect from time to time.

Eurodollar”, when used in reference to any Loan or Borrowing, refers to whether such Loan, or the Loans comprising such Borrowing, are bearing interest at a rate determined by reference to the Adjusted LIBO Rate.

Event of Default” has the meaning assigned to such term in Section 10.01.

Excepted Liens” means: (a) Liens for Taxes, assessments or other governmental charges or levies which are not delinquent for more than 90 days or which are being contested in good faith by appropriate action and for which adequate reserves have been maintained in accordance with GAAP; (b) Liens in connection with workers’ compensation, unemployment insurance or other social security, old age pension or public liability obligations which are not delinquent for more than ninety (90) days or which are being contested in good faith by appropriate action and for which adequate reserves have been maintained in accordance with GAAP; (c) landlords’, operators’, vendors’, carriers’, warehousemen’s, repairmen’s, mechanics’, suppliers’, workers’, materialmen’s, construction or other like Liens arising by operation of law in the ordinary course of business or incident to the exploration, development, operation and maintenance of Oil and Gas Properties, each of which is in respect of obligations that are not more than ninety (90) days delinquent or which are being contested in good faith by appropriate action and for which adequate reserves have been maintained in accordance with GAAP; (d) Liens which arise in the ordinary course of business under operating agreements, joint venture agreements, oil and gas partnership agreements, oil and gas leases, farm-out agreements, division orders, contracts for the sale, transportation or exchange of oil and natural gas, unitization and pooling declarations and agreements, area of mutual

 

16


interest agreements, overriding royalty agreements, marketing agreements, processing agreements, net profits agreements, development agreements, gas balancing or deferred production agreements, injection, repressuring and recycling agreements, salt water or other disposal agreements, seismic or other geophysical permits or agreements, and other agreements which are usual and customary in the Oil and Gas Business and are for claims which are not delinquent for more than ninety (90) days or which are being contested in good faith by appropriate action and for which adequate reserves have been maintained in accordance with GAAP, provided that any such Lien referred to in this clause does not materially impair the use of any material Property covered by such Lien for the purposes for which such Property is held by the Borrower or any other Credit Party or materially impair the value of any material Property subject thereto; (e) Liens arising solely by virtue of any statutory or common law provision relating to banker’s liens, rights of set-off or similar rights and remedies arising in the ordinary course of business and burdening only deposit accounts or other funds maintained with a creditor depository institution; (f) easements, restrictions, servitudes, permits, conditions, covenants, exceptions, reservations, zoning and land use requirements and other title defects in any Property of the Borrower or any other Credit Party for the purpose of roads, pipelines, transmission lines, transportation lines, distribution lines for the removal of gas, oil, coal or other minerals or timber, and other like purposes, or for the joint or common use of real estate, rights of way, facilities and equipment, and Liens related to surface leases, subleases, licenses, sublicenses and surface operations, that in each case do not secure Indebtedness and that in the aggregate do not materially impair the use of such Property for the purposes of which such Property is held by the Borrower or any other Credit Party or materially impair the value of such Property subject thereto; (g) Liens to secure performance of tenders, surety and appeal bonds, government contracts, performance and return of money bonds, bids, trade contracts, leases, statutory obligations, regulatory obligations, obligations in respect of workers’ compensation, unemployment insurance or other forms of government benefits or insurance and other obligations of a like nature incurred in the ordinary course of business; (h) Liens, titles and interests of lessors (including sub-lessors) of property leased by such lessors to the Borrower or any other Credit Party, restrictions and prohibitions on encumbrances and transferability with respect to such property and the Borrower’s or such other Credit Party’s interests therein imposed by such leases, and Liens and encumbrances encumbering such lessors’ titles and interests in such property and to which the Borrower’s or such other Credit Party’s leasehold interests may be subject or subordinate, in each case, whether or not evidenced by UCC financing statement filings or other documents of record, provided that such Liens do not secure Indebtedness of the Borrower or any other Credit Party and do not encumber Property of the Borrower or any other Credit Party other than the Property that is the subject of such leases and items located thereon; (i) Liens, titles and interests of licensors of software and other intangible property licensed by such licensors to the Borrower or any other Credit Party, restrictions and prohibitions on encumbrances and transferability with respect to such property and the Borrower’s or such other Credit Party’s interests therein imposed by such licenses, and Liens and encumbrances encumbering such licensors’ titles and interests in such property and to which the Borrower’s or such other Credit Party’s license interests may be subject or subordinate, in each case, whether or not evidenced by UCC financing statement filings or other documents of record, provided that such Liens do not secure Indebtedness of the Borrower or any other Credit Party and do not encumber Property of the Borrower or any other Credit Party other than the Property that is the subject of such licenses; (j) judgment and attachment Liens not giving rise to an Event of Default; and (k) Liens of issuers of commercial letters of credit or similar undertakings on the goods that are the subject of such letters of credit or undertakings. Provisions in the Loan Documents allowing Excepted Liens or other Permitted Liens on any item of Property shall be construed to allow such Excepted Liens and other Permitted Liens also to cover any improvements, fixtures or accessions to such Property and the proceeds of and insurance on such Property, improvements, fixtures or accessions. No intention to subordinate any Lien granted in favor of the Administrative Agent and the other Secured Parties is to be hereby implied or expressed by the permitted existence of any Excepted Liens. The term “Excepted Liens” shall not include any Lien securing Indebtedness for borrowed money.

 

17


Excess Cash Test Date” means each Wednesday; provided that if such day is not a Business Day, then “Excess Cash Test Date” means the immediately succeeding Business Day.

Excess Cash Threshold” means $75,000,000.

Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.

Excluded Account” means (a) any Deposit Account, Commodity Account or Securities Account so long as the average daily maximum balance in each such account, individually, does not exceed $2,000,000 over any 30-day period and the aggregate daily maximum balance of all such Deposit Accounts, Commodity Accounts and Securities Accounts does not at any time exceed $5,000,000, (b) any Deposit Account that is a zero balance account or a deposit account for which the balance of such Deposit Account is transferred at the end of each date to a deposit account that is not an Excluded Account, (c) any other Deposit Accounts exclusively used for trust, payroll, payroll taxes and other employee wage and benefit payments to or for the benefit of any employees of the Credit Parties, (d) fiduciary accounts, (e) trust and suspense accounts of the Borrower and any other Credit Party used for payments of royalty obligations, working interest and similar obligations, (f) accounts constituting cash collateral accounts permitted under Section 9.03 and (g) the Professional Fee Escrow Account (as defined in the Plan of Reorganization).

Excluded Cash” means, as of any date of determination, (a) any amounts in an Excluded Account other than any Excluded Account described in clause (a) or (f) of the definition thereof, (b) any amounts held in cash collateral accounts permitted under Section 9.03 in respect of obligations owing by any Credit Party to a third party in an aggregate amount not to exceed $1.0 million, (c) any cash collateral required to cash collateralize any Letter of Credit in accordance with Section 2.08(j), (d) any cash or Cash Equivalents of the Parent Guarantor or its Restricted Subsidiaries constituting purchase price deposits held in escrow by an unaffiliated third party pursuant to a binding and enforceable purchase and sale agreement with an unaffiliated third party containing customary provisions regarding the payment and refunding of such deposits, (e) without duplication of amounts described in the foregoing clause (d), any cash proceeds of a Borrowing to be used by the Parent Guarantor or its Restricted Subsidiaries within two (2) Business Days after receipt thereof to pay the purchase price for property to be acquired by such Person or other Investments permitted under Section 9.05, in each case, pursuant to a binding and enforceable purchase and sale agreement with a third party and (f) any cash or Cash Equivalents for which the Parent Guarantor or any Restricted Subsidiary has, in the ordinary course of business, issued checks or initiated wires or ACH transfers (or, in the case of cash or Cash Equivalents that will be used to pay royalty obligations, working interest obligations, suspense payments, severance taxes, payroll or other taxes, lease rental payments and other customary general and administrative expenses, will issue checks or initiate wires or ACH transfers within five (5) Business Days in respect of amounts due and owing) in order to utilize such cash or Cash Equivalents.

Excluded Subsidiary” means (a) Whiting Programs, Inc., a Delaware corporation, (b) any Restricted Subsidiary that is not a Wholly-Owned Material Subsidiary, (c) any Unrestricted Subsidiary, (d) each Subsidiary that is prohibited by (i) any applicable contractual obligation existing on the Effective Date (other than customary non-assignment provisions that are ineffective under the UCC or other applicable law or any term, covenant, condition or provision that could be waived by the Parent Guarantor or its Affiliates and only to the extent such contractual obligation was not entered into in contemplation of such Subsidiary becoming a Subsidiary or a Restricted Subsidiary) or (ii) such Subsidiary’s organizational documents or any applicable law, rule or regulation, in each case, from guaranteeing or granting Liens to secure the Obligations at the time such Subsidiary becomes a Restricted Subsidiary (and for so long as such restriction or any replacement or renewal thereof is in effect) or such guarantee or grant of Liens to secure the Obligations at the time such Subsidiary becomes a Restricted Subsidiary would require a consent,

 

18


approval, license or authorization of a Governmental Authority (unless such consent, approval, license or authorization has been received and only for so long as such restriction is outstanding) and (e) any other Subsidiary with respect to which, (i) in the reasonable judgment of the Administrative Agent, the cost or other consequences of providing a guarantee of the Obligations shall be excessive in view of the benefits to be obtained by the Lenders therefrom or (ii) providing such a guarantee could reasonably be expected to result in material and adverse tax consequences as reasonably determined by the Parent Guarantor in good faith.

Excluded Swap Obligation” means, with respect to the Borrower and the Guarantors individually determined, any CFTC Hedging Obligation if, and solely to the extent that, all or a portion of the guarantee of the Borrower or such Guarantor of, or the grant by the Borrower or such Guarantor of a security interest to secure, such CFTC Hedging Obligation (or any guarantee thereof) is or becomes illegal under the Commodity Exchange Act by virtue of the Borrower’s or such Guarantor’s failure for any reason to constitute an “eligible contract participant” (as defined in the Commodity Exchange Act) with respect to such CFTC Hedging Obligation at any time such guarantee or grant of a security interest becomes effective with respect to such CFTC Hedging Obligation.

Excluded Taxes” means any of the following Taxes imposed on or with respect to a Recipient or required to be withheld or deducted from a payment to a Recipient:

(a)    Taxes imposed on or measured by net income (however denominated), franchise Taxes, and branch profits Taxes, in each case, (i) imposed as a result of such Recipient being organized under the laws of, or having its principal office or, in the case of any Lender, its applicable lending office located in, the jurisdiction imposing such Tax (or any political subdivision thereof) or (ii) that are Other Connection Taxes,

(b)    in the case of a Lender, U.S. federal withholding Taxes imposed on amounts payable to or for the account of such Lender with respect to an applicable interest in a Loan or Commitment pursuant to a law in effect on the date on which (i) such Lender acquires such interest in the Loan or Commitment (other than pursuant to an assignment to such Lender that was requested by the Borrower under Section 5.05) or (ii) such Lender changes its lending office, except in each case to the extent that, pursuant to Section 5.03, amounts with respect to such Taxes were payable either to such Lender’s assignor immediately before such Lender became a party hereto or to such Lender immediately before it changed its lending office,

(c)    Taxes attributable to such Recipient’s failure or inability to comply with Section 5.03(g), and

(d)    any withholding Taxes imposed under FATCA.

Existing Letters of Credit” means each letter of credit set forth on Schedule 1.02(e) that was issued under the Pre-Petition Credit Agreement prior to the Effective Date by a Person that shall be an Issuing Bank with respect to such letter of credit. On the Effective Date, each Existing Letter of Credit shall be deemed issued and outstanding as a Letter of Credit under this Agreement.

Existing Secured Swap Agreements” means the Swap Agreements described on Schedule 1.02(e)(i), which shall be secured with the Obligations pursuant to this Agreement and the other Loan Documents.

Existing Treasury Management Agreements” means Treasury Management Agreements between the Borrower or any other Credit Party, on the one hand, and any Lender or an Affiliate of a Lender, on the other hand, existing on the date hereof, which shall be secured with the Obligations pursuant to this Agreement and the other Loan Documents.

 

19


Extended Hedge Deadline” has the meaning assigned to such term in Section 8.20.

Facility Amount” means $1,500,000,000.

FATCA” means Sections 1471 through 1474 of the Code, as of the date of this Agreement (or any amended or successor version to the extent substantively comparable and not materially more onerous to comply with), any current or future regulations or official interpretations thereof and any agreements entered into pursuant to Section 1471(b)(1) of the Code or any fiscal or regulatory legislation, rules or practices adopted pursuant to any intergovernmental agreement, treaty or convention among Governmental Authorities entered into in connection with the implementation of the foregoing.

FCPA” means the Foreign Corrupt Practices Act of 1977, as amended.

Federal Funds Effective Rate” means, for any day, the rate calculated by the NYFRB based on such day’s federal funds transactions by depositary institutions, as determined in such manner as shall be set forth on the Federal Reserve Bank of New York’s Website from time to time, and published on the next succeeding Business Day by the NYFRB as the effective federal funds rate; provided that if the Federal Funds Effective Rate as so determined would be less than zero, such rate shall be deemed to be zero for the purposes of this Agreement.

Federal Reserve Bank of New York’s Website means the website of the Federal Reserve Bank of New York at http://www.newyorkfed.org, or any successor source.

Federal Reserve Board” means the Board of Governors of the Federal Reserve System of the United States of America.

Fee Letters” means, collectively, (a) the Fee Letter, dated as of July 18, 2020, among the Parent Guarantor, the Borrower and JPMorgan Chase Bank, N.A. and (b) any other fee letters entered into between Administrative Agent (or its Affiliates) and the Borrower.

Financial Officer” means, for any Person, the chief financial officer, principal accounting officer, treasurer, or controller of such Person or any other natural person principally responsible for the financial matters of such Person. Unless otherwise specified, all references herein to a Financial Officer mean a Financial Officer of the Parent Guarantor.

Financial Performance Covenants” means the financial covenants set forth in Sections 9.01(a) and (b).

Flood Insurance Regulations” means (a) the National Flood Insurance Act of 1968, (b) the Flood Disaster Protection Act of 1973, (c) the National Flood Insurance Reform Act of 1994 (amending 42 USC § 4001, et seq.), (d) the Flood Insurance Reform Act of 2004 and (e) the Biggert-Waters Flood Insurance Reform Act of 2012, in each case as now or hereafter in effect or any successor statute thereto and including 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 located. For purposes of this definition, the United States of America, each State thereof and the District of Columbia shall be deemed to constitute a single jurisdiction.

Foreign Subsidiary” means any Subsidiary that is organized under the laws of a jurisdiction other than the United States of America or any state thereof or the District of Columbia.

 

20


Free Cash Flow” means, as of the last day of any Specified Rolling Period, the amount equal to (a) EBITDAX of the Parent Guarantor for such Specified Rolling Period minus (b) the sum, in each case without duplication, of the following amounts paid during such Specified Rolling Period: (i) voluntary and scheduled cash prepayments and repayments of Indebtedness (other than the Loans) which cannot be reborrowed pursuant to the terms of such Indebtedness (other than any Redemptions of Junior Indebtedness and other transactions contemplated by Section 9.04(b)(iii)), (ii) capital expenditures paid in cash, (iii) working capital expenses paid in cash, (iv) cash payments described in the definition of “Consolidated Interest Expense”, (v) taxes paid in cash, (vi) exploration and development expenses or costs paid in cash, (vii)(A) Investments made in cash (other than to any Credit Party or Restricted Subsidiary thereof) during such period (other than those made in reliance on Section 9.05(i)) and (B) Restricted Payments made in cash (other than to any Credit Party or Restricted Subsidiary thereof) during such period (other than those made in reliance on Section 9.04(a)(v)) and (viii) to the extent not included in the foregoing and added back in the calculation of EBITDAX, any other cash charge (other than those described in clause (a)(xi) of the definition of “EBITDAX”) that reduces the earnings of the Parent Guarantor and its Restricted Subsidiaries, plus (c) the sum, in each case without duplication, of any non-cash amounts that were deducted from or otherwise served to decrease EBITDAX for such Specified Rolling Period, minus (d) the sum, in each case without duplication, of any non-cash amounts described in clauses (a)(viii) and (ix) of the definition of “EBITDAX” that were added to or otherwise served to increase EBITDAX for such Specified Rolling Period.

Free Cash Flow Utilizations” means, for any period, the aggregate amount of each of the following transactions during such period: (a) Restricted Payments made under Section 9.04(a)(v), (b) Redemptions of Junior Indebtedness made under Section 9.04(b)(iii) and (c) Investments made under Section 9.05(i).

GAAP” means generally accepted accounting principles in the United States of America as in effect from time to time, subject to the terms and conditions set forth in Section 1.05.

Governmental Authority” means the government of the United States of America, any other nation or any political subdivision thereof, whether state or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government.

Governmental Requirement” means any law, statute, code, ordinance, order, determination, rule, regulation, judgment, decree, injunction, franchise, permit, certificate, license, rules of common law, authorization or other directive or requirement, whether now or hereinafter in effect, of any Governmental Authority.

Guarantors” means the Parent Guarantor and each Restricted Subsidiary that guarantees the Obligations pursuant to Section 8.14.

Guaranty and Collateral Agreement” means the Guaranty and Collateral Agreement, dated as of the Effective Date, among the Administrative Agent, the Borrower and the Guarantors, in form and substance reasonably satisfactory to the Administrative Agent pursuant to which (a) the Guarantors guaranty, on a joint and several basis, payment of the Obligations and (b) the Borrower and the Guarantors grant security interests on the Borrower’s and the Guarantors’ personal property constituting “Collateral” as defined therein in favor of the Administrative Agent for the benefit of the Secured Parties to secure the Obligations, as the same may be amended, modified, supplemented or restated from time to time.

Hazardous Material” means any substance regulated or as to which liability might arise under any applicable Environmental Law due to its hazardous or toxic characteristics including: any chemical, compound, material, product, byproduct, substance or waste defined as or included in the definition or

 

21


meaning of “hazardous substance,” “hazardous material,” “hazardous waste,” “solid waste,” “toxic waste,” “extremely hazardous substance,” “toxic substance,” “contaminant,” “pollutant,” or words of similar meaning or import found in any applicable Environmental Law; Hydrocarbons, petroleum products, petroleum substances, natural gas, oil, oil and gas waste, crude oil, and any components, fractions, or derivatives thereof; and radioactive materials, explosives, asbestos or asbestos containing materials, polychlorinated biphenyls, radon, infectious or medical wastes.

Hedge Availability Shortfall Event” has the meaning assigned to such term in Section 8.20.

Hedging Principles” means that, for purposes of determining compliance by the Parent Guarantor and its Restricted Subsidiaries with Section 8.20, (a) all Swap Agreements that constitute any portion of the Required Hedges (including swaps, collars and puts) shall be entered into at prices no less than the lesser of (i) the prices set forth in the Bank Price Deck most recently delivered by the Administrative Agent to the Borrower and (ii) 10.0% below the-then current Strip Price measured at the time of entry into such Swap Agreements and (b) no “three-way” Swap Agreement shall constitute any portion of the Required Hedges, or otherwise receive credit toward the satisfaction of the requirements set forth in Section 8.20.

Highest Lawful Rate” means, with respect to each Lender, the maximum nonusurious interest rate, if any, that at any time or from time to time may be contracted for, taken, reserved, charged or received on the Loans or on other Obligations under laws applicable to such Lender which are presently in effect or, to the extent allowed by law, under such applicable laws which may hereafter be in effect and which allow a higher maximum nonusurious interest rate than applicable laws allow as of the date hereof.

Hydrocarbon Interests” means all rights, titles, interests and estates now or hereafter acquired in and to oil and gas leases, oil, gas and mineral leases, or other liquid or gaseous hydrocarbon leases, mineral fee interests, overriding royalty and royalty interests, net profit interests and production payment interests, including any reserved or residual interests of whatever nature.

Hydrocarbons” means oil, gas, casinghead gas, drip gasoline, natural gasoline, condensate, distillate, liquid hydrocarbons, gaseous hydrocarbons and all products refined or separated therefrom.

IBA” has the meaning assigned to such term in Section 1.06.

Impacted Interest Period” has the meaning assigned to such term in the definition of “LIBO Rate.”

Indebtedness” means, for any Person:

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

(b)     obligations of such Person (whether contingent or otherwise) in respect of letters of credit for which such Person is the applicant;

(c)     obligations of such Person with respect to Disqualified Capital Stock;

(d)     obligations of such Person under Capital Leases or Synthetic Leases;

(e)     obligations of such Person to pay the deferred purchase price of Property;

(f)     Indebtedness (as defined in the other clauses of this definition) of others secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) a

 

22


Lien on any Property of such Person, whether or not such Indebtedness is assumed by such Person; provided, however, that in the case of Indebtedness of the type described in this clause (f), the amount of such Indebtedness shall be deemed to be the lesser of (i) such Person’s liability for such Indebtedness and (ii) the book value of such property;

(g)     Indebtedness (as defined in the other clauses of this definition) of others guaranteed by such Person or in which such Person otherwise assures a creditor against loss of the Indebtedness (howsoever such assurance shall be made, including by means of obligations to pay for goods or services even if such goods or services are not actually taken, received or utilized) to the extent of the lesser of the amount of such Indebtedness and the maximum stated amount of such guarantee or assurance against loss;

(h)     Indebtedness (as defined in the other clauses of this definition) of a partnership for which such Person is liable either by agreement, by operation of law or by a Governmental Requirement, but only to the extent of such liability; and

(i)     obligations owing by a Person or any other Person guaranteeing such Person’s Indebtedness under one or more Swap Agreements with the same counterparty;

provided, however, that “Indebtedness” does not include (i) obligations with respect to surety, performance or appeal bonds and similar instruments or (ii) trade accounts and other similar accounts that are payable no later than ninety (90) days after invoice or which are being contested in good faith by appropriate action and for which adequate reserves have been maintained in accordance with GAAP.

Indemnified Taxes” means (a) Taxes, other than Excluded Taxes, imposed on or with respect to any payment made by or on account of any obligation of the Borrower or any Guarantor under any Loan Document and (b) to the extent not otherwise described in (a), Other Taxes.

Indemnitee” has the meaning assigned to such term in Section 12.03(b).

Initial Redetermination Date” means April 1, 2021.

Industry Competitor” means any Person (other than Borrower, any Guarantor or any of their Affiliates or Subsidiaries) that, directly or indirectly, is actively engaged as one of its principal businesses in lease acquisitions, exploration and production operations or development of oil and gas properties (including the drilling and completion of producing wells) in the same geographical basins as the Borrower and the Guarantors; provided that any Person that would be an Industry Competitor hereunder shall not constitute an Industry Competitor if such Person is a bank, financial institution, bona fide debt fund or investment vehicle that is engaged in, or that advises funds or other investment vehicles that are engaged in, as one of its principal businesses, making, purchasing, holding, or otherwise investing in commercial loans, bonds or similar extensions of credit or securities in the ordinary course of business.

Information” has the meaning assigned to such term in Section 12.11.

Initial Reserve Report” means an internally prepared report with respect to the Oil and Gas Properties of the Credit Parties to which Proved Reserves are attributed prepared by, or under the supervision of, the chief engineer of the Borrower with an “as of” date of May 30, 2020.

Interest Election Request” means a request by the Borrower to convert or continue a Borrowing in accordance with Section 2.04.

 

23


Interest Payment Date” means with respect to any ABR Loan, the last day of each March, June, September and December and with respect to any Eurodollar Loan, the last day of the Interest Period applicable to the Borrowing of which such Loan is a part and, in the case of a Eurodollar Borrowing with an Interest Period of more than three (3) months’ duration, each day prior to the last day of such Interest Period that occurs at intervals of three (3) months’ duration after the first day of such Interest Period.

Interest Period” means with respect to any Eurodollar Borrowing, the period commencing on the date of such Borrowing and ending on the numerically corresponding day in the calendar month that is one, two, three or six months (or, with the consent of each Lender, nine or twelve months) thereafter, as the Borrower may elect; provided, that (a) if any Interest Period would end on a day other than a Business Day, such Interest Period shall be extended to the next succeeding Business Day unless such next succeeding Business Day would fall in the next calendar month, in which case such Interest Period shall end on the next preceding Business Day, (b) any Interest Period pertaining to a Eurodollar Borrowing that commences on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the last calendar month of such Interest Period) shall end on the last Business Day of the last calendar month of such Interest Period and (c) no Interest Period may have a term which would extend beyond the Maturity Date. For purposes hereof, the date of a Borrowing initially shall be the date on which such Borrowing is made and thereafter shall be the effective date of the most recent conversion or continuation of such Borrowing.

Interim Redetermination” has the meaning assigned to such term in Section 2.07(b).

Interpolated Rate” means, at any time, for any Interest Period, the rate per annum (rounded to the same number of decimal places as the LIBO Screen Rate) determined by the Administrative Agent (which determination shall be conclusive and binding absent manifest error) to be equal to the rate that results from interpolating on a linear basis between: (a) the LIBO Screen Rate (for the longest period for which the LIBO Screen Rate is) that is shorter than the Impacted Interest Period; and (b) the LIBO Screen Rate for the shortest period (for which that LIBO Screen Rate is available) that exceeds the Impacted Interest Period, in each case, at such time, provided, that, if any Interpolated Rate shall be less than 1.00%, such rate shall be deemed to be 1.00% for the purposes of this Agreement.

Investment” means, for any Person:

(a)     the acquisition (whether for cash, Property, services or securities or otherwise) of Equity Interests of any other Person (including any “short sale” or any sale of any securities at a time when such securities are not owned by the Person entering into such short sale);

(b)     the making of any deposit with, or advance, loan or capital contribution to, assumption of Indebtedness of, purchase or other acquisition of any other Indebtedness of or equity participation or equity interest in, or other extension of credit to, any other Person (including the purchase of Property from another Person subject to an understanding or agreement, contingent or otherwise, to resell such Property to such Person), but excluding any such advance, loan or extension of credit having a term not exceeding ninety (90) days representing the purchase price of inventory or supplies sold by such Person in the ordinary course of business;

(c)     the purchase or acquisition (in one or a series of transactions) of Property of another Person that constitutes a business unit both before and after such purchase or acquisition; or

(d)     the guarantee of, or other contingent or surety obligation (including the deposit of any Equity Interests to be sold) with respect to, Indebtedness of any other Person and (without duplication) any amount committed to be advanced, lent or extended to such Person;

 

24


provided that accounts receivable acquired in the ordinary course of business do not constitute Investments.

Issuing Bank” means (a) JPMorgan Chase Bank, N.A., (b) any issuer of an Existing Letter of Credit and (c) each Lender that is reasonably acceptable to the Administrative Agent and the Borrower and that agrees to act as an issuer of Letters of Credit hereunder, in each case, in its capacity as the issuer of Letters of Credit hereunder, and its successors in such capacity as provided in Section 2.08(i). Any Issuing Bank may, in its discretion, arrange for one or more Letters of Credit to be issued by Affiliates of such Issuing Bank, in which case the term “Issuing Bank” shall include any such Affiliate with respect to Letters of Credit issued by such Affiliate. In the event there is more than one Issuing Bank hereunder at any time, references herein and in the other Loan Documents to the “Issuing Bank” shall be deemed to refer to the Issuing Bank in respect of the applicable Letter of Credit, or to all Issuing Banks, as the context requires.

Junior Indebtedness” has the meaning assigned to such term in Section 9.04(b).

LC Commitment” means, at any time, $50,000,000, as the same may be modified from time to time in accordance with the terms of this Agreement.

LC Disbursement” means a payment made by any Issuing Bank pursuant to a Letter of Credit.

LC Exposure” means, at any time, the sum of the aggregate Undrawn Amount of all outstanding Letters of Credit at such time plus the aggregate amount of all LC Disbursements that have not yet been reimbursed by or on behalf of the Borrower at such time. The LC Exposure of any Lender at any time shall be its Applicable Percentage of the total LC Exposure of all Lenders at such time.

LC Issuance Limit” means, with respect to each Issuing Bank, the amount set forth on Schedule 1.02(l) opposite such Issuing Bank’s name.

Lender Parent” means, with respect to any Lender, any Person as to which such Lender is, directly or indirectly, a subsidiary.

Lender Treasury Management Agreement” means a Treasury Management Agreement between the Borrower or any other Credit Party, on the one hand, and any counterparty that is a Treasury Management Lender, on the other hand.

Lenders” means the Persons listed on Annex I, any Person that shall have become a party hereto pursuant to an Assignment and Assumption, and any Person that shall have become a party hereto as an Additional Lender pursuant to Section 2.06(c), other than, in each case, any such Person that ceases to be a party hereto pursuant to an Assignment and Assumption.

Letter of Credit” means (a) any standby letter of credit issued pursuant to this Agreement and (b) each Existing Letter of Credit.

Letter of Credit Agreements” means all letter of credit applications and other agreements (including any amendments, modifications or supplements thereto) submitted by the Borrower, or entered into by the Borrower, with an Issuing Bank relating to a Letter of Credit.

LIBO Rate” means, with respect to any Eurodollar Borrowing for any Interest Period, the LIBO Screen Rate at approximately 11:00 a.m., London time, two (2) Business Days prior to the commencement of such Interest Period; provided that if the LIBO Screen Rate shall not be available at such time for such Interest Period (an “Impacted Interest Period”) then the LIBO Rate shall be the Interpolated Rate.

 

25


LIBO Screen Rate” means, for any day and time, with respect to any Eurodollar Borrowing for any Interest Period, the London interbank offered rate as administered by ICE Benchmark Administration (or any other Person that takes over the administration of such rate for dollars for a period equal in length to such Interest Period as displayed on such day and time on pages LIBOR01 or LIBOR02 of the Reuters screen that displays such rate (or, in the event such rate does not appear on a Reuters page or screen, on any successor or substitute page on such screen that displays such rate, or on the appropriate page of such other information service that publishes such rate from time to time as selected by the Administrative Agent in its reasonable discretion, provided, that, if the LIBO Screen Rate as so determined would be less than 1.00%, such rate shall be deemed to be 1.00% for the purposes of this Agreement).

Lien” means any interest in Property securing an obligation owed to, or a claim by, a Person other than the owner of the Property, whether such interest is based on the common law, statute or contract, and whether such obligation or claim is fixed or contingent, and including but not limited to the lien or security interest arising from a mortgage, pledge, security agreement, conditional sale or trust receipt or a lease, consignment or bailment for security purposes. For the purposes of this Agreement, the Borrower or any other Credit Party shall be deemed to be the owner of any Property which it has acquired or holds subject to a conditional sale agreement, or leases under a financing lease or other arrangement pursuant to which title to the Property has been retained by or vested in some other Person in a transaction intended to create a financing.

Liquidate” means, with respect to any Swap Agreement, the sale, assignment, novation, unwind, cancellation or early termination of all or any part of such Swap Agreement; provided that for purposes of this definition, a Swap Agreement shall not be deemed to have been Liquidated if, (a) such Swap Agreement is novated to an Approved Counterparty, with the Borrower or another Credit Party being the “remaining party” for purposes of such novation, or (b) upon its sale, assignment, novation, unwind or early termination, it is replaced, in a substantially contemporaneous transaction, with one or more Swap Agreements with prices, tenors and volumes not less favorable to the Credit Parties than those of such replaced Swap Agreements and without cash payments to the Borrower or any other Credit Party in connection therewith. The terms “Liquidated” and “Liquidation” have correlative meanings thereto.

Loan Documents” means this Agreement, the Notes, the Fee Letters, the Letter of Credit Agreements and the Security Instruments.

Loan Limit” means the least of (a) the Facility Amount, (b) the then-effective Total Commitment and (c) the Borrowing Base at such time as determined in accordance with Section 2.07, as may be adjusted from time to time pursuant to the Borrowing Base Adjustment Provisions.

Loan Limit Utilization Percentage” means, as of any day, the fraction (expressed as a percentage), (a) the numerator of which is the aggregate Revolving Credit Exposures on such day and (b) the denominator of which is the Loan Limit in effect on such day.

Loans” means the loans made by the Lenders to the Borrower pursuant to this Agreement.

MAE Event” has the meaning set forth in Section 6.01(x).

Majority Lenders” means, (a) at any time while no Loans or LC Exposure are outstanding, Non-Defaulting Lenders having or holding more than fifty percent (50%) of the Total Commitments of all Non-Defaulting Lenders, and (b) at any time while any Loan or LC Exposure is outstanding, Non-Defaulting Lenders holding more than fifty percent (50%) of the outstanding aggregate principal amount of the Loans and participation interests in Letters of Credit of all Non-Defaulting Lenders (in each case without regard to any sale by a Non-Defaulting Lender of a participation in any Loan under Section 12.04(c)).

 

26


Material Acquisition” means any acquisition of Property or series of related acquisitions of Property (including by way of merger or consolidation) that involves the payment of consideration by the Parent Guarantor or its Consolidated Restricted Subsidiaries in excess of the Threshold Amount.

Material Adverse Effect” means (a) after giving effect to the filing of the Chapter 11 Cases, the entry of the Confirmation Order and the confirmation and consummation of the Plan of Reorganization and (b) excluding any matters publicly disclosed prior to the filing of the Chapter 11 Cases, any matters disclosed in any first day pleadings or declarations in connection with the Chapter 11 Cases and the events and conditions related and/or leading up to the Chapter 11 Cases and the effects thereof, any event, change, effect, occurrence, development, circumstance, condition, result, state of fact or change of fact, or the worsening of any of the foregoing (each, an “Event”), that, individually or together with all other Events, has had or would reasonably be expected to have, a material adverse effect on the (i) business, operations, Property or condition (financial or otherwise) of the Credit Parties taken as a whole, (ii) ability of the Credit Parties, taken as a whole, to perform their obligations under the Loan Documents, or (iii) rights and remedies of the Administrative Agent, the Issuing Bank or any Lender under the Loan Documents.

Material Disposition” means any disposition of Property or series of related dispositions of Properties that yields gross proceeds to the Parent Guarantor or any of its Consolidated Restricted Subsidiaries in excess of the Threshold Amount.

Material Indebtedness” means any Indebtedness (other than the Loans and Letters of Credit), or obligations in respect of one or more Swap Agreements, of any one or more of the Parent Guarantor and its Restricted Subsidiaries in an aggregate outstanding principal amount in excess of $50,000,000. For purposes of determining Material Indebtedness, the “principal amount” of the obligations of the Parent Guarantor or any Restricted Subsidiary in respect of any Swap Agreement at any time shall be the Swap Termination Value of such Swap Agreement (giving effect to any netting agreements) that the Parent Guarantor or such Restricted Subsidiary would be required to pay if such Swap Agreement were terminated at such time.

Material Subsidiary” means, at any date of determination, each Restricted Subsidiary (a) that owns any Borrowing Base Properties, (b) incurs or guarantees any Material Indebtedness or (c) whose revenues, when taken together with its Subsidiaries, as of the last day of the most recent fiscal quarter for which financial statements are required to have been delivered pursuant to Section 8.01(a) or Section 8.01(b), were equal to or greater than 2.5% of the consolidated revenues of the Parent Guarantor and the Consolidated Restricted Subsidiaries as of such date, determined in accordance with GAAP; provided that, if as of the last day of the most recent fiscal quarter for which financial statements are required to have been delivered pursuant to Section 8.01(a) or Section 8.01(b), the aggregate revenues attributable to all Restricted Subsidiaries that are not Material Subsidiaries exceed 5.0% of the consolidated revenues of the Parent Guarantor and the Consolidated Restricted Subsidiaries as of such date, then the Parent Guarantor shall designate in the compliance certificate required to be delivered pursuant to Section 8.01(c) for such fiscal quarter or fiscal year, as applicable, one or more Restricted Subsidiaries that are not Material Subsidiaries as Material Subsidiaries as may be necessary to eliminate such excess, and upon the delivery of such compliance certificate to the Administrative Agent, such designated Restricted Subsidiaries shall for all purposes of this Agreement constitute Material Subsidiaries.

Maturity Date” means April 1, 2024.

Moody’s” means Moody’s Investors Service, Inc. and any successor thereto that is a nationally recognized rating agency.

 

27


Mortgaged Property” means, at any time, any real or immovable Property owned by the Borrower or any Guarantor which is subject to the Liens existing at such time under the terms of the Security Instruments.

Multiemployer Plan” means any employee pension plan as defined in Section 3(2) of ERISA covered by Title IV of ERISA that is a multiemployer plan as defined in section 4001 (a)(3) of ERISA, to which (a) the Parent Guarantor or a Subsidiary or an ERISA Affiliate makes, or is obligated to make, contributions or during the preceding five plan years has made, or been obligated to make, contributions or (b) any of Parent Guarantor or a Subsidiary has or would reasonably expect to have any liability, including on account of an ERISA Affiliate.

New Borrowing Base Notice” has the meaning assigned to such term in Section 2.07(d).

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

Notes” means the promissory notes of the Borrower described in Section 2.02(d) and being substantially in the form of Exhibit A or such other form approved by the Administrative Agent, together with all amendments, modifications, replacements, extensions and rearrangements thereof.

NYFRB” means the Federal Reserve Bank of New York.

NYFRB Rate” means, for any day, the greater of (a) the Federal Funds Effective Rate in effect on such day and (b) the Overnight Bank Funding Rate in effect on such day (or for any day that is not a Business Day, for the immediately preceding Business Day); provided that if none of such rates are published for any day that is a Business Day, the term “NYFRB Rate” means the rate for a federal funds transaction quoted at 11:00 a.m. on such day received by the Administrative Agent from a federal funds broker of recognized standing selected by it; provided, further, that if any of the aforesaid rates as so determined be less than zero, such rate shall be deemed to be zero for purposes of this Agreement.

Obligations” means any and all amounts owing or to be owing (including all interest on any of the Loans, any interest accruing at any post-default rate and interest accruing after the filing of any petition in bankruptcy, or the commencement of any insolvency, reorganization or like proceeding, relating to the Borrower or any Guarantor (or which could accrue but for the operation of applicable bankruptcy or insolvency laws), whether or not a claim for post-filing or post-petition interest is allowed in such proceeding) by the Borrower or any Guarantor (whether direct or indirect (including those acquired by assumption), absolute or contingent, due or to become due, now existing or hereafter arising): (a) to the Administrative Agent, the Issuing Banks or any Lender under any Loan Document, (b) to any Secured Swap Party or (c) to any Treasury Management Lender under any Lender Treasury Management Agreement, including in each case all renewals, extensions and/or rearrangements of any of the above; provided that solely with respect to any Guarantor that is not an “eligible contract participant” under the Commodity Exchange Act or any regulations promulgated thereunder, Excluded Swap Obligations of such Guarantor shall in any event be excluded from “Obligations” owing by such Guarantor.

OFAC” means the U.S. Department of the Treasury’s Office of Foreign Assets Control.

Oil and Gas Business” means the business of acquiring, exploring, drilling, exploiting, developing, producing, operating, treating, storing, gathering, processing, and selling oil and gas and the products thereof, together with activities (including physical and financial hedging and swapping) that are ancillary thereto.

 

28


Oil and Gas Properties” means (a) Hydrocarbon Interests; (b) the Properties now or hereafter pooled or unitized with Hydrocarbon Interests; (c) all presently existing or future unitization agreements, communitization agreements, pooling agreements and declarations of pooled units and the units created thereby (including without limitation all units created under orders, regulations and rules of any Governmental Authority) which may affect all or any portion of the Hydrocarbon Interests; (d) all operating agreements, production sales or other contracts, farmout agreements, farm-in agreements, area of mutual interest agreements, equipment leases and other agreements which relate to any Hydrocarbon Interests or any interests therein or to the production, sale, purchase, exchange, processing, handling, storage, transporting or marketing of any Hydrocarbons from or attributable to such Hydrocarbon Interests; (e) all Hydrocarbons; (f) all tenements, hereditaments, appurtenances and Properties in any manner appertaining, belonging, affixed or incidental to any Hydrocarbon Interests, including all compressor sites, settling ponds and equipment or pipe yards; and (g) all Properties, rights, titles, interests and estates described or referred to above whether now owned or hereinafter acquired, including any and all Property, real or personal, immoveable or moveable, situated upon, used, held for use or useful in connection with the operating, working or development of any Hydrocarbon Interests or Property (excluding drilling rigs, automotive equipment, rental equipment or other personal property which may be on such premises for the purpose of drilling a well or for other similar temporary uses) and including any and all wellbores, oil wells, gas wells, injection wells or other wells, structures, fuel separators, liquid extraction plants, plant compressors, pumps, pumping units, pipelines, sales and flow lines, gathering systems, field gathering systems, salt water disposal facilities, tanks and tank batteries, fixtures, valves, fittings, machinery and parts, engines, boilers, steam generation facilities, meters, apparatus, equipment, appliances, tools, implements, cables, wires, towers, casing, tubing and rods, surface leases, rights-of-way, easements, servitudes licenses and other surface and subsurface rights, together with all additions, substitutions, replacements, accessions and attachments to any and all of the foregoing.

Other Connection Taxes” means, with respect to any Recipient, Taxes imposed as a result of a present or former connection between such Recipient and the jurisdiction imposing such Tax (other than connections arising from such Recipient having executed, delivered, become a party to, performed its obligations under, received payments under, received or perfected a security interest under, engaged in any other transaction pursuant to or enforced any Loan Document, or sold or assigned an interest in any Loan or Loan Document).

Other Taxes” means all present or future stamp, court or documentary, intangible, recording, filing or similar Taxes that arise from any payment made under, from the execution, delivery, performance, enforcement or registration of, from the receipt or perfection of a security interest under, or otherwise with respect to, any Loan Document, except any such Taxes that are Other Connection Taxes imposed with respect to an assignment (other than an assignment made pursuant to Section 5.04 or Section 5.05).

Overnight Bank Funding Rate” means, for any day, the rate comprised of both overnight federal funds and overnight Eurodollar borrowings by U.S.-managed banking offices of depository institutions, as such composite rate shall be determined by the NYFRB as set forth on the Federal Reserve Bank of New York’s Website from time to time, and published on the next succeeding Business Day by the NYFRB as an overnight bank funding rate.

Parent Guarantor” has the meaning assigned to such term in the preamble hereto.

Participant” has the meaning assigned to such term in Section 12.04(b).

Participant Register” has the meaning assigned to such term in Section 12.04(c).

 

29


Payment in Full” means (a) the Commitments have expired or been terminated, (b) the principal of and interest on each Loan and all fees payable hereunder and all other amounts payable under the Loan Documents shall have been indefeasibly paid in full in cash (other than contingent indemnification obligations), (c) all Letters of Credit shall have expired or terminated (or are cash collateralized or otherwise arrangements in respect of which have been made to the satisfaction of the applicable Issuing Bank) and all LC Disbursements shall have been reimbursed and (d) all amounts due under Secured Swap Agreements shall have been indefeasibly paid in full in cash (or such Secured Swap Agreements are cash collateralized or otherwise arrangements in respect of which have been made to the satisfaction of the applicable Secured Swap Party).

PBGC” means the Pension Benefit Guaranty Corporation and any Person succeeding to any or all of its functions under ERISA.

Perfection Certificate” means a certificate of a Responsible Officer of the Parent Guarantor substantially in the form of Exhibit K or such other form reasonably acceptable to the Administrative Agent.

Permitted Investors” means, collectively, Persons that, on the Effective Date, after giving effect to the Plan of Reorganization, are the beneficial owners, together with any of their respective Affiliates and successors (but excluding any operating portfolio companies of the foregoing Persons), of Equity Interests representing 5% or more of the aggregate ordinary voting power represented by the issued and outstanding Equity Interests of the Parent Guarantor at such time.

Permitted Lien” means any Lien permitted under Section 9.03.

Permitted Refinancing Indebtedness” means Indebtedness (for purposes of this definition, “New Indebtedness”) incurred in exchange for, or proceeds of which are used to refinance, all of any other Indebtedness (the “Refinanced Indebtedness”); provided that:

(a)     such New Indebtedness is in an aggregate principal amount not in excess of the sum of (i) the aggregate principal of, plus accrued interest on, the amount then outstanding of the Refinanced Indebtedness (or, if the Refinanced Indebtedness is exchanged or acquired for an amount less than the principal amount thereof to be due and payable upon a declaration of acceleration thereof, such lesser amount) and (ii) an amount necessary to pay any fees and expenses, including premiums, related to such exchange or refinancing;

(b)     such New Indebtedness has a stated maturity no earlier than the stated maturity of the Refinanced Indebtedness and a weighted average life no shorter than the weighted average life of the Refinanced Indebtedness and does not, by its terms, restrict the prepayment or repayment of the Obligations;

(c)     such New Indebtedness contains covenants, events of default and guarantees which (other than “market” interest rate, fees, funding discounts and redemption or prepayment premiums as determined by the Borrower at the time of issuance or incurrence of any such Indebtedness) are not materially more restrictive, taken as a whole, on the Parent Guarantor and each of its Restricted Subsidiaries than the terms of this Agreement (as in effect at the time of such issuance or incurrence) unless the Borrower offers to amend this Agreement to incorporate such more restrictive covenants, events of default and guarantees (and executes an amendment giving effect to such terms to the extent agreed to by the Majority Lenders);

(d)     no Subsidiary of the Parent Guarantor (other than a Guarantor or a Person who becomes a Guarantor in connection therewith) is an obligor under such New Indebtedness; and

 

30


(e)    such New Indebtedness (and any guarantees thereof) is subordinated in right of payment to the Obligations to at least the same extent as the Refinanced Indebtedness was.

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

Petition Date” has the meaning assigned to such term in the recitals hereto.

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

Plan” means any employee pension benefit plan, as defined in section 3(2) of ERISA (other than a Multiemployer Plan), that is subject to Title IV of ERISA or section 412 of the Code and that (a) is sponsored, maintained or contributed to by Parent Guarantor or a Subsidiary or (b) with respect to which any of Parent Guarantor or a Subsidiary has or would reasonably expect to have any liability, including on account of an ERISA Affiliate.

Plan Effective Date” means the “Effective Date” as defined in the Plan of Reorganization.

Plan of Reorganization” has the meaning assigned to such term in the recitals hereto.

Post-Default Rate” has the meaning assigned to such term in Section 3.02(c).

Pre-Petition Credit Agreement” has the meaning assigned to such term in the recitals hereto.

Pre-Petition Judgments” means judgments that are discharged by operation of the Plan, including without limitation, judgments that were classified as General Unsecured Claims (as defined in the Plan).

Pre-Petition RBL Lenders” means each “Lender” as defined in the Pre-Petition Credit Agreement.

Prime Rate” means the rate of interest last quoted by The Wall Street Journal as the “Prime Rate” in the U.S. or, if The Wall Street Journal ceases to quote such rate, the highest per annum interest rate published by the Federal Reserve Board in Federal Reserve Statistical Release H.15 (519) (Selected Interest Rates) as the “bank prime loan” rate or, if such rate is no longer quoted therein, any similar rate quoted therein (as reasonably determined by the Administrative Agent) or any similar release by the Federal Reserve Board (as reasonably determined by the Administrative Agent). Each change in the Prime Rate shall be effective from and including the date such change is publicly announced or quoted as being effective.

Property” means any interest in any kind of property or asset, whether real, personal or mixed, or tangible or intangible, including cash, securities, accounts and contract rights.

Proposed Acquisition” has the meaning assigned to such term in Section 9.17(a)(iii).

Proposed Borrowing Base” has the meaning assigned to such term in Section 2.07(c)(i).

Proposed Borrowing Base Notice” has the meaning assigned to such term in Section 2.07(c)(ii).

Proved Developed Producing Reserves” means oil and gas mineral interests that, in accordance with Petroleum Industry Standards, are classified as both “Proved Reserves” and “Developed Producing Reserves.”

 

31


Proved Reserves” means oil and gas reserves that, in accordance with Petroleum Industry Standards, are classified as both “Proved Reserves” and one of the following: (a) “Developed Producing Reserves”, (b) “Developed Non-Producing Reserves” or (c) “Undeveloped Reserves.”

PTE” means a prohibited transaction class exemption issued by the U.S. Department of Labor, as any such exemption may be amended from time to time.

Public Lender” has the meaning assigned such term in Section 8.01.

Purchase Money Indebtedness” means Indebtedness, the proceeds of which are used to finance the acquisition, construction, or improvement of inventory, equipment or other Property in the ordinary course of business.

PV-9” means, on any date of determination, with respect to any Proved Reserves expected to be produced from any Borrowing Base Properties, the net present value, discounted at 9% per annum, of the future net revenues expected to accrue to the Parent Guarantor’s and its Restricted Subsidiaries’ collective interests in such reserves during the remaining expected economic lives of such Proved Reserves, calculated in accordance with the Bank Price Deck.

QFC” has the meaning assigned to the term “qualified financial contract” in, and shall be interpreted in accordance with, 12 U.S.C. § 5390(c)(8)(D).

QFC Credit Support” has the meaning set forth in Section 12.18.

Qualified ECP Counterparty” means, in respect of any CFTC Hedging Obligation, the Borrower and each Guarantor to the extent that such Person (a) has total assets exceeding $10,000,000 at the time any guaranty of obligations under such CFTC Hedging Obligation or any grant of a security interest to secure such CFTC Hedging Obligation becomes effective or (b) otherwise constitutes an “eligible contract participant” with respect to such Swap Agreement under the Commodity Exchange Act and can cause another Person to qualify as an “eligible contract participant” at such time by entering into a keepwell under Section 1a(18)(A)(v)(II) of the Commodity Exchange Act.

Recipient” means (a) the Administrative Agent, (b) any Lender and (c) any Issuing Bank, as applicable.

Redemption” means with respect to any Indebtedness, the repurchase, redemption, prepayment, repayment, defeasance or any other acquisition or retirement for value (or the segregation of funds with respect to any of the foregoing) of such Indebtedness. “Redeem” has the correlative meaning thereto.

Redetermination Date” means, with respect to any Scheduled Redetermination or any Interim Redetermination, the date that the redetermined Borrowing Base related thereto becomes effective pursuant to Section 2.07(d).

Register” has the meaning assigned to such term in Section 12.04(b)(iv).

Regulation D” means Regulation D of the Board, as the same may be amended, supplemented or replaced from time to time.

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

 

32


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

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

Related Parties” means, with respect to any specified Person, such Person’s Affiliates and the respective directors, officers, employees, agents and advisors (including attorneys, accountants and experts) of such Person and such Person’s Affiliates.

Release” means any depositing, spilling, leaking, pumping, pouring, placing, emitting, discarding, abandoning, emptying, discharging, injecting, escaping, leaching, dumping, or disposing.

Relevant Governmental Body” means, with respect to the LIBO Rate or a SOFR-Based Rate (as applicable), the Federal Reserve Board and/or the Federal Reserve Bank of New York, or a committee officially endorsed or convened by the Federal Reserve Board and/or the Federal Reserve Bank of New York or any successor thereto.

Remedial Work” has the meaning assigned to such term in Section 8.10(a).

Required Hedges” has the meaning assigned to such term in Section 8.20.

Required Lenders” means, (a) at any time while no Loan or LC Exposure is outstanding, Non-Defaulting Lenders having at least sixty-six and two-thirds percent (66-2/3%) of the Total Commitment of all Non-Defaulting Lenders, and (b) at any time while any Loan or LC Exposure is outstanding, Non-Defaulting Lenders holding at least sixty-six and two-thirds percent (66-2/3%) of the outstanding aggregate principal amount of the Loans and participation interests in Letters of Credit of all Non-Defaulting Lenders (in each case without regard to any sale by a Non-Defaulting Lender of a participation in any Loan under Section 12.04(c)).

Reserve Report” means the Initial Reserve Report and each subsequent report, in form and substance reasonably satisfactory to the Administrative Agent, setting forth, as of the dates set forth in Section 8.12(a) (or such other date in the event of an Interim Redetermination or such other acquisition or Investment as contemplated under Section 2.07(f)), the oil and gas reserves attributable to the Oil and Gas Properties of the Borrower and the other Credit Parties, together with a projection of the rate of production and future net income, taxes, operating expenses and capital expenditures with respect thereto as of such date, based upon the pricing assumptions consistent with the Administrative Agent’s lending requirements at such time.

Resolution Authority” means an EEA Resolution Authority or, with respect to any UK Financial Institution, a UK Resolution Authority.

Responsible Officer” means, as to any Person, the Chief Executive Officer, the President, any Financial Officer or any Vice President of such Person. Unless otherwise specified, all references to a Responsible Officer herein mean a Responsible Officer of the Parent Guarantor.

Restricted Payment” means any dividend or other distribution (whether in cash, securities or other Property) with respect to any Equity Interest in the Parent Guarantor or any of its Subsidiaries, or any payment (whether in cash, securities or other Property), including any sinking fund or similar deposit, on account of the purchase, redemption, retirement, acquisition, cancellation or termination of any Equity Interest in the Parent Guarantor or any of its Subsidiaries. For the avoidance of doubt, any conversion of convertible Indebtedness into Equity Interests in accordance with its terms shall not constitute a “Restricted Payment”.

 

33


Restricted Subsidiary” means (a) the Borrower and (b) any other Subsidiary of the Parent Guarantor that is not an Unrestricted Subsidiary.

Restructuring Subsidiary” means any Subsidiary described on Schedule 9.05(j) that is formed solely for purposes of consummating the Restructuring Transactions and which will cease to exist upon the consummation thereof

Restructuring Transactions” means, collectively, the transactions that are set forth on Schedule 9.05(j).

Reuters” means, as applicable, Thomson Reuters Corp., Refinitiv, or any successor thereto.

Revolving Credit Exposure” means, with respect to any Lender at any time, the sum of the outstanding principal amount of such Lender’s Loans and its LC Exposure at such time.

Rolling Period” means for the end of any fiscal quarter, the period of four (4) consecutive fiscal quarters ending on the last day of such fiscal quarter.

S&P” means Standard & Poor’s Rating Services, a Standard & Poor’s Financial Services LLC business and any successor thereto that is a nationally recognized rating agency.

Sanctioned Country” means, at any time, a country, region or territory which is itself the subject or target of any Sanctions (at the time of this Agreement, Crimea, Cuba, Iran, North Korea and Syria).

Sanctioned Person” means, at any time, (a) any Person listed in any Sanctions-related list of designated Persons maintained by OFAC, the U.S. Department of State, the United Nations Security Council, Her Majesty’s Treasury of the United Kingdom, or any other relevant sanctions authority, (b) any Person operating, organized or resident in a Sanctioned Country, (c) any Person owned or controlled by any such Person or Persons described in the foregoing clauses (a) or (b), or (d) any Person otherwise the subject of any Sanctions.

Sanctions” means all economic or financial sanctions or trade embargoes imposed, administered or enforced from time to time by (a) the U.S. government, including those administered by OFAC or the U.S. Department of State or (b) the United Nations Security Council, Her Majesty’s Treasury of the United Kingdom, or any other relevant sanctions authority.

Scheduled Redetermination” has the meaning assigned to such term in Section 2.07(b).

SEC” means the Securities and Exchange Commission or any successor Governmental Authority.

Secured Parties” means, collectively, the Administrative Agent, each Issuing Bank, each Lender, each Treasury Management Lender and each Secured Swap Parties, and “Secured Party” means any of them individually.

Secured Swap Agreement” means a Swap Agreement between (a) any Credit Party and (b) a Secured Swap Party, which shall include, for the avoidance of doubt, the Existing Secured Swap Agreements.

 

34


Secured Swap Obligations” means Obligations referred to in clause (b) of the definition of Obligations.

Secured Swap Party” means, with respect to any Swap Agreement, (a) any Person who is an Approved Counterparty under clause (b) of the definition thereof and who is the counterparty to such Swap Agreement with a Credit Party and (b) any Person who was a Lender or an Affiliate of a Lender at the time when such Person entered into such Swap Agreement who is a counterparty to any such Swap Agreement with a Credit Party; provided that any such Secured Swap Party that ceases to be a Lender or an Affiliate of a Lender shall continue to be a “Secured Swap Party” for purposes of the Loan Documents to the extent that such Secured Swap Party entered into a Secured Swap Agreement with the Borrower or any other Credit Party prior to the date hereof or at the time such Secured Swap Party was a Lender (or Affiliate of a Lender) hereunder and such Secured Swap Agreement remains in effect and there are remaining obligations under such Secured Swap Agreement (but excluding any transactions, confirms, or trades entered into after such Person ceases to be a Lender or an Affiliate of a Lender) (it being understood that if such Swap Agreement is novated or otherwise transferred by such Person to a third party that is not a Lender or an Affiliate of a Lender, such third party shall not constitute a Secured Swap Party).

Securities Account” shall have the meaning set forth in Article 9 of the UCC or other applicable law.

Security Instruments” means the mortgages, deeds of trust, pledge agreements, security agreements, control agreements and other agreements, instruments, supplements or certificates described or referred to in Exhibit E, and any and all other agreements, instruments, supplements, consents or certificates now or hereafter executed and delivered by the Borrower or any other Credit Party (other than Secured Swap Agreements or participation or similar agreements between any Lender and any other lender or creditor with respect to any Obligations pursuant to this Agreement), in each case in connection with, or in order to guarantee or provide collateral security for the payment or performance of the Obligations, the Loans, the Notes, this Agreement or reimbursement obligations under the Letters of Credit, as such agreements may be amended, modified, supplemented or restated from time to time.

SOFR with respect to any day means the secured overnight financing rate published for such day by the Federal Reserve Bank of New York, as the administrator of the benchmark, (or a successor administrator) on the Federal Reserve Bank of New York’s Website.

SOFR-Based Rate means SOFR, Compounded SOFR or Term SOFR.

Specified Additional Indebtedness” means unsecured senior or senior subordinated Indebtedness issued or incurred by the Borrower and any guarantees thereof by the Guarantors (including any Persons becoming Guarantors simultaneously with the incurrence of such Indebtedness):

(a)    that does not restrict, by its terms, the prepayment or repayment of the Obligations;

(b)    that has terms which do not provide for the maturity of such Indebtedness to be or any scheduled repayment, mandatory redemption or sinking fund obligation to occur prior to ninety-one (91) days after the Maturity Date (other than customary offers to purchase upon a change of control, asset sales or casualty events and customary acceleration rights after an event of default);

(c)    the covenants, events of default and guarantees of which (other than “market” interest rate, fees, funding discounts and redemption or prepayment premiums as determined by the Borrower at the time of issuance or incurrence of any such Indebtedness) are not materially more restrictive, taken as a whole, on the Parent Guarantor and each of its Restricted Subsidiaries than the terms of this Agreement (as in

 

35


effect at the time of such issuance or incurrence) unless the Borrower offers to amend this Agreement to incorporate such more restrictive covenants, events of default and guarantees (and executes an amendment giving effect to such terms to the extent agreed to by the Majority Lenders);

(d)    where, if such Indebtedness is subordinated Indebtedness in right of payment, the terms of such Indebtedness provide for customary subordination of such Indebtedness to the Obligations; and

(e)    where no Subsidiary of the Parent Guarantor (other than a Guarantor or a Person who becomes a Guarantor in connection therewith) is an obligor under such Indebtedness.

Specified Subsidiaries” means, collectively, (a) Whiting US Holdings, (b) Whiting Canadian Holding Company, (c) Whiting Resources Corporation, a Colorado corporation and (d) any Restructuring Subsidiary.

Statutory Reserve Rate” means a fraction (expressed as a decimal), the numerator of which is the number one and the denominator of which is the number one minus the aggregate of the maximum reserve percentage (including any marginal, special, emergency or supplemental reserves) expressed as a decimal established by the Federal Reserve Board to which the Administrative Agent is subject with respect to the Adjusted LIBO Rate, for eurocurrency funding (currently referred to as “Eurocurrency liabilities” in Regulation D). Such reserve percentage shall include those imposed pursuant to Regulation D. Eurodollar Loans shall be deemed to constitute eurocurrency funding and to be subject to such reserve requirements without benefit of or credit for proration, exemptions or offsets that may be available from time to time to any Lender under Regulation D or any comparable regulation. The Statutory Reserve Rate shall be adjusted automatically on and as of the effective date of any change in any reserve percentage.

Strip Price” means, as of any date of determination, the forward month prices as of such date, 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 remaining flat each year thereafter, as such prices are quoted on the NYMEX as of the determination date, adjusted for any basis differential, quality and gravity as of the date of determination, without giving effect to non-property related expenses such as general and administrative expenses, debt service, future income tax expense and depreciation, depletion and amortization.

subsidiary” means, with respect to any Person (the “parent”) at any date, (a) any other Person the accounts of which would be consolidated with those of the parent in the parent’s consolidated financial statements if such financial statements were prepared in accordance with GAAP as of such date, or (b) any other Person of which Equity Interests representing (i) more than 50% of the equity, (ii) more than 50% of the ordinary voting power (irrespective of whether or not at the time Equity Interests of any other class or classes of such Person shall have or might have voting power by reason of the happening of any contingency) or (iii) in the case of a partnership, more than 50% of the general partnership interests, are, as of such date, owned, Controlled or held by the parent or one or more subsidiaries of the parent or by the parent and one or more subsidiaries of the parent.

Subsidiary” means, unless stated otherwise, any subsidiary of the Parent Guarantor.

Subsidiary Guarantor” means any Subsidiary that is a Guarantor.

Supported QFC” has the meaning set forth in Section 12.18.

 

36


Swap Agreement” means any agreement with respect to any swap, forward, future or derivative transaction or option or similar agreement, whether exchange traded, “over-the-counter” or otherwise, involving, or settled by reference to, one or more rates, currencies, commodities, equity or debt instruments or securities, or economic, financial or pricing indices or measures of economic, financial or pricing risk or value or any similar transaction or any combination of these transactions; provided that no phantom stock or similar plan providing for payments only on account of services provided by current or former directors, officers, employees or consultants of the Borrower or the other Credit Parties shall be a Swap Agreement. If multiple transactions are entered into under a master agreement, each transaction is a separate Swap Agreement.

Swap PV” means, with respect to any Swap Agreement in respect of commodities, the net present value, discounted at 9% per annum, of the future receipts expected to be paid to the Borrower or the other Credit Parties under such Swap Agreement, calculated in accordance with the Bank Price Deck and the Hedging Principles; provided that the “Swap PV” shall never be less than $0.00.

Swap Termination Value” means, in respect of any one or more Swap Agreements, after taking into account the effect of any legally enforceable netting agreement relating to such Swap Agreements, (a) for any date on or after the date such Swap Agreements have been closed out and termination value(s) determined in accordance therewith, such termination value(s) and (b) for any date prior to the date referenced in clause (a), the amount(s) determined as the mark-to-market value(s) for such Swap Agreements, as determined by the counterparties to such Swap Agreements (including, without duplication, any unpaid amounts due on the date of calculation).

Synthetic Leases” means, in respect of any Person, all leases which shall have been, or should have been, in accordance with GAAP, treated as operating leases on the financial statements of the Person liable (whether contingently or otherwise) for the payment of rent thereunder and which were properly treated as indebtedness for borrowed money for purposes of U.S. federal income taxes, if the lessee in respect thereof is obligated to either purchase for an amount in excess of, or pay upon early termination an amount in excess of, 80% of the residual value of the Property subject to such operating lease upon expiration or early termination of such lease.

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

Term SOFR means the forward-looking term rate based on SOFR that has been selected or recommended by the Relevant Governmental Body.

Termination Date” means the earlier of the Maturity Date and the date of termination of the Commitments.

Threshold Amount” means the greater of (x) $75,000,000 and (y) 10% of the Borrowing Base.

Total Commitment” means the sum of the Commitments of the Lenders. As of the Effective Date, the Total Commitment is $750,000,000.

Transactions” means, (a) with respect to the Borrower, (i) the execution, delivery and performance by the Borrower of this Agreement and each other Loan Document to which it is a party, (ii) the borrowing of Loans and the issuance of Letters of Credit hereunder and (iii) the grant of Liens by the Borrower on Mortgaged Properties and other Collateral pursuant to the Security Instruments, (b) with respect to each Guarantor, (i) the execution, delivery and performance by such Guarantor of each Loan

 

37


Document to which it is a party, (ii) the guaranteeing of the Obligations by such Guarantor and (iii) the grant by such Guarantor of Liens on Mortgaged Properties and other Collateral pursuant to the Security Instruments and (c) the effectiveness and consummation of the Plan of Reorganization pursuant to the Confirmation Order.

Transfer” has the meaning assigned to such term in Section 9.10.

Treasury Management Agreement” means any agreement to provide cash management services, including treasury, depositing, overdraft, credit or debit card, electronic funds transfer and other cash management arrangements, which shall include, for the avoidance of doubt, the Existing Treasury Management Agreements.

Treasury Management Lender” means (a) any Person that, at the time it enters into a Treasury Management Agreement, is a Lender or an Affiliate of a Lender, in its capacity as a party to such Treasury Management Agreement and (b) any counterparty to an Existing Treasury Management Agreement.

Trust” means Whiting USA Trust II, a Delaware statutory trust.

Type”, when used in reference to any Loan or Borrowing, refers to whether the rate of interest on such Loan, or on the Loans comprising such Borrowing, is determined by reference to the Alternate Base Rate or the Adjusted LIBO Rate.

UCC” means the Uniform Commercial Code, as in effect from time to time, of the State of New York or of any other state the laws of which are required as a result thereof to be applied in connection with the attachment, perfection or priority of, or remedies with respect to, the Administrative Agent’s or any other Secured Party’s Lien on any Collateral.

UK Financial Institutions” means any BRRD Undertaking (as such term is defined under the PRA Rulebook (as amended form time to time) promulgated by the United Kingdom Prudential Regulation Authority) or any person falling within IFPRU 11.6 of the FCA Handbook (as amended from time to time) promulgated by the United Kingdom Financial Conduct Authority, which includes certain credit institutions and investment firms, and certain affiliates of such credit institutions or investment firms.

UK Resolution Authority” means the Bank of England or any other public administrative authority having responsibility for the resolution of any UK Financial Institution.

Unadjusted Benchmark Replacement” means the Benchmark Replacement excluding the Benchmark Replacement Adjustment; provided that, if the Unadjusted Benchmark Replacement will be deemed to be less than 1.00%, the Unadjusted Benchmark Replacement will be deemed to be 1.00% for the purposes of this Agreement.

Undrawn Amount” means, at any time, with respect to any Letter of Credit, the maximum amount that may be drawn under such Letter of Credit after giving effect to (a) all provisions in such Letter of Credit providing for future automatic increases in the amount that may be drawn under such Letter of Credit (regardless of whether such automatic increases have then occurred at such time) and (b) any amounts previously drawn under such Letter of Credit.

Unproven Acreage” means, at any time, all Oil and Gas Properties that had no Proved Reserves attributed thereto in the then most recent Reserve Report (including, for the avoidance of doubt, Oil and Gas Properties not evaluated in the most recent Reserve Report).

 

38


Unrestricted Subsidiary” means (a) any Subsidiary of the Parent Guarantor designated as such on Schedule 7.14 as of the Effective Date, (b) any Subsidiary of the Parent Guarantor which the Parent Guarantor has designated in writing to the Administrative Agent to be an Unrestricted Subsidiary in accordance with Section 9.14 and (c) any subsidiary of an Unrestricted Subsidiary.

U.S. Special Resolution Regimes” has the meaning set forth in Section 12.18.

U.S. Tax Compliance Certificate” has the meaning assigned to such term in Section 5.03(g)(ii) (B)(3).

Whiting Canadian Holding Company” means Whiting Canadian Holding Company ULC, an unlimited liability corporation organized under the laws of Canada.

Whiting US Holdings” means Whiting US Holding Company, a Delaware corporation.

Wholly-Owned Material Subsidiary” means each Material Subsidiary that is a Wholly-Owned Subsidiary.

Wholly-Owned Subsidiary” means any Restricted Subsidiary of which all of the outstanding Equity Interests (other than any directors’ qualifying shares or shares that are required by the applicable laws and regulations of the jurisdiction of organization of such Subsidiary to be owned by the government of such jurisdiction or individual corporate citizens of such jurisdiction), on a fully-diluted basis, are owned by the Parent Guarantor and/or one or more of its Wholly-Owned Subsidiaries.

Withholding Agent” means the Borrower, any Guarantor or the Administrative Agent.

Write-Down and Conversion Powers” means, (a) with respect to any EEA Resolution Authority, the write-down and conversion powers of such EEA Resolution Authority from time to time under the Bail-In Legislation for the applicable EEA Member Country, which write-down and conversion powers are described in the EU Bail-In Legislation Schedule, and (b) with respect to the United Kingdom, any powers of the applicable Resolution Authority under the Bail-In Legislation to cancel, reduce, modify or change the form of a liability of any UK Financial Institution or any contract or instrument under which that liability arises, to convert all or part of that liability into shares, securities or obligations of that person or any other person, to provide that any such contract or instrument is to have effect as if a right had been exercised under it or to suspend any obligation in respect of that liability or any of the powers under that Bail-In Legislation that are related to or ancillary to any of those powers.

Section 1.03    Types of Loans and Borrowings. For purposes of this Agreement, Loans and Borrowings, respectively, may be classified and referred to by Type (e.g., a “Eurodollar Loan” or a “Eurodollar Borrowing”).

Section 1.04    Terms Generally; Rules of Construction. The definitions of terms herein shall apply equally to the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words “include”, “includes” and “including” as used in this Agreement shall be deemed to be followed by the phrase “without limitation”. The word “or” is not exclusive. The word “shall” shall be construed to have the same meaning and effect as the word “will”. Unless the context requires otherwise (a) any definition of or reference to any agreement, instrument or other document herein shall be construed as referring to such agreement, instrument or other document as from time to time amended, supplemented or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth in the Loan Documents), (b) any reference herein to any law shall be construed as referring to such law as amended, modified,

 

39


codified or reenacted, in whole or in part, and in effect from time to time, (c) any reference herein to any Person shall be construed to include such Person’s successors and assigns (subject to the restrictions contained in the Loan Documents), (d) the words “herein”, “hereof” and “hereunder”, and words of similar import, shall be construed to refer to this Agreement in its entirety and not to any particular provision hereof, (e) with respect to the determination of any time period, the word “from” means “from and including” and the word “to” means “to and including”, (f) any reference herein to Articles, Sections, Annexes, Exhibits and Schedules shall be construed to refer to Articles and Sections of, and Annexes, Exhibits and Schedules to, this Agreement and (g) with respect to the requirement to deliver any certificate, an executed paper copy of such certificate shall accompany any other form of delivery permitted hereunder. The use of the phrase “subject to” as used in connection with Excepted Liens or otherwise and the permitted existence of any Excepted Liens or any other Liens shall not be interpreted to expressly or impliedly subordinate any Liens granted in favor of the Administrative Agent and the other Secured Parties as there is no intention to subordinate the Liens granted in favor of the Administrative Agent and the other Secured Parties. No provision of this Agreement or any other Loan Document shall be interpreted or construed against any Person solely because such Person or its legal representative drafted such provision.

Section 1.05    Accounting Terms and Determinations; GAAP.

(a)    Unless otherwise specified herein, all terms of an accounting or financial nature shall be construed in accordance with GAAP, as in effect from time to time; provided that, if the Borrower notifies the Administrative Agent that the Borrower requests an amendment to any provision hereof to eliminate the effect of any change occurring after the date hereof in GAAP or in the application thereof on the operation of such provision (or if the Administrative Agent notifies the Borrower that the Majority Lenders request an amendment to any provision hereof for such purpose), regardless of whether any such notice is given before or after such change in GAAP or in the application thereof, then such provision shall be interpreted on the basis of GAAP as in effect and applied immediately before such change shall have become effective until such notice shall have been withdrawn or such provision amended in accordance herewith. Notwithstanding any other provision contained herein, 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 Financial Accounting Standards Board Accounting Standards Codification 825 (or any other Financial Accounting Standard having a similar result or effect) to value any Indebtedness or other liabilities of the Parent Guarantor or any Subsidiary at “fair value”, as defined therein and (ii) any treatment of Indebtedness under Accounting Standards Codification 470-20 or 2015-03 (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.

(b)    Notwithstanding anything to the contrary contained in Section 1.05(a) or in the definition of “Capital Lease,” any change in accounting for leases pursuant to GAAP resulting from the adoption of Financial Accounting Standards Board Accounting Standards Update No. 2016-02, Leases (Topic 842) (“FAS 842), to the extent such adoption would require treating any lease (or similar arrangement conveying the right to use) as a capital lease where such lease (or similar arrangement) would not have been required to be so treated under GAAP as in effect on December 31, 2015, such lease shall not be considered a capital lease, and all calculations and deliverables under this Agreement or any other Loan Document shall be made or delivered, as applicable, in accordance therewith.

Section 1.06    Interest Rates; LIBO Rate Notification. The interest rate on Eurodollar Loans is determined by reference to the LIBO Rate, which is derived from the London interbank offered rate. The London interbank offered rate is intended to represent the rate at which contributing banks may obtain short-term borrowings from each other in the London interbank market. In July 2017, the U.K. Financial Conduct Authority announced that, after the end of 2021, it would no longer persuade or compel

 

40


contributing banks to make rate submissions to the ICE Benchmark Administration (together with any successor to the ICE Benchmark Administrator, the “IBA”) for purposes of the IBA setting the London interbank offered rate. As a result, it is possible that commencing in 2022, the London interbank offered rate may no longer be available or may no longer be deemed an appropriate reference rate upon which to determine the interest rate on Eurodollar Loans. In light of this eventuality, public and private sector industry initiatives are currently underway to identify new or alternative reference rates to be used in place of the London interbank offered rate. Upon the occurrence of a Benchmark Transition Event or an Early Opt-in Election, Section 3.03 provides a mechanism for determining an alternative rate of interest. The Administrative Agent will promptly notify the Borrower, pursuant to Section 3.03(d), of any change to the reference rate upon which the interest rate on Eurodollar Loans is based. However, the Administrative Agent does not warrant or accept any responsibility for, and shall not have any liability with respect to, the administration, submission or any other matter related to the London interbank offered rate or other rates in the definition of “LIBO Rate” or with respect to any alternative or successor rate thereto, or replacement rate thereof (including, without limitation, (a) any such alternative, successor or replacement rate implemented pursuant to Section 3.03(b), whether upon the occurrence of a Benchmark Transition Event or an Early Opt-in Election, and (b) the implementation of any Benchmark Replacement Conforming Changes pursuant to Section 3.03(c)), including without limitation, whether the composition or characteristics of any such alternative, successor or replacement reference rate will be similar to, or produce the same value or economic equivalence of, the LIBO Rate or have the same volume or liquidity as did the London interbank offered rate prior to its discontinuance or unavailability.

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 amount of such Letter of Credit available to be drawn at such time; provided that with respect to any Letter of Credit that, by its terms or the terms of any Letter of Credit Agreement related thereto, provides for one or more automatic increases in the available amount thereof, the amount of such Letter of Credit shall be deemed to be the maximum amount of such Letter of Credit after giving effect to all such increases, whether or not such maximum amount is available to be drawn at such time.

Section 1.08    Divisions. For all purposes under the Loan Documents, in connection with any division or plan of division under Delaware law (or any comparable event under a different jurisdiction’s laws): (a) if any asset, right, obligation or liability of any Person becomes the asset, right, obligation or liability of a different Person, then it shall be deemed to have been transferred from the original Person to the subsequent Person, and (b) if any new Person comes into existence, such new Person shall be deemed to have been organized and acquired on the first date of its existence by the holders of its Equity Interests at such time.

ARTICLE II

THE CREDITS

Section 2.01    Commitments. Subject to the terms and conditions set forth herein, each Lender agrees to make Loans to the Borrower during the Availability Period in an aggregate principal amount that will not result in such Lender’s Revolving Credit Exposure exceeding such Lender’s Commitment or the total Revolving Credit Exposures exceeding the Loan Limit. Within the foregoing limits and subject to the terms and conditions set forth herein, the Borrower may borrow, repay and reborrow the Loans.

Section 2.02    Loans and Borrowings.

(a)    Borrowings; Several Obligations. Each Loan shall be made as part of a Borrowing consisting of Loans made by the Lenders ratably in accordance with their respective Commitments. The failure of any Lender to make any Loan required to be made by it shall not relieve any other Lender of its obligations hereunder; provided that the Commitments are several and no Lender shall be responsible for any other Lender’s failure to make Loans as required.

 

41


(b)    Types of Loans. Subject to Section 3.03, each Borrowing shall be comprised entirely of ABR Loans or Eurodollar Loans as the Borrower may request in accordance herewith. Each Lender at its option may make any Eurodollar Loan by causing any domestic or foreign branch or Affiliate of such Lender to make such Loan; provided that any exercise of such option shall not affect the obligation of the Borrower to repay such Loan in accordance with the terms of this Agreement.

(c)    Minimum Amounts; Limitation on Number of Borrowings. At the commencement of each Interest Period for any Eurodollar Borrowing, such Borrowing shall be in an aggregate amount that is an integral multiple of $100,000 and not less than $500,000. At the time that each ABR Borrowing is made, such Borrowing shall be in an aggregate amount that is an integral multiple of $100,000 and not less than $500,000; provided that, notwithstanding the foregoing, an ABR Borrowing may be in an aggregate amount that is equal to the entire unused balance of the Loan Limit or that is required to finance the reimbursement of an LC Disbursement as contemplated by Section 2.08(e). Borrowings of more than one Type may be outstanding at the same time, provided that there shall not at any time be more than a total of ten (10) Eurodollar Borrowings outstanding. Notwithstanding any other provision of this Agreement, the Borrower shall not be entitled to request, or to elect to convert or continue, any Borrowing if the Interest Period requested with respect thereto would end after the Maturity Date.

(d)    Notes. Upon request of a Lender, the Loans made by such Lender shall be evidenced by a single promissory note of the Borrower in substantially the form of Exhibit A, and (i) in the case of any Lender party hereto as of the date of this Agreement, such Note shall be dated as of the date of this Agreement, (ii) in the case of any Lender that becomes a party hereto pursuant to an Assignment and Assumption, such Note shall be dated as of the effective date of the Assignment and Assumption, or (iii) in the case of any Lender that becomes a party hereto in connection with an increase in the Total Commitment pursuant to Section 2.06(c), as of the effective date of such increase, in each case, payable to such Lender in a principal amount equal to its Commitment as in effect on such date, and otherwise duly completed. In the event that any Lender’s Commitment increases or decreases for any reason (whether pursuant to Section 2.06, Section 12.04(b) or otherwise), the Borrower shall, upon request of such Lender, deliver or cause to be delivered on the effective date of such increase or decrease, a new Note payable to such Lender in a principal amount equal to its Commitment after giving effect to such increase or decrease, and otherwise duly completed, against return to the Borrower of the Note so replaced. The date, amount, Type, interest rate and, if applicable, Interest Period of each Loan made by each Lender, and all payments made on account of the principal thereof, shall be recorded by such Lender on its books for its Note, and, prior to any transfer, may be endorsed by such Lender on a schedule attached to such Note or any continuation thereof or on any separate record maintained by such Lender. Failure to make any such notation or to attach a schedule shall not affect any Lender’s or the Borrower’s rights or obligations in respect of such Loans or affect the validity of such transfer by any Lender of its Note.

Section 2.03    Requests for Borrowings. To request a Borrowing, the Borrower shall notify the Administrative Agent of such request in writing in the case of a Eurodollar Borrowing, not later than 12:00 noon, New York City time, three (3) Business Days before the date of the proposed Borrowing or, in the case of an ABR Borrowing, not later than 12:00 noon, New York City time, on the Business Day of the proposed Borrowing; provided that no such notice shall be required for any deemed request of an ABR Borrowing to finance the reimbursement of an LC Disbursement as provided in Section 2.08(e). Each such written Borrowing Request shall be irrevocable and shall be in substantially the form of Exhibit B and signed by the Borrower. Each such written Borrowing Request shall specify the following information in compliance with Section 2.02:

(a)    the aggregate amount of the requested Borrowing;

 

42


(b)    the date of such Borrowing, which shall be a Business Day;

(c)    whether such Borrowing is to be an ABR Borrowing or a Eurodollar Borrowing;

(d)    in the case of a Eurodollar Borrowing, the initial Interest Period to be applicable thereto, which shall be a period contemplated by the definition of the term “Interest Period”;

(e)    the amount of the then-effective Borrowing Base, the amount of the then-effective Total Commitment, the current Loan Limit, the current aggregate Revolving Credit Exposures (without regard to the requested Borrowing) and the pro forma aggregate Revolving Credit Exposures (giving effect to the requested Borrowing); and

(f)    the location and number of the Borrower’s account to which funds are to be disbursed, which shall comply with the requirements of Section 2.05.

If no election as to the Type of Borrowing is specified, then the requested Borrowing shall be an ABR Borrowing. If no Interest Period is specified with respect to any requested Eurodollar Borrowing, then the Borrower shall be deemed to have selected an Interest Period of one (1) month’s duration. Each Borrowing Request shall constitute a representation by the Borrower that the amount of the requested Borrowing shall not cause the total Revolving Credit Exposures to exceed the Loan Limit.

Promptly following receipt of a Borrowing Request in accordance with this Section 2.03, the Administrative Agent shall advise each Lender of the details thereof and of the amount of such Lender’s Loan to be made as part of the requested Borrowing.

Section 2.04    Interest Elections.

(a)    Conversion and Continuance. Each Borrowing initially shall be of the Type specified in the applicable Borrowing Request and, in the case of a Eurodollar Borrowing, shall have an initial Interest Period as specified in such Borrowing Request. Thereafter, the Borrower may elect to convert such Borrowing to a different Type or to continue such Borrowing and, in the case of a Eurodollar Borrowing, may elect Interest Periods therefor, all as provided in this Section 2.04. The Borrower may elect different options with respect to different portions of the affected Borrowing, in which case each such portion shall be allocated ratably among the Lenders holding the Loans comprising such Borrowing, and the Loans comprising each such portion shall be considered a separate Borrowing.

(b)    Interest Election Requests. To make an election pursuant to this Section 2.04, the Borrower shall notify the Administrative Agent of such election in writing by the time that a Borrowing Request would be required under Section 2.03 if the Borrower were requesting a Borrowing of the Type resulting from such election to be made on the effective date of such election. Each such written Interest Election Request shall be irrevocable and shall be in substantially the form of Exhibit C and signed by the Borrower.

(c)    Information in Interest Election Requests. Each written Interest Election Request shall specify the following information in compliance with Section 2.02:

(i)    the Borrowing to which such Interest Election Request applies and, if different options are being elected with respect to different portions thereof, the portions thereof to be allocated to each resulting Borrowing (in which case the information to be specified pursuant to Section 2.04(c)(iii) and (iv) shall be specified for each resulting Borrowing);

 

43


(ii)    the effective date of the election made pursuant to such Interest Election Request, which shall be a Business Day;

(iii)    whether the resulting Borrowing is to be an ABR Borrowing or a Eurodollar Borrowing; and

(iv) if the resulting Borrowing is a Eurodollar Borrowing, the Interest Period to be applicable thereto after giving effect to such election, which shall be a period contemplated by the definition of the term “Interest Period”.

(v)    If any such Interest Election Request requests a Eurodollar Borrowing but does not specify an Interest Period, then the Borrower shall be deemed to have selected an Interest Period of one (1) month’s duration.

(d)    Notice to Lenders by the Administrative Agent. Promptly following receipt of an Interest Election Request, the Administrative Agent shall advise each Lender of the details thereof and of such Lender’s portion of each resulting Borrowing.

(e)    Effect of Failure to Deliver Timely Interest Election Request and Events of Default on Interest Election. If the Borrower fails to deliver a timely Interest Election Request with respect to a Eurodollar Borrowing prior to the end of the Interest Period applicable thereto, then, unless such Borrowing is repaid as provided herein, at the end of such Interest Period such Borrowing shall be converted to an ABR Borrowing. Notwithstanding any contrary provision hereof, if an Event of Default has occurred and is continuing, no outstanding Borrowing may be converted to or continued as a Eurodollar Borrowing (and any Interest Election Request that requests the conversion of any Borrowing to, or continuation of any Borrowing as, a Eurodollar Borrowing shall be ineffective) and unless repaid, each Eurodollar Borrowing shall be converted to an ABR Borrowing at the end of the Interest Period applicable thereto.

Section 2.05    Funding of Borrowings.

(a)    Funding by Lenders. Each Lender shall make each Loan to be made by it hereunder on the proposed date thereof by wire transfer of immediately available funds by 1:00 p.m., New York City time, to the account of the Administrative Agent most recently designated by it for such purpose by notice to the Lenders. The Administrative Agent will make such Loans available to the Borrower by promptly crediting the amounts so received, in like funds, to a Deposit Account of the Borrower that is subject to an Account Control Agreement and that is maintained with a Lender and designated by the Borrower in the applicable Borrowing Request; provided that ABR Loans made to finance the reimbursement of an LC Disbursement as provided in Section 2.08(e) shall be remitted by the Administrative Agent to the applicable Issuing Bank. Nothing herein shall be deemed to obligate any Lender to obtain the funds for its Loan in any particular place or manner or to constitute a representation by any Lender that it has obtained or will obtain the funds for its Loan in any particular place or manner.

(b)    Presumption of Funding by the Lenders. Unless the Administrative Agent shall have received notice from a Lender prior to the proposed date of any Borrowing that such Lender will not make available to the Administrative Agent such Lender’s share of such Borrowing, the Administrative Agent may assume that such Lender has made such share available on such date in accordance with Section 2.05(a) and may, in reliance upon such assumption, make available to the Borrower a corresponding amount. In such event, if a Lender has not in fact made its share of the applicable Borrowing available to

 

44


the Administrative Agent, then the applicable Lender and the Borrower severally agree to pay to the Administrative Agent forthwith on demand such corresponding amount with interest thereon, for each day from and including the date such amount is made available to the Borrower to but excluding the date of payment to the Administrative Agent, at in the case of such Lender, the greater of the NYFRB Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation or, in the case of the Borrower, the interest rate applicable to ABR Loans. If such Lender pays such amount to the Administrative Agent, then such amount shall constitute such Lender’s Loan included in such Borrowing. Any payment by the Borrower shall be without prejudice to any claim the Borrower may have against a Lender that shall have failed to make such payment to the Administrative Agent.

Section 2.06    Increase, Reduction and Termination of Total Commitment.

(a)    Scheduled Termination of Commitments. Unless previously terminated, the Commitments shall terminate on the Maturity Date. If at any time the Total Commitment or the Borrowing Base is terminated or reduced to zero, then the Commitments shall terminate on the effective date of such termination or reduction.

(b)    Optional Termination and Reduction of Total Commitment.

(i)    The Borrower may at any time terminate, or from time to time reduce, the Total Commitment; provided that (A) each reduction of the Total Commitment shall be in an amount that is an integral multiple of $1,000,000 and not less than $2,000,000, (B) the Borrower shall not terminate or reduce the Total Commitment if, after giving effect to any concurrent prepayment of the Loans in accordance with Section 3.04(c)(i), the total Revolving Credit Exposures would exceed the Total Commitments, and (C) upon any reduction of the Total Commitment, the Commitments shall be automatically reduced (ratably among the Lenders in accordance with each Lender’s Applicable Percentage) so that they equal the Total Commitment as so reduced.

(ii)    The Borrower shall notify the Administrative Agent of any election to terminate or reduce the Total Commitment under Section 2.06(b)(i) at least three (3) Business Days prior to the effective date of such termination or reduction, specifying such election and the effective date thereof. Promptly following receipt of any notice, the Administrative Agent shall advise the Lenders of the contents thereof. Each notice delivered by the Borrower pursuant to this Section 2.06(b)(ii) shall be irrevocable; provided, however, that such notice of commitment reduction may state that such termination or reduction is conditioned upon the effectiveness of other credit facilities, the proceeds of which shall be used to repay the Obligations, in which case such notice may be revoked by the Borrower (by written notice provided to Agent prior to the specified effective date thereof) if such condition is not satisfied. Any termination or reduction of the Total Commitment shall be permanent and may not be reinstated, except pursuant to Section 2.06(c). Each reduction of the Total Commitment shall be made ratably among the Lenders in accordance with each Lender’s Applicable Percentage.

(c)    Increases of Total Commitment.

(i)    Subject to the conditions set forth in Section 2.06(c)(ii), the Borrower may increase the Total Commitment then in effect by (A) increasing the Commitment of a Lender or (B) subject to Section 2.06(c)(ii)(H), causing a Person that is reasonably acceptable to the Administrative Agent and each Issuing Bank that at such time is not a Lender to become a Lender (any such Person that is not at such time a Lender and becomes a Lender, an “Additional Lender”), or (C) a combination of the methods described in clauses (A) and (B).

 

45


(ii)    Any increase in the Total Commitment shall be subject to the following additional conditions:

(A)    such increase shall not be less than $5,000,000 unless the Administrative Agent otherwise consents;

(B)    such increase shall not cause the Total Commitment to exceed the lesser of (x) the then-effective Borrowing Base and (y) the Facility Amount.

(C)    no Default shall have occurred and be continuing on the effective date of such increase or would result therefrom;

(D)    no Lender’s Commitment may be increased without the consent of such Lender;

(E)    the representations and warranties of the Borrower and the Guarantors set forth in this Agreement and in the other Loan Documents shall be true and correct in all material respects on and as of the date of such increase, except (x) to the extent any such representations and warranties are expressly limited to an earlier date, in which case, on and as of the date of such increase, such representations and warranties shall be true and correct in all material respects as of such specified earlier date, and (y) to the extent that any such representation and warranty is expressly qualified by materiality or by reference to Material Adverse Effect, such representation and warranty (as so qualified) shall continue to be true and correct in all respects;

(F)    the maturity date of the Commitments subject to such increase shall be the same as the Maturity Date;

(G)    the Commitments subject to such increase shall be on the exact same terms and pursuant to the exact same documentation applicable to this Agreement (other than with respect to any arrangement, structuring, upfront or other fees or discounts payable in connection with such increase);

(H)    the Borrower may seek Commitments from either (1) existing Lenders or (2) with the consent of the Administrative Agent and each Issuing Bank (in each case, such consent not to be unreasonably withheld or delayed), from Additional Lenders;

(I)    no Borrowing Base Deficiency shall exist after giving effect to the increase (provided that, for the avoidance of doubt, the Borrower may elect to redetermine the Borrowing Base in accordance with Section 2.07(b)(ii) for purposes of satisfying the condition set forth in this Section 2.06(c)(ii)(I);

(J)    if the Borrower elects to increase the Total Commitment by increasing the Commitment of a Lender, the Borrower and such Lender shall execute and deliver to the Administrative Agent a certificate substantially in the form of Exhibit H (a “Commitment Increase Certificate”);

(K)    if the Borrower elects to increase the Total Commitment by causing an Additional Lender to become a party to this Agreement, then the Borrower and such Additional Lender shall execute and deliver to the Administrative Agent a certificate substantially in the form of Exhibit I (an “Additional Lender Certificate”), together with an Administrative Questionnaire and a processing and recordation fee of $3,500 (provided that the Administrative Agent may, in its discretion,

 

46


elect to waive such processing and recordation fee in connection with any such increase), and the Borrower shall (1) if requested by the Additional Lender, deliver a Note payable to such Additional Lender in a principal amount equal to its Commitment, and otherwise duly completed and (2) pay any applicable fees as may have been agreed to between the Borrower and the Additional Lender; and

(L)    the Borrower shall deliver or cause to be delivered any customary legal opinions or other documents (including, without limitation, a resolution duly adopted by the board of directors (or equivalent body) of each Credit Party authorizing such increase in the Total Commitment), in each case, to the extent reasonably requested by the Administrative Agent.

(iii)    Subject to acceptance and recording thereof pursuant to Section 2.06(c)(iv), from and after the effective date specified in the Commitment Increase Certificate or the Additional Lender Certificate (or if any Eurodollar Borrowings are outstanding, then the last day of the Interest Period in respect of such Eurodollar Borrowings, unless the Borrower has paid any compensation required by Section 5.02): (A) the amount of the Total Commitment shall be increased as set forth therein, and (B) in the case of an Additional Lender Certificate, any Additional Lender party thereto shall be a party to this Agreement and have the rights and obligations of a Lender under this Agreement and the other Loan Documents. In addition, the Lender or the Additional Lender, as applicable, shall purchase a pro rata portion of the outstanding Loans (and participation interests in Letters of Credit) of each of the other Lenders (and such Lenders hereby agree to sell and take all such further action to effectuate such sale) such that each Lender (including any Additional Lender, if applicable) shall hold its Applicable Percentage of the outstanding Loans (and participation interests) after giving effect to the increase in the Total Commitment (and the resulting modifications of each Lender’s Commitment pursuant to Section 2.06(c)(iv) or Section 2.06(c)(v)).

(iv)    Upon its receipt of a duly completed Commitment Increase Certificate or an Additional Lender Certificate, executed by the Borrower and the Lender or by the Borrower and the Additional Lender party thereto, as applicable, the Administrative Questionnaire referred to in Section 2.06(c)(ii) and the break-funding payments from the Borrower, if any, required by Section 5.02, if applicable, the Administrative Agent shall accept such Commitment Increase Certificate or Additional Lender Certificate and record the information contained therein in the Register required to be maintained by the Administrative Agent pursuant to Section 12.04(b)(iv). No increase in the Total Commitment shall be effective for purposes of this Agreement unless it has been recorded in the Register as provided in this Section 2.06(c)(iv).

(v)    Upon any increase in the Total Commitment pursuant to this Section 2.06(c), (A) each Lender’s Applicable Percentage shall be automatically deemed amended to the extent necessary so that each such Lender’s Applicable Percentage equals the percentage of the Total Commitment represented by such Lender’s Commitment, in each case after giving effect to such increase, and (B) Annex I to this Agreement shall be deemed amended to reflect the Commitment of each Lender (including any Additional Lender) as thereby increased, any changes in the Lenders’ Commitments pursuant to the foregoing clause (A), and any resulting changes in the Lenders’ Applicable Percentages.

(vi)    Contemporaneously with any increase in the Borrowing Base pursuant to this Agreement, if (A) the Borrower elects to increase the Total Commitment and (B) each Lender has consented to such increase in its Commitment, then the Total Commitment shall be increased (ratably among the Lenders in accordance with each Lender’s Applicable Percentage) by the amount requested by the Borrower (subject to the limitations set forth in Section 2.06(c)(ii)(A)) without the requirement that any Lender deliver a Commitment Increase Certificate or that the Borrower pay any amounts under Section 5.02, and Annex I shall be deemed amended to reflect such amendments to each Lender’s Commitment and the Total Commitment. The Administrative Agent shall record the information regarding such increases in the Register required to be maintained by the Administrative Agent pursuant to Section 12.04(b)(iv).

 

47


(d)    Automatic Reductions of Total Commitment. Upon any redetermination or other adjustment in the Borrowing Base pursuant to this Agreement that would otherwise result in the Borrowing Base becoming less than the Total Commitment, the Total Commitment shall be automatically reduced (ratably among the Lenders in accordance with each Lender’s Applicable Percentage) so that the Total Commitment equals the Borrowing Base (and Annex I shall be deemed amended to reflect such amendments to each Lender’s Commitment and the Total Commitment). Any such reduction of the Total Commitment shall be permanent and may not be reinstated, except pursuant to Section 2.06(c).

Section 2.07    Borrowing Base.

(a)    Initial Borrowing Base. For the period from and including the Effective Date to but excluding the Initial Redetermination Date, the amount of the Borrowing Base shall be $750,000,000. Notwithstanding the foregoing, the Borrowing Base may be subject to further adjustments from time to time pursuant to the Borrowing Base Adjustment Provisions.

(b)    Scheduled and Interim Redeterminations.

(i)    The Borrowing Base shall be redetermined semi-annually in accordance with this Section 2.07 (each such redetermination, a “Scheduled Redetermination”) and, subject to Section 2.07(d), such redetermined Borrowing Base shall become effective and applicable to the Borrower, the Administrative Agent, the Issuing Bank(s) and the Lenders on or about April 1st and October 1st of each year, commencing on or about the Initial Redetermination Date.

(ii)    In addition, the Borrower may elect to cause, by notifying the Administrative Agent thereof, and the Administrative Agent shall cause, at the election and direction of the Required Lenders, by notifying the Borrower thereof, in each case, no more than one (1) time between Scheduled Redeterminations, the Borrowing Base to be redetermined between Scheduled Redeterminations. Each redetermination of the Borrowing Base pursuant to the immediately preceding sentence is referred to herein as an “Interim Redetermination” and shall be effectuated in accordance with this Section 2.07. Notwithstanding the foregoing, neither the Borrower nor the Required Lenders may cause an Interim Redetermination to occur prior to the Initial Redetermination Date.

(c)    Scheduled and Interim Redetermination Procedure.

(i)    Each Scheduled Redetermination and each Interim Redetermination shall be effectuated as follows: Upon receipt by the Administrative Agent of the Reserve Report and the certificate required to be delivered by the Borrower to the Administrative Agent, in the case of a Scheduled Redetermination, pursuant to Section 8.12(a) and (d), and, in the case of an Interim Redetermination, pursuant to Section 8.12(c) and (d), and such other reports, data and supplemental information, including the information provided pursuant to Section 8.12(c), as may, from time to time, be reasonably requested by the Required Lenders (the Reserve Report, such certificate and such other reports, data and supplemental information being the “Engineering Reports”), the Administrative Agent shall evaluate the information contained in the Engineering Reports and shall, in good faith, propose a new Borrowing Base (the “Proposed Borrowing Base”) based upon such information and such other information (including, without limitation, the status of title information with respect to the Oil and Gas Properties as described in the Engineering Reports and the existence of any other Indebtedness) as the Administrative Agent deems appropriate in its sole discretion and consistent with its normal oil and gas lending criteria as it exists at the particular time.

 

48


(ii)    The Administrative Agent shall notify the Borrower and the Lenders of the Proposed Borrowing Base (the “Proposed Borrowing Base Notice”):

(A)    in the case of a Scheduled Redetermination (1) if the Administrative Agent shall have received the Engineering Reports required to be delivered by the Borrower pursuant to Section 8.12(a) and (d) in a timely and complete manner, then, on or before each March 15 and September 15 (or such date promptly thereafter as reasonably practicable) of each year following the date of delivery or (2) if the Administrative Agent shall not have received the Engineering Reports required to be delivered by the Borrower pursuant to Section 8.12(a) and (d) in a timely and complete manner, then promptly after the Administrative Agent has received complete Engineering Reports from the Borrower and has had a reasonable opportunity to determine the Proposed Borrowing Base in accordance with Section 2.07(c)(i); and

(B)    in the case of an Interim Redetermination, promptly, and in any event, within fifteen (15) days after the Administrative Agent has received the required Engineering Reports.

(iii)    (A) Any Proposed Borrowing Base that would increase the Borrowing Base then in effect must be approved by all of the Lenders and (B) any Proposed Borrowing Base that would decrease or maintain the Borrowing Base then in effect must be approved by the Required Lenders, in each case, as provided in this Section 2.07(c)(iii). Such decisions will be made by each Lender based upon the Engineering Reports and such other information (including the status of title information with respect to the Oil and Gas Properties as described in the Engineering Reports and the existence of any other Indebtedness) as such Lender deems appropriate in its sole credit discretion and consistent with each Lender’s normal and customary standards and practices for determining the value of oil and gas properties based upon its usual and customary criteria for reserve based oil and gas lending criteria as it exists at the particular time. Upon receipt of the Proposed Borrowing Base Notice, each Lender shall have fifteen (15) days to agree with the Proposed Borrowing Base or disagree with the Proposed Borrowing Base by proposing an alternate Borrowing Base. If, at the end of such 15-day period, all of the Lenders, in the case of a Proposed Borrowing Base that would increase the Borrowing Base then in effect, or the Required Lenders, in the case of a Proposed Borrowing Base that would decrease or maintain the Borrowing Base then in effect, have approved as aforesaid, then the Proposed Borrowing Base shall become the new Borrowing Base, effective on the date specified in Section 2.07(d). If, however, at the end of such 15-day period, all of the Lenders or the Required Lenders, as applicable, have not approved as aforesaid, then the Administrative Agent shall poll the Lenders to ascertain the highest Borrowing Base then acceptable to a number of Lenders sufficient to constitute the Required Lenders and, so long as such amount does not increase the Borrowing Base then in effect, such amount shall become the new Borrowing Base, effective on the date specified in Section 2.07(d) (provided that, if the Administrative Agent shall have polled the Lenders and ascertained that the highest Borrowing Base then acceptable to all of the Lenders increases the Borrowing Base then in effect, such amount shall become the new Borrowing Base, effective on the date specified in Section 2.07(d)).

(d)    Effectiveness of a Redetermined Borrowing Base. After a redetermined Borrowing Base is approved by all of the Lenders or the Required Lenders, as applicable, pursuant to Section 2.07(c)(iii), the Administrative Agent shall notify the Borrower and the Lenders of the amount of the redetermined Borrowing Base (the “New Borrowing Base Notice”), and such amount shall become the new Borrowing Base, effective and applicable to the Borrower, the Administrative Agent, the Issuing Bank and the Lenders:

(i)    in the case of a Scheduled Redetermination, if the Administrative Agent shall have received the Engineering Reports required to be delivered by the Borrower pursuant to Section 8.12(a)

 

49


and (d) in a timely and complete manner, then on or about the Initial Redetermination Date and thereafter each April 1 and October 1, as applicable, following such notice (or, in each case, such date promptly thereafter as reasonably practicable), or if the Administrative Agent shall not have received the Engineering Reports required to be delivered by the Borrower pursuant to Section 8.12(a) and (d) in a timely and complete manner, then on the Business Day next succeeding delivery of such New Borrowing Base Notice; and

(ii)    in the case of an Interim Redetermination, on the Business Day next succeeding delivery of such New Borrowing Base Notice.

Such amount shall then become the Borrowing Base until the next Redetermination Date or the next adjustment to the Borrowing Base under the Borrowing Base Adjustment Provisions, whichever occurs first. Notwithstanding the foregoing, no Scheduled Redetermination or Interim Redetermination shall become effective until the New Borrowing Base Notice related thereto is received by the Borrower.

(e)    Reduction of Borrowing Base Upon Issuance of Specified Additional Indebtedness. Upon the issuance of any Specified Additional Indebtedness (other than any Permitted Refinancing Indebtedness in respect thereof) after the Effective Date by the Borrower or any Guarantor pursuant to Section 9.02(f) (other than any Permitted Refinancing Indebtedness in respect thereof), the Borrowing Base then in effect shall be automatically reduced by an amount equal to (i) 0.25 multiplied by (ii) the stated principal amount of such Specified Additional Indebtedness (without regard to any initial issue discount), and, in each case, the Borrowing Base as so reduced shall become the new Borrowing Base immediately upon the date of such issuance, effective and applicable to the Borrower, the Administrative Agent, the Issuing Bank, and the Lenders on such date until the next redetermination or adjustment of the Borrowing Base pursuant to this Agreement.

(f)    Reduction of Borrowing Base in Connection with Asset Sales and Liquidation of Swap Agreements. In the event of (i) any Transfer of any Borrowing Base Properties by the Parent Guarantor, the Borrower or any Credit Party to any Person other than the Parent Guarantor, the Borrower or another Credit Party or (ii) any Liquidation of any Swap Agreements by the Parent Guarantor or any Restricted Subsidiary, if, upon (and after giving effect to) any such Transfer or Liquidation, the sum of (A) the PV-9 of all Borrowing Base Properties Transferred by the Parent Guarantor or any Restricted Subsidiary to any Person other than the Parent Guarantor or another Restricted Subsidiary plus (B) the Swap PV of all Swap Agreements Liquidated, in each case, since the later of (x) the last Redetermination Date and (y) the last adjustment of the Borrowing Base pursuant to this Section 2.07(f), exceeds five percent (5%) of the then-effective Borrowing Base (as reasonably determined by the Administrative Agent after (1) giving effect to any acquisitions of and other Investments in Oil and Gas Properties by the Parent Guarantor and the Restricted Subsidiaries during such period with respect to which the Borrower has delivered a Reserve Report that is reasonably acceptable to the Administrative Agent and (2) taking into account any other Swap Agreements permitted hereunder entered into during such period that are in effect at the time of such determination and that are reasonably acceptable to the Administrative Agent), individually or in the aggregate, then the Borrowing Base will be automatically reduced by an amount equal to the Borrowing Base Value of such Borrowing Base Properties or such Liquidated Swap Agreements and, upon any such reduction, the Administrative Agent shall promptly inform the Borrower of the amount of the adjusted Borrowing Base. For the purposes of this Section 2.07(f), (I) the Transfer of Equity Interests in any E&P Subsidiary owning such Borrowing Base Properties and/or commodity Swap Agreements shall be deemed the Transfer of the Borrowing Base Properties and the Liquidation of commodity Swap Agreements owned by such E&P Subsidiary and (II) a Transfer of Borrowing Base Properties shall be deemed to include the designation of a Restricted Subsidiary that is an E&P Subsidiary as an Unrestricted Subsidiary and the Transfer of Oil and Gas Properties, or Equity Interests in any E&P Subsidiary, to an Unrestricted Subsidiary.

 

50


(g)    Reduction of Borrowing Base Related to Title Defects. If the Required Lenders have adjusted the Borrowing Base in accordance with Section 8.13(c), so that, after giving effect to such reduction, the Borrower will satisfy the requirements of Section 8.13, the Administrative Agent shall promptly notify the Borrower in writing and, upon receipt of such notice, the new Borrowing Base will simultaneously become effective.

(h)    Reduction of Borrowing Base for Failure to Enter into the Required Hedges. The Borrowing Base may be adjusted by the Administrative Agent in accordance with clause (y) of the proviso to Section 8.20.

Section 2.08    Letters of Credit.

(a)    General. Subject to the terms and conditions set forth herein, the Borrower may request the issuance of dollar denominated Letters of Credit for its own account or for the account of any of its Subsidiaries that is a Restricted Subsidiary, in a form reasonably acceptable to the Administrative Agent and the applicable Issuing Bank, at any time and from time to time during the Availability Period; provided that the Borrower may not request the issuance, amendment, renewal or extension of Letters of Credit hereunder if a Borrowing Base Deficiency exists at such time or would exist as a result thereof. The aggregate amount of the outstanding Letters of Credit issued by any Issuing Bank shall not exceed such Issuing Bank’s LC Issuance Limit and the aggregate amount of all outstanding Letters of Credit issued by all Issuing Banks shall not exceed the LC Commitment. Each Letter of Credit shall be in a minimum face amount of Twenty-Five Thousand Dollars ($25,000) (or such lesser amount as may be agreed to by the applicable Issuing Bank). In the event of any inconsistency between the terms and conditions of this Agreement and the terms and conditions of any form of letter of credit application or other agreement submitted by the Borrower to, or entered into by the Borrower with, the Issuing Bank relating to any Letter of Credit, the terms and conditions of this Agreement shall control.

(b)    Notice of Issuance, Amendment, Renewal, Extension; Certain Conditions. To request the issuance of a Letter of Credit (or the amendment, renewal or extension of an outstanding Letter of Credit), the Borrower shall hand deliver or facsimile (or transmit by electronic communication, if arrangements for doing so have been approved by the applicable Issuing Bank) to the applicable Issuing Bank and the Administrative Agent (not less than five (5) Business Days in advance of the requested date of issuance, amendment, renewal or extension) a notice:

(i)    requesting the issuance of a Letter of Credit or identifying the Letter of Credit to be amended, renewed or extended;

(ii)    specifying the date of issuance, amendment, renewal or extension (which shall be a Business Day);

(iii)    specifying the date on which such Letter of Credit is to expire (which shall comply with Section 2.08(c));

(iv)    specifying the amount of such Letter of Credit;

(v)    specifying the name and address of the beneficiary thereof and such other information as shall be necessary to prepare, amend, renew or extend such Letter of Credit; and

(vi)    specifying the amount of the then-effective Borrowing Base and the then-effective Total Commitment and whether a Borrowing Base Deficiency exists at such time and the current total Revolving Credit Exposures (without regard to the requested Letter of Credit or the requested

 

51


amendment, renewal or extension of an outstanding Letter of Credit) and the pro forma total Revolving Credit Exposures (giving effect to the requested Letter of Credit or the requested amendment, renewal or extension of an outstanding Letter of Credit).

In addition, if requested by the applicable Issuing Bank in connection with any Letter of Credit issuance, the Borrower shall have entered into a Letter of Credit Agreement. In the event of any inconsistency between the terms and conditions of this Agreement and the terms and conditions of any Letter of Credit Agreement, the terms and conditions of this Agreement shall control.

Each notice shall constitute a representation and warranty by the Borrower that after giving effect to the requested issuance, amendment, renewal or extension, as applicable, (A) the LC Exposure shall not exceed the LC Commitment, (B) the aggregate amount of outstanding Letters of Credit issued by the applicable Issuing Bank does not exceed the LC Issuance Limit of such Issuing Bank, and (C) the total Revolving Credit Exposures do not exceed the Loan Limit. No letter of credit issued by any Issuing Bank (if such Issuing Bank is not the Administrative Agent) shall be deemed to be a “Letter of Credit” issued under this Agreement unless the Issuing Bank has requested and received written confirmation from the Administrative Agent that the representations by Borrower contained in clauses (A) and (C) of the immediately preceding sentence are true and correct.

Additionally, an Issuing Bank shall not be under any obligation to issue any Letter of Credit if:

(i)    any order, judgment or decree of any Governmental Authority or arbitrator shall by its terms purport to enjoin or restrain such Issuing Bank from issuing such Letter of Credit, or any law applicable to such Issuing Bank shall prohibit, or require that such Issuing Bank refrain from, the issuance of letters of credit generally or such Letter of Credit in particular or shall impose upon such Issuing Bank with respect to such Letter of Credit any restriction, reserve or capital requirement (for which such Issuing Bank is not otherwise compensated hereunder) not in effect on the Effective Date, or shall impose upon such Issuing Bank any unreimbursed loss, cost or expense that was not applicable on the Effective Date and that such Issuing Bank in good faith deems material to it; or

(ii)    the issuance of such Letter of Credit would violate one or more policies of such Issuing Bank applicable to letters of credit generally,

so long as, in the case of the immediately preceding clauses (i) and (ii), such Issuing Bank, or the Administrative Agent on behalf of such Issuing Bank, after receipt of the applicable request for issuance of a Letter of Credit, has promptly notified the Borrower of the occurrence of any such event or circumstance, describing in reasonable detail such event or circumstance and stating in good faith that as a result of such events or circumstances, such Issuing Bank refuses to issue the requested Letter of Credit pursuant to this Section 2.08(b).

(c)    Expiration Date. Each Letter of Credit shall expire at or prior to the close of business on the earlier of (i) the date one (1) year after the date of the issuance of such Letter of Credit (or, in the case of any renewal or extension thereof, one (1) year after such renewal or extension), and (ii) the date that is five (5) Business Days prior to the Maturity Date. Each Letter of Credit with a one (1) year term may provide for the renewal thereof for additional one (1) year periods; provided that no such period shall extend beyond the date described in clause (ii) above.

(d)    Participations. By the issuance of a Letter of Credit (or an amendment to a Letter of Credit increasing the amount thereof) and without any further action on the part of the applicable Issuing Bank or the Lenders, the applicable Issuing Bank hereby grants to each Lender, and each Lender hereby

 

52


acquires from such Issuing Bank, a participation in such Letter of Credit equal to such Lender’s Applicable Percentage of the aggregate amount available to be drawn under such Letter of Credit. In consideration and in furtherance of the foregoing, each Lender hereby absolutely and unconditionally agrees to pay to the Administrative Agent, for the account of such Issuing Bank, such Lender’s Applicable Percentage of each LC Disbursement made by such Issuing Bank and not reimbursed by the Borrower on the date due as provided in Section 2.08(e), or of any reimbursement payment required to be refunded to the Borrower for any reason. Each Lender acknowledges and agrees that its obligation to acquire participations pursuant to this Section 2.08(d) in respect of Letters of Credit is absolute and unconditional and shall not be affected by any circumstance whatsoever, including any amendment, renewal or extension of any Letter of Credit or the occurrence and continuance of a Default, the existence of a Borrowing Base Deficiency or the reduction or termination of the Commitments, and that each such payment shall be made without any offset, abatement, withholding or reduction whatsoever.

(e)    Reimbursement. If any Issuing Bank shall make any LC Disbursement in respect of a Letter of Credit, the Borrower shall reimburse such LC Disbursement by paying to the Administrative Agent an amount equal to such LC Disbursement not later than 12:00 noon, New York City time, on the Business Day immediately following the date that such LC Disbursement is made, if the Borrower shall have received notice of such LC Disbursement prior to 10:00 a.m., New York City time, on such date, or, if such notice has not been received by the Borrower prior to such time on such date, then not later than 3:00 p.m., New York City time, on (i) the Business Day that the Borrower receives such notice, if such notice is received prior to 10:00 a.m., New York City time, on the day of receipt, or (ii) the Business Day immediately following the day that the Borrower receives such notice, if such notice is not received prior to such time on the day of receipt; provided that, unless the Borrower has notified the Administrative Agent that it intends to reimburse all or part of such LC Disbursement without using Loan proceeds or has submitted a Borrowing Request with respect thereto, the Borrower shall be deemed (without regard to the satisfaction of the conditions specified in Section 6.02) to have requested, and the Borrower does hereby request under such circumstances, that such payment be financed with an ABR Borrowing in an equivalent amount and, to the extent so financed, the Borrower’s obligation to make such payment shall be discharged and replaced by the resulting ABR Borrowing. If the Borrower fails to make such payment when due, the Administrative Agent shall notify each Lender of the applicable LC Disbursement, the payment then due from the Borrower in respect thereof and such Lender’s Applicable Percentage thereof. Promptly following receipt of such notice, each Lender shall pay to the Administrative Agent its Applicable Percentage of the payment then due from the Borrower, in the same manner as provided in Section 2.05 with respect to Loans made by such Lender (and Section 2.05 shall apply, mutatis mutandis, to the payment obligations of the Lenders), and the Administrative Agent shall promptly pay to the applicable Issuing Bank the amounts so received by it from the Lenders. Promptly following receipt by the Administrative Agent of any payment from the Borrower pursuant to this Section 2.08(e), the Administrative Agent shall distribute such payment to the applicable Issuing Bank or, to the extent that Lenders have made payments pursuant to this Section 2.08(e) to reimburse such Issuing Bank, then to such Lenders and such Issuing Bank as their interests may appear. Any payment made by a Lender pursuant to this Section 2.08(e) to reimburse the applicable Issuing Bank for any LC Disbursement (other than the funding of ABR Loans as contemplated above) shall not constitute a Loan and shall not relieve the Borrower of its obligation to reimburse such LC Disbursement.

(f)    Obligations Absolute. The Borrower’s obligation to reimburse LC Disbursements as provided in Section 2.08(e) shall be absolute, unconditional and irrevocable, and shall be performed strictly in accordance with the terms of this Agreement under any and all circumstances whatsoever and irrespective of any lack of validity or enforceability of any Letter of Credit, any Letter of Credit Agreement or this Agreement, or any term or provision therein, any draft or other document presented under a Letter of Credit proving to be forged, fraudulent or invalid in any respect or any statement therein being untrue or inaccurate in any respect, payment by any Issuing Bank under a Letter of Credit against presentation of a draft or other document that does not comply with the terms of such Letter of Credit or any Letter of Credit

 

53


Agreement, or any other event or circumstance whatsoever, whether or not similar to any of the foregoing, that might, but for the provisions of this Section 2.08(f), constitute a legal or equitable discharge of, or provide a right of setoff against, the Borrower’s obligations hereunder. Neither the Administrative Agent, the Lenders nor any Issuing Bank, nor any of their Related Parties shall have any liability or responsibility by reason of or in connection with the issuance or transfer of any Letter of Credit or any payment or failure to make any payment thereunder (irrespective of any of the circumstances referred to in the preceding sentence), or any error, omission, interruption, loss or delay in transmission or delivery of any draft, notice or other communication under or relating to any Letter of Credit (including any document required to make a drawing thereunder), any error in interpretation of technical terms or any consequence arising from causes beyond the control of any Issuing Bank; provided that the foregoing shall not be construed to excuse any Issuing Bank from liability to the Borrower to the extent of any direct damages (as opposed to consequential damages, claims in respect of which are hereby waived by the Borrower to the extent permitted by applicable law) suffered by the Borrower that are caused by such Issuing Bank’s failure to exercise due care when determining whether drafts and other documents presented under a Letter of Credit comply with the terms thereof or by such Issuing Bank’s gross negligence or willful misconduct (as finally determined by a court of competent jurisdiction). In furtherance of the foregoing and without limiting the generality thereof, the parties agree that, with respect to documents presented which appear on their face to be in substantial compliance with the terms of a Letter of Credit, the applicable Issuing Bank may, in its sole discretion, either accept and make payment upon such documents without responsibility for further investigation, regardless of any notice or information to the contrary, or refuse to accept and make payment upon such documents if such documents are not in strict compliance with the terms of such Letter of Credit.

(g)    Disbursement Procedures. Each Issuing Bank shall, promptly following its receipt thereof, examine all documents purporting to represent a demand for payment under a Letter of Credit. Each Issuing Bank shall promptly notify the Administrative Agent and the Borrower by telephone (confirmed by facsimile) of such demand for payment and whether such Issuing Bank has made or will make an LC Disbursement thereunder; provided that any failure to give or delay in giving such notice shall not relieve the Borrower of its obligation to reimburse such Issuing Bank and the Lenders with respect to any such LC Disbursement.

(h)    Interim Interest. If any Issuing Bank shall make any LC Disbursement, then, until the Borrower shall have reimbursed such Issuing Bank for such LC Disbursement (either with its own funds or a Borrowing under Section 2.08(e)), the unpaid amount thereof shall bear interest, for each day from and including the date such LC Disbursement is made to but excluding the date that the Borrower reimburses such LC Disbursement, at the rate per annum then applicable to ABR Loans. Interest accrued pursuant to this Section 2.08(h) shall be for the account of such Issuing Bank, except that interest accrued on and after the date of payment by any Lender pursuant to Section 2.08(e) to reimburse such Issuing Bank shall be for the account of such Lender to the extent of such payment.

(i)    Replacement of Issuing Banks.

(i)    Each Issuing Bank may be replaced at any time by written agreement among the Borrower, the Administrative Agent, the replaced Issuing Bank and the successor Issuing Bank. The Administrative Agent shall notify the Lenders of any such replacement of any Issuing Bank. At the time any such replacement shall become effective, the Borrower shall pay all unpaid fees accrued for the account of the replaced Issuing Bank pursuant to Section 3.05(b). From and after the effective date of any such replacement, the successor Issuing Bank shall have all the rights and obligations of an Issuing Bank under this Agreement with respect to Letters of Credit to be issued thereafter and references herein to the term “Issuing Bank” shall be deemed to refer to such successor or to any previous Issuing Bank, or to such successor and all previous Issuing Banks, as the context shall require. After the replacement of any Issuing Bank hereunder, the replaced Issuing Bank shall remain a party hereto and shall continue to have all the

 

54


rights and obligations of an Issuing Bank under this Agreement with respect to Letters of Credit issued by it prior to such replacement, but shall not be required to issue additional Letters of Credit. Schedule 1.02(l) shall be amended upon the written agreement of the Borrower, the Administrative Agent and any successor Issuing Bank to set forth such Issuing Bank’s LC Issuance Limit, and no successor Issuing Bank shall be an “Issuing Bank” hereunder until such amendment is effective.

(ii)    Subject to the appointment and acceptance by the Borrower and Administrative Agent of a successor Issuing Bank, any Issuing Bank may resign as an Issuing Bank at any time upon thirty (30) days’ prior written notice to the Administrative Agent, the Borrower and the Lenders, in which case, such resigning Issuing Bank shall be replaced in accordance with Section 2.08(i)(i) above.

(j)    Cash Collateralization.

(i)    If the Borrower is required to Cash Collateralize the excess attributable to LC Exposure in connection with any prepayment pursuant to Section 3.04(c), or the Borrower is required to Cash Collateralize a Defaulting Lender’s LC Exposure pursuant to Section 4.05(a)(iv), then the Borrower shall Cash Collateralize such LC Exposure or the excess attributable to such LC Exposure, as the case may be, as of such date. In addition, if the Commitments are terminated or the Loans become due and payable pursuant to Section 10.02(a) or the Loans are not paid in full on the Maturity Date, then the Borrower shall deposit, in an account with the Administrative Agent, in the name of the Administrative Agent and for the benefit of the Lenders, an amount in cash equal to the LC Exposure.

(ii)    The Borrower, and to the extent provided by any Defaulting Lender, such Defaulting Lender, hereby grants to the Administrative Agent, for the benefit of the Issuing Banks and the Lenders, a security interest in and Lien on each account (a “Collateral Account”) in which the Borrower has Cash Collateralized any obligation hereunder and all cash, checks, drafts, certificates and instruments, if any, from time to time deposited or held in such account, all deposits or wire transfers made thereto, any and all investments purchased with funds deposited in such account, all interest, dividends, cash, instruments, financial assets and other Property from time to time received, receivable or otherwise payable in respect of, or in exchange for, any or all of the foregoing, and all proceeds, products, accessions, rents, profits, income and benefits therefrom, and any substitutions and replacements therefor (collectively, the “Cash Collateral”). The Borrower, and to the extent granted by any Defaulting Lender, such Defaulting Lender, agrees to maintain, or cause to be maintained, such security interest as an exclusive first priority and continuing perfected security interest. If at any time the Administrative Agent determines that Cash Collateral is subject to any right or claim of any Person other than the Administrative Agent and the Issuing Banks as herein provided (other than Permitted Liens), or that the total amount of such Cash Collateral is less than the minimum collateral amount required hereunder, the Borrower will, promptly upon demand by the Administrative Agent, pay or provide to the Administrative Agent additional Cash Collateral in an amount sufficient to eliminate such deficiency (after giving effect to any Cash Collateral provided by the Defaulting Lender).

(iii)    The Borrower’s obligation to Cash Collateralize pursuant to this Section 2.08(j) shall be absolute and unconditional, without regard to whether any beneficiary of any Letter of Credit has attempted to draw down all or a portion of such amount under the terms of a Letter of Credit, and, to the fullest extent permitted by applicable law, shall not be subject to any defense or be affected by a right of set-off, counterclaim or recoupment which the Borrower or any Restricted Subsidiary may now or hereafter have against any such beneficiary, any Issuing Bank, the Administrative Agent, the Lenders or any other Person for any reason whatsoever.

(iv)    Each Collateral Account and all Cash Collateral shall secure the payment and performance of the Borrower’s and the Guarantors’ Obligations under this Agreement and the other

 

55


Loan Documents. The Administrative Agent shall have exclusive dominion and control, including the exclusive right of withdrawal, over each Collateral Account and the Cash Collateral. Other than any interest earned on the investment of such deposits, which investments shall be made at the option and sole discretion of the Administrative Agent and at the Borrower’s risk and expense, such deposits shall not bear interest. Interest or profits, if any, on such investments shall accumulate in each Collateral Account. Moneys in such account shall be applied by the Administrative Agent to reimburse each Issuing Bank for LC Disbursements for which it has not been reimbursed and, to the extent not so applied, shall be held for the satisfaction of the reimbursement obligations of the Borrower for the LC Exposure at such time or, if the maturity of the Loans has been accelerated, be applied to satisfy other obligations of the Borrower and the Guarantors under this Agreement or the other Loan Documents. If the Borrower is required to Cash Collateralize hereunder in connection with any prepayment pursuant to Section 3.04(c), then such Cash Collateral will be returned to the Borrower within three (3) Business Days after the Borrowing Base Deficiency or amount in excess of the Loan Limit, as applicable, ceases to exist; provided that such Cash Collateral shall remain subject to the security interest granted pursuant to the Loan Documents. If the Borrower is required to Cash Collateralize hereunder pursuant to Section 4.05(a)(iv), then such Cash Collateral shall no longer be required to be held as Cash Collateral pursuant to this Section 2.08(j) following the elimination or reduction of the applicable LC Exposure (including by the termination of Defaulting Lender status of the applicable Lender) such that there exists excess Cash Collateral; provided that, subject to Section 4.05 the Person providing Cash Collateral and the Issuing Banks may agree that Cash Collateral shall be held to support future anticipated LC Exposure or other obligations, and provided further that to the extent that such Cash Collateral was provided by the Borrower, such Cash Collateral shall be returned to the Borrower but shall remain subject to the security interest granted pursuant to the Loan Documents. If the Borrower is required to Cash Collateralize hereunder pursuant to the final sentence of Section 2.08(j)(i), then such Cash Collateral shall be returned to the Borrower within three (3) Business Days after the LC Exposure has been reduced to zero.

(k)    Letters of Credit Issued for Account of Restricted Subsidiaries. Notwithstanding that a Letter of Credit issued or outstanding hereunder supports any obligations of, or is for the account of, a Restricted Subsidiary, or states that a Restricted Subsidiary is the “account party,” “applicant,” “customer,” “instructing party,” or the like of or for such Letter of Credit, and without derogating from any rights of the applicable Issuing Bank (whether arising by contract, at law, in equity or otherwise) against such Restricted Subsidiary in respect of such Letter of Credit, the Borrower shall reimburse, indemnify and compensate the applicable Issuing Bank hereunder for such Letter of Credit (including to reimburse any and all drawings thereunder) in accordance with the terms of this Agreement as if such Letter of Credit had been issued solely for the account of the Borrower. The Borrower hereby acknowledges that the issuance of such Letters of Credit for its Subsidiaries that are Restricted Subsidiaries inures to the benefit of the Borrower, and that the Borrower’s business derives substantial benefits from the businesses of such Restricted Subsidiaries.

ARTICLE III

PAYMENTS OF PRINCIPAL AND INTEREST; PREPAYMENTS; FEES

Section 3.01    Repayment of Loans. The Borrower hereby unconditionally promises to pay to the Administrative Agent for the account of each Lender the then unpaid principal amount of each Loan on the Termination Date.

Section 3.02    Interest.

(a)    ABR Loans. The Loans comprising each ABR Borrowing shall bear interest at the Alternate Base Rate plus the Applicable Margin for ABR Borrowings, but in no event to exceed the Highest Lawful Rate.

 

56


(b)    Eurodollar Loans. The Loans comprising each Eurodollar Borrowing shall bear interest at the Adjusted LIBO Rate for the Interest Period in effect for such Borrowing plus the Applicable Margin for Eurodollar Borrowings, but in no event to exceed the Highest Lawful Rate.

(c)    Post-Default Rate. Notwithstanding the foregoing, if an Event of Default has occurred and is continuing, then, at the direction of the Majority Lenders, all Loans and other obligations outstanding under this Agreement shall bear interest at a rate per annum equal to (A) in the case of the principal amount of any Loan, two percent (2.00%) plus the rate otherwise applicable to such Loan as provided in Section 3.02(a) or Section 3.02(b), or (B) in the case of any other amount, two percent (2.00%) plus the rate applicable to ABR Loans as provided in Section 3.02(a), but in no event to exceed the Highest Lawful Rate (the “Post-Default Rate”); provided that if an Event of Default specified in Section 10.01(a), 10.01(b), 10.01(h) or 10.01(i) has occurred and is continuing, the Post-Default Rate shall apply automatically upon the occurrence of such Event of Default.

(d)    Interest Payment Dates. Accrued interest on each Loan shall be payable in arrears on each Interest Payment Date for such Loan and on the Termination Date; provided that interest accrued pursuant to Section 3.02(c) shall be payable on demand. In the event of any repayment or prepayment of any Loan (other than an optional prepayment of an ABR Loan prior to the Termination Date), accrued interest on the principal amount repaid or prepaid shall be payable on the date of such repayment or prepayment, and in the event of any conversion of any Eurodollar Loan prior to the end of the current Interest Period therefor, accrued interest on such Loan shall be payable on the effective date of such conversion.

(e)    Interest Rate Computations. All interest hereunder shall be computed on the basis of a year of 360 days, unless such computation would exceed the Highest Lawful Rate, in which case interest shall be computed on the basis of a year of 365 days (or 366 days in a leap year), except that interest computed by reference to the Alternate Base Rate at times when the Alternate Base Rate is based on the Prime Rate shall be computed on the basis of a year of 365 days (or 366 days in a leap year), and in each case shall be payable for the actual number of days elapsed (including the first day but excluding the last day). The applicable Alternate Base Rate, Adjusted LIBO Rate or LIBO Rate shall be determined by the Administrative Agent, and such determination shall be conclusive absent manifest error, and be binding upon the parties hereto.

Section 3.03    Alternate Rate of Interest.

(a)    Subject to clauses (b), (c), (d) and (e) of this Section 3.03, if prior to the commencement of any Interest Period for a Eurodollar Borrowing:

(i)    the Administrative Agent determines (which determination shall be conclusive absent manifest error) that adequate and reasonable means do not exist for ascertaining the Adjusted LIBO Rate or the LIBO Rate, as applicable (including because the LIBO Screen Rate is not available or published on a current basis) for such Interest Period; or

(ii)    the Administrative Agent is advised by the Required Lenders that the Adjusted LIBO Rate or the LIBO Rate, as applicable, for such Interest Period will not adequately and fairly reflect the cost to such Lenders (or Lender) of making or maintaining their Loans (or its Loan) included in such Borrowing for such Interest Period;

then the Administrative Agent shall give notice thereof to the Borrower and the Lenders by telephone, telecopy or electronic mail as promptly as practicable thereafter and, until the Administrative Agent notifies the Borrower and the Lenders that the circumstances giving rise to such notice no longer exist, any Interest

 

57


Election Request that requests the conversion of any Borrowing to, or continuation of any Borrowing as, a Eurodollar Borrowing shall be ineffective, and if any Borrowing Request requests a Eurodollar Borrowing, such Borrowing shall be made as an ABR Borrowing.

(b)    Notwithstanding anything to the contrary herein or in any other Loan Document, upon the occurrence of a Benchmark Transition Event or an Early Opt-in Election, as applicable, the Administrative Agent and the Borrower may amend this Agreement to replace the LIBO Rate with a Benchmark Replacement. Any such amendment with respect to a Benchmark Transition Event will become effective at 5:00 p.m. on the fifth (5th) Business Day after the Administrative Agent has posted such proposed amendment to all Lenders and the Borrower, so long as the Administrative Agent has not received, by such time, written notice of objection to such proposed amendment from Lenders comprising the Required Lenders; provided that, with respect to any proposed amendment containing any SOFR-Based Rate, the Required Lenders shall be entitled to object only to the Benchmark Replacement Adjustment contained therein. Any such amendment with respect to an Early Opt-in Election will become effective on the date that Lenders comprising the Required Lenders have delivered to the Administrative Agent written notice that such Required Lenders accept such amendment. No replacement of the LIBO Rate with a Benchmark Replacement pursuant to this Section 3.03 will occur prior to the applicable Benchmark Transition Start Date.

(c)    In connection with the implementation of a Benchmark Replacement, the Administrative Agent will have the right to make Benchmark Replacement Conforming Changes from time to time and, notwithstanding anything to the contrary herein or in any other Loan Document, any amendments implementing such Benchmark Replacement Conforming Changes will become effective without any further action or consent of any other party to this Agreement.

(d)    The Administrative Agent will promptly notify the Borrower and the Lenders of (i) any occurrence of a Benchmark Transition Event or an Early Opt-in Election, as applicable, (ii) the implementation of any Benchmark Replacement, (iii) the effectiveness of any Benchmark Replacement Conforming Changes and (iv) the commencement or conclusion of any Benchmark Unavailability Period. Any determination, decision or election that may be made by the Administrative Agent or Lenders pursuant to this Section 3.03, including any determination with respect to a tenor, rate or adjustment or of the occurrence or non-occurrence of an event, circumstance or date and any decision to take or refrain from taking any action, will be conclusive and binding absent manifest error and may be made in its or their sole discretion and without consent from any other party hereto, except, in each case, as expressly required pursuant to this Section 3.03.

(e)    Upon the Borrower’s receipt of notice of the commencement of a Benchmark Unavailability Period, (i) any Interest Election Request that requests the conversion of any Borrowing to, or continuation of any Borrowing as, a Eurodollar Borrowing shall be ineffective and (ii) if any Borrowing Request requests a Eurodollar Borrowing, such Borrowing shall be made as an ABR Borrowing.

Section 3.04    Prepayments.

(a)    Optional Prepayments. The Borrower shall have the right at any time and from time to time to prepay any Borrowing in whole or in part, subject to prior notice in accordance with Section 3.04(b).

(b)    Notice and Terms of Optional Prepayment. The Borrower shall notify the Administrative Agent by telephone (confirmed by facsimile) of any optional prepayment hereunder (i) in the case of prepayment of a Eurodollar Borrowing, not later than 12:00 noon, New York City time, three (3) Business Days before the date of prepayment, or (ii) in the case of prepayment of an ABR Borrowing,

 

58


not later than 12:00 noon, New York City time, one (1) Business Day before the date of prepayment. Each such notice shall specify the prepayment date and the principal amount of each Borrowing or portion thereof to be prepaid. Promptly following receipt of any such notice relating to a Borrowing, the Administrative Agent shall advise the Lenders of the contents thereof. Each such partial prepayment of any Borrowing shall be in an amount that would be permitted in the case of an advance of a Borrowing of the same Type as provided in Section 2.02. Each such prepayment of a Borrowing shall be applied ratably to the Loans included in the prepaid Borrowing and shall be accompanied by accrued interest to the extent required by Section 3.02.

(c)    Mandatory Prepayments.

(i)    Upon Optional Termination and Reduction. If, after giving effect to any termination or reduction in the Total Commitment pursuant to Section 2.06(b), the total Revolving Credit Exposures exceed the Loan Limit, then the Borrower shall prepay the Borrowings on the date of such termination or reduction in an aggregate principal amount equal to such excess, and if any excess remains after prepaying all of the Borrowings as a result of an LC Exposure, Cash Collateralize such excess as provided in Section 2.08(j).

(ii)    Upon Redeterminations and Title Related Borrowing Base Adjustments. If there is a Borrowing Base Deficiency (A) on any Redetermination Date as a result of any redetermination in accordance with Section 2.07 or (B) as a result of a Borrowing Base adjustment pursuant to Section 2.07(g), then upon such Redetermination Date or the occurrence of such Borrowing Base Adjustment (the “Deficiency Date”), the Borrower shall eliminate such Borrowing Base Deficiency in its entirety by electing (with written notice to the Administrative Agent) within ten (10) Business Days of the Deficiency Date to take one or more of the following actions (and if the Borrower fails to make an election within such ten (10) Business Day period, then Borrower shall be deemed to have selected the prepayment option specified in clause (C) below):

(A)    within thirty (30) days after such Deficiency Date, prepaying the Borrowings, and if any excess remains after prepaying all of the Borrowings as a result of an LC Exposure, Cash Collateralizing such excess as provided in Section 2.08(j);

(B)    within thirty (30) days after such Deficiency Date, adding additional Oil and Gas Properties of the Borrower and the other Credit Parties to the Reserve Report (and, if required under Section 8.14, mortgaging additional Oil and Gas Properties in compliance with the requirements of Section 8.14) that, in each case, are reasonably acceptable to the Administrative Agent and the Lenders and would result in an increase to the Borrowing Base (in an amount proposed by the Administrative Agent and approved by the Required Lenders) that is sufficient to eliminate such Borrowing Base Deficiency;

(C)    make five (5) equal monthly payments that collectively prepay the Borrowings plus accrued interest thereon until such Borrowing Base Deficiency (as it may be further increased or reduced during such five (5) month period) is reduced to zero (and if any excess remains after prepaying all of the Borrowings as a result of an LC Exposure, Cash Collateralize such excess as provided in Section 2.08(j)), with the first such payment being due and payable within thirty (30) days after such Deficiency Date, and each subsequent payment being due and payable on the same day in each of the subsequent calendar months; or

(D)    any combination of the foregoing;

 

59


provided that all payments required to be made pursuant to this Section 3.04(c)(ii) must be made on or prior to the Termination Date.

(iii)    Upon the Issuance of Specified Additional Indebtedness or Certain Asset Sales or Liquidations. If any Borrowing Base Deficiency occurs as the result of any adjustment to the Borrowing Base pursuant to Section 2.07(e) or Section 2.07(f), then the Borrower shall prepay the Borrowings in an aggregate principal amount equal to such Borrowing Base Deficiency and if any Borrowing Base Deficiency remains after prepaying all of the Borrowings as a result of an LC Exposure, Cash Collateralize such excess as provided in Section 2.08(j). The Borrower shall be obligated to make such prepayment and/or Cash Collateralize such excess on the Business Day after it receives the net cash proceeds from the transactions under Section 2.07(e) or Section 2.07(f); provided that all payments required to be made pursuant to this Section 3.04(c)(iii) must be made on or prior to the Termination Date.

(iv)    Upon the Occurrence and Continuation of a Borrowing Base Deficiency. In addition to the foregoing mandatory prepayments set forth in this Section 3.04(c), at any time that Specified Additional Indebtedness (other than Permitted Refinancing Indebtedness in respect thereof) shall be incurred or issued while a Borrowing Base Deficiency exists, the Borrower shall to the extent necessary to cure such Borrowing Base Deficiency (calculated after giving effect to the Borrowing Base adjustment required pursuant to Section 2.07(e) in connection with such Specified Additional Indebtedness), within one (1) Business Day of the incurrence or issuance of such Specified Additional Indebtedness, prepay the Loans in an aggregate amount equal to the lesser of (A) one hundred percent (100%) of the net cash proceeds received in respect of such Specified Additional Indebtedness and (B) the aggregate principal amount equal to (1) such Borrowing Base Deficiency and (2) if any Borrowing Base Deficiency remains after prepaying all of the Borrowings as a result of an LC Exposure, pay to the Administrative Agent on behalf of the Lenders an amount equal to such remaining Borrowing Base Deficiency to be held as cash collateral as provided in Section 2.08(j).

(v)    Consolidated Cash Balance. If, at the end of any Excess Cash Test Date, (A) Loans are outstanding and (B) the Consolidated Cash Balance as of the end of such Excess Cash Test Date exceeds the Excess Cash Threshold (an “Excess Cash Event”), then the Borrower shall prepay the Loans in an amount equal to such excess on the next Business Day after the occurrence of such Excess Cash Event, and if any excess remains after prepaying all of the Loans as a result of an LC Exposure, Cash Collateralize such excess as provided in Section 2.08(j); provided that all payments required to be made pursuant to this Section 3.04(c)(v) must be made on or prior to the Termination Date.

(vi)    Each prepayment of Borrowings pursuant to this Section 3.04(c) shall be applied, first, ratably to any ABR Borrowings then outstanding, and, second, to any Eurodollar Borrowings then outstanding, and if more than one Eurodollar Borrowing is then outstanding, to each such Eurodollar Borrowing in order of priority beginning with the Eurodollar Borrowing with the least number of days remaining in the Interest Period applicable thereto and ending with the Eurodollar Borrowing with the most number of days remaining in the Interest Period applicable thereto.

(vii)    Each prepayment of Borrowings pursuant to this Section 3.04(c) shall be applied ratably to the Loans included in the prepaid Borrowings. Prepayments pursuant to this Section 3.04(c) shall be accompanied by accrued interest to the extent required by Section 3.02.

(d)    No Premium or Penalty. All prepayments permitted or required under this Section 3.04 shall include breakage expense, if any, required under Section 5.02 (other than any such prepayment made pursuant to Section 3.04(c)(v)) and shall be without premium or penalty.

 

60


Section 3.05    Fees.

(a)    Commitment Fees. Except as otherwise provided in Section 4.05(a)(iii), the Borrower agrees to pay to the Administrative Agent for the account of each Lender a commitment fee, which shall accrue at the applicable Commitment Fee Rate on the average daily amount of the unused amount of the Commitment of such Lender during the period from and including the date of this Agreement to but excluding the Termination Date. Accrued commitment fees shall be payable in arrears on the last day of March, June, September and December of each year and on the Termination Date, commencing on the first such date to occur after the date hereof. All commitment fees shall be computed on the basis of a year of 360 days, unless such computation would exceed the Highest Lawful Rate, in which case interest shall be computed on the basis of a year of 365 days (or 366 days in a leap year), and shall be payable for the actual number of days elapsed (including the first day but excluding the last day).

(b)    Letter of Credit Fees. The Borrower agrees to pay to the Administrative Agent for the account of each Lender a participation fee with respect to its participations in Letters of Credit, which shall accrue at the same Applicable Margin used to determine the interest rate applicable to Eurodollar Loans on the average daily amount of such Lender’s LC Exposure (excluding any portion thereof attributable to unreimbursed LC Disbursements) during the period from and including the date of this Agreement to but excluding the later of the date on which such Lender’s Commitment terminates and the date on which such Lender ceases to have any LC Exposure. The Borrower also agrees to pay to the Issuing Bank, for its own account, (i) a fronting fee, which shall be payable at issuance of each Letter of Credit in an amount equal to 0.125% of the face amount of such Letter of Credit (which, for purposes of this clause (i), shall mean the maximum face amount of such Letter of Credit after giving effect to all provisions in such Letter of Credit providing for future automatic increases in the amount that may be drawn under such Letter of Credit) and (ii) the Issuing Bank’s standard fees with respect to the issuance, amendment, renewal or extension of any Letter of Credit or processing of drawings thereunder. Participation fees accrued through and including the last day of March, June, September and December of each year shall be payable on the third Business Day following such last day, commencing on the first such date to occur after the date of this Agreement; provided that all such fees shall be payable on the Termination Date and any such fees accruing after the Termination Date shall be payable on demand. Any other fees payable to the Issuing Bank pursuant to this Section 3.05(b) shall be payable within ten (10) days after demand. All participation fees shall be computed on the basis of a year of 360 days, unless such computation would exceed the Highest Lawful Rate, in which case interest shall be computed on the basis of a year of 365 days (or 366 days in a leap year), and shall be payable for the actual number of days elapsed (including the first day but excluding the last day).

(c)    Administrative Agent Fees. The Borrower agrees to pay to the Administrative Agent, for its own account, fees payable in the amounts and at the times separately agreed upon between the Borrower and the Administrative Agent in the Fee Letters.

ARTICLE IV

PAYMENTS; PRO RATA TREATMENT; SHARING OF SET-OFFS

Section 4.01    Payments Generally; Pro Rata Treatment; Sharing of Set-offs.

(a)    Payments by the Borrower. The Borrower shall make each payment required to be made by it hereunder (whether of principal, interest, fees or reimbursement of LC Disbursements, or of amounts payable under Section 5.01, Section 5.02, Section 5.03 or otherwise) prior to 12:00 noon, New York City time, on the date when due, in immediately available funds, without defense, deduction, recoupment, set-off or counterclaim. Fees, once paid, shall be fully earned and shall not be refundable under any circumstances, absent manifest error. Any amounts received after such time on any date may, in the discretion of the Administrative Agent, be deemed to have been received on the next succeeding Business Day for purposes of calculating interest thereon. All such payments shall be made to the

 

61


Administrative Agent at its offices specified in Section 12.01, except payments to be made directly to the Issuing Bank as expressly provided herein and except that payments pursuant to Section 5.01, Section 5.02, Section 5.03 and Section 12.03 shall be made directly to the Persons entitled thereto. The Administrative Agent shall distribute any such payments received by it for the account of any other Person to the appropriate recipient promptly following receipt thereof. If any payment hereunder shall be due on a day that is not a Business Day, the date for payment shall be extended to the next succeeding Business Day, and, in the case of any payment accruing interest, interest thereon shall be payable for the period of such extension. All payments hereunder shall be made in dollars.

(b)    Application of Insufficient Payments. If at any time insufficient funds are received by and available to the Administrative Agent to pay fully all amounts of principal, unreimbursed LC Disbursements, interest and fees then due hereunder, such funds shall be applied first, towards payment of interest and fees then due hereunder, ratably among the parties entitled thereto in accordance with the amounts of interest and fees then due to such parties, and second, towards payment of principal and unreimbursed LC Disbursements then due hereunder, ratably among the parties entitled thereto in accordance with the amounts of principal and unreimbursed LC Disbursements then due to such parties.

(c)    Sharing of Payments by Lenders. If any Lender shall, by exercising any right of set-off or counterclaim or otherwise, obtain payment in respect of any principal of or interest on any of its Loans or participations in LC Disbursements resulting in such Lender receiving payment of a greater proportion of the aggregate amount of its Loans and participations in LC Disbursements and accrued interest thereon than the proportion received by any other Lender, then the Lender receiving such greater proportion shall purchase (for cash at face value) participations in the Loans and participations in LC Disbursements of other Lenders to the extent necessary so that the benefit of all such payments shall be shared by the Lenders ratably in accordance with the aggregate amount of principal of and accrued interest on their respective Loans and participations in LC Disbursements; provided that (i) if any such participations are purchased and all or any portion of the payment giving rise thereto is recovered, such participations shall be rescinded and the purchase price restored to the extent of such recovery, without interest, and (ii) the provisions of this Section 4.01(c) shall not be construed to apply to any payment made by the Borrower pursuant to and in accordance with the express terms of this Agreement or any payment obtained by a Lender as consideration for the assignment of or sale of a participation in any of its Loans or participations in LC Disbursements to any assignee or participant, other than to the Parent Guarantor or any Restricted Subsidiary thereof (as to which the provisions of this Section 4.01(c) shall apply). The Borrower consents to the foregoing and agrees, to the extent it may effectively do so under applicable law, that any Lender acquiring a participation pursuant to the foregoing arrangements may exercise against the Borrower rights of 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 4.02    Presumption of Payment by the Borrower. Unless the Administrative Agent shall have received notice from the Borrower prior to the date on which any payment is due to the Administrative Agent for the account of the Lenders or the Issuing Bank that the Borrower will not make such payment, the Administrative Agent may assume that the Borrower has made such payment on such date in accordance herewith and may, in reliance upon such assumption, distribute to the Lenders or the Issuing Bank, as the case may be, the amount due. In such event, if the Borrower has not in fact made such payment, then each of the Lenders or the Issuing Bank, as the case may be, severally agrees to repay to the Administrative Agent forthwith on demand the amount so distributed to such Lender or Issuing Bank with interest thereon, for each day from and including the date such amount is distributed to it to but excluding the date of payment to the Administrative Agent, at the greater of the Federal Funds Effective Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation.

 

62


Section 4.03    Deductions by the Administrative Agent.

(a)    Certain Deductions by the Administrative Agent. If any Lender shall fail to make any payment required to be made by it pursuant to Section 2.05(b), Section 2.08(d), Section 2.08(e) or Section 4.02, or otherwise hereunder, then the Administrative Agent may, in its sole discretion (notwithstanding any contrary provision hereof), (i) apply any amounts thereafter received by the Administrative Agent for the account of such Lender to satisfy such Lender’s obligations under such Sections until all such unsatisfied obligations are fully paid or (ii) hold any such amounts in a segregated account as Cash Collateral for, and application to, any future funding obligations of such Lender hereunder, in the case of each of clauses (i) and (ii) above, in any order as determined by the Administrative Agent in its discretion.

(b)    Payments to Defaulting Lenders. If a Defaulting Lender (or a Lender who would be a Defaulting Lender but for the expiration of the relevant grace period) as a result of the exercise of a set-off shall have received a payment in respect of its Revolving Credit Exposure which results in its Revolving Credit Exposure being less than its Applicable Percentage of the aggregate Revolving Credit Exposures, then (i) all amounts so set off shall be paid over immediately to the Administrative Agent for further application in accordance with the provisions of Section 4.05 and, pending such payment, shall be segregated by such Defaulting Lender from its other funds and deemed held in trust for the benefit of the Administrative Agent and the Lenders, and (ii) no payments will be made to such Defaulting Lender until such time as such Defaulting Lender shall have complied with Section 4.05, and all amounts due and owing to the Lenders have been equalized in accordance with each Lender’s respective pro rata share of the Obligations. Further, if at any time prior to the acceleration or maturity of the Loans, the Administrative Agent shall receive any payment in respect of principal of a Loan or a reimbursement of an LC Disbursement while one or more Defaulting Lenders shall be party to this Agreement, the Administrative Agent shall apply such payment first to the Borrowing(s) for which such Defaulting Lender(s) shall have failed to fund its pro rata share until such time as such Borrowing(s) are paid in full or each Lender (including each Defaulting Lender) is owed its Applicable Percentage of all Loans then outstanding. After acceleration or maturity of the Loans, subject to the first sentence of this Section 4.03(b), all principal will be paid ratably as provided in Section 10.02(c).

Section 4.04    Collection of Proceeds of Production. The Security Instruments contain an assignment by the Borrower and/or the Guarantors to and in favor of the Administrative Agent for the benefit of the Secured Parties of all of the Borrower’s or each Guarantor’s interest in and to production and all proceeds attributable thereto which may be produced from or allocated to the Mortgaged Property. The Security Instruments further provide in general for the application of such proceeds to the satisfaction of the Obligations and other obligations described therein and secured thereby. Notwithstanding the assignment contained in such Security Instruments, unless an Event of Default has occurred and is continuing, the Administrative Agent and the Lenders will neither notify the purchaser or purchasers of such production nor take any other action to cause such proceeds to be remitted to the Administrative Agent, the Administrative Agent or the Lenders, but the Lenders will instead permit such proceeds to be paid to the Borrower and the other Credit Parties and the Lenders hereby authorize the Administrative Agent or the Administrative Agent to take such actions as may be necessary to cause such proceeds to be paid to the Borrower and the other Credit Parties.

 

63


Section 4.05    Defaulting Lenders.

(a)    Defaulting Lender Adjustments. Notwithstanding any provision of this Agreement to the contrary, if any Lender becomes a Defaulting Lender, then the following provisions shall apply for so long as such Lender is a Defaulting Lender, to the extent not prohibited by applicable law:

(i)    Waivers and Amendments. Such Defaulting Lender’s right to approve or disapprove any amendment, waiver or consent with respect to this Agreement shall be restricted as set forth in the definitions of Required Lenders and Majority Lenders and in Section 12.02(b).

(ii)    Defaulting Lender Waterfall. Any payment of principal, interest, fees or other amounts received by the Administrative Agent for the account of such Defaulting Lender (whether voluntary or mandatory, at maturity, pursuant to Article X or otherwise) or received by the Administrative Agent from a Defaulting Lender pursuant to Section 12.08 shall be applied at such time or times as may be determined by the Administrative Agent as follows: first, to the payment of any amounts owing by such Defaulting Lender to the Administrative Agent hereunder; second, to the payment on a pro rata basis of any amounts owing by such Defaulting Lender to any Issuing Bank hereunder; third, to Cash Collateralize LC Exposure with respect to such Defaulting Lender in accordance with this Section; fourth, as the Borrower may request (so long as no Default or Event of Default exists), to the funding of any Loan in respect of which such Defaulting Lender has failed to fund its portion thereof as required by this Agreement, as determined by the Administrative Agent; fifth, if so determined by the Administrative Agent and the Borrower, to be held in a deposit account and released pro rata in order to (x) satisfy such Defaulting Lender’s potential future funding obligations with respect to Loans under this Agreement and (y) Cash Collateralize future LC Exposure with respect to such Defaulting Lender with respect to future Letters of Credit issued under this Agreement, in accordance with this Section; sixth, to the payment of any amounts owing to the Lenders or the Issuing Banks as a result of any judgment of a court of competent jurisdiction obtained by any Lender or any Issuing Bank against such Defaulting Lender as a result of such Defaulting Lender’s breach of its obligations under this Agreement or under any other Loan Document; 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 or under any other Loan Document; and eighth, to such Defaulting Lender or as otherwise directed by a court of competent jurisdiction; provided that if (x) such payment is a payment of the principal amount of any Loans or LC Disbursements in respect of which such Defaulting Lender has not fully funded its appropriate share, and (y) such Loans were made or the related Letters of Credit were issued at a time when the conditions set forth in Section 6.02 were satisfied or waived, such payment shall be applied solely to pay the Loans of, and LC Disbursements owed to, all Non-Defaulting Lenders on a pro rata basis prior to being applied to the payment of any Loans of, or LC Disbursements owed to, such Defaulting Lender until such time as all Loans and funded and unfunded participations in the Borrower’s obligations corresponding to such Defaulting Lender’s LC Exposure are held by the Lenders pro rata in accordance with the Commitments without giving effect to clause (iv) below. 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 shall be deemed paid to and redirected by such Defaulting Lender, and each Lender irrevocably consents hereto.

(iii)    Certain Fees.

(A)    No Defaulting Lender shall be entitled to receive any commitment fee pursuant to Section 3.05(a) for any period during which that Lender is a Defaulting Lender (and the Borrower shall not be required to pay any such fee that otherwise would have been required to have been paid to that Defaulting Lender).

(B)    Each Defaulting Lender shall be entitled to receive Letter of Credit fees pursuant to Section 3.05(b) for any period during which that Lender is a Defaulting Lender only to the extent allocable to its Applicable Percentage of the stated amount of Letters of Credit for which it has provided Cash Collateral pursuant to Section 2.08(j).

 

64


(iv)    Reallocation of LC Exposure. if any LC Exposure exists at the time such Lender becomes a Defaulting Lender then:

(A)    all or any part of the LC Exposure of such Defaulting Lender shall be reallocated among the Non-Defaulting Lenders in accordance with their respective Applicable Percentages but only to the extent that such reallocation does not, as to any Non-Defaulting Lender, cause such Non-Defaulting Lender’s Revolving Credit Exposure to exceed its Commitment;

(B)    if the reallocation described in clause (A) above cannot, or can only partially, be effected, within one (1) Business Day following the written request of the Administrative Agent, the Borrower shall, without prejudice to any right or remedy available to it hereunder or under law, Cash Collateralize for the benefit of the Issuing Banks only the Borrower’s obligations corresponding to such Defaulting Lender’s LC Exposure (after giving effect to any partial reallocation pursuant to clause (A) above) in accordance with the procedures set forth in Section 2.08(j);

(C)    if the Borrower Cash Collateralizes any portion of such Defaulting Lender’s LC Exposure pursuant to clause (B) above, the Borrower shall not be required to pay any fees to such Defaulting Lender pursuant to Section 3.05(b) with respect to such Defaulting Lender’s LC Exposure during the period such Defaulting Lender’s LC Exposure is Cash Collateralized;

(D)    if the LC Exposure of the Non-Defaulting Lenders is reallocated pursuant to clause (A) above, then the fees payable to the Lenders pursuant to Section 3.05(a) and Section 3.05(b) shall be adjusted in accordance with such Non-Defaulting Lenders’ Applicable Percentages; and

(E)    if all or any portion of such Defaulting Lender’s LC Exposure is neither reallocated nor Cash Collateralized pursuant to clause (A) or (B) above, then, without prejudice to any rights or remedies of any Issuing Bank or any other Lender hereunder, all fees payable under Section 3.05(a) that otherwise would have been payable to such Defaulting Lender (solely with respect to the portion of such Defaulting Lender’s Commitment that was utilized by such LC Exposure) and payable under Section 3.05(b) with respect to such Defaulting Lender’s LC Exposure shall be payable to the Issuing Banks until and to the extent that such LC Exposure is reallocated and/or Cash Collateralized.

(b)    Defaulting Lender Cure. If the Borrower, the Administrative Agent and Issuing Bank agree in writing that a Lender is no longer a Defaulting Lender, the Administrative Agent will so notify the parties hereto, whereupon as of the effective date specified in such notice and subject to any conditions set forth therein, that Lender will, to the extent applicable, purchase at par that portion of outstanding Loans of the other Lenders or take such other actions as the Administrative Agent may determine to be necessary to cause the Loans and funded and unfunded participations in Letters of Credit to be held pro rata by the Lenders in accordance with the Commitments (without giving effect to Section 4.05(a)(iv)), whereupon such Lender will cease to be a Defaulting Lender; provided that no adjustments will be made retroactively with respect to fees accrued or payments made by or on behalf of the Borrower while that Lender was a Defaulting Lender; and provided, further, that except to the extent otherwise expressly agreed by the affected parties, no change hereunder from Defaulting Lender to Lender will constitute a waiver or release of any claim of any party hereunder arising from that Lender’s having been a Defaulting Lender.

(c)    New Letters of Credit. If (i) a Bankruptcy Event or a Bail-In Action with respect to a Lender Parent shall occur following the date hereof and for so long as such event shall continue or (ii) any Issuing Bank has a good faith belief that any Lender is a Defaulting Lender, no Issuing Bank shall be required to issue, amend or increase any Letter of Credit, unless it is satisfied that the related exposure and the Defaulting Lender’s then outstanding LC Exposure will be 100% covered by the Commitments of the

 

65


Non-Defaulting Lenders and/or Cash Collateral will be provided by the Borrower in accordance with Section 4.05(a)(iv), and LC Exposure related to any newly issued or increased Letter of Credit shall be allocated among Non-Defaulting Lenders in a manner consistent with Section 4.05(a)(iv)(A) (and such Defaulting Lender shall not participate therein).

ARTICLE V

INCREASED COSTS; BREAK FUNDING PAYMENTS; TAXES; ILLEGALITY

Section 5.01    Increased Costs.

(a)    Changes in Law. 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 by, any Lender (except any such reserve requirement reflected in the Adjusted LIBO Rate) or Issuing Bank; or

(ii)    subject any Recipient to any Taxes (other than (A) Indemnified Taxes, (B) Taxes described in clauses (b) through (d) of the definition of Excluded Taxes and (C) Connection Income Taxes) on its Loans, Loan principal, Commitments, Letters of Credit or other obligations, or its deposits, reserves, other liabilities or capital attributable thereto; or

(iii)    impose on any Lender or Issuing Bank or the London interbank market any other condition, cost or expense (other than Taxes) affecting this Agreement or Loans made by such Lender or any Letter of Credit or participation therein;

and the result of any of the foregoing shall be to increase the cost to such Lender or such other Recipient of making, continuing, converting or maintaining any Loan (or of maintaining its obligation to make any such Loan) or to increase the cost to such Lender, such Issuing Bank or such other Recipient of participating in, issuing or maintaining any Letter of Credit or to reduce the amount of any sum received or receivable by such Lender, such Issuing Bank or such other Recipient hereunder (whether of principal, interest or otherwise), then the Borrower will pay to such Lender, such Issuing Bank or such other Recipient, as the case may be, such additional amount or amounts as will compensate such Lender, such Issuing Bank or such other Recipient, as the case may be, for such additional costs incurred or reduction suffered.

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

(c)    Certificates. A certificate of a Lender or the Issuing Bank setting forth, in reasonable detail, the amount or amounts necessary to compensate such Lender or the Issuing Bank or its holding company, as the case may be, as specified in Section 4.01(a) or (b) shall be delivered to the Borrower and shall be conclusive absent manifest error. The Borrower shall pay such Lender or the Issuing Bank, as the case may be, the amount shown as due on any such certificate within ten (10) days after receipt thereof.

 

66


(d)    Effect of Failure or Delay in Requesting Compensation. Failure or delay on the part of any Lender or the Issuing Bank to demand compensation pursuant to this Section 5.01 shall not constitute a waiver of such Lender’s or the Issuing Bank’s right to demand such compensation; provided that the Borrower shall not be required to compensate a Lender or the Issuing Bank pursuant to this Section 5.01 for any increased costs or reductions incurred more than 270 days prior to the date that such Lender or the Issuing Bank, as the case may be, notifies the Borrower of the Change in Law giving rise to such increased costs or reductions and of such Lender’s or the Issuing Bank’s intention to claim compensation therefor; provided, further, that if the Change in Law giving rise to such increased costs or reductions is retroactive, then the 270-day period referred to above shall be extended to include the period of retroactive effect thereof.

Section 5.02    Break Funding Payments. In the event of (a) the payment of any principal of any Eurodollar Loan other than on the last day of an Interest Period applicable thereto (including as a result of an Event of Default but excluding any prepayment of Loans under Section 3.04(c)(v)), (b) the conversion of any Eurodollar Loan into an ABR Loan other than on the last day of the Interest Period applicable thereto, (c) the failure to borrow, convert or continue any Eurodollar Loan on the date specified in any notice delivered pursuant hereto, or (d) the assignment of any Eurodollar Loan other than on the last day of the Interest Period applicable thereto as a result of a request by the Borrower pursuant to Section 5.05, then, in any such event, the Borrower shall compensate each Lender for the loss, cost and expense attributable to such event. In the case of a Eurodollar Loan, such loss, cost or expense to any Lender shall be deemed to be the excess, if any, of (x) the amount of interest which would have accrued on the principal amount of such Loan had such event not occurred, at the Adjusted LIBO Rate that would have been applicable to such Loan, for the period from the date of such event to the last day of the then current Interest Period therefor (or, in the case of a failure to borrow, convert or continue, for the period that would have been the Interest Period for such Loan), over (y) the amount of interest which would accrue on such principal amount for such period at the interest rate which such Lender would bid were it to bid, at the commencement of such period, for dollar deposits of a comparable amount and period from other banks in the eurodollar market.

A certificate of any Lender setting forth any amount or amounts that such Lender is entitled to receive pursuant to this Section 5.02 shall be delivered to the Borrower and shall be conclusive absent manifest error. The Borrower shall pay such Lender the amount shown as due on any such certificate within ten (10) days after receipt thereof.

Section 5.03    Taxes.

(a)    Issuing Bank. For purposes of this Section 5.03, the term “Lender” includes Issuing Bank and the term “applicable law” includes FATCA.

(b)    Payments Free of Taxes. Any and all payments by or on account of any obligation of the Borrower or any Guarantor under any Loan Document shall be made free and clear of and without deduction for any Indemnified Taxes, except as otherwise required by applicable law. If an applicable Withholding Agent shall be required to deduct or withhold any Indemnified Taxes from such payments under applicable law (as determined in the good faith of an applicable Withholding Agent), then (i) the sum payable shall be increased as necessary so that after making any required deductions or withholding of Indemnified Taxes (including deductions applicable to additional sums payable under this Section 5.03(b)), the Administrative Agent, any Lender or Issuing Bank (as the case may be) receives an amount equal to the sum it would have received had no such deduction or withholding been made, (ii) the Borrower or such

 

67


Guarantor (or other applicable Withholding Agent) shall make such deductions or withholding and (iii) the Borrower or such Guarantor (or other applicable Withholding Agent) shall pay the full amount deducted or withheld to the relevant Governmental Authority in accordance with applicable law.

(c)    Payment of Other Taxes by the Borrower. The Borrower shall timely pay any Other Taxes to the relevant Governmental Authority in accordance with applicable law, or at the option of the Administrative Agent, timely reimburse it for the payment of, any Other Taxes that have been paid by the Administrative Agent.

(d)    Indemnification by the Borrower. The Borrower shall indemnify each Recipient, within thirty (30) days after demand therefor, for the full amount of any Indemnified Taxes paid or payable by such Recipient, or required to be withheld or deducted from a payment to such Recipient, on or with respect to any payment by or on account of any obligation of the Borrower hereunder (including Indemnified Taxes imposed or asserted on or attributable to amounts payable under this Section 5.03, but without duplication of any amount indemnified or paid under any provisions of this Agreement) and any reasonable expenses arising therefrom or with respect thereto, in each case, other than any interest, additions to tax or penalties resulting from the bad faith or willful misconduct of any Recipient. A certificate of the Administrative Agent, a Lender or the Issuing Bank as to the amount of such payment or liability, and setting forth in reasonable detail the basis for such Indemnified Taxes, delivered to the Borrower by a Lender or the Issuing Bank (with a copy to the Administrative Agent) or by the Administrative Agent on its own behalf or on behalf of a Lender or the Issuing Bank, shall be conclusive absent manifest error.

(e)    Indemnification by the Lenders. Each Lender shall severally indemnify the Administrative Agent, within ten (10) days after demand therefor, for (i) any Indemnified Taxes attributable to such Lender (but only to the extent that the Borrower has not already indemnified the Administrative Agent for such Indemnified Taxes and without limiting the obligation of the Borrower to do so), (ii) any Taxes attributable to such Lender’s failure to comply with the provisions of Section 12.04 relating to the maintenance of a Participant Register and (iii) any Excluded Taxes attributable to such Lender, in each case, that are payable or paid by the Administrative Agent in connection with any Loan Document, and any reasonable expenses arising therefrom or with respect thereto, whether or not such Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate as to the amount of such payment or liability delivered to any Lender by the Administrative Agent shall be conclusive absent manifest error. Each Lender hereby authorizes the Administrative Agent to set off and apply any and all amounts at any time owing to such Lender under any Loan Document or otherwise payable by the Administrative Agent to the Lender from any other source against any amount due to the Administrative Agent under this paragraph (e).

(f)    Evidence of Payments. As soon as practicable after any payment of Indemnified Taxes by the Borrower or a Guarantor to a Governmental Authority, the Borrower or Guarantor shall deliver to the Administrative Agent the original or a certified copy of a receipt issued by such Governmental Authority evidencing such payment, a copy of the return reporting such payment or other evidence of such payment reasonably satisfactory to the Administrative Agent.

(g)    Status of Lenders.

(i)    Any Lender that is entitled to an exemption from or reduction of withholding Tax under the law of the jurisdiction in which the Borrower is located, or any treaty to which such jurisdiction is a party, or otherwise, with respect to payments under this Agreement or any other Loan Document shall deliver to the Borrower and the Administrative Agent, at the time or times reasonably requested by Borrower or the Administrative Agent, such properly completed and executed documentation reasonably requested by the Borrower or the Administrative Agent as will permit such payments to be made

 

68


without withholding or at a reduced rate. In addition, any Lender, if reasonably requested by the Borrower or the Administrative Agent, shall deliver such other documentation prescribed by applicable law or reasonably requested by the Borrower or the Administrative Agent as will enable the Borrower or the Administrative Agent to determine whether or not such Lender is subject to backup withholding or information reporting requirements. Notwithstanding anything to the contrary in the preceding two sentences, the completion, execution, and submission of such documentation (other than such documentation set forth in Section 5.03(g)(ii)(A), (ii)(B), or (ii)(D) below) shall not be required if in the Lender’s reasonable judgment such completion, execution or submission would subject such Lender to any material unreimbursed cost or expense or would materially prejudice the legal or commercial position of such Lender. For purposes of this Section 5.03(g), the term “Lender” or “Foreign Lender,” as the case may be, shall include the Administrative Agent.

(ii)    Without limiting the generality of the foregoing:

(A)    any Lender that is a U.S. Person shall deliver to the Borrower and the Administrative Agent on or prior to the date on which such Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of the Borrower or the Administrative Agent), executed copies of Internal Revenue Service Form W-9 certifying that such Lender is exempt from U.S. federal backup withholding tax;

(B)    any Foreign Lender shall, to the extent it is legally entitled to do so, deliver to the Borrower and the Administrative Agent (in such number of copies as shall be requested by the recipient) on or prior to the date on which such Foreign Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of the Borrower or the Administrative Agent), whichever of the following is applicable:

(1)    in the case of a Foreign Lender claiming the benefits of an income tax treaty to which the United States is a party, duly completed copies of Internal Revenue Service Form W-8BEN or W-8BEN-E, as applicable, claiming eligibility for benefits of an income tax treaty to which the United States is a party,

(2)    duly completed copies of Internal Revenue Service Form W-8ECI,

(3)    in the case of a Foreign Lender claiming the benefits of the exemption for portfolio interest under section 881(c) of the Code, (x) a certificate substantially in the form of Exhibit G-1 to the effect that such Foreign Lender is not a “bank” within the meaning of section 881(c)(3)(A) of the Code, a “10 percent shareholder” of the Borrower within the meaning of section 881(c)(3)(B) of the Code, or a “controlled foreign corporation” described in section 881(c)(3)(C) of the Code (a “U.S. Tax Compliance Certificate”) and (y) duly completed copies of Internal Revenue Service Form W-8BEN or W-8BEN-E, as applicable;

(4)    to the extent a Foreign Lender is not the beneficial owner, executed copies of Internal Revenue Service Form W-8IMY, accompanied by Internal Revenue Service Form W-8ECI, Internal Revenue Service Form W-8BEN or W-8BEN-E, as applicable, a U.S. Tax Compliance Certificate substantially in the form of Exhibit G-2 or Exhibit G-3, Internal Revenue Service Form W-9, and/or other certification documents from each beneficial owner, as applicable; provided that if the Foreign Lender is a partnership and one or more direct or indirect partners of such Foreign Lender are claiming the portfolio interest exemption, such Foreign Lender may provide a U.S. Tax Compliance Certificate substantially in the form of Exhibit G-4 on behalf of each such direct and indirect partner; or

 

69


(C)    any Foreign Lender shall, to the extent it is legally entitled to do so, deliver to the Borrower and the Administrative Agent (in such number of copies as shall be requested by the recipient) on or prior to the date on which such Foreign Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of the Borrower or the Administrative Agent), executed copies of any other form prescribed by applicable law as a basis for claiming exemption from or a reduction in U.S. Federal withholding Tax duly completed together with such supplementary documentation as may be prescribed by applicable law to permit the Borrower or the Administrative Agent to determine the withholding or deduction required to be made; and

(D)    if a payment made to a Lender under any Loan Document would be subject to U.S. Federal withholding Tax imposed by FATCA if such Lender were to fail to comply with the applicable reporting requirements of FATCA (including those contained in Section 1471(b) or 1472(b) of the Code, as applicable), such Lender shall deliver to the Borrower and 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 Borrower and the Administrative Agent to comply with its obligations under FATCA and to determine that such Lender has complied with such Lender’s obligations under FATCA or to determine the amount to deduct and withhold from such payment. Solely for purposes of this clause (D), “FATCA” shall include any amendments made to FATCA after the date of this Agreement.

Each Lender agrees that if any form or certification it previously delivered expires or becomes obsolete or inaccurate in any respect, it shall update such form or certification or promptly notify the Borrower and the Administrative Agent in writing of its legal inability to do so.

(h)    Treatment of Certain Refunds. If the Administrative Agent, a Lender or the Issuing Bank determines, that it has received a refund of any Indemnified Taxes as to which it has been indemnified by the Borrower or with respect to which the Borrower has paid additional amounts pursuant to this Section 5.03, it shall pay 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 5.03 with respect to the Indemnified Taxes giving rise to such refund), net of all out-of-pocket expenses of the Administrative Agent, such Lender or the Issuing Bank, as the case may be, and without interest (other than any interest paid by the relevant Governmental Authority with respect to such refund). Such indemnifying party, upon the request of such indemnified party, shall repay to such indemnified party the amount paid over pursuant to this clause (h) (plus any penalties, interest or other charges imposed by the relevant Governmental Authority) in the event that such indemnified party is required to repay such refund to such Governmental Authority. Notwithstanding anything to the contrary in this clause (h), in no event will the indemnified party be required to pay any amount to the Borrower pursuant to this clause (h) to the extent such payment would place the indemnified party in a less favorable net after-Tax position than the indemnified party would have been in if the Tax subject to indemnification and giving rise to such refund had not been deducted, withheld or otherwise imposed and the indemnification payments or additional amounts with respect to such Tax had never been paid. This paragraph shall not be construed to require any indemnified party to make available its Tax returns (or any other information relating to its Taxes that it deems confidential) to the Borrower or any other Person.

(i)    Survival. Each party’s obligations under this Section 5.03 shall survive the resignation or replacement of the Administrative Agent or any assignment of rights by, or the replacement of, a Lender, the termination of the Commitments and the repayment, satisfaction or discharge of all obligations under any Loan Document.

 

70


Section 5.04     Mitigation Obligations; Designation of Different Lending Office. If any Lender requests compensation under Section 5.01, or if the Borrower is required to pay any Indemnified Taxes or additional amount to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 5.03, then such Lender shall (at the request of Borrower) use reasonable efforts to designate a different lending office for funding or booking its Loans hereunder or to assign its rights and obligations hereunder to another of its offices, branches or affiliates, if, in the judgment of such Lender, such designation or assignment would eliminate or reduce amounts payable pursuant to Section 5.01 or Section 5.03, as the case may be, in the future and 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.

Section 5.05     Replacement of Lenders. If (a) any Lender requests compensation under Section 5.01, (b) the Borrower is required to pay any Indemnified Taxes or additional amounts to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 5.03, and such Lender has not prevented such required payment by designating a different lending office in accordance with Section 5.04, (c) any Lender is a Defaulting Lender, (d) any Lender fails to consent to a Borrowing Base increase or an election, consent, approval, amendment, waiver or other modification to this Agreement or any other Loan Document that requires the consent of all Lenders or of all Lenders affected thereby, and such Borrowing Base increase, election, consent, amendment, waiver or other modification is otherwise consented to by the Required Lenders, or (e) any Lender has given notice pursuant to Section 5.06 that it is unable to make or maintain Eurodollar Loans but Lenders constituting Majority Lenders have not given such notice, 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 Section 12.04(b)), all its interests, rights (other than its existing rights to payments pursuant to Section 5.01 or Section 5.03) and obligations under this Agreement and the other Loan Documents to an assignee that shall assume such obligations (which assignee may be another Lender, if a Lender accepts such assignment); provided that (i) the Borrower shall have paid to the Administrative Agent the assignment fee specified in Section 12.04(b)(ii)(C), (ii) if such assignee is not already a Lender, the Borrower shall have received the prior written consent of the Administrative Agent and the Issuing Bank, which consent shall not unreasonably be withheld, (iii) such assigning Lender shall have received payment of an amount equal to the outstanding principal of its Loans and participations in LC Disbursements, accrued interest thereon, accrued fees and all other amounts payable to it hereunder and under the other Loan Documents (including any amounts under Section 5.02), from the assignee (to the extent of such outstanding principal and accrued interest and fees) or the Borrower (in the case of all other amounts), (iv) in the case of any such assignment resulting from a claim for compensation under Section 5.01 or payments required to be made pursuant to Section 5.03, such assignment will result in a reduction in such compensation or payments, (v) such assignment does not conflict with applicable law; and (vi) in the case of any assignment resulting from a Lender not consenting to a Borrowing Base increase or an election, consent, approval, amendment, waiver or other modification as described in clause (d) above, the applicable assignee shall have consented to the applicable Borrowing Base increase, election, consent, approval, amendment, waiver or other modification. A Lender shall not be required to make any such assignment and delegation if, prior thereto, as a result of a waiver by such Lender or otherwise, the circumstances entitling the Borrower to require such assignment and delegation cease to apply. Each party hereto agrees that (x) an assignment required pursuant to this paragraph may be effected pursuant to an Assignment and Assumption executed by the Borrower, the Administrative Agent and the assignee (or, to the extent applicable, an agreement incorporating an Assignment and Assumption by reference pursuant to an Approved Electronic Platform as to which the Administrative Agent and such parties are participants) and (y) the Lender required to make such assignment need not be a party thereto in order for such assignment to be effective and shall be deemed to have consented to an be bound by the terms thereof; provided that, following the effectiveness of any such assignment, the other parties to such assignment

 

71


agree to execute and deliver such documents necessary to evidence such assignment as reasonably requested by the applicable Lender; provided that any such documents shall be without recourse to or warranty by the parties thereto.

Section 5.06     Illegality. Notwithstanding any other provision of this Agreement, in the event that it becomes unlawful for any Lender or its applicable lending office to honor its obligation to make or maintain Eurodollar Loans either generally or having a particular Interest Period hereunder, then (a) such Lender shall promptly notify the Borrower and the Administrative Agent thereof and such Lender’s obligation to make such Eurodollar Loans shall be suspended (the “Affected Loans”) until such time as such Lender may again make and maintain such Eurodollar Loans and (b) all Affected Loans which would otherwise be made by such Lender shall be made instead as ABR Loans (and, if such Lender so requests by notice to the Borrower and the Administrative Agent, all Affected Loans of such Lender then outstanding shall be automatically converted into ABR Loans on the date specified by such Lender in such notice) and, to the extent that Affected Loans are so made as (or converted into) ABR Loans, all payments of principal which would otherwise be applied to such Lender’s Affected Loans shall be applied instead to its ABR Loans.

ARTICLE VI

CONDITIONS PRECEDENT

Section 6.01     Effective Date. The rights and obligations under this Agreement (including the obligations of the Lenders to make Loans and of the Issuing Banks to issue Letters of Credit hereunder) shall not become effective until the date on which each of the following conditions has been satisfied (or waived in accordance with Section 12.02):

(a)     The Administrative Agent, the Arrangers and the Lenders shall have received all commitment and agency fees and all other fees and amounts due and payable on or prior to the Effective Date, including, without duplication, (i) fees payable pursuant to Section 3.05(c), (ii) fees payable pursuant to the Fee Letters and (iii) to the extent invoiced at least two (2) Business Days prior to the Effective Date, reimbursement or payment of all out-of-pocket expenses required to be reimbursed or paid by the Borrower hereunder (including the fees and expenses of Simpson Thacher & Bartlett LLP, counsel to the Administrative Agent).

(b)     The Administrative Agent shall have received a certificate of the Secretary, Assistant Secretary or a Responsible Officer of the Borrower and each Guarantor setting forth (i) resolutions of the members, board of directors or other appropriate governing body with respect to the authorization of the Borrower or such Guarantor to execute and deliver the Loan Documents to which it is a party and to enter into the transactions contemplated in those documents, (ii) the officers of the Borrower or such Guarantor who are authorized to sign the Loan Documents to which the Borrower or such Guarantor is a party and who will, until replaced by another officer or officers duly authorized for that purpose, act as its representative for the purposes of signing documents and giving notices and other communications in connection with this Agreement and the transactions contemplated hereby, (iii) specimen signatures of such authorized officers, and (iv) the limited liability company agreement, the articles or certificate of incorporation and bylaws (or comparable organizational documents) of the Borrower and such Guarantor, certified as being true and complete. The Administrative Agent and the Lenders may conclusively rely on such certificate until the Administrative Agent receives notice in writing from the Borrower to the contrary.

(c)     The Administrative Agent shall have received certificates of the appropriate State agencies from the jurisdiction of organization of each Credit Party with respect to the existence and good standing of the Borrower and each other Credit Party.

 

72


(d)     On the Effective Date, the representations and warranties of Parent Guarantor, the Borrower and the other Credit Parties contained in Article VII shall be true and correct in all material respects, except that (i) in the case of any representation or warranty which expressly relates to a given date or period, such representation or warranty shall be true and correct in all material respects as of the respective date or for the respective period, as the case may be and (ii) to the extent that any representation or warranty is qualified by or subject to a “material adverse effect”, “material adverse change” or similar term or qualification, the same shall be true and correct in all respects.

(e)     The Administrative Agent shall have received from each party hereto counterparts (in such number as may be requested by the Administrative Agent) of this Agreement signed on behalf of such party.

(f)     The Administrative Agent shall have received a duly executed Note payable to each Lender that has requested a Note at least two (2) Business Days before the Effective Date in a principal amount equal to its Commitment dated as of the date hereof.

(g)     The Administrative Agent shall have received from each party thereto duly executed counterparts (in such number as may be requested by the Administrative Agent) of the Security Instruments described on Exhibit E. Subject to Section 8.21(a), in connection with the execution and delivery of the Security Instruments, the Administrative Agent shall be reasonably satisfied that (i) the Liens under the Security Instruments will, upon the recording of the Security Instruments, be first priority (subject to Permitted Liens), perfected Liens on all other Property purported to be pledged as Collateral pursuant to the Security Instruments (including all of the Equity Interests in the Borrower and each Restricted Subsidiary that are owned by a Credit Party (and to the extent any such Equity Interests are certificated, the Parent Guarantor shall also have caused the applicable Credit Party to deliver to the Administrative Agent the original stock certificates evidencing such Equity Interests together with an appropriate undated stock power for each certificate duly executed in blank by the registered owner thereof)) and (ii) upon recording the Security Instruments, in the appropriate filing offices, it shall have a first priority Lien (subject to Permitted Liens) on at least ninety percent (90%) of the PV-9 of the Borrowing Base Properties; provided that, notwithstanding anything to the contrary in this clause (g), with respect to all Collateral constituting personal property, the Credit Parties shall not be required to take any action to perfect a Lien on any such assets unless such perfection may be accomplished by (A) the filing of a UCC-1 financing statement or other equivalent filing, (B) delivery of any certificates representing any Equity Interests constituting Collateral, in each case, with appropriate endorsements or transfer powers, or (C) subject to Section 8.21(a), granting the Administrative Agent control (within the meaning of the UCC) over Deposit Accounts, Commodity Accounts and Securities Accounts (other than Excluded Accounts).

(h)     The Administrative Agent shall have received satisfactory evidence that the Borrower has made (or will, concurrently with the occurrence of the Effective Date, make) a cash payment to the Lenders, in an amount not less than $330,000,000, with cash on hand (other than proceeds of any Borrowing of Loans).

(i)     The Administrative Agent shall have received an opinion of (i) Kirkland & Ellis LLP, special New York counsel to the Borrower and the Guarantors and (ii) local counsel to the Borrower and the Guarantors in the States of North Dakota, Colorado and Montana and the province of British Columbia, in each case in form and substance reasonably satisfactory to the Administrative Agent.

(j)     The Administrative Agent shall have received a certificate of insurance coverage of the Borrower and the other Credit Parties evidencing that the Borrower and the other Credit Parties are carrying insurance in accordance with Section 7.12; provided that subject to the Borrower and the other Credit Parties using commercially reasonable efforts to deliver the applicable insurance certificates and/or endorsements referenced therein by the Effective Date, if such certificates and/or

 

73


endorsements have not been delivered on or prior to the Effective Date, the delivery of such certificates and/or endorsements shall not be a condition to the occurrence of the Effective Date and shall instead be required to be delivered pursuant to Section 8.21(b).

(k)     The Administrative Agent shall have received a solvency certificate (giving pro forma effect to the Transactions contemplated to occur on the Effective Date) substantially in the form of Exhibit J and signed by a Financial Officer.

(l)     The Administrative Agent shall have received a Perfection Certificate, dated as of the Effective Date, signed by a Financial Officer.

(m)     The Administrative Agent shall have received (i) a reasonably satisfactory Initial Reserve Report (it being agreed that the reserve report as of May 30, 2020 previously provided by the Borrower to the Administrative Agent is reasonably satisfactory) and (ii) lease operating statements and production reports with respect to the Borrowing Base Properties evaluated in the Initial Reserve Report for the fiscal year ended December 31, 2019 and for each fiscal quarter ending thereafter ending at least 45 days prior to the Effective Date, which shall be in form and substance reasonably satisfactory to the Administrative Agent.

(n)     The Administrative Agent shall have received title information in form and substance acceptable to it covering not less than 90% of the total PV-9 of the Borrowing Base Properties evaluated in the Initial Reserve Report.

(o)     The Administrative Agent shall have received appropriate customary UCC, tax and judgment searches with respect to the Credit Parties reflecting no prior Liens encumbering the Properties of the Borrower and the other Credit Parties for the State of Delaware and any other jurisdiction reasonably requested by the Administrative Agent, other than those being released on or prior to the Effective Date or Permitted Liens.

(p)     The Administrative Agent shall have received evidence reasonably satisfactory to it that (i) all loans and other obligations under, and the agreements in respect of, the Pre-Petition Credit Agreement are being repaid or otherwise satisfied in full and terminated in a manner consistent with the Plan of Reorganization, other than Existing Letters of Credit deemed issued under this Agreement on the Effective Date and (ii) the Liens securing the obligations under the Pre-Petition Credit Agreement are being released substantially contemporaneously with the occurrence of the Effective Date. After giving effect to the Transactions, the Parent Guarantor and its Subsidiaries shall have no Indebtedness outstanding other than (A) the Obligations and (B) any other Indebtedness permitted by Section 9.02 (other than Section 9.02(f)). The Administrative Agent shall have received evidence reasonably satisfactory to it that all Liens on the assets of the Parent Guarantor and its Subsidiaries (other than Permitted Liens) have been (or will be concurrently with the initial funding of Loans under this Agreement on the Effective Date) released or terminated and that duly executed recordable releases and terminations in forms reasonably acceptable to the Administrative Agent with respect thereto have been obtained by the Parent Guarantor or its Subsidiaries, as applicable.

(q)     The Administrative Agent shall have received a certificate of a Responsible Officer of the Parent Guarantor certifying the absence of any action, suit, investigation or proceeding pending or threatened in any court or before any arbitrator or governmental authority that would reasonably be expected to have a material adverse effect on the consummation of the Plan of Reorganization.

 

74


(r)     The Administrative Agent and each Lender who has requested the same shall have received, at least three (3) Business Days prior to the Effective Date, (i) all documentation and other information regarding the Borrower in connection with applicable “know your customer” and anti-money laundering rules and regulations, including the USA PATRIOT Act, and (ii) to the extent the Borrower qualifies as a “legal entity customer” under the Beneficial Ownership Regulation, a Beneficial Ownership Certification in a form reasonably satisfactory to the Administrative Agent and each requesting Lender, in the case of clauses (i) and (ii), to the extent reasonably requested in writing at least eight (8) Business Days prior to the Effective Date (provided that, upon the execution and delivery by such Lender of its signature page to this Agreement, the condition set forth in this clause (r) shall be deemed to be satisfied).

(s)     The Administrative Agent shall be reasonably satisfied that, after giving pro forma effect to the Transactions that will occur on the Effective Date (including the initial Borrowings hereunder), the Consolidated Net Leverage Ratio as of the Effective Date shall be less than or equal to 2.0 to 1.0; provided that for purposes of this Section 6.01(s) only, clause (b) of the definition of “Consolidated Net Leverage Ratio” shall mean “Effective Date EBITDAX”.

(t)     The (i) terms of the Plan of Reorganization shall be reasonably satisfactory to the Administrative Agent and the Required Lenders (it being understood that the Plan of Reorganization attached hereto as Exhibit L is reasonably satisfactory to the Administrative Agent and the Required Lenders) and (ii) the Bankruptcy Court shall have entered the Confirmation Order approving the Plan of Reorganization, which such order shall be reasonably satisfactory to the Administrative Agent and the Required Lenders, and such order shall have become a final order of the Bankruptcy Court (unless waived in writing (which may be via e-mail) by the Administrative Agent and the Required Lenders) and shall not have been stayed, reversed, vacated, amended, supplemented or otherwise modified in any manner that would reasonably be expected to adversely affect the interests of the Arrangers, the Administrative Agent or the Lenders or the treatment contemplated by the Plan of Reorganization to the Pre-Petition RBL Lenders.

(u)     An order of the Bankruptcy Court (which can include the Confirmation Order), in form and substance reasonably satisfactory to the Administrative Agent, shall have been entered approving that certain Commitment Letter, dated as of July 18, 2020, among the Parent Guarantor, the Borrower and JPMorgan Chase Bank, N.A. and the Fee Letters (including the fees set forth in the Fee Letters and specifically providing for the right to receive all amounts due and owing, including indemnification obligations, the fees and other payments as set forth therein, and reimbursement of all reasonable costs and expenses incurred in connection with the transactions contemplated therein and as set forth therein and which, indemnification and reimbursement obligations shall be entitled to priority as administrative expense claims under Sections 503(b) and 507(a)(1) of title 11 of the Bankruptcy Code) and such order shall have become a final order of the Bankruptcy Court (unless waived in writing (which may be via e-mail) by the Administrative Agent and the Required Lenders), which order shall not have been stayed, reversed, vacated, amended, supplemented or otherwise modified in any manner.

(v)     The Administrative Agent shall have received reasonably satisfactory evidence that the Parent Guarantor and its Restricted Subsidiaries have entered into Swap Agreements with one or more Approved Counterparties that have notional volumes of not less than (i) 65% of the projected production of oil and gas from the Parent Guarantor’s and its Restricted Subsidiaries’ total Proved Developed Producing Reserves (based on the Initial Reserve Report), calculated separately, for the 12-month period immediately succeeding the Effective Date and (ii) 35% of the projected production of oil and natural gas from the Parent Guarantor’s and its Restricted Subsidiaries’ total Proved Developed Producing Reserves (based on the Initial Reserve Report), calculated separately, for the 12-month period immediately succeeding the 12-month period described in clause (i) (it being understood and agreed that compliance with this Section 6.01(v) shall be determined in accordance with the Hedging Principles);

 

75


provided, that, to the extent the Parent Guarantor and its Restricted Subsidiaries are unable to enter into the requisite Swap Agreements required under this Section 6.01(v) on or prior to the Effective Date after the use of commercially reasonably efforts to do so, the entry into such Swap Agreements shall not constitute a condition precedent to the Effective Date, but instead shall be required to be entered into in accordance with Section 8.20.

(w)     The Plan of Reorganization and all transactions contemplated therein or in the Confirmation Order to occur on the Plan Effective Date shall have been (or concurrently with the Effective Date, shall be) substantially consummated in accordance with the terms thereof and in compliance with applicable law and Bankruptcy Court and regulatory approvals.

(x)     The Administrative Agent shall have received a certificate of a Responsible Officer of the Parent Guarantor certifying that (i) all material governmental and third party approvals necessary in connection with the consummation of the Plan of Reorganization and the other Transactions, and the continuing operations of the Parent Guarantor and its Subsidiaries shall have been obtained (or will be substantially concurrently obtained) and be in full force and effect, and (ii) since April 1, 2020, no Material Adverse Effect shall have occurred. For purposes of this Section 6.01(x) only, “Material Adverse Effect” means, other than the filing of the Chapter 11 Cases and any judgments entered after the filing of the Chapter 11 Cases with respect to litigation pending upon the filing of the Chapter 11 Cases, any event, change, effect, occurrence, development, circumstance, condition, result, state of fact or change of fact, or the worsening of any of the foregoing (each, an “MAE Event”), that, individually or together with all other MAE Events, has had or would reasonably be expected to have, a material adverse effect on either (x) the business, operations, finances, properties, interests, reserves, condition (financial or otherwise), assets or liabilities of the Credit Parties, taken as a whole or (y) the ability of the Credit Parties, taken as a whole, to perform their respective obligations under, or to consummate the transactions contemplated by, the Plan of Reorganization.

(y)     The Administrative Agent shall have received (i) audited consolidated balance sheets and related statements of income, stockholders’ equity and cash flows of the Parent Guarantor and its Subsidiaries, for the three (3) most recently completed fiscal years ended at least ninety (90) days before the Effective Date (it being understood and agreed that the financial statements described in this clause (i) have been received by the Administrative Agent and the condition precedent described in this clause (i) has been satisfied with respect to the fiscal years of the Parent Guarantor ended December 31, 2017, December 31, 2018, and December 31, 2019), (ii) unaudited consolidated balance sheets and related statements of income, stockholders’ equity and cash flows of the Parent Guarantor and its Subsidiaries, for each subsequent fiscal quarter (other than the fourth fiscal quarter of any fiscal year) ended at least forty-five (45) days before the Effective Date (in each case, together with the corresponding period from the prior fiscal year) (it being agreed and understood that the financial statements described in this clause (ii) have been received by the Administrative Agent and the condition precedent described in this clause (ii) has been satisfied with respect to the fiscal quarter of the Parent Guarantor ended March 31, 2020) and (iii) a pro forma unaudited consolidated balance sheet of the Parent Guarantor and its Subsidiaries as of the Effective Date (as if the Effective Date had occurred on the last date of the most recently ended fiscal quarter for which financial statements are available), after giving effect to the making of the initial extensions of credit under this Agreement, the application of the proceeds thereof and to the other Transactions contemplated to occur on the Effective Date, certified by a Financial Officer of the Parent Guarantor, which shall reflect no Indebtedness other than (x) the Obligations and (y) Indebtedness permitted by Section 9.02 (excluding Section 9.02(f)).

Without limiting the generality of the provisions of Section 11.04, for purposes of determining compliance with the conditions specified in this Section 6.01, each Lender that has signed this Agreement shall be deemed to have consented to, approved or accepted or to be satisfied with, each document or other matter

 

76


required under this Section 6.01 to be consented to or approved by or acceptable to a Lender unless the Administrative Agent shall have received notice from such Lender prior to the Effective Date specifying its objection thereto. The Administrative Agent shall notify the Parent Guarantor, the Borrower and the Lenders of the Effective Date, and such notice shall be conclusive and binding.

Section 6.02     Each Credit Event. The obligation of each Lender to make any new Loan, and of the Issuing Bank to issue, amend, renew or extend any Letter of Credit is subject to the satisfaction of the following conditions:

(a)     At the time of and immediately after giving effect to such Borrowing or the issuance, amendment, renewal or extension of such Letter of Credit, as applicable, no Default shall have occurred and be continuing.

(b)     The representations and warranties of the Credit Parties set forth in this Agreement and in the other Loan Documents shall be true and correct in all material respects on and as of the date of such Borrowing or the date of issuance, amendment, renewal or extension of such Letter of Credit, as applicable, except (i) to the extent any such representations and warranties are expressly limited to an earlier date, in which case, on and as of the date of such Borrowing or the date of issuance, amendment, renewal or extension of such Letter of Credit, as applicable, such representations and warranties shall be true and correct in all material respects as of such specified earlier date, and (ii) to the extent that any such representation and warranty is expressly qualified by materiality or by reference to Material Adverse Effect, such representation and warranty (as so qualified) shall be true and correct in all respects.

(c)     At the time of and immediately after giving effect to such Borrowing or the issuance, amendment, renewal or extension of such Letter of Credit, as applicable, the Consolidated Cash Balance does not exceed the Excess Cash Threshold.

(d)     The receipt by the Administrative Agent of a Borrowing Request in accordance with Section 2.03 or a request for a Letter of Credit (including an amendment, extension or renewal of a Letter of Credit) in accordance with Section 2.08(b), as applicable.

Each request for a Borrowing and each request for the issuance, amendment, renewal or extension of any Letter of Credit shall be deemed to constitute a representation and warranty by the Borrower on the date thereof as to the matters specified in the foregoing clauses (a) through (c).

ARTICLE VII

REPRESENTATIONS AND WARRANTIES

Parent Guarantor and the Borrower jointly and severally represent and warrant to the Lenders that:

Section 7.01     Organization; Powers. The Parent Guarantor and each Restricted Subsidiary is duly organized, validly existing and, to the extent applicable, in good standing under the laws of the jurisdiction of its organization, has all requisite power and authority, and has all material governmental licenses, authorizations, consents and approvals necessary, to own its assets and to carry on its business as now conducted, and is qualified to do business in, and is in good standing in, every jurisdiction where such qualification is required, except where failure to have such power, authority, licenses, authorizations, consents, approvals and qualifications would not reasonably be expected to have a Material Adverse Effect.

Section 7.02     Authority; Enforceability. After giving effect to the Confirmation Order and the Plan of Reorganization, the Transactions are within the Parent Guarantor’s and each Restricted Subsidiary’s corporate, limited liability company, or partnership powers and have been duly authorized by all necessary

 

77


corporate, limited liability company or partnership action and, if required, action by any holders of its Equity Interests (including any action required to be taken by any class of directors, managers or supervisors, whether interested or disinterested, as applicable, of the Parent Guarantor or any other Person, in order to ensure the due authorization of the Transactions). Each Loan Document to which the Borrower and each Guarantor is a party has been duly executed and delivered by the Borrower and such Guarantor and constitutes a legal, valid and binding obligation of the Borrower and such Guarantor, as applicable, enforceable in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium or other laws affecting creditors’ rights generally and subject to general principles of equity, regardless of whether considered in a proceeding in equity or at law.

Section 7.03     Approvals; No Conflicts. After giving effect to the Confirmation Order and the Plan of Reorganization, the Transactions (a) do not require any consent or approval of, registration or filing with, or any other action by, any Governmental Authority or any other third Person (including holders of its Equity Interests or any class of directors, managers or supervisors, as applicable, whether interested or disinterested, of the Parent Guarantor or any other Person), nor is any such consent, approval, registration, filing or other action necessary for the validity or enforceability of any Loan Document or the consummation of the Transactions, except such as have been obtained or made and are in full force and effect, other than (i) the recording and filing of the Security Instruments as required by this Agreement, (ii) those third party approvals or consents which, if not made or obtained, would not cause a Default or an Event of Default under any provision of this Agreement other than this Section 7.03 or would not reasonably be expected to have a Material Adverse Effect, (iii) the filing of any required document with the SEC and (iv) such consents, approvals, registrations, filings and actions as may be necessary in connection with the grant of Liens on any Properties that are under the jurisdiction of the Bureau of Indian Affairs or any similar tribal Governmental Authority, (b) will not violate any applicable law or regulation or the limited liability company agreements, charter, by-laws or other organizational documents of the Parent Guarantor or any Restricted Subsidiary or any order of any Governmental Authority, which violation would reasonably be expected to have a Material Adverse Effect, (c) will not violate or result in a default under any indenture or other agreement regarding Material Indebtedness binding upon the Parent Guarantor or any Restricted Subsidiary or any of their respective Properties, or give rise to a right thereunder to require any payment to be made by the Parent Guarantor or any Restricted Subsidiary and (d) will not result in the creation or imposition of any Lien on any material Property of the Parent Guarantor or any Restricted Subsidiary (other than the Liens created by the Loan Documents), except to the extent such violation, default or Lien under this clause (d) could not reasonably be expected to result in a Material Adverse Effect.

Section 7.04     Financial Condition; No Material Adverse Effect.

(a)     The Borrower has heretofore furnished to the Lenders the Parent Guarantor’s (or its parent entity, if applicable) consolidated balance sheet and statements of income, stockholders equity and cash flows (i) as of and for the fiscal year ended December 31, 2019, reported on by Deloitte & Touche LLP, independent public accountants and (ii) as of and for the fiscal quarter and the portion of the fiscal year ended June 30, 2020. Such financial statements present fairly, in all material respects, the financial position and results of operations and cash flows of the Parent Guarantor and its Consolidated Restricted Subsidiaries as of such dates and for such periods in accordance with GAAP, subject to year-end audit adjustments and the absence of footnotes in the case of the unaudited quarterly financial statements.

(b)     No Material Adverse Effect has occurred since the Effective Date.

(c)     Except as set forth on Schedule 7.04(c), and other than the Obligations hereunder, neither the Parent Guarantor nor any Restricted Subsidiary has on the date hereof after giving effect to the Transactions, any material Indebtedness (including Disqualified Capital Stock) or any material off-balance sheet liabilities or partnership liabilities that would be required by GAAP to be reflected or noted in audited financial statements, or any unusual forward or long-term commitments or unrealized or anticipated losses from any such unfavorable commitments.

 

78


Section 7.05     Litigation. After giving effect to the Confirmation Order and the Plan of Reorganization, and except as set forth on Schedule 7.05, there are no actions, suits, investigations or proceedings by or before any arbitrator or Governmental Authority pending against or, to the knowledge of the Parent Guarantor or the Borrower, threatened in writing against the Parent Guarantor or any Restricted Subsidiary (a) not fully covered by insurance (except for normal deductibles), that would reasonably be expected, individually or in the aggregate, to result in a Material Adverse Effect or (b) that are non-frivolous and challenge the validity or enforceability of any Loan Document or the Transactions.

Section 7.06     Environmental Matters. Except for matters set forth on Schedule 7.06 or that, individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect:

(a)     After giving effect to the Confirmation Order and the Plan of Reorganization, Parent Guarantor and its Subsidiaries and each of their respective Properties and operations thereon are in compliance with all applicable Environmental Laws;

(b)     After giving effect to the Confirmation Order and the Plan of Reorganization, Parent Guarantor and its Subsidiaries have obtained all Environmental Permits required for their respective operations and each of their Properties, with all such Environmental Permits being currently in full force and effect, and neither the Parent Guarantor nor any of its Subsidiaries has received any written notice or, to the Parent Guarantor’s or the Borrower’s knowledge, oral notice that any such existing Environmental Permit will be revoked or that any application for any new Environmental Permit or renewal of any existing Environmental Permit will be denied;

(c)     After giving effect to the Confirmation Order and the Plan of Reorganization, there are no claims, demands, suits, orders, inquiries, or proceedings concerning any violation of, or any liability (including as a potentially responsible party) under, any applicable Environmental Laws that is pending or, to the Parent Guarantor’s or the Borrower’s knowledge, threatened against the Parent Guarantor or any Subsidiary with respect to any of their respective Properties or as a result of any operations at such Properties;

(d)     none of the Properties of the Parent Guarantor or any Subsidiary contain any: underground storage tanks for Hazardous Materials; asbestos-containing materials; landfills or dumps; hazardous waste management units as defined pursuant to RCRA or any comparable state law; or sites on or nominated for the National Priority List promulgated pursuant to CERCLA or any state remedial priority list promulgated or published pursuant to any comparable state law, in each case that would reasonably be expected to result in liability for the Parent Guarantor or any Subsidiary under Environmental Law;

(e)     (i) there has been no Release or, to the Parent Guarantor’s or the Borrower’s knowledge, threatened Release, of Hazardous Materials at, on, under or from the Parent Guarantor’s or any Subsidiary’s Properties that would reasonably be expected to result in liability for the Parent Guarantor or any Subsidiary under Environmental Law, and (ii) there are no investigations, remediations, abatements, removals, or monitorings related to any contamination by Hazardous Materials required under applicable Environmental Laws at such Properties and, to the knowledge of the Parent Guarantor or the Borrower, none of such Properties are adversely affected by any Release or threatened Release of a Hazardous Material originating or emanating from any other real property that would reasonably be expected to result in liability for the Parent Guarantor or any Subsidiary under Environmental Law;

 

79


(f)     neither the Parent Guarantor nor any Subsidiary has received any written notice asserting an alleged liability or obligation under any applicable Environmental Laws with respect to the investigation, remediation, abatement, removal, or monitoring of any Hazardous Materials at, under, or Released or threatened to be Released from any real properties offsite the Parent Guarantor’s or any Subsidiary’s Properties and, to the Parent Guarantor’s or the Borrower’s knowledge, there are no conditions of contamination that would reasonably be expected to result in the receipt of such written notice;

(g)     there has been no exposure of any Person to any Hazardous Materials as a result of or in connection with the operations and businesses of any of Parent Guarantor’s or the Subsidiaries’ Properties that would reasonably be expected to form the basis for a claim against the Parent Guarantor or any Subsidiary for damages or compensation pursuant to Environmental Law; and

(h)     on or prior to the Effective Date, the Parent Guarantor and the Borrower have made available to the Administrative Agent complete and correct copies of all material environmental site assessment report, and studies on environmental matters (including matters relating to any alleged non-compliance with or liability under Environmental Laws) that have been prepared within the last three (3) years immediately preceding the Effective Date and are in the Parent Guarantor’s or the Borrower’s possession and relating to the Parent Guarantor’s or any Subsidiary’s Properties or operations thereon.

Section 7.07     Compliance with Laws and Agreements; No Defaults.

(a)     After giving effect to the Confirmation Order and the Plan of Reorganization, each of Parent Guarantor and the Restricted Subsidiaries is in compliance with all Governmental Requirements applicable to it or its Property and all agreements and other instruments binding upon it or its Property, and possesses all licenses, permits, franchises, exemptions, approvals and other governmental authorizations necessary for the ownership of its Property and the conduct of its business, except where the failure to be in compliance or to have possession, individually or in the aggregate, would not reasonably be expected to result in a Material Adverse Effect.

(b)     No Default has occurred and is continuing.

Section 7.08     Investment Company Act. Neither the Parent Guarantor nor any Restricted Subsidiary is required to register as an “investment company” or a company “controlled” by an entity required to register as “investment company,” within the meaning of, or subject to regulation under, the Investment Company Act of 1940, as amended.

Section 7.09     Taxes. Each of Parent Guarantor and the Restricted Subsidiaries has timely filed or caused to be filed all federal income Tax returns and reports, and all other material Tax returns and reports, required to have been filed and has paid or caused to be paid all Taxes required to have been paid by it (in each case, for the avoidance of doubt and to the extent applicable, after giving effect to the Confirmation Order and Plan of Reorganization), except (a) Taxes that are being contested in good faith by appropriate proceedings and for which Parent Guarantor or such Restricted Subsidiary, as applicable, has set aside on its books adequate reserves in accordance with GAAP or (b) to the extent that the failure to do so would not reasonably be expected to result in a Material Adverse Effect. The charges, accruals and reserves on the books of Parent Guarantor and the Restricted Subsidiaries in respect of Taxes and other governmental charges are, in the reasonable opinion of the Parent Guarantor, adequate in all material respects. Except as would not reasonably be expected to result in a Material Adverse Effect, no Tax Lien (other than an Excepted Lien) has been filed and, to the knowledge of the Parent Guarantor or the Borrower, no claim is being asserted with respect to any such Tax or other such governmental charge.

 

80


Section 7.10    ERISA. Except for such matters that, individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect:

(a)    the Parent Guarantor, the Subsidiaries and each ERISA Affiliate is in material compliance with ERISA and, where applicable, the Code regarding each Plan;

(b)    each Plan is, and has been, established and maintained in substantial compliance with its terms, ERISA and, where applicable, the Code;

(c)    no act, omission or transaction has occurred which could result in the imposition on the Parent Guarantor or any Subsidiary (whether directly or indirectly) of either a civil penalty assessed pursuant to subsections (i) or (l) of section 502 of ERISA or a tax imposed pursuant to section 4975 of the Code or breach of fiduciary duty liability damages under section 409 of ERISA;

(d)    full payment when due has been made of all amounts which the Parent Guarantor, the Subsidiaries or any ERISA Affiliate is required under the terms of each Plan or applicable law to have paid as contributions to such Plan as of the date hereof; and

(e)    none of the Parent Guarantor, any Subsidiary or any ERISA Affiliate sponsors, maintains, or contributes to an employee welfare benefit plan, as defined in section 3(1) of ERISA that provides benefits to retirees or former employees of such entities, with respect to which its sponsorship of, maintenance of or contribution to may not be terminated by the Parent Guarantor, a Subsidiary or an ERISA Affiliate, as the case may be, in its sole discretion at any time without any material liability to the Parent Guarantor or any Subsidiary other than for benefits due as of, or claims incurred prior to, the effective date of such termination, except where such a termination is not allowed under applicable law (including, but not limited to, the Consolidated Omnibus Budget Reconciliation Act of 1985).

Section 7.11    Disclosure; No Material Misstatements.

(a)    The certificates, written statements and reports, and other written information, taken as a whole, furnished by or on behalf of the Borrower or any Guarantor to the Administrative Agent and the Lenders in connection with the negotiation of any Loan Document or included therein or delivered pursuant thereto, do not, when furnished, contain any material misstatement of fact or omit to state any material fact necessary to make the statements therein, taken as a whole, in the light of the circumstances under which they were or are made, not materially misleading; provided that (i) to the extent any such certificate, statement, report, or information was based upon or constitutes a forecast or projection, each of the Parent Guarantor and the Borrower represents only that such information was prepared in good faith based upon assumptions believed by it to be reasonable at the time furnished (it being recognized by the Lenders, however, that such forecast or projection is not to be viewed as facts and that actual results during the period or periods covered by any such forecast or projection may differ from the projected results, and such differences may be material and that each of the Parent Guarantor and the Borrower makes no representation that such projections will be realized) and (ii) as to statements, information and reports supplied by third parties, each of the Parent Guarantor and the Borrower represents only that it is not aware of any material misstatement or omission therein. There are no statements or conclusions in any Reserve Report which are based upon or include material misleading information of a material fact or fail to take into account known material information, in light of the circumstances under which they are made, regarding the matters reported therein, it being understood that projections concerning volumes attributable to the Oil and Gas Properties of the Borrower and the other Credit Parties and production and cost estimates contained in each Reserve Report are necessarily based upon professional opinions, estimates and projections and that the Borrower and the other Credit Parties do not warrant that such opinions, estimates and projections will ultimately prove to have been accurate.

 

81


(b)    As of the Effective Date, to the knowledge of the Borrower, the information included in the Beneficial Ownership Certification delivered, on or prior to the Effective Date, to any Lender in connection with this Agreement is true and correct in all material respects.

Section 7.12    Insurance. Parent Guarantor and the Borrower have, and have caused the Restricted Subsidiaries to have, (a) all insurance policies sufficient for the compliance by each of them with all material Governmental Requirements and all material agreements and (b) insurance coverage in at least such amounts and against such risks as are usually insured against by companies similarly situated and engaged in the same or a similar business for the assets and operations of the Parent Guarantor and the Restricted Subsidiaries (it being understood and agreed that the Parent Guarantor and its Subsidiaries may self-insure to the extent and in a manner customary for companies engaged in the same or similar business of similar size and financial condition). The Administrative Agent and the Lenders have been named as additional insureds in respect of such liability insurance policies and the Administrative Agent has been named as a loss payee with respect to such property loss insurance covering Collateral.

Section 7.13    Restriction on Liens. After giving effect to the Confirmation Order and the Plan of Reorganization, neither the Parent Guarantor nor any Restricted Subsidiary is a party to any material agreement or arrangement, or subject to any order, judgment, writ or decree, that restricts or purports to restrict its ability to grant Liens to the Administrative Agent for the benefit of the Secured Parties on or in respect of their Properties to secure the Indebtedness under the Loan Documents, or restricts any Restricted Subsidiary from paying dividends or making any other distributions in respect of its Equity Interests to Parent Guarantor or any Restricted Subsidiary, or restricts any Restricted Subsidiary from making loans or advances to Parent Guarantor or any Restricted Subsidiary, or which requires the consent of other Persons in connection therewith, except, in each case, for such encumbrances or restrictions permitted under Section 9.13.

Section 7.14    Subsidiaries. Except as set forth on Schedule 7.14 or as disclosed in writing to the Administrative Agent from time to time (which shall promptly furnish a copy to the Lenders), which shall upon disclosure be deemed a supplement to Schedule 7.14, the Parent Guarantor and the Restricted Subsidiaries do not have any other Subsidiaries. Schedule 7.14 identifies, as of the Effective Date, each Subsidiary listed thereon as either (a) a Restricted Subsidiary or an Unrestricted Subsidiary and (b) a Foreign Subsidiary or a Domestic Subsidiary. As of the Effective Date, Schedule 7.14 sets forth each Person (other than a Subsidiary) in which the Parent Guarantor or a Restricted Subsidiary owns Equity Interests and the percentage of all Equity Interests in such Person owned by the Parent Guarantor or such Restricted Subsidiary. The Parent Guarantor has no Foreign Subsidiaries other than (i) Whiting Canadian Holding Company and (ii) any Restructuring Subsidiary that is a Foreign Subsidiary.

Section 7.15    Location of Business and Offices. After giving effect to the Confirmation Order and the Plan of Reorganization, the Borrower’s jurisdiction of organization is Delaware, the name of the Borrower as listed in the public records of its jurisdiction of organization is Whiting Oil and Gas Corporation, and the organizational identification number of the Borrower in its jurisdiction of organization is 2015285 (or, in each case, as set forth in a notice delivered to the Administrative Agent pursuant to Section 8.01(g) in accordance with Section 12.01). The Borrower’s chief executive offices are located at the address specified in Section 12.01 (or as set forth in a notice delivered pursuant to Section 8.01(g) and Section 12.01(c)). Each Guarantor’s jurisdiction of organization, name as listed in the public records of its jurisdiction of organization, organizational identification number in its jurisdiction of organization, and the location of its chief executive office is stated on Schedule 7.14 (or as set forth in a notice delivered pursuant to Section 8.01(g)).

 

82


Section 7.16    Properties; Titles, Etc.. After giving effect to the Confirmation Order and the Plan of Reorganization:

(a)    Each of the Borrower and the other Credit Parties has good and defensible title to substantially all of its Borrowing Base Properties evaluated in the most recently delivered Reserve Report (other than those Transferred in compliance with Section 9.10 since delivery of such Reserve Report, leases that have expired in accordance with their terms and those title defects disclosed in writing to the Administrative Agent) and good title to, or a valid contractual interest in, all of its material personal Properties, in each case, free and clear of all Liens except Permitted Liens. The Borrower or the other Credit Parties specified as the owner owns in all material respects the net interests in production attributable to their Oil and Gas Properties as reflected in the most recently delivered Reserve Report, and the ownership of such Properties does not in any material respect obligate such Person to bear the costs and expenses relating to the maintenance, development and operations of each such Property in an amount in excess of the working interest of each Property set forth in the most recently delivered Reserve Report that is not offset by a corresponding proportionate increase in its net revenue interest in such Property or the revenues therefrom.

(b)    Except as would not reasonably be expected to have a Material Adverse Effect, (i) all material leases and agreements necessary for the conduct of the business of the Borrower and the other Credit Parties and (ii) all oil and gas leases of the Borrower and the other Credit Parties are, in each case, valid and subsisting and in full force and effect, and there exists no default or event or circumstance which with the giving of notice or the passage of time or both would give rise to a default under any such lease or leases referred to in the foregoing clauses (i) and (ii).

(c)    The rights and Properties presently owned, leased or licensed by the Borrower and the other Credit Parties, including all easements and rights of way, include all rights and Properties necessary to permit the Borrower and the other Credit Parties to conduct their business in all material respects in the same manner as their business has been conducted prior to the date hereof.

(d)    All of the Properties of the Borrower and the other Credit Parties which are reasonably necessary for the operation of their businesses are in good working condition and are maintained in accordance with prudent business standards, ordinary wear and tear excepted, except to the extent any failure to satisfy the foregoing would not reasonably be expected to have a Material Adverse Effect.

(e)    The Parent Guarantor and each Restricted Subsidiary owns, or is licensed to use, all trademarks, tradenames, copyrights, patents and other intellectual Property material to its business (including databases, geological data, geophysical data, engineering data, seismic data, maps, interpretations and other technical data), and the use thereof by the Parent Guarantor and the Restricted Subsidiaries does not infringe upon the rights of any other Person, except for any such infringements that, individually or in the aggregate, would not reasonably be expected to result in a Material Adverse Effect.

Section 7.17    Maintenance of Properties. After giving effect to the Confirmation Order and the Plan of Reorganization, except for such acts or failures to act as would not be reasonably expected to have a Material Adverse Effect, the Oil and Gas Properties of the Parent Guarantor and its Restricted Subsidiaries have been maintained, operated and developed in a good and workmanlike manner and in conformity with all applicable Governmental Requirements and in conformity with the provisions of all leases, subleases or other contracts comprising a part of the Oil and Gas Properties of the Parent Guarantor and its Restricted Subsidiaries and other contracts and agreements forming a part of the Oil and Gas Properties of the Parent Guarantor and its Restricted Subsidiaries.

Section 7.18    Gas Imbalances, Prepayments. Except as set forth on Schedule 7.18 or on the most recent certificate delivered pursuant to Section 8.12(d), on a net basis there are no gas imbalances, take or pay or other prepayments which would require the Parent Guarantor or any of its Restricted Subsidiaries to deliver Hydrocarbons produced from their Oil and Gas Properties at some future time,

 

83


without then or thereafter receiving full payment therefor, exceeding 1.0% of the aggregate annual production of gas from the Oil and Gas Properties of the Parent Guarantor and its Restricted Subsidiaries during the most recent calendar year (on an mcf basis).

Section 7.19    Marketing of Production. Except for contracts listed and in effect on the date hereof on Schedule 7.19, or hereafter either disclosed in writing to the Administrative Agent or included in the most recently delivered Reserve Report (but, in each case, subject to any limitations on disclosure of such information pursuant to binding confidentiality obligations with non-Affiliates), no material agreements exist, which are not cancelable on ninety (90) days’ notice or less without penalty or detriment, for the sale of the Parent Guarantor’s and its Restricted Subsidiaries’ Hydrocarbon production (including calls on or other rights to purchase, production, whether or not the same are currently being exercised) that pertain to the sale of production at a fixed price and have a maturity or expiry date of longer than six (6) months from the date hereof.

Section 7.20    Swap Agreements and Qualified ECP Counterparty. Schedule 7.20, as of the date hereof, and after the date hereof, each report required to be delivered by the Borrower pursuant to Section 8.01(d), as of the date of (or as of the date(s) otherwise set forth in) such report, sets forth, a true and complete list of all Swap Agreements of the Parent Guarantor and each of its Restricted Subsidiaries, the material terms thereof (including the type, term, effective date, termination date and notional amounts or volumes), the estimated net mark-to-market value thereof, all credit support agreements relating thereto other than Loan Documents (including any margin required or supplied) and the counterparty to each such agreement. The Borrower is a Qualified ECP Counterparty.

Section 7.21    Use of Loans and Letters of Credit. The proceeds of the Loans and the Letters of Credit shall be used (a) for working capital and other general corporate purposes of the Parent Guarantor and its Subsidiaries, (b) together with cash on hand, to refinance and replace a portion of the outstanding obligations under the Pre-Petition Credit Agreement, (c) to pay fees and expenses in connection with the Transactions, and (d) to pay fees and expenses in connection with the Credit Parties’ emergence from the Chapter 11 Cases. The Parent Guarantor and its Restricted Subsidiaries are not engaged principally, or as one of its or their important activities, in the business of extending credit for the purpose, whether immediate, incidental or ultimate, of buying or carrying margin stock (within the meaning of Regulation T, Regulation U or Regulation X). No part of the proceeds of any Loan will be used, whether directly or indirectly, to buy or carry any margin stock or for any purpose that entails a violation of any of the regulations of the Federal Reserve Board, including Regulation T, Regulation U and Regulation X. The Borrower will not request any Borrowing or Letter of Credit, and neither the Parent Guarantor nor the Borrower shall use, and shall procure that their respective Subsidiaries and their or their respective Subsidiaries’ respective directors, officers, employees and agents shall not use, the proceeds of any Borrowing or Letter of Credit (i) in furtherance of an offer, payment, promise to pay, or authorization of the payment or giving of money, or anything else of value, to any Person in violation of any Anti-Corruption Laws, (ii) for the purpose of funding, financing or facilitating any activities, business or transaction of or with any Sanctioned Person, or in any Sanctioned Country, except to the extent permitted for a Person required to comply with Sanctions, or (iii) in any manner that would result in the violation of any Sanctions applicable to any party hereto.

Section 7.22    Solvency. After giving effect to the Confirmation Order, the Plan of Reorganization, the Transactions and the other transactions contemplated hereby and thereby and each Borrowing and issuance, amendment, renewal or extension of any Letter of Credit made hereunder, (a) the aggregate assets (after giving effect to amounts that would reasonably be expected to be received by reason of indemnity, offset, insurance or any similar arrangement), at a fair valuation, of the Borrower and the Guarantors, taken as a whole, exceed the aggregate Indebtedness and liabilities of the Borrower and the Guarantors on a consolidated basis, (b) the Borrower and the Guarantors have not incurred and do not intend

 

84


to incur, and do not believe that they have incurred, Indebtedness and liabilities beyond their ability to pay such Indebtedness or liabilities (after taking into account the timing and amounts of cash they reasonably expect could be received and the amounts that they reasonably expect could be payable on or in respect of their liabilities, and giving effect to amounts that would reasonably be expected to be received by reason of indemnity, offset, insurance or any similar arrangement) as such Indebtedness and liabilities become absolute and mature, and (c) the Borrower and the Guarantors, taken as a whole, do not have (and do not have reason to believe that they will have thereafter) unreasonably small capital for the conduct of their business.

Section 7.23    Anti-Corruption Laws and Sanctions. The Parent Guarantor and the Borrower have implemented and maintain in effect policies and procedures designed to ensure compliance by the Parent Guarantor, its Subsidiaries and their respective directors, officers, employees and agents with Anti-Corruption Laws and applicable Sanctions, and the Parent Guarantor, its Subsidiaries and their respective officers and directors and, to the knowledge of each of the Parent Guarantor and the Borrower, its employees and agents, are in compliance with Anti-Corruption Laws and applicable Sanctions in all material respects. None of (a) the Parent Guarantor, any Subsidiary, any of their respective directors, officers or employees, or (b) to the knowledge of each of the Parent Guarantor and the Borrower, any agent of the Parent Guarantor or any Subsidiary that will act in any capacity in connection with or benefit from the credit facility established hereby, is a Sanctioned Person. No Borrowing or Letter of Credit, use of proceeds or other Transactions will violate any Anti-Corruption Law or applicable Sanctions.

Section 7.24    Affected Financial Institutions. No Credit Party is an Affected Financial Institution.

Section 7.25    Security Instruments. The Security Instruments are (or, in the case of Security Instruments executed after the Effective Date, will be) effective to create in favor of the Administrative Agent, for the benefit of the Secured Parties, a legal, valid and enforceable security interest in the Mortgaged Property and Collateral and proceeds thereof.

ARTICLE VIII

AFFIRMATIVE COVENANTS

Until Payment in Full, each of Parent Guarantor and the Borrower covenants and agrees with the Lenders that:

Section 8.01    Financial Statements; Other Information. The Parent Guarantor or the Borrower, as applicable, will furnish to the Administrative Agent and each Lender:

(a)    Annual Financial Statements. As soon as available, but in any event in accordance with then applicable law and not later than one hundred five (105) days after the end of each fiscal year of Parent Guarantor, its audited consolidated balance sheet and related statements of operations, owners’ equity and cash flows as of the end of and for such year, setting forth in each case in comparative form the figures for the previous fiscal year (except for the fiscal year ending December 31, 2020 for which no comparison shall be required to be delivered other than as required by Accounting Standard Codification 852), all reported on by independent public accountants of recognized national standing (without a “going concern” or like qualification or exception and without any qualification or exception as to the scope of such audit other than, solely in the case of any such opinion delivered within one (1) year of the Maturity Date, solely with respect to, or resulting solely from, the current Maturity Date under this Agreement) to the effect that such consolidated financial statements present fairly in all material respects the financial condition and results of operations of Parent Guarantor and its Subsidiaries on a consolidated basis in accordance with GAAP consistently applied.

 

85


(b)    Quarterly Financial Statements. As soon as available, but in any event in accordance with then applicable law and not later than forty-five (45) days after the end of each of the first three (3) fiscal quarters of each fiscal year of Parent Guarantor commencing with the fiscal quarter ending September 30, 2020, its consolidated balance sheet and related statements of operations, owners’ equity and cash flows as of the end of and for such fiscal quarter and the then elapsed portion of the fiscal year, setting forth in each case in comparative form the figures for the corresponding period or periods of (or, in the case of the balance sheet, as of the end of) the previous fiscal year (except for any fiscal quarters ending on or prior to June 30, 2021 for which no comparison shall be required to be delivered other than as required by Accounting Standard Codification 852), all certified by one of its Financial Officers as presenting fairly in all material respects the financial condition and results of operations of Parent Guarantor and its consolidated Subsidiaries on a consolidated basis in accordance with GAAP consistently applied, subject to normal year-end audit adjustments and the absence of footnotes.

(c)    Certificate of Financial Officer - Compliance. Concurrently with any delivery of financial statements under Section 8.01(a) or Section 8.01(b), a compliance certificate of a Financial Officer in substantially the form of Exhibit D hereto (i) certifying as to whether a Default then exists and, if a Default then exists, (ii) specifying the details thereof and any action taken or proposed to be taken with respect thereto, (iii) certifying that the Parent Guarantor is in compliance with Section 9.01 as of the last day of the fiscal period covered by such financial statements as required therein and in connection therewith, setting forth reasonably detailed calculations demonstrating compliance with Section 9.01 and (iv) stating whether any change in GAAP or in the application thereof that is applicable to the Parent Guarantor or the Borrower has occurred since December 31, 2019 and, if any such change has occurred, specifying the effect of such change on the financial statements accompanying such certificate.

(d)    Certificate of Financial Officer - Swap Agreements. Concurrently with any delivery of a Reserve Report under Section 8.12(a), a certificate of a Financial Officer, in form and substance reasonably satisfactory to the Administrative Agent, setting forth as of a recent date, a true and complete list of all Swap Agreements of the Parent Guarantor and each Restricted Subsidiary, the material terms thereof (including the type, term, effective date, termination date and notional amounts or volumes set forth for each month during the term of such Swap Agreement), the estimated net mark-to-market value therefor, any new credit support agreements relating thereto (other than Loan Documents) not listed on Schedule 7.20, any margin required or supplied under any credit support document and the counterparty to each such agreement.

(e)    Certificate of Insurer - Insurance Coverage. Concurrently with any delivery of financial statements under Section 8.01(a), one or more certificates of insurance coverage from Parent Guarantor’s insurance broker or insurers with respect to the insurance required by Section 8.07, in form and substance reasonably satisfactory to the Administrative Agent, and, if requested by the Administrative Agent, copies of the applicable policies.

(f)    [Reserved].

(g)    Information Regarding Borrower and Guarantors. Promptly, but in any event, within five (5) Business Days after the occurrence thereof (or such later date as the Administrative Agent may agree to in its sole discretion), written notice of any change in (i) the Borrower’s or any Guarantor’s corporate name, (ii) the jurisdiction in which the Borrower or any Guarantor is incorporated, formed, or otherwise organized, (iii) the location of the Borrower’s or any Guarantor’s chief executive office, (iv) the Borrower’s or any Guarantor’s identity or corporate, limited liability or partnership structure, or (v) the Borrower’s or any Guarantor’s organizational identification number in such jurisdiction of organization or federal taxpayer identification number.

 

86


(h)    Notices of Certain Changes. Promptly, but in any event within ten (10) Business Days after the execution thereof (or such later date as the Administrative Agent may agree to in its sole discretion), copies of any material amendment, modification or supplement to the certificate of formation, limited liability company agreement, articles of incorporation, by-laws, any preferred stock designation or any other organic document of the Parent Guarantor or any Restricted Subsidiary.

(i)    Issuance and Incurrence of Indebtedness. Promptly, but in any event, within three (3) Business Days (or such longer period as the Administrative Agent may agree in its sole discretion) after the incurrence thereof, written notice of the incurrence by the Parent Guarantor or any Restricted Subsidiary of any Specified Additional Indebtedness (to the extent constituting Material Indebtedness), any Permitted Refinancing Indebtedness in respect thereof or any Material Indebtedness, as well as the amount thereof, the closing date and definitive documentation for the foregoing and any other related information reasonably requested by the Administrative Agent (to the extent permitted by, and subject to, the confidentiality provisions thereof).

(j)    Opening of Accounts. Promptly, but in any event, within ten (10) Business Days (or such longer period as the Administrative Agent may agree in its sole discretion) after the opening thereof, written notice (such notice to include reasonably detailed information regarding the account number, purpose and applicable bank or other institution in respect of such Deposit Account, Commodities Account or Securities Account) to the Administrative Agent of any Deposit Account, Commodities Account or Securities Account (other than an Excluded Account) opened by the Borrower or any Guarantor.

(k)    Other Requested Information. Promptly following any reasonable request therefor, (i) such other information regarding the operations, business affairs and financial condition of Parent Guarantor or any Restricted Subsidiary (including any Plan and any reports or other information required to be filed with the Internal Revenue Service, the Department of Labor and/or the PBGC with respect thereto under the Code or under ERISA), or compliance with the terms of this Agreement or any other Loan Document, as the Administrative Agent may reasonably request and (ii) information and documentation reasonably requested by the Administrative Agent or any Lender for purposes of compliance with applicable “know your customer” and anti-money laundering rules and regulations, including the Patriot Act and the Beneficial Ownership Regulation.

(l)    12-Month Cash Flow Forecast. On each Redetermination Date with respect to a Scheduled Redetermination, a forecast of cash flows and capital expenditures of the Parent Guarantor and the Restricted Subsidiaries for the immediately succeeding 12-month period (beginning with the Initial Redetermination Date), including assumptions used in calculating such projections and such other information as may be reasonably requested by the Administrative Agent, which shall be in a form reasonably satisfactory to the Administrative Agent.

(m)    Production Report and Lease Operating Statements. Concurrently with the delivery of any Reserve Report under Section 8.12, (i) a report setting forth, for each calendar month during the then current fiscal year to date, the volume of production and sales attributable to production (and the prices at which such sales were made and the revenues derived from such sales) for each such calendar month from the Oil and Gas Properties of the Borrower and the Guarantors and (ii) a report setting forth, for each calendar quarter during the then current fiscal year to date, the related ad valorem, severance and production taxes and lease operating expenses attributable to such production and incurred for each such calendar quarter (such data provided may be based on actual information received to date and not based on a GAAP accrual basis of accounting).

(n)    Certificate of Financial Officer – Consolidating Information. If, at any time, all of the Subsidiaries of the Parent Guarantor are not Consolidated Restricted Subsidiaries, then concurrently

 

87


with any delivery of financial statements under Section 8.01(a) or Section 8.01(b), a certificate of a Financial Officer setting forth consolidating spreadsheets that show all consolidated Unrestricted Subsidiaries and the eliminating entries, in such form as would be presentable to the auditors of the Parent Guarantor.

(o)    Other Accounting Reports. Promptly upon receipt thereof, subject to confidentiality provisions contained therein that are binding on the Parent Guarantor or its Subsidiaries with respect to such information, a copy of each other material report or opinion submitted to the Parent Guarantor or any of its Subsidiaries by independent accountants in connection with any annual audit made by them of the books of the Parent Guarantor or any such Subsidiary, and a copy of any response by the Parent Guarantor or any such Subsidiary to such material report or opinion.

(p)    SEC and Other Filings; Reports to Shareholders. To the extent the Parent Guarantor or the Borrower is required to file periodic reports with the Securities and Exchange Commission, promptly after the same become publicly available, copies of all periodic and other reports, proxy statements and other materials filed by the Parent Guarantor or any Subsidiary with the SEC, or with any national securities exchange and distributed by the Parent Guarantor or the Borrower to its shareholders.

(q)    List of Purchasers. Concurrently with any delivery of financial statements under Section 8.01(a), a certificate of an Responsible Officer of the Borrower setting forth a list of Persons purchasing Hydrocarbons from the Borrower or any other Credit Party which collectively account for at least 80% of the revenues resulting from the sale of all Hydrocarbons from the Borrower and such other Credit Parties during the fiscal year for which such financial statements relate.

(r)    Notice of Sales of Oil and Gas Properties and Liquidation of Swap Agreements. In the event the Parent Guarantor or any Restricted Subsidiary intends to sell, transfer, assign, Liquidate or otherwise Transfer Borrowing Base Properties, Swap Agreements or any Equity Interests in any Restricted Subsidiary that owns Borrowing Base Properties in accordance with Section 9.10 which are included in the then-current Borrowing Base, in each case, that when taken together with all other such Transfers or Liquidations since the most recent Redetermination Date, would exceed 5.0% of the then-effective Borrowing Base, at least three (3) Business Days’ prior written notice (or such shorter period as the Administrative Agent may agree in its sole discretion) of such Transfer or Liquidation, which notice shall set forth (i) the price thereof, in the case of Borrowing Base Properties (or any Equity Interests of any Restricted Subsidiary that owns Borrowing Base Properties), (ii) the anticipated decline in the mark-to-market value thereof or net cash proceeds therefrom, in the case of Swap Agreements and (iii) in each case, the date of anticipated closing and any other details thereof reasonably requested by the Administrative Agent.

(s)    Notice of Casualty Events. Prompt written notice, and in any event within three (3) Business Days after a Responsible Officer of the Borrower or of any Guarantor obtains knowledge of the occurrence of any Casualty Event or the commencement of any action or proceeding that could reasonably be expected to result in a Casualty Event having a fair market value in excess of $10,000,000.

(t)    Excess Cash Certificate. If, at the end of any Excess Cash Test Date, (i) Loans are outstanding and (ii) the Consolidated Cash Balance is greater than or equal to seventy-five percent (75%) of the Excess Cash Threshold, then the Borrower shall, on the immediately following Business Day (and in any event, no later than concurrently with any prepayment required under Section 3.04(c)(iv) on such date), provide to the Administrative Agent a certificate of a Financial Officer of the Borrower, certifying to accuracy of the calculations of the Consolidated Cash Balance and Excluded Cash, in each case, as of such Excess Cash Test Date, and attaching as an exhibit thereto reasonably detailed summary bank statements of in support of such calculations.

 

88


Documents required to be delivered pursuant to Section 8.01(a), (b), (i), (o) or (p) may be delivered electronically and shall be deemed to have been so delivered on the date (i) on which Parent Guarantor or the Borrower posts such documents, or provides a link thereto on Parent Guarantor’s or the Borrower’s public website; or (ii) on which such documents are posted on the Borrower’s behalf on an Internet or intranet website (including the SEC’s EDGAR 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).

The Administrative Agent may make available to the Lenders materials and/or information provided by or on behalf of the Parent Guarantor and/or the Borrower hereunder (collectively, “Company Materials”) by posting the Company Materials on an Approved Electronic Platform. The Parent Guarantor and the Borrower hereby acknowledge that certain of the Lenders may from time to time elect to be “public-side” Lenders (i.e., Lenders that do not wish to receive material non-public information with respect to the Borrower or its securities) (each, a “Public Lender”) and the Parent Guarantor and the Borrower hereby agree that (w) all Company Materials that are to be made available to Public Lenders shall be clearly and conspicuously marked “PUBLIC” which, at a minimum, shall mean that the word “PUBLIC” shall appear prominently on the first page thereof, (x) by marking Company Materials “PUBLIC,” the Parent Guarantor and the Borrower shall be deemed to have authorized the Administrative Agent and the Lenders to treat such Company Materials as either publicly available information or not material information (although it may be sensitive and proprietary) with respect to the Parent Guarantor, the Borrower or their respective securities for purposes of United States Federal and state securities laws, (y) all Company Materials marked “PUBLIC” are permitted to be made available through a portion of the Approved Electronic Platform designated “Public Investor” and (z) the Administrative Agent shall be entitled to treat Company Materials that are not marked “PUBLIC” as being suitable only for posting on a portion of the Approved Electronic Platform not designated “Public Investor.”

Section 8.02    Notices of Material Events. In addition to the notices required under Section 8.01 and Section 8.10(b), the Parent Guarantor or the Borrower, as applicable, will furnish to the Administrative Agent and each Lender prompt (and in any event within five (5) Business Days of a Responsible Officer becoming aware thereof) written notice of the following:

(a)    the occurrence of any Default;

(b)    the filing or commencement of, or the threat in writing of, any action, suit, proceeding, investigation or arbitration by or before any arbitrator or Governmental Authority against or affecting the Parent Guarantor or any Restricted Subsidiary not previously disclosed in writing to the Lenders that would reasonably be expected to result in a Material Adverse Effect, or the occurrence of any adverse development in any such action, suit, proceeding, investigation or arbitration that is reasonably expected to result in a Material Adverse Effect;

(c)    the filing or commencement of, or the threat in writing of, any action, suit, proceeding, investigation or arbitration by or before any arbitrator or Governmental Authority that (i) constitutes a material adverse claim against, or asserts a material cloud upon the Borrower’s or any other Credit Party’s title to, any material Mortgaged Property or other Collateral pledged pursuant to the Security Instruments or (ii) otherwise attacks the validity or (other than by asserting a Permitted Lien) the priority of the Administrative Agent’s Liens in any material Mortgaged Property or other Collateral pledged pursuant to the Security Instruments, or of the Security Instruments under which such Mortgaged Property or other Collateral is mortgaged or pledged; and

(d)    any other development that results in, or would reasonably be expected to result in a Material Adverse Effect.

 

89


Each notice delivered under this Section 8.02 shall be accompanied by a statement of a Responsible Officer setting forth the details of the event or development requiring such notice and any action taken or proposed to be taken with respect thereto.

Section 8.03    Existence; Conduct of Business. The Parent Guarantor and the Borrower will, and will cause each Restricted Subsidiary to, do or cause to be done all things necessary to preserve, renew and keep in full force and effect (a) its legal existence and (b) the rights, licenses, permits, privileges and franchises material to the conduct of its business and maintain, if necessary, its qualification to do business in each other jurisdiction in which its Oil and Gas Properties are located or the ownership of its Properties requires such qualification, except where the failure to so qualify would not reasonably be expected to have a Material Adverse Effect; provided that the foregoing shall not prohibit any merger, consolidation, liquidation or dissolution permitted under Section 9.09. The Parent Guarantor and the Borrower will, and will cause each Restricted Subsidiary to maintain its legal existence in Delaware, another State within the United States of America or the District of Columbia.

Section 8.04    Payment of Obligations. After giving effect to the Confirmation Order and the Plan of Reorganization, Parent Guarantor and the Borrower will, and will cause each Restricted Subsidiary to, pay its obligations, including Tax liabilities of Parent Guarantor and all of its Restricted Subsidiaries before the same shall become delinquent or in default, except where (a) the validity or amount thereof is being contested in good faith by appropriate proceedings and Parent Guarantor or such Restricted Subsidiary has set aside on its books adequate reserves with respect thereto in accordance with GAAP or (b) the failure to make payment pending such contest would not reasonably be expected to result in a Material Adverse Effect or result in the seizure or levy of any material Property of Parent Guarantor or any Restricted Subsidiary.

Section 8.05    Performance of Obligations under Loan Documents. The Borrower will pay the Loans in accordance with the terms hereof, and the Parent Guarantor and the Borrower will, and will cause each Restricted Subsidiary to, do and perform every act and discharge all of the obligations to be performed and discharged by them under the Loan Documents.

Section 8.06    Operation and Maintenance of Properties. The Parent Guarantor and the Borrower, at their own expense, will, and will cause each Restricted Subsidiary to:

(a)    operate its Oil and Gas Properties and other material Properties or cause such Oil and Gas Properties and other material Properties to be operated in a careful and efficient manner in compliance with all applicable contracts and agreements and in compliance with all Governmental Requirements, including applicable proration requirements and Environmental Laws, and all applicable laws, rules and regulations of every other Governmental Authority from time to time constituted to regulate the development and operation of its Oil and Gas Properties and the production and sale of Hydrocarbons and other minerals therefrom, except, in each case, where the failure to do so would not reasonably be expected to have a Material Adverse Effect.

(b)    keep and maintain all Property material to the conduct of its business in good working order and condition, ordinary wear and tear excepted, and preserve, maintain and keep in good repair, working order and efficiency (ordinary wear and tear and depletion excepted) all of its Oil and Gas Properties, except, in each case, where the failure to do so would not reasonably be expected to have a Material Adverse Effect.

(c)     promptly pay and discharge, or make reasonable and customary efforts to cause to be paid and discharged, all delay rentals, royalties, expenses and indebtedness accruing under the leases or other agreements affecting or pertaining to its Oil and Gas Properties and do all other things necessary to keep unimpaired its rights with respect thereto and prevent any forfeiture thereof or default thereunder, except where the failure to do so would not reasonably be expected to result in a Material Adverse Effect.

 

90


(d)    promptly perform or make reasonable and customary efforts to cause to be performed, in accordance with customary industry standards, the obligations required by the assignments, deeds, leases, sub-leases, contracts and agreements affecting its interests in its Oil and Gas Properties and other material Properties, except, in each case, where the failure to do so would not reasonably be expected to have a Material Adverse Effect.

(e)    To the extent the Parent Guarantor or a Restricted Subsidiary is not the operator of any Property, the Borrower shall use reasonable efforts to cause the operator to comply with this Section 8.06, but failure of the operator so to comply will not constitute a Default or an Event of Default hereunder.

Section 8.07    Insurance. The Parent Guarantor and the Borrower will, and will cause each Restricted Subsidiary to, maintain, with financially sound and reputable insurance companies, insurance in such amounts and against such risks as are customarily maintained by companies engaged in the same or similar businesses operating in the same or similar locations (it being understood and agreed that the Parent Guarantor and its Subsidiaries may self-insure to the extent and in a manner customary for companies engaged in the same or similar business of similar size and financial condition). The Administrative Agent and the Lenders shall be named as additional insureds in respect of such liability insurance policies, and the Administrative Agent shall be named as lender loss payee with respect to property loss insurance covering Collateral and such policies shall provide that the Administrative Agent shall receive not less than thirty (30) days’ prior notice of cancellation or non-renewal (or, if less, the maximum advance notice that the applicable carrier will agree to provide).

Section 8.08    Books and Records; Inspection Rights. The Parent Guarantor and the Borrower will, and will cause each Restricted Subsidiary to, keep proper books of record and account in which full, true and correct entries in conformity with GAAP are made of all dealings and transactions in relation to its business and activities (to the extent required by GAAP). The Parent Guarantor and the Borrower will, and will cause each Restricted Subsidiary to, permit any representatives designated by the Administrative Agent, upon reasonable prior notice, to visit and inspect its Properties, to examine and make extracts from its books and records, and to discuss its affairs, finances and condition with its officers and independent accountants, all at such reasonable times and as reasonably requested, and at the sole expense of Borrower not to exceed once in any calendar year (unless an Event of Default has occurred and is continuing).

Section 8.09    Compliance with Laws. The Parent Guarantor and the Borrower will, and will cause each Restricted Subsidiary to, comply with all laws, rules, regulations and orders of any Governmental Authority applicable to it or its Property, except where the failure to do so, individually or in the aggregate, would not reasonably be expected to result in a Material Adverse Effect. The Parent Guarantor and the Borrower will maintain in effect and enforce policies and procedures, to ensure regarding compliance by the Parent Guarantor, the Borrower, their Subsidiaries and each of their respective directors, officers, employees and agents with Anti-Corruption Laws and applicable Sanctions.

Section 8.10    Environmental Matters.

(a) Each of the Parent Guarantor and the Borrower will at its sole expense: (i) comply, and cause its Properties and operations and each Subsidiary and each Subsidiary’s Properties and operations to comply, with all applicable Environmental Laws, to the extent the breach thereof would be reasonably expected to have a Material Adverse Effect; (ii) not Release or threaten to Release, and cause each Subsidiary not to Release or threaten to Release, any Hazardous Material on, under, about or from any of the Parent Guarantor’s, the Borrower’s or their Subsidiaries’ Properties or any other property offsite the

 

91


Property to the extent caused by the Parent Guarantor’s, the Borrower’s or any of their Subsidiaries’ operations except in compliance with applicable Environmental Laws, to the extent such Release or threatened Release would reasonably be expected to have a Material Adverse Effect; (iii) timely obtain or file, and cause each Subsidiary to timely obtain or file, all Environmental Permits, if any, required under applicable Environmental Laws to be obtained or filed in connection with the operation or use of the Parent Guarantor’s, the Borrower’s or their Subsidiaries’ Properties, to the extent such failure to obtain or file would reasonably be expected to have a Material Adverse Effect; (iv) promptly commence and diligently prosecute to completion, and cause each Subsidiary to promptly commence and diligently prosecute to completion, any assessment, evaluation, investigation, monitoring, containment, cleanup, removal, repair, restoration, remediation or other remedial obligations (collectively, the “Remedial Work”) in the event any Remedial Work is required of the Parent Guarantor or any Subsidiary under applicable Environmental Laws because of or in connection with the actual or suspected past, present or future Release or threatened Release of any Hazardous Material on, under, about or from any of the Parent Guarantor, the Borrower’s or their Subsidiaries’ Properties, to the extent failure to do so would reasonably be expected to have a Material Adverse Effect; and (v) conduct, and cause its Subsidiaries to conduct, their respective operations and businesses in a manner that will not unreasonably expose any Property or Person to Hazardous Materials that would reasonably be expected to cause the Parent Guarantor, the Borrower or their Subsidiaries to owe damages or compensation pursuant to applicable Environmental Laws that would reasonably be expected to cause a Material Adverse Effect.

(b)    If the Parent Guarantor or any Subsidiary receives written notice of any action or, investigation or inquiry by any Governmental Authority or any threatened demand or lawsuit by any Person against the Parent Guarantor, the Borrower or their Subsidiaries or their Properties, in each case in connection with any Environmental Laws, the Borrower will within fifteen days after any Responsible Officer obtains actual knowledge thereof give written notice of the same to Administrative Agent if such action, investigation, inquiry, demand or lawsuit would reasonably be expected to cause a Material Adverse Effect.

(c)    In connection with any acquisition by the Parent Guarantor or any Restricted Subsidiary of any Oil and Gas Property, other than an acquisition of additional interests in Oil and Gas Properties in which the Parent Guarantor or any Restricted Subsidiary previously held an interest, to the extent the Parent Guarantor or such Restricted Subsidiary obtains or is provided with same, the Parent Guarantor and the Borrower will, and will cause each Restricted Subsidiary to, promptly following the Parent Guarantor’s or such Restricted Subsidiary’s obtaining or being provided with the same, deliver to the Administrative Agent such final and non-privileged material environmental reports of such Oil and Gas Properties as are reasonably requested by the Administrative Agent.

Section 8.11    Further Assurances.

(a)    Each of the Parent Guarantor and the Borrower at its sole expense will, and will cause each Restricted Subsidiary to, promptly execute and deliver to the Administrative Agent all such other documents, agreements and instruments reasonably requested by the Administrative Agent to comply with, cure any defects or accomplish the conditions precedent, covenants and agreements of the Parent Guarantor or any Restricted Subsidiary, as the case may be, in the Loan Documents, including the Notes, or to further evidence and more fully describe the collateral intended as security for the Obligations (including an updated Perfection Certificate, exhibits to Security Instruments (which shall be in recordable form for the applicable jurisdiction) and any other information reasonably requested in connection with the identification of any Collateral), or to correct any omissions in this Agreement or the Security Instruments, or to state more fully the obligations secured therein, or to perfect, protect or preserve any Liens created pursuant to this Agreement or any of the Security Instruments or the priority thereof, or to make any recordings, file any notices or obtain any consents that may be reasonably necessary or appropriate in connection therewith.

 

92


(b)    The Parent Guarantor and the Borrower hereby authorize the Administrative Agent (or its designee) to file one or more financing or continuation statements, and amendments thereto, describing all or any part of the Collateral without the signature of the Borrower or any Guarantor where permitted by law. A carbon, photographic or other reproduction of the Security Instruments or any financing statement covering the Collateral or any part thereof shall be sufficient as a financing statement where permitted by law. Each of the Parent Guarantor and the Borrower acknowledges and agrees that any such financing statement may describe the collateral as “all assets” of the applicable Credit Party or words of similar effect as may be required by the Administrative Agent.

Section 8.12    Reserve Reports.

(a)    In addition to the Initial Reserve Report which has been delivered on or prior to the Effective Date, on or before each date set out in the right column of the following table, the Parent Guarantor shall furnish to the Administrative Agent and the Lenders a Reserve Report evaluating the Oil and Gas Properties of the Borrower and the Guarantors as of the date set out in the same line in the left column of such table:

 

As-of Date

  

Delivery Date

January 1, 2021 and each January 1 thereafter    the next following March 1
July 1, 2021 and each July 1 thereafter    the next following September 1

(b)    The Reserve Reports as of January 1 of each year shall be prepared by one or more Approved Petroleum Engineers, and the Reserve Reports as of July 1 of each year shall be prepared at the Parent Guarantor’s option, either by Approved Petroleum Engineers or by the internal reserve engineering staff of the Parent Guarantor and/or the Borrower, provided that if the July 1 Reserve Report is prepared by the internal reserve engineering staff of the Parent Guarantor and/or the Borrower, such Reserve Report shall be (i) certified by the chief engineer of the Parent Guarantor and/or the Borrower as true and accurate in all material respects and (ii) prepared in accordance with the procedures used in the immediately preceding January 1 Reserve Report.

(c)    In the event of an Interim Redetermination, the Parent Guarantor shall furnish to the Administrative Agent and the Lenders a Reserve Report prepared either by Approved Petroleum Engineers or by the Parent Guarantor’s and/or the Borrower’s internal reserve engineering staff, in each case in accordance with the procedures used in the immediately preceding January 1 Reserve Report. For any Interim Redetermination requested by the Administrative Agent or the Borrower pursuant to Section 2.07(b), the Parent Guarantor shall provide such Reserve Report with an “as of” date as required by the Administrative Agent as soon as possible, but in any event no later than thirty (30) days following the receipt of such request.

(d)    With the delivery of each Reserve Report (other than the Initial Reserve Report), the Borrower shall provide to the Administrative Agent and the Lenders a certificate from a Responsible Officer on behalf of the Parent Guarantor certifying that in all material respects (i) the information contained in the Reserve Report and any other information delivered in connection therewith is true and correct in all material respects, (ii) the Parent Guarantor or its Restricted Subsidiaries owns good and defensible title to the Oil and Gas Properties evaluated in such Reserve Report and such Properties are free of all Liens except for Permitted Liens, (iii) except as set forth on an exhibit to the certificate, on a net basis there are no gas imbalances, take or pay or other prepayments in excess of the volume specified in Section 7.18 with respect to its Oil and Gas Properties evaluated in such Reserve Report which would require the Parent Guarantor

 

93


or any of its Restricted Subsidiaries to deliver Hydrocarbons either generally or produced from such Oil and Gas Properties at some future time without then or thereafter receiving full payment therefor, (iv) none of the Borrowing Base Properties have been sold since the date of the last Borrowing Base determination except as set forth on an exhibit to the certificate, which certificate shall list all such Borrowing Base Properties sold, (v) attached thereto is a list of all marketing agreements entered into subsequent to the later of the date hereof and the most recently delivered Reserve Report which the Parent Guarantor would reasonably be expected to have been obligated to list on Schedule 7.19 had such agreement been in effect on the date hereof and (vi) the percentage of the total value of the Borrowing Base Properties that the value of the then Mortgaged Properties represents in compliance with Section 8.14(a).

Section 8.13    Title Information.

(a)    On or before the delivery to the Administrative Agent and the Lenders of each Reserve Report required by Section 8.12(a), the Parent Guarantor shall deliver title information in form and substance acceptable to the Administrative Agent covering enough of the Oil and Gas Properties of the Borrower and the Guarantors evaluated by such Reserve Report that were not included in the immediately preceding Reserve Report, so that the Administrative Agent shall have received, together with title information previously delivered to the Administrative Agent, satisfactory title information on at least 90% of the total PV-9 of the Borrowing Base Properties of the Borrower and the Guarantors evaluated by such Reserve Report.

(b)    If the Parent Guarantor has provided title information for additional Oil and Gas Properties under Section 8.13(a), the Parent Guarantor shall, within sixty (60) days of notice from the Administrative Agent that title defects or exceptions exist with respect to such additional Oil and Gas Properties (or such longer period as the Administrative Agent may approve in its sole discretion), either (i) cure any such title defects or exceptions (including defects or exceptions as to priority) which are not permitted by Section 9.03 raised by such information, (ii) substitute acceptable Mortgaged Properties with no title defects or exceptions having an equivalent or greater value or (iii) deliver title information in form and substance reasonably acceptable to the Administrative Agent so that the Administrative Agent shall have received, together with title information previously delivered to the Administrative Agent, reasonably satisfactory title information on at least 90% of the PV-9 of the Borrowing Base Properties of the Borrower and the Guarantors evaluated by such Reserve Report.

(c)    If the Parent Guarantor is unable to cure any title defect requested by the Administrative Agent to be cured within the 60-day period of time required by clause (b) above or the Parent Guarantor does not comply with the requirements to provide acceptable title information covering at least 90% of the PV-9 of the Borrowing Base Properties of the Borrower and the Guarantors evaluated in the most recent Reserve Report within such 60-day period, such failure shall not be a Default, but instead the Required Lenders shall have the right to exercise the following remedy in their sole discretion from time to time, and any failure to so exercise this remedy at any time shall not be a waiver as to future exercise of the remedy by the Administrative Agent or the Lenders. To the extent that the Required Lenders are not reasonably satisfied with title to any Mortgaged Property after the 60-day period has elapsed, such unacceptable Mortgaged Property shall not count towards the mortgage requirement in Section 8.14(a), and the Administrative Agent may send a notice to the Parent Guarantor, the Borrower and the Lenders that the then outstanding Borrowing Base shall be reduced by an amount as determined by the Required Lenders (which amount may be proposed by the Administrative Agent) to cause the Parent Guarantor to be in compliance with the requirement to provide reasonably acceptable title information covering at least 90% of the PV-9 of the Borrowing Base Properties evaluated by such Reserve Report. This new Borrowing Base shall become effective immediately after receipt of such notice.

 

94


Section 8.14    Additional Collateral; Additional Guarantors.

(a)    In connection with each redetermination of the Borrowing Base following the Effective Date, the Parent Guarantor shall review the Reserve Report and the list of current Mortgaged Properties (as described in Section 8.12(d)) to ascertain whether the Mortgaged Properties represent at least 90% of the total PV-9 of the Borrowing Base Properties of the Borrower and the Guarantors evaluated by such Reserve Report, after giving effect to exploration and production activities, acquisitions, dispositions and production. In the event that the Mortgaged Properties do not satisfy the foregoing requirements, then the Parent Guarantor shall, and shall cause its Restricted Subsidiaries to, promptly grant, within thirty (30) days (or such later date as the Administrative Agent may agree in its sole discretion) after delivery of the certificate required under Section 8.12(d), to the Administrative Agent, as security for the Obligations, Security Instruments covering additional Borrowing Base Properties not already subject to a Lien of the Security Instruments such that after giving effect thereto, the Mortgaged Properties will comply with such requirements. All such Liens will be created and perfected by and in accordance with the provisions of deeds of trust, mortgages, security agreements and financing statements or other Security Instruments, all in form and substance reasonably satisfactory to the Administrative Agent and in sufficient executed (and acknowledged where necessary or appropriate) counterparts for recording purposes. In order to comply with the foregoing, if any Restricted Subsidiary (i) places a Lien on its Oil and Gas Properties and such Restricted Subsidiary is not a Guarantor and/or (ii) incurs or guarantees any Material Indebtedness, then in each case, it shall become a Guarantor and comply with Section 8.14(b).

(b)    The Parent Guarantor shall promptly cause each Subsidiary (other than Excluded Subsidiaries) to guarantee the Obligations pursuant to the Guaranty and Collateral Agreement. In connection with any such guaranty, the Parent Guarantor shall, or shall cause such Subsidiary to, promptly, but in any event no later than thirty (30) days (as may be extended by the Administrative Agent in its sole discretion) the formation or acquisition (or other similar event) of such Subsidiary, or the date such Subsidiary ceases to be an Excluded Subsidiary, to (i) execute and deliver a supplement to the Guaranty and Collateral Agreement, executed by such Subsidiary, (ii) pledge all of the Equity Interests of such Subsidiary that are owned by the Borrower or any Guarantor (and deliver the original stock certificates, if any, evidencing the Equity Interests of such Subsidiary, together with an appropriate undated stock power for each certificate duly executed in blank by the registered owner thereof), (iii) grant Liens in favor of the Administrative Agent on all Property of such Subsidiary (other than Property excluded from the grant of such Liens pursuant to the terms of the Security Instruments) and (iv) execute and deliver such other additional closing documents, certificates and legal opinions as shall reasonably be requested by the Administrative Agent. It is agreed and understood that the Parent Guarantor may (in its sole discretion) cause any Subsidiary to become a Guarantor and to execute and deliver the Guaranty and Collateral Agreement (or a supplement to such document).

(c)    Notwithstanding any provision in any of the Loan Documents to the contrary, (i) in no event is any Building (as defined in the applicable Flood Insurance Regulations) or Manufactured (Mobile) Home (as defined in the applicable Flood Insurance Regulations) owned by the Borrower or any other Credit Party required to be included in the Mortgaged Property and no Building or Manufactured (Mobile) Home shall be encumbered by any Security Instrument; provided, that the Borrower’s and the other Credit Parties’ interests in all lands and Hydrocarbons situated under any such Building or Manufactured (Mobile) Home shall not be excluded from the Mortgaged Property and shall be encumbered by all applicable Security Instruments and (ii) no Foreign Subsidiary shall be required to be a Guarantor.

(d)    The Parent Guarantor and the Borrower shall cause all Borrowing Base Properties to at all times be owned by the Borrower or a Wholly-Owned Subsidiary.

 

95


Section 8.15    Unrestricted Subsidiaries. The Parent Guarantor and the Borrower:

(a)    will cause the management, business and affairs of each of the Parent Guarantor, the Restricted Subsidiaries and the Unrestricted Subsidiaries to be conducted in such a manner (including, without limitation, by keeping separate books of account, furnishing separate financial statements of Unrestricted Subsidiaries to creditors and potential creditors thereof and by not permitting Properties of the Parent Guarantor and the respective Restricted Subsidiaries to be commingled) so that each Unrestricted Subsidiary that is a corporation will be treated as a corporate entity separate and distinct from the Parent Guarantor and the Restricted Subsidiaries.

(b)    will not, and will not permit any of the Restricted Subsidiaries to, incur, assume, guarantee or be or become liable for any Indebtedness of any of the Unrestricted Subsidiaries.

(c)    will not permit any Unrestricted Subsidiary to hold any Equity Interest in, or any Indebtedness of, the Parent Guarantor or any Restricted Subsidiary.

Section 8.16    Commodity Exchange Act Keepwell Provisions. The Borrower hereby absolutely, unconditionally and irrevocably undertakes to provide to each Credit Party (other than the Borrower) such funds or other support as may be needed from time to time by such Credit Party in order for such Credit Party to honor its Obligations with respect to any Swap Agreements or CFTC Hedging Obligations for which it is liable, whether such Swap Agreements or CFTC Hedging Obligations are entered into directly by such Credit Party or are guaranteed under the Guaranty and Collateral Agreement (provided, however, that the Borrower shall only be liable under this Section 8.16 for the maximum amount of such liability that can be hereby incurred without rendering its obligations under this Section 8.16, or otherwise under this Agreement or any Loan Document, 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 8.16 shall remain in full force and effect until this Agreement is terminated in accordance with its terms. Borrower intends that this Section 8.16 constitute a “keepwell, support, or other agreement” for the benefit of each other Credit Party for all purposes of Section 1a(18)(A)(v)(II) of the Commodity Exchange Act.

Section 8.17    ERISA Compliance. The Parent Guarantor and the Borrower will promptly furnish and will cause the Subsidiaries to promptly furnish to the Administrative Agent after written request therefor by the Administrative Agent, copies of each annual and other report with respect to each Plan or any trust created thereunder, and promptly upon becoming aware of the occurrence of any “prohibited transaction,” as described in section 406 of ERISA or in section 4975 of the Code for which no exemption exists or is available by statute, regulation, administrative exemption, or otherwise, in connection with any Plan or any trust created thereunder and that is reasonably expected to result in liability to the Parent Guarantor or any Subsidiary that is expected to have Material Adverse Effect, a written notice signed by the President or the principal Financial Officer or the Subsidiary, as the case may be, specifying the nature thereof, what action the Parent Guarantor or the Subsidiary or the ERISA Affiliate is taking or proposes to take with respect thereto, and, when known, any action taken or proposed by the Internal Revenue Service or the Department of Labor with respect thereto.

Section 8.18    Use of Proceeds and Letters of Credit. Each of the Parent Guarantor and the Borrower shall, and shall cause each of their respective Subsidiaries to, use the proceeds of the Loans and the Letters of Credit in accordance with Section 7.21.

 

96


Section 8.19    Deposit Accounts, Commodities Accounts and Securities Accounts; Location of Proceeds of Loans.

(a)    Subject to Section 8.21(a), the Parent Guarantor will, and will cause each other Credit Party to, cause each of their respective Deposit Accounts, Commodities Accounts or Securities Accounts (in each case, other than Excluded Accounts) to, within thirty (30) days (or such later date as the Administrative Agent may agree in its sole discretion) following the opening of any such account, at all times be subject to an Account Control Agreement in accordance with and to the extent required by the Guaranty and Collateral Agreement.

(b)    Subject to Section 8.21(a), the Parent Guarantor will, and will cause each other Credit Party to, until the proceeds of any Loans are transferred to a third party in a transaction not prohibited by the Loan Documents, hold the proceeds of any Loans made under this Agreement in a Deposit Account and/or a Securities Account that is subject to an Account Control Agreement (unless such proceeds are transferred to an Excluded Account described in clauses (c) through (g) of the definition thereof to be used exclusively for the purposes described therein). All Deposit Accounts of the Credit Parties (other than Excluded Accounts) shall at all times be maintained with a Lender.

Section 8.20    Swap Agreements. On the Effective Date, the Parent Guarantor and its Restricted Subsidiaries shall have entered into, and thereafter maintain, as of the Effective Date and the last day of each fiscal quarter of the Parent Guarantor thereafter, Swap Agreements with one or more Approved Counterparties that have notional volumes of not less than (a) 65% of the projected production of oil and gas from the Parent Guarantor’s and its Restricted Subsidiaries’ total Proved Developed Producing Reserves (based on the Reserve Report most recently delivered to the Administrative Agent), calculated separately, for the immediately succeeding 12-month period and (b) 35% of the projected production of oil and natural gas from the Parent Guarantor’s and its Restricted Subsidiaries’ total Proved Developed Producing Reserves (based on the Reserve Report most recently delivered to the Administrative Agent), calculated separately, for the 12-month period immediately succeeding the 12-month period described in clause (a) (clauses (a) and (b), collectively, the “Required Hedges”) (it being understood and agreed that compliance with this Section 8.20 shall be determined in accordance with the Hedging Principles); provided, that solely to the extent the Parent Guarantor and its Restricted Subsidiaries are unable to enter into and thereafter maintain the Required Hedges as of the Effective Date after the use of commercially reasonable efforts to do so (as determined by the Parent Guarantor in good faith), the Parent Guarantor and its Restricted Subsidiaries shall be required to enter into the Required Hedges no later than the date that is thirty (30) days after the Effective Date (or such later date as the Administrative Agent may agree in its sole discretion) (the “Extended Hedge Deadline”); provided, further, that if the Parent Guarantor reasonably determines in good faith that, after working in good faith with the applicable Approved Counterparties, such Approved Counterparties have insufficient aggregate capacity or are unwilling or otherwise fail or refuse to enter into the Required Hedges with one or more Credit Parties on commercially reasonable terms substantially consistent with terms available to other similarly situated borrowers under reserve-based revolving credit facilities in the oil and gas industry by the Extended Hedge Deadline (the “Hedge Availability Shortfall Event”), then (x) on and after the Extended Hedge Deadline, the minimum percentages specified in the definition “Required Hedges” shall be reduced for purposes of compliance with this Section 8.20 solely to the extent necessary to reflect the maximum volumes for which such Approved Counterparties have sufficient aggregate capacity, willingness or otherwise agree to enter into with respect to such Required Hedges (as determined by the Parent Guarantor in good faith); provided, that the reduction of such minimum percentages described in the immediately preceding proviso shall automatically terminate, and such immediately preceding proviso shall be of no further force and effect during the term of this Agreement, on the first date on which the Hedge Availability Shortfall Event is no longer continuing and (y) during the period from the Extended Hedge Deadline until the Initial Redetermination Date, the Administrative Agent shall have the option to reduce the Borrowing Base in an amount determined by the Administrative Agent in its sole discretion (provided that no new Reserve Reports will need to be provided by the Parent Guarantor unless it so elects) to reflect the Borrowing Base Value accorded to such Required Hedges in the initial determination of the Borrowing Base to the extent that they were not entered into.

 

97


Section 8.21    Post-Effective Date Covenants.

(a)    Account Control Agreements. Notwithstanding the requirements set forth in Section 8.19, with respect to each Deposit Account, Commodity Account and Securities Account of the Credit Parties in existence on the Effective Date (other than, in each case, Excluded Accounts for so long as it is an Excluded Account), on or prior to the date that is ten (10) Business Days following the Effective Date (or such later date as the Administrative Agent may agree in its sole discretion), the Borrower and each Guarantor shall deliver to the Administrative Agent duly executed Account Control Agreements in accordance with and to the extent required by the Guaranty and Collateral Agreement.

(b)    Insurance Certificates and/or Endorsements. To the extent that the Borrower and the other Credit Parties have not delivered the insurance certificates and/or endorsements required pursuant to Section 6.01(j) as of the Effective Date, the Borrower and/or the other Credit Parties shall, within thirty (30) days of the Effective Date (or such later date as the Administrative Agent may agree in its sole discretion) deliver such insurance certificates and/or endorsements.

ARTICLE IX

NEGATIVE COVENANTS

Until Payment in Full, each of Parent Guarantor and the Borrower covenants and agrees with the Lenders that:

Section 9.01    Financial Covenants.

(a)    Consolidated Net Leverage Ratio. Commencing with the fiscal quarter ending December 31, 2020, the Parent Guarantor will not permit the Consolidated Net Leverage Ratio as of the last day of any fiscal quarter to exceed 3.50 to 1.00.

(b)    Current Ratio. Commencing with the fiscal quarter ending December 31, 2020, the Parent Guarantor will not permit, as of the last day of any fiscal quarter, the Current Ratio as of such date to be less than 1.0 to 1.0.

Section 9.02    Indebtedness. The Parent Guarantor and the Borrower will not, and will not permit any Restricted Subsidiary to, incur, create, assume or suffer to exist any Indebtedness, except:

(a)    the Loans, any Notes and other Obligations arising under the Loan Documents;

(b)    Indebtedness existing on the Effective Date and that is disclosed to the Lenders on Schedule 9.02;

(c)    Indebtedness under Capital Leases or that constitutes Purchase Money Indebtedness; provided that the aggregate principal amount of all Indebtedness described in this Section 9.02(c) at any one time outstanding shall not exceed $50,000,000 in the aggregate;

(d)    intercompany Indebtedness owing by the Borrower or any Guarantor to the Borrower or any Guarantor to the extent permitted by Section 9.05(c); provided that such Indebtedness is not held, assigned, transferred, negotiated or pledged to any Person other than a Credit Party; provided further, that any such Indebtedness owed by either the Borrower or a Guarantor shall be subordinated to the Obligations on terms set forth in the Guaranty and Collateral Agreement;

 

98


(e)    Indebtedness constituting a guaranty by Borrower or any other Credit Party of other Indebtedness permitted to be incurred under this Section 9.02;

(f)    Indebtedness in respect of Specified Additional Indebtedness in an aggregate principal amount not to exceed $400,000,000 at any one time outstanding; provided that (i) at the time of, and after giving effect to, the incurrence of such Indebtedness, no Default, Event of Default or Borrowing Base Deficiency has occurred and is continuing, (ii) after giving pro forma effect to such issuance or incurrence and any concurrent repayment of Indebtedness, (A) the Consolidated Net Leverage Ratio shall not exceed 3.00 to 1.00 and (B) the Current Ratio shall not be less than 1.00 to 1.00 (it being understood that for purposes of calculating the Consolidated Net Leverage Ratio and the Current Ratio, (x) the Consolidated Net Leverage Ratio and Current Liabilities shall give pro forma effect to the issuance or incurrence of such Indebtedness and any other Indebtedness incurred through such date of determination and any concurrent repayment of Indebtedness and (y) Current Assets shall exclude the amount of any cash to be received by the Parent Guarantor or any Subsidiary in connection with the incurrence of such Specified Additional Indebtedness for the purposes of determining the pro forma Current Ratio and such cash shall not be permitted to be netted under clause (b) of the definition of “Consolidated Net Debt” for purposes of determining the pro forma Consolidated Net Leverage Ratio), (iii) at the time of the issuance or incurrence of such Indebtedness, the Borrowing Base is adjusted as contemplated by Section 2.07(e) and the Borrower makes any prepayment required under Section 3.04(c)(iii) and (iv) the Borrower shall have complied with Section 8.01(i); and any Permitted Refinancing Indebtedness in respect of such Specified Additional Indebtedness;

(g)    Indebtedness under Swap Agreements permitted pursuant to Section 9.17;

(h)    Indebtedness associated with bonds or surety obligations (i) required in connection with self-insurance or the performance of contracts or (ii) required by Governmental Requirements in connection with the operation of the Oil and Gas Properties;

(i)    endorsements of negotiable instruments for collection in the ordinary course of business and Debt arising from the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently (except in the case of daylight overdrafts) drawn against insufficient funds in the ordinary course of business, in each case, so long as such Debt is extinguished within 5 Business Days of the incurrence thereof;

(j)    Indebtedness owed to insurance companies for premiums on policies required by Section 8.07; and

(k)    other Indebtedness so long as the aggregate principal amount of all Indebtedness described in this Section 9.02(k) does not exceed $25,000,000 at any one time outstanding.

Section 9.03     Liens. Parent Guarantor and the Borrower will not, and will not permit any Restricted Subsidiary to, create, incur, assume or permit to exist any Lien on any of its Properties (now owned or hereafter acquired), except:

(a)    Liens securing the Obligations;

(b)    Excepted Liens;

 

99


(c)    [reserved];

(d)    Liens securing Capital Leases and Purchase Money Indebtedness permitted by Section 9.02(c) but only on the Property under lease or the Property purchased, constructed or improved with such Purchase Money Indebtedness;

(e)    Liens securing Indebtedness owed to an insurance company permitted by Section 9.02(j); provided that such liens attach solely to the unearned portion of such premiums.

(f)    [reserved];

(g)    Liens on cash advances in favor of the seller of any Property to be acquired in an Investment permitted under Section 9.05 that are to be applied against the purchase price for such Property; and

(h)    other Liens securing obligations not to exceed $10,000,000 in the aggregate at any time outstanding.

Section 9.04    Restricted Payments and Payments in Respect of Certain Indebtedness.

(a)    Restricted Payments. The Parent Guarantor and the Borrower shall not, and shall not permit any Restricted Subsidiary to, declare or make, or agree to pay or make, directly or indirectly (collectively in this section, “make”), any Restricted Payment except:

(i)    the Borrower or any Guarantor (or any Subsidiary of the Borrower or any Guarantor) may make Restricted Payments to the Borrower or any Guarantor;

(ii)    the Parent Guarantor may make Restricted Payments with respect to its Equity Interests payable solely in additional shares of (or the right to acquire additional shares of) its Equity Interests (other than Disqualified Capital Stock);

(iii)    the Parent Guarantor and its Restricted Subsidiaries may make Restricted Payments pursuant to equity incentive plans, stock option plans or other benefit plans for the benefit of the employees, management and directors of Parent Guarantor and its Restricted Subsidiaries so long as no Event of Default exists at the time of such payment or results therefrom;

(iv)    the Parent Guarantor may purchase, repurchase, redeem, defease, exchange or otherwise acquire or retire any Equity Interests of the Parent Guarantor by conversion into, or by or in exchange for, Equity Interests of the Parent Guarantor (other than Disqualified Capital Stock); and

(v)    from and after September 1, 2021, the Parent Guarantor and its Restricted Subsidiaries may make Restricted Payments in an amount not to exceed Distributable Free Cash Flow as of the time such Restricted Payment is made, so long as (A) after giving pro forma effect thereto, (x) Availability is not less than 20% of the Loan Limit in effect at such time and (y) the Consolidated Net Leverage Ratio is less than or equal to 2.00 to 1.00 and (B) at the time of and immediately after giving effect thereto, no Event of Default or Borrowing Base Deficiency exists and is continuing.

(b)    Redemptions. The Parent Guarantor and the Borrower will not, and will not permit any Restricted Subsidiary to, prior to the date that is ninety-one (91) days after the Maturity Date, call, make or offer to make any optional or voluntary Redemption of or otherwise optionally or voluntarily Redeem (whether in whole or in part) (i) any principal amount of Specified Additional Indebtedness

 

100


permitted under Section 9.02(f) or (ii) any Permitted Refinancing Indebtedness in respect thereof (the foregoing clauses (i) and (ii), collectively, “Junior Indebtedness”), except:

(i)    so long as no Event of Default or Borrowing Base Deficiency has occurred and is continuing or would result therefrom, the Parent Guarantor or the applicable Restricted Subsidiary may, substantially contemporaneously with (and, in any case, within one hundred twenty (120) days of) its receipt of any cash proceeds from any sale by Parent Guarantor of Equity Interests (other than Disqualified Capital Stock) in Parent Guarantor, voluntarily prepay or otherwise Redeem any principal of Junior Indebtedness in an amount equal to the amount of the net cash proceeds received from such sale of Equity Interests (other than Disqualified Capital Stock) of Parent Guarantor;

(ii)    the Parent Guarantor or the applicable Restricted Subsidiary may Redeem Junior Indebtedness with the proceeds of, or in exchange for, Permitted Refinancing Indebtedness in respect thereof; and

(iii)    from and after September 1, 2021, the Credit Parties may Redeem Junior Indebtedness in an amount not to exceed Distributable Free Cash Flow as of the time such Redemption is made, so long as after giving pro forma effect thereto, (x) Availability is not less than 20% of the Loan Limit in effect at such time, (y) the Consolidated Net Leverage Ratio is less than or equal to 2.00 to 1.00 and (z) at the time of immediately after giving effect thereto, no Event of Default or Borrowing Base Deficiency exists and is continuing.

Section 9.05    Investments, Loans and Advances. The Parent Guarantor and the Borrower will not, and will not permit any Restricted Subsidiary to, make, or permit to remain outstanding, any Investments in or to any Person, except that the foregoing restriction shall not apply to:

(a)    Investments existing on the Effective Date and that are disclosed to the Lenders in Schedule 9.05;

(b)    Investments in Cash and Cash Equivalents;

(c)    Investments made by (i) the Parent Guarantor or the Borrower in or to any Guarantor or any Person that will, upon making such Investment, become a Guarantor or made by any Guarantor (including any newly formed Restricted Subsidiary that becomes a Guarantor in accordance with this Agreement) in or to the Borrower or any other Guarantor (including any newly formed Restricted Subsidiary that becomes a Guarantor in accordance with this Agreement) or any Person that will, contemporaneously with the making of such Investment, become a Guarantor and (ii) any Credit Party in or to any other Credit Party;

(d)    loans or advances to employees, officers or directors in the ordinary course of business of the Parent Guarantor or any Restricted Subsidiaries, in each case only as permitted by applicable law, but in any event not to exceed $5,000,000 in the aggregate at any time outstanding;

(e)    Investments in stock, obligations or securities received in settlement of debts arising from Investments permitted under this Section 9.05 or from accounts receivable and other similar obligations arising in the ordinary course of business, which Investments are obtained by the Parent Guarantor or any Restricted Subsidiary as a result of a bankruptcy or other insolvency proceeding of, or difficulties in collecting from, the obligor in respect of such obligations;

(f)    Investments constituting Indebtedness permitted under Section 9.02;

 

101


(g)    subject to the limits in Section 9.06 (and without duplication of Investments permitted under clause (h) below), Investments by the Borrower or another Restricted Subsidiary in direct ownership interests in additional Oil and Gas Properties and gathering, transportation, processing electricity and power generation or related systems or related to gas and mineral leases, unitization agreements, joint bidding agreements, service contracts, operating agreements, processing agreements, area of mutual interest agreements, farm-in, farm-out, joint operating agreement or other similar arrangements which are usual and customary in the oil and gas exploration and production business located within the geographic boundaries of the United States of America;

(h)    subject to the limits in Section 9.06, 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 another Restricted Subsidiary with third parties in the ordinary course of business; provided that (i) any such venture is engaged exclusively in oil and gas exploration, development, production, processing and related activities, including transportation, (ii) the interest in such venture is acquired in the ordinary course of business and on fair and reasonable terms and (iii) such venture interests acquired and capital contributions made (valued as of the date such interest was acquired or the contribution made) do not exceed, in the aggregate at any time outstanding an amount equal to $10,000,000;

(i)    Investments made from and after September 1, 2021, in an amount not to exceed Distributable Free Cash Flow as of the time such Investment is made, so long as (A) after giving pro forma effect thereto, (x) Availability is not less than 20% of the Loan Limit in effect at such time and (y) the Consolidated Net Leverage Ratio is less than or equal to 2.00 to 1.00 and (B) at the time of and immediately after giving effect thereto, no Event of Default or Borrowing Base Deficiency has occurred and is continuing;

(j)    Investments constituting Restructuring Transactions;

(k)    Investments constituting units of beneficial ownership issued by the Trust owned on the Closing Date;

(l)    Investments (including Indebtedness obligations) received in connection with the bankruptcy or reorganization of suppliers and customers and in settlement of delinquent obligations of, and other disputes with, customers and suppliers arising in the ordinary course of business;

(m)    Investments constituting deposits made in connection with the purchase of goods or services or to secure the performance of statutory obligations constituting Liens permitted hereunder, in each case in the ordinary course of business; and

(n)    other Investments that do not exceed $10,000,000 in the aggregate at any time.

Section 9.06    Nature of Business; International Operations. The Parent Guarantor and the Borrower will not, and will not permit any Restricted Subsidiary to, allow any material change to be made in the character of its business as a company engaged in the Oil and Gas Business. From and after the date hereof, the Parent Guarantor and the Restricted Subsidiaries will not acquire or make any other expenditure with respect to (whether such expenditure is capital, operating or otherwise) or commit to acquire (or make any other expenditure with respect to) any Oil and Gas Properties not located within the geographical boundaries of the United States of America. The Parent Guarantor shall not directly own any interest in any Borrowing Base Properties. Any Borrowing Base Properties of the Credit Parties will at all times be owned by the Borrower or one or more other Restricted Subsidiaries.

 

102


Section 9.07    ERISA Compliance. The Parent Guarantor and the Borrower will not, and will not permit any Subsidiary to, at any time:

(a)    engage in any transaction in connection with which the Parent Guarantor or a Subsidiary could be subjected to either a civil penalty assessed pursuant to subsections (i) or (l) of section 502 of ERISA or a tax imposed by section 4975 of the Code, except where such penalty or tax would not reasonably be expected to have a Material Adverse Effect;

(b)    fail to make full payment when due of all amounts which, under the provisions of any Plan, agreement relating thereto or applicable law, Parent Guarantor or a Subsidiary is required to pay as contributions thereto, except where such failure would not reasonably be expected to have a Material Adverse Effect; or

(c)    contribute to or assume an obligation to contribute to, or permit any ERISA Affiliate to contribute to or assume an obligation to contribute to, any employee welfare benefit plan, as defined in section 3(1) of ERISA that provides benefits to retirees or former employees of such entities that may not be terminated by such entities in their sole discretion at any time without any liability other than for benefits due as of, or claims incurred prior to, the effective date of such termination, except where such contribution or assumption of an obligation would not reasonably be expected to have a Material Adverse Effect.

Section 9.08    Sale or Discount of Notes or Receivables. Except for the sale of defaulted notes or accounts receivable not made in connection with any financing transaction, the Parent Guarantor and the Borrower will not, and will not permit any Restricted Subsidiary to, sell (with or without recourse or discount) any of its notes receivable or accounts receivable to any Person other than the Borrower or any Guarantor. The settlement or compromise of joint interest billings or of accounts receivable and other receivables in connection with the collection or compromise thereof will not constitute a sale for the purposes of the preceding sentence.

Section 9.09    Mergers, Etc.. The Parent Guarantor and the Borrower will not, and will not permit any Restricted Subsidiary to, merge into or with or consolidate with any other Person, or permit any other Person to merge into or consolidate with it, or sell, transfer, lease or otherwise dispose of (whether in one transaction or in a series of transactions) all or substantially all of its Property to any other Person (whether now owned or hereafter acquired) (any such transaction, a “consolidation”), or liquidate or dissolve; provided that, so long as no Event of Default has occurred and is then continuing:

(a)    any Restricted Subsidiary may be liquidated or may participate in a merger or consolidation with the Borrower or the Parent Guarantor (provided that the Borrower or the Parent Guarantor shall be the continuing or surviving entity in any such transaction involving the Borrower or the Parent Guarantor);

(b)    any Restricted Subsidiary may be liquidated or may participate in a merger or consolidation with any other Restricted Subsidiary or another Person who becomes a Restricted Subsidiary concurrent with such merger or consolidation;

(c)    any Subsidiary may participate in a merger or consolidation pursuant to the Restructuring Transactions; provided that the surviving entity in any such merger or consolidation shall be a Guarantor;

(d)    any Subsidiary Guarantor may participate in a consolidation with another Subsidiary Guarantor; or

 

103


(e)    any Credit Party may consummate the Transactions on the Effective Date.

Section 9.10    Sale of Properties and Liquidation of Swap Agreements. As used herein, “Transfer” means to sell, lease, sell and leaseback, assign, farm out, convey, transfer, condemn or otherwise dispose or transfer (in one transaction or in a series of transactions and whether effected pursuant to a division or otherwise) Property or to Liquidate any Swap Agreement in respect of commodities, provided that Transfer does not include the grant or creation of a Lien. The Parent Guarantor and the Borrower will not, and will not permit any Restricted Subsidiary to, Transfer (1) any Oil and Gas Property or any interest in Hydrocarbons produced or to be produced therefrom, (2) any commodity Swap Agreement or (3) any Equity Interest in any Restricted Subsidiary that owns any Oil and Gas Property, any interest in Hydrocarbons produced or to be produced therefrom, or any commodity Swap Agreement (in this Section 9.10, an “E&P Subsidiary”), except for:

(a)    the sale of Hydrocarbons in the ordinary course of business;

(b)    farmouts of undeveloped acreage and assignments in connection with such farmouts;

(c)    Transfers among the Parent Guarantor and the Restricted Subsidiaries; provided that (i) the provisions of Section 8.14 are complied with to the extent applicable and (ii) if the transferor is a Credit Party, the transferee shall be a Credit Party (or shall become a Credit Party contemporaneously with such Transfer);

(d)    the sale or transfer of non-Borrowing Base Properties, Unproven Acreage or of any Equity Interests in any E&P Subsidiary (other than an E&P Subsidiary that owns any Borrowing Base Properties, any interest in Hydrocarbons produced or to be produced therefrom, or any commodity Swap Agreement included in the most recent determination of the Borrowing Base); provided that (i) prior to and after giving effect to such sale or transfer, the Parent Guarantor is in compliance with Section 9.17, (ii) if a Borrowing Base Deficiency exists prior to such sale or transfer, 100% of the net cash proceeds of such sale or transfer are applied to prepay the Loans up to an amount sufficient to cure such Borrowing Base Deficiency and (iii) at the time of and immediately after giving effect to such sale or transfer, no Default exists and is continuing;

(e)    Transfers of Borrowing Base Properties, of commodity Swap Agreements, and of Equity Interests in any E&P Subsidiary that owns any Borrowing Base Properties, any interest in Hydrocarbons produced or to be produced therefrom or any commodity Swap Agreement included in the most recent determination of the Borrowing Base, provided that no Default or Borrowing Base Deficiency exists or would result therefrom (after giving effect to any prepayment under Section 3.04(c)(iii) required pursuant to clause (iv) below) and:

(i)    the consideration received in respect of such Transfer shall be cash or Cash Equivalents, the assumption of liabilities (including indemnification obligations) related to the Borrowing Base Properties Transferred, new Oil and Gas Properties (and related Additional Oil and Gas Assets) and new commodity Swap Agreements acquired, or Investments permitted under Section 9.05; provided that at least 75% of the aggregate consideration received in respect of such Transfer shall be cash or Cash Equivalents (other than with respect to Transfers constituting exchanges for new Oil and Gas Properties (and related Additional Oil and Gas Assets), so long as (x) such exchange qualifies for nonrecognition of gain or loss under the provisions of Section 1031 of the Code and (y) if any Borrowing Base Deficiency would result from such Transfer, the cash consideration received in connection therewith shall be an amount at least sufficient to pay such Borrowing Base Deficiency in full under Section 3.04(c)(iii));

 

104


(ii)    the consideration received in respect of such Transfer shall be equal to or greater than the fair market value of the Borrowing Base Properties, commodity Swap Agreements and Equity Interests in E&P Subsidiaries that are Transferred (as reasonably determined by the Borrower and, if requested by the Administrative Agent, the Borrower shall deliver a certificate of the Borrower certifying to that effect);

(iii)    if any such Transfer is of an E&P Subsidiary, such Transfer shall include all the Equity Interests of such E&P Subsidiary owned by Parent Guarantor and the Restricted Subsidiaries; and

(iv)    if any Transfer pursuant to this Section 9.10(e) would trigger an adjustment to the Borrowing Base pursuant to Section 2.07(f), the Borrower shall (x) prepay Borrowings to the extent required by Section 3.04(c)(iii) and (y) deliver to the Administrative Agent five (5) Business Days’ prior written notice of such Transfer or Liquidation and provide the Administrative Agent with such information regarding such Transfer as the Administrative Agent may reasonably request;

(f)    Transfers of equipment that is (i) worn out or obsolete, including any equipment that is no longer necessary, used or useful for the business of any Credit Party, (ii) replaced by equipment of at least comparable value or (iii) excess or surplus equipment;

(g)    Transfers of Equity Interests in Unrestricted Subsidiaries;

(h)    Transfers pursuant to a Casualty Event (provided that if any Transfer pursuant to this Section 9.10(h) would trigger an adjustment to the Borrowing Base pursuant to Section 2.07(f), the Borrower shall prepay Borrowings to the extent required by Section 3.04(c)(iii));

(i)    [reserved];

(j)    the Transfer of units of beneficial ownership in the Trust; and

(k)    Transfers of assets not constituting Borrowing Base Properties not to exceed $2,500,000 in the aggregate since the Effective Date.

Section 9.11    Transactions with Affiliates. The Parent Guarantor and the Borrower will not, and will not permit any Restricted Subsidiary to, enter into any transaction, with any Affiliate (other than the Parent Guarantor and the Restricted Subsidiaries) unless such transaction is upon terms that are no less favorable to it than those that could reasonably be expected to be obtained in a comparable arm’s length transaction with a Person not an Affiliate. The restrictions set forth in this Section 9.11 shall not apply to (a) executing, delivering, and performing obligations under the Loan Documents, (b) compensation to, and the terms of employment contracts with, individuals who are officers, managers and directors of Parent Guarantor or the Borrower, provided such compensation or contract is approved by the board of directors of the Parent Guarantor or the Borrower as applicable, (c) the issuance of Equity Interests (other than Disqualified Capital Stock) by the Parent Guarantor, (d) transactions expressly permitted under this Agreement and (e) transactions contemplated by the Plan of Reorganization.

Section 9.12    Subsidiaries.

(a)    The Parent Guarantor and the Borrower will not, and will not permit any Restricted Subsidiary to, create or acquire any additional Restricted Subsidiary unless the Parent Guarantor gives written notice to the Administrative Agent of such creation or acquisition and complies with Section 8.14(b). The Parent Guarantor and the Borrower will not, and will not permit any Restricted Subsidiary to,

 

105


sell, assign or otherwise dispose of any Equity Interests in the Borrower or any Restricted Subsidiary except (i) to the Borrower or another Restricted Subsidiary or (ii) in compliance with Section 9.10. The Parent Guarantor and the Borrower will not permit any Equity Interests of any Restricted Subsidiary to be directly owned by any Person other than the Parent Guarantor or another Restricted Subsidiary.

(b)    The Parent Guarantor will not (i) directly own any subsidiary other than (A) the Borrower and (B) Whiting US Holdings, (ii) have any Subsidiaries other than (A) the Borrower and its Subsidiaries and (B) the Specified Subsidiaries and (iii) have any Foreign Subsidiaries other than Whiting Canadian Holding Company and any Restructuring Subsidiary that is a Foreign Subsidiary. The Parent Guarantor shall not permit any Foreign Subsidiary to cease to be a Disregarded Entity.

Section 9.13    Negative Pledge Agreements; Subsidiary Dividend Restrictions. The Parent Guarantor and the Borrower will not, and will not permit any Restricted Subsidiary to, create, incur, assume or suffer to exist any contract, agreement or understanding (other than (i) this Agreement and the Security Instruments, (ii) agreements with respect to Indebtedness secured by Liens permitted by Section 9.03(d) but then only with respect to the Property that is financed by such Indebtedness and the proceeds thereof, (iii) documents creating Liens which are described in clause (d), (f), (h) or (i) of the definition of “Excepted Liens”, but then only with respect to the Property that is the subject of the applicable lease, document or license described in such clause (d), (f), (h) or (i) and the proceeds thereof and (iv) agreements with respect to any Indebtedness permitted under Section 9.02(f) or Equity Interests (other than any Disqualified Capital Stock not permitted under the terms of Section 9.02) that in any way prohibits or restricts the granting, conveying, creation or imposition of the Liens on any of its Property in favor of the Administrative Agent for the benefit of the Secured Parties that are created pursuant to the Security Instruments to secure the Obligations. The Parent Guarantor and the Borrower will not, and will not permit any Restricted Subsidiary to, create, incur, assume or suffer to exist any contract, agreement or understanding (other than the Loan Documents and the documents governing any Specified Additional Indebtedness or any Permitted Refinancing Indebtedness in respect thereof or any amendments, modifications, restatements, renewals, increases, supplements, refundings, replacements or refinancings of the contracts, instruments or obligations in respect of the foregoing) that restricts any Restricted Subsidiary from paying dividends or making any other distributions in respect of its Equity Interests to the Parent Guarantor, the Borrower or any other Restricted Subsidiary.

Section 9.14    Designation and Conversion of Restricted and Unrestricted Subsidiaries.

(a)    Any Person that becomes a Subsidiary of the Parent Guarantor or any Restricted Subsidiary shall be a Restricted Subsidiary unless such Person (i) is designated as an Unrestricted Subsidiary on Schedule 7.14, as of the date hereof, (ii) is designated as an Unrestricted Subsidiary after the date hereof in compliance with Section 9.14(b), or (iii) is a subsidiary of an Unrestricted Subsidiary.

(b)    The Parent Guarantor may designate by written notification thereof to the Administrative Agent, any Person that would otherwise be a Restricted Subsidiary of the Parent Guarantor, including a newly formed or newly acquired Person that would otherwise be a Restricted Subsidiary of the Parent Guarantor, as an Unrestricted Subsidiary if (i) prior, and after giving effect, to such designation, neither a Default nor a Borrowing Base Deficiency would exist, (ii) such Person does not own or operate any Borrowing Base Properties, other than Borrowing Base Properties permitted to be sold or otherwise transferred pursuant to Section 9.10 (which shall count as a Transfer thereunder), (iii) such Person is not a guarantor or the primary obligor with respect to any Indebtedness permitted under Section 9.02(f) or any other Material Indebtedness unless such Person will be released contemporaneously with such designation, (iv) such Person is not a party to any agreement, contract, arrangement or understanding with the Parent Guarantor or any Subsidiary unless the terms of such agreement, contract, arrangement or understanding are permitted by Section 9.11, (v) such designation is deemed to be an Investment in an Unrestricted

 

106


Subsidiary and such Investment would be permitted to be made under Section 9.05 and (vi) the Administrative Agent shall have received a certificate of a Responsible Officer certifying that such designation complies with the requirements of this Section 9.14(b). For purposes of the foregoing, the designation of a Person as an Unrestricted Subsidiary shall be deemed to be the designation of all present and future subsidiaries of such Person as Unrestricted Subsidiaries. Except as provided in this Section 9.14(b), no Restricted Subsidiary may be redesignated as an Unrestricted Subsidiary.

(c)    The Parent Guarantor may designate any Unrestricted Subsidiary to be a Restricted Subsidiary if after giving effect to such designation, (i) the representations and warranties of the Borrower and the other Credit Parties contained in each of the Loan Documents are true and correct in all material respects on and as of such date as if made on and as of the date of such redesignation except to the extent (A) any such representations and warranties are expressly limited to an earlier date, in which case, on and as of the date of such redesignation, such representations and warranties shall be true and correct in all material respects as of such specified earlier date and (B) to the extent that any such representation and warranty is expressly qualified by materiality or by reference to Material Adverse Effect, such representation and warranty (as so qualified) shall be true and correct in all respects on and as of the date of such redesignation, (ii) no Event of Default would exist as a result of such designation and (iii) the Parent Guarantor complies with the requirements of Section 8.14, Section 8.15 and Section 9.12(a). Upon any such designation, an amount equal to the lesser of the fair market value of the Parent Guarantor’s direct and indirect ownership interest in such Subsidiary or the amount of the Parent Guarantor’s cash investment previously made in such Subsidiary shall be deemed no longer outstanding for purposes of the limitation on Investments under Section 9.05.

Section 9.15    Non-Qualified ECP Counterparties. The Parent Guarantor and the Borrower shall not permit any Guarantor that is not a Qualified ECP Counterparty to own, at any time, any Borrowing Base Properties. The Parent Guarantor shall not permit any Guarantor that is not a Qualified ECP Counterparty to own, at any time, any Equity Interests in any Restricted Subsidiaries.

Section 9.16    Modifications to Debt Documents. The Parent Guarantor and the Borrower will not, and will not permit any Restricted Subsidiary to amend, modify, waive or otherwise change, consent or agree to any amendment, modification, waiver or other change to any of the terms of any documents governing any Junior Indebtedness if doing so would cause such Junior Indebtedness to not meet the requirements set forth in (a) the definition of “Specified Additional Indebtedness” or (b) the definition of “Permitted Refinancing Indebtedness” (tested as if such Junior Indebtedness was being issued or incurred at such time).

Section 9.17    Swap Agreements.

(a)    The Parent Guarantor and the Borrower will not, and will not permit any Restricted Subsidiary to, enter into any Swap Agreements with any Person other than:

(i)    Swap Agreements with an Approved Counterparty not for speculative purposes in respect of commodities fixing a price for a term of not more than sixty (60) months and the notional volumes for which (when aggregated with other commodity Swap Agreements then in effect other than put or floor options as to which an upfront premium has been paid or basis differential swaps on volumes already hedged pursuant to other Swap Agreements) do not exceed, as of the date such Swap Agreement is executed, eighty-five percent (85%) of the reasonably anticipated projected production from the total Proved Reserves of the Credit Parties (as forecast based upon the most recently delivered Reserve Report) for each of crude oil, natural gas and natural gas liquids, calculated separately, for each fiscal quarter during the period of sixty (60) months following the date such Swap Agreement is executed; provided that the Parent Guarantor shall have the option to update the reasonably anticipated projected

 

107


production from Oil and Gas Properties between the delivery of Reserve Reports hereunder (which updates shall be provided to the Administrative Agent in writing and shall be in form and substance reasonably satisfactory to the Administrative Agent) and shall have the option to enter into commodity Swap Agreements with respect to such updated projected production subject to the foregoing limitation on aggregate notional volumes;

(ii)    Swap Agreements with an Approved Counterparty not for speculative purposes in respect of interest rates, the notional amounts of which (when aggregated with all other Swap Agreements of the Parent Guarantor and its Subsidiaries then in effect) do not exceed eighty-five percent (85%) of the then outstanding principal amount of the Borrower’s Indebtedness for borrowed money; and

(iii)    in addition to Swap Agreements under Section 9.17(a)(i), in connection with a proposed acquisition of Oil and Gas Properties or Equity Interests of a Person owning Oil and Gas Properties (a “Proposed Acquisition”), the Parent Guarantor or any Restricted Subsidiary may also enter into incremental Swap Agreements with respect to the reasonably anticipated projected production from the Oil and Gas Properties subject of the Proposed Acquisition so long as (A) the Parent Guarantor or a Restricted Subsidiary has signed a definitive acquisition agreement in connection with a Proposed Acquisition and (B) the aggregate notional volumes associated with such incremental Swap Agreements do not exceed eighty-five percent (85)% of the reasonably anticipated projected production from the total Proved Reserves that are the subject of such Proposed Acquisition (as forecast based upon the reserve report for the Oil and Gas Properties subject of such Proposed Acquisition which has been delivered to the Lenders) of crude oil, natural gas and natural gas liquids, calculated separately, for each calendar quarter during the period of thirty-six (36) months (unless otherwise approved by the Administrative Agent in its sole discretion) following the date such incremental Swap Agreement is executed. The Parent Guarantor may permit such incremental Swap Agreements to remain in place so long as none of the following has occurred: (1) the thirtieth (30th) day (or such longer period as the Administrative Agent may reasonably agree) after the date of the termination of the definitive acquisition agreement in connection with such Proposed Acquisition has passed or (2) the ninetieth (90th) day (or such longer period as the Administrative Agent may reasonably agree) after such definitive acquisition agreement in connection with such Proposed Acquisition was executed (or, in the event parties mutually extended the closing date, the one hundred and twentieth (120th) day after such definitive acquisition agreement in connection with such Proposed Acquisition was executed) has passed and the Proposed Acquisition has not been consummated. If such incremental Swap Agreements are not permitted to remain in place pursuant to the preceding sentence, the Parent Guarantor shall promptly terminate or unwind such Swap Agreements.

In no event shall any Swap Agreement, (i) other than a master Swap Agreement pursuant to which the Parent Guarantor executes only put or floor options as to which an upfront premium has been paid, contain any requirement, agreement or covenant for the Parent Guarantor or any Subsidiary to post collateral or margin to secure their obligations under such Swap Agreement other than the benefit of the Security Instruments as contemplated herein or (ii) have a tenor longer than sixty (60) months.

(b)    If, after the end of any fiscal quarter, the Parent Guarantor determines that the aggregate notional volume of all Swap Agreements in respect of commodities for such fiscal quarter exceeded 100% of actual production of Hydrocarbons in such fiscal quarter, then the Parent Guarantor shall (i) promptly notify the Administrative Agent of such determination and (ii) within thirty (30) days after the end of such fiscal quarter, terminate, create off-setting positions or otherwise unwind or monetize existing Swap Agreements such that, at such time, future volumes under commodity Swap Agreements will not exceed 100% of reasonably anticipated projected production for the then-current and any succeeding fiscal quarters.

 

108


(c)    Notwithstanding the foregoing, the Parent Guarantor and any Subsidiary may enter into Swap Agreements in respect of crude oil or natural gas that are puts or floors, provided that such puts and floors are independent and are not matched with a ceiling or call (i.e., costless collars or participating structures).

ARTICLE X

EVENTS OF DEFAULT; REMEDIES

Section 10.01    Events of Default. One or more of the following events shall constitute an “Event of Default”:

(a)    the Borrower shall fail to pay any principal of any Loan when and as the same shall become due and payable, whether at the due date thereof or at a date fixed for prepayment thereof, by acceleration or otherwise;

(b)    the Borrower shall fail to pay any interest on any Loan or any fee or any other amount (other than an amount referred to in Section 10.01(a)) payable under any Loan Document, when and as the same shall become due and payable, and such failure shall continue unremedied for a period of three (3) Business Days;

(c)    any representation or warranty made or deemed made by or on behalf of the Parent Guarantor or any Restricted Subsidiary in or in connection with any Loan Document or any amendment or modification of any Loan Document or waiver under such Loan Document, or in any report, certificate, financial statement or other document furnished pursuant to or in connection with any Loan Document or any amendment or modification thereof or waiver thereunder that (i) was subject to a materiality qualifier (by reference to Material Adverse Effect or otherwise) shall prove to have been incorrect when made or deemed made or (ii) was not subject to a materiality qualifier shall prove to have been incorrect in any material respect when made or deemed made;

(d)    the Parent Guarantor or any Restricted Subsidiary shall fail to observe or perform any covenant, condition or agreement contained in Section 8.01(c), (i) or (t), Section 8.02, Section 8.03(a), Section 8.14, Section 8.18, Section 8.19, Section 8.20 (and, in the case of Section 8.20 only, such failure shall continue unremedied for a period of five (5) Business Days), Section 8.21 or Article IX;

(e)    the Parent Guarantor or any Restricted Subsidiary shall fail to observe or perform any covenant, condition or agreement contained in this Agreement (other than those specified in Section 10.01(a), Section 10.01(b), Section 10.01(c) or Section 10.01(d)) or any other Loan Document, and such failure shall continue unremedied for a period of thirty (30) days after the earlier to occur of (i) a Responsible Officer of the Parent Guarantor, the Borrower or any Restricted Subsidiary having knowledge of such default, or (ii) receipt of notice thereof by the Borrower from the Administrative Agent;

(f)    the Parent Guarantor, or any Restricted Subsidiary shall fail to make any payment of principal or interest on any Material Indebtedness, when and as the same shall become due and payable, and such failure to pay shall extend beyond any applicable period of grace;

(g)    any event or condition occurs that results in any Material Indebtedness becoming due prior to its scheduled maturity or that enables or permits the holder or holders of such Material Indebtedness or any trustee or agent on its or their behalf to cause such Material Indebtedness to become due, or to require the Redemption thereof or any offer to Redeem to be made in respect thereof, prior to its scheduled maturity or require the Parent Guarantor or any Restricted Subsidiary to make an offer in respect thereof (unless such offer is subject to the prior Payment in Full);

 

109


(h)    an involuntary proceeding shall be commenced or an involuntary petition shall be filed seeking liquidation, reorganization or other relief in respect of the Parent Guarantor or any Restricted Subsidiary or its debts, or of a substantial part of its assets, under any Federal, state or foreign bankruptcy, insolvency, receivership or similar law now or hereafter in effect or the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Parent Guarantor or any Restricted Subsidiary or for a substantial part of its assets, and, in any such case, such proceeding or petition shall continue undismissed for sixty (60) days or an order or decree approving or ordering any of the foregoing shall be entered;

(i)    the Parent Guarantor or any Restricted Subsidiary shall voluntarily commence any proceeding or file any petition seeking liquidation, reorganization or other relief under any Federal, state or foreign bankruptcy, insolvency, receivership or similar law now or hereafter in effect, consent to the institution of, or fail to contest in a timely and appropriate manner, any proceeding or petition described in Section 10.01(h), apply for or consent to the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Parent Guarantor or any Restricted Subsidiary or for a substantial part of its assets, file an answer admitting the material allegations of a petition filed against it in any such proceeding, make a general assignment for the benefit of creditors, or take any action for the purpose of effecting any of the foregoing;

(j)    the Parent Guarantor or any Restricted Subsidiary shall become unable, admit in writing its inability or fail generally to pay its debts as they become due;

(k)    other than in respect of the Pre-Petition Judgments, one or more judgments for the payment of money in an aggregate amount in excess of $50,000,000 (to the extent not covered by independent third party insurance as to which the insurer, which is not subject to an insolvency proceeding, does not dispute coverage) shall be rendered against the Parent Guarantor, t any Restricted Subsidiary or any combination thereof and the same shall not be either discharged, vacated or stayed within sixty (60) days after becoming a final judgment;

(l)    the Loan Documents after delivery thereof shall for any reason, except to the extent permitted by the terms thereof, cease to be in full force and effect and valid, binding and enforceable in accordance with their terms against the Parent Guarantor or any Restricted Subsidiary party thereto, or shall be repudiated by any of them, or cease to create valid and perfected Liens of the priority required thereby on the Collateral purported to be covered thereby, except to the extent permitted by the terms of this Agreement or the Security Instruments, or the Parent Guarantor or any Restricted Subsidiary or any of their Affiliates shall so state in writing;

(m)    other than transactions contemplated by the Plan of Reorganization to occur on the Effective Date, a Change in Control shall occur; or

(n)    an ERISA Event shall have occurred that, when taken together with all other ERISA Events that have occurred, would reasonably be expected to result in a Material Adverse Effect.

Section 10.02    Remedies.

(a)    In the case of an Event of Default other than one described in Section 10.01(h) or Section 10.01(i), at any time thereafter during the continuance of such Event of Default, the Administrative Agent may, and at the request of the Majority Lenders, shall, by notice to the Borrower, take either or both of the following actions, at the same or different times: (i) terminate the Commitments and/or the LC Commitments, and thereupon the Commitments and/or the LC Commitments shall terminate immediately, and (ii) declare the Notes and the Loans then outstanding to be due and payable in whole (or in part, in

 

110


which case any principal not so declared to be due and payable may thereafter be declared to be due and payable), and thereupon the principal of the Loans so declared to be due and payable, together with accrued interest thereon and all fees and other obligations of the Borrower and the Guarantors accrued under this Agreement, the Notes and the other Loan Documents (including the payment of Cash Collateral to secure the LC Exposure as provided in Section 2.08(j)), shall become due and payable immediately, without presentment, demand, protest, notice of intent to accelerate, notice of acceleration or other notice of any kind, all of which are hereby waived by the Borrower and each other Credit Party; and in case of an Event of Default described in Section 10.01(h), or Section 10.01(i), the Commitments shall automatically terminate and the Notes and the principal of the Loans then outstanding, together with accrued interest thereon and all fees and the other obligations of the Borrower and the Guarantors accrued under this Agreement, the Notes and the other Loan Documents (including the payment of Cash Collateral to secure the LC Exposure as provided in Section 2.08(j)), shall automatically become due and payable, without presentment, demand, protest, notice of intent to accelerate, notice of acceleration or other notice of any kind, all of which are hereby waived by the Borrower and each Guarantor.

(b)    In the case of the occurrence and continuation of an Event of Default, the Administrative Agent and the Lenders will have all other rights and remedies available at law and equity.

(c)    All proceeds realized from the liquidation or other disposition of Collateral or otherwise received after maturity of the Loans, whether from the Borrower or another Credit Party, by acceleration or otherwise, shall be applied:

(i)    first, to payment or reimbursement of that portion of the Obligations constituting fees, expenses and indemnities payable to the Administrative Agent in its capacity as such;

(ii)    second, pro rata to payment or reimbursement of that portion of the Obligations constituting fees, expenses and indemnities payable to the Lenders;

(iii)    third, pro rata to payment of accrued interest on the Loans;

(iv)    fourth, pro rata to payment of principal outstanding on the Loans, to serve as Cash Collateral to secure outstanding LC Exposure, to payment of Secured Swap Obligations then due and owing to Secured Swap Parties and to payment of Obligations then due and owing to Treasury Management Lenders under Lender Treasury Management Agreements;

(v)    fifth, pro rata to any other Obligations;

(vi)    sixth, any excess, after all of the Obligations shall have been indefeasibly paid in full in cash, shall be paid to the Borrower or as otherwise required by any Governmental Requirement.

(d)    In the case of the occurrence of an Event of Default which results in the Commitments terminating then each of the Facility Amount and the Borrowing Base shall automatically and concurrently be reduced to $0.

Notwithstanding the foregoing, amounts received from the Borrower or any Guarantor that is not an “eligible contract participant” under the Commodity Exchange Act shall not be applied to any Excluded Swap Obligations (it being understood, that in the event that any amount is applied to Obligations other than Excluded Swap Obligations as a result of this clause, the Administrative Agent shall make such adjustments as it determines are appropriate to distributions pursuant to clause fourth above from amounts received from “eligible contract participants” under the Commodity Exchange Act to ensure, as nearly as

 

111


possible, that the proportional aggregate recoveries with respect to Obligations described in clause fourth above by the holders of any Excluded Swap Obligations are the same as the proportional aggregate recoveries with respect to other Obligations pursuant to clause fourth above).

ARTICLE XI

THE AGENT

Section 11.01     Authorization and Action.

(a)    Each Lender and each Issuing Bank hereby irrevocably appoints the entity named as Administrative Agent in the heading of this Agreement and its successors and assigns to serve as the administrative agent under the Loan Documents and each Lender and each Issuing Bank authorizes the Administrative Agent to take such actions as agent on its behalf and to exercise such powers under this Agreement and the other Loan Documents as are delegated to the Administrative Agent under such agreements and to exercise such powers as are reasonably incidental thereto. Without limiting the foregoing, each Lender and each Issuing Bank hereby authorizes the Administrative Agent to execute and deliver, and to perform its obligations under, each of the Loan Documents to which the Administrative Agent is a party, and to exercise all rights, powers and remedies that the Administrative Agent may have under such Loan Documents.

(b)    As to any matters not expressly provided for herein and in the other Loan Documents (including enforcement or collection), the Administrative Agent shall not be required to exercise any discretion or take any action, but shall be required to act or to refrain from acting (and shall be fully protected in so acting or refraining from acting) upon the written instructions of the Majority Lenders (or such other number or percentage of the Lenders as shall be necessary, pursuant to the terms in the Loan Documents), and, unless and until revoked in writing, such instructions shall be binding upon each Lender and each Issuing Bank; provided, however, that the Administrative Agent shall not be required to take any action that (i) the Administrative Agent in good faith believes exposes it to liability unless the Administrative Agent receives an indemnification and is exculpated in a manner satisfactory to it from the Lenders and the Issuing Banks with respect to such action or (ii) is contrary to this Agreement or any other Loan Document or applicable law, including any action that may be in violation of the automatic stay under any requirement of law relating to bankruptcy, insolvency or reorganization or relief of debtors or that may effect a forfeiture, modification or termination of property of a Defaulting Lender in violation of any requirement of law relating to bankruptcy, insolvency or reorganization or relief of debtors; provided, further, that the Administrative Agent may seek clarification or direction from the Majority Lenders prior to the exercise of any such instructed action and may refrain from acting until such clarification or direction has been provided. Except as expressly set forth in the Loan Documents, the Administrative Agent shall not have any duty to disclose, and shall not be liable for the failure to disclose, any information relating to the Parent Guarantor, any Subsidiary or any Affiliate of any of the foregoing that is communicated to or obtained by the Person serving as Administrative Agent or any of its Affiliates in any capacity. Nothing in this Agreement shall require the Administrative 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.

(c)    In performing its functions and duties hereunder and under the other Loan Documents, the Administrative Agent is acting solely on behalf of the Lenders and the Issuing Banks (except in limited circumstances expressly provided for herein relating to the maintenance of the Register),

 

112


and its duties are entirely mechanical and administrative in nature. Without limiting the generality of the foregoing:

(i)    the Administrative Agent does not assume and shall not be deemed to have assumed any obligation or duty or any other relationship as the agent, fiduciary or trustee of or for any Lender or Issuing Bank other than as expressly set forth herein and in the other Loan Documents, regardless of whether a Default or an Event of Default has occurred and is continuing (and it is understood and agreed that the use of the term “agent” (or any similar term) herein or in any other Loan Document with reference to the Administrative Agent is not intended to connote any fiduciary duty or other implied (or express) obligations arising under agency doctrine of any applicable law, and that such term is used as a matter of market custom and is intended to create or reflect only an administrative relationship between contracting parties); additionally, each Lender agrees that it will not assert any claim against the Administrative Agent based on an alleged breach of fiduciary duty by the Administrative Agent in connection with this Agreement and/or the transactions contemplated hereby;

(ii)    where the Administrative Agent is required or deemed to act as a trustee in respect of any Collateral over which a security interest has been created pursuant to a Loan Document expressed to be governed by the laws of the United States, or is required or deemed to hold any Collateral “on trust” pursuant to the foregoing, the obligations and liabilities of the Administrative Agent to the Secured Parties in its capacity as trustee shall be excluded to the fullest extent permitted by applicable law;

(iii)    nothing in this Agreement or any Loan Document shall require the Administrative Agent to account to any Lender for any sum or the profit element of any sum received by the Administrative Agent for its own account;

(d)    The Administrative Agent may perform any 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 of their respective duties and exercise their respective rights and powers through their respective Related Parties. The exculpatory provisions of this Article shall apply to any such sub-agent and to the Related Parties of the Administrative Agent and any such sub-agent, and shall apply to their respective activities pursuant to this Agreement. The Administrative Agent shall not be responsible for the negligence or misconduct of any sub-agent except to the extent that a court of competent jurisdiction determines in a final and nonappealable judgment that the Administrative Agent acted with gross negligence or willful misconduct in the selection of such sub-agent.

(e)    No Arranger shall have obligations or duties whatsoever in such capacity under this Agreement or any other Loan Document and shall incur no liability hereunder or thereunder in such capacity, but all such persons shall have the benefit of the indemnities provided for hereunder.

(f)    In case of the pendency of any proceeding with respect to any Credit Party under any Federal, state or foreign bankruptcy, insolvency, receivership or similar law now or hereafter in effect, the Administrative Agent (irrespective of whether the principal of any Loan or any reimbursement 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 (but not obligated) by intervention in such proceeding or otherwise:

(i)    to file and prove a claim for the whole amount of the principal and interest owing and unpaid in respect of the Loans, LC Disbursements and all other Obligations that are owing and unpaid and to file such other documents as may be necessary or advisable in order to have the claims of the Lenders, the Issuing Banks and the Administrative Agent (including any claim under Sections 3.02, 3.05, 5.01, 5.03 and 12.03) allowed in such judicial proceeding; and

 

113


(ii)    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 proceeding is hereby authorized by each Lender, each Issuing Bank and each other Secured Party 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, the Issuing Banks or the other Secured Parties, to pay to the Administrative Agent any amount due to it, in its capacity as the Administrative Agent, under the Loan Documents (including under Section 12.03). 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 Issuing Bank any plan of reorganization, arrangement, adjustment or composition affecting the Obligations or the rights of any Lender or Issuing Bank or to authorize the Administrative Agent to vote in respect of the claim of any Lender or Issuing Bank in any such proceeding.

(g)    The provisions of this Article are solely for the benefit of the Administrative Agent, the Lenders and the Issuing Banks, and, except solely to the extent of the Parent Guarantor’s rights to consent pursuant to and subject to the conditions set forth in this Article, none of the Parent Guarantor or any Subsidiary, or any of their respective Affiliates, shall have any rights as a third party beneficiary under any such provisions. Each Secured Party, whether or not a party hereto, will be deemed, by its acceptance of the benefits of the Collateral and of the guarantees of the Obligations provided under the Loan Documents, to have agreed to the provisions of this Article.

Section 11.02    Administrative Agents Reliance, Limitation of Liability, Etc..

(a)    Neither the Administrative Agent nor any of its Related Parties shall be (i) liable for any action taken or omitted to be taken by such party, the Administrative Agent or any of its Related Parties under or in connection with this Agreement or the other Loan Documents (x) with the consent of 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 to be necessary, under the circumstances as provided in the Loan Documents) or (y) in the absence of its own gross negligence or willful misconduct (such absence to be presumed unless otherwise determined by a court of competent jurisdiction by a final and non-appealable judgment) or (ii) responsible in any manner to any of the Lenders for any recitals, statements, representations or warranties made by any Credit Party or any officer thereof contained in this Agreement or any other Loan Document or in any certificate, report, statement or other document referred to or provided for in, or received by the Administrative Agent under or in connection with, this Agreement or any other Loan Document or for the value, validity, effectiveness, genuineness, enforceability or sufficiency of this Agreement or any other Loan Document (including, for the avoidance of doubt, in connection with the Administrative Agent’s reliance on any Electronic Signature transmitted by telecopy, emailed pdf. or any other electronic means that reproduces an image of an actual executed signature page) or for any failure of any Credit Party to perform its obligations hereunder or thereunder.

(b)    The Administrative Agent shall be deemed not to have knowledge of any (i) notice of any of the events or circumstances set forth or described in Section 8.02 unless and until written notice thereof stating that it is a “notice under Section 8.02” in respect of this Agreement and identifying the specific clause under said Section is given to the Administrative Agent by the Borrower, or (ii) notice of any Default or Event of Default unless and until written notice thereof (stating that it is a “notice of Default” or a “notice of an Event of Default”) is given to the Administrative Agent by the Borrower, a Lender or an Issuing Bank. Further, 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 any Loan Document, (ii) the contents of any certificate, report or other document delivered thereunder or in connection therewith, (iii) the performance or observance of any of the covenants, agreements or other

 

114


terms or conditions set forth in any Loan Document or the occurrence of any Default or Event of Default, (iv) the sufficiency, validity, enforceability, effectiveness or genuineness of any Loan Document or any other agreement, instrument or document, (v) the satisfaction of any condition set forth in Article VI or elsewhere in any Loan Document, other than to confirm receipt of items (which on their face purport to be such items) expressly required to be delivered to the Administrative Agent or satisfaction of any condition that expressly refers to the matters described therein being acceptable or satisfactory to the Administrative Agent or (vi) the creation, perfection or priority of Liens on the Collateral.

(c)    Without limiting the foregoing, the Administrative Agent (i) may treat the payee of any promissory note as its holder until such promissory note has been assigned in accordance with Section 12.04, (ii) may rely on the Register to the extent set forth in Section 12.04(b), (iii) may consult with legal counsel (including counsel to the Borrower), independent public accountants and other experts selected by it, and shall not be liable for any action taken or omitted to be taken in good faith by it in accordance with the advice of such counsel, accountants or experts, (iv) makes no warranty or representation to any Lender or Issuing Bank and shall not be responsible to any Lender or Issuing Bank for any statements, warranties or representations made by or on behalf of any Credit Party in connection with this Agreement or any other Loan Document, (v) in determining compliance with any condition hereunder to the making of a Loan, or the issuance of a Letter of Credit, that by its terms must be fulfilled to the satisfaction of a Lender or an Issuing Bank, may presume that such condition is satisfactory to such Lender or Issuing Bank unless the Administrative Agent shall have received notice to the contrary from such Lender or Issuing Bank sufficiently in advance of the making of such Loan or the issuance of such Letter of Credit and (vi) shall be entitled to rely on, and shall incur no liability under or in respect of this Agreement or any other Loan Document by acting upon, any notice, consent, certificate or other instrument or writing (which writing may be a fax, any electronic message, Internet or intranet website posting or other distribution) or any statement made to it orally or by telephone and believed by it to be genuine and signed or sent or otherwise authenticated by the proper party or parties (whether or not such Person in fact meets the requirements set forth in the Loan Documents for being the maker thereof).

Section 11.03    Posting of Communications.

(a)    The Borrower agrees that the Administrative Agent may, but shall not be obligated to, make any Communications available to the Lenders and the Issuing Banks by posting the Communications on IntraLinks, DebtDomain, SyndTrak, ClearPar or any other electronic platform chosen by the Administrative Agent to be its electronic transmission system (the “Approved Electronic Platform”).

(b)    Although the Approved Electronic Platform and its primary web portal are secured with generally-applicable security procedures and policies implemented or modified by the Administrative Agent from time to time (including, as of the Effective Date, a user ID/password authorization system) and the Approved Electronic Platform is secured through a per-deal authorization method whereby each user may access the Approved Electronic Platform only on a deal-by-deal basis, each of the Lenders, each of the Issuing Banks and the Borrower acknowledges and agrees that the distribution of material through an electronic medium is not necessarily secure, that the Administrative Agent is not responsible for approving or vetting the representatives or contacts of any Lender that are added to the Approved Electronic Platform, and that there may be confidentiality and other risks associated with such distribution. Each of the Lenders, each of the Issuing Banks and the Borrower hereby approves distribution of the Communications through the Approved Electronic Platform and understands and assumes the risks of such distribution.

(c)    THE APPROVED ELECTRONIC PLATFORM AND THE COMMUNICATIONS ARE PROVIDED “AS IS” AND “AS AVAILABLE”. THE APPLICABLE PARTIES (AS DEFINED BELOW) DO NOT WARRANT THE ACCURACY OR COMPLETENESS OF THE COMMUNICATIONS, OR THE ADEQUACY OF

 

115


THE APPROVED ELECTRONIC PLATFORM AND EXPRESSLY DISCLAIM LIABILITY FOR ERRORS OR OMISSIONS IN THE APPROVED ELECTRONIC PLATFORM AND THE COMMUNICATIONS. 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 THE APPLICABLE PARTIES IN CONNECTION WITH THE COMMUNICATIONS OR THE APPROVED ELECTRONIC PLATFORM. IN NO EVENT SHALL THE ADMINISTRATIVE AGENT, ANY ARRANGER OR ANY OF THEIR RESPECTIVE RELATED PARTIES (COLLECTIVELY, “APPLICABLE PARTIES”) HAVE ANY LIABILITY TO ANY CREDIT PARTY, ANY LENDER, ANY ISSUING BANK OR ANY OTHER PERSON OR ENTITY FOR DAMAGES OF ANY KIND, INCLUDING DIRECT OR INDIRECT, SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES, LOSSES OR EXPENSES (WHETHER IN TORT, CONTRACT OR OTHERWISE) ARISING OUT OF ANY CREDIT PARTY’S OR THE ADMINISTRATIVE AGENT’S TRANSMISSION OF COMMUNICATIONS THROUGH THE INTERNET OR THE APPROVED ELECTRONIC PLATFORM, EXCEPT TO THE EXTENT THE LIABILITY OF ANY SUCH PERSON IS FOUND BY A FINAL AND NON-APPEALABLE JUDGMENT OF A COURT OF COMPETENT JURISDICTION TO HAVE RESULTED FROM SUCH PERSON’S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT.

(d)    Each Lender and each Issuing Bank agrees that notice to it (as provided in the next sentence) specifying that Communications have been posted to the Approved Electronic Platform shall constitute effective delivery of the Communications to such Lender for purposes of the Loan Documents. Each Lender and Issuing Bank agrees (i) to notify the Administrative Agent in writing (which could be in the form of electronic communication) from time to time of such Lender’s or Issuing Bank’s (as applicable) email address to which the foregoing notice may be sent by electronic transmission and (ii) that the foregoing notice may be sent to such email address.

(e)    Each of the Lenders, each of the Issuing Banks and the Borrower agrees that the Administrative Agent may, but (except as may be required by applicable law) shall not be obligated to, store the Communications on the Approved Electronic Platform in accordance with the Administrative Agent’s generally applicable document retention procedures and policies.

(f)    Nothing herein shall prejudice the right of the Administrative Agent, any Lender or any Issuing Bank to give any notice or other communication pursuant to any Loan Document in any other manner specified in such Loan Document.

Section 11.04    The Administrative Agent Individually. With respect to its Commitments, Loans, LC Commitments and Letters of Credit, the Person serving as the Administrative Agent shall have and may exercise the same rights and powers hereunder and is subject to the same obligations and liabilities as and to the extent set forth herein for any other Lender or Issuing Bank, as the case may be. The terms “Issuing Banks”, “Lenders”, “Majority Lenders”, “Required Lenders” and any similar terms shall, unless the context clearly otherwise indicates, include the Administrative Agent in its individual capacity as a Lender, Issuing Bank or as one of the Majority Lenders or Required Lenders, as applicable. The Person serving as the Administrative Agent and its Affiliates may accept deposits from, lend money to, own securities of, act as the financial advisor or in any other advisory capacity for and generally engage in any kind of banking, trust or other business with, the Parent Guarantor, any Subsidiary or any Affiliate of any of the foregoing as if such Person was not acting as the Administrative Agent and without any duty to account therefor to the Lenders or the Issuing Banks.

 

116


Section 11.05    Successor Administrative Agent.

(a)    The Administrative Agent may resign at any time by giving 30 days’ prior written notice thereof to the Lenders, the Issuing Banks and the Borrower, whether or not a successor Administrative Agent has been appointed. Upon any such resignation, the Majority Lenders shall have the right to appoint a successor Administrative Agent. If no successor Administrative Agent shall have been so appointed by the Majority Lenders, and shall have accepted such appointment, within 30 days after the retiring Administrative Agent’s giving of notice of resignation, then the retiring Administrative Agent may, on behalf of the Lenders and the Issuing Banks, appoint a successor Administrative Agent, which shall be a bank with an office in New York, New York or an Affiliate of any such bank. In either case, such appointment shall be subject to the prior written approval of the Borrower (which approval may not be unreasonably withheld and shall not be required while an Event of Default has occurred and is continuing). Upon the acceptance of any appointment as Administrative Agent by a successor Administrative Agent, such successor Administrative Agent shall succeed to, and become vested with, all the rights, powers, privileges and duties of the retiring Administrative Agent. Upon the acceptance of appointment as Administrative Agent by a successor Administrative Agent, the retiring Administrative Agent shall be discharged from its duties and obligations under this Agreement and the other Loan Documents. Prior to any retiring Administrative Agent’s resignation hereunder as Administrative Agent, the retiring Administrative Agent shall take such action as may be reasonably necessary to assign to the successor Administrative Agent its rights as Administrative Agent under the Loan Documents.

(b)    Notwithstanding paragraph (a) of this Section, in the event no successor Administrative Agent shall have been so appointed and shall have accepted such appointment within 30 days after the retiring Administrative Agent gives notice of its intent to resign, the retiring Administrative Agent may give notice of the effectiveness of its resignation to the Lenders, the Issuing Banks and the Borrower, whereupon, on the date of effectiveness of such resignation stated in such notice, (i) the retiring Administrative Agent shall be discharged from its duties and obligations hereunder and under the other Loan Documents; provided that, solely for purposes of maintaining any security interest granted to the Administrative Agent under any Security Instrument for the benefit of the Secured Parties, the retiring Administrative Agent shall continue to be vested with such security interest as collateral agent for the benefit of the Secured Parties, and continue to be entitled to the rights set forth in such Security Instrument and Loan Document, and, in the case of any Collateral in the possession of the Administrative Agent, shall continue to hold such Collateral, in each case until such time as a successor Administrative Agent is appointed and accepts such appointment in accordance with this Section (it being understood and agreed that the retiring Administrative Agent shall have no duty or obligation to take any further action under any Security Instrument, including any action required to maintain the perfection of any such security interest), and (ii) the Majority Lenders shall succeed to and become vested with all the rights, powers, privileges and duties of the retiring Administrative Agent; provided that (A) all payments required to be made hereunder or under any other Loan Document to the Administrative Agent for the account of any Person other than the Administrative Agent shall be made directly to such Person and (B) all notices and other communications required or contemplated to be given or made to the Administrative Agent shall directly be given or made to each Lender and each Issuing Bank. Following the effectiveness of the Administrative Agent’s resignation from its capacity as such, the provisions of this Article and Section 12.03, as well as any exculpatory, reimbursement and indemnification provisions set forth in any other Loan Document, 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 and in respect of the matters referred to in the proviso under clause (i) above.

Section 11.06    Acknowledgements of Lenders and Issuing Banks.

(a)    Each Lender and each Issuing Bank represents and warrants that (i) the Loan Documents set forth the terms of a commercial lending facility, (ii) it is engaged in making, acquiring or

 

117


holding commercial loans and in providing other facilities set forth herein as may be applicable to such Lender or Issuing Bank, in each case in the ordinary course of business, and not for the purpose of purchasing, acquiring or holding any other type of financial instrument (and each Lender and each Issuing Bank agrees not to assert a claim in contravention of the foregoing), (iii) it has, independently and without reliance upon the Administrative Agent, any Arranger or any other Lender or Issuing Bank, or any of the Related Parties of any of the foregoing, and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement as a Lender, and to make, acquire or hold Loans hereunder and (iv) it is sophisticated with respect to decisions to make, acquire and/or hold commercial loans and to provide other facilities set forth herein, as may be applicable to such Lender or such Issuing Bank, and either it, or the Person exercising discretion in making its decision to make, acquire and/or hold such commercial loans or to provide such other facilities, is experienced in making, acquiring or holding such commercial loans or providing such other facilities. Each Lender and each Issuing Bank also acknowledges that it will, independently and without reliance upon the Administrative Agent, any Arranger or any other Lender or Issuing Bank, or any of the Related Parties of any of the foregoing, and based on such documents and information (which may contain material, non-public information within the meaning of the United States securities laws concerning the Borrower and its Affiliates) 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.

(b)    Each Lender, by delivering its signature page to this Agreement on the Effective Date, or delivering its signature page to an Assignment and Assumption or any other Loan Document pursuant to which it shall become a Lender hereunder, shall be deemed to have acknowledged receipt of, and consented to and approved, each Loan Document and each other document required to be delivered to, or be approved by or satisfactory to, the Administrative Agent or the Lenders on the Effective Date.

Section 11.07    Collateral Matters.

(a)    Except with respect to the exercise of setoff rights in accordance with Section 12.08 or with respect to a Secured Party’s right to file a proof of claim in an insolvency proceeding, no Secured Party shall have any right individually to realize upon any of the Collateral or to enforce any guarantee of the Obligations, it being understood and agreed that all powers, rights and remedies under the Loan Documents may be exercised solely by the Administrative Agent on behalf of the Secured Parties in accordance with the terms thereof.

(b)    In furtherance of the foregoing and not in limitation thereof, no Lender Treasury Management Agreements nor Secured Swap Agreement will create (or be deemed to create) in favor of any Secured Party that is a party thereto any rights in connection with the management or release of any Collateral or of the obligations of any Credit Party under any Loan Document. By accepting the benefits of the Collateral, each Secured Party that is a Treasury Management Lender or a Secured Swap Party shall be deemed to have appointed the Administrative Agent to serve as administrative agent and collateral agent under the Loan Documents and agreed to be bound by the Loan Documents as a Secured Party thereunder, subject to the limitations set forth in this paragraph.

(c)    The Secured Parties irrevocably authorize the Administrative Agent to take the following actions:

(i)    to release any Lien on any property granted to or held by the Administrative Agent under any Loan Document (A) upon Payment in Full, (B) that is, or is to be, sold, released or otherwise disposed of as permitted pursuant to the terms of the Loan Documents or (C) if approved, authorized or ratified in writing by the Majority Lenders (or, if approval, authorization or ratification by all Lenders is required under Section 12.02(b), then by all Lenders);

 

118


(ii)    to subordinate (or release) any Lien on any Property granted to or held by the Administrative Agent under any Loan Document to any Lien on such Property that is permitted by Section 9.03(b);

(iii)    to release any Guarantor from its obligations under the Guaranty and Collateral Agreement and the other Loan Documents if such Person ceases to be a Restricted Subsidiary as a result of a transaction permitted under the Loan Documents; and

(iv)    to execute and deliver to the Borrower, at the Borrower’s sole cost and expense, any and all releases of Liens, termination statements, assignments or other documents necessary or useful to accomplish or evidence the foregoing.

(d)    Upon the request of the Administrative Agent at any time, the Majority Lenders will confirm in writing the Administrative Agent’s authority to release particular types or items of Collateral pursuant to this Section 11.07.

(e)    The Administrative Agent shall not be responsible for or have a duty to ascertain or inquire into any representation or warranty regarding the existence, value or collectability of the Collateral, the existence, priority or perfection of the Administrative Agent’s Lien thereon or any certificate prepared by any Credit Party in connection therewith, nor shall the Administrative Agent be responsible or liable to the Lenders or any other Secured Party for any failure to monitor or maintain any portion of the Collateral.

Section 11.08    Credit Bidding. The Secured Parties hereby irrevocably authorize the Administrative Agent, at the direction of the Majority Lenders, to credit bid all or any portion of the Obligations (including by accepting some or all of the Collateral in satisfaction of some or all of the Obligations pursuant to a deed in lieu of foreclosure or otherwise) and in such manner purchase (either directly or through one or more acquisition vehicles) all or any portion of the Collateral (a) at any sale thereof conducted under the provisions of the Bankruptcy Code, including under Sections 363, 1123 or 1129 of the Bankruptcy Code, or any similar laws in any other jurisdictions to which a Credit Party is subject, or (b) at any other sale, foreclosure or acceptance of collateral in lieu of debt conducted by (or with the consent or at the direction of) the Administrative Agent (whether by judicial action or otherwise) in accordance with any applicable law. In connection with any such credit bid and purchase, the Obligations owed to the Secured Parties shall be entitled to be, and shall be, credit bid by the Administrative Agent at the direction of the Majority Lenders on a ratable basis (with Obligations with respect to contingent or unliquidated claims receiving contingent interests in the acquired assets on a ratable basis that shall vest upon the liquidation of such claims in an amount proportional to the liquidated portion of the contingent claim amount used in allocating the contingent interests) for the asset or assets so purchased (or for the equity interests or debt instruments of the acquisition vehicle or vehicles that are issued in connection with such purchase). In connection with any such bid, (i) the Administrative Agent shall be authorized to form one or more acquisition vehicles and to assign any successful credit bid to such acquisition vehicle or vehicles, (ii) each of the Secured Parties’ ratable interests in the Obligations which were credit bid shall be deemed without any further action under this Agreement to be assigned to such vehicle or vehicles for the purpose of closing such sale, (iii) the Administrative Agent shall be authorized to adopt documents providing for the governance of the acquisition vehicle or vehicles (provided that any actions by the Administrative Agent with respect to such acquisition vehicle or vehicles, including any disposition of the assets or equity interests thereof, shall be governed, directly or indirectly, by, and the governing documents shall provide for, control by the vote of the Majority Lenders or their permitted assignees under the terms

 

119


of this Agreement or the governing documents of the applicable acquisition vehicle or vehicles, as the case may be, irrespective of the termination of this Agreement and without giving effect to the limitations on actions by the Majority Lenders contained in Section 12.02 of this Agreement), (iv) the Administrative Agent on behalf of such acquisition vehicle or vehicles shall be authorized to issue to each of the Secured Parties, ratably on account of the relevant Obligations which were credit bid, interests, whether as equity, partnership interests, limited partnership interests or membership interests, in any such acquisition vehicle and/or debt instruments issued by such acquisition vehicle, all without the need for any Secured Party or acquisition vehicle to take any further action, and (v) to the extent that Obligations that are assigned to an acquisition vehicle are not used to acquire Collateral for any reason (as a result of another bid being higher or better, because the amount of Obligations assigned to the acquisition vehicle exceeds the amount of Obligations credit bid by the acquisition vehicle or otherwise), such Obligations shall automatically be reassigned to the Secured Parties pro rata with their original interest in such Obligations and the equity interests and/or debt instruments issued by any acquisition vehicle on account of such Obligations shall automatically be cancelled, without the need for any Secured Party or any acquisition vehicle to take any further action. Notwithstanding that the ratable portion of the Obligations of each Secured Party are deemed assigned to the acquisition vehicle or vehicles as set forth in clause (ii) above, each Secured Party shall execute such documents and provide such information regarding the Secured Party (and/or any designee of the Secured Party which will receive interests in or debt instruments issued by such acquisition vehicle) as the Administrative Agent may reasonably request in connection with the formation of any acquisition vehicle, the formulation or submission of any credit bid or the consummation of the transactions contemplated by such credit bid.

Section 11.09    Certain ERISA Matters.

(a)    Each Lender (x) represents and warrants, as of the date such Person became a Lender party hereto, to, and (y) covenants, from the date such Person became a Lender party hereto to the date such Person ceases being a Lender party hereto, for the benefit of, the Administrative Agent, and each Arranger and their respective Affiliates, and not, for the avoidance of doubt, to or for the benefit of the Borrower or any other Credit Party, that at least one of the following is and will be true:

(i)    such Lender is not using “plan assets” (within the meaning of the Plan Asset Regulations) of one or more Benefit Plans in connection with the Loans, the Letters of Credit or the Commitments,

(ii)    the transaction exemption set forth in one or more PTEs, such as PTE 84-14 (a class exemption for certain transactions determined by independent qualified professional asset managers), PTE 95-60 (a class exemption for certain transactions involving insurance company general accounts), PTE 90-1 (a class exemption for certain transactions involving insurance company pooled separate accounts), PTE 91-38 (a class exemption for certain transactions involving bank collective investment funds) or PTE 96-23 (a class exemption for certain transactions determined by in-house asset managers), is applicable with respect to such Lender’s entrance into, participation in, administration of and performance of the Loans, the Letters of Credit, the Commitments and this Agreement,

(iii)    (A) such Lender is an investment fund managed by a “Qualified Professional Asset Manager” (within the meaning of Part VI of PTE 84-14), (B) such Qualified Professional Asset Manager made the investment decision on behalf of such Lender to enter into, participate in, administer and perform the Loans, the Letters of Credit, the Commitments and this Agreement, (C) the entrance into, participation in, administration of and performance of the Loans, the Letters of Credit, the Commitments and this Agreement satisfies the requirements of sub-sections (b) through (g) of Part I of PTE 84-14 and (D) to the best knowledge of such Lender, the requirements of subsection (a) of Part I of PTE 84-14 are satisfied with respect to such Lender’s entrance into, participation in, administration of and performance of the Loans, the Letters of Credit, the Commitments and this Agreement, or

 

120


(iv)     such other representation, warranty and covenant as may be agreed in writing between the Administrative Agent, in its sole discretion, and such Lender.

(b)     In addition, unless sub-clause (i) in the immediately preceding clause (a) is true with respect to a Lender or such Lender has provided another representation, warranty and covenant as provided in sub-clause (iv) in the immediately preceding clause (a), such Lender further (x) represents and warrants, as of the date such Person became a Lender party hereto, to, and (y) covenants, from the date such Person became a Lender party hereto to the date such Person ceases being a Lender party hereto, for the benefit of, the Administrative Agent, and each Arranger and their respective Affiliates, and not, for the avoidance of doubt, to or for the benefit of the Borrower or any other Credit Party, that none of the Administrative Agent, or any Arranger or any of their respective Affiliates is a fiduciary with respect to the Collateral or the assets of such Lender (including in connection with the reservation or exercise of any rights by the Administrative Agent under this Agreement, any Loan Document or any documents related to hereto or thereto).

(c)     The Administrative Agent, and each Arranger hereby informs the Lenders that each such Person is not undertaking to provide investment advice or to give advice in a fiduciary capacity, in connection with the transactions contemplated hereby, and that such Person has a financial interest in the transactions contemplated hereby in that such Person or an Affiliate thereof (i) may receive interest or other payments with respect to the Loans, the Letters of Credit, the Commitments, this Agreement and any other Loan Documents (ii) may recognize a gain if it extended the Loans, the Letters of Credit or the Commitments for an amount less than the amount being paid for an interest in the Loans, the Letters of Credit or the Commitments by such Lender or (iii) may receive fees or other payments in connection with the transactions contemplated hereby, the Loan Documents or otherwise, including structuring fees, commitment fees, arrangement fees, facility fees, upfront fees, underwriting fees, ticking fees, agency fees, administrative agent or collateral agent fees, utilization fees, minimum usage fees, letter of credit fees, fronting fees, deal-away or alternate transaction fees, amendment fees, processing fees, term out premiums, banker’s acceptance fees, breakage or other early termination fees or fees similar to the foregoing.

ARTICLE XII

MISCELLANEOUS

Section 12.01     Notices.

(a)     Except in the case of notices and other communications expressly permitted to be given by telephone (and subject to Section 12.01(b)), all notices and other communications provided for herein shall be in writing and shall be delivered by hand or overnight courier service, mailed by certified or registered mail or sent by facsimile, to it at its address set forth on Schedule 12.01, and if to any Lender that becomes a Lender after the Effective Date, to it at its address (or facsimile number) set forth in its Administrative Questionnaire. Notices delivered through Approved Electronic Platforms, to the extent provided in clause (b) below, shall be effective as provided in said clause (b).

(b)     Notices and other communications to the Lenders hereunder may be delivered or furnished by Approved Electronic Platforms pursuant to procedures approved by the Administrative Agent; provided that the foregoing shall not apply to notices pursuant to Articles II, III, IV or V, unless otherwise agreed by the Administrative Agent and the applicable Lender, if any, in writing. 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.

 

121


(c)     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.

(d)     The Administrative Agent and the Lenders shall be entitled to rely and act upon any notices (including telephonic notices) purportedly given by or on behalf of the Parent Guarantor and/or 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. All telephonic notices to and telephonic communications with the Administrative Agent may be recorded by the Administrative Agent, and each of the parties hereby consents to such recording.

Section 12.02     Waivers; Amendments.

(a)     No failure on the part of the Administrative Agent, the Issuing Bank or any Lender to exercise and no delay in exercising, and no course of dealing with respect to, any right, power or privilege, or any abandonment or discontinuance of steps to enforce such right, power or privilege, under any of the Loan Documents shall operate as a waiver thereof, nor shall any single or partial exercise of any right, power or privilege under any of the Loan Documents preclude any other or further exercise thereof or the exercise of any other right, power or privilege. The rights and remedies of the Administrative Agent, any other Agent, the Issuing Bank and the Lenders hereunder and under the other Loan Documents are cumulative and are not exclusive of any rights or remedies that they would otherwise have. No waiver of any provision of this Agreement or any other Loan Document or consent to any departure by the Parent Guarantor or the Borrower therefrom shall in any event be effective unless the same shall be permitted by Section 12.02(b), and then such waiver or consent shall be effective only in the specific instance and for the purpose for which given. Without limiting the generality of the foregoing, the making of a Loan or issuance of a Letter of Credit shall not be construed as a waiver of any Default, regardless of whether the Administrative Agent, any other Agent, any Lender or the Issuing Bank may have had notice or knowledge of such Default at the time.

(b)     Subject to Section 2.06(c)(ii)(G) and Section 3.03, neither this Agreement nor any provision hereof nor any other Loan Document nor any provision thereof may be waived, amended or modified except pursuant to an agreement or agreements in writing entered into by the Borrower and the Majority Lenders or by the Parent Guarantor, the Borrower and the Administrative Agent with the consent of the Majority Lenders; provided that no such agreement shall:

(i)     increase the Commitment of any Lender without the written consent of such Lender;

(ii)     increase the Borrowing Base without the written consent of each Lender (other than any Defaulting Lender);

(iii)     (A) decrease or maintain the Borrowing Base without the consent of the Required Lenders; provided that a Scheduled Redetermination and the delivery of a Reserve Report may be postponed by the Required Lenders; provided further that it is understood that any waiver (or amendment or modification that would have the effect of a waiver) of the right of the Required Lenders to adjust (through a reduction of) the Borrowing Base or the amount of such adjustment in the form of a reduction

 

122


to the Borrowing Base pursuant to the Borrowing Base Adjustment Provisions in connection with the occurrence of a relevant event giving rise to such right shall require the consent of the Required Lenders or (B) reduce the percentages set forth in Section 8.14(a) to less than 90%, without the consent of the Required Lenders,

(iv)     reduce the principal amount of any Loan or LC Disbursement or reduce the rate of interest thereon, or reduce any fees payable hereunder, or reduce any other Obligations hereunder or under any other Loan Document, without the written consent of each Lender directly and adversely affected thereby (except in connection with any amendment or waiver of the applicability of any post-default increase in interest rates, which shall be effective with the written consent of the Majority Lenders);

(v)     postpone the scheduled date of payment or prepayment of the principal amount of any Loan or LC Disbursement (other than with respect to prepayments to be made pursuant to Section 3.04(c)(ii) (solely in respect of a Borrowing Base adjustment pursuant to Section 2.07(g)), Section 3.04(c)(iii) or Section 3.04(c)(v)), or any interest thereon, or any fees payable hereunder, or any other Obligations hereunder or under any other Loan Document, or reduce the amount of, waive or excuse any such payment, or postpone or extend the Termination Date or the Maturity Date without the written consent of each Lender directly and adversely affected thereby;

(vi)     change Section 4.01(b), Section 4.01(c), the definition of “Applicable Percentage” or any other term or condition hereof in a manner that would alter the pro rata sharing of payments required thereby, without the written consent of each Lender directly and adversely affected thereby;

(vii)     waive or amend Section 6.01 or Section 10.02(c), without the written consent of each Lender directly and adversely affected thereby;

(viii)     release any Guarantor (except as set forth in the Guaranty and Collateral Agreement or pursuant to a transaction permitted by this Agreement), or release all or substantially all of the Collateral (except as set forth in the Guaranty and Collateral Agreement or pursuant to a transaction permitted by this Agreement), without the written consent of each Lender directly and adversely affected thereby (other than a Defaulting Lender); or

(ix)     change any of the provisions of this Section 12.02(b) or the definitions of “Required Lenders” or “Majority Lenders” or any other provision hereof specifying the number or percentage of Lenders required to waive, amend or modify any rights hereunder or under any other Loan Documents or make any determination or grant any consent hereunder or any other Loan Documents, without the written consent of each Lender directly and adversely affected thereby; provided further that no such agreement shall amend, modify or otherwise affect the rights or duties of the Administrative Agent, any other Agent or the Issuing Bank hereunder or under any other Loan Document without the prior written consent of the Administrative Agent, such other Agent or the Issuing Bank, as the case may be. Notwithstanding the foregoing, (1) any supplement to Schedule 7.14 shall be effective simply by delivering to the Administrative Agent a supplemental schedule clearly marked as such and, upon receipt, the Administrative Agent will promptly deliver a copy thereof to the Lenders, (2) the Parent Guarantor, the Borrower and the Administrative Agent may amend this Agreement or any other Loan Document without the consent of the Lenders in order to correct, amend or cure any ambiguity, inconsistency or defect or correct any typographical error or other manifest error in any Loan Document, and (3) the Administrative Agent, the Parent Guarantor and the Borrower may, without the consent of any Lender, enter into any amendment, modification or waiver of this Agreement or any other Loan Document or enter into any agreement or instrument to add additional Guarantors as contemplated in Section 8.14(b) or to effect the granting, perfection, protection, expansion or enhancement of any security interest in any Collateral or

 

123


Property to become Collateral to secure the Obligations for the benefit of the Lenders or as required by any Governmental Requirement to give effect to, protect or otherwise enhance the rights or benefits of any Lender under the Loan Documents. Notwithstanding the foregoing, Schedule 1.02(l) may be amended to add an Issuing Bank, remove an Issuing Bank or modify the LC Issuance Limit of any Issuing Bank, provided that the LC Commitment of any Issuing Bank may be increased with only the consent of the Parent Guarantor, the Borrower, the Administrative Agent and such Issuing Bank (and the consent of the Majority Lenders shall not be required).

(c)     Notwithstanding anything to the contrary contained in any Loan Documents, the Commitment of any Defaulting Lender may not be increased without its consent (it being understood, for avoidance of doubt, that no Defaulting Lender shall have any right to approve or disapprove any increase, decrease or reaffirmation of the Borrowing Base) and the Administrative Agent may with the consent of the Parent Guarantor, the Borrower and the non-Defaulting Lenders amend, modify or supplement the Loan Documents to effectuate an increase to the Borrowing Base where such Defaulting Lender does not consent to an increase to its Commitment, including not increasing the Borrowing Base by the portion thereof applicable to the Defaulting Lender.

Section 12.03     Expenses, Indemnity; Damage Waiver.

(a)     The Borrower shall pay (i) all reasonable and documented out-of-pocket expenses incurred by the Administrative Agent, the Arrangers and their respective Affiliates (including the reasonable fees, charges and disbursements of counsel and other outside consultants for the Administrative Agent and the Arrangers, the reasonable travel, photocopy, mailing, courier, telephone and other similar expenses, and the cost of environmental assessments (to the extent required under Section 8.10(a)), surveys and appraisals; provided that, in the case of legal counsel, such fees charges and disbursements shall be limited to (A) the reasonable and documented fees, disbursements and other charges of a single outside counsel to the Administrative Agent, the Arrangers and their respective Affiliates, taken as a whole, and (if necessary) one local counsel in each relevant material jurisdiction to the Administrative Agent, the Arrangers and their respective Affiliates, taken as a whole, and (B) solely in the event of an actual or perceived conflict of interest, one additional outside counsel (and, if necessary one local counsel in each relevant material jurisdiction) to the Administrative Agent, the Arrangers and their respective Affiliates) in connection with the Transactions, the Chapter 11 Cases, the syndication of the credit facility provided for herein, the preparation, negotiation, execution, delivery and administration (both before and after the execution hereof and including advice of counsel to the Administrative Agent as to the rights and duties of the Administrative Agent and the Lenders with respect thereto) of this Agreement and the other Loan Documents and any amendments, modifications or waivers of or consents related to the provisions hereof or thereof (whether or not the transactions contemplated hereby or thereby shall be consummated), (ii) all costs, expenses, assessments and other charges incurred by the Administrative Agent (or any sub-agent thereof) or any Lender in connection with any filing, registration, recording or perfection of any security interest contemplated by this Agreement or any Security Instrument or any other document referred to therein, (iii) all reasonable and documented out-of-pocket expenses incurred by the Issuing Bank in connection with the issuance, amendment, renewal or extension of any Letter of Credit or any demand for payment thereunder, and (iv) all reasonable out-of-pocket expenses incurred by the Administrative Agent, each Issuing Bank or any Lender, including the fees, charges and disbursements of any counsel for the Administrative Agent, any Issuing Bank or any Lender, in connection with the enforcement or protection of its rights in connection with this Agreement or any other Loan Document, including its rights under this Section 12.03, or in connection with the Loans made or Letters of Credit issued hereunder, including all such out-of-pocket expenses incurred during any workout, restructuring or negotiations in respect of such Loans or Letters of Credit.

 

124


(b)     THE BORROWER SHALL INDEMNIFY THE ADMINISTRATIVE AGENT (AND ANY SUB-AGENT THEREOF), THE ARRANGERS, EACH ISSUING BANK AND EACH LENDER, AND EACH RELATED PARTY OF ANY OF THE FOREGOING PERSONS (EACH SUCH PERSON BEING CALLED AN “INDEMNITEE”) AGAINST, AND DEFEND AND HOLD EACH INDEMNITEE HARMLESS FROM, ANY AND ALL LOSSES, CLAIMS, DAMAGES, PENALTIES, LIABILITIES AND RELATED EXPENSES, INCLUDING THE REASONABLE AND DOCUMENTED FEES, CHARGES AND DISBURSEMENTS OF ANY COUNSEL FOR ANY INDEMNITEE (BUT LIMITED IN THE CASE OF LEGAL FEES AND EXPENSES TO REASONABLE AND DOCUMENTED OUT-OF-POCKET FEES, DISBURSEMENTS AND OTHER CHARGES OF ONE OUTSIDE COUNSEL TO ALL INDEMNITEES TAKEN AS A WHOLE AND, IF NECESSARY, ONE LOCAL COUNSEL FOR ALL INDEMNITEES TAKEN AS A WHOLE IN EACH RELEVANT MATERIAL JURISDICTION, AND IN THE CASE OF AN ACTUAL OR PERCEIVED CONFLICT OF INTEREST, ONE ADDITIONAL COUNSEL AND (IF REASONABLY NECESSARY) ONE LOCAL COUNSEL IN EACH RELEVANT MATERIAL JURISDICTION TO THE AFFECTED INDEMNITEES SIMILARLY SITUATED), INCURRED BY OR ASSERTED AGAINST ANY INDEMNITEE ARISING OUT OF, IN CONNECTION WITH, OR AS A RESULT OF (i) THE EXECUTION OR DELIVERY OF THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR ANY AGREEMENT OR INSTRUMENT CONTEMPLATED HEREBY OR THEREBY, (ii) THE PERFORMANCE BY THE PARTIES HERETO OR THE PARTIES TO ANY OTHER LOAN DOCUMENT OF THEIR RESPECTIVE OBLIGATIONS HEREUNDER OR THEREUNDER OR THE CONSUMMATION OF THE TRANSACTIONS CONTEMPLATED HEREBY OR BY ANY OTHER LOAN DOCUMENT, (iii) THE FAILURE OF THE PARENT GUARANTOR OR ANY RESTRICTED SUBSIDIARY TO COMPLY WITH THE TERMS OF ANY LOAN DOCUMENT, INCLUDING THIS AGREEMENT, (iv) ANY INACCURACY OF ANY REPRESENTATION OR ANY BREACH OF ANY WARRANTY OR COVENANT OF THE BORROWER OR ANY GUARANTOR SET FORTH IN ANY OF THE LOAN DOCUMENTS OR ANY INSTRUMENTS, DOCUMENTS OR CERTIFICATIONS DELIVERED IN CONNECTION THEREWITH, (v) ANY LOAN OR LETTER OF CREDIT OR THE USE OF THE PROCEEDS THEREFROM, INCLUDING ANY REFUSAL BY THE ISSUING BANK TO HONOR A DEMAND FOR PAYMENT UNDER A LETTER OF CREDIT IF THE DOCUMENTS PRESENTED IN CONNECTION WITH SUCH DEMAND DO NOT STRICTLY COMPLY WITH THE TERMS OF SUCH LETTER OF CREDIT, OR ANY OTHER ASPECT OF THE LOAN DOCUMENTS, (vi) THE TRANSACTIONS, (vii) ANY ASSERTION THAT THE LENDERS WERE NOT ENTITLED TO RECEIVE THE PROCEEDS RECEIVED PURSUANT TO THE SECURITY INSTRUMENTS, (viii) ANY LIABILITY UNDER ENVIRONMENTAL LAW APPLICABLE TO THE PARENT GUARANTOR OR ANY SUBSIDIARY OR ANY OF THEIR PROPERTIES OR OPERATIONS, INCLUDING WITH RESPECT TO THE PRESENCE, GENERATION, STORAGE, RELEASE, THREATENED RELEASE, USE, TRANSPORT, DISPOSAL, ARRANGEMENT OF DISPOSAL OR TREATMENT OF HAZARDOUS MATERIALS ON OR AT ANY OF THEIR PROPERTIES, (ix) THE BREACH OR NON-COMPLIANCE BY THE PARENT GUARANTOR OR ANY SUBSIDIARY WITH ANY ENVIRONMENTAL LAW APPLICABLE TO THE PARENT GUARANTOR OR ANY SUBSIDIARY, (x) THE PAST OWNERSHIP BY THE PARENT GUARANTOR OR ANY SUBSIDIARY OF ANY OF THEIR PROPERTIES OR PAST ACTIVITY ON ANY OF THEIR PROPERTIES WHICH, THOUGH LAWFUL AND FULLY PERMISSIBLE AT THE TIME, COULD RESULT IN PRESENT LIABILITY, (xi) THE PRESENCE, USE, RELEASE, STORAGE, TREATMENT, DISPOSAL, GENERATION, THREATENED RELEASE, TRANSPORT, ARRANGEMENT FOR TRANSPORT OR ARRANGEMENT FOR DISPOSAL OF HAZARDOUS MATERIALS ON OR AT ANY OF THE PROPERTIES OWNED OR OPERATED BY THE PARENT GUARANTOR OR ANY SUBSIDIARY OR ANY ACTUAL OR ALLEGED PRESENCE OR RELEASE OF HAZARDOUS MATERIALS ON OR FROM ANY PROPERTY OWNED OR

 

125


OPERATED BY THE PARENT GUARANTOR OR ANY OF THE PARENT GUARANTOR’S SUBSIDIARIES, (xii) ANY LIABILITY UNDER ENVIRONMENTAL LAWS RELATED IN ANY WAY TO THE PARENT GUARANTOR OR ANY OF THE PARENT GUARANTOR’S SUBSIDIARIES, OR ANY OTHER ENVIRONMENTAL, HEALTH OR SAFETY CONDITION IN CONNECTION WITH THE LOAN DOCUMENTS, OR (xiii) ANY ACTUAL OR THREATENED CLAIM, LITIGATION, INVESTIGATION OR PROCEEDING RELATING TO ANY OF THE FOREGOING, AND REGARDLESS OF WHETHER ANY INDEMNITEE IS A PARTY THERETO OR WHETHER BROUGHT BY THE BORROWER, ANY GUARANTOR OR ANY OTHER PARTY, AND SUCH INDEMNITY SHALL EXTEND TO EACH INDEMNITEE NOTWITHSTANDING THE SOLE OR CONCURRENT NEGLIGENCE OF EVERY KIND OR CHARACTER WHATSOEVER, WHETHER ACTIVE OR PASSIVE, WHETHER AN AFFIRMATIVE ACT OR AN OMISSION, INCLUDING WITHOUT LIMITATION, ALL TYPES OF NEGLIGENT CONDUCT IDENTIFIED IN THE RESTATEMENT (SECOND) OF TORTS OF ONE OR MORE OF THE INDEMNITEES OR BY REASON OF STRICT LIABILITY IMPOSED WITHOUT FAULT ON ANY ONE OR MORE OF THE INDEMNITEES; PROVIDED THAT SUCH INDEMNITY SHALL NOT, AS TO ANY INDEMNITEE, BE AVAILABLE TO THE EXTENT THAT SUCH LOSSES, CLAIMS, DAMAGES, LIABILITIES OR RELATED EXPENSES ARE DETERMINED BY A COURT OF COMPETENT JURISDICTION BY FINAL AND NONAPPEALABLE JUDGMENT TO HAVE RESULTED FROM (I) THE BAD FAITH, GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF SUCH INDEMNITEE, (II) A MATERIAL BREACH OF SUCH INDEMNITEE’S OBLIGATIONS UNDER THE LOAN DOCUMENTS AND (III) DISPUTES SOLELY AMONG INDEMNITEES THAT DO NOT INVOLVE ANY ACTION OR OMISSION BY ANY CREDIT PARTY, OR ANY SUBSIDIARY THEREOF AND THAT ARE NOT RELATED TO A CLAIM AGAINST THE ARRANGERS, THE ADMINISTRATIVE AGENT, THE ISSUING BANKS OR ANY OF THEIR AFFILIATES IN THEIR RESPECTIVE CAPACITIES OR IN FULFILLING THEIR RESPECTIVE ROLES AS ARRANGERS, THE ADMINISTRATIVE AGENT OR ISSUING BANKS OR ANY SIMILAR ROLE UNDER THIS AGREEMENT.

(c)     To the extent that the Borrower fails to pay any amount required to be paid by it to the Administrative Agent (or any sub-agent thereof), the Arrangers or any Issuing Bank under Section 12.03(a) or (b) or any Related Party of the foregoing, each Lender severally agrees to pay to the Administrative Agent (or any such sub-agent), the Arrangers or such Issuing Bank, as the case may be, such Lender’s Applicable Percentage (determined as of the time that the applicable unreimbursed expense or indemnity payment is sought) of such unpaid amount (including any such unpaid amount in respect of a claim asserted by such Lender); 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 sub-agent thereof), the Arrangers or such Issuing Bank in its capacity as such.

(d)     All amounts due under this Section 12.03 shall be payable not later than thirty (30) days after written demand therefor.

(e)     Each party’s obligations under this Section 12.03 shall survive the termination of the Loan Documents and payment of the obligations hereunder.

(f)     Section 12.03 shall not apply with respect to Taxes other than any Taxes that represent losses, claims, or damages arising from a non-Tax claim.

 

126


Section 12.04     Successors and Assigns; No Third Party Beneficiaries.

(a)     The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns permitted hereby (including any Affiliate of the Issuing Bank that issues any Letter of Credit), except that neither the Parent Guarantor nor the Borrower may assign or otherwise transfer any of its rights or obligations hereunder without the prior written consent of Administrative Agent and each Lender and no Lender may assign or otherwise transfer its rights or obligations hereunder except in accordance with this Section 12.04. Nothing in this Agreement, expressed or implied, shall be construed to confer upon any Person (other than the parties hereto, their respective successors and assigns permitted hereby (including any Affiliate of the Issuing Bank that issues any Letter of Credit), Participants (to the extent provided in Section 12.04(c)) and, to the extent expressly contemplated hereby, the Related Parties of each of the Administrative Agent, the Issuing Bank and the Lenders) any legal or equitable right, remedy or claim under or by reason of this Agreement, and except for the foregoing Persons there are no third party beneficiaries to this Agreement.

(b)     (i)     Subject to the conditions set forth in Section 12.04(b)(ii), any Lender may assign to one or more assignees all or a portion of its rights and obligations under this Agreement (including all or a portion of its Commitment and the Loans at the time owing to it) with the prior written consent (such consent not to be unreasonably withheld or delayed) of:

(A)     the Borrower; provided that (i) no consent of the Borrower shall be required if such assignment is to a Lender, an Affiliate of a Lender, an Approved Fund or if an Event of Default under Section 10.01(a), (h) or (i) has occurred and is continuing and (ii) if the Borrower has not responded within ten (10) Business Days after the delivery of any such request for a consent, such consent shall be deemed to have been given; and

(B)     the Administrative Agent and each Issuing Bank; provided that no consent of the Administrative Agent shall be required for an assignment to an assignee that is a Lender, an Affiliate of a Lender or an Approved Fund immediately prior to giving effect to such assignment.

(ii)     Assignments shall be subject to the following additional conditions:

(A)     except in the case of an assignment to a Lender or an Affiliate of a Lender or an assignment of the entire remaining amount of the assigning Lender’s Commitment or Loans, the amount of the Commitment or Loans of the assigning Lender subject to each such assignment (determined as of the date the Assignment and Assumption with respect to such assignment is delivered to the Administrative Agent) shall not be less than $1,000,000 unless each of the Borrower and the Administrative Agent otherwise consent; provided that no such consent of the Borrower shall be required if an Event of Default has occurred and is continuing;

(B)     each partial assignment shall be made as an assignment of a proportionate part of all the assigning Lender’s rights and obligations under this Agreement;

(C)     the parties to each assignment shall execute and deliver to the Administrative Agent an Assignment and Assumption or to the extent applicable, an agreement incorporating an Assignment and Assumption by reference pursuant to an Approved Electronic Platform as to which the Administrative Agent and the parties to the Assignment and Assumption are participants, in each case, together with a processing and recordation fee of $3,500; provided that the Administrative Agent may, in its sole discretion, elect to waive such processing and recordation fee in the case of any assignment;

 

127


(D)     the assignee, if it shall not be a Lender, shall deliver to the Administrative Agent an Administrative Questionnaire;

(E)     no such assignment shall be made to a natural Person (or a holding company, investment vehicle or trust for, or owned and operated for the primary benefit of, a natural Person) or the Parent Guarantor or any of the Parent Guarantor’s Affiliates or Subsidiaries;

(F)     no such assignment shall be made to an Industry Competitor; and

(G)     no such assignment shall be made to a Defaulting Lender or any of its subsidiaries, or any Person who, upon becoming a Lender hereunder, would constitute a Defaulting Lender or a Subsidiary of a Defaulting Lender.

(iii)     Subject to Section 12.04(b)(iv) and the acceptance and recording thereof by the Administrative Agent, from and after the effective date specified in each Assignment and Assumption the assignee thereunder shall be a party hereto and, to the extent of the interest assigned by such Assignment and Assumption, have the rights and obligations of a Lender under this Agreement, and the assigning Lender thereunder shall, to the extent of the interest assigned by such Assignment and Assumption, be released from its obligations under this Agreement (and, in the case of an Assignment and Assumption covering all of the assigning Lender’s rights and obligations under this Agreement, such Lender shall cease to be a party hereto) but shall continue to be entitled to the benefits of Section 5.01, Section 5.02, Section 5.03 and Section 12.03 with respect to facts and circumstances occurring prior to the effective date of such assignment; provided, that except to the extent otherwise expressly agreed by the affected parties, no assignment by a Defaulting Lender will constitute a waiver or release of any claim of any party hereunder arising from that Lender’s having been a Defaulting Lender. Any assignment or transfer by a Lender of rights or obligations under this Agreement that does not comply with this Section 12.04 shall be treated for purposes of this Agreement as a sale by such Lender of a participation in such rights and obligations in accordance with Section 12.04(c).

(iv)     The Administrative Agent, acting for this purpose as a non-fiduciary agent of the Borrower, shall maintain at one of its offices a copy of each Assignment and Assumption delivered to it and a register for the recordation of the names and addresses of the Lenders, and the Commitment of, and principal amount of the Loans and of the LC Disbursements owing to, each Lender pursuant to the terms hereof from time to time (the “Register”). The entries in the Register shall be conclusive absent manifest error, and the Borrower, the Administrative Agent, the Issuing Bank 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, the Issuing Bank and any Lender, at any reasonable time and from time to time upon reasonable prior notice. In connection with any changes to the Register, if necessary, the Administrative Agent will reflect the revisions on Annex I and forward a copy of such revised Annex I to the Borrower, the Issuing Bank and each Lender. This Section 12.04(b)(iv) shall be construed so that all Loans are at all times maintained in “registered form” within the meaning of sections 163(f), 871(h)(2) and 881(c)(2) of the Code and any related Treasury Regulations (or any other relevant or successor provisions of the Code or such Treasury Regulations).

(v)     Upon its receipt of a duly completed Assignment and Assumption executed by an assigning Lender and an assignee or, to the extent applicable, an agreement incorporating an Assignment and Assumption by reference pursuant to an Approved Electronic Platform as to which the Administrative Agent and the parties to the Assignment and Assumption are participants, the assignee’s completed Administrative Questionnaire (unless the assignee shall already be a Lender hereunder), the processing and recordation fee referred to in Section 12.04(b) and any written consent to such assignment

 

128


required by Section 12.04(b), the Administrative Agent shall accept such Assignment and Assumption and record the information contained therein in the Register. No assignment shall be effective for purposes of this Agreement unless it has been recorded in the Register as provided in this Section 12.04(b).

(c)     Any Lender may, without the consent of the Borrower, the Administrative Agent or the Issuing Bank, sell participations to one or more banks or other entities (a “Participant”) in all or a portion of such Lender’s rights and obligations under this Agreement (including all or a portion of its Commitment and the Loans owing to it); provided that:

(i)     such Lender’s obligations under this Agreement shall remain unchanged, such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations, the Borrower, the Administrative Agent, the Issuing Bank and the other Lenders shall continue to deal solely and directly with such Lender in connection with such Lender’s rights and obligations under this Agreement;

(ii)     such Participant must first agree to comply with Section 12.11;

(iii)     no such participation may be sold to a natural Person (or a holding company, investment vehicle or trust for, or owned and operated for the primary benefit of, a natural Person), an Industry Competitor, a Defaulting Lender or the Parent Guarantor or an Affiliate or a Subsidiary of the Parent Guarantor; and

(iv)     any agreement or instrument pursuant to which a Lender sells such a participation shall provide that such Lender retains the sole right to enforce this Agreement and to approve any amendment, modification or waiver of any provision of this Agreement, except that such agreement or instrument may provide that such Lender will not, without the consent of the Participant, agree to any amendment, modification or waiver described in the first proviso to Section 12.02(b) that affects such Participant.

Each such Participant shall be entitled to the benefits of Section 5.01, 5.02 and 5.03 and shall be subject to the requirements of and limitations in Sections 5.01, 5.02, 5.03 and 5.05 (it being understood that the documentation required under Section 5.03(g) shall be delivered to the participating Lender, i.e., the Lender selling such participation) to the same extent as if such Participant were a Lender and had acquired its interest by assignment pursuant to paragraph (b) of this Section; provided that such Participant shall not be entitled at any time to receive any greater payment under Sections 5.01 or 5.03, with respect to any participation, than its participating Lender would have been entitled to receive at such time, except to the extent such entitlement to receive a greater payment results from a Change in Law that occurs after the Participant acquired the applicable participation. A Participant that would be a Foreign Lender if it were a Lender shall not be entitled to the benefits of Section 5.03 unless the Borrower is notified of the participation sold to such Participant and such Participant complies with Section 5.03 as though it were a Lender. Each Lender that sells a participation agrees, at the Borrower’s request and expense, to use reasonable efforts to cooperate with the Borrower to effectuate the provisions of Section 5.05 with respect to any Participant. To the extent permitted by law, each Participant also shall be entitled to the benefits of Section 12.08 as though it were a Lender; provided that such Participant agrees to be subject to Section 4.01(c) as though it were a Lender. Each Lender that sells a participation shall, acting solely for this purpose as a non-fiduciary agent of the Borrower, maintain a register on which it enters the name and address of each Participant and the principal amounts (and stated interest) of each Participant’s interest in the Loans or other obligations under the Loan Documents (the “Participant Register”); provided that no Lender shall have any obligation to disclose all or any portion of the Participant Register (including the identity of any Participant or any information relating to a Participant’s interest in any Commitment, Loans or its other obligations under any Loan Document) to any Person except to the extent that such disclosure is necessary to establish that such

 

129


Commitment, Loan, 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.

(d)     Any Lender may at any time pledge or assign a security interest in all or any portion of its rights under this Agreement to secure obligations of such Lender, including any pledge or assignment to secure obligations to a Federal Reserve Bank or other central bank having jurisdiction over such Lender, and this Section 12.04 shall not apply to any such pledge or assignment of a security interest; provided that no such pledge or assignment of a security interest shall release a Lender from any of its obligations hereunder or substitute any such pledgee or assignee for such Lender as a party hereto.

(e)     Notwithstanding any other provisions of this Section 12.04, no transfer or assignment of the interests or obligations of any Lender or any grant of participations therein shall be permitted if such transfer, assignment or grant would require any Credit Party to file a registration statement with the SEC or to qualify the Loans under the “Blue Sky” laws of any state.

Section 12.05     Survival; Revival; Reinstatement.

(a)     All covenants, agreements, representations and warranties made by Parent Guarantor and the Borrower herein and in the certificates or other instruments delivered in connection with or pursuant to this Agreement or any other Loan Document shall be considered to have been relied upon by the other parties hereto and shall survive the execution and delivery of this Agreement and the making of any Loans and issuance of any Letters of Credit, regardless of any investigation made by any such other party or on its behalf and notwithstanding that the Administrative Agent, any other Agent, the Issuing Bank or any Lender may have had notice or knowledge of any Default or incorrect representation or warranty at the time any credit is extended hereunder, and shall continue in full force and effect as long as the principal of or any accrued interest on any Loan or any fee or any other amount payable under this Agreement is outstanding and unpaid or any Letter of Credit is outstanding (or any drawing is pending on any Letter of Credit) and so long as the Commitments have not expired or terminated. The provisions of Section 5.01, Section 5.02, Section 5.03 and Section 12.03 and Article XI shall survive and remain in full force and effect regardless of the consummation of the transactions contemplated hereby, the repayment of the Loans, the expiration or termination of the Letters of Credit and the Commitments or the termination of this Agreement, any other Loan Document or any provision hereof or thereof.

(b)     To the extent that any payments on the Obligations or proceeds of any Collateral are subsequently invalidated, declared to be fraudulent or preferential, set aside or required to be repaid to a trustee, debtor in possession, receiver or other Person under any bankruptcy law, common law or equitable cause, then to such extent, the Obligations so satisfied shall be revived and continue as if such payment or proceeds had not been received and the Administrative Agent’s and the Lenders’ Liens, security interests, rights, powers and remedies under this Agreement and each Loan Document shall continue in full force and effect. In such event, each Loan Document shall be automatically reinstated and Parent Guarantor and the Borrower shall take such action as may be reasonably requested by the Administrative Agent and the Lenders to effect such reinstatement.

 

130


Section 12.06    Counterparts; Integration; Effectiveness.

(a)    This Agreement may be executed in counterparts (and by different parties hereto on different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract.

(b)    This Agreement, the other Loan Documents and any separate letter agreements with respect to fees payable to the Administrative Agent constitute the entire contract among the parties relating to the subject matter hereof and thereof and supersede any and all previous agreements and understandings, oral or written, relating to the subject matter hereof and thereof. THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT AMONG THE PARTIES HERETO AND THERETO AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.

(c)    Except as provided in Section 6.01, this Agreement shall become effective when it shall have been executed by the Administrative Agent and when the Administrative Agent shall have received counterparts hereof which, when taken together, bear the signatures of each of the other parties hereto, and thereafter shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns. Delivery of an executed counterpart of a signature page of (i) this Agreement, (ii) any other Loan Document and/or (iii) any document, amendment, approval, consent, information, notice (including, for the avoidance of doubt, any notice delivered pursuant to Section 12.01), certificate, request, statement, disclosure or authorization related to this Agreement, any other Loan Document and/or the transactions contemplated hereby and/or thereby (each an “Ancillary Document”) that is an Electronic Signature transmitted by telecopy, emailed pdf. or any other electronic means that reproduces an image of an actual executed signature page shall be effective as delivery of a manually executed counterpart of this Agreement, such other Loan Document or such Ancillary Document, as applicable. The words “execution,” “signed,” “signature,” “delivery,” and words of like import in or relating to this Agreement, any other Loan Document and/or any Ancillary Document shall be deemed to include Electronic Signatures, deliveries or the keeping of records in any electronic form (including deliveries by telecopy, emailed pdf. or any other electronic means that reproduces an image of an actual executed signature page), each of which shall be of the same legal effect, validity or enforceability as a manually executed signature, physical delivery thereof or the use of a paper-based recordkeeping system, as the case may be; provided that nothing herein shall require the Administrative Agent to accept Electronic Signatures in any form or format without its prior written consent and pursuant to procedures approved by it; provided further, without limiting the foregoing, (x) to the extent the Administrative Agent has agreed to accept any Electronic Signature, the Administrative Agent and each of the Lenders shall be entitled to rely on such Electronic Signature purportedly given by or on behalf of the Borrower or any other Credit Party without further verification thereof and without any obligation to review the appearance or form of any such Electronic signature and (y) upon the request of the Administrative Agent or any Lender, any Electronic Signature shall be promptly followed by a manually executed counterpart. Without limiting the generality of the foregoing, the Borrower and each Credit Party hereby (A) agrees that, for all purposes, including without limitation, in connection with any workout, restructuring, enforcement of remedies, bankruptcy proceedings or litigation among the Administrative Agent, the Lenders, the Borrower and the Credit Parties, Electronic Signatures transmitted by telecopy, emailed pdf. or any other electronic means that reproduces an image of an actual executed signature page and/or any electronic images of this Agreement, any other Loan Document and/or any Ancillary Document shall have the same legal effect, validity and enforceability as any paper original, (B) the Administrative Agent and each of the Lenders may, at its option, create one or more copies of this Agreement, any other Loan Document and/or any Ancillary Document in the form of an imaged electronic record in any format, which shall be deemed created in the ordinary course of such Person’s business, and destroy the original

 

131


paper document (and all such electronic records shall be considered an original for all purposes and shall have the same legal effect, validity and enforceability as a paper record), (C) waives any argument, defense or right to contest the legal effect, validity or enforceability of this Agreement, any other Loan Document and/or any Ancillary Document based solely on the lack of paper original copies of this Agreement, such other Loan Document and/or such Ancillary Document, respectively, including with respect to any signature pages thereto and (D) waives any claim against the Administrative Agent, any Arranger, any Lender, any Issuing Bank, or any of their Related Parties for any liabilities arising solely from the Administrative Agent’s and/or any Lender’s reliance on or use of Electronic Signatures and/or transmissions by telecopy, emailed pdf. or any other electronic means that reproduces an image of an actual executed signature page, including any liabilities arising as a result of the failure of the Borrower and/or any Credit Party to use any available security measures in connection with the execution, delivery or transmission of any Electronic Signature.

Section 12.07    Severability. Any provision of this Agreement or any other Loan Document held to be invalid, illegal or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such invalidity, illegality or unenforceability without affecting the validity, legality and enforceability of the remaining provisions hereof or thereof; and the invalidity of a particular provision in a particular jurisdiction shall not invalidate such provision in any other jurisdiction.

Section 12.08    Right of Setoff. If an Event of Default shall have occurred and be continuing, each Lender, each Issuing Bank and each of their respective Affiliates is hereby authorized at any time and from time to time, to the fullest extent permitted by 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, and of whatsoever kind, including obligations under Swap Agreements) at any time owing by such Lender, such Issuing Bank or any such Affiliate to or for the credit or the account of any Credit Party against any and all of the obligations of any Credit Party owing to such Lender or its Affiliates now or hereafter existing under this Agreement or any other Loan Document, irrespective of whether or not such Lender, such Issuing Bank or such Affiliate shall have made any demand under this Agreement or any other Loan Document and although such obligations may be unmatured or are owed to a branch, office or Affiliate of such Lender different from the branch, office or Affiliate holding such deposit or obligated on such indebtedness. The rights of each Lender, each Issuing Bank and each of their respective Affiliates under this Section 12.08 are in addition to other rights and remedies (including other rights of setoff) which such Lender, such Issuing Bank or any such Affiliate may have. Each Lender and each Issuing Bank agrees to notify the Borrower and the Administrative Agent promptly after any such setoff and application; provided that the failure to give such notice shall not affect the validity of such setoff and application.

Section 12.09    GOVERNING LAW; JURISDICTION; CONSENT TO SERVICE OF PROCESS.

(a)    THIS AGREEMENT AND THE NOTES SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

(b)    ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THE LOAN DOCUMENTS SHALL BE BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT JURISDICTION IN THE STATE, COUNTY, AND CITY OF NEW YORK, BOROUGH OF MANHATTAN, AND, BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH PARTY HEREBY ACCEPTS FOR ITSELF AND (TO THE EXTENT PERMITTED BY LAW) IN RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE EXCLUSIVE JURISDICTION OF THE AFORESAID COURTS; PROVIDED, THAT NOTHING CONTAINED HEREIN OR IN ANY OTHER LOAN DOCUMENT WILL PREVENT ANY PARTY FROM BRINGING ANY ACTION TO ENFORCE ANY AWARD OR JUDGMENT OR EXERCISE ANY RIGHT UNDER THE LOAN

 

132


DOCUMENTS IN ANY OTHER FORUM IN WHICH JURISDICTION CAN BE ESTABLISHED. EACH OF THE PARTIES HERETO AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING, WITHOUT LIMITATION, ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY SUCH ACTION OR PROCEEDING IN SUCH RESPECTIVE JURISDICTIONS.

(c)    EACH PARTY IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO IT AT THE ADDRESS SPECIFIED IN SECTION 12.01 OR SUCH OTHER ADDRESS AS IS SPECIFIED PURSUANT TO SECTION 12.01 (OR ITS ASSIGNMENT AND ASSUMPTION), SUCH SERVICE TO BECOME EFFECTIVE THIRTY (30) DAYS AFTER SUCH MAILING (OR AS SOON THEREAFTER AS IS PROVIDED BY APPLICABLE LAW). NOTHING HEREIN SHALL AFFECT THE RIGHT OF A PARTY OR ANY HOLDER OF A NOTE TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST ANOTHER PARTY IN ANY OTHER JURISDICTION.

(d)    EACH PARTY (i) HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN; (ii) IRREVOCABLY WAIVES, TO THE MAXIMUM EXTENT NOT PROHIBITED BY LAW, ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN ANY SUCH LITIGATION ANY SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES, OR DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL DAMAGES; PROVIDED THAT, THE FOREGOING WAIVER SHALL NOT LIMIT THE INDEMNITY OBLIGATIONS OF THE BORROWER UNDER SECTION 12.03 TO THE EXTENT ANY SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES ARE INCLUDED IN A THIRD PARTY CLAIM IN CONNECTION WITH WHICH AN INDEMNITEE IS ENTITLED TO INDEMNIFICATION BY THE BORROWER UNDER SECTION 12.03; AND (iii) CERTIFIES THAT NO PARTY HERETO NOR ANY REPRESENTATIVE OR AGENT OF COUNSEL FOR ANY PARTY HERETO HAS REPRESENTED, EXPRESSLY OR OTHERWISE, OR IMPLIED THAT SUCH PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVERS, AND ACKNOWLEDGES THAT IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT, THE LOAN DOCUMENTS AND THE TRANSACTIONS CONTEMPLATED HEREBY AND THEREBY BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS CONTAINED IN THIS SECTION 12.09.

Section 12.10    Headings. Article and Section headings and the Table of Contents used herein are for convenience of reference only, are not part of this Agreement and shall not affect the construction of, or be taken into consideration in interpreting, this Agreement.

Section 12.11    Confidentiality. Each of the Administrative Agent, the Issuing Bank and the Lenders agrees to maintain the confidentiality of the Information (as defined below), except that Information may be disclosed (a) to its and its Affiliates’ directors, officers, employees and agents, including accountants, legal counsel and other advisors (it being understood that the Persons to whom such disclosure is made will be informed of the confidential nature of such Information and instructed to keep

 

133


such Information confidential in accordance with the terms hereof), (b) to the extent requested by any regulatory authority having jurisdiction over the disclosing party, (c) to the extent required by applicable laws or regulations or by any subpoena or similar legal process, (d) to any other party to this Agreement or any other Loan Document, (e) in connection with the exercise of any remedies hereunder or under any other Loan Document or any suit, action or proceeding relating to this Agreement or any other Loan Document or the enforcement of rights hereunder or thereunder, (f) subject to an agreement for the express benefit of the Borrower containing provisions substantially the same as those of this Section 12.11, to any assignee of or Participant in, or any prospective assignee of or Participant in, any of its rights or obligations under this Agreement or to any actual or prospective counterparty (or its advisors) to any Swap Agreement relating to the Parent Guarantor, the Borrower and its obligations, (g) with the consent of the Borrower or (h) to the extent such Information becomes publicly available other than as a result of a breach of this Section 12.11 or becomes available to the Administrative Agent, the Issuing Bank or any Lender on a nonconfidential basis from a source (other than any Credit Party) not known by them to be subject to disclosure restrictions. For the purposes of this Section 12.11, “Information” means all information received from Parent Guarantor or any Subsidiary relating to Parent Guarantor or any Subsidiary and their businesses, other than any such information that is available to the Administrative Agent, the Issuing Bank or any Lender on a nonconfidential basis prior to disclosure by Parent Guarantor or a Subsidiary; provided that, in the case of information received from Parent Guarantor or any Subsidiary after the date hereof, such information is clearly identified at the time of delivery as confidential. Any Person required to maintain the confidentiality of Information as provided in this Section 12.11 shall be considered to have complied with its obligation to do so if such Person has exercised the same degree of care to maintain the confidentiality of such Information as such Person would accord to its own confidential information. In addition, the Administrative Agent and the Lenders may disclose the existence of this Agreement and information about this Agreement to rating agencies, market data collectors, similar service providers to the lending industry and service providers to the Agents and the Lenders in connection with the administration of this Agreement, the other Loan Documents, and the Commitments.

Section 12.12    Interest Rate Limitation. It is the intention of the parties hereto that each Lender shall conform strictly to usury laws applicable to it. Accordingly, if the transactions contemplated hereby would be usurious as to any Lender under laws applicable to it (including the laws of the United States of America or any state or other jurisdiction whose laws may be mandatorily applicable to such Lender notwithstanding the other provisions of this Agreement), then, in that event, notwithstanding anything to the contrary in any of the Loan Documents or any agreement entered into in connection with or as security for the Notes, it is agreed as follows: (a) the aggregate of all consideration which constitutes interest under law applicable to any Lender that is contracted for, taken, reserved, charged or received by such Lender under any of the Loan Documents or agreements or otherwise in connection with the Notes shall under no circumstances exceed the maximum amount allowed by such applicable law, and any excess shall be canceled automatically and if theretofore paid shall be credited by such Lender on the principal amount of the Obligations (or, to the extent that the principal amount of the Obligations shall have been or would thereby be paid in full, refunded by such Lender to the Borrower); and (b) in the event that the maturity of the Notes is accelerated by reason of an election of the holder thereof resulting from any Event of Default under this Agreement or otherwise, or in the event of any required or permitted prepayment, then such consideration that constitutes interest under law applicable to any Lender may never include more than the maximum amount allowed by such applicable law, and excess interest, if any, provided for in this Agreement or otherwise shall be canceled automatically by such Lender as of the date of such acceleration or prepayment and, if theretofore paid, shall be credited by such Lender on the principal amount of the Obligations (or, to the extent that the principal amount of the Obligations shall have been or would thereby be paid in full, refunded by such Lender to the Borrower). All sums paid or agreed to be paid to any Lender for the use, forbearance or detention of sums due hereunder shall, to the extent permitted by law applicable to such Lender, be amortized, prorated, allocated and spread throughout the stated term of the Loans until payment in full so that the rate or amount of interest on account of any Loans hereunder does not exceed

 

134


the maximum amount allowed by such applicable law. If at any time and from time to time the amount of interest payable to any Lender on any date shall be computed at the Highest Lawful Rate applicable to such Lender pursuant to this Section 12.12 and in respect of any subsequent interest computation period the amount of interest otherwise payable to such Lender would be less than the amount of interest payable to such Lender computed at the Highest Lawful Rate applicable to such Lender, then the amount of interest payable to such Lender in respect of such subsequent interest computation period shall continue to be computed at the Highest Lawful Rate applicable to such Lender until the total amount of interest payable to such Lender shall equal the total amount of interest which would have been payable to such Lender if the total amount of interest had been computed without giving effect to this Section 12.12.

Section 12.13    EXCULPATION PROVISIONS. EACH OF THE PARTIES HERETO SPECIFICALLY AGREES THAT IT HAS A DUTY TO READ THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS AND AGREES THAT IT IS CHARGED WITH NOTICE AND KNOWLEDGE OF THE TERMS OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS; THAT IT HAS IN FACT READ THIS AGREEMENT AND IS FULLY INFORMED AND HAS FULL NOTICE AND KNOWLEDGE OF THE TERMS, CONDITIONS AND EFFECTS OF THIS AGREEMENT; THAT IT HAS BEEN REPRESENTED BY INDEPENDENT LEGAL COUNSEL OF ITS CHOICE THROUGHOUT THE NEGOTIATIONS PRECEDING ITS EXECUTION OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS; AND HAS RECEIVED THE ADVICE OF ITS ATTORNEY IN ENTERING INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS; AND THAT IT RECOGNIZES THAT CERTAIN OF THE TERMS OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS RESULT IN ONE PARTY ASSUMING THE LIABILITY INHERENT IN SOME ASPECTS OF THE TRANSACTION AND RELIEVING THE OTHER PARTY OF ITS RESPONSIBILITY FOR SUCH LIABILITY. EACH PARTY HERETO AGREES AND COVENANTS THAT IT WILL NOT CONTEST THE VALIDITY OR ENFORCEABILITY OF ANY EXCULPATORY PROVISION OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS ON THE BASIS THAT THE PARTY HAD NO NOTICE OR KNOWLEDGE OF SUCH PROVISION OR THAT THE PROVISION IS NOT “CONSPICUOUS.”

Section 12.14    Collateral Matters; Swap Agreements; Treasury Management Agreements. The benefit of the Security Instruments and of the provisions of this Agreement relating to any Collateral securing the Obligations shall also extend to and be available to Secured Swap Parties and Treasury Management Lenders on a pro rata basis (but subject to the terms of the Loan Documents, including provisions thereof relating to the application and priority of payments to the Persons entitled thereto) in respect of any obligations of the Parent Guarantor, any of its Restricted Subsidiaries or any other Guarantors which arise under Secured Swap Agreements or Lender Treasury Management Agreements, as applicable. No Secured Swap Party or Treasury Management Lender shall have any voting or approval rights under any Loan Document as a result of the existence of obligations owed to it under any such Swap Agreements or Lender Treasury Management Agreements, as applicable. By accepting the benefits of the Collateral, each Secured Swap Party agrees that, notwithstanding anything to the contrary in any of its Swap Agreements with the Parent Guarantor, the Borrower or any other Credit Party, the Parent Guarantor, the Borrower and the other Credit Parties may grant Liens under the Loan Documents that burden and attach to such Swap Agreements and the rights of Parent Guarantor, the Borrower and the other Credit Parties thereunder.

Section 12.15    USA Patriot Act Notice. Each Agent and each Lender hereby notifies Parent Guarantor and the Borrower that pursuant to the requirements of the USA Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)) (the “Act”), it is required to obtain, verify and record information that identifies the Borrower and each Guarantor, which information includes the name and address of the Borrower and each Guarantor and other information that will allow it to identify the Borrower and each Guarantor in accordance with the Act.

 

135


Section 12.16    No Advisory or Fiduciary Responsibility. In connection with all aspects of each transaction contemplated hereby (including in connection with any amendment, waiver or other modification hereof or of any other Loan Document), each of Parent Guarantor and the Borrower acknowledges and agrees, and acknowledges its Subsidiaries’ understanding, that: (a) (i) no fiduciary, advisory or (except as expressly provided in Section 12.04) agency relationship between Parent Guarantor and its Subsidiaries and the Administrative Agent or any Lender is intended to be or has been created in respect of the transactions contemplated hereby or by the other Loan Documents, irrespective of whether the Administrative Agent or any Lender has advised or is advising Parent Guarantor or any Subsidiary on other matters; (ii) the arranging and other services regarding this Agreement provided by the Administrative Agent and the Lenders are arm’s-length commercial transactions between Parent Guarantor, the Borrower and their Subsidiaries, on the one hand, and the Administrative Agent and the Lenders, on the other hand; (iii) each of Parent Guarantor and the Borrower has consulted its own legal, accounting, regulatory and tax advisors to the extent that it has deemed appropriate; and (iv) each of Parent Guarantor and the Borrower is capable of evaluating, and understands and accepts, the terms, risks and conditions of the transactions contemplated hereby and by the other Loan Documents; and (b) (i) the Administrative Agent and the Lenders each is and has been acting solely as a principal and, except as expressly agreed in writing by the relevant parties, has not been, is not, and will not be acting as an advisor, agent or fiduciary for Parent Guarantor, the Borrower or any of their Subsidiaries, or any other Person; (ii) neither the Administrative Agent nor the Lenders has any obligation to Parent Guarantor, the Borrower or any of their Subsidiaries with respect to the transactions contemplated hereby except those obligations expressly set forth herein and in the other Loan Documents; and (iii) the Administrative Agent and the Lenders and their respective Affiliates may be engaged, for their own accounts or the accounts of customers, in a broad range of transactions that involve interests that differ from those of Parent Guarantor, the Borrower and their Subsidiaries, and neither the Administrative Agent nor the Lenders has any obligation to disclose any of such interests to Parent Guarantor, the Borrower or their Subsidiaries. To the fullest extent permitted by Law, each of Parent Guarantor and the Borrower hereby waives and releases any claims that it may have against the Administrative Agent and the Lenders with respect to any breach or alleged breach of agency (except as expressly set forth in Section 12.04) or fiduciary duty in connection with any aspect of any transaction contemplated hereby.

Section 12.17    Acknowledgement and Consent to Bail-In of Affected Financial Institutions. Notwithstanding anything to the contrary in any Loan Document or in any other agreement, arrangement or understanding among any such parties, each party hereto acknowledges that any liability of any Affected Financial Institution arising under any Loan Document may be subject to the Write-Down and Conversion Powers of a Resolution Authority and agrees and consents to, and acknowledges and agrees to be bound by:

(a)    the application of any Write-Down and Conversion Powers by the applicable Resolution Authority to any such liabilities arising hereunder which may be payable to it by any party hereto that is an Affected Financial Institution; and

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

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

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

 

136


(iii)    the variation of the terms of such liability in connection with the exercise of the Write-Down and Conversion Powers of the applicable Resolution Authority.

Section 12.18    Acknowledgement Regarding any Supported QFCs. To the extent that the Loan Documents provide support, through a guarantee or otherwise, for Swap Agreements or any other agreement or instrument that is a QFC (such support “QFC Credit Support” and each such QFC a “Supported QFC”), the parties acknowledge and agree as follows with respect to the resolution power of the Federal Deposit Insurance Corporation under the Federal Deposit Insurance Act and Title II of the Dodd-Frank Wall Street Reform and Consumer Protection Act (together with the regulations promulgated thereunder, the “U.S. Special Resolution Regimes”) in respect of such Supported QFC and QFC Credit Support (with the provisions below applicable notwithstanding that the Loan Documents and any Supported QFC may in fact be stated to be governed by the laws of the State of New York and/or of the United States or any other state of the United States:

In the event a Covered Entity that is party to a Supported QFC (each, a “Covered Party”) becomes subject to a proceeding under a U.S. Special Resolution Regime, the transfer of such Supported QFC and the benefit of such QFC Credit Support (and any interest and obligation in or under such Supported QFC and such QFC Credit Support, and any rights in property securing such Supported QFC or such QFC Credit Support) from such Covered Party will be effective to the same extent as the transfer would be effective under the U.S. Special Resolution Regime if the Supported QFC and such QFC Credit Support (and any such interest, obligation and rights in property) were governed by the laws of the United States or a state of the United States. In the event a Covered Party or a BHC Act Affiliate of a Covered Party becomes subject to a proceeding under a U.S. Special Resolution Regime, Default Rights under the Loan Documents that might otherwise apply to such Supported QFC or any QFC Credit Support that may be exercised against such Covered Party are permitted to be exercised to no greater extent than such Default Rights could be exercised under the U.S. Special Resolution Regime if the Supported QFC and the Loan Documents were governed by the laws of the United States or a state of the United States. Without limitation of the foregoing, it is understood and agreed that rights and remedies of the parties with respect to a Defaulting Lender shall in no event affect the rights of any Covered Party with respect to a Supported QFC or any QFC Credit Support.

[SIGNATURES BEGIN NEXT PAGE]

 

137


The parties hereto have caused this Agreement to be duly executed as of the day and year first above written.

 

WHITING PETROLEUM CORPORATION,

as Parent Guarantor

By:  

/s/ Charles J. Rimer

Name:   Charles J. Rimer
Title:   Chief Operating Officer

WHITING OIL AND GAS CORPORATION,

as Borrower

By:  

/s/ Charles J. Rimer

Name:   Charles J. Rimer
Title:   Chief Operating Officer

 

[Whiting Oil and Gas Corporation – Signature Page to Credit Agreement]


JPMORGAN CHASE BANK, N.A., as
Administrative Agent, an Issuing Bank and a Lender
By:  

/s/ Dalton Harris

  Name: Dalton Harris
  Title: Authorized Officer

 

[Whiting Oil and Gas Corporation – Signature Page to Credit Agreement]


[Lenders’ Signature Pages on file with the Company]

 

[Whiting Oil and Gas Corporation – Signature Page to Credit Agreement]


EXHIBIT A

[FORM OF] NOTE

$[            ]               , 202[    ]

FOR VALUE RECEIVED, WHITING OIL AND GAS CORPORATION, a Delaware corporation (the “Borrower”) hereby promises to pay to [                    ] (the “Lender”), at the office of JPMorgan Chase Bank, N.A. (the “Administrative Agent”), located at 712 Main Street, 5th Floor South, Houston, Texas 77002, the principal sum equal to the amount of such Lender’s Commitment (or such lesser amount as shall equal the aggregate unpaid principal amount of the Loans made by the Lender to the Borrower under the Credit Agreement, as hereinafter defined), in lawful money of the United States of America and in immediately available funds, on the dates and in the principal amounts provided in the Credit Agreement, and to pay interest on the unpaid principal amount of each such Loan, at such office, in like money and funds, for the period commencing on the date of such Loan until such Loan shall be paid in full, at the rates per annum and on the dates provided in the Credit Agreement.

The date, amount, Type, interest rate, Interest Period and maturity of each Loan made by the Lender to the Borrower, and each payment made on account of the principal thereof, shall be recorded by the Lender on its books and, prior to any transfer of this Note, may be endorsed by the Lender on the schedules attached hereto or any continuation thereof or on any separate record maintained by the Lender. Failure to make any such notation or to attach a schedule shall not affect the Lender’s or the Borrower’s rights or obligations in respect of such Loans or affect the validity of such transfer by the Lender of this Note.

This Note is one of the Notes referred to in the Credit Agreement, dated as of September 1, 2020, among the Borrower, the Parent Guarantor, the Administrative Agent, and the lenders and other parties signatory thereto (including the Lender), and evidences Loans made by the Lender thereunder (as amended, amended and restated, supplemented or otherwise modified from time to time, the “Credit Agreement”). Capitalized terms used in this Note have the respective meanings assigned to them in the Credit Agreement.

This Note is issued pursuant to, and is subject to the terms and conditions set forth in, the Credit Agreement and is entitled to the benefits provided for in the Credit Agreement and the other Loan Documents. The Credit Agreement provides for the acceleration of the maturity of this Note upon the occurrence of certain events, for prepayments of Loans upon the terms and conditions specified therein and other provisions relevant to this Note. The Credit Agreement contains requirements for the transfer of this Note and the registration of such transfer.

[Remainder of page intentionally left blank]

 

Exhibit A


THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

 

WHITING OIL AND GAS CORPORATION,

a Delaware corporation

By:  

                                                          

Name:  

 

Title:  

 

 

Exhibit A


EXHIBIT B

[FORM OF] BORROWING REQUEST

[            ], 20[    ]

WHITING OIL AND GAS CORPORATION, a Delaware corporation (the “Borrower”), pursuant to Section 2.03 of the Credit Agreement, dated as of September 1, 2020, among the Borrower, the Parent Guarantor, JPMorgan Chase Bank, N.A., as Administrative Agent, the Lenders and other parties from time to time party thereto (as amended, amended and restated, supplemented or otherwise modified from time to time, the “Credit Agreement”; unless otherwise defined herein, each capitalized term used herein has the meaning assigned to such term in the Credit Agreement), hereby requests a Borrowing as follows:

(i)    Aggregate amount of the requested Borrowing is $[            ];

(ii)    Date of such Borrowing is [            ], 20[    ];

(iii)    Requested Borrowing is to be [an ABR Borrowing] [a Eurodollar Borrowing];

(iv)    In the case of a Eurodollar Borrowing, the initial Interest Period applicable thereto is [            ];

(v)    Amount of Borrowing Base in effect on the date hereof is $[            ];

(vi)    Amount of the Total Commitment in effect on the date hereof is $[            ];

(vii)    The Loan Limit on the date hereof is $[            ];

(viii)    The aggregate Revolving Credit Exposures on the date hereof before giving effect to the requested Borrowing is $[                ];

(ix)    The pro forma aggregate Revolving Credit Exposures (giving effect to the requested Borrowing) is $[            ]; and

(x)    Location and number of the Borrower’s account to which funds are to be disbursed, which complies with the requirements of Section 2.05 of the Credit Agreement, is as follows:

[                                          ]

[                                          ]

[                                          ]

[                                          ]

[                                          ]

 

Exhibit B


The undersigned certifies on behalf of the Borrower (and not individually) that he/she is a Responsible Officer of the Borrower, and that as such he/she is authorized to execute this certificate on behalf of the Borrower. The undersigned further certifies, represents and warrants on behalf of the Borrower (and not individually) that the Borrower is entitled to receive the requested Borrowing under the terms and conditions of the Credit Agreement.

 

WHITING OIL AND GAS CORPORATION,

a Delaware corporation

By:  

                                                  

Name:  

 

Title:  

 

 

Exhibit B


EXHIBIT C

[FORM OF] INTEREST ELECTION REQUEST

[            ], 20[    ]

WHITING OIL AND GAS CORPORATION, a Delaware corporation (the “Borrower”), pursuant to Section 2.04 of the Credit Agreement, dated as of September 1, 2020, among the Borrower, the Parent Guarantor, JPMorgan Chase Bank, N.A., as Administrative Agent, the Lenders and other parties from time to time party thereto (as amended, amended and restated, supplemented or otherwise modified from time to time, the “Credit Agreement”; unless otherwise defined herein, each capitalized term used herein has the meaning assigned to such term in the Credit Agreement), hereby makes an Interest Election Request as follows:

(i)    The Borrowing to which this Interest Election Request applies, and if different options are being elected with respect to different portions thereof, the portions thereof to be allocated to each resulting Borrowing (in which case the information specified pursuant to (iii) [and (iv)] below shall be specified for each resulting Borrowing) is [                ];

(ii)    The effective date of the election made pursuant to this Interest Election Request is [                ], 20[    ]1; [and]

(iii)    The resulting Borrowing is to be [an ABR Borrowing] [a Eurodollar Borrowing][; and]

[If the resulting Borrowing is a Eurodollar Borrowing, add the following:]

[(iv)    The Interest Period2 applicable to the resulting Borrowing after giving effect to such election is [                ]].

The undersigned certifies on behalf of the Borrower (and not individually) that he/she is a Responsible Officer of the Borrower, and that as such he/she is authorized to execute this certificate on behalf of the Borrower. The undersigned further certifies, represents and warrants on behalf of the Borrower (and not individually) that the Borrower is entitled to receive the requested continuation or conversion under the terms and conditions of the Credit Agreement.

 

 

1 

Which shall be a Business Day.

2 

Which shall be a period contemplated by the definition of the term “Interest Period” from the Credit Agreement.

 

Exhibit C


WHITING OIL AND GAS CORPORATION,

a Delaware corporation

By:  

                                          

Name:  

                                          

Title:  

 

 

Exhibit C


EXHIBIT D

[FORM OF] COMPLIANCE CERTIFICATE

[DATE]

Compliance Period: Fiscal Quarter ended             , 20    

The undersigned hereby certifies that he/she is the [                    ] of WHITING PETROLEUM CORPORATION, a Delaware corporation (the “Parent Guarantor”), and that as such he/she is authorized to execute this certificate on behalf of the Parent Guarantor. With reference to the Credit Agreement, dated as of September 1, 2020, among the Borrower, the Parent Guarantor, JPMorgan Chase Bank, N.A., as Administrative Agent, the Lenders and other parties from time to time party thereto (as amended, amended and restated, supplemented or otherwise modified from time to time, the “Credit Agreement”; unless otherwise defined herein, each capitalized term used herein has the meaning assigned to such term in the Credit Agreement), the undersigned certifies on behalf of the Parent Guarantor (and not individually) as follows:

(a)    As of the date hereof, there exists no Default or Event of Default [or specify Default and describe any action taken or proposed to be taken with respect thereto].

(b)    The Parent Guarantor was in compliance with Section 9.01 of the Credit Agreement as of the last day of the fiscal period indicated above and covered by the financial statements accompanying this certificate as required therein, and in connection therewith attached hereto as Annex A are the reasonably detailed computations necessary to determine such compliance with Section 9.01 of the Credit Agreement.

(c)    No change in GAAP or in the application thereof that is applicable to the Parent Guarantor or the Borrower has occurred since December 31, 2019 that affects the financial statements accompanying this certificate [or, if a change in GAAP or the application thereof has occurred since December 31, 2019, specify the effect of such change on the financial statements accompanying this certificate].

EXECUTED AND DELIVERED as of the date first written above.

 

WHITING PETROLEUM CORPORATION,
a Delaware corporation
By:  

                                          

Name:  

                                          

Title:  

 

 

Exhibit D


Annex A

The information described herein is attached to and made part of the Compliance Certificate dated [            ], 20[    ], and pertains to the period from [            ], 20[    ] to [            ], 20[    ] (the “Compliance Period”).

Section 9.01(a)     Consolidated Net Leverage Ratio

 

(1). Consolidated Net Debt:      

(a) Consolidated Total Debt as of the last day of the Compliance Period

   $               

(b) $             3

     

(c) clause 1(a) minus clause 1(b)

   $               
(2). EBITDAX for the Rolling Period ending      

[            ], 20[    ]:

     

(a) Consolidated Net Income

   $               

(b) $            4

     

(c) $            

     

(d) $            

     

(e) $            

     

(f) $             

     

(g) $            

     

(h) $            

     

(i) $             

     

(j) $             

     

(k) $            

     

(l) $             

     

(m) sum of clauses 2(a) through 2(l)

   $               

(n) $            5

     

(o) $            

     

(p) sum of clauses 2(n) and 2(o)

   $               

(q) clause 2(m) minus clause 2(p)

   $               
(3). Consolidated Net Leverage Ratio (clause 1(c) divided by clause (2)(q)):            :1.00   
Maximum ratio permitted under Section 9.01(a) of the Credit Agreement:    3.50:1.00   

 

 

3 

Include unrestricted cash and Cash Equivalents of the Parent Guarantor, the Borrower and its Consolidated Restricted Subsidiaries that would appear on a consolidated balance sheet on the last day of the applicable Compliance Period in an aggregate amount not to exceed $75,000,000.

4 

Clauses 2(b) through 2(l) to correspond to EBITDAX add-backs for the applicable Rolling Period in clauses (a)(i) through (a)(xi) of the definition thereof.

5 

Clauses 2(n) and 2(o) to correspond to EBITDAX deductions for the applicable Rolling Period in clauses (b)(i) and (b)(ii) of the definition thereof.

 

Exhibit D


Section 9.01(b)    Current Ratio      
(1) Current Assets    $               
(2) Current Liabilities    $               
(3) Current Ratio (clause (1) divided by clause (2))            :1.00   
Minimum ratio required under Section 9.01(b)      
of the Credit Agreement:    1.00:1.00   

 

Exhibit D


EXHIBIT E

SECURITY INSTRUMENTS AS OF THE EFFECTIVE DATE

The Security Instruments in existence as of the Effective Date are as follows:

1.    That certain Guaranty and Collateral Agreement, dated as of the Effective Date, among the Credit Parties and the Administrative Agent.

2.    That certain Mortgage, Deed of Trust, Assignment of As-Extracted Collateral, Security Agreement, Fixture Filing and Financing Statement, dated as of the Effective Date, from the Borrower and Whiting Resources Corporation, as Mortgagor, to the Administrative Agent, as Mortgagee, to be filed in certain counties in the State of North Dakota.

3.    That certain Mortgage, Assignment of As-Extracted Collateral, Security Agreement, Fixture Filing and Financing Statement, dated as of the Effective Date, from the Borrower, as Mortgagor, to the Administrative Agent, as Mortgagee, to be filed in certain counties in the State of Montana.

4.    That certain Mortgage, Assignment of As-Extracted Collateral, Security Agreement, Fixture Filing and Financing Statement, dated as of the Effective Date, from the Borrower, as Mortgagor, to the Administrative Agent, as Mortgagee, to be filed in certain counties in the State of Colorado.

5.    UCC-1 Financing Statements in respect of the foregoing items 1 and 2.

6.    Any certificates representing any Equity Interests constituting Collateral, together with appropriate transfer powers indorsed in blank.

7.    Account Control Agreement, dated as of the Effective Date, among the Administrative Agent and JPMorgan Chase Bank, N.A. granting the Administrative Agent control over Deposit Accounts, Commodity Accounts and Securities Accounts (other than Excluded Accounts) maintained by such Credit Parties at JPMorgan Chase Bank, N.A.

Unless otherwise defined herein, each capitalized term used in this Exhibit E has the meaning assigned to such term in that certain Credit Agreement, dated as of September 1, 2020, among the Borrower, the Parent Guarantor, JPMorgan Chase Bank, N.A., as Administrative Agent, the Lenders and other parties from time to time party thereto (as amended, amended and restated, supplemented or otherwise modified from time to time).

 

Exhibit E


EXHIBIT F

[FORM OF] ASSIGNMENT AND ASSUMPTION

This Assignment and Assumption (this “Assignment and Assumption”) is dated as of the Effective Date set forth below and is entered into by and between [Insert name of Assignor] (the “Assignor”) and [Insert name of Assignee] (the “Assignee”). Capitalized terms used but not defined herein shall have the meanings given to them in the Credit Agreement identified below (as amended, amended and restated, supplemented or otherwise modified from time to time, the “Credit Agreement”), receipt of a copy of which is hereby acknowledged by the Assignee. The Standard Terms and Conditions set forth in Annex 1 attached hereto (the “Standard Terms and Conditions”) are hereby agreed to and incorporated herein by reference and made a part of this Assignment and Assumption as if set forth herein in full.

For an agreed consideration, the Assignor hereby irrevocably sells and assigns to the Assignee, and the Assignee hereby irrevocably purchases and assumes from the Assignor, subject to and in accordance with the Standard Terms and Conditions and the Credit Agreement, as of the Effective Date inserted by the Administrative Agent as contemplated below (i) all of the Assignor’s rights and obligations in its capacity as a Lender under the Credit Agreement and any other documents or instruments delivered pursuant thereto to the extent related to the amount and percentage interest identified below of all of such outstanding rights and obligations of the Assignor under the respective facilities identified below (including any letters of credit and guarantees included in such facilities) and (ii) to the extent permitted to be assigned under applicable law, all claims, suits, causes of action and any other right of the Assignor (in its capacity as a Lender) against any Person, whether known or unknown, arising under or in connection with the Credit Agreement, any other documents or instruments delivered pursuant thereto or the loan transactions governed thereby or in any way based on or related to any of the foregoing, including contract claims, tort claims, malpractice claims, statutory claims and all other claims at law or in equity related to the rights and obligations sold and assigned pursuant to clause (i) above (the rights and obligations sold and assigned pursuant to clauses (i) and (ii) above being referred to herein collectively as the “Assigned Interest”). Such sale and assignment is without recourse to the Assignor and, except as expressly provided in this Assignment and Assumption, without representation or warranty by the Assignor.

 

1.    Assignor:                                             
2.    Assignee:                                             
      [and is an Affiliate/Approved Fund of [identify Lender]6]
3.    Borrower:    Whiting Oil and Gas Corporation, a Delaware corporation (the “Borrower”)
4.    Administrative Agent:    JPMorgan Chase Bank, N.A., as the Administrative Agent under the Credit Agreement

 

 

6 

Select as applicable.

 

Exhibit F

-1-


5.    Credit Agreement:    Credit Agreement, dated as of September 1, 2020, among the Borrower, the Parent Guarantor, JPMorgan Chase Bank, N.A., as Administrative Agent, and the Lenders and other parties from time to time party thereto
6.    Assigned Interest:   

 

Commitment

Assigned        

   Aggregate Amount of
Commitment/Loans
for all Lenders
     Amount of
Commitment/Loans
Assigned
     Percentage Assigned
of
Commitment/Loans7
 
   $                    $                      %      
   $                    $                      %      
   $                    $                      %      

Effective Date:             , 20     (the “Effective Date”) [TO BE INSERTED BY ADMINISTRATIVE AGENT AND WHICH SHALL BE THE EFFECTIVE DATE OF RECORDATION OF TRANSFER IN THE REGISTER THEREFOR.]

The terms set forth in this Assignment and Assumption are hereby agreed to:

 

ASSIGNOR

[NAME OF ASSIGNOR]

By:

 

                                          

Name:

 

 

Title:

 

 

ASSIGNEE

[NAME OF ASSIGNEE]

By:

 

                                          

Name:

 

 

Title:

 

 

 

 

7 

Set forth, to at least 9 decimals, as a percentage of the Commitment/Loans of all Lenders thereunder.

 

Exhibit F

-2-


[Consented to and]8 Accepted:

JPMORGAN CHASE BANK, N.A., as Administrative Agent

By:  

                                          

Name:  

 

Title:  

 

[Consented to:]9
[                    ], as Issuing Bank
By:  

                                          

Name:  

 

Title:  

 

[Consented to:]10
WHITING OIL AND GAS CORPORATION, a Delaware corporation
By:  

                                          

Name:  

 

Title:  

 

 

 

8 

To be added only if the consent of the Administrative Agent is required by the terms of the Credit Agreement.

9 

To be added only if the consent of the Issuing Banks is required by the terms of the Credit Agreement.

10 

To be added only if the consent of the Borrower is required by the terms of the Credit Agreement.

 

Exhibit F

-3-


ANNEX 1

[                    ]11

STANDARD TERMS AND CONDITIONS FOR

ASSIGNMENT AND ASSUMPTION

1.    Assignor. The Assignor (a) represents and warrants that (i) it is the legal and beneficial owner of the Assigned Interest, (ii) the Assigned Interest is free and clear of any lien, encumbrance or other adverse claim and (iii) it has full power and authority, and has taken all action necessary, to execute and deliver this Assignment and Assumption and to consummate the transactions contemplated hereby; and (b) assumes no responsibility with respect to (i) any statements, warranties or representations made in or in connection with the Credit Agreement or any other Loan Document, (ii) the execution, legality, validity, enforceability, genuineness, sufficiency or value of the Loan Documents or any collateral thereunder, (iii) the financial condition of the Parent Guarantor, any of its Subsidiaries or Affiliates or any other Person obligated in respect of any Loan Document or (iv) the performance or observance by the Parent Guarantor, any of its Subsidiaries or Affiliates or any other Person of any of their respective obligations under any Loan Document.

1.2.    Assignee. The Assignee (a) represents and warrants that (i) it has full power and authority, and has taken all action necessary, to execute and deliver this Assignment and Assumption and to consummate the transactions contemplated hereby and to become a Lender under the Credit Agreement, (ii) it satisfies the requirements, if any, specified in the Credit Agreement and under applicable law that are required to be satisfied by it in order to acquire the Assigned Interest and become a Lender, (iii) from and after the Effective Date, it shall be bound by the provisions of the Credit Agreement as a Lender thereunder and, to the extent of the Assigned Interest, shall have the obligations of a Lender thereunder, (iv) it is sophisticated with respect to decisions to acquire assets of the type represented by the Assigned Interest and either it, or the Person exercising discretion in making its decision to acquire the Assigned Interest, is experienced in acquiring assets of such type, (v) it has received a copy of the Credit Agreement, together with copies of the most recent financial statements delivered pursuant to Section 8.01 thereof, as applicable, and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into this Assignment and Assumption and to purchase the Assigned Interest on the basis of which it has made such analysis and decision independently and without reliance on the Administrative Agent, the Assignor or any other Lender or any of their respective Related Parties, (vi) is not a Defaulting Lender, and (vii) attached to the Assignment and Assumption is any documentation required to be delivered by it pursuant to the terms of the Credit Agreement, duly completed and executed by the Assignee; and (b) agrees that (i) it will, independently and without reliance on the Administrative Agent, the Assignor or any other Lender or any of their respective Related Parties, and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Loan Documents, and (ii) it will perform in accordance with their terms all of the obligations which by the terms of the Loan Documents are required to be performed by it as a Lender.

 

 

11 

Describe Credit Agreement at option of Administrative Agent.

 

Exhibit F

-4-


2.    Payments. From and after the Effective Date, the Administrative Agent shall make all payments in respect of the Assigned Interest (including payments of principal, interest, fees and other amounts) to the Assignor for amounts which have accrued to but excluding the Effective Date and to the Assignee for amounts which have accrued from and after the Effective Date.

3.    General Provisions. This Assignment and Assumption shall be binding upon, and inure to the benefit of, the parties hereto and the other parties to the Credit Agreement and their respective successors and assigns. This Assignment and Assumption may be executed in any number of counterparts, which together shall constitute one instrument. Acceptance and adoption of the terms of this Assignment and Assumption by the Assignee and the Assignor by Electronic Signature or delivery of an executed counterpart of a signature page of this Assignment and Assumption by any Approved Electronic Platform shall be effective as delivery of a manually executed counterpart of this Assignment and Assumption. This Assignment and Assumption shall be governed by, and construed in accordance with, the laws of the State of New York.

 

Exhibit F

-5-


EXHIBIT G-1

[FORM OF] U.S. TAX COMPLIANCE CERTIFICATE (FOREIGN LENDERS;

NOT PARTNERSHIPS)

(For Foreign Lenders That Are Not Partnerships For U.S. Federal Income Tax Purposes)

Reference is hereby made to the Credit Agreement, dated as of September 1, 2020, among the Borrower, the Parent Guarantor, JPMorgan Chase Bank, N.A., as Administrative Agent and the Lenders and other parties from time to time party thereto (as amended, amended and restated, supplemented or otherwise modified from time to time, the “Credit Agreement”; unless otherwise defined herein, each capitalized term used herein has the meaning assigned to such term in the Credit Agreement).

Pursuant to the provisions of Section 5.03 of the Credit Agreement, the undersigned hereby certifies that (i) it is the sole record and beneficial owner of the Loan(s) (as well as any Note(s) evidencing such Loan(s)) in respect of which it is providing this certificate, (ii) it is not a bank within the meaning of Section 881(c)(3)(A) of the Code, (iii) it is not a ten percent shareholder of the Borrower within the meaning of Section 881(c)(3)(B) of the Code and (iv) it is not a controlled foreign corporation related to the Borrower as described in Section 881(c)(3)(C) of the Code.

The undersigned has furnished the Administrative Agent and the Borrower with a certificate of its non-U.S. Person status on IRS Form W-8BEN or W-8BEN-E, as applicable. By executing this certificate, the undersigned agrees that (1) if the information provided on this certificate changes, the undersigned shall promptly so inform the Borrower and the Administrative Agent, and (2) the undersigned shall have at all times furnished the Borrower and the Administrative Agent with a properly completed and currently effective certificate in either the calendar year in which each payment is to be made to the undersigned, or in either of the two calendar years preceding such payments.

 

[NAME OF LENDER]
By:
Name:
Title:
Date:            , 20[    ]

 

Exhibit G-1


EXHIBIT G-2

[FORM OF] U.S. TAX COMPLIANCE CERTIFICATE (FOREIGN PARTICIPANTS;

NOT PARTNERSHIPS)

(For Foreign Participants That Are Not Partnerships For U.S. Federal Income Tax Purposes)

Reference is hereby made to the Credit Agreement, dated as of September 1, 2020, among the Borrower, the Parent Guarantor, JPMorgan Chase Bank, N.A., as Administrative Agent and the Lenders and other parties from time to time party thereto (as amended, amended and restated, supplemented or otherwise modified from time to time, the “Credit Agreement”; unless otherwise defined herein, each capitalized term used herein has the meaning assigned to such term in the Credit Agreement)..

Pursuant to the provisions of Section 5.03 of the Credit Agreement, the undersigned hereby certifies that (i) it is the sole record and beneficial owner of the participation in respect of which it is providing this certificate, (ii) it is not a bank within the meaning of Section 881(c)(3)(A) of the Code, (iii) it is not a ten percent shareholder of the Borrower within the meaning of Section 881(c)(3)(B) of the Code, and (iv) it is not a controlled foreign corporation related to the Borrower as described in Section 881(c)(3)(C) of the Code.

The undersigned has furnished its participating Lender with a certificate of its non-U.S. Person status on IRS Form W-8BEN or W-8BEN-E, as applicable. By executing this certificate, the undersigned agrees that (1) if the information provided on this certificate changes, the undersigned shall promptly so inform such Lender in writing, and (2) the undersigned shall have at all times furnished such Lender with a properly completed and currently effective certificate in either the calendar year in which each payment is to be made to the undersigned, or in either of the two calendar years preceding such payments.

 

[NAME OF PARTICIPANT]
By:
Name:
Title:
Date:            , 20[    ]

 

Exhibit G-2


EXHIBIT G-3

[FORM OF] U.S. TAX COMPLIANCE CERTIFICATE (FOREIGN PARTICIPANTS;

PARTNERSHIPS)

(For Foreign Participants That Are Partnerships For U.S. Federal Income Tax Purposes)

Reference is hereby made to the Credit Agreement, dated as of September 1, 2020, among the Borrower, the Parent Guarantor, JPMorgan Chase Bank, N.A., as Administrative Agent and the Lenders and other parties from time to time party thereto (as amended, amended and restated, supplemented or otherwise modified from time to time, the “Credit Agreement”; unless otherwise defined herein, each capitalized term used herein has the meaning assigned to such term in the Credit Agreement).

Pursuant to the provisions of Section 5.03 of the Credit Agreement, the undersigned hereby certifies that (i) it is the sole record owner of the participation in respect of which it is providing this certificate, (ii) its direct or indirect partners/members are the sole beneficial owners of such participation, (iii) with respect such participation, neither the undersigned nor any of its direct or indirect partners/members is a bank extending credit pursuant to a loan agreement entered into in the ordinary course of its trade or business within the meaning of Section 881(c)(3)(A) of the Code, (iv) none of its direct or indirect partners/members is a ten percent shareholder of the Borrower within the meaning of Section 881(c)(3)(B) of the Code and (v) none of its direct or indirect partners/members is a controlled foreign corporation related to the Borrower as described in Section 881(c)(3)(C) of the Code.

The undersigned has furnished its participating Lender with IRS Form W-8IMY accompanied by one of the following forms from each of its partners/members that is claiming the portfolio interest exemption: (i) an IRS Form W-8BEN or W-8BEN-E, as applicable, or (ii) an IRS Form W-8IMY accompanied by an IRS Form W-8BEN or W-8BEN-E, as applicable, from each of such partner’s/member’s beneficial owners that is claiming the portfolio interest exemption. By executing this certificate, the undersigned agrees that (1) if the information provided on this certificate changes, the undersigned shall promptly so inform such Lender and (2) the undersigned shall have at all times furnished such Lender with a properly completed and currently effective certificate in either the calendar year in which each payment is to be made to the undersigned, or in either of the two calendar years preceding such payments.

 

[NAME OF PARTICIPANT]
By:
Name:
Title:
Date:            , 20[    ]

 

Exhibit G-3


EXHIBIT G-4

[FORM OF] U.S. TAX COMPLIANCE CERTIFICATE (FOREIGN LENDERS;

PARTNERSHIPS)

(For Foreign Lenders That Are Partnerships For U.S. Federal Income Tax Purposes)

Reference is hereby made to the Credit Agreement, dated as of September 1, 2020, among the Borrower, the Parent Guarantor, JPMorgan Chase Bank, N.A., as Administrative Agent and the Lenders and other parties from time to time party thereto (as amended, amended and restated, supplemented or otherwise modified from time to time, the “Credit Agreement”; unless otherwise defined herein, each capitalized term used herein has the meaning assigned to such term in the Credit Agreement).

Pursuant to the provisions of Section 5.03 of the Credit Agreement, the undersigned hereby certifies that (i) it is the sole record owner of the Loan(s) (as well as any Note(s) evidencing such Loan(s)) in respect of which it is providing this certificate, (ii) its direct or indirect partners/members are the sole beneficial owners of such Loan(s) (as well as any Note(s) evidencing such Loan(s)), (iii) with respect to the extension of credit pursuant to this Credit Agreement or any other Loan Document, neither the undersigned nor any of its direct or indirect partners/members is a bank extending credit pursuant to a loan agreement entered into in the ordinary course of its trade or business within the meaning of Section 881(c)(3)(A) of the Code, (iv) none of its direct or indirect partners/members is a ten percent shareholder of the Borrower within the meaning of Section 881(c)(3)(B) of the Code and (v) none of its direct or indirect partners/members is a controlled foreign corporation related to the Borrower as described in Section 881(c)(3)(C) of the Code.

The undersigned has furnished the Administrative Agent and the Borrower with IRS Form W-8IMY accompanied by one of the following forms from each of its partners/members that is claiming the portfolio interest exemption: (i) an IRS Form W-8BEN or W-8BEN-E, as applicable, or (ii) an IRS Form W-8IMY accompanied by an IRS Form W-8BEN or W-8BEN-E, as applicable, from each of such partner’s/member’s beneficial owners that is claiming the portfolio interest exemption. By executing this certificate, the undersigned agrees that (1) if the information provided on this certificate changes, the undersigned shall promptly so inform the Borrower and the Administrative Agent, and (2) the undersigned shall have at all times furnished the Borrower and the Administrative Agent with a properly completed and currently effective certificate in either the calendar year in which each payment is to be made to the undersigned, or in either of the two calendar years preceding such payments.

 

[NAME OF LENDER]
By:
Name:
Title:
Date:            , 20[    ]

 

Exhibit G-4


EXHIBIT H

FORM OF COMMITMENT INCREASE CERTIFICATE

[            ], 20[    ]

To:    JPMorgan Chase Bank, N.A., as Administrative Agent

Whiting Oil and Gas Corporation, a Delaware corporation (the “Borrower”), the Parent Guarantor, the Administrative Agent and the Lenders and other parties from time to time party thereto have heretofore entered into a Credit Agreement, dated as of September 1, 2020 (as amended, amended and restated, supplemented or otherwise modified from time to time, the “Credit Agreement”). Capitalized terms used but not otherwise defined herein shall have the meaning given to such terms in the Credit Agreement.

This Commitment Increase Certificate is being delivered pursuant to Section 2.06(c)(ii)(J) of the Credit Agreement.

Please be advised that the undersigned Lender has agreed (a) to increase its Commitment under the Credit Agreement effective [            ], 20[    ] (the “Increase Effective Date”) from $[        ] to $[        ] and (b) that it shall continue to be a party in all respects to the Credit Agreement and the other Loan Documents.

With reference to Section 2.06(c)(iii) of the Credit Agreement, the Borrower hereby confirms that [Check Applicable Box]:

 

 

There are or, if the Increase Effective Date is after the date hereof, there will be, no Eurodollar Borrowings outstanding on the Increase Effective Date.

 

 

There are or, if the Increase Effective Date is after the date hereof, there will be, Eurodollar Borrowings outstanding on the Increase Effective Date and the Borrower will pay any compensation required by Section 5.02 of the Credit Agreement on the Increase Effective Date.

The Borrower hereby represents and warrants that each condition set forth in Section 2.06(c)(ii) is satisfied with respect to the contemplated increase in the Total Commitment as of the Increase Effective Date.

 

Very truly yours,

WHITING OIL AND GAS CORPORATION,

a Delaware corporation

By:  

                                  

Name:  

 

Title:  

 

 

Exhibit H

-1-


Accepted and Agreed:

JPMORGAN CHASE BANK, N.A.,

 

as Administrative Agent

By:  

                     

Name:  

 

Title:  

 

Accepted and Agreed:
[Name of Increasing Lender]
By:  

 

Name:  

 

Title:  

 

 

Exhibit H

-2-


EXHIBIT I

[FORM OF] ADDITIONAL LENDER CERTIFICATE

[            ], 20[    ]

To:    JPMorgan Chase Bank, N.A., as Administrative Agent

Whiting Oil and Gas Corporation, a Delaware corporation (the “Borrower”), the Parent Guarantor, the Administrative Agent and the Lenders and other parties from time to time party thereto have heretofore entered into a Credit Agreement, dated as of September 1, 2020 (as amended, amended and restated, supplemented or otherwise modified from time to time, the “Credit Agreement”). Capitalized terms used but not otherwise defined herein shall have the meaning given to such terms in the Credit Agreement.

This Additional Lender Certificate is being delivered pursuant to Section 2.06(c)(ii)(K) of the Credit Agreement.

Please be advised that the undersigned Additional Lender has agreed (a) to become a Lender under the Credit Agreement effective [            ], 20[    ] (the “Additional Lender Effective Date”) with a Commitment of $[        ] and (b) that it shall be a party in all respects to the Credit Agreement and the other Loan Documents.

This Additional Lender Certificate is being delivered to the Administrative Agent together with (a) if the Additional Lender is a Foreign Lender, any documentation required to be delivered by such Additional Lender pursuant to Section 5.03(g) of the Credit Agreement, duly completed and executed by the Additional Lender, and (b) an Administrative Questionnaire in the form supplied by the Administrative Agent, duly completed by the Additional Lender. [The [Borrower/Additional Lender] shall pay the processing and recordation fee payable to the Administrative Agent pursuant to Section 2.06(c)(ii)(K) of the Credit Agreement.]12

With reference to Section 2.06(c)(iii) of the Credit Agreement, the Borrower hereby confirms that [Check Applicable Box]:

 

 

There are or, if the Additional Lender Effective Date is after the date hereof, there will be, no Eurodollar Borrowings outstanding on the Additional Lender Effective Date.

 

 

There are or, if the Additional Lender Effective Date is after the date hereof, there will be, Eurodollar Borrowings outstanding on the Additional Lender Effective Date and the Borrower will pay any compensation required by Section 5.02 of the Credit Agreement on the Additional Lender Effective Date.

The Borrower hereby represents and warrants that each condition set forth in Section 2.06(c)(ii) is satisfied with respect to the contemplated increase in the Total Commitment as of the Additional Lender Effective Date.

 

 

12 

Include, if applicable.

 

Exhibit I

-1-


Very truly yours,

WHITING OIL AND GAS CORPORATION,

a Delaware corporation

By:  

                                              

Name:  

 

Title:  

 

 

Exhibit I

-2-


Accepted and Agreed:
JPMORGAN CHASE BANK, N.A.,
As Administrative Agent
By:  

                                  

Name:  

 

Title:  

 

Accepted and Agreed:
[Name of Additional Lender]
By:  

 

Name:  

 

Title:  

 

 

Exhibit I

-3-


EXHIBIT J

[FORM OF] SOLVENCY CERTIFICATE

The undersigned hereby certifies that he/she is a Financial Officer of WHITING PETROLEUM CORPORATION, a Delaware corporation (the “Parent Guarantor”), and that as such he/she is authorized to execute this certificate on behalf of the Parent Guarantor and the Borrower. This Solvency Certificate is being delivered pursuant to Section 6.01(k) of the Credit Agreement, dated as of September 1, 2020, among the Borrower, the Parent Guarantor, JPMorgan Chase Bank, N.A., as Administrative Agent, the Lenders and other parties from time to time party thereto (as amended, amended and restated, supplemented or otherwise modified from time to time, the “Credit Agreement”; unless otherwise defined herein, each capitalized term used herein has the meaning assigned to such term in the Credit Agreement).

The undersigned certifies on behalf of the Parent Guarantor and the Borrower (and not individually) that, as of the Effective Date, after giving effect to the Confirmation Order, the Plan of Reorganization, the Transactions and the other transactions contemplated to occur thereby and under the Credit Agreement and each Borrowing or issuance, amendment, renewal or extension of any Letter of Credit made on the Effective Date:

(a) the aggregate assets (after giving effect to amounts that would reasonably be expected to be received by reason of indemnity, offset, insurance or any similar arrangement), at a fair valuation, of the Borrower and the Guarantors, taken as a whole, exceed the aggregate Indebtedness and liabilities of the Borrower and the Guarantors on a consolidated basis;

(b) the Borrower and the Guarantors have not incurred and do not intend to incur, and do not believe that they have incurred, Indebtedness and liabilities beyond their ability to pay such Indebtedness or liabilities (after taking into account the timing and amounts of cash they reasonably expect could be received and the amounts that they reasonably expect could be payable on or in respect of their liabilities, and giving effect to amounts that would reasonably be expected to be received by reason of indemnity, offset, insurance or any similar arrangement) as such Indebtedness and liabilities become absolute and mature; and

(c) the Borrower and the Guarantors, taken as a whole, do not have (and do not have reason to believe that they will have thereafter) unreasonably small capital for the conduct of their business.

 

WHITING PETROLEUM CORPORATION,

a Delaware corporation

By:  

                              

Name:  

 

Title:  

 

 

Exhibit J

-1-


EXHIBIT K

[FORM OF] PERFECTION CERTIFICATE

[            ], 20[    ]

Reference is hereby made to that certain Credit Agreement, dated as [                ], 2020 (as amended, amended and restated, supplemented or otherwise modified from time to time, the “Credit Agreement”), among Whiting Oil and Gas Corporation, a Delaware Corporation (the “Borrower”), Whiting Petroleum Corporation (the “Parent Guarantor”), the Lenders, JPMorgan Chase Bank, N.A. as administrative agent (in such capacity, the “Administrative Agent”) and the other parties from time to time party thereto.

Capitalized terms used and not otherwise defined herein shall have the meanings assigned to them in the Credit Agreement.

The undersigned, a Responsible Officer of the Parent Guarantor and the Borrower, hereby certifies, as of the Effective Date, to the Administrative Agent and each other Secured Party, on behalf of the Parent Guarantor and the Borrower and each of the Guarantors (and not in any individual capacity) as follows:

1.    Names.

(a) The exact legal name of each Credit Party, as such name appears in its respective certificate of incorporation or any other organizational document, is set forth in Schedule 1(a). Each Credit Party is (i) the type of entity disclosed next to its name in Schedule 1(a) and (ii) a registered organization except to the extent disclosed in Schedule 1(a). Also set forth in Schedule 1(a) is the jurisdiction of formation for each Credit Party.

(b)    Set forth in Schedule 1(b) hereto is a list of any other corporate or organizational names each Credit Party has had in the past five (5) years, together with the date of the relevant change.

(c)    Set forth in Schedule 1(c) is a list of all other names used by each Credit Party, or any other business or organization to which each Credit Party became the successor by merger, consolidation, acquisition, change in form, nature or jurisdiction of organization or otherwise, and on any filings with the Internal Revenue Service at any time within the five (5) years preceding the date hereof. Except as set forth in Schedule 1(c), no Credit Party has changed its jurisdiction of organization at any time during the past four (4) months.

2.    Current Locations.

(a) The chief executive office of each Credit Party is located at the address set forth in Schedule 2(a) hereto.

(b)    With respect to each Credit Party, set forth in Schedule 2(b) are (i) all locations where such Credit Party maintains any books or records relating to any Accounts Receivable, and (ii) the name and address of any Person other than a Credit Party that has possession of any Collateral (indicating whether such Person holds such Collateral subject to a Lien (including warehousemen’s, mechanics’ and other statutory liens)).

 

Exhibit K

-1-


3.    Extraordinary Transactions. Except for those purchases, acquisitions and other transactions described in Schedule 3 attached hereto, all of the Collateral has been originated by each Credit Party in the ordinary course of business or consists of goods which have been acquired by such Credit Party in the ordinary course of business from a person in the business of selling goods of that kind.

4.    UCC Filings. UCC financing statements have been prepared for filing in the proper UCC filing office in the jurisdiction in which each Credit Party is organized and, to the extent any of the Collateral is comprised of fixtures, in the proper local jurisdiction, in each case with respect to such Credit Party. Set forth on Schedule 4 is a true and correct list of each such UCC filing office or county recorder’s office in which such filing is to be made

5.    Stock Ownership and Other Equity Interests.

(a) Attached hereto as Schedule 5(a) is a true and correct list of each of all of the authorized, and the issued and outstanding, stock, partnership interests, limited liability company membership interests or other equity interest of each Credit Party and its Subsidiaries and the record and beneficial owners of such stock, partnership interests, membership interests or other equity interests setting forth the percentage of such equity interests pledged under the Guaranty and Collateral Agreement.

(b)    Set forth in Schedule 5(b) is each equity investment of each Credit Party that represents 50% or less of the equity of the entity in which such investment was made setting forth the percentage of such equity interests pledged under the Guaranty and Collateral Agreement.

6.    Instruments and Tangible Chattel Paper. Attached hereto as Schedule 6 is a true and correct list of all promissory notes, instruments (other than checks to be deposited in the ordinary course of business), tangible chattel paper, electronic chattel paper and other evidence of indebtedness held by each Credit Party, including all intercompany notes between or among any two or more Credit Parties or any of their Subsidiaries, stating if such instruments, chattel paper or other evidence of indebtedness is pledged under the Guaranty and Collateral Agreement.

7.    Commercial Tort Claims. Attached hereto as Schedule 7 is a true and correct list of all Commercial Tort Claims (as defined in the Guaranty and Collateral Agreement) held by each Grantor, valued at over $1,000,000 individually or in the aggregate, including a brief description thereof and stating if such commercial tort claims are required to be pledged under the Guaranty and Collateral Agreement.

8.    Letter-of-Credit Rights. Attached hereto as Schedule 8 is a true and correct list of all Letters of Credit with a fair market value in excess of $1,000,000 individually or in the aggregate issued in favor of each Credit Party.

 

Exhibit K

-2-


9.    Securities Accounts, Deposit Accounts and Commodity Accounts.

(a) Attached hereto as Schedule 9(a) is a true and correct list of all securities accounts in which each Credit Party customarily maintains securities or other assets, including the name and address of the intermediary institutions and the type of account.

(b)    Attached hereto as Schedule 9(b) is a true and correct list of all depositary accounts maintained by each Credit Party, including the name and address of the depositary institution and type of account.

(c)    Attached hereto as Schedule 9(c) is a true and correct list of all commodity accounts maintained by each Credit Party, including the name and address of the depositary institution and type of account.

[The remainder of this page has been intentionally left blank]

 

Exhibit K

-3-


IN WITNESS WHEREOF, we have hereunto signed this Perfection Certificate as of the date first written above.

 

WHITING PETROLEUM CORPORATION,
a Delaware Corporation
By:  

                                          

  Name:
  Title:

 

Exhibit K


Schedule 1(a)

Legal Names, Etc.

 

Legal Name

  

Type of

Entity

  

Registered

Organization

(Yes/No)

  

State of

Formation

        
        
        
        
        
        
        
        
        
        

 

Exhibit K


Schedule 1(b)

Prior Organizational Names

 

Entity

  

Prior Legal Name

  

Date Changed

     
     
     
     
     
     
     
     

 

Exhibit K


Schedule 1(c)

Changes in Corporate Identity; Other Names

 

Entity

  

Prior Legal Name

  
  
  
  
  

 

Exhibit K


Schedule 2(a)

Chief Executive Offices

 

Grantor

  

Address

  
  
  
  
  
  
  
  
  
  

 

Exhibit K


Schedule 2(b)

Location of Books and Records

 

Grantor

  

Address of Books and Records

  
  
  
  

 

Exhibit K


Schedule 3

Extraordinary Transactions

 

Loan Party/Subsidiary

  

Description of Transaction Including

Parties Thereto

  

Date of

Transaction

     
     
     

 

Exhibit K


Schedule 4

UCC Filings

 

Exhibit K


Schedule 5(a)

Stock Ownership

 

Current Legal

Entities Owned

  

Record Owner

  

Certificate

No.

  

No. Shares/Interest

  

Percent

Pledged

           
           
           
           

 

Exhibit K


Schedule 5(b)

Other Equity Interests

 

Current Legal

Entities Owned

 

Record Owner

 

Certificate

No.

  

No. Shares/Interest

  

Percent

Pledged

         
         
         
         

 

Exhibit K


Schedule 6

Instruments and Tangible Chattel Paper

1. Promissory Notes.

 

Entity

 

Principal

Amount

 

Date of

Issuance

  

Interest Rate

  

Maturity Date

         
         
         

2. Chattel Paper.

 

Exhibit K


Schedule 7

Commercial Tort Claims

 

Exhibit K


Schedule 8

Letter of Credit Rights

 

Exhibit K


Schedule 9(a)

Securities Accounts

 

Owner

 

Type of Account

 

Bank or

Intermediary

  

Account Number

      
      
      
      

 

Exhibit K


Schedule 9(b)

Deposit Accounts

 

Owner

 

Type of Account

 

Bank or

Intermediary

  

Account Number

      
      
      
      

 

Exhibit K


Schedule 9(c)

Commodity Accounts

 

Owner

 

Type of Account

 

Bank or

Intermediary

 

Account Number

     
     
     
     

 

Exhibit K


EXHIBIT L

PLAN OF REORGANIZATION

[incorporated by reference to Exhibit 2 of Whiting’s Current Report on Form 8-K filed on September 1, 2020]

 

Exhibit L

Exhibit 10.2

Execution Version

WARRANT AGREEMENT

between

WHITING PETROLEUM CORPORATION,

COMPUTERSHARE INC.

and

COMPUTERSHARE TRUST COMPANY, N.A.,

as Warrant Agent

Dated as of September 1, 2020

Series A Warrants to Purchase Common Stock

 


TABLE OF CONTENTS

 

               Page  

1.

  

Definitions

     1

2.

  

Warrant Certificates

     5
  

2.1

  

Original Issuance of Warrants

     5
  

2.2

  

Form of Warrant Certificates

     6
  

2.3

  

Execution and Delivery of Warrant Certificates

     6
  

2.4

  

Global Warrant Certificates

     7

3.

  

Exercise and Expiration of Warrants

     9
  

3.1

  

Right to Acquire Common Stock Upon Exercise

     9
  

3.2

  

Exercise and Expiration of Warrants

     9
  

3.3

  

Application of Funds upon Exercise of Warrants

     11
  

3.4

  

Payment of Taxes

     11
  

3.5

  

Cancellation of Warrant Certificates

     11
  

3.6

  

Shares Issuable

     12
  

3.7

  

Cashless Exercise

     12
  

3.8

  

Cost Basis Information

     12

4.

  

Dissolution, Liquidation or Winding up

     13

5.

  

Adjustments

     13
  

5.1

  

Adjustments

     13
  

5.2

  

Fractional Interest

     18
  

5.3

  

No Other Adjustments

     18

6.

  

Loss or Mutilation

     19

7.

  

Reservation and Authorization of Common Stock

     19

8.

  

Warrant Transfer Books

     20

9.

  

Warrant Holders

     22
  

9.1

  

No Voting or Dividend Rights

     22
  

9.2

  

Rights of Action

     22
  

9.3

  

Treatment of Holders of Warrant Certificates

     22

10.

  

Concerning the Warrant Agent

     22
  

10.1

  

Rights and Duties of the Warrant Agent

     22
  

10.2

  

Limitation of Liability

     25
  

10.3

  

Indemnification

     26  
  

10.4

  

Right to Consult Counsel

     26
  

10.5

  

Compensation and Reimbursement

     26
  

10.6

  

Warrant Agent May Hold Company Securities

     26
  

10.7

  

Resignation and Removal; Appointment of Successor

     27
  

10.8

  

Appointment of Countersigning Agent

     27

11.

  

Notices

     29
  

11.1

  

Notices Generally

     29
  

11.2

  

Required Notices to Holders

     30

 

i


12.

  

Inspection

     30

13.

  

Amendments

     31

14.

  

Waivers

     32

15.

  

Successor to Company

     32

16.

  

Headings

     32

17.

  

Counterparts

     32

18.

  

Severability

     32

19.

  

No Redemption

     32

20.

  

Persons Benefiting

     33

21.

  

Applicable Law

     33

22.

  

Entire Agreement

     33

23.

  

Force Majeure

     33

24.

  

Further Assurances

     33

25.

  

Confidentiality

     33

 

EXHIBITS   
Exhibit A    Form of Series A Warrant Certificate

 

 

ii


WARRANT AGREEMENT

This Warrant Agreement (as may be supplemented, amended or amended and restated pursuant to the applicable provisions hereof, this “Agreement”), dated as of September 1, 2020, between Whiting Petroleum Corporation, a Delaware corporation (and any Successor Company (as defined below) that becomes successor to the Company in accordance with Section 15) (the “Company”), Computershare Inc., a Delaware corporation (“Computershare”) and its wholly-owned subsidiary Computershare Trust Company, N.A., a federally chartered trust company (collectively, including any successors of such Warrant Agent appointed in accordance with the terms hereof, the “Warrant Agent”). Capitalized terms that are used in this Agreement shall have the meanings set forth in Section 1 hereof.

WITNESSETH THAT:

WHEREAS, pursuant to the terms and conditions of the Joint Prepackaged Chapter 11 Plan of Reorganization for Whiting Petroleum Corporation and Its Debtor Affiliates, Docket No. 198 of Case No. 20-32021 (DRJ) (the “Plan”) relating to a reorganization under chapter 11 of title 11 of the United States Code (the “Bankruptcy Code”), the Company proposes to issue and deliver Warrants (as defined below) to purchase up to an aggregate of 4,837,821 shares of its Common Stock (as defined below), subject to adjustment as provided herein, and the Warrant Certificates (as defined below) evidencing such Warrants;

WHEREAS, each Warrant shall entitle the registered owner thereof to purchase one share of the Common Stock, subject to adjustment as provided herein;

WHEREAS, the Warrants and the shares of Common Stock issuable upon exercise of the Warrants are being issued in an offering in reliance on the exemption from the registration requirements of the Securities Act (as defined below) afforded by Section 1145 of the Bankruptcy Code, and of any applicable state securities or “blue sky” laws; and

WHEREAS, the Company desires that the Warrant Agent act on behalf of the Company, and the Warrant Agent is willing to so act, in connection with the issuance, exchange, transfer, substitution and exercise of Warrants.

NOW THEREFORE, in consideration of the mutual agreements herein contained, the Company and the Warrant Agent agree as follows:

 

1.

Definitions.

Action” has the meaning set forth in Section 11.2(c).

Adjustment Events” has the meaning set forth in Section 5.1.

Affiliate” of any specified Person, means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person. For the purposes of this definition, “control” when used with respect to any Person means the power to direct the management and policies of such specified Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise, and the terms “controlling” and “controlled” have meanings correlative to the foregoing.


Agent Members” has the meaning set forth in Section 2.4(b).

Agreement” has the meaning set forth in the preamble hereto.

Applicable Procedures” means, with respect to any transfer or exchange of, or exercise of any Warrants evidenced by, any Global Warrant Certificate, the rules and procedures of the Depositary that apply to such transfer, exchange or exercise.

Appropriate Officer” means (i) the Chief Executive Officer, President, Chief Operating Officer, Chief Financial Officer, Treasurer or Secretary or any Vice President of the Company or (ii) any other person designated as such by the Board of Directors from time to time.

Bankruptcy Code” has the meaning set forth in the recitals hereto.

Board of Directors” means either the board of directors of the Company or any duly authorized committee of that board.

Business Day” means each Monday, Tuesday, Wednesday, Thursday and Friday which is not a legal holiday in the State of New York or a day on which banking institutions and trust companies in the state in which the Corporate Agency Office is located are authorized or obligated by law, regulation or executive order to close.

Commission” means the Securities and Exchange Commission, or any other federal agency at the time administering the Securities Act or the Exchange Act, whichever is the relevant statute for the particular purpose.

Common Stock” means, subject to the provisions of Section 5.1(f), the common stock, par value $0.001 per share, of the Company.

Company” means the company identified in the preamble hereto.

Company Order” means a written request or order signed in the name of the Company by an Appropriate Officer and delivered to the Warrant Agent.

Computershare has the meaning set forth in the preamble hereto.

Constituent Person” has the meaning set forth in Section 5.1(f)(i)(A).

Corporate Agency Office” has the meaning set forth in Section 8.

Countersigning Agent” means any Person authorized by the Warrant Agent to act on behalf of the Warrant Agent to countersign Warrant Certificates.

 

2


Current Market Price” means on any date:

(i)    if the reference is to the per share price of Common Stock on any date herein specified and if on such date the Common Stock is listed or admitted to trading on any U.S. national securities exchange or traded and quoted in the over-the-counter market in the United States:

(A)    for the purpose of any computation under this Agreement (except under Section 5.2), the average of the Quoted Prices for the 30 consecutive Trading Days ending on such date or, if such date is not a Trading Day, on the next preceding Trading Day; or

(B)    for the purposes of any computation under Section 5.2, the Quoted Price for such date or, if such date is not a Trading Day, for the next preceding Trading Day; or

(ii)    if the reference is to the per share price of Common Stock on any date herein specified and if on such date the Common Stock is not listed or admitted to trading on any U.S. national securities exchange or traded and quoted in the over-the-counter market in the United States, the amount which a willing buyer would pay a willing seller in an arm’s length transaction on such date (neither being under any compulsion to buy or sell) for one share of the Common Stock as determined as of such date by the Treasurer or Chief Financial Officer of the Company in good faith, whose determination shall be final and conclusive and evidenced by a certificate of such officer delivered to the Warrant Agent.

For the avoidance of doubt, no appraisal of any Person or third-party (other than the Treasurer or Chief Financial Officer of the Company as further described in clause (ii)) above shall be permitted or required to determine the Current Market Price.

Definitive Warrant Certificate” means a Warrant Certificate registered in the name of the Holder thereof that does not bear the Global Warrant Legend and that does not have a “Schedule of Decreases in Warrants” attached thereto.

Depositary” means DTC and its successors as depositary hereunder.

DTC” means The Depository Trust Company.

Exchange Act” means the Securities Exchange Act of 1934 and any statute successor thereto, in each case, as amended from time to time.

Exercise Date” has the meaning set forth in Section 3.2(f).

Exercise Form” has the meaning set forth in Section 3.2(c).

Exercise Period” means the period from and including the Original Issue Date to and including the Expiration Date.

Exercise Price” means the exercise price per share of Common Stock, initially set at $73.44, subject to adjustment as provided in Section 5.1.

 

3


Expiration Date” means the earlier to occur of (i) the Scheduled Expiration Date and (ii) a Winding Up.

Funds” has the meaning set forth in Section 3.3.

Global Warrant Certificate” means a Warrant Certificate deposited with or on behalf of and registered in the name of the Depositary or its nominee, that bears the Global Warrant Legend and that has the “Schedule of Decreases in Warrants” attached thereto.

Global Warrant Legend” means the legend set forth in Section 2.4(a).

Holder” means any Person in whose name at the time any Warrant Certificate is registered upon the Warrant Register and, when used with respect to any Warrant Certificate, the Person in whose name such Warrant Certificate is registered in the Warrant Register.

Non-Surviving Transaction” has the meaning set forth in Section 5.1(f).

Original Issue Date” means September 1, 2020, the date on which Warrants are originally issued under this Agreement.

outstanding” when used with respect to any Warrants, means, as of the time of determination, all Warrants theretofore originally issued under this Agreement, as adjusted pursuant to Section 5.1, except (i) Warrants that have been exercised pursuant to Section 3.2(a), (ii) Warrants that have expired, terminated or become void pursuant to Section 3.2(b) or Section 4 and (iii) Warrants that have otherwise been acquired by the Company; provided, however, that in determining whether the Holders of the requisite amount of the outstanding Warrants have given any request, demand, authorization, direction, notice, consent or waiver under the provisions of this Agreement, Warrants held directly or beneficially by the Company or any Subsidiary of the Company or any of their respective employees shall be disregarded and deemed not to be outstanding.

Person” means any individual, corporation, limited liability company, partnership, joint venture, trust, association, joint-stock company, business trust or any other entity, unincorporated organization or government or any agency or political subdivision thereof.

Plan” has the meaning set forth in the recitals hereto.

Quoted Price” means, on any Trading Day, with respect to the Common Stock, the VWAP of the Common Stock on such Trading Day on the principal U.S. national securities exchange on which the Common Stock is listed or admitted to trading or, if the Common Stock is not listed or admitted to trading on any U.S. national securities exchange, the average of the closing bid and asked prices in the over-the-counter market in the United States as furnished by any New York Stock Exchange member firm that shall be selected from time to time by the Company for that purpose.

Recipient” has the meaning set forth in Section 3.2(e).

 

4


Required Warrant Holders” means Holders of Warrant Certificates evidencing a majority of the then-outstanding Warrants.

Scheduled Expiration Date” means September 1, 2024 (the fourth (4th) anniversary of the Original Issue Date) or, if not a Business Day, then the next Business Day thereafter.

Securities Act” means the Securities Act of 1933, as amended.

Subsidiary” means a Person more than 50% of the outstanding voting stock of which is owned, directly or indirectly, by the Company or by one or more other Subsidiaries, or by the Company and one or more other Subsidiaries. For purposes of this definition, “voting stock” means stock which ordinarily has voting power for the election of directors, whether at all times or only so long as no senior class of stock has such voting power by reason of any contingency.

Substituted Securities” has the meaning set forth in Section 5.1(f)(i)(A).

Successor Company” has the meaning set forth in Section 15.

Surviving Transaction” has the meaning set forth in Section 5.1(f).

Trading Day” means each Monday, Tuesday, Wednesday, Thursday and Friday, other than any day on which securities are not traded on the applicable securities exchange or in the applicable securities market.

Transaction” has the meaning set forth in Section 5.1(f).

VWAP” means the volume-weighted average price for trading hours of the regular trading session (including any extensions thereof), determined without regard to pre-open or after-hours trading or any other trading outside of the trading hours of the regular trading session (including any extensions thereof).

Warrant Agent” has the meaning set forth in the preamble hereto.

Warrant Certificates” means those certain warrant certificates evidencing the Warrants, substantially in the form set forth in Exhibit A attached hereto, which, for the avoidance of doubt, are either Global Warrant Certificates or Definitive Warrant Certificates.

Warrant Register” has the meaning set forth in Section 8.

Warrants” means those certain warrants to purchase initially up to an aggregate of 4,837,821 shares of Common Stock at the Exercise Price, subject to adjustment pursuant to Section 5, issued hereunder.

Winding Up” has the meaning set forth in Section 4.

 

2.

Warrant Certificates.

2.1    Original Issuance of Warrants.

 

5


(a)    On the Original Issue Date, one or more Global Warrant Certificates evidencing the Warrants shall be executed by the Company and delivered to the Warrant Agent for countersignature, and the Warrant Agent shall, upon receipt of a Company Order and at the direction of the Company set forth therein, countersign (by manual or facsimile signature) and deliver such Global Warrant Certificates for original issuance to the Depositary, or its custodian, for crediting to the accounts of its participants for the benefit of the holders of beneficial interests in the Warrants on the Original Issue Date pursuant to the Applicable Procedures of the Depositary on the Original Issue Date.

(b)    Except as set forth in Section 2.4, Section 3.2(d), Section 6 and Section 8, the Global Warrant Certificates delivered to the Depositary (or a nominee thereof) on the Original Issue Date shall be the only Warrant Certificates issued or outstanding under this Agreement.

(c)    Each Warrant Certificate shall evidence the number of Warrants specified therein, and each Warrant evidenced thereby shall represent the right, subject to the provisions contained herein and therein, to purchase one share of Common Stock, subject to adjustment as provided in Section 5.

2.2    Form of Warrant Certificates.

The Warrant Certificates evidencing the Warrants shall be in registered form only and substantially in the form set forth in Exhibit A hereto, shall be dated the date on which countersigned by the Warrant Agent, shall have such insertions as are appropriate or required or permitted by this Agreement and may have such letters, numbers or other marks of identification and such legends and endorsements typed, stamped, printed, lithographed or engraved thereon (which does not impact the Warrant Agent’s rights, duties or immunities) as the officers of the Company executing the same may approve (execution thereof to be conclusive evidence of such approval) and as are not inconsistent with the provisions of this Agreement, or as may be required to comply with any law or with any rule or regulation pursuant thereto or with any rule or regulation of any securities exchange on which the Warrants may be listed, or to conform to usage.

2.3    Execution and Delivery of Warrant Certificates.

(a)    Warrant Certificates evidencing the Warrants which may be countersigned and delivered under this Agreement are limited to Warrant Certificates evidencing 4,837,821 Warrants except for Warrant Certificates countersigned and delivered upon registration of transfer of, or in exchange for, or in lieu of, one or more previously countersigned Warrant Certificates pursuant to Section 2.4, Section 3.2(d), Section 6 and Section 8.

(b)    The Warrant Agent is hereby authorized to countersign (by manual or facsimile signature) and deliver Warrant Certificates as required by Section 2.1 or by Section 2.4, Section 3.2(d), Section 6 or Section 8.

(c)    The Warrant Certificates shall be executed in the corporate name and on behalf of the Company by the Chairman (or any Co-Chairman) of the Board of Directors, the Chief Executive Officer, the President or any one of the Vice Presidents of the Company under corporate seal reproduced thereon (if the Company has a corporate seal) and attested to by the Secretary or one of the Assistant Secretaries of the Company, either manually or by facsimile signature printed

 

6


thereon. The Warrant Certificates shall be countersigned, either by manual or facsimile signature, by the Warrant Agent and shall not be valid for any purpose unless so countersigned. In case any officer of the Company whose signature shall have been placed upon any of the Warrant Certificates shall cease to be such officer of the Company before countersignature by the Warrant Agent and issue and delivery thereof, such Warrant Certificates may, nevertheless, be countersigned by the Warrant Agent and issued and delivered with the same force and effect as though such person had not ceased to be such officer of the Company, and any Warrant Certificate may be signed on behalf of the Company by such person as, at the actual date of the execution of such Warrant Certificate, shall be a proper officer of the Company, although at the date of the execution of this Agreement any such person was not such officer.

2.4    Global Warrant Certificates.

(a)    Any Global Warrant Certificate 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 Certificate is registered in the name of the Depositary or its nominee, members of, or participants in, the Depositary (“Agent Members”) shall have no rights under this Agreement with respect to the Warrants evidenced by such Global Warrant Certificate held on their behalf by the Depositary or its custodian, and the Depositary may be treated by the Company, the Warrant Agent and any agent of the Company or the Warrant Agent as the absolute owner of such Warrants, and as the sole Holder of such Warrant Certificate, for all purposes. Accordingly, any such Agent Member’s beneficial interest in such Warrants will be shown only on, and the transfer of such interest shall be effected only through, records maintained by the Depositary or its nominee or its Agent Members, and neither the Company nor the Warrant Agent shall have any responsibility or liability with respect to such records maintained by the Depositary or its nominee or its Agent Members. Notwithstanding the foregoing, nothing herein shall prevent the Company, the Warrant Agent or any agent of the Company or the Warrant Agent from giving effect to any written certification, proxy or other authorization furnished by the Depositary or impair, as between the Depositary and its Agent Members, the operation of customary practices governing the exercise of the rights of a holder of any security.

(c)    Any holder of a beneficial interest in Warrants evidenced by a Global Warrant Certificate registered in the name of the Depositary or its nominee shall, by acceptance of such beneficial interest, agree that transfers of beneficial interests in the Warrants evidenced by such Global Warrant Certificate may be effected only through a book-entry system maintained by the Depositary as the Holder of such Global Warrant Certificate (or its agent), and that ownership of a beneficial interest in Warrants evidenced thereby shall be reflected solely in such book-entry form.

(d)    Transfers of a Global Warrant Certificate registered in the name of the Depositary or its nominee shall be limited to transfers in whole, and not in part, to the Depositary, its successors, and their respective nominees except as set forth in Section 2.4(e). Interests of beneficial owners in a Global Warrant Certificate registered in the name of the Depositary or its nominee shall be transferred in accordance with the Applicable Procedures of the Depositary.

 

7


(e)    A Global Warrant Certificate registered in the name of the Depositary or its nominee shall be exchanged for Definitive Warrant Certificates only if the Depositary (i) has notified the Company that it is unwilling or unable to continue as or ceases to be a clearing agency registered under Section 17A of the Exchange Act and (ii) a successor to the Depositary registered as a clearing agency under Section 17A of the Exchange Act is not able to be appointed by the Company within 90 days or the Depositary is at any time unwilling or unable to continue as Depositary and a successor to the Depositary is not able to be appointed by the Company within 90 days. In any such event, each Global Warrant Certificate registered in the name of the Depositary or its nominee shall be surrendered to the Warrant Agent for cancellation in accordance with Section 3.5, and the Company shall execute, and the Warrant Agent shall countersign and deliver, upon the Company’s instruction, to each beneficial owner identified by the Depositary, in exchange for such beneficial owner’s beneficial interest in such Global Warrant Certificate, Definitive Warrant Certificates evidencing, in the aggregate, the number of Warrants theretofore represented by such Global Warrant Certificate with respect to such beneficial owner’s respective beneficial interest. Any Definitive Warrant Certificate delivered in exchange for an interest in a Global Warrant Certificate pursuant to this Section 2.4(e) shall not bear the Global Warrant Legend. Interests in any Global Warrant Certificate may not be exchanged for Definitive Warrant Certificates other than as provided in this Section 2.4(e).

(f)    The holder of a Global Warrant Certificate registered in the name of the Depositary or its nominee may grant proxies and otherwise authorize any Person, including Agent Members and Persons that may hold interests through Agent Members, to take any action which a Holder of a Warrant Certificate is entitled to take under this Agreement or such Global Warrant Certificate.

(g)    Each Global Warrant Certificate will evidence such of the outstanding Warrants as will be specified therein and each shall provide that it evidences the aggregate number of outstanding Warrants from time to time endorsed thereon and that the aggregate number of outstanding Warrants evidenced thereby may from time to time be reduced, to reflect exercises or expirations. Any endorsement of a Global Warrant Certificate to reflect the amount of any decrease in the aggregate number of outstanding Warrants evidenced thereby will be made by the Warrant Agent (i) in the case of an exercise, in accordance with the Applicable Procedures as required by Section 3.2(c) or (ii) in the case of an expiration, in accordance with Section 3.2(b).

(h)    The Company initially appoints DTC to act as Depositary with respect to the Global Warrant Certificates.

(i)    Every Warrant Certificate authenticated and delivered in exchange for, or in lieu of, a Global Warrant Certificate or any portion thereof, pursuant to this Section 2.4 or Section 8 or Section 10, shall be authenticated and delivered in the form of, and shall be, a Global Warrant Certificate, and a Global Warrant Certificate may not be exchanged for a Definitive Warrant Certificate, in each case, other than as provided in Section 2.4(e). Whenever any provision herein refers to issuance by the Company and countersignature and delivery by the Warrant Agent of a new Warrant Certificate in exchange for the portion of a surrendered Warrant Certificate that has not been exercised, in lieu of the surrender of any Global Warrant Certificate and the issuance, countersignature and delivery of a new Global Warrant Certificate in exchange therefor, the Warrant Agent, on the Company’s instruction, may endorse such Global Warrant Certificate to reflect a reduction in the number of Warrants evidenced thereby in the amount of Warrants so evidenced that have been so exercised.

 

8


(j)    Beneficial interests in any Global Warrant Certificate may be transferred to Persons who take delivery thereof in the form of a beneficial interest in the same Global Warrant Certificate in accordance with the Applicable Procedures.

(k)    At such time as all Warrants evidenced by a particular Global Warrant Certificate have been exercised or expired, terminated or become void in whole and not in part, such Global Warrant Certificate shall, if not in custody of the Warrant Agent, be surrendered to or retained by the Warrant Agent for cancellation in accordance with Section 3.5.

 

3.

Exercise and Expiration of Warrants.

3.1    Right to Acquire Common Stock Upon Exercise. Each Warrant Certificate duly issued by the Company shall, when countersigned by the Warrant Agent, entitle the Holder thereof, subject to the provisions thereof and of this Agreement, to acquire from the Company, for each Warrant evidenced thereby, one share of Common Stock at the Exercise Price, subject to adjustment as provided in this Agreement. The Exercise Price, and the number of shares of Common Stock obtainable upon exercise of each Warrant, shall be adjusted from time to time as required by Section 5.1.

3.2    Exercise and Expiration of Warrants.

(a)    Exercise of Warrants. Subject to and upon compliance with the terms and conditions set forth herein, a Holder of a Warrant Certificate may exercise all or any whole number of the Warrants evidenced thereby, on any Business Day from and after the Original Issue Date until 5:00 p.m., New York time, on the Expiration Date, for the shares of Common Stock obtainable thereunder.

(b)    Expiration of Warrants. The Warrants, to the extent not exercised prior thereto, shall automatically expire, terminate and become void as of 5:00 p.m., New York time, on the Expiration Date. No further action of any Person (including by, or on behalf of, any Holder, the Company, or the Warrant Agent) shall be required to effectuate the expiration of Warrants pursuant to this Section 3.2(b).

(c)    Method of Exercise. In order for a Holder to exercise all or any of the Warrants represented by a Warrant Certificate, the Holder thereof must (i) (x) in the case of a Global Warrant Certificate, deliver to the Warrant Agent an exercise form for the election to exercise such Warrants substantially in the form set forth in Exhibit A hereto (an “Exercise Form”), setting forth the number of Warrants being exercised and otherwise properly completed and duly executed by the Holder thereof and deliver such Warrants by book-entry transfer through the facilities of the Depositary to the Warrant Agent in accordance with the Applicable Procedures and otherwise comply with the Applicable Procedures in respect of the exercise of such Warrants or (y) in the case of a Definitive Warrant Certificate, at the Corporate Agency Office, (I) deliver to the Warrant Agent an Exercise Form, setting forth the number of Warrants being exercised and otherwise properly completed and duly executed by the Holder thereof as well as any such other necessary information the Warrant Agent may reasonably require, and (II) surrender to the

 

9


Warrant Agent the Definitive Warrant Certificate evidencing such Warrants; and (ii) pay to the Warrant Agent an amount equal to all taxes required to be paid by the Holder, if any, pursuant to Section 3.4 prior to, or concurrently with, exercise of such Warrants by wire transfer in immediately available funds, to the account (No. 0000001-9249-3417; ABA No. 021000021; Reference: Whiting Petroleum Corporation; Attention: Chief Financial Officer) of the Company at the Warrant Agent or such other account as the Warrant Agent shall have given notice to the Company and such Holder in accordance with Section 11.1(b). For the avoidance of doubt, any exercise of any Warrant shall be “net share settled” pursuant to a cashless exercise as described in Section 3.7.

(d)    Partial Exercise. If fewer than all the Warrants represented by a Warrant Certificate are exercised, (i) in the case of exercise of Warrants evidenced by a Global Warrant Certificate, the Warrant Agent shall cause the custodian of DTC to endorse the “Schedule of Decreases in Warrants” attached to such Global Warrant Certificate to reflect the Warrants being exercised and (ii) in the case of exercise of Warrants evidenced by a Definitive Warrant Certificate, such Definitive Warrant Certificate shall be surrendered and a new Definitive Warrant Certificate of the same tenor and for the number of Warrants which were not exercised shall be executed by the Company. The Warrant Agent shall countersign the new Definitive Warrant Certificate, registered in such name or names, subject to the provisions of Section 8 regarding registration of transfer and payment of governmental charges in respect thereof, as may be directed in writing by the Holder, and shall deliver the new Definitive Warrant Certificate to the Person or Persons in whose name such new Definitive Warrant Certificate is so registered. The Company, whenever required by the Warrant Agent, will supply the Warrant Agent with Definitive Warrant Certificates duly executed on behalf of the Company for such purpose.

(e)    Issuance of Common Stock. Upon due exercise of Warrants evidenced by any Warrant Certificate in conformity with the foregoing provisions of Section 3.2(c), the Warrant Agent shall, when actions specified in Section 3.2(c)(i) have been effected and any payment specified in Section 3.2(c)(ii) is received, deliver to the Company the Exercise Form received pursuant to Section 3.2(c)(i), deliver or deposit any funds, in accordance with Section 3.3, received as instructed in writing by the Company and advise the Company by telephone at the end of such day of the amount of funds so deposited to its account. The Company shall thereupon, as promptly as practicable, and in any event within two (2) Business Days after the Exercise Date referred to below, (i) determine the number of shares of Common Stock issuable pursuant to exercise of such Warrants pursuant to Section 3.7 and (ii) (x) in the case of exercise of Warrants evidenced by a Global Warrant Certificate, deliver or cause to be delivered to the Recipient (as defined below) in accordance with the Applicable Procedures shares of Common Stock in book-entry form to be so held through the facilities of DTC in an amount equal to, or, if the Common Stock may not then be held in book-entry form through the facilities of DTC, duly executed certificates representing, or (y) in the case of exercise of Warrants evidenced by Definitive Warrant Certificates, execute or cause to be executed and deliver or cause to be delivered to the Recipient (as defined below) a certificate or certificates representing, in case of (x) and (y), the aggregate number of shares of Common Stock issuable upon such exercise (based upon the aggregate number of Warrants so exercised), as so determined, together with an amount in cash in lieu of any fractional share(s), if the Company so elects pursuant to Section 5.2. The shares of Common Stock in book-entry form or certificate or certificates representing shares of Common Stock so delivered shall be, to the extent possible, in such denomination or denominations as such Holder shall request in the

 

10


applicable Exercise Form and shall be registered or otherwise placed in the name of, and delivered to, the Holder or, subject to Section 3.4, such other Person as shall be designated by the Holder in such Exercise Form (the Holder or such other Person being referred to herein as the “Recipient”).

(f)    Time of Exercise. Each exercise of a Warrant shall be deemed to have been effected immediately prior to the close of business on the day on which each of the requirements for exercise of such Warrant specified in Section 3.2(c) has been duly satisfied (the “Exercise Date”). At such time, subject to Section 5.1(d)(iv), shares of Common Stock in book-entry form or the certificates for the shares of Common Stock issuable upon such exercise as provided in Section 3.2(e) shall be deemed to have been issued and, for all purposes of this Agreement, the Recipient shall, as between such Person and the Company, be deemed to be and entitled to all rights of the holder or record of such Common Stock.

3.3    Application of Funds upon Exercise of Warrants. All funds received by the Warrant Agent under this Agreement that are to be distributed or applied by the Warrant Agent in the performance of services (the “Funds”) shall be held by Computershare in its name as agent for the Company. Until paid pursuant to the terms of this Agreement, Computershare will hold the Funds through such accounts in: deposit accounts of commercial banks with Tier 1 capital exceeding $1 billion or with an average rating above investment grade by S&P (LT Local Issuer Credit Rating), Moody’s (Long Term Rating) and Fitch Ratings, Inc. (LT Issuer Default Rating) (each as reported by Bloomberg Finance L.P.). Computershare shall have no responsibility or liability for any diminution of the Funds that may result from any deposit made by Computershare in accordance with this paragraph, including any losses resulting from a default by any bank, financial institution or other third party. Computershare may from time to time receive interest, dividends or other earnings in connection with such deposits. Computershare shall not be obligated to pay such interest, dividends or earnings to the Company, any holder or any other party. The Warrant Agent shall forward funds received for Warrant exercises in a given month by the 5th Business Day of the following month by wire transfer to an account designated by the Company or as the Warrant Agent otherwise may be directed in writing by the Company.

3.4    Payment of Taxes. The Company shall pay any and all taxes (other than income taxes) that may be payable in respect of the issue or delivery of shares of Common Stock on exercise of Warrants pursuant hereto. The Company or the Warrant Agent shall not be required, however, to pay any tax or other charge imposed in respect of any transfer involved in the issue and delivery of shares of Common Stock in book-entry form or any certificates for shares of Common Stock or payment of cash or other property to any Recipient other than, in the case of the Company, the Holder of the Warrant Certificate evidencing the exercised Warrant, and in case of such transfer or payment, the Warrant Agent and the Company shall not be required to issue or deliver any shares of Common Stock in book-entry form or any certificate or pay any cash until (a) such tax or charge has been paid or an amount sufficient for the payment thereof has been delivered to the Warrant Agent or the Company or (b) it has been established to the Company’s or Warrant Agent’s satisfaction that any such tax or other charge that is or may become due has been paid.

3.5    Cancellation of Warrant Certificates. Any Definitive Warrant Certificate surrendered for exercise shall, if surrendered to the Company, be delivered to the Warrant Agent. All Warrant Certificates surrendered or delivered to or received by the Warrant Agent for

 

11


cancellation pursuant to this Section 3.5 or Section 2.4(e) or Section 2.4(j) shall be promptly cancelled by the Warrant Agent and shall not be reissued by the Company. The Warrant Agent shall destroy any such cancelled Warrant Certificates and deliver its certificate of destruction to the Company, unless the Company shall otherwise direct in writing.

3.6    Shares Issuable. The number of shares of Common Stock “obtainable upon exercise” of Warrants at any time shall be the number of shares of Common Stock into which such Warrants are then exercisable. The Company will confirm the number of shares obtainable if so requested by the Warrant Agent. The number of shares of Common Stock “into which each Warrant is exercisable” shall be one share, subject to adjustment as provided in Section 5.1.

3.7    Cashless Exercise. Notwithstanding any provisions herein to the contrary, upon exercise of any Warrants the Company shall issue to the Holder a number of shares of Common Stock with respect to the Warrants being exercised computed using the following formula:

 

   X = (Y (A-B)) ÷ A
Where X =    the number of shares of Common Stock to be issued to the Holder in respect of the Warrants being exercised.
Y =    the number of shares of Common Stock into which the Warrants being exercised by the Holder are exercisable (on the Exercise Date).
A =    the Current Market Price of one share of Common Stock (on the Exercise Date).
B =    the applicable Exercise Price (as adjusted through and including the Exercise Date).

If the foregoing calculation results in a negative number, then no Common Stock shall be issued upon exercise pursuant to this Section 3.

The Company shall calculate and transmit to the Warrant Agent the number of shares of Common Stock to be issued on such exercise, and the Warrant Agent shall have no obligation under this Agreement to calculate, confirm or verify such amount.

3.8    Cost Basis Information. The Company hereby instructs the Warrant Agent to record cost basis for newly issued shares at the time of exercise in accordance with instructions by the Company. If the Company does not provide such cost basis information to the Warrant Agent, as outlined above, then the Warrant Agent will treat those shares issued hereunder as uncovered securities or the equivalent, and each holder of such shares will need to obtain such cost basis information from the Company.

 

12


4.

Dissolution, Liquidation or Winding up.

Unless Section 5.1(f) applies, if, on or prior to the Expiration Date, the Company (or any other Person controlling the Company) shall propose a voluntary or involuntary dissolution, liquidation or winding up (a “Winding Up”) of the affairs of the Company, the Company shall give written notice thereof to the Warrant Agent and all Holders in the manner provided in Section 11.1(b) at least ten (10) business days prior to the date on which such transaction is expected to become effective or, if earlier, the record date for such transaction. Such notice shall also specify the date as of which the holders of record of the shares of Common Stock shall be entitled to exchange their shares for securities, money or other property deliverable upon such Winding Up on which date each Holder of Warrant Certificates shall receive the securities, money or other property which such Holder would have been entitled to receive had such Holder been the holder of record of the shares of Common Stock into which the Warrants were exercisable immediately prior to such Winding Up (net of the then applicable Exercise Price) and the rights to exercise the Warrants shall terminate.

Unless Section 5.1(f) applies, in case of any such Winding Up of the Company, the Company shall deposit with the Warrant Agent any funds or other property which the Holders are entitled to receive pursuant to the above paragraph, together with a Company Order as to the distribution thereof. After receipt of such deposit from the Company and after receipt of surrendered Warrant Certificates evidencing Warrants, and any such other necessary information as the Warrant Agent may reasonably require, the Warrant Agent shall make payment in the appropriate amount to such Person or Persons as it may be directed in writing by the Holder surrendering such Warrant Certificate. The Warrant Agent shall not be required to pay interest on any money deposited pursuant to the provisions of this Section 4 except such as it shall agree with the Company to pay thereon. Any moneys, securities or other property which at any time shall be deposited by the Company or on its behalf with the Warrant Agent pursuant to this Section 4 shall be, and are hereby, assigned, transferred and set over to the Warrant Agent in accordance with Section 3.3 hereof; provided, that, moneys, securities or other property need not be segregated from other funds, securities or other property held by the Warrant Agent except to the extent required by law.

 

5.

Adjustments.

5.1    Adjustments. In order to prevent dilution of the rights granted under the Warrants and to grant the Holders certain additional rights, the Exercise Price shall be subject to adjustment from time to time only as specifically provided in this Section 5.1 (the “Adjustment Events”) and the number of shares of Common Stock obtainable upon exercise of Warrants shall be subject to adjustment from time to time only as specifically provided in this Section 5.1.

(a)    Subdivisions and Combinations. In the event the Company shall, at any time or from time to time after the Original Issue Date while any Warrants remain outstanding and unexpired in whole or in part, effect a subdivision (by any stock split or otherwise) of the outstanding shares of Common Stock into a greater number of shares of Common Stock (other than (x) a subdivision upon a Transaction to which Section 5.1(f) applies or (y) a stock split effected by means of a stock dividend or distribution to which Section 5.1(b) applies), then and in each such event the Exercise Price in effect at the opening of business on the day after the date

 

13


upon which such subdivision becomes effective shall be proportionately decreased. Conversely, if the Company shall, at any time or from time to time after the Original Issue Date while any Warrants remain outstanding and unexpired in whole or in part, effect a combination (by any reverse stock split, combination, subdivision or otherwise) of the outstanding shares of Common Stock into a smaller number of shares of Common Stock (other than a combination upon a Transaction to which Section 5.1(f) applies), then and in each such event the Exercise Price in effect at the opening of business on the day after the date upon which such combination becomes effective shall be proportionately increased. Any adjustment under this Section 5.1(a) shall become effective immediately after the opening of business on the day after the date upon which the subdivision or combination becomes effective.

(b)    Common Stock Dividends. In the event the Company shall, at any time or from time to time after the Original Issue Date while any Warrants remain outstanding and unexpired in whole or in part, make or issue to the holders of its Common Stock a dividend or distribution payable in, or otherwise make or issue a dividend or other distribution on any class of its capital stock payable in, shares of Common Stock (other than a dividend or distribution upon a Transaction to which Section 5.1(f) applies), then and in each such event the Exercise Price in effect at the opening of business on the day after the date for the determination of the holders of shares of Common Stock entitled to receive such dividend or distribution shall be decreased by multiplying such Exercise Price by a fraction (not to be greater than 1):

(i)    the numerator of which shall be the total number of shares of Common Stock issued and outstanding at the close of business on such date for determination; and

(ii)    the denominator of which shall be the total number of shares of Common Stock issued and outstanding at the close of business on such date for determination plus the number of shares of Common Stock issuable in payment of such dividend or distribution.

Any adjustment under this Section 5.1(b) shall, subject to Section 5.1(d)(iv), become effective immediately after the opening of business on the day after the date the holders of shares of Common Stock received such dividend or distribution.

(c)    Reclassifications. A reclassification of the Common Stock (other than any such reclassification in connection with a Transaction to which Section 5.1(f) applies) into shares of Common Stock and shares of any other class of stock shall be deemed, if the outstanding shares of Common Stock shall be changed into a larger or smaller number of shares of Common Stock as a part of such reclassification, a subdivision or combination, as the case may be, of the outstanding shares of Common Stock for the purposes and within the meaning of Section 5.1(a) (and the effective date of such reclassification shall be deemed to be “the date upon which such subdivision becomes effective” or “the date upon which such combination becomes effective,” as applicable, for the purposes and within the meaning of Section 5.1(a)).

(d)    Other Provisions Applicable to Adjustments. The following provisions shall be applicable to the making of adjustments to the Exercise Price and the number of shares of Common Stock into which each Warrant is exercisable under this Section 5.1:

 

14


(i)    Treasury Stock. The dividend or distribution of any issued shares of Common Stock owned or held by or for the account of the Company shall be deemed a dividend or distribution of shares of Common Stock for purposes of Section 5.1(b). The Company shall not make or issue any dividend or distribution on shares of Common Stock held in the treasury of the Company. For the purposes of Section 5.1(b), the number of shares of Common Stock at any time outstanding shall not include shares held in the treasury of the Company.

(ii)    When Adjustments Are to be Made. The adjustments required by Section 5.1(a), Section 5.1(b) and Section 5.1(c) shall be made whenever and as often as any specified event requiring an adjustment shall occur, except that no adjustment of the Exercise Price that would otherwise be required shall be made unless and until such adjustment either by itself or with other adjustments not previously made increases or decreases the Exercise Price immediately prior to the making of such adjustment by at least 1%. Any adjustment representing a change of less than such minimum amount (except as aforesaid) shall be carried forward and made as soon as such adjustment, together with other adjustments required by Section 5.1(a), Section 5.1(b) and Section 5.1(c) and not previously made, would result in such minimum adjustment.

(iii)    Fractional Interests. In computing adjustments under Section 5.1, fractional interests in Common Stock shall be taken into account to the nearest one-thousandth of a share.

(iv)    Deferral of Issuance Upon Exercise. In any case in which Section 5.1(b) shall require that a decrease in the Exercise Price be made effective prior to the occurrence of a specified event and any Warrant is exercised after the time at which the adjustment became effective but prior to the occurrence of such specified event and, in connection therewith, Section 5.1(e) shall require a corresponding increase in the number of shares of Common Stock into which each Warrant is exercisable, the Company may elect to defer, with written notice to the Warrant Agent (but not in any event later than the Expiration Date or the closing date of the applicable Transaction) until the occurrence of such specified event (A) the issuance to the Holder of the Warrant Certificate evidencing such Warrant (or other Person entitled thereto) of, and the registration of such Holder (or other Person) as the record holder of, the Common Stock over and above the Common Stock issuable upon such exercise on the basis of the number of shares of Common Stock obtainable upon exercise of such Warrant immediately prior to such adjustment and to require payment in respect of such number of shares the issuance of which is not deferred on the basis of the Exercise Price in effect immediately prior to such adjustment and (B) the corresponding reduction in the Exercise Price; provided, however, that the Company shall deliver to such Holder or other person a due bill or other appropriate instrument that meet any applicable requirements of the principal national securities exchange or other market on which the Common Stock is then traded and evidences the right of such Holder or other Person to receive, and to become the record holder of, such additional shares of Common Stock, upon the occurrence of such specified event requiring such adjustment (without payment of any additional Exercise Price in respect of such additional shares).

 

15


(e)    Adjustment to Shares Obtainable Upon Exercise. Whenever the Exercise Price is adjusted as provided in this Section 5.1, the number of shares of Common Stock into which a Warrant is exercisable shall simultaneously be adjusted by multiplying such number of shares of Common Stock into which a Warrant is exercisable immediately prior to such adjustment by a fraction, the numerator of which shall be the Exercise Price immediately prior to such adjustment, and the denominator of which shall be the Exercise Price immediately thereafter.

(f)    Changes in Common Stock. In case at any time or from time to time after the Original Issue Date while any Warrants remain outstanding and unexpired in whole or in part, the Company shall be a party to or shall otherwise engage in any transaction or series of related transactions constituting: (1) a merger of the Company into, a direct or indirect sale of all of the Company’s equity to, or a consolidation of the Company with, any other Person in which the previously outstanding shares of Common Stock shall be (either directly or upon subsequent liquidation) cancelled, reclassified or converted or changed into or exchanged for securities or other property (including cash) or any combination of the foregoing, or a sale of all or substantially all of the assets of the Company and its Subsidiaries (taken as a whole) (a “Non-Surviving Transaction”), or (2) any merger of another Person into the Company in which the previously outstanding shares of Common Stock shall be cancelled, reclassified or converted or changed into or exchanged for securities of the Company or other property (including cash) or any combination of the foregoing (a “Surviving Transaction”; any Non-Surviving Transaction or Surviving Transaction being herein called a “Transaction”) then:

(i)    as a condition to the consummation of such Transaction, the Company shall cause such other Person to execute and deliver to the Warrant Agent a written instrument providing that:

(A)    so long as any Warrant remains outstanding in whole or in part (including after giving effect to the changes specified under clause (B) below), such Warrant, upon the exercise thereof at any time on or after the consummation of such Transaction, shall be exercisable (on such terms and subject to such conditions as shall be as nearly equivalent as may be practicable to the provisions set forth in this Agreement) into, in lieu of the Common Stock issuable upon such exercise prior to such consummation, only the securities (“Substituted Securities”) that would have been receivable upon such Transaction by a holder of the number of shares of Common Stock into which such Warrant was exercisable immediately prior to such Transaction assuming, in the case of any such Transaction, if (as a result of rights of election or otherwise) the kind or amount of securities, cash and other property receivable upon such Transaction is not the same for each share of Common Stock held immediately prior to such Transaction, such holder of Common Stock is a Person that is neither (I) an employee of the Company or of any Subsidiary thereof nor (II) a Person with which the Company consolidated or into which the Company merged or which merged into the Company or to which such sale or transfer was made, as the case may be (“Constituent Person”), or an Affiliate of a Constituent Person; and

(B)    the rights and obligations of such other Person and the Holders in respect of Substituted Securities shall be substantially unchanged to be as nearly equivalent as may be practicable to the rights and obligations of the Company and Holders in respect of Common Stock hereunder as set forth in Section 3.1 hereof;

 

16


(ii)    with respect to any Transaction, such written instrument under clause (i) above shall provide for adjustments which, for events subsequent to the effective date of such written instrument shall be as nearly equivalent as may be practicable to the adjustments provided for in this Section 5. The above provisions of this Section 5.1(f) shall similarly apply to successive Transactions.

(g)    Compliance with Governmental Requirements. Before taking any action that would cause an adjustment reducing the Exercise Price below the then par value of any of 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.

(h)    Optional Tax Adjustment. The Company may at its option, at any time during the term of the Warrants, increase the number of shares of Common Stock into which each Warrant is exercisable, or decrease the Exercise Price, in addition to those changes required by Section 5.1(a), Section 5.1(b) and Section 5.1(c) as deemed advisable by the Board of Directors of the Company, in order that any event treated for federal income tax purposes as a dividend of stock or stock rights shall not be taxable to the recipients.

(i)    Warrants Deemed Exercisable. For purposes solely of this Section 5, the number of shares of Common Stock which the holder of any Warrant would have been entitled to receive had such Warrant been exercised in full at any time or into which any Warrant was exercisable at any time shall be determined assuming such Warrant was exercisable in full at such time.

(j)    Notice of Adjustment. Upon the occurrence of each adjustment of the Exercise Price or the number of shares of Common Stock into which a Warrant is exercisable pursuant to this Section 5.1, the Company at its expense shall promptly:

(i)    compute such adjustment in accordance with the terms hereof;

(ii)    after such adjustment becomes effective, deliver to all Holders, in accordance with Section 11.1(b) and Section 11.2, a notice setting forth such adjustment and showing in detail the facts upon which such adjustment is based; and

(iii)    deliver to the Warrant Agent a certificate of the Treasurer or Chief Financial Officer of the Company setting forth the Exercise Price and the number of shares of Common Stock into which each Warrant is exercisable after such adjustment and setting forth a brief statement of the facts requiring such adjustment and the computation by which such adjustment was made (including a description of the basis on which the Current Market Price of the Common Stock). As provided in Section 10, the Warrant Agent shall be entitled to rely on such certificate and shall be under no duty or responsibility with respect to any such certificate, except to exhibit the same from time to time at the Corporate Agency Office (as defined below) to any Holder desiring an inspection thereof during reasonable business hours. The Company hereby agrees that it will provide the Holders

 

17


and the Warrant Agent with reasonable notice of any Adjustment Event set forth in this Section 5.1. The Company further agrees that it will provide to the Holders and Warrant Agent with any new or amended exercise terms. The Warrant Agent shall have no obligation under any Section of this Agreement to determine whether an Adjustment Event has occurred or to calculate any of the adjustments set forth herein.

(k)    Statement on Warrant Certificates. Irrespective of any adjustment in the Exercise Price or amount or kind of shares into which the Warrants are exercisable, Warrant Certificates theretofore or thereafter issued may continue to express the same Exercise Price initially applicable or amount or kind of shares initially issuable upon exercise of the Warrants evidenced thereby pursuant to this Agreement.

5.2    Fractional Interest. The Company shall not be required upon the exercise of any Warrant to issue any fractional shares of Common Stock, but may, in lieu of issuing any fractional shares of Common Stock make an adjustment therefore in cash on the basis of the Current Market Price per share of Common Stock on the date of such exercise. If Warrant Certificates evidencing more than one Warrant shall be presented for exercise at the same time by the same Holder, the number of full shares of Common Stock which shall be issuable upon such exercise thereof shall be computed on the basis of the aggregate number of Warrants so to be exercised. The Holders, by their acceptance of the Warrant Certificates, expressly waive their right to receive any fraction of a share of Common Stock or a stock certificate representing a fraction of a share of Common Stock if such amount of cash is paid in lieu thereof. The Company shall provide an initial funding of one thousand dollars ($1,000) for the purpose of issuing cash in lieu of fractional shares. From time to time thereafter, Warrant Agent may request additional funding to cover fractional payments. The Warrant Agent shall have no obligation to make fractional payments unless the Company shall have provided the necessary funds to pay in full all amounts due and payable with respect thereto.

5.3    No Other Adjustments. Except in accordance with Section 5.1, the applicable Exercise Price and the number of shares of Common Stock obtainable upon exercise of 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)    upon the issuance of any other securities by the Company on or after the Original Issue Date, whether or not contemplated by the Plan, or upon the issuance of shares of Common Stock upon the exercise of any such securities;

(ii)    upon the issuance of any shares of Common Stock or other securities or any payments pursuant to any management or other equity incentive plan of the Company;

(iii)    upon the issuance of any shares of Common Stock pursuant to the exercise of the Warrants; or

(iv)    upon the issuance of any shares of Common Stock or other securities of the Company in connection with a business acquisition transaction.

 

18


6.

Loss or Mutilation.

If (a) any mutilated Warrant Certificate is surrendered to the Warrant Agent or (b) both (i) there shall be delivered to the Company and the Warrant Agent (A) a claim by a Holder as to the destruction, loss or wrongful taking of any Warrant Certificate of such Holder and a request thereby for a new replacement Warrant Certificate, and (B) such open penalty surety bond and/or indemnity bond as may be required by them to save each of them and any agent of either of them harmless and (ii) such other reasonable requirements as may be imposed by the Company or Warrant Agent as permitted by Section 8-405 of the Uniform Commercial Code have been satisfied, then, in the absence of notice to the Company or the Warrant Agent that such Warrant Certificate has been acquired by a “protected purchaser” within the meaning of Section 8-405 of the Uniform Commercial Code or bona fide purchaser, the Company shall execute and upon its written request the Warrant Agent shall countersign and deliver to the registered Holder of the lost, wrongfully taken, destroyed or mutilated Warrant Certificate, in exchange therefore or in lieu thereof, a new Warrant Certificate of the same tenor and for a like aggregate number of Warrants. At the written request of such registered Holder, the new Warrant Certificate so issued shall be retained by the Warrant Agent as having been surrendered for exercise, in lieu of delivery thereof to such Holder, and shall be deemed for purposes of Section 3.2(c)(ii) to have been surrendered for exercise on the date the conditions specified in clauses (A) or (B) of the preceding sentence were first satisfied. The Warrant Agent may, at its option, issue replacement Warrants for mutilated certificates upon presentation thereof without such indemnity.

Upon the issuance of any new Warrant Certificate under this Section 6, the Company may require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and other expenses (including the fees and expenses of the Warrant Agent and of counsel to the Company) in connection therewith.

Every new Warrant Certificate executed and delivered pursuant to this Section 6 in lieu of any lost, wrongfully taken or destroyed Warrant Certificate shall constitute an additional contractual obligation of the Company, whether or not the allegedly lost, wrongfully taken or destroyed Warrant Certificate shall be at any time enforceable by anyone, and shall be entitled to the benefits of this Agreement equally and proportionately with any and all other Warrant Certificates duly executed and delivered hereunder.

The provisions of this Section 6 are exclusive and shall preclude (to the extent lawful) all other rights or remedies with respect to the replacement of mutilated, lost, wrongfully taken, or destroyed Warrant Certificates.

 

7.

Reservation and Authorization of Common Stock.

The Company covenants that, for the duration of the Exercise Period, the Company will at all times reserve and keep available, from its authorized and unissued shares of Common Stock solely for issuance and delivery upon the exercise of the Warrants and free of preemptive rights, such number of shares of Common Stock and other securities, cash or property as from time to time shall be issuable upon the exercise in full of all outstanding Warrants for cash. The Company further covenants that it shall, from time to time, take all steps necessary to increase the authorized number of shares of its Common Stock to such number of shares as shall be sufficient to deliver

 

19


all shares of Common Stock deliverable upon exercise in full of all outstanding Warrants, if at any time the authorized number of shares of Common Stock remaining unissued would otherwise be insufficient to allow delivery of all the shares of Common Stock then deliverable upon the exercise in full of all outstanding Warrants. The Company covenants that all shares of Common Stock issuable upon exercise of the Warrants will, upon issuance, be duly and validly issued, fully paid and nonassessable and will be free of restrictions on transfer and will be free from all taxes, liens and charges in respect of the issue thereof (other than taxes in respect of any transfer occurring contemporaneously or as otherwise specified herein). The Company shall take all such actions as may be necessary to ensure that all such shares of Common Stock may be so issued without violation of any applicable law or governmental regulation or any requirements of any U.S. national securities exchange upon which shares of Common Stock may be listed (except for official notice of issuance which shall be immediately delivered by the Company upon each such issuance). The Company covenants that all shares of Common Stock will, at all times that Warrants are exercisable, be duly approved for listing subject to official notice of issuance on each securities exchange, if any, on which the Common Stock is then listed. The Company covenants that the stock certificates, if any, issued to evidence any shares of Common Stock issued upon exercise of Warrants will comply with the Delaware General Corporation Law and any other applicable law.

The Company hereby authorizes and directs its current and future transfer agents for the Common Stock at all times to reserve stock certificates for such number of authorized shares, to the extent as, and if, required. The Company will supply such transfer agents with duly executed stock certificates for such purposes, to the extent as, and if, required.

The Company hereby represents and warrants to the Holders that the issuance of the Warrants and the issuance of shares of Common Stock upon exercise thereof in accordance with the terms hereof will not constitute a breach of, or a default under, any other material agreements to which the Company is a party on the date hereof.

 

8.

Warrant Transfer Books.

The Warrant Agent will maintain an office or offices (the “Corporate Agency Office”) in the United States of America, where Warrant Certificates may be surrendered for registration of transfer or exchange and where Warrant Certificates may be surrendered for exercise of Warrants evidenced thereby, which office is 150 Royall Street, Canton, MA. 02021, Attn: Corporate Actions on the Original Issue Date. The Warrant Agent will give prompt written notice to all Holders of Warrant Certificates of any change in the location of such office.

The Warrants shall be issued in registered form only. The Company shall cause to be kept at the Corporate Agency Office a warrant register (the “Warrant Register”) in which, subject to such reasonable regulations as the Warrant Agent may prescribe and such regulations as may be prescribed by law, the Company shall provide for the registration of Warrants and of transfers or exchanges of Warrants as herein provided.

Upon surrender for registration of transfer of any Warrant Certificate at the Corporate Agency Office, the Company shall execute, and the Warrant Agent shall countersign and deliver, in the name of the designated transferee or transferees, one or more new Warrant Certificates evidencing a like aggregate number of Warrants.

 

20


At the option of the Holder, Warrant Certificates may be exchanged at the Corporate Agency Office upon payment of the charges hereinafter provided for other Warrant Certificates evidencing a like aggregate number of Warrants. Whenever any Warrant Certificates are so surrendered for exchange, the Company shall execute, and the Warrant Agent shall countersign and deliver, the Warrant Certificates of the same tenor and evidencing the same number of Warrants as evidenced by the Warrant Certificates surrendered by the Holder making the exchange.

All Warrant Certificates issued upon any registration of transfer or exchange of Warrant Certificates shall be the valid obligations of the Company, evidencing the same obligations, and entitled to the same benefits under this Agreement, as the Warrant Certificates surrendered for such registration of transfer or exchange.

Every Warrant Certificate surrendered for registration of transfer or exchange shall (if so required by the Company or the Warrant Agent) be: (i) duly endorsed and containing a signature guarantee from an eligible guarantor institution participating in a signature guarantee program approved by the Securities Transfer Association, or (ii) be accompanied by a written instrument of transfer in form satisfactory to the Company and the Warrant Agent, duly executed by the Holder thereof or his attorney duly authorized in writing, also containing a signature guarantee from an eligible guarantor institution participating in a signature guarantee program approved by the Securities Transfer Association. In addition, in connection with any transfer, the Warrant Agent or the Company may request a written opinion of counsel reasonably acceptable to the Company or the Warrant Agent, as applicable, that such transfer is in compliance with the Securities Act and application state securities or “blue sky” laws. Further, to effect such transfer or exchange, all other necessary information or documentation shall be provided as the Warrant Agent may reasonably request.

No service charge shall be made for any registration of transfer or exchange of Warrants; provided, however, the Company may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any registration of transfer or exchange of Warrant Certificates. The Warrant Agent shall not have any duty or obligation to take any action under any section of this Agreement that requires the payment of taxes and/or charges unless and until it is satisfied that all such payments have been made.

The Warrant Agent shall, upon request and at the expense of the Company from time to time, deliver to the Company such reports of registered ownership of the Warrants and such records of transactions with respect to the Warrants and the shares of Common Stock as the Company may request. The Warrant Agent shall, upon reasonable advance notice, also make available to the Company for inspection by the Company’s agents or employees, from time to time as the Company may request, such books of accounts and records maintained by the Warrant Agent in connection with the issuance and exercise of Warrants hereunder, such inspections to occur at the Corporate Agency Office during normal business hours.

The Warrant Agent shall keep copies of this Agreement and any notices given to Holders hereunder available for inspection, upon reasonable advance notice, by the Holders during normal business hours at the Corporate Agency Office. The Company shall supply the Warrant Agent from time to time with such numbers of copies of this Agreement as the Warrant Agent may request.

 

21


9.

Warrant Holders.

9.1    No Voting or Dividend Rights.

(a)    No Holder of a Warrant Certificate evidencing any Warrant shall have or exercise any rights by virtue hereof as a holder of Common Stock of the Company, including, without limitation, the right to vote, to receive dividends and other distributions as a holder of Common Stock or to receive notice of, or attend, meetings or any other proceedings of the holders of Common Stock.

(b)    The consent of any Holder of a Warrant Certificate shall not be required with respect to any action or proceeding of the Company.

(c)    Except as provided in Section 4, no Holder of a Warrant Certificate, by reason of the ownership or possession of a Warrant or the Warrant Certificate representing the same, shall have any right to receive any cash dividends, stock dividends, allotments or rights or other distributions paid, allotted or distributed or distributable to the holders of Common Stock prior to, or for which the relevant record date preceded, the date of the exercise of such Warrant.

(d)    No Holder of a Warrant Certificate shall have any right not expressly conferred hereunder or under, or by applicable law with respect to, the Warrant Certificate held by such Holder.

9.2    Rights of Action. All rights of action against the Company in respect of this Agreement, except rights of action vested in the Warrant Agent, are vested in the Holders of the Warrant Certificates, and any Holder of any Warrant Certificate, without the consent of the Warrant Agent or the Holder of any other Warrant Certificate, may, in such Holder’s own behalf and for such Holder’s own benefit, enforce and may institute and maintain any suit, action or proceeding against the Company suitable to enforce, or otherwise in respect of, such Holder’s right to exercise such Holder’s Warrants in the manner provided in this Agreement.

9.3    Treatment of Holders of Warrant Certificates. Every Holder, by virtue of accepting a Warrant Certificate, consents and agrees with the Company, with the Warrant Agent and with every subsequent holder of such Warrant Certificate that, prior to due presentment of such Warrant Certificate for registration of transfer, the Company and the Warrant Agent may treat the Person in whose name the Warrant Certificate is registered as the owner thereof for all purposes and as the Person entitled to exercise the rights granted under the Warrants, and neither the Company, the Warrant Agent nor any agent thereof shall be affected by any notice to the contrary.

 

10.

Concerning the Warrant Agent. Sections 10.1, 10.2, 10.3, 10.4, 10.5, 10.6 and 10.8 shall survive the expiration of the Warrants and the termination of this Agreement and the resignation, replacement or removal of the Warrant Agent.

10.1    Rights and Duties of the Warrant Agent.

(a)    The Company hereby appoints the Warrant Agent to act as agent of the Company as set forth in this Agreement. The Warrant Agent hereby accepts the appointment as agent of the Company and agrees to perform that agency upon the express

 

22


terms and conditions set forth in this Agreement and in the Warrant Certificates or as the Company and the Warrant Agent may hereafter agree in writing, by all of which the Company and the Holders of Warrant Certificates, by their acceptance thereof, shall be bound; provided, however, that the terms and conditions contained in the Warrant Certificates are subject to and governed by this Agreement or any other terms and conditions hereafter agreed to by the Company and the Warrant Agent in writing.

(b)     The Warrant Agent shall not, by countersigning Warrant Certificates or by any other act hereunder, be deemed to make any representations as to validity or authorization of (i) the Warrants or the Warrant Certificates (except as to its countersignature thereon), (ii) any securities or other property delivered upon exercise of any Warrant, (iii) the accuracy of the computation of the number or kind or amount of stock or other securities or other property deliverable upon exercise of any Warrant, (iv) the correctness of any of the representations of the Company made in such certificates that the Warrant Agent receives; or (v) any of the statements of act or recitals contained in this Agreement. The Warrant Agent shall not at any time have any duty to calculate or determine whether any facts exist that may require any adjustments pursuant to Section 5 hereof with respect to the kind and amount of shares or other securities or any property issuable to Holders upon the exercise of Warrants required from time to time. The Warrant Agent shall have no duty or responsibility to determine the accuracy or correctness of such calculation or with respect to the methods employed in making the same. The Warrant Agent shall not be accountable with respect to the validity or value (or the kind or amount) of any shares of Common Stock or of any securities or property which may at any time be issued or delivered upon the exercise of any Warrant or upon any adjustment pursuant to Section 5 hereof, and it makes no representation with respect thereto. The Warrant Agent shall not be responsible for any failure of the Company to make any cash payment or to issue, transfer or deliver any shares of Common Stock or stock certificates or other securities or property upon the surrender of any Warrant Certificate for the purpose of exercise or upon any adjustment pursuant to Section 5 hereof or to comply with any of the covenants of the Company contained in Section 5 hereof.

(c)     The Warrant Agent shall not be liable for or by reason of any of the statements of fact or recitals contained in this Agreement or in the Warrant Certificates (except its countersignature thereof) or be required to verify the same, and all such statements and recitals are and shall be deemed to have been made by the Company only.

(d)    The Warrant Agent shall not have any duty or responsibility in the case of the receipt of any written demand from any holder of Warrants with respect to any action or default by the Company, including, without limiting the generality of the foregoing, any duty or responsibility to initiate or attempt to initiate any proceedings at law or otherwise or to make any demand upon the Company.

(e)    The Warrant Agent may execute and exercise any of the rights or powers hereby vested in it or perform any duty hereunder either itself or by or through its attorney or agents, and the Warrant Agent shall not be answerable or accountable for any act, default, neglect or misconduct of any such attorney or agents or for any loss to the Company resulting from any such act, default, neglect or misconduct, absent gross negligence, willful misconduct, fraud or bad faith (each as determined by a final judgment of a court of competent jurisdiction) in the selection and continued employment thereof.

 

23


(f)    The Warrant Agent may rely on and shall be held harmless and protected and shall incur no liability for or in respect of any action taken, suffered or omitted to be taken by it absent gross negligence, willful misconduct, fraud or bad faith (each as determined by a final judgment of a court of competent jurisdiction) in reliance upon any certificate, statement, instrument, opinion, notice, letter, facsimile transmission, telegram or other document, or any security delivered to it, and believed by it to be genuine and to have been made or signed by the proper party or parties, or upon any written or oral instructions or statements from the Company with respect to any matter relating to its acting as Warrant Agent hereunder.

(g)    The Warrant Agent shall not be obligated to expend or risk its own funds or to take any action that it believes would expose or subject it to expense or liability or to a risk of incurring expense or liability, unless it has been furnished with assurances of repayment or indemnity satisfactory to it.

(h)     The Warrant Agent shall not be liable or responsible for any failure of the Company to comply with any of its obligations relating to any registration statement filed with the Securities and Exchange Commission or this Agreement, including without limitation obligations under applicable regulation or law.

(i)    The Warrant Agent shall not be accountable or under any duty or responsibility for the use by the Company of any Warrants authenticated by the Warrant Agent and delivered by it to the Company pursuant to this Agreement or for the application by the Company of the proceeds of the issue and sale, or exercise, of the Warrants.

(j)    The Warrant Agent shall act hereunder solely as agent for the Company, and its duties shall be determined solely by the express provisions hereof (and no duties or obligations shall be inferred or implied). The Warrant Agent shall not assume any obligations or relationship of agency or trust with any of the owners or holders of the Warrants.

(k)    The Warrant Agent may rely on and be fully authorized and protected in acting or failing to act upon any guaranty of signature by an “eligible guarantor institution” that is a member or participant in the Securities Transfer Agents Medallion Program or other comparable “signature guarantee program” or insurance program in addition to, or in substitution for, the foregoing.

(l)    In the event the Warrant Agent believes any ambiguity or uncertainty exists hereunder or in any notice, instruction, direction, request or other communication, paper or document received by the Warrant Agent hereunder, the Warrant Agent, may, in its sole discretion, refrain from taking any action, and shall be fully protected and shall not be liable in any way to Company, the holder of any Warrant Certificate or any other person or entity for refraining from taking such action, unless the Warrant Agent receives written instructions signed by the Company which eliminates such ambiguity or uncertainty to the satisfaction of Warrant Agent.

(m)    Reliance on Company Statement. Whenever in the performance of its duties under this Agreement, the Warrant Agent shall deem it necessary or desirable that any fact

 

24


or matter be proved or established by the Company prior to taking or suffering any action hereunder, such fact or matter (unless other evidence in respect thereof be herein specifically prescribed) may be deemed to be conclusively proved and established by a statement signed by an Appropriate Officer and delivered to the Warrant Agent. The Warrant Agent may rely upon such statement, and will be indemnified and held harmless for such reliance, and shall not be held liable in connection with any delay in receiving such statement.

(n)    The Warrant Agent shall have no responsibility to the Company, any Holders of Warrants or any holders of shares of Common Stock for interest or earnings on any moneys held by the Warrant Agent pursuant to this Agreement.

(o)    The Warrant Agent shall not be required to take notice or be deemed to have notice of any event or condition hereunder, including any event or condition that may require action by the Warrant Agent, unless the Warrant Agent shall be specifically notified in writing of such event or condition by the Company, and all notices or other instruments required by this Agreement to be delivered to the Warrant Agent must, in order to be effective, be received by the Warrant Agent as specified in Section 11.1 hereof, and in the absence of such notice so delivered, the Warrant Agent may conclusively assume no such event or condition exists.

10.2    Limitation of Liability.

(a)    The Warrant Agent shall be liable hereunder only for its own gross negligence, willful misconduct, fraud or bad faith (each as determined by a final judgment of a court of competent jurisdiction). Notwithstanding anything contained herein to the contrary, the Warrant Agent’s aggregate liability during any term of this Agreement with respect to, arising from, or arising in connection with this Agreement, or from all services provided or omitted to be provided under this Agreement, whether in contract, or in tort, or otherwise, is limited to, and shall not exceed, the amounts paid hereunder by the Company to Warrant Agent as fees and charges, but not including reimbursable expenses, during the twelve (12) months immediately preceding the event for which recovery from Warrant Agent is being sought. Neither party to this Agreement shall be liable to the other party for any consequential, indirect, special or incidental damages under any provisions of this Agreement or for any consequential, indirect, punitive, special or incidental damages arising out of any act or failure to act hereunder even if that party has been advised of or has foreseen the possibility of such damages.

(b)    Exclusions. The Warrant Agent shall have no responsibility with respect to the validity of this Agreement or with respect to the validity or execution of any Warrant. The Warrant Agent shall not be responsible for any breach by the Company of any covenant or condition contained in this Agreement or in any Warrant. The Warrant Agent shall not be responsible to make any adjustments required under the provisions of Section 5 hereof or responsible for the manner, method, or amount of any such adjustment or the ascertaining of the existence of facts that would require any such adjustment; nor shall it by any act hereunder be deemed to make any representation or warranty as to the authorization or reservation of any shares of Common Stock to be issued pursuant to this Agreement or any Warrant or as to whether any shares of Common Stock shall, when issued, be valid and fully paid and non-assessable.

 

25


10.3    Indemnification.

(a)    The Company covenants and agrees to indemnify and to hold the Warrant Agent harmless against any costs, expenses (including reasonable and documented fees of its legal counsel), losses or damages, which may be paid, incurred or suffered by or to which it may become subject, arising from or out of, directly or indirectly, any claims or liability resulting from its actions as Warrant Agent pursuant hereto; provided, however, that such covenant and agreement does not extend to, and the Warrant Agent shall not be indemnified with respect to, such costs, expenses, losses and damages incurred or suffered by the Warrant Agent as a result of, or arising out of, its gross negligence, bad faith, or willful misconduct (each as determined by a final judgment of a court of competent jurisdiction). The costs and expenses incurred in enforcing this right of indemnification shall be paid by the Company.

(b)    Instructions. From time to time, the Company may provide the Warrant Agent with instructions, by Company Order or otherwise, concerning the services performed by the Warrant Agent hereunder. In addition, at any time the Warrant Agent may apply to any officer of Company for instruction, and may consult with legal counsel for the Warrant Agent or the Company with respect to any matter arising in connection with the services to be performed by the Warrant Agent under this Agreement. Warrant Agent and its agents and subcontractors shall not be liable and shall be indemnified by Company for any action taken, suffered or omitted to be taken by Warrant Agent in reliance upon any Company instructions or upon the advice or opinion of such counsel. Warrant Agent shall not be held to have notice of any change of authority of any person, until receipt of written notice thereof from Company.

10.4    Right to Consult Counsel. The Warrant Agent may at any time consult with legal counsel satisfactory to it (who may be legal counsel for the Company), and the Warrant Agent shall incur no liability or responsibility to the Company or to any Holder for any action taken, suffered or omitted by it absent gross negligence, willful misconduct, fraud or bad faith (each as determined by a final judgment of a court of competent jurisdiction) in accordance with the opinion or advice of such counsel.

10.5    Compensation and Reimbursement. The Company agrees to pay the Warrant from time to time compensation for all fees and expenses relating to its services hereunder as the Company and the Warrant Agent may agree in writing from time to time and to reimburse the Warrant Agent for all of its reasonable expenses and disbursements, including reasonable counsel fees and other disbursements incurred in connection with the preparation, delivery, negotiation, amendment, administration and execution of this Agreement and the exercise and performance of its duties hereunder.

10.6    Warrant Agent May Hold Company Securities. The Warrant Agent and any stockholder, director, officer or employee of the Warrant Agent may buy, sell or deal in any of the Warrants or other securities of the Company or become pecuniarily interested in any transaction in which the Company may be interested, or contract with or lend money to the Company or otherwise act as fully and freely as though it were not Warrant Agent under this Agreement. Nothing herein shall preclude the Warrant Agent from acting in any other capacity for the Company or for any other legal entity. Nothing herein shall preclude the Warrant Agent or any Countersigning Agent from acting in any other capacity for the Company or for any other legal entity.

 

26


10.7    Resignation and Removal; Appointment of Successor.

(a)    The Warrant Agent may resign its duties and be discharged from all further duties and liability hereunder (except liability arising as a result of the Warrant Agent’s own gross negligence, willful misconduct, fraud or bad faith (each as determined by a final judgment of a court of competent jurisdiction)) after giving 30 days’ prior written notice to the Company. The Company may remove the Warrant Agent upon 30 days’ written notice, and the Warrant Agent shall thereupon in like manner be discharged from all further duties and liabilities hereunder, except as aforesaid. The Warrant Agent shall, at the expense of the Company, cause notice to be given in accordance with Section 11.1(b) to the Company of said notice of resignation or notice of removal, as the case may be. Upon such resignation or removal, the Company shall appoint in writing a new Warrant Agent. If the Company shall fail to make such appointment within a period of 30 calendar days after it has been notified in writing of such resignation by the resigning Warrant Agent or after such removal, then the Holder of any Warrant Certificate may apply to any court of competent jurisdiction for the appointment of a new Warrant Agent. Any new Warrant Agent, whether appointed by the Company or by such a court, shall be a Person (other than a natural person) doing business under the laws of the United States or any state thereof in good standing, authorized under such laws to act as Warrant Agent, and having a combined capital and surplus (together with its Affiliates) of not less than $25,000,000. The combined capital and surplus of such new Warrant Agent shall be deemed to be the combined capital and surplus as set forth in the most recent annual report of its condition published by such Warrant Agent prior to its appointment; provided, however, 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 new Warrant Agent, it shall be vested with the same powers, rights, duties and responsibilities as if it had been originally named herein as the Warrant Agent, without any further assurance, conveyance, act or deed; but if for any reason it shall be reasonably necessary or expedient to execute and deliver any further assurance, conveyance, act or deed, the same shall be done at the reasonable expense of the Company and shall be legally and validly executed and delivered by the resigning or removed Warrant Agent. Not later than the effective date of any such appointment, the Company shall file notice thereof with the resigning or removed Warrant Agent. Failure to give any notice provided for in this Section 10.7(a), however, or any defect therein, shall not affect the legality or validity of the resignation of the Warrant Agent or the appointment of a new Warrant Agent as the case may be.

(b)    Any Person into which the Warrant Agent or any new Warrant Agent may be merged, or any Person resulting from any consolidation to which the Warrant Agent or any new Warrant Agent shall be a party, shall be a successor Warrant Agent under this Agreement without any further act; provided, however, that such Person would be eligible for appointment as successor to the Warrant Agent under the provisions of Section 10.7(a). Any such successor Warrant Agent shall promptly cause notice of its succession as Warrant Agent to be given in accordance with Section 11.1(b) to each Holder of a Warrant Certificate at such Holder’s last address as shown on the Warrant Register.

10.8    Appointment of Countersigning Agent.

(a)    The Warrant Agent may, but is not required to, appoint a Countersigning Agent or Agents which shall be authorized to act on behalf of the Warrant Agent to countersign

 

27


Warrant Certificates issued upon original issue and upon exchange, registration of transfer or pursuant to Section 6, and Warrant Certificates so countersigned shall be entitled to the benefits of this Agreement equally and proportionately with any and all other Warrant Certificates duly executed and delivered hereunder. Wherever reference is made in this Agreement to the countersignature and delivery of Warrant Certificates by the Warrant Agent or to Warrant Certificates countersigned by the Warrant Agent, such reference shall be deemed to include countersignature and delivery on behalf of the Warrant Agent by a Countersigning Agent and Warrant Certificates countersigned by a Countersigning Agent. Each Countersigning Agent shall be acceptable to the Company and shall at the time of appointment be a Person (other than a natural person) doing business under the laws of the United States or any state thereof in good standing, authorized under such laws to act as Countersigning Agent, and having a combined capital and surplus (together with its Affiliates) of not less than $25,000,000. The combined capital and surplus of such new Countersigning Agent shall be deemed to be the combined capital and surplus as set forth in the most recent annual report of its condition published by such Countersigning Agent prior to its appointment; provided, however, such reports are published at least annually pursuant to law or to the requirements of a federal or state supervising or examining authority.

(b)    Any Person into which a Countersigning Agent may be merged or any Person resulting from any consolidation to which such Countersigning Agent shall be a party, shall be a successor Countersigning Agent without any further act; provided, that, such Person would be eligible for appointment as a new Countersigning Agent under the provisions of Section 10.8(a), without the execution or filing of any paper or any further act on the part of the Warrant Agent or the Countersigning Agent. Any such successor Countersigning Agent shall promptly cause notice of its succession as Countersigning Agent to be given in accordance with Section 11.1(b) to each Holder of a Warrant Certificate at such Holder’s last address as shown on the Warrant Register.

(c)    A Countersigning Agent may resign at any time by giving 30 days’ prior written notice thereof to the Warrant Agent and to the Company. The Warrant Agent may at any time terminate the agency of a Countersigning Agent by giving 30 days’ prior written notice thereof to such Countersigning Agent and to the Company.

(d)    The Warrant Agent agrees to pay to each Countersigning Agent from time to time reasonable compensation for its services under this Section 10.8 and the Warrant Agent shall be entitled to be reimbursed for such payments, subject to the provisions of Section 10.5.

(e)    Any Countersigning Agent shall have the same rights and immunities as those of the Warrant Agent set forth in this Section 10 and in this Agreement.

 

28


11.

Notices.

11.1    Notices Generally.

(a)    Any request, notice, direction, authorization, consent, waiver, demand or other communication permitted or authorized by this Agreement to be made upon, given or furnished to or filed with the Company or the Warrant Agent by the other party hereto or by any Holder shall be sufficient for every purpose hereunder if in writing (including telecopy communication) and telecopied, sent via trackable or first-class mail or delivered by hand (including by courier service) as follows:

if to the Company, to:

Whiting Petroleum Corporation

1700 Lincoln, Suite 4700

Denver, Colorado 80203

Attention:        Chief Financial Officer

Attention:        General Counsel

if to the Warrant Agent, to:

Computershare Inc.

Computershare Trust Company, N.A.

150 Royall Street

Canton, MA 02021

Facsimile:        (781) 575-2549

Attention:         Corporate Actions

with a copy which shall not constitute notice to:

Computershare Inc.

Computershare Trust Company, N.A.

150 Royall Street

Canton, MA 02021

Attention:         Legal Department

or, in either case, such other address as shall have been set forth in a notice delivered in accordance with this Section 11.1(a).

All such communications shall be effective when sent.

Any Person that telecopies any communication hereunder to any Person shall, on the same date as such telecopy is transmitted, also send, by trackable or first class mail, postage prepaid and addressed to such Person as specified above, an original copy of the communication so transmitted.

(b)    Where this Agreement provides for notice to Holders of any event, such notice shall be sufficiently given (unless otherwise herein expressly provided) if in writing and mailed, by trackable or first-class mail, to each Holder affected by such event, at the address of

 

29


such Holder as it appears in the Warrant Register. In any case where notice to Holders is given by mail, neither the failure to mail such notice, nor any defect in any notice so mailed, to any particular Holder shall affect the sufficiency of such notice with respect to other Holders. Where this Agreement provides for notice in any manner, such notice may be waived in writing by the Person entitled to receive such notice, either before or after the event, and such waiver shall be the equivalent of such notice.

In case by reason of the suspension of regular mail service or by reason of any other cause it shall be impracticable to give such notice by mail, then such notification as shall be made by a method approved by the Warrant Agent as one which would be most reliable under the circumstances for successfully delivering the notice to the addressees shall constitute a sufficient notification for every purpose hereunder.

Where this Agreement provides for notice of any event to a Holder of a Global Warrant Certificate, such notice shall be sufficiently given if given to the Depositary (or its designee), pursuant to its Applicable Procedures, not later than the latest date (if any), and not earlier than the earliest date (if any), prescribed for the giving of such notice.

11.2    Required Notices to Holders. In the event the Company shall:

(a)    take any action that would result in an adjustment to the Exercise Price and/or the number of shares of Common Stock issuable upon exercise of a Warrant pursuant to Section 5.1;

(b)    consummate any Winding Up; or

(c)    consummate any Transaction (each of (a), (b) or (c), an “Action”);

then, in each such case, the Company shall deliver to the Warrant Agent and, unless the Company has made a filing with the Commission, including pursuant to a Current Report on Form 8-K, which filing discloses such Action, the Company shall deliver (or cause to be delivered ) to each Holder of a Warrant Certificate, in accordance with Section 11.1(b) hereof, a written notice of such Action, including, in the case of an action pursuant to Section 11.2(a), the information required under Section 5.1(j)(ii). Such notice shall be given promptly after taking such Action.

If at any time the Company shall cancel any of the Actions for which notice has been given under this Section 11.2 prior to the consummation thereof, the Company shall give each Holder prompt notice of such cancellation in accordance with Section 11.1(b), unless the Company has made a filing with the Commission, including pursuant to a current report on Form 8-K, which filing discloses the cancellation of such Actions. For the avoidance of doubt, if at any time the Company shall cancel any of the Actions for which notice has been given under this Section 11.2 prior to the consummation thereof, the Company shall give Warrant Agent prompt notice of such cancellation in accordance with Section 11.1(b).

 

12.

Inspection.

The Warrant Agent shall cause a copy of this Agreement to be available at all reasonable times at the office of the Warrant Agent for inspection by any Holder of any Warrant Certificate. The Warrant Agent may require any such Holder to submit its Warrant Certificate for inspection by the Warrant Agent.

 

30


13.

Amendments.

(a)    This Agreement may be amended by the Company and the Warrant Agent with the consent of the Required Warrant Holders.

(b)    Notwithstanding the foregoing, the Company and the Warrant Agent may, without the consent or concurrence of the Holders of the Warrant Certificates, by supplemental agreement or otherwise, amend this Agreement for the purpose of making any changes or corrections in this Agreement that (i) are required to cure any ambiguity or to correct or supplement any defective or inconsistent provision or clerical omission or mistake or manifest error herein contained or (ii) add to the covenants and agreements of the Company in this Agreement further covenants and agreements of the Company thereafter to be observed, or surrender any rights or powers reserved to or conferred upon the Company in this Agreement; provided, however, that in either case such amendment shall not adversely affect the rights or interests of the Holders of the Warrant Certificates hereunder in any material respect.

(c)    The consent of each Holder of any Warrant Certificate evidencing any warrants affected thereby shall be required for any supplement or amendment to this Agreement or the Warrants that would: (i) increase the Exercise Price or decrease the number of shares of Common Stock receivable upon exercise of Warrants, in each case other than as provided in Section 5.1; (ii) cause the Expiration Date to be changed to an earlier date; or (iii) modify the provisions contained in Section 5.1 in a manner adverse to the Holders of Warrant Certificates generally with respect to their Warrants.

(d)    The Warrant Agent shall join with the Company in the execution and delivery of any such amendment unless such amendment affects the Warrant Agent’s own rights, duties or immunities hereunder, in which case the Warrant Agent may, but shall not be required to, join in such execution and delivery; provided, that, as a condition precedent to the Warrant Agent’s execution of any amendment to this Agreement, the Company shall deliver to the Warrant Agent a certificate from an Appropriate Officer that states that the proposed amendment is in compliance with the terms of this Section 13. Upon execution and delivery of any amendment pursuant to this Section 13, such amendment shall be considered a part of this Agreement for all purposes and every Holder of a Warrant Certificate theretofore or thereafter countersigned and delivered hereunder shall be bound thereby.

(e)    Promptly after the execution by the Company and the Warrant Agent of any such amendment, unless the Company has made a filing with the Commission, including pursuant to a current report on Form 8-K, which filing discloses such adjustment, the Company shall give notice to the Holders of Warrant Certificates, setting forth in general terms the substance of such amendment, in accordance with the provisions of Section 11.1(b). Any failure of the Company to mail such notice or any defect therein, shall not, however, in any way impair or affect the validity of any such amendment.

 

31


14.

Waivers.

The Company may take any action herein prohibited, or omit to perform any act herein required to be performed by it, only if the Company has obtained the written consent of the Required Warrant Holders, as required pursuant to Section 13.

 

15.

Successor to Company.

So long as Warrants remain outstanding, the Company will not enter into any Transaction unless the acquirer (a “Successor Company”) shall expressly assume by a supplemental agreement, executed and delivered to the Warrant Agent, in form reasonably satisfactory to the Warrant Agent, the due and punctual performance of every covenant of this Agreement on the part of the Company to be performed and observed and shall have provided for exercise rights in accordance with Section 5.1(f)(i). Upon the consummation of such Transaction, the acquirer shall succeed to, and be substituted for, and may exercise every right and power of, the Company under this Agreement with the same effect as if such acquirer had been named as the Company herein.

 

16.

Headings.

The section headings contained in this Agreement are inserted for convenience only and will not affect in any way the meaning or interpretation of this Agreement.

 

17.

Counterparts.

This Agreement may be executed in two or more counterparts, each of which will be deemed to be an original, but all of which together constitute one and the same instrument. A signature to this Agreement transmitted electronically shall have the same authority, effect and enforceability as an original signature.

 

18.

Severability.

The provisions of this Agreement will be deemed severable and the invalidity or unenforceability of any provision hereof will not affect the validity or enforceability of the other provisions hereof; provided, that, if any provision of this Agreement, as applied to any party or to any circumstance, is adjudged by a court or governmental body not to be enforceable in accordance with its terms, the parties agree that the court or governmental body making such determination will have the power to modify the provision in a manner consistent with its objectives such that it is enforceable, and/or to delete specific words or phrases, and in its reduced form, such provision will then be enforceable and will be enforced; further, provided, that, if such excluded provision shall affect the rights, immunities, liabilities, duties or obligations of the Warrant Agent, the Warrant Agent shall be entitled to resign immediately upon written notice to the Company.

 

19.

No Redemption.

The Warrants shall not be subject to redemption by the Company or any other Person; provided, that, the Warrants may be acquired by means other than a redemption, whether by tender offer, open market purchases, negotiated transactions or otherwise, in accordance with applicable securities laws, so long as such acquisition does not otherwise violate the terms of this Agreement.

 

32


20.

Persons Benefiting.

This Agreement shall be binding upon and inure to the benefit of the Company, the Warrant Agent and the Holders from time to time. Nothing in this Agreement, express or implied, is intended to confer upon any person other than the Company, the Warrant Agent and the Holders any rights or remedies under or by reason of this Agreement or any part hereof, and all covenants, conditions, stipulations, promises and agreements contained in this Agreement shall be for the sole and exclusive benefit of the parties hereto and of the Holders. Each Holder, by acceptance of a Warrant Certificate, agrees to all of the terms and provisions of this Agreement applicable thereto.

 

21.

Applicable Law.

THIS AGREEMENT, EACH WARRANT CERTIFICATE ISSUED HEREUNDER, EACH WARRANT EVIDENCED THEREBY AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HERETO AND THERETO, INCLUDING THE INTERPRETATION, CONSTRUCTION, VALIDITY AND ENFORCEABILITY THEREOF, SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REFERENCE TO ANY RULES OR PRINCIPLES THAT WOULD REQUIRE THE APPLICATION OF THE LAWS OF ANY OTHER JURISDICTION.

 

22.

Entire Agreement.

This Agreement sets forth the entire agreement of the parties hereto as to the subject matter hereof and supersedes all previous agreements among all or some of the parties hereto with respect thereto, whether written, oral or otherwise.

 

23.

Force Majeure.

Notwithstanding anything to the contrary contained herein, the Warrant Agent will not be liable for any delays or failures in performance resulting from acts beyond its reasonable control including, without limitation, acts of God, terrorist acts, shortage of supply, disruptions in public utilities, interruptions or malfunction of computer facilities, or loss of data due to power failures or mechanical difficulties with information storage or retrieval systems, labor difficulties, war, pandemics, epidemics or civil unrest.

 

24.

Further Assurances.

The Company shall perform, acknowledge and deliver or cause to be performed, acknowledged and delivered all such further and other acts, documents, instruments and assurances as may be reasonably required by the Warrant Agent for the carrying out or performing by the Warrant Agent of the provisions of this Agreement.

 

25.

Confidentiality.

The Warrant Agent and the Company agree that all books, records, information and data pertaining to the business of the other party, including inter alia, personal, non-public warrant holder information, which are exchanged or received pursuant to the negotiation or the carrying

 

33


out of this Agreement including the fees for services set forth in the attached schedule shall remain confidential, and shall not be voluntarily disclosed to any other person, except as may be required by law, including, without limitation, pursuant to subpoenas from state or federal government authorities (e.g., in divorce and criminal actions) or to such party’s advisors (including its attorneys). However, each party may disclose relevant aspects of the other party’s confidential information to its officers, affiliates, agents, subcontractors and employees to the extent reasonably necessary to perform its duties and obligations under this Agreement and such disclosure is not prohibited by applicable law.

[Remainder of Page Intentionally Left Blank]

 

34


IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered as of the day and year first above written.

 

WHITING PETROLEUM CORPORATION, a Delaware corporation
By:  

/s/ Bruce DeBoer

  Name:   Bruce DeBoer
  Title:   Chief Administrative Officer, General Counsel & Secretary

COMPUTERSHARE TRUST COMPANY, N.A. and COMPUTERSHARE INC.

On behalf of both entities

By:  

/s/ Collin Ekeogu

  Name:   Collin Ekeogu
  Title:   Manager, Corporate Actions

 

[Signature Page to Warrant Agreement]


EXHIBIT A

[FACE OF SERIES A WARRANT CERTIFICATE]1

WHITING PETROLEUM CORPORATION

WARRANT CERTIFICATE

EVIDENCING

SERIES A WARRANTS TO PURCHASE COMMON STOCK

[FACE]

 

No. [                    ]    CUSIP No. 966387110

[UNLESS THIS GLOBAL SERIES A WARRANT CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (“DTC”), TO WHITING PETROLEUM CORPORATION (THE “COMPANY”), THE CUSTODIAN OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

TRANSFER OF THIS GLOBAL SERIES A WARRANT CERTIFICATE SHALL BE LIMITED TO TRANSFERS IN WHOLE, AND NOT IN PART, TO THE COMPANY, DTC, THEIR SUCCESSORS AND THEIR RESPECTIVE NOMINEES.]2

 

 

1 

To be removed in the versions of the Definitive Warrant Certificates printed in multiple copies for use by the Warrant Agent in preparing Definitive Warrants Certificates for issuance and delivery from time to time to holders.

2 

Include only on Global Warrant Certificate.


WHITING PETROLEUM CORPORATION

 

No. [                    ]  

[        ,    ,        ] Warrants

CUSIP No. 966387110

THIS CERTIFIES THAT, for value received, [                    ], or registered assigns, is the registered owner of the number of Warrants to purchase Common Stock of Whiting Petroleum Corporation, a Delaware corporation (the “Company”, which term includes any successor thereto under the Warrant Agreement (as may be supplemented, amended or amended and restated pursuant to the applicable provisions hereof, the “Warrant Agreement”), dated as of September 1, 2020, between the Company, Computershare Inc., a Delaware corporation (“Computershare”), and its wholly-owned subsidiary Computershare Trust Company, N.A., a federally chartered trust company (collectively, the “Warrant Agent”, which term includes any successor thereto permitted under the Warrant Agreement)) specified above [or such lesser number as may from time to time be endorsed on the “Schedule of Decreases in Warrants” attached hereto]3, and is entitled, subject to and upon compliance with the provisions hereof and of the Warrant Agreement, at such Holder’s option, at any time when the Warrants evidenced hereby are exercisable, to purchase from the Company one share of Common Stock of the Company for each Warrant evidenced hereby, at the purchase price of $73.44 per share (as adjusted from time to time, the “Exercise Price”), payable in full at the time of purchase, the number of shares of Common Stock into which and the Exercise Price at which each Warrant shall be exercisable each being subject to adjustment as provided in Section 5 of the Warrant Agreement.

All shares of Common Stock issuable by the Company upon the exercise of Warrants shall, upon such issuance, be duly and validly issued and fully paid and nonassessable. The Company shall pay any and all taxes (other than income taxes) that may be payable in respect of the issue or delivery of shares of Common Stock on exercise of Warrants. The Company or Warrant Agent shall not be required, however, to pay any tax or other charge imposed in respect of any transfer involved in the issue and delivery of shares of Common Stock in book-entry form or any certificates for shares of Common Stock or payment of cash or other property to any Recipient other than the Holder of the Warrant Certificate evidencing the exercised Warrant, and in case of such transfer or payment, the Warrant Agent and the Company shall not be required to issue or deliver any shares of Common Stock in book-entry form or any certificate or pay any cash until (a) such tax or charge has been paid or an amount sufficient for the payment thereof has been delivered to the Warrant Agent or to the Company, (b) it has been established to the Company’s or Warrant Agent’s satisfaction that any such tax or other charge that is or may become due has been paid or (c) the receipt of any other such information as set forth in the Warrant Agreement.

Each Warrant evidenced hereby may be exercised by the Holder hereof at the Exercise Price then in effect on any Business Day from and after the Original Issue Date until 5:00 p.m., New York time, on the Expiration Date in the Warrant Agreement.

 

 

3 

Include only on Global Warrant Certificate.

 

A-2


Subject to the provisions hereof and of the Warrant Agreement, the Holder of this Warrant Certificate may exercise all or any whole number of the Warrants evidenced hereby by, in the case of a Global Warrant Certificate, by delivery to the Warrant Agent of the Exercise Form on the reverse hereof, setting forth the number of Warrants being exercised and otherwise properly completed and duly executed by the Holder thereof to the Warrant Agent, and delivering such Warrants by book-entry transfer through the facilities of the Depositary, to the Warrant Agent in accordance with the Applicable Procedures and otherwise complying with Applicable Procedures in respect of the exercise of such Warrants or, in the case of a Definitive Warrant Certificate, by delivery to the Warrant Agent of the Exercise Form on the reverse hereof, setting forth the number of Warrants being exercised and otherwise properly completed and duly executed by the Holder thereof to the Warrant Agent, and surrendering this Warrant Certificate to the Warrant Agent at its office maintained for such purpose (the “Corporate Agency Office”).

Reference is hereby made to the further provisions of this Warrant Certificate set forth on the reverse hereof, which further provisions shall for all purposes have the same effect as if set forth at this place.

Unless this Warrant Certificate has been countersigned by the Warrant Agent by manual or facsimile signature of an authorized officer on behalf of the Warrant Agent, this Warrant Certificate shall not be valid for any purpose and no Warrant evidenced hereby shall be exercisable.

IN WITNESS WHEREOF, the Company has caused this certificate to be duly executed under its corporate seal.

Dated: [                 ], 20[    ]

 

    WHITING PETROLEUM CORPORATION
[SEAL]     By:  

 

      [Title]
ATTEST:      
Countersigned:      

Computershare Inc. and Computershare

Trust Company, N.A., jointly as Warrant

Agent

    [                    ]
    OR    
By:  

 

    By:  

 

  Authorized Agent       as Countersigning Agent
      By:  

 

        Authorized Officer

 

A-3


Reverse of Series A Warrant Certificate

WHITING PETROLEUM CORPORATION

SERIES A WARRANT CERTIFICATE

EVIDENCING

SERIES A WARRANTS TO PURCHASE COMMON STOCK

The Warrants evidenced hereby are one of a duly authorized issue of Warrants of the Company designated as its Series A Warrants to Purchase Common Stock (“Warrants”), limited in aggregate number to 4,837,821 issued under and in accordance with the Warrant Agreement, dated as of September 1, 2020 (the “Warrant Agreement”), between the Company, Computershare Inc., a Delaware corporation (“Computershare”), and its wholly-owned subsidiary Computershare Trust Company, N.A., a federally chartered trust company (collectively, the “Warrant Agent”, which term includes any successor thereto permitted under the Warrant Agreement), to which the Warrant Agreement and all amendments thereto reference is hereby made for a statement of the respective rights, limitations of rights, duties and immunities thereunder of the Company, the Warrant Agent, the Holders of Warrant Certificates and the owners of the Warrants evidenced thereby and of the terms upon which the Warrant Certificates are, and are to be, countersigned and delivered. A copy of the Warrant Agreement shall be available at all reasonable times at the office of the Warrant Agent for inspection by the Holder hereof.

The Warrant Agreement provides that, in addition to certain adjustments to the number of shares of Common Stock into which a Warrant is exercisable and the Exercise Price required to be made in certain circumstances, in the case of any Transaction the Company shall cause the other Person involved in such Transaction to execute and deliver to the Warrant Agent a written instrument providing that (i) the Warrants evidenced hereby, if then outstanding, will be exercisable thereafter, during the period the Warrants evidenced hereby shall be exercisable as specified herein, only into the Substituted Securities that would have been receivable upon such Transaction by a holder of the number of shares of Common Stock that would have been issued upon exercise of such Warrant if such Warrant had been exercised in full immediately prior to such Transaction (upon certain assumptions specified in the Warrant Agreement); and (ii) the rights and obligations of the other Person involved in such Transaction and the holders in respect of Substituted Securities shall be substantially unchanged to be as nearly equivalent as may be practicable to the rights and obligations of the Company and Holders in respect of Common Stock.

Except as provided in the Warrant Agreement, all outstanding Warrants shall expire and all rights of the Holders of Warrant Certificates evidencing such Warrants shall automatically terminate and cease to exist, as of 5:00 p.m., New York time, on the Expiration Date. The “Expiration Date” shall mean the earlier to occur of (x) September 1, 2024 (the fourth (4th) anniversary of the Original Issue Date) or, if not a Business Day, then the next Business Day thereafter; (y) the date of consummation of a Transaction to which clause (ii) of Section 5.1(f) of the Warrant Agreement applies; and (z) a Winding Up.

In the event of the exercise of less than all of the Warrants evidenced hereby, a new Warrant Certificate of the same tenor and for the number of Warrants which are not exercised shall be issued by the Company in the name or upon the written order of the Holder of this Warrant Certificate upon the cancellation hereof.

 

A-4


The Warrant Certificates are issuable only in registered form in denominations of whole numbers of Warrants. Upon surrender at the office of the Warrant Agent and payment of the charges specified herein and in the Warrant Agreement, this Warrant Certificate may be exchanged for Warrant Certificates in other authorized denominations or the transfer hereof may be registered in whole or in part in authorized denominations to one or more designated transferees; provided, however, that such other Warrant Certificates issued upon exchange or registration of transfer shall evidence the same aggregate number of Warrants as this Warrant Certificate. The Company shall cause to be kept at the office or offices of the Warrant Agent the Warrant Register in which, subject to such reasonable regulations as the Warrant Agent may prescribe and such regulations as may be prescribed by law, the Company shall provide for the registration of Warrant Certificates and of transfers or exchanges of Warrant Certificates. No service charge shall be made for any registration of transfer or exchange of Warrant Certificates; provided, however, the Company may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any registration of transfer or exchange of Warrant Certificates.

Prior to due presentment of this Warrant Certificate for registration of transfer, the Company, the Warrant Agent and any agent of the Company or the Warrant Agent may treat the Person in whose name this Warrant Certificate is registered as the owner hereof for all purposes, and neither the Company, the Warrant Agent nor any such agent shall be affected by notice to the contrary.

The Warrant Agreement permits, with certain exceptions as therein provided, the amendment thereof and the modification of the rights and obligations of the Company and the rights of the Holders of Warrant Certificates under the Warrant Agreement at any time by the Company and the Warrant Agent with the consent of the Required Warrant Holders.

Until the exercise of any Warrant, subject to the provisions of the Warrant Agreement and except as may be specifically provided for in the Warrant Agreement, (i) no Holder of a Warrant Certificate evidencing any Warrant shall have or exercise any rights by virtue hereof as a holder of Common Stock of the Company, including, without limitation, the right to vote, to receive dividends and other distributions or to receive notice of, or attend meetings of, stockholders or any other proceedings of the Company; (ii) the consent of any such Holder shall not be required with respect to any action or proceeding of the Company; (iii) except as provided with respect to a Winding Up of the Company, no such Holder, by reason of the ownership or possession of a Warrant or the Warrant Certificate representing the same, shall have any right to receive any cash dividends, stock dividends, allotments or rights or other distributions (except as specifically provided in the Warrant Agreement), paid, allotted or distributed or distributable to the stockholders of the Company prior to or for which the relevant record date preceded the date of the exercise of such Warrant; and (iv) no such Holder shall have any right not expressly conferred by the Warrant or Warrant Certificate held by such Holder.

This Warrant Certificate, each Warrant evidenced thereby and the Warrant Agreement shall be governed by and construed in accordance with the laws of the State of New York.

 

A-5


All terms used in this Warrant Certificate which are defined in the Warrant Agreement shall have the meanings assigned to them in the Warrant Agreement. In the event of any conflict between this Warrant Certificate and the Warrant Agreement, the Warrant Agreement shall control.

 

A-6


Exercise Form for Series A Warrant Certificate

Computershare Trust Company, N.A.

250 Royall Street

Canton, MA 02021

Attention: Corporate Actions

Re: Whiting Petroleum Corporation Warrant Agreement, dated as of September 1, 2020

In accordance with and subject to the terms and conditions hereof and of the Warrant Agreement, the undersigned registered Holder of this Warrant Certificate hereby irrevocably elects to exercise                      Warrants evidenced by this Warrant Certificate.

The undersigned requests that the shares of Common Stock issuable upon exercise be in fully registered form in such denominations and registered in such names and delivered, together with any other property receivable upon exercise, in such manner as is specified in the instructions set forth below.

If the number of Warrants exercised is less than all of the Warrants evidenced hereby, (i) if this Warrant Certificate is a Global Warrant Certificate, the Warrant Agent shall endorse the “Schedule of Decreases in Warrants” attached hereto to reflect the Warrants being exercised or (ii) if this Warrant Certificate is a Definitive Warrant Certificate, the undersigned requests that a new Definitive Warrant Certificate representing the remaining Warrants evidenced hereby be issued and delivered to the undersigned unless otherwise specified in the instructions below.

 

A-7


Dated:                                                                                                      Name:  

 

 

    (Please Print)

(Insert Social Security or Other

Identifying Number of Holder)

    Address:  

 

   

 

   

 

    Signature
    (Signature must conform in all respects to name of Holder as specified on the face of this Warrant Certificate and must bear a signature guarantee by a bank, trust company or member firm of a U.S. national securities exchange.)

Signature Guaranteed:

Instructions (i) as to denominations and names of Common Stock issuable upon exercise and as to delivery of such securities and any other property issuable upon exercise and (ii) if applicable, as to Definitive Warrant Certificates evidencing unexercised Warrants:

Assignment

(Form of Assignment To Be Executed If Holder Desires To Transfer Warrant Certificate)

FOR VALUE RECEIVED                      hereby sells, assigns and transfers unto

Please insert social security or

other identifying number

(Please print name and address including zip code)

the Warrants represented by the within Warrant Certificate and does hereby irrevocably constitute and appoint                      Attorney, to transfer said Warrant Certificate on the books of the within-named Company with full power of substitution in the premises.

 

Dated:  

 

    Signature   

 

      (Signature must conform in all respects to name of Holder as specified on the face of this Warrant Certificate and must bear a signature guarantee by a bank, trust company or member firm of a U.S. national securities exchange.)

 

A-8


[SCHEDULE A

SCHEDULE OF DECREASES IN WARRANTS

The following decreases in the number of Warrants evidenced by this Global Warrant Certificate have been made:

 

Date

  

Amount of decrease in

number of Warrants

evidenced by this Global

Warrant Certificate

  

Number of Warrants

evidenced by this Global

Warrant Certificate

following such decrease

  

Signature of authorized
signatory]4

        
        
        
        
        
        

 

 

 

4

Include only on Global Warrant Certificate.

 

A-9

Exhibit 10.3

Execution Version

WARRANT AGREEMENT

between

WHITING PETROLEUM CORPORATION,

COMPUTERSHARE INC.

and

COMPUTERSHARE TRUST COMPANY, N.A.,

as Warrant Agent

Dated as of September 1, 2020

Series B Warrants to Purchase Common Stock


TABLE OF CONTENTS

 

              Page  

1.

 

Definitions

     1

2.

 

Warrant Certificates

     6
 

2.1

  

Original Issuance of Warrants

     6
 

2.2

  

Form of Warrant Certificates

     6
 

2.3

  

Execution and Delivery of Warrant Certificates

     6
 

2.4

  

Global Warrant Certificates

     7

3.

 

Exercise and Expiration of Warrants

     9
 

3.1

  

Right to Acquire Common Stock Upon Exercise

     9
 

3.2

  

Exercise and Expiration of Warrants

     9
 

3.3

  

Application of Funds upon Exercise of Warrants

     11
 

3.4

  

Payment of Taxes

     11
 

3.5

  

Cancellation of Warrant Certificates

     11
 

3.6

  

Shares Issuable

     12
 

3.7

  

Cashless Exercise

     12
 

3.8

  

Cost Basis Information

     12

4.

 

Dissolution, Liquidation or Winding up

     12

5.

 

Adjustments

     13
 

5.1

  

Adjustments

     13
 

5.2

  

Fractional Interest

     18
 

5.3

  

No Other Adjustments

     18

6.

 

Loss or Mutilation

     19

7.

 

Reservation and Authorization of Common Stock

     19

8.

 

Warrant Transfer Books

     20

9.

 

Warrant Holders

     22
 

9.1

  

No Voting or Dividend Rights

     22
 

9.2

  

Rights of Action

     22
 

9.3

  

Treatment of Holders of Warrant Certificates

     22

10.

 

Concerning the Warrant Agent

     22
 

10.1

  

Rights and Duties of the Warrant Agent

     22
 

10.2

  

Limitation of Liability

     25
 

10.3

  

Indemnification

     26
 

10.4

  

Right to Consult Counsel

     26
 

10.5

  

Compensation and Reimbursement

     26
 

10.6

  

Warrant Agent May Hold Company Securities

     26
 

10.7

  

Resignation and Removal; Appointment of Successor

     27
 

10.8

  

Appointment of Countersigning Agent

     27

11.

 

Notices

     29
 

11.1

  

Notices Generally

     29
 

11.2

  

Required Notices to Holders

     30

 

i


12.

 

Inspection

     30

13.

 

Amendments

     31

14.

 

Waivers

     32

15.

 

Successor to Company

     32

16.

 

Headings

     32

17.

 

Counterparts

     32

18.

 

Severability

     32

19.

 

No Redemption

     32

20.

 

Persons Benefiting

     33

21.

 

Applicable Law

     33

22.

 

Entire Agreement

     33

23.

 

Force Majeure

     33

24.

 

Further Assurances

     33

25.

 

Confidentiality

     33

 

EXHIBITS

Exhibit A

  

    Form of Series B Warrant Certificate

 

ii


WARRANT AGREEMENT

This Warrant Agreement (as may be supplemented, amended or amended and restated pursuant to the applicable provisions hereof, this “Agreement”), dated as of September 1, 2020, between Whiting Petroleum Corporation, a Delaware corporation (and any Successor Company (as defined below) that becomes successor to the Company in accordance with Section 15) (the “Company”), Computershare Inc., a Delaware corporation (“Computershare”) and its wholly-owned subsidiary Computershare Trust Company, N.A., a federally chartered trust company (collectively, including any successors of such Warrant Agent appointed in accordance with the terms hereof, the “Warrant Agent”). Capitalized terms that are used in this Agreement shall have the meanings set forth in Section 1 hereof.

WITNESSETH THAT:

WHEREAS, pursuant to the terms and conditions of the Joint Prepackaged Chapter 11 Plan of Reorganization for Whiting Petroleum Corporation and Its Debtor Affiliates, Docket No. 198 of Case No. 20-32021 (DRJ) (the “Plan”) relating to a reorganization under chapter 11 of title 11 of the United States Code (the “Bankruptcy Code”), the Company proposes to issue and deliver Warrants (as defined below) to purchase up to an aggregate of 2,418,910 shares of its Common Stock (as defined below), subject to adjustment as provided herein, and the Warrant Certificates (as defined below) evidencing such Warrants;

WHEREAS, each Warrant shall entitle the registered owner thereof to purchase one share of the Common Stock, subject to adjustment as provided herein;

WHEREAS, the Warrants and the shares of Common Stock issuable upon exercise of the Warrants are being issued in an offering in reliance on the exemption from the registration requirements of the Securities Act (as defined below) afforded by Section 1145 of the Bankruptcy Code, and of any applicable state securities or “blue sky” laws; and

WHEREAS, the Company desires that the Warrant Agent act on behalf of the Company, and the Warrant Agent is willing to so act, in connection with the issuance, exchange, transfer, substitution and exercise of Warrants.

NOW THEREFORE, in consideration of the mutual agreements herein contained, the Company and the Warrant Agent agree as follows:

 

1.

Definitions.

Action” has the meaning set forth in Section 11.2(c).

Adjustment Events” has the meaning set forth in Section 5.1.

Affiliate” of any specified Person, means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person. For the purposes of this definition, “control” when used with respect to any Person means the power to direct the management and policies of such specified Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise, and the terms “controlling” and “controlled” have meanings correlative to the foregoing.


Agent Members” has the meaning set forth in Section 2.4(b).

Agreement” has the meaning set forth in the preamble hereto.

Applicable Procedures” means, with respect to any transfer or exchange of, or exercise of any Warrants evidenced by, any Global Warrant Certificate, the rules and procedures of the Depositary that apply to such transfer, exchange or exercise.

Appropriate Officer” means (i) the Chief Executive Officer, President, Chief Operating Officer, Chief Financial Officer, Treasurer or Secretary or any Vice President of the Company or (ii) any other person designated as such by the Board of Directors from time to time.

Bankruptcy Code” has the meaning set forth in the recitals hereto.

Board of Directors” means either the board of directors of the Company or any duly authorized committee of that board.

Business Day” means each Monday, Tuesday, Wednesday, Thursday and Friday which is not a legal holiday in the State of New York or a day on which banking institutions and trust companies in the state in which the Corporate Agency Office is located are authorized or obligated by law, regulation or executive order to close.

Commission” means the Securities and Exchange Commission, or any other federal agency at the time administering the Securities Act or the Exchange Act, whichever is the relevant statute for the particular purpose.

Common Stock” means, subject to the provisions of Section 5.1(f), the common stock, par value $0.001 per share, of the Company.

Company” means the company identified in the preamble hereto.

Company Order” means a written request or order signed in the name of the Company by an Appropriate Officer and delivered to the Warrant Agent.

Computershare has the meaning set forth in the preamble hereto.

Constituent Person” has the meaning set forth in Section 5.1(f)(i)(A).

Corporate Agency Office” has the meaning set forth in Section 8.

Countersigning Agent” means any Person authorized by the Warrant Agent to act on behalf of the Warrant Agent to countersign Warrant Certificates.

 

2


Current Market Price” means on any date:

(i)    if the reference is to the per share price of Common Stock on any date herein specified and if on such date the Common Stock is listed or admitted to trading on any U.S. national securities exchange or traded and quoted in the over-the-counter market in the United States:

(A)    for the purpose of any computation under this Agreement (except under Section 5.2), the average of the Quoted Prices for the 30 consecutive Trading Days ending on such date or, if such date is not a Trading Day, on the next preceding Trading Day; or

(B)    for the purposes of any computation under Section 5.2, the Quoted Price for such date or, if such date is not a Trading Day, for the next preceding Trading Day; or

(ii)    if the reference is to the per share price of Common Stock on any date herein specified and if on such date the Common Stock is not listed or admitted to trading on any U.S. national securities exchange or traded and quoted in the over-the-counter market in the United States, the amount which a willing buyer would pay a willing seller in an arm’s length transaction on such date (neither being under any compulsion to buy or sell) for one share of the Common Stock as determined as of such date by the Treasurer or Chief Financial Officer of the Company in good faith, whose determination shall be final and conclusive and evidenced by a certificate of such officer delivered to the Warrant Agent.

For the avoidance of doubt, no appraisal of any Person or third-party (other than the Treasurer or Chief Financial Officer of the Company as further described in clause (ii)) above shall be permitted or required to determine the Current Market Price.

Definitive Warrant Certificate” means a Warrant Certificate registered in the name of the Holder thereof that does not bear the Global Warrant Legend and that does not have a “Schedule of Decreases in Warrants” attached thereto.

Depositary” means DTC and its successors as depositary hereunder.

DTC” means The Depository Trust Company.

Exchange Act” means the Securities Exchange Act of 1934 and any statute successor thereto, in each case, as amended from time to time.

Exercise Date” has the meaning set forth in Section 3.2(f).

Exercise Form” has the meaning set forth in Section 3.2(c).

Exercise Period” means the period from and including the Original Issue Date to and including the Expiration Date.

Exercise Price” means the exercise price per share of Common Stock, initially set at $83.45, subject to adjustment as provided in Section 5.1.

 

3


Expiration Date” means the earlier to occur of (i) the Scheduled Expiration Date and (ii) a Winding Up.

Funds” has the meaning set forth in Section 3.3.

Global Warrant Certificate” means a Warrant Certificate deposited with or on behalf of and registered in the name of the Depositary or its nominee, that bears the Global Warrant Legend and that has the “Schedule of Decreases in Warrants” attached thereto.

Global Warrant Legend” means the legend set forth in Section 2.4(a).

Holder” means any Person in whose name at the time any Warrant Certificate is registered upon the Warrant Register and, when used with respect to any Warrant Certificate, the Person in whose name such Warrant Certificate is registered in the Warrant Register.

Non-Surviving Transaction” has the meaning set forth in Section 5.1(f).

Original Issue Date” means September 1, 2020, the date on which Warrants are originally issued under this Agreement.

outstanding” when used with respect to any Warrants, means, as of the time of determination, all Warrants theretofore originally issued under this Agreement, as adjusted pursuant to Section 5.1, except (i) Warrants that have been exercised pursuant to Section 3.2(a), (ii) Warrants that have expired, terminated or become void pursuant to Section 3.2(b) or Section 4 and (iii) Warrants that have otherwise been acquired by the Company; provided, however, that in determining whether the Holders of the requisite amount of the outstanding Warrants have given any request, demand, authorization, direction, notice, consent or waiver under the provisions of this Agreement, Warrants held directly or beneficially by the Company or any Subsidiary of the Company or any of their respective employees shall be disregarded and deemed not to be outstanding.

Person” means any individual, corporation, limited liability company, partnership, joint venture, trust, association, joint-stock company, business trust or any other entity, unincorporated organization or government or any agency or political subdivision thereof.

Plan” has the meaning set forth in the recitals hereto.

Quoted Price” means, on any Trading Day, with respect to the Common Stock, the VWAP of the Common Stock on such Trading Day on the principal U.S. national securities exchange on which the Common Stock is listed or admitted to trading or, if the Common Stock is not listed or admitted to trading on any U.S. national securities exchange, the average of the closing bid and asked prices in the over-the-counter market in the United States as furnished by any New York Stock Exchange member firm that shall be selected from time to time by the Company for that purpose.

Recipient” has the meaning set forth in Section 3.2(e).

 

4


Required Warrant Holders” means Holders of Warrant Certificates evidencing a majority of the then-outstanding Warrants.

Scheduled Expiration Date” means September 1, 2025 (the fifth (5th) anniversary of the Original Issue Date) or, if not a Business Day, then the next Business Day thereafter.

Securities Act” means the Securities Act of 1933, as amended.

Subsidiary” means a Person more than 50% of the outstanding voting stock of which is owned, directly or indirectly, by the Company or by one or more other Subsidiaries, or by the Company and one or more other Subsidiaries. For purposes of this definition, “voting stock” means stock which ordinarily has voting power for the election of directors, whether at all times or only so long as no senior class of stock has such voting power by reason of any contingency.

Substituted Securities” has the meaning set forth in Section 5.1(f)(i)(A).

Successor Company” has the meaning set forth in Section 15.

Surviving Transaction” has the meaning set forth in Section 5.1(f).

Trading Day” means each Monday, Tuesday, Wednesday, Thursday and Friday, other than any day on which securities are not traded on the applicable securities exchange or in the applicable securities market.

Transaction” has the meaning set forth in Section 5.1(f).

VWAP” means the volume-weighted average price for trading hours of the regular trading session (including any extensions thereof), determined without regard to pre-open or after-hours trading or any other trading outside of the trading hours of the regular trading session (including any extensions thereof).

Warrant Agent” has the meaning set forth in the preamble hereto.

Warrant Certificates” means those certain warrant certificates evidencing the Warrants, substantially in the form set forth in Exhibit A attached hereto, which, for the avoidance of doubt, are either Global Warrant Certificates or Definitive Warrant Certificates.

Warrant Register” has the meaning set forth in Section 8.

Warrants” means those certain warrants to purchase initially up to an aggregate of 2,418,910 shares of Common Stock at the Exercise Price, subject to adjustment pursuant to Section 5, issued hereunder.

Winding Up” has the meaning set forth in Section 4.

 

5


2.

Warrant Certificates.

2.1    Original Issuance of Warrants.

(a)    On the Original Issue Date, one or more Global Warrant Certificates evidencing the Warrants shall be executed by the Company and delivered to the Warrant Agent for countersignature, and the Warrant Agent shall, upon receipt of a Company Order and at the direction of the Company set forth therein, countersign (by manual or facsimile signature) and deliver such Global Warrant Certificates for original issuance to the Depositary, or its custodian, for crediting to the accounts of its participants for the benefit of the holders of beneficial interests in the Warrants on the Original Issue Date pursuant to the Applicable Procedures of the Depositary on the Original Issue Date.

(b)    Except as set forth in Section 2.4, Section 3.2(d), Section 6 and Section 8, the Global Warrant Certificates delivered to the Depositary (or a nominee thereof) on the Original Issue Date shall be the only Warrant Certificates issued or outstanding under this Agreement.

(c)    Each Warrant Certificate shall evidence the number of Warrants specified therein, and each Warrant evidenced thereby shall represent the right, subject to the provisions contained herein and therein, to purchase one share of Common Stock, subject to adjustment as provided in Section 5.

2.2    Form of Warrant Certificates.

The Warrant Certificates evidencing the Warrants shall be in registered form only and substantially in the form set forth in Exhibit A hereto, shall be dated the date on which countersigned by the Warrant Agent, shall have such insertions as are appropriate or required or permitted by this Agreement and may have such letters, numbers or other marks of identification and such legends and endorsements typed, stamped, printed, lithographed or engraved thereon (which does not impact the Warrant Agent’s rights, duties or immunities) as the officers of the Company executing the same may approve (execution thereof to be conclusive evidence of such approval) and as are not inconsistent with the provisions of this Agreement, or as may be required to comply with any law or with any rule or regulation pursuant thereto or with any rule or regulation of any securities exchange on which the Warrants may be listed, or to conform to usage.

2.3    Execution and Delivery of Warrant Certificates.

(a)    Warrant Certificates evidencing the Warrants which may be countersigned and delivered under this Agreement are limited to Warrant Certificates evidencing 2,418,910 Warrants except for Warrant Certificates countersigned and delivered upon registration of transfer of, or in exchange for, or in lieu of, one or more previously countersigned Warrant Certificates pursuant to Section 2.4, Section 3.2(d), Section 6 and Section 8.

(b)    The Warrant Agent is hereby authorized to countersign (by manual or facsimile signature) and deliver Warrant Certificates as required by Section 2.1 or by Section 2.4, Section 3.2(d), Section 6 or Section 8.

(c)    The Warrant Certificates shall be executed in the corporate name and on behalf of the Company by the Chairman (or any Co-Chairman) of the Board of Directors, the Chief Executive Officer, the President or any one of the Vice Presidents of the Company under corporate seal reproduced thereon (if the Company has a corporate seal) and attested to by the Secretary or one of the Assistant Secretaries of the Company, either manually or by facsimile signature printed

 

6


thereon. The Warrant Certificates shall be countersigned, either by manual or facsimile signature, by the Warrant Agent and shall not be valid for any purpose unless so countersigned. In case any officer of the Company whose signature shall have been placed upon any of the Warrant Certificates shall cease to be such officer of the Company before countersignature by the Warrant Agent and issue and delivery thereof, such Warrant Certificates may, nevertheless, be countersigned by the Warrant Agent and issued and delivered with the same force and effect as though such person had not ceased to be such officer of the Company, and any Warrant Certificate may be signed on behalf of the Company by such person as, at the actual date of the execution of such Warrant Certificate, shall be a proper officer of the Company, although at the date of the execution of this Agreement any such person was not such officer.

2.4    Global Warrant Certificates.

(a)    Any Global Warrant Certificate 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 Certificate is registered in the name of the Depositary or its nominee, members of, or participants in, the Depositary (“Agent Members”) shall have no rights under this Agreement with respect to the Warrants evidenced by such Global Warrant Certificate held on their behalf by the Depositary or its custodian, and the Depositary may be treated by the Company, the Warrant Agent and any agent of the Company or the Warrant Agent as the absolute owner of such Warrants, and as the sole Holder of such Warrant Certificate, for all purposes. Accordingly, any such Agent Member’s beneficial interest in such Warrants will be shown only on, and the transfer of such interest shall be effected only through, records maintained by the Depositary or its nominee or its Agent Members, and neither the Company nor the Warrant Agent shall have any responsibility or liability with respect to such records maintained by the Depositary or its nominee or its Agent Members. Notwithstanding the foregoing, nothing herein shall prevent the Company, the Warrant Agent or any agent of the Company or the Warrant Agent from giving effect to any written certification, proxy or other authorization furnished by the Depositary or impair, as between the Depositary and its Agent Members, the operation of customary practices governing the exercise of the rights of a holder of any security.

(c)    Any holder of a beneficial interest in Warrants evidenced by a Global Warrant Certificate registered in the name of the Depositary or its nominee shall, by acceptance of such beneficial interest, agree that transfers of beneficial interests in the Warrants evidenced by such Global Warrant Certificate may be effected only through a book-entry system maintained by the Depositary as the Holder of such Global Warrant Certificate (or its agent), and that ownership of a beneficial interest in Warrants evidenced thereby shall be reflected solely in such book-entry form.

(d)    Transfers of a Global Warrant Certificate registered in the name of the Depositary or its nominee shall be limited to transfers in whole, and not in part, to the Depositary, its successors, and their respective nominees except as set forth in Section 2.4(e). Interests of beneficial owners in a Global Warrant Certificate registered in the name of the Depositary or its nominee shall be transferred in accordance with the Applicable Procedures of the Depositary.

 

7


(e)    A Global Warrant Certificate registered in the name of the Depositary or its nominee shall be exchanged for Definitive Warrant Certificates only if the Depositary (i) has notified the Company that it is unwilling or unable to continue as or ceases to be a clearing agency registered under Section 17A of the Exchange Act and (ii) a successor to the Depositary registered as a clearing agency under Section 17A of the Exchange Act is not able to be appointed by the Company within 90 days or the Depositary is at any time unwilling or unable to continue as Depositary and a successor to the Depositary is not able to be appointed by the Company within 90 days. In any such event, each Global Warrant Certificate registered in the name of the Depositary or its nominee shall be surrendered to the Warrant Agent for cancellation in accordance with Section 3.5, and the Company shall execute, and the Warrant Agent shall countersign and deliver, upon the Company’s instruction, to each beneficial owner identified by the Depositary, in exchange for such beneficial owner’s beneficial interest in such Global Warrant Certificate, Definitive Warrant Certificates evidencing, in the aggregate, the number of Warrants theretofore represented by such Global Warrant Certificate with respect to such beneficial owner’s respective beneficial interest. Any Definitive Warrant Certificate delivered in exchange for an interest in a Global Warrant Certificate pursuant to this Section 2.4(e) shall not bear the Global Warrant Legend. Interests in any Global Warrant Certificate may not be exchanged for Definitive Warrant Certificates other than as provided in this Section 2.4(e).

(f)    The holder of a Global Warrant Certificate registered in the name of the Depositary or its nominee may grant proxies and otherwise authorize any Person, including Agent Members and Persons that may hold interests through Agent Members, to take any action which a Holder of a Warrant Certificate is entitled to take under this Agreement or such Global Warrant Certificate.

(g)    Each Global Warrant Certificate will evidence such of the outstanding Warrants as will be specified therein and each shall provide that it evidences the aggregate number of outstanding Warrants from time to time endorsed thereon and that the aggregate number of outstanding Warrants evidenced thereby may from time to time be reduced, to reflect exercises or expirations. Any endorsement of a Global Warrant Certificate to reflect the amount of any decrease in the aggregate number of outstanding Warrants evidenced thereby will be made by the Warrant Agent (i) in the case of an exercise, in accordance with the Applicable Procedures as required by Section 3.2(c) or (ii) in the case of an expiration, in accordance with Section 3.2(b).

(h)    The Company initially appoints DTC to act as Depositary with respect to the Global Warrant Certificates.

(i)    Every Warrant Certificate authenticated and delivered in exchange for, or in lieu of, a Global Warrant Certificate or any portion thereof, pursuant to this Section 2.4 or Section 8 or Section 10, shall be authenticated and delivered in the form of, and shall be, a Global Warrant Certificate, and a Global Warrant Certificate may not be exchanged for a Definitive Warrant Certificate, in each case, other than as provided in Section 2.4(e). Whenever any provision herein refers to issuance by the Company and countersignature and delivery by the Warrant Agent of a new Warrant Certificate in exchange for the portion of a surrendered Warrant Certificate that has not been exercised, in lieu of the surrender of any Global Warrant Certificate and the issuance, countersignature and delivery of a new Global Warrant Certificate in exchange therefor, the Warrant Agent, on the Company’s instruction, may endorse such Global Warrant Certificate to reflect a reduction in the number of Warrants evidenced thereby in the amount of Warrants so evidenced that have been so exercised.

 

8


(j)    Beneficial interests in any Global Warrant Certificate may be transferred to Persons who take delivery thereof in the form of a beneficial interest in the same Global Warrant Certificate in accordance with the Applicable Procedures.

(k)    At such time as all Warrants evidenced by a particular Global Warrant Certificate have been exercised or expired, terminated or become void in whole and not in part, such Global Warrant Certificate shall, if not in custody of the Warrant Agent, be surrendered to or retained by the Warrant Agent for cancellation in accordance with Section 3.5.

 

3.

Exercise and Expiration of Warrants.

3.1    Right to Acquire Common Stock Upon Exercise. Each Warrant Certificate duly issued by the Company shall, when countersigned by the Warrant Agent, entitle the Holder thereof, subject to the provisions thereof and of this Agreement, to acquire from the Company, for each Warrant evidenced thereby, one share of Common Stock at the Exercise Price, subject to adjustment as provided in this Agreement. The Exercise Price, and the number of shares of Common Stock obtainable upon exercise of each Warrant, shall be adjusted from time to time as required by Section 5.1.

3.2    Exercise and Expiration of Warrants.

(a)    Exercise of Warrants. Subject to and upon compliance with the terms and conditions set forth herein, a Holder of a Warrant Certificate may exercise all or any whole number of the Warrants evidenced thereby, on any Business Day from and after the Original Issue Date until 5:00 p.m., New York time, on the Expiration Date, for the shares of Common Stock obtainable thereunder.

(b)    Expiration of Warrants. The Warrants, to the extent not exercised prior thereto, shall automatically expire, terminate and become void as of 5:00 p.m., New York time, on the Expiration Date. No further action of any Person (including by, or on behalf of, any Holder, the Company, or the Warrant Agent) shall be required to effectuate the expiration of Warrants pursuant to this Section 3.2(b).

(c)    Method of Exercise. In order for a Holder to exercise all or any of the Warrants represented by a Warrant Certificate, the Holder thereof must (i) (x) in the case of a Global Warrant Certificate, deliver to the Warrant Agent an exercise form for the election to exercise such Warrants substantially in the form set forth in Exhibit A hereto (an “Exercise Form”), setting forth the number of Warrants being exercised and otherwise properly completed and duly executed by the Holder thereof and deliver such Warrants by book-entry transfer through the facilities of the Depositary to the Warrant Agent in accordance with the Applicable Procedures and otherwise comply with the Applicable Procedures in respect of the exercise of such Warrants or (y) in the case of a Definitive Warrant Certificate, at the Corporate Agency Office, (I) deliver to the Warrant Agent an Exercise Form, setting forth the number of Warrants being exercised and otherwise properly completed and duly executed by the Holder thereof as well as any such other necessary information the Warrant Agent may reasonably require, and (II) surrender to the

 

9


Warrant Agent the Definitive Warrant Certificate evidencing such Warrants; and (ii) pay to the Warrant Agent an amount equal to all taxes required to be paid by the Holder, if any, pursuant to Section 3.4 prior to, or concurrently with, exercise of such Warrants by wire transfer in immediately available funds, to the account (No. 0000001-9249-3417; ABA No. 021000021; Reference: Whiting Petroleum Corporation; Attention: Chief Financial Officer) of the Company at the Warrant Agent or such other account as the Warrant Agent shall have given notice to the Company and such Holder in accordance with Section 11.1(b). For the avoidance of doubt, any exercise of any Warrant shall be “net share settled” pursuant to a cashless exercise as described in Section 3.7.

(d)    Partial Exercise. If fewer than all the Warrants represented by a Warrant Certificate are exercised, (i) in the case of exercise of Warrants evidenced by a Global Warrant Certificate, the Warrant Agent shall cause the custodian of DTC to endorse the “Schedule of Decreases in Warrants” attached to such Global Warrant Certificate to reflect the Warrants being exercised and (ii) in the case of exercise of Warrants evidenced by a Definitive Warrant Certificate, such Definitive Warrant Certificate shall be surrendered and a new Definitive Warrant Certificate of the same tenor and for the number of Warrants which were not exercised shall be executed by the Company. The Warrant Agent shall countersign the new Definitive Warrant Certificate, registered in such name or names, subject to the provisions of Section 8 regarding registration of transfer and payment of governmental charges in respect thereof, as may be directed in writing by the Holder, and shall deliver the new Definitive Warrant Certificate to the Person or Persons in whose name such new Definitive Warrant Certificate is so registered. The Company, whenever required by the Warrant Agent, will supply the Warrant Agent with Definitive Warrant Certificates duly executed on behalf of the Company for such purpose.

(e)    Issuance of Common Stock. Upon due exercise of Warrants evidenced by any Warrant Certificate in conformity with the foregoing provisions of Section 3.2(c), the Warrant Agent shall, when actions specified in Section 3.2(c)(i) have been effected and any payment specified in Section 3.2(c)(ii) is received, deliver to the Company the Exercise Form received pursuant to Section 3.2(c)(i), deliver or deposit any funds, in accordance with Section 3.3, received as instructed in writing by the Company and advise the Company by telephone at the end of such day of the amount of funds so deposited to its account. The Company shall thereupon, as promptly as practicable, and in any event within two (2) Business Days after the Exercise Date referred to below, (i) determine the number of shares of Common Stock issuable pursuant to exercise of such Warrants pursuant to Section 3.7 and (ii) (x) in the case of exercise of Warrants evidenced by a Global Warrant Certificate, deliver or cause to be delivered to the Recipient (as defined below) in accordance with the Applicable Procedures shares of Common Stock in book-entry form to be so held through the facilities of DTC in an amount equal to, or, if the Common Stock may not then be held in book-entry form through the facilities of DTC, duly executed certificates representing, or (y) in the case of exercise of Warrants evidenced by Definitive Warrant Certificates, execute or cause to be executed and deliver or cause to be delivered to the Recipient (as defined below) a certificate or certificates representing, in case of (x) and (y), the aggregate number of shares of Common Stock issuable upon such exercise (based upon the aggregate number of Warrants so exercised), as so determined, together with an amount in cash in lieu of any fractional share(s), if the Company so elects pursuant to Section 5.2. The shares of Common Stock in book-entry form or certificate or certificates representing shares of Common Stock so delivered shall be, to the extent possible, in such denomination or denominations as such Holder shall request in the

 

10


applicable Exercise Form and shall be registered or otherwise placed in the name of, and delivered to, the Holder or, subject to Section 3.4, such other Person as shall be designated by the Holder in such Exercise Form (the Holder or such other Person being referred to herein as the “Recipient”).

(f)    Time of Exercise. Each exercise of a Warrant shall be deemed to have been effected immediately prior to the close of business on the day on which each of the requirements for exercise of such Warrant specified in Section 3.2(c) has been duly satisfied (the “Exercise Date”). At such time, subject to Section 5.1(d)(iv), shares of Common Stock in book-entry form or the certificates for the shares of Common Stock issuable upon such exercise as provided in Section 3.2(e) shall be deemed to have been issued and, for all purposes of this Agreement, the Recipient shall, as between such Person and the Company, be deemed to be and entitled to all rights of the holder or record of such Common Stock.

3.3    Application of Funds upon Exercise of Warrants. All funds received by the Warrant Agent under this Agreement that are to be distributed or applied by the Warrant Agent in the performance of services (the “Funds”) shall be held by Computershare in its name as agent for the Company. Until paid pursuant to the terms of this Agreement, Computershare will hold the Funds through such accounts in: deposit accounts of commercial banks with Tier 1 capital exceeding $1 billion or with an average rating above investment grade by S&P (LT Local Issuer Credit Rating), Moody’s (Long Term Rating) and Fitch Ratings, Inc. (LT Issuer Default Rating) (each as reported by Bloomberg Finance L.P.). Computershare shall have no responsibility or liability for any diminution of the Funds that may result from any deposit made by Computershare in accordance with this paragraph, including any losses resulting from a default by any bank, financial institution or other third party. Computershare may from time to time receive interest, dividends or other earnings in connection with such deposits. Computershare shall not be obligated to pay such interest, dividends or earnings to the Company, any holder or any other party. The Warrant Agent shall forward funds received for Warrant exercises in a given month by the 5th Business Day of the following month by wire transfer to an account designated by the Company or as the Warrant Agent otherwise may be directed in writing by the Company.

3.4    Payment of Taxes. The Company shall pay any and all taxes (other than income taxes) that may be payable in respect of the issue or delivery of shares of Common Stock on exercise of Warrants pursuant hereto. The Company or the Warrant Agent shall not be required, however, to pay any tax or other charge imposed in respect of any transfer involved in the issue and delivery of shares of Common Stock in book-entry form or any certificates for shares of Common Stock or payment of cash or other property to any Recipient other than, in the case of the Company, the Holder of the Warrant Certificate evidencing the exercised Warrant, and in case of such transfer or payment, the Warrant Agent and the Company shall not be required to issue or deliver any shares of Common Stock in book-entry form or any certificate or pay any cash until (a) such tax or charge has been paid or an amount sufficient for the payment thereof has been delivered to the Warrant Agent or the Company or (b) it has been established to the Company’s or Warrant Agent’s satisfaction that any such tax or other charge that is or may become due has been paid.

3.5    Cancellation of Warrant Certificates. Any Definitive Warrant Certificate surrendered for exercise shall, if surrendered to the Company, be delivered to the Warrant Agent. All Warrant Certificates surrendered or delivered to or received by the Warrant Agent for

 

11


cancellation pursuant to this Section 3.5 or Section 2.4(e) or Section 2.4(j) shall be promptly cancelled by the Warrant Agent and shall not be reissued by the Company. The Warrant Agent shall destroy any such cancelled Warrant Certificates and deliver its certificate of destruction to the Company, unless the Company shall otherwise direct in writing.

3.6    Shares Issuable. The number of shares of Common Stock “obtainable upon exercise” of Warrants at any time shall be the number of shares of Common Stock into which such Warrants are then exercisable. The Company will confirm the number of shares obtainable if so requested by the Warrant Agent. The number of shares of Common Stock “into which each Warrant is exercisable” shall be one share, subject to adjustment as provided in Section 5.1.

3.7    Cashless Exercise. Notwithstanding any provisions herein to the contrary, upon exercise of any Warrants the Company shall issue to the Holder a number of shares of Common Stock with respect to the Warrants being exercised computed using the following formula:

 

     X = (Y (A-B)) ÷ A
Where X =      the number of shares of Common Stock to be issued to the Holder in respect of the Warrants being exercised.
Y =      the number of shares of Common Stock into which the Warrants being exercised by the Holder are exercisable (on the Exercise Date).
A =      the Current Market Price of one share of Common Stock (on the Exercise Date).
B =      the applicable Exercise Price (as adjusted through and including the Exercise Date).

If the foregoing calculation results in a negative number, then no Common Stock shall be issued upon exercise pursuant to this Section 3.

The Company shall calculate and transmit to the Warrant Agent the number of shares of Common Stock to be issued on such exercise, and the Warrant Agent shall have no obligation under this Agreement to calculate, confirm or verify such amount.

3.8    Cost Basis Information. The Company hereby instructs the Warrant Agent to record cost basis for newly issued shares at the time of exercise in accordance with instructions by the Company. If the Company does not provide such cost basis information to the Warrant Agent, as outlined above, then the Warrant Agent will treat those shares issued hereunder as uncovered securities or the equivalent, and each holder of such shares will need to obtain such cost basis information from the Company.

 

4.

Dissolution, Liquidation or Winding up.

Unless Section 5.1(f) applies, if, on or prior to the Expiration Date, the Company (or any other Person controlling the Company) shall propose a voluntary or involuntary dissolution,

 

12


liquidation or winding up (a “Winding Up”) of the affairs of the Company, the Company shall give written notice thereof to the Warrant Agent and all Holders in the manner provided in Section 11.1(b) at least ten (10) business days prior to the date on which such transaction is expected to become effective or, if earlier, the record date for such transaction. Such notice shall also specify the date as of which the holders of record of the shares of Common Stock shall be entitled to exchange their shares for securities, money or other property deliverable upon such Winding Up on which date each Holder of Warrant Certificates shall receive the securities, money or other property which such Holder would have been entitled to receive had such Holder been the holder of record of the shares of Common Stock into which the Warrants were exercisable immediately prior to such Winding Up (net of the then applicable Exercise Price) and the rights to exercise the Warrants shall terminate.

Unless Section 5.1(f) applies, in case of any such Winding Up of the Company, the Company shall deposit with the Warrant Agent any funds or other property which the Holders are entitled to receive pursuant to the above paragraph, together with a Company Order as to the distribution thereof. After receipt of such deposit from the Company and after receipt of surrendered Warrant Certificates evidencing Warrants, and any such other necessary information as the Warrant Agent may reasonably require, the Warrant Agent shall make payment in the appropriate amount to such Person or Persons as it may be directed in writing by the Holder surrendering such Warrant Certificate. The Warrant Agent shall not be required to pay interest on any money deposited pursuant to the provisions of this Section 4 except such as it shall agree with the Company to pay thereon. Any moneys, securities or other property which at any time shall be deposited by the Company or on its behalf with the Warrant Agent pursuant to this Section 4 shall be, and are hereby, assigned, transferred and set over to the Warrant Agent in accordance with Section 3.3 hereof; provided, that, moneys, securities or other property need not be segregated from other funds, securities or other property held by the Warrant Agent except to the extent required by law.

 

5.

Adjustments.

5.1    Adjustments. In order to prevent dilution of the rights granted under the Warrants and to grant the Holders certain additional rights, the Exercise Price shall be subject to adjustment from time to time only as specifically provided in this Section 5.1 (the “Adjustment Events”) and the number of shares of Common Stock obtainable upon exercise of Warrants shall be subject to adjustment from time to time only as specifically provided in this Section 5.1.

(a)    Subdivisions and Combinations. In the event the Company shall, at any time or from time to time after the Original Issue Date while any Warrants remain outstanding and unexpired in whole or in part, effect a subdivision (by any stock split or otherwise) of the outstanding shares of Common Stock into a greater number of shares of Common Stock (other than (x) a subdivision upon a Transaction to which Section 5.1(f) applies or (y) a stock split effected by means of a stock dividend or distribution to which Section 5.1(b) applies), then and in each such event the Exercise Price in effect at the opening of business on the day after the date upon which such subdivision becomes effective shall be proportionately decreased. Conversely, if the Company shall, at any time or from time to time after the Original Issue Date while any Warrants remain outstanding and unexpired in whole or in part, effect a combination (by any reverse stock split, combination, subdivision or otherwise) of the outstanding shares of Common

 

13


Stock into a smaller number of shares of Common Stock (other than a combination upon a Transaction to which Section 5.1(f) applies), then and in each such event the Exercise Price in effect at the opening of business on the day after the date upon which such combination becomes effective shall be proportionately increased. Any adjustment under this Section 5.1(a) shall become effective immediately after the opening of business on the day after the date upon which the subdivision or combination becomes effective.

(b)    Common Stock Dividends. In the event the Company shall, at any time or from time to time after the Original Issue Date while any Warrants remain outstanding and unexpired in whole or in part, make or issue to the holders of its Common Stock a dividend or distribution payable in, or otherwise make or issue a dividend or other distribution on any class of its capital stock payable in, shares of Common Stock (other than a dividend or distribution upon a Transaction to which Section 5.1(f) applies), then and in each such event the Exercise Price in effect at the opening of business on the day after the date for the determination of the holders of shares of Common Stock entitled to receive such dividend or distribution shall be decreased by multiplying such Exercise Price by a fraction (not to be greater than 1):

(i)    the numerator of which shall be the total number of shares of Common Stock issued and outstanding at the close of business on such date for determination; and

(ii)    the denominator of which shall be the total number of shares of Common Stock issued and outstanding at the close of business on such date for determination plus the number of shares of Common Stock issuable in payment of such dividend or distribution.

Any adjustment under this Section 5.1(b) shall, subject to Section 5.1(d)(iv), become effective immediately after the opening of business on the day after the date the holders of shares of Common Stock received such dividend or distribution.

(c)    Reclassifications. A reclassification of the Common Stock (other than any such reclassification in connection with a Transaction to which Section 5.1(f) applies) into shares of Common Stock and shares of any other class of stock shall be deemed, if the outstanding shares of Common Stock shall be changed into a larger or smaller number of shares of Common Stock as a part of such reclassification, a subdivision or combination, as the case may be, of the outstanding shares of Common Stock for the purposes and within the meaning of Section 5.1(a) (and the effective date of such reclassification shall be deemed to be “the date upon which such subdivision becomes effective” or “the date upon which such combination becomes effective,” as applicable, for the purposes and within the meaning of Section 5.1(a)).

(d)    Other Provisions Applicable to Adjustments. The following provisions shall be applicable to the making of adjustments to the Exercise Price and the number of shares of Common Stock into which each Warrant is exercisable under this Section 5.1:

(i)    Treasury Stock. The dividend or distribution of any issued shares of Common Stock owned or held by or for the account of the Company shall be deemed a dividend or distribution of shares of Common Stock for purposes of Section 5.1(b). The Company shall not make or issue any dividend or distribution on shares of Common Stock

 

14


held in the treasury of the Company. For the purposes of Section 5.1(b), the number of shares of Common Stock at any time outstanding shall not include shares held in the treasury of the Company.

(ii)    When Adjustments Are to be Made. The adjustments required by Section 5.1(a), Section 5.1(b) and Section 5.1(c) shall be made whenever and as often as any specified event requiring an adjustment shall occur, except that no adjustment of the Exercise Price that would otherwise be required shall be made unless and until such adjustment either by itself or with other adjustments not previously made increases or decreases the Exercise Price immediately prior to the making of such adjustment by at least 1%. Any adjustment representing a change of less than such minimum amount (except as aforesaid) shall be carried forward and made as soon as such adjustment, together with other adjustments required by Section 5.1(a), Section 5.1(b) and Section 5.1(c) and not previously made, would result in such minimum adjustment.

(iii)    Fractional Interests. In computing adjustments under Section 5.1, fractional interests in Common Stock shall be taken into account to the nearest one-thousandth of a share.

(iv)    Deferral of Issuance Upon Exercise. In any case in which Section 5.1(b) shall require that a decrease in the Exercise Price be made effective prior to the occurrence of a specified event and any Warrant is exercised after the time at which the adjustment became effective but prior to the occurrence of such specified event and, in connection therewith, Section 5.1(e) shall require a corresponding increase in the number of shares of Common Stock into which each Warrant is exercisable, the Company may elect to defer, with written notice to the Warrant Agent (but not in any event later than the Expiration Date or the closing date of the applicable Transaction) until the occurrence of such specified event (A) the issuance to the Holder of the Warrant Certificate evidencing such Warrant (or other Person entitled thereto) of, and the registration of such Holder (or other Person) as the record holder of, the Common Stock over and above the Common Stock issuable upon such exercise on the basis of the number of shares of Common Stock obtainable upon exercise of such Warrant immediately prior to such adjustment and to require payment in respect of such number of shares the issuance of which is not deferred on the basis of the Exercise Price in effect immediately prior to such adjustment and (B) the corresponding reduction in the Exercise Price; provided, however, that the Company shall deliver to such Holder or other person a due bill or other appropriate instrument that meet any applicable requirements of the principal national securities exchange or other market on which the Common Stock is then traded and evidences the right of such Holder or other Person to receive, and to become the record holder of, such additional shares of Common Stock, upon the occurrence of such specified event requiring such adjustment (without payment of any additional Exercise Price in respect of such additional shares).

(e)    Adjustment to Shares Obtainable Upon Exercise. Whenever the Exercise Price is adjusted as provided in this Section 5.1, the number of shares of Common Stock into which a Warrant is exercisable shall simultaneously be adjusted by multiplying such number of shares of Common Stock into which a Warrant is exercisable immediately prior to such adjustment by a fraction, the numerator of which shall be the Exercise Price immediately prior to such adjustment, and the denominator of which shall be the Exercise Price immediately thereafter.

 

15


(f)    Changes in Common Stock. In case at any time or from time to time after the Original Issue Date while any Warrants remain outstanding and unexpired in whole or in part, the Company shall be a party to or shall otherwise engage in any transaction or series of related transactions constituting: (1) a merger of the Company into, a direct or indirect sale of all of the Company’s equity to, or a consolidation of the Company with, any other Person in which the previously outstanding shares of Common Stock shall be (either directly or upon subsequent liquidation) cancelled, reclassified or converted or changed into or exchanged for securities or other property (including cash) or any combination of the foregoing, or a sale of all or substantially all of the assets of the Company and its Subsidiaries (taken as a whole) (a “Non-Surviving Transaction”), or (2) any merger of another Person into the Company in which the previously outstanding shares of Common Stock shall be cancelled, reclassified or converted or changed into or exchanged for securities of the Company or other property (including cash) or any combination of the foregoing (a “Surviving Transaction”; any Non-Surviving Transaction or Surviving Transaction being herein called a “Transaction”) then:

(i)    as a condition to the consummation of such Transaction, the Company shall cause such other Person to execute and deliver to the Warrant Agent a written instrument providing that:

(A)    so long as any Warrant remains outstanding in whole or in part (including after giving effect to the changes specified under clause (B) below), such Warrant, upon the exercise thereof at any time on or after the consummation of such Transaction, shall be exercisable (on such terms and subject to such conditions as shall be as nearly equivalent as may be practicable to the provisions set forth in this Agreement) into, in lieu of the Common Stock issuable upon such exercise prior to such consummation, only the securities (“Substituted Securities”) that would have been receivable upon such Transaction by a holder of the number of shares of Common Stock into which such Warrant was exercisable immediately prior to such Transaction assuming, in the case of any such Transaction, if (as a result of rights of election or otherwise) the kind or amount of securities, cash and other property receivable upon such Transaction is not the same for each share of Common Stock held immediately prior to such Transaction, such holder of Common Stock is a Person that is neither (I) an employee of the Company or of any Subsidiary thereof nor (II) a Person with which the Company consolidated or into which the Company merged or which merged into the Company or to which such sale or transfer was made, as the case may be (“Constituent Person”), or an Affiliate of a Constituent Person; and

(B)    the rights and obligations of such other Person and the Holders in respect of Substituted Securities shall be substantially unchanged to be as nearly equivalent as may be practicable to the rights and obligations of the Company and Holders in respect of Common Stock hereunder as set forth in Section 3.1 hereof;

 

16


(ii)    with respect to any Transaction, such written instrument under clause (i) above shall provide for adjustments which, for events subsequent to the effective date of such written instrument shall be as nearly equivalent as may be practicable to the adjustments provided for in this Section 5. The above provisions of this Section 5.1(f) shall similarly apply to successive Transactions.

(g)    Compliance with Governmental Requirements. Before taking any action that would cause an adjustment reducing the Exercise Price below the then par value of any of 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.

(h)    Optional Tax Adjustment. The Company may at its option, at any time during the term of the Warrants, increase the number of shares of Common Stock into which each Warrant is exercisable, or decrease the Exercise Price, in addition to those changes required by Section 5.1(a), Section 5.1(b) and Section 5.1(c) as deemed advisable by the Board of Directors of the Company, in order that any event treated for federal income tax purposes as a dividend of stock or stock rights shall not be taxable to the recipients.

(i)    Warrants Deemed Exercisable. For purposes solely of this Section 5, the number of shares of Common Stock which the holder of any Warrant would have been entitled to receive had such Warrant been exercised in full at any time or into which any Warrant was exercisable at any time shall be determined assuming such Warrant was exercisable in full at such time.

(j)    Notice of Adjustment. Upon the occurrence of each adjustment of the Exercise Price or the number of shares of Common Stock into which a Warrant is exercisable pursuant to this Section 5.1, the Company at its expense shall promptly:

(i)    compute such adjustment in accordance with the terms hereof;

(ii)    after such adjustment becomes effective, deliver to all Holders, in accordance with Section 11.1(b) and Section 11.2, a notice setting forth such adjustment and showing in detail the facts upon which such adjustment is based; and

(iii)    deliver to the Warrant Agent a certificate of the Treasurer or Chief Financial Officer of the Company setting forth the Exercise Price and the number of shares of Common Stock into which each Warrant is exercisable after such adjustment and setting forth a brief statement of the facts requiring such adjustment and the computation by which such adjustment was made (including a description of the basis on which the Current Market Price of the Common Stock). As provided in Section 10, the Warrant Agent shall be entitled to rely on such certificate and shall be under no duty or responsibility with respect to any such certificate, except to exhibit the same from time to time at the Corporate Agency Office (as defined below) to any Holder desiring an inspection thereof during reasonable business hours. The Company hereby agrees that it will provide the Holders and the Warrant Agent with reasonable notice of any Adjustment Event set forth in this Section 5.1. The Company further agrees that it will provide to the Holders and Warrant

 

17


Agent with any new or amended exercise terms. The Warrant Agent shall have no obligation under any Section of this Agreement to determine whether an Adjustment Event has occurred or to calculate any of the adjustments set forth herein.

(k)    Statement on Warrant Certificates. Irrespective of any adjustment in the Exercise Price or amount or kind of shares into which the Warrants are exercisable, Warrant Certificates theretofore or thereafter issued may continue to express the same Exercise Price initially applicable or amount or kind of shares initially issuable upon exercise of the Warrants evidenced thereby pursuant to this Agreement.

5.2    Fractional Interest. The Company shall not be required upon the exercise of any Warrant to issue any fractional shares of Common Stock, but may, in lieu of issuing any fractional shares of Common Stock make an adjustment therefore in cash on the basis of the Current Market Price per share of Common Stock on the date of such exercise. If Warrant Certificates evidencing more than one Warrant shall be presented for exercise at the same time by the same Holder, the number of full shares of Common Stock which shall be issuable upon such exercise thereof shall be computed on the basis of the aggregate number of Warrants so to be exercised. The Holders, by their acceptance of the Warrant Certificates, expressly waive their right to receive any fraction of a share of Common Stock or a stock certificate representing a fraction of a share of Common Stock if such amount of cash is paid in lieu thereof. The Company shall provide an initial funding of one thousand dollars ($1,000) for the purpose of issuing cash in lieu of fractional shares. From time to time thereafter, Warrant Agent may request additional funding to cover fractional payments. The Warrant Agent shall have no obligation to make fractional payments unless the Company shall have provided the necessary funds to pay in full all amounts due and payable with respect thereto.

5.3    No Other Adjustments. Except in accordance with Section 5.1, the applicable Exercise Price and the number of shares of Common Stock obtainable upon exercise of 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)    upon the issuance of any other securities by the Company on or after the Original Issue Date, whether or not contemplated by the Plan, or upon the issuance of shares of Common Stock upon the exercise of any such securities;

(ii)    upon the issuance of any shares of Common Stock or other securities or any payments pursuant to any management or other equity incentive plan of the Company;

(iii)    upon the issuance of any shares of Common Stock pursuant to the exercise of the Warrants; or

(iv)    upon the issuance of any shares of Common Stock or other securities of the Company in connection with a business acquisition transaction.

 

18


6.

Loss or Mutilation.

If (a) any mutilated Warrant Certificate is surrendered to the Warrant Agent or (b) both (i) there shall be delivered to the Company and the Warrant Agent (A) a claim by a Holder as to the destruction, loss or wrongful taking of any Warrant Certificate of such Holder and a request thereby for a new replacement Warrant Certificate, and (B) such open penalty surety bond and/or indemnity bond as may be required by them to save each of them and any agent of either of them harmless and (ii) such other reasonable requirements as may be imposed by the Company or Warrant Agent as permitted by Section 8-405 of the Uniform Commercial Code have been satisfied, then, in the absence of notice to the Company or the Warrant Agent that such Warrant Certificate has been acquired by a “protected purchaser” within the meaning of Section 8-405 of the Uniform Commercial Code or bona fide purchaser, the Company shall execute and upon its written request the Warrant Agent shall countersign and deliver to the registered Holder of the lost, wrongfully taken, destroyed or mutilated Warrant Certificate, in exchange therefore or in lieu thereof, a new Warrant Certificate of the same tenor and for a like aggregate number of Warrants. At the written request of such registered Holder, the new Warrant Certificate so issued shall be retained by the Warrant Agent as having been surrendered for exercise, in lieu of delivery thereof to such Holder, and shall be deemed for purposes of Section 3.2(c)(ii) to have been surrendered for exercise on the date the conditions specified in clauses (A) or (B) of the preceding sentence were first satisfied. The Warrant Agent may, at its option, issue replacement Warrants for mutilated certificates upon presentation thereof without such indemnity.

Upon the issuance of any new Warrant Certificate under this Section 6, the Company may require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and other expenses (including the fees and expenses of the Warrant Agent and of counsel to the Company) in connection therewith.

Every new Warrant Certificate executed and delivered pursuant to this Section 6 in lieu of any lost, wrongfully taken or destroyed Warrant Certificate shall constitute an additional contractual obligation of the Company, whether or not the allegedly lost, wrongfully taken or destroyed Warrant Certificate shall be at any time enforceable by anyone, and shall be entitled to the benefits of this Agreement equally and proportionately with any and all other Warrant Certificates duly executed and delivered hereunder.

The provisions of this Section 6 are exclusive and shall preclude (to the extent lawful) all other rights or remedies with respect to the replacement of mutilated, lost, wrongfully taken, or destroyed Warrant Certificates.

 

7.

Reservation and Authorization of Common Stock.

The Company covenants that, for the duration of the Exercise Period, the Company will at all times reserve and keep available, from its authorized and unissued shares of Common Stock solely for issuance and delivery upon the exercise of the Warrants and free of preemptive rights, such number of shares of Common Stock and other securities, cash or property as from time to time shall be issuable upon the exercise in full of all outstanding Warrants for cash. The Company further covenants that it shall, from time to time, take all steps necessary to increase the authorized number of shares of its Common Stock to such number of shares as shall be sufficient to deliver

 

19


all shares of Common Stock deliverable upon exercise in full of all outstanding Warrants, if at any time the authorized number of shares of Common Stock remaining unissued would otherwise be insufficient to allow delivery of all the shares of Common Stock then deliverable upon the exercise in full of all outstanding Warrants. The Company covenants that all shares of Common Stock issuable upon exercise of the Warrants will, upon issuance, be duly and validly issued, fully paid and nonassessable and will be free of restrictions on transfer and will be free from all taxes, liens and charges in respect of the issue thereof (other than taxes in respect of any transfer occurring contemporaneously or as otherwise specified herein). The Company shall take all such actions as may be necessary to ensure that all such shares of Common Stock may be so issued without violation of any applicable law or governmental regulation or any requirements of any U.S. national securities exchange upon which shares of Common Stock may be listed (except for official notice of issuance which shall be immediately delivered by the Company upon each such issuance). The Company covenants that all shares of Common Stock will, at all times that Warrants are exercisable, be duly approved for listing subject to official notice of issuance on each securities exchange, if any, on which the Common Stock is then listed. The Company covenants that the stock certificates, if any, issued to evidence any shares of Common Stock issued upon exercise of Warrants will comply with the Delaware General Corporation Law and any other applicable law.

The Company hereby authorizes and directs its current and future transfer agents for the Common Stock at all times to reserve stock certificates for such number of authorized shares, to the extent as, and if, required. The Company will supply such transfer agents with duly executed stock certificates for such purposes, to the extent as, and if, required.

The Company hereby represents and warrants to the Holders that the issuance of the Warrants and the issuance of shares of Common Stock upon exercise thereof in accordance with the terms hereof will not constitute a breach of, or a default under, any other material agreements to which the Company is a party on the date hereof.

 

8.

Warrant Transfer Books.

The Warrant Agent will maintain an office or offices (the “Corporate Agency Office”) in the United States of America, where Warrant Certificates may be surrendered for registration of transfer or exchange and where Warrant Certificates may be surrendered for exercise of Warrants evidenced thereby, which office is 150 Royall Street, Canton, MA. 02021, Attn: Corporate Actions on the Original Issue Date. The Warrant Agent will give prompt written notice to all Holders of Warrant Certificates of any change in the location of such office.

The Warrants shall be issued in registered form only. The Company shall cause to be kept at the Corporate Agency Office a warrant register (the “Warrant Register”) in which, subject to such reasonable regulations as the Warrant Agent may prescribe and such regulations as may be prescribed by law, the Company shall provide for the registration of Warrants and of transfers or exchanges of Warrants as herein provided.

Upon surrender for registration of transfer of any Warrant Certificate at the Corporate Agency Office, the Company shall execute, and the Warrant Agent shall countersign and deliver, in the name of the designated transferee or transferees, one or more new Warrant Certificates evidencing a like aggregate number of Warrants.

 

20


At the option of the Holder, Warrant Certificates may be exchanged at the Corporate Agency Office upon payment of the charges hereinafter provided for other Warrant Certificates evidencing a like aggregate number of Warrants. Whenever any Warrant Certificates are so surrendered for exchange, the Company shall execute, and the Warrant Agent shall countersign and deliver, the Warrant Certificates of the same tenor and evidencing the same number of Warrants as evidenced by the Warrant Certificates surrendered by the Holder making the exchange.

All Warrant Certificates issued upon any registration of transfer or exchange of Warrant Certificates shall be the valid obligations of the Company, evidencing the same obligations, and entitled to the same benefits under this Agreement, as the Warrant Certificates surrendered for such registration of transfer or exchange.

Every Warrant Certificate surrendered for registration of transfer or exchange shall (if so required by the Company or the Warrant Agent) be: (i) duly endorsed and containing a signature guarantee from an eligible guarantor institution participating in a signature guarantee program approved by the Securities Transfer Association, or (ii) be accompanied by a written instrument of transfer in form satisfactory to the Company and the Warrant Agent, duly executed by the Holder thereof or his attorney duly authorized in writing, also containing a signature guarantee from an eligible guarantor institution participating in a signature guarantee program approved by the Securities Transfer Association. In addition, in connection with any transfer, the Warrant Agent or the Company may request a written opinion of counsel reasonably acceptable to the Company or the Warrant Agent, as applicable, that such transfer is in compliance with the Securities Act and application state securities or “blue sky” laws. Further, to effect such transfer or exchange, all other necessary information or documentation shall be provided as the Warrant Agent may reasonably request.

No service charge shall be made for any registration of transfer or exchange of Warrants; provided, however, the Company may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any registration of transfer or exchange of Warrant Certificates. The Warrant Agent shall not have any duty or obligation to take any action under any section of this Agreement that requires the payment of taxes and/or charges unless and until it is satisfied that all such payments have been made.

The Warrant Agent shall, upon request and at the expense of the Company from time to time, deliver to the Company such reports of registered ownership of the Warrants and such records of transactions with respect to the Warrants and the shares of Common Stock as the Company may request. The Warrant Agent shall, upon reasonable advance notice, also make available to the Company for inspection by the Company’s agents or employees, from time to time as the Company may request, such books of accounts and records maintained by the Warrant Agent in connection with the issuance and exercise of Warrants hereunder, such inspections to occur at the Corporate Agency Office during normal business hours.

The Warrant Agent shall keep copies of this Agreement and any notices given to Holders hereunder available for inspection, upon reasonable advance notice, by the Holders during normal business hours at the Corporate Agency Office. The Company shall supply the Warrant Agent from time to time with such numbers of copies of this Agreement as the Warrant Agent may request.

 

21


9.

Warrant Holders.

9.1    No Voting or Dividend Rights.

(a)    No Holder of a Warrant Certificate evidencing any Warrant shall have or exercise any rights by virtue hereof as a holder of Common Stock of the Company, including, without limitation, the right to vote, to receive dividends and other distributions as a holder of Common Stock or to receive notice of, or attend, meetings or any other proceedings of the holders of Common Stock.

(b)    The consent of any Holder of a Warrant Certificate shall not be required with respect to any action or proceeding of the Company.

(c)    Except as provided in Section 4, no Holder of a Warrant Certificate, by reason of the ownership or possession of a Warrant or the Warrant Certificate representing the same, shall have any right to receive any cash dividends, stock dividends, allotments or rights or other distributions paid, allotted or distributed or distributable to the holders of Common Stock prior to, or for which the relevant record date preceded, the date of the exercise of such Warrant.

(d)    No Holder of a Warrant Certificate shall have any right not expressly conferred hereunder or under, or by applicable law with respect to, the Warrant Certificate held by such Holder.

9.2    Rights of Action. All rights of action against the Company in respect of this Agreement, except rights of action vested in the Warrant Agent, are vested in the Holders of the Warrant Certificates, and any Holder of any Warrant Certificate, without the consent of the Warrant Agent or the Holder of any other Warrant Certificate, may, in such Holder’s own behalf and for such Holder’s own benefit, enforce and may institute and maintain any suit, action or proceeding against the Company suitable to enforce, or otherwise in respect of, such Holder’s right to exercise such Holder’s Warrants in the manner provided in this Agreement.

9.3    Treatment of Holders of Warrant Certificates. Every Holder, by virtue of accepting a Warrant Certificate, consents and agrees with the Company, with the Warrant Agent and with every subsequent holder of such Warrant Certificate that, prior to due presentment of such Warrant Certificate for registration of transfer, the Company and the Warrant Agent may treat the Person in whose name the Warrant Certificate is registered as the owner thereof for all purposes and as the Person entitled to exercise the rights granted under the Warrants, and neither the Company, the Warrant Agent nor any agent thereof shall be affected by any notice to the contrary.

 

10.

Concerning the Warrant Agent. Sections 10.1, 10.2, 10.3, 10.4, 10.5, 10.6 and 10.8 shall survive the expiration of the Warrants and the termination of this Agreement and the resignation, replacement or removal of the Warrant Agent.

10.1    Rights and Duties of the Warrant Agent.

(a)    The Company hereby appoints the Warrant Agent to act as agent of the Company as set forth in this Agreement. The Warrant Agent hereby accepts the appointment as agent of the Company and agrees to perform that agency upon the express

 

22


terms and conditions set forth in this Agreement and in the Warrant Certificates or as the Company and the Warrant Agent may hereafter agree in writing, by all of which the Company and the Holders of Warrant Certificates, by their acceptance thereof, shall be bound; provided, however, that the terms and conditions contained in the Warrant Certificates are subject to and governed by this Agreement or any other terms and conditions hereafter agreed to by the Company and the Warrant Agent in writing.

(b)    The Warrant Agent shall not, by countersigning Warrant Certificates or by any other act hereunder, be deemed to make any representations as to validity or authorization of (i) the Warrants or the Warrant Certificates (except as to its countersignature thereon), (ii) any securities or other property delivered upon exercise of any Warrant, (iii) the accuracy of the computation of the number or kind or amount of stock or other securities or other property deliverable upon exercise of any Warrant, (iv) the correctness of any of the representations of the Company made in such certificates that the Warrant Agent receives; or (v) any of the statements of act or recitals contained in this Agreement. The Warrant Agent shall not at any time have any duty to calculate or determine whether any facts exist that may require any adjustments pursuant to Section 5 hereof with respect to the kind and amount of shares or other securities or any property issuable to Holders upon the exercise of Warrants required from time to time. The Warrant Agent shall have no duty or responsibility to determine the accuracy or correctness of such calculation or with respect to the methods employed in making the same. The Warrant Agent shall not be accountable with respect to the validity or value (or the kind or amount) of any shares of Common Stock or of any securities or property which may at any time be issued or delivered upon the exercise of any Warrant or upon any adjustment pursuant to Section 5 hereof, and it makes no representation with respect thereto. The Warrant Agent shall not be responsible for any failure of the Company to make any cash payment or to issue, transfer or deliver any shares of Common Stock or stock certificates or other securities or property upon the surrender of any Warrant Certificate for the purpose of exercise or upon any adjustment pursuant to Section 5 hereof or to comply with any of the covenants of the Company contained in Section 5 hereof.

(c)    The Warrant Agent shall not be liable for or by reason of any of the statements of fact or recitals contained in this Agreement or in the Warrant Certificates (except its countersignature thereof) or be required to verify the same, and all such statements and recitals are and shall be deemed to have been made by the Company only.

(d)    The Warrant Agent shall not have any duty or responsibility in the case of the receipt of any written demand from any holder of Warrants with respect to any action or default by the Company, including, without limiting the generality of the foregoing, any duty or responsibility to initiate or attempt to initiate any proceedings at law or otherwise or to make any demand upon the Company.

(e)    The Warrant Agent may execute and exercise any of the rights or powers hereby vested in it or perform any duty hereunder either itself or by or through its attorney or agents, and the Warrant Agent shall not be answerable or accountable for any act, default, neglect or misconduct of any such attorney or agents or for any loss to the Company resulting from any such act, default, neglect or misconduct, absent gross negligence, willful misconduct, fraud or bad faith (each as determined by a final judgment of a court of competent jurisdiction) in the selection and continued employment thereof.

 

23


(f)    The Warrant Agent may rely on and shall be held harmless and protected and shall incur no liability for or in respect of any action taken, suffered or omitted to be taken by it absent gross negligence, willful misconduct, fraud or bad faith (each as determined by a final judgment of a court of competent jurisdiction) in reliance upon any certificate, statement, instrument, opinion, notice, letter, facsimile transmission, telegram or other document, or any security delivered to it, and believed by it to be genuine and to have been made or signed by the proper party or parties, or upon any written or oral instructions or statements from the Company with respect to any matter relating to its acting as Warrant Agent hereunder.

(g)    The Warrant Agent shall not be obligated to expend or risk its own funds or to take any action that it believes would expose or subject it to expense or liability or to a risk of incurring expense or liability, unless it has been furnished with assurances of repayment or indemnity satisfactory to it.

(h)     The Warrant Agent shall not be liable or responsible for any failure of the Company to comply with any of its obligations relating to any registration statement filed with the Securities and Exchange Commission or this Agreement, including without limitation obligations under applicable regulation or law.

(i)    The Warrant Agent shall not be accountable or under any duty or responsibility for the use by the Company of any Warrants authenticated by the Warrant Agent and delivered by it to the Company pursuant to this Agreement or for the application by the Company of the proceeds of the issue and sale, or exercise, of the Warrants.

(j)    The Warrant Agent shall act hereunder solely as agent for the Company, and its duties shall be determined solely by the express provisions hereof (and no duties or obligations shall be inferred or implied). The Warrant Agent shall not assume any obligations or relationship of agency or trust with any of the owners or holders of the Warrants.

(k)    The Warrant Agent may rely on and be fully authorized and protected in acting or failing to act upon any guaranty of signature by an “eligible guarantor institution” that is a member or participant in the Securities Transfer Agents Medallion Program or other comparable “signature guarantee program” or insurance program in addition to, or in substitution for, the foregoing.

(l)    In the event the Warrant Agent believes any ambiguity or uncertainty exists hereunder or in any notice, instruction, direction, request or other communication, paper or document received by the Warrant Agent hereunder, the Warrant Agent, may, in its sole discretion, refrain from taking any action, and shall be fully protected and shall not be liable in any way to Company, the holder of any Warrant Certificate or any other person or entity for refraining from taking such action, unless the Warrant Agent receives written instructions signed by the Company which eliminates such ambiguity or uncertainty to the satisfaction of Warrant Agent.

(m)    Reliance on Company Statement. Whenever in the performance of its duties under this Agreement, the Warrant Agent shall deem it necessary or desirable that any fact

 

24


or matter be proved or established by the Company prior to taking or suffering any action hereunder, such fact or matter (unless other evidence in respect thereof be herein specifically prescribed) may be deemed to be conclusively proved and established by a statement signed by an Appropriate Officer and delivered to the Warrant Agent. The Warrant Agent may rely upon such statement, and will be indemnified and held harmless for such reliance, and shall not be held liable in connection with any delay in receiving such statement.

(n)    The Warrant Agent shall have no responsibility to the Company, any Holders of Warrants or any holders of shares of Common Stock for interest or earnings on any moneys held by the Warrant Agent pursuant to this Agreement.

(o)    The Warrant Agent shall not be required to take notice or be deemed to have notice of any event or condition hereunder, including any event or condition that may require action by the Warrant Agent, unless the Warrant Agent shall be specifically notified in writing of such event or condition by the Company, and all notices or other instruments required by this Agreement to be delivered to the Warrant Agent must, in order to be effective, be received by the Warrant Agent as specified in Section 11.1 hereof, and in the absence of such notice so delivered, the Warrant Agent may conclusively assume no such event or condition exists.

10.2    Limitation of Liability.

(a)    The Warrant Agent shall be liable hereunder only for its own gross negligence, willful misconduct, fraud or bad faith (each as determined by a final judgment of a court of competent jurisdiction). Notwithstanding anything contained herein to the contrary, the Warrant Agent’s aggregate liability during any term of this Agreement with respect to, arising from, or arising in connection with this Agreement, or from all services provided or omitted to be provided under this Agreement, whether in contract, or in tort, or otherwise, is limited to, and shall not exceed, the amounts paid hereunder by the Company to Warrant Agent as fees and charges, but not including reimbursable expenses, during the twelve (12) months immediately preceding the event for which recovery from Warrant Agent is being sought. Neither party to this Agreement shall be liable to the other party for any consequential, indirect, special or incidental damages under any provisions of this Agreement or for any consequential, indirect, punitive, special or incidental damages arising out of any act or failure to act hereunder even if that party has been advised of or has foreseen the possibility of such damages.

(b)    Exclusions. The Warrant Agent shall have no responsibility with respect to the validity of this Agreement or with respect to the validity or execution of any Warrant. The Warrant Agent shall not be responsible for any breach by the Company of any covenant or condition contained in this Agreement or in any Warrant. The Warrant Agent shall not be responsible to make any adjustments required under the provisions of Section 5 hereof or responsible for the manner, method, or amount of any such adjustment or the ascertaining of the existence of facts that would require any such adjustment; nor shall it by any act hereunder be deemed to make any representation or warranty as to the authorization or reservation of any shares of Common Stock to be issued pursuant to this Agreement or any Warrant or as to whether any shares of Common Stock shall, when issued, be valid and fully paid and non-assessable.

 

25


10.3    Indemnification.

(a)    The Company covenants and agrees to indemnify and to hold the Warrant Agent harmless against any costs, expenses (including reasonable and documented fees of its legal counsel), losses or damages, which may be paid, incurred or suffered by or to which it may become subject, arising from or out of, directly or indirectly, any claims or liability resulting from its actions as Warrant Agent pursuant hereto; provided, however, that such covenant and agreement does not extend to, and the Warrant Agent shall not be indemnified with respect to, such costs, expenses, losses and damages incurred or suffered by the Warrant Agent as a result of, or arising out of, its gross negligence, bad faith, or willful misconduct (each as determined by a final judgment of a court of competent jurisdiction). The costs and expenses incurred in enforcing this right of indemnification shall be paid by the Company.

(b)    Instructions. From time to time, the Company may provide the Warrant Agent with instructions, by Company Order or otherwise, concerning the services performed by the Warrant Agent hereunder. In addition, at any time the Warrant Agent may apply to any officer of Company for instruction, and may consult with legal counsel for the Warrant Agent or the Company with respect to any matter arising in connection with the services to be performed by the Warrant Agent under this Agreement. Warrant Agent and its agents and subcontractors shall not be liable and shall be indemnified by Company for any action taken, suffered or omitted to be taken by Warrant Agent in reliance upon any Company instructions or upon the advice or opinion of such counsel. Warrant Agent shall not be held to have notice of any change of authority of any person, until receipt of written notice thereof from Company.

10.4    Right to Consult Counsel. The Warrant Agent may at any time consult with legal counsel satisfactory to it (who may be legal counsel for the Company), and the Warrant Agent shall incur no liability or responsibility to the Company or to any Holder for any action taken, suffered or omitted by it absent gross negligence, willful misconduct, fraud or bad faith (each as determined by a final judgment of a court of competent jurisdiction) in accordance with the opinion or advice of such counsel.

10.5    Compensation and Reimbursement. The Company agrees to pay the Warrant from time to time compensation for all fees and expenses relating to its services hereunder as the Company and the Warrant Agent may agree in writing from time to time and to reimburse the Warrant Agent for all of its reasonable expenses and disbursements, including reasonable counsel fees and other disbursements incurred in connection with the preparation, delivery, negotiation, amendment, administration and execution of this Agreement and the exercise and performance of its duties hereunder.

10.6    Warrant Agent May Hold Company Securities. The Warrant Agent and any stockholder, director, officer or employee of the Warrant Agent may buy, sell or deal in any of the Warrants or other securities of the Company or become pecuniarily interested in any transaction in which the Company may be interested, or contract with or lend money to the Company or otherwise act as fully and freely as though it were not Warrant Agent under this Agreement. Nothing herein shall preclude the Warrant Agent from acting in any other capacity for the Company or for any other legal entity. Nothing herein shall preclude the Warrant Agent or any Countersigning Agent from acting in any other capacity for the Company or for any other legal entity.

 

26


10.7    Resignation and Removal; Appointment of Successor.

(a)    The Warrant Agent may resign its duties and be discharged from all further duties and liability hereunder (except liability arising as a result of the Warrant Agent’s own gross negligence, willful misconduct, fraud or bad faith (each as determined by a final judgment of a court of competent jurisdiction)) after giving 30 days’ prior written notice to the Company. The Company may remove the Warrant Agent upon 30 days’ written notice, and the Warrant Agent shall thereupon in like manner be discharged from all further duties and liabilities hereunder, except as aforesaid. The Warrant Agent shall, at the expense of the Company, cause notice to be given in accordance with Section 11.1(b) to the Company of said notice of resignation or notice of removal, as the case may be. Upon such resignation or removal, the Company shall appoint in writing a new Warrant Agent. If the Company shall fail to make such appointment within a period of 30 calendar days after it has been notified in writing of such resignation by the resigning Warrant Agent or after such removal, then the Holder of any Warrant Certificate may apply to any court of competent jurisdiction for the appointment of a new Warrant Agent. Any new Warrant Agent, whether appointed by the Company or by such a court, shall be a Person (other than a natural person) doing business under the laws of the United States or any state thereof in good standing, authorized under such laws to act as Warrant Agent, and having a combined capital and surplus (together with its Affiliates) of not less than $25,000,000. The combined capital and surplus of such new Warrant Agent shall be deemed to be the combined capital and surplus as set forth in the most recent annual report of its condition published by such Warrant Agent prior to its appointment; provided, however, 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 new Warrant Agent, it shall be vested with the same powers, rights, duties and responsibilities as if it had been originally named herein as the Warrant Agent, without any further assurance, conveyance, act or deed; but if for any reason it shall be reasonably necessary or expedient to execute and deliver any further assurance, conveyance, act or deed, the same shall be done at the reasonable expense of the Company and shall be legally and validly executed and delivered by the resigning or removed Warrant Agent. Not later than the effective date of any such appointment, the Company shall file notice thereof with the resigning or removed Warrant Agent. Failure to give any notice provided for in this Section 10.7(a), however, or any defect therein, shall not affect the legality or validity of the resignation of the Warrant Agent or the appointment of a new Warrant Agent as the case may be.

(b)    Any Person into which the Warrant Agent or any new Warrant Agent may be merged, or any Person resulting from any consolidation to which the Warrant Agent or any new Warrant Agent shall be a party, shall be a successor Warrant Agent under this Agreement without any further act; provided, however, that such Person would be eligible for appointment as successor to the Warrant Agent under the provisions of Section 10.7(a). Any such successor Warrant Agent shall promptly cause notice of its succession as Warrant Agent to be given in accordance with Section 11.1(b) to each Holder of a Warrant Certificate at such Holder’s last address as shown on the Warrant Register.

10.8    Appointment of Countersigning Agent.

(a)    The Warrant Agent may, but is not required to, appoint a Countersigning Agent or Agents which shall be authorized to act on behalf of the Warrant Agent to countersign

 

27


Warrant Certificates issued upon original issue and upon exchange, registration of transfer or pursuant to Section 6, and Warrant Certificates so countersigned shall be entitled to the benefits of this Agreement equally and proportionately with any and all other Warrant Certificates duly executed and delivered hereunder. Wherever reference is made in this Agreement to the countersignature and delivery of Warrant Certificates by the Warrant Agent or to Warrant Certificates countersigned by the Warrant Agent, such reference shall be deemed to include countersignature and delivery on behalf of the Warrant Agent by a Countersigning Agent and Warrant Certificates countersigned by a Countersigning Agent. Each Countersigning Agent shall be acceptable to the Company and shall at the time of appointment be a Person (other than a natural person) doing business under the laws of the United States or any state thereof in good standing, authorized under such laws to act as Countersigning Agent, and having a combined capital and surplus (together with its Affiliates) of not less than $25,000,000. The combined capital and surplus of such new Countersigning Agent shall be deemed to be the combined capital and surplus as set forth in the most recent annual report of its condition published by such Countersigning Agent prior to its appointment; provided, however, such reports are published at least annually pursuant to law or to the requirements of a federal or state supervising or examining authority.

(b)    Any Person into which a Countersigning Agent may be merged or any Person resulting from any consolidation to which such Countersigning Agent shall be a party, shall be a successor Countersigning Agent without any further act; provided, that, such Person would be eligible for appointment as a new Countersigning Agent under the provisions of Section 10.8(a), without the execution or filing of any paper or any further act on the part of the Warrant Agent or the Countersigning Agent. Any such successor Countersigning Agent shall promptly cause notice of its succession as Countersigning Agent to be given in accordance with Section 11.1(b) to each Holder of a Warrant Certificate at such Holder’s last address as shown on the Warrant Register.

(c)    A Countersigning Agent may resign at any time by giving 30 days’ prior written notice thereof to the Warrant Agent and to the Company. The Warrant Agent may at any time terminate the agency of a Countersigning Agent by giving 30 days’ prior written notice thereof to such Countersigning Agent and to the Company.

(d)    The Warrant Agent agrees to pay to each Countersigning Agent from time to time reasonable compensation for its services under this Section 10.8 and the Warrant Agent shall be entitled to be reimbursed for such payments, subject to the provisions of Section 10.5.

(e)    Any Countersigning Agent shall have the same rights and immunities as those of the Warrant Agent set forth in this Section 10 and in this Agreement.

 

28


11.

Notices.

11.1    Notices Generally.

(a)    Any request, notice, direction, authorization, consent, waiver, demand or other communication permitted or authorized by this Agreement to be made upon, given or furnished to or filed with the Company or the Warrant Agent by the other party hereto or by any Holder shall be sufficient for every purpose hereunder if in writing (including telecopy communication) and telecopied, sent via trackable or first-class mail or delivered by hand (including by courier service) as follows:

if to the Company, to:

Whiting Petroleum Corporation

1700 Lincoln, Suite 4700

Denver, Colorado 80203

Attention:    Chief Financial Officer

Attention:    General Counsel

if to the Warrant Agent, to:

Computershare Inc.

Computershare Trust Company, N.A.

150 Royall Street

Canton, MA 02021

Facsimile:    (781) 575-2549

Attention:     Corporate Actions

with a copy which shall not constitute notice to:

Computershare Inc.

Computershare Trust Company, N.A.

150 Royall Street

Canton, MA 02021

Attention:     Legal Department

or, in either case, such other address as shall have been set forth in a notice delivered in accordance with this Section 11.1(a).

All such communications shall be effective when sent.

Any Person that telecopies any communication hereunder to any Person shall, on the same date as such telecopy is transmitted, also send, by trackable or first class mail, postage prepaid and addressed to such Person as specified above, an original copy of the communication so transmitted.

(b)    Where this Agreement provides for notice to Holders of any event, such notice shall be sufficiently given (unless otherwise herein expressly provided) if in writing and mailed, by trackable or first-class mail, to each Holder affected by such event, at the address of

 

29


such Holder as it appears in the Warrant Register. In any case where notice to Holders is given by mail, neither the failure to mail such notice, nor any defect in any notice so mailed, to any particular Holder shall affect the sufficiency of such notice with respect to other Holders. Where this Agreement provides for notice in any manner, such notice may be waived in writing by the Person entitled to receive such notice, either before or after the event, and such waiver shall be the equivalent of such notice.

In case by reason of the suspension of regular mail service or by reason of any other cause it shall be impracticable to give such notice by mail, then such notification as shall be made by a method approved by the Warrant Agent as one which would be most reliable under the circumstances for successfully delivering the notice to the addressees shall constitute a sufficient notification for every purpose hereunder.

Where this Agreement provides for notice of any event to a Holder of a Global Warrant Certificate, such notice shall be sufficiently given if given to the Depositary (or its designee), pursuant to its Applicable Procedures, not later than the latest date (if any), and not earlier than the earliest date (if any), prescribed for the giving of such notice.

11.2    Required Notices to Holders. In the event the Company shall:

(a)    take any action that would result in an adjustment to the Exercise Price and/or the number of shares of Common Stock issuable upon exercise of a Warrant pursuant to Section 5.1;

(b)    consummate any Winding Up; or

(c)    consummate any Transaction (each of (a), (b) or (c), an “Action”);

then, in each such case, the Company shall deliver to the Warrant Agent and, unless the Company has made a filing with the Commission, including pursuant to a Current Report on Form 8-K, which filing discloses such Action, the Company shall deliver (or cause to be delivered ) to each Holder of a Warrant Certificate, in accordance with Section 11.1(b) hereof, a written notice of such Action, including, in the case of an action pursuant to Section 11.2(a), the information required under Section 5.1(j)(ii). Such notice shall be given promptly after taking such Action.

If at any time the Company shall cancel any of the Actions for which notice has been given under this Section 11.2 prior to the consummation thereof, the Company shall give each Holder prompt notice of such cancellation in accordance with Section 11.1(b), unless the Company has made a filing with the Commission, including pursuant to a current report on Form 8-K, which filing discloses the cancellation of such Actions. For the avoidance of doubt, if at any time the Company shall cancel any of the Actions for which notice has been given under this Section 11.2 prior to the consummation thereof, the Company shall give Warrant Agent prompt notice of such cancellation in accordance with Section 11.1(b).

 

12.

Inspection.

The Warrant Agent shall cause a copy of this Agreement to be available at all reasonable times at the office of the Warrant Agent for inspection by any Holder of any Warrant Certificate. The Warrant Agent may require any such Holder to submit its Warrant Certificate for inspection by the Warrant Agent.

 

30


13.

Amendments.

(a)    This Agreement may be amended by the Company and the Warrant Agent with the consent of the Required Warrant Holders.

(b)    Notwithstanding the foregoing, the Company and the Warrant Agent may, without the consent or concurrence of the Holders of the Warrant Certificates, by supplemental agreement or otherwise, amend this Agreement for the purpose of making any changes or corrections in this Agreement that (i) are required to cure any ambiguity or to correct or supplement any defective or inconsistent provision or clerical omission or mistake or manifest error herein contained or (ii) add to the covenants and agreements of the Company in this Agreement further covenants and agreements of the Company thereafter to be observed, or surrender any rights or powers reserved to or conferred upon the Company in this Agreement; provided, however, that in either case such amendment shall not adversely affect the rights or interests of the Holders of the Warrant Certificates hereunder in any material respect.

(c)    The consent of each Holder of any Warrant Certificate evidencing any warrants affected thereby shall be required for any supplement or amendment to this Agreement or the Warrants that would: (i) increase the Exercise Price or decrease the number of shares of Common Stock receivable upon exercise of Warrants, in each case other than as provided in Section 5.1; (ii) cause the Expiration Date to be changed to an earlier date; or (iii) modify the provisions contained in Section 5.1 in a manner adverse to the Holders of Warrant Certificates generally with respect to their Warrants.

(d)    The Warrant Agent shall join with the Company in the execution and delivery of any such amendment unless such amendment affects the Warrant Agent’s own rights, duties or immunities hereunder, in which case the Warrant Agent may, but shall not be required to, join in such execution and delivery; provided, that, as a condition precedent to the Warrant Agent’s execution of any amendment to this Agreement, the Company shall deliver to the Warrant Agent a certificate from an Appropriate Officer that states that the proposed amendment is in compliance with the terms of this Section 13. Upon execution and delivery of any amendment pursuant to this Section 13, such amendment shall be considered a part of this Agreement for all purposes and every Holder of a Warrant Certificate theretofore or thereafter countersigned and delivered hereunder shall be bound thereby.

(e)    Promptly after the execution by the Company and the Warrant Agent of any such amendment, unless the Company has made a filing with the Commission, including pursuant to a current report on Form 8-K, which filing discloses such adjustment, the Company shall give notice to the Holders of Warrant Certificates, setting forth in general terms the substance of such amendment, in accordance with the provisions of Section 11.1(b). Any failure of the Company to mail such notice or any defect therein, shall not, however, in any way impair or affect the validity of any such amendment.

 

31


14.

Waivers.

The Company may take any action herein prohibited, or omit to perform any act herein required to be performed by it, only if the Company has obtained the written consent of the Required Warrant Holders, as required pursuant to Section 13.

 

15.

Successor to Company.

So long as Warrants remain outstanding, the Company will not enter into any Transaction unless the acquirer (a “Successor Company”) shall expressly assume by a supplemental agreement, executed and delivered to the Warrant Agent, in form reasonably satisfactory to the Warrant Agent, the due and punctual performance of every covenant of this Agreement on the part of the Company to be performed and observed and shall have provided for exercise rights in accordance with Section 5.1(f)(i). Upon the consummation of such Transaction, the acquirer shall succeed to, and be substituted for, and may exercise every right and power of, the Company under this Agreement with the same effect as if such acquirer had been named as the Company herein.

 

16.

Headings.

The section headings contained in this Agreement are inserted for convenience only and will not affect in any way the meaning or interpretation of this Agreement.

 

17.

Counterparts.

This Agreement may be executed in two or more counterparts, each of which will be deemed to be an original, but all of which together constitute one and the same instrument. A signature to this Agreement transmitted electronically shall have the same authority, effect and enforceability as an original signature.

 

18.

Severability.

The provisions of this Agreement will be deemed severable and the invalidity or unenforceability of any provision hereof will not affect the validity or enforceability of the other provisions hereof; provided, that, if any provision of this Agreement, as applied to any party or to any circumstance, is adjudged by a court or governmental body not to be enforceable in accordance with its terms, the parties agree that the court or governmental body making such determination will have the power to modify the provision in a manner consistent with its objectives such that it is enforceable, and/or to delete specific words or phrases, and in its reduced form, such provision will then be enforceable and will be enforced; further, provided, that, if such excluded provision shall affect the rights, immunities, liabilities, duties or obligations of the Warrant Agent, the Warrant Agent shall be entitled to resign immediately upon written notice to the Company.

 

19.

No Redemption.

The Warrants shall not be subject to redemption by the Company or any other Person; provided, that, the Warrants may be acquired by means other than a redemption, whether by tender offer, open market purchases, negotiated transactions or otherwise, in accordance with applicable securities laws, so long as such acquisition does not otherwise violate the terms of this Agreement.

 

32


20.

Persons Benefiting.

This Agreement shall be binding upon and inure to the benefit of the Company, the Warrant Agent and the Holders from time to time. Nothing in this Agreement, express or implied, is intended to confer upon any person other than the Company, the Warrant Agent and the Holders any rights or remedies under or by reason of this Agreement or any part hereof, and all covenants, conditions, stipulations, promises and agreements contained in this Agreement shall be for the sole and exclusive benefit of the parties hereto and of the Holders. Each Holder, by acceptance of a Warrant Certificate, agrees to all of the terms and provisions of this Agreement applicable thereto.

 

21.

Applicable Law.

THIS AGREEMENT, EACH WARRANT CERTIFICATE ISSUED HEREUNDER, EACH WARRANT EVIDENCED THEREBY AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HERETO AND THERETO, INCLUDING THE INTERPRETATION, CONSTRUCTION, VALIDITY AND ENFORCEABILITY THEREOF, SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REFERENCE TO ANY RULES OR PRINCIPLES THAT WOULD REQUIRE THE APPLICATION OF THE LAWS OF ANY OTHER JURISDICTION.

 

22.

Entire Agreement.

This Agreement sets forth the entire agreement of the parties hereto as to the subject matter hereof and supersedes all previous agreements among all or some of the parties hereto with respect thereto, whether written, oral or otherwise.

 

23.

Force Majeure.

Notwithstanding anything to the contrary contained herein, the Warrant Agent will not be liable for any delays or failures in performance resulting from acts beyond its reasonable control including, without limitation, acts of God, terrorist acts, shortage of supply, disruptions in public utilities, interruptions or malfunction of computer facilities, or loss of data due to power failures or mechanical difficulties with information storage or retrieval systems, labor difficulties, war, pandemics, epidemics or civil unrest.

 

24.

Further Assurances.

The Company shall perform, acknowledge and deliver or cause to be performed, acknowledged and delivered all such further and other acts, documents, instruments and assurances as may be reasonably required by the Warrant Agent for the carrying out or performing by the Warrant Agent of the provisions of this Agreement.

 

25.

Confidentiality.

The Warrant Agent and the Company agree that all books, records, information and data pertaining to the business of the other party, including inter alia, personal, non-public warrant holder information, which are exchanged or received pursuant to the negotiation or the carrying

 

33


out of this Agreement including the fees for services set forth in the attached schedule shall remain confidential, and shall not be voluntarily disclosed to any other person, except as may be required by law, including, without limitation, pursuant to subpoenas from state or federal government authorities (e.g., in divorce and criminal actions) or to such party’s advisors (including its attorneys). However, each party may disclose relevant aspects of the other party’s confidential information to its officers, affiliates, agents, subcontractors and employees to the extent reasonably necessary to perform its duties and obligations under this Agreement and such disclosure is not prohibited by applicable law.

[Remainder of Page Intentionally Left Blank]

 

34


IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered as of the day and year first above written.

 

WHITING PETROLEUM CORPORATION, a

Delaware corporation

By:  

/s/ Bruce DeBoer

  Name:   Bruce DeBoer
  Title:   Chief Administrative Officer, General Counsel & Secretary

COMPUTERSHARE TRUST COMPANY, N.A.

and COMPUTERSHARE INC.

On behalf of both entities

By:  

/s/ Collin Ekeogu

  Name:   Collin Ekeogu
  Title:   Manager, Corporate Actions

 

[Signature Page to Warrant Agreement]


EXHIBIT A

[FACE OF SERIES B WARRANT CERTIFICATE]1

WHITING PETROLEUM CORPORATION

WARRANT CERTIFICATE

EVIDENCING

SERIES B WARRANTS TO PURCHASE COMMON STOCK

[FACE]

 

No. [    ]   CUSIP No. 966387128

[UNLESS THIS GLOBAL SERIES B WARRANT CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (“DTC”), TO WHITING PETROLEUM CORPORATION (THE “COMPANY”), THE CUSTODIAN OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

TRANSFER OF THIS GLOBAL SERIES B WARRANT CERTIFICATE SHALL BE LIMITED TO TRANSFERS IN WHOLE, AND NOT IN PART, TO THE COMPANY, DTC, THEIR SUCCESSORS AND THEIR RESPECTIVE NOMINEES.]2

 

 

1 

To be removed in the versions of the Definitive Warrant Certificates printed in multiple copies for use by the Warrant Agent in preparing Definitive Warrants Certificates for issuance and delivery from time to time to holders.

2 

Include only on Global Warrant Certificate.


WHITING PETROLEUM CORPORATION

 

No. [    ]    [    ,    ,    ] Warrants

CUSIP No. 966387128

THIS CERTIFIES THAT, for value received, [                    ], or registered assigns, is the registered owner of the number of Warrants to purchase Common Stock of Whiting Petroleum Corporation, a Delaware corporation (the “Company”, which term includes any successor thereto under the Warrant Agreement (as may be supplemented, amended or amended and restated pursuant to the applicable provisions hereof, the “Warrant Agreement”), dated as of September 1, 2020, between the Company, Computershare Inc., a Delaware corporation (“Computershare”), and its wholly-owned subsidiary Computershare Trust Company, N.A., a federally chartered trust company (collectively, the “Warrant Agent”, which term includes any successor thereto permitted under the Warrant Agreement)) specified above [or such lesser number as may from time to time be endorsed on the “Schedule of Decreases in Warrants” attached hereto]3, and is entitled, subject to and upon compliance with the provisions hereof and of the Warrant Agreement, at such Holder’s option, at any time when the Warrants evidenced hereby are exercisable, to purchase from the Company one share of Common Stock of the Company for each Warrant evidenced hereby, at the purchase price of $83.45 per share (as adjusted from time to time, the “Exercise Price”), payable in full at the time of purchase, the number of shares of Common Stock into which and the Exercise Price at which each Warrant shall be exercisable each being subject to adjustment as provided in Section 5 of the Warrant Agreement.

All shares of Common Stock issuable by the Company upon the exercise of Warrants shall, upon such issuance, be duly and validly issued and fully paid and nonassessable. The Company shall pay any and all taxes (other than income taxes) that may be payable in respect of the issue or delivery of shares of Common Stock on exercise of Warrants. The Company or Warrant Agent shall not be required, however, to pay any tax or other charge imposed in respect of any transfer involved in the issue and delivery of shares of Common Stock in book-entry form or any certificates for shares of Common Stock or payment of cash or other property to any Recipient other than the Holder of the Warrant Certificate evidencing the exercised Warrant, and in case of such transfer or payment, the Warrant Agent and the Company shall not be required to issue or deliver any shares of Common Stock in book-entry form or any certificate or pay any cash until (a) such tax or charge has been paid or an amount sufficient for the payment thereof has been delivered to the Warrant Agent or to the Company, (b) it has been established to the Company’s or Warrant Agent’s satisfaction that any such tax or other charge that is or may become due has been paid or (c) the receipt of any other such information as set forth in the Warrant Agreement.

Each Warrant evidenced hereby may be exercised by the Holder hereof at the Exercise Price then in effect on any Business Day from and after the Original Issue Date until 5:00 p.m., New York time, on the Expiration Date in the Warrant Agreement.

Subject to the provisions hereof and of the Warrant Agreement, the Holder of this Warrant Certificate may exercise all or any whole number of the Warrants evidenced hereby by, in the case

 

3 

Include only on Global Warrant Certificate.

 

A-2


of a Global Warrant Certificate, by delivery to the Warrant Agent of the Exercise Form on the reverse hereof, setting forth the number of Warrants being exercised and otherwise properly completed and duly executed by the Holder thereof to the Warrant Agent, and delivering such Warrants by book-entry transfer through the facilities of the Depositary, to the Warrant Agent in accordance with the Applicable Procedures and otherwise complying with Applicable Procedures in respect of the exercise of such Warrants or, in the case of a Definitive Warrant Certificate, by delivery to the Warrant Agent of the Exercise Form on the reverse hereof, setting forth the number of Warrants being exercised and otherwise properly completed and duly executed by the Holder thereof to the Warrant Agent, and surrendering this Warrant Certificate to the Warrant Agent at its office maintained for such purpose (the “Corporate Agency Office”).

Reference is hereby made to the further provisions of this Warrant Certificate set forth on the reverse hereof, which further provisions shall for all purposes have the same effect as if set forth at this place.

Unless this Warrant Certificate has been countersigned by the Warrant Agent by manual or facsimile signature of an authorized officer on behalf of the Warrant Agent, this Warrant Certificate shall not be valid for any purpose and no Warrant evidenced hereby shall be exercisable.

IN WITNESS WHEREOF, the Company has caused this certificate to be duly executed under its corporate seal.

Dated: [             ], 20[    ]

 

   

WHITING PETROLEUM

CORPORATION

[SEAL]     By:  

                    

      [Title]
ATTEST:      
Countersigned:      
Computershare Inc. and Computershare Trust Company, N.A., jointly as Warrant Agent     [                    ]
    OR    
By:  

                    

    By:  

 

  Authorized Agent       as Countersigning Agent
      By:  

 

        Authorized Officer

 

A-3


Reverse of Series B Warrant Certificate

WHITING PETROLEUM CORPORATION

SERIES B WARRANT CERTIFICATE

EVIDENCING

SERIES B WARRANTS TO PURCHASE COMMON STOCK

The Warrants evidenced hereby are one of a duly authorized issue of Warrants of the Company designated as its Series B Warrants to Purchase Common Stock (“Warrants”), limited in aggregate number to 2,418,910 issued under and in accordance with the Warrant Agreement, dated as of September 1, 2020 (the “Warrant Agreement”), between the Company, Computershare Inc., a Delaware corporation (“Computershare”), and its wholly-owned subsidiary Computershare Trust Company, N.A., a federally chartered trust company (collectively, the “Warrant Agent”, which term includes any successor thereto permitted under the Warrant Agreement), to which the Warrant Agreement and all amendments thereto reference is hereby made for a statement of the respective rights, limitations of rights, duties and immunities thereunder of the Company, the Warrant Agent, the Holders of Warrant Certificates and the owners of the Warrants evidenced thereby and of the terms upon which the Warrant Certificates are, and are to be, countersigned and delivered. A copy of the Warrant Agreement shall be available at all reasonable times at the office of the Warrant Agent for inspection by the Holder hereof.

The Warrant Agreement provides that, in addition to certain adjustments to the number of shares of Common Stock into which a Warrant is exercisable and the Exercise Price required to be made in certain circumstances, in the case of any Transaction the Company shall cause the other Person involved in such Transaction to execute and deliver to the Warrant Agent a written instrument providing that (i) the Warrants evidenced hereby, if then outstanding, will be exercisable thereafter, during the period the Warrants evidenced hereby shall be exercisable as specified herein, only into the Substituted Securities that would have been receivable upon such Transaction by a holder of the number of shares of Common Stock that would have been issued upon exercise of such Warrant if such Warrant had been exercised in full immediately prior to such Transaction (upon certain assumptions specified in the Warrant Agreement); and (ii) the rights and obligations of the other Person involved in such Transaction and the holders in respect of Substituted Securities shall be substantially unchanged to be as nearly equivalent as may be practicable to the rights and obligations of the Company and Holders in respect of Common Stock.

Except as provided in the Warrant Agreement, all outstanding Warrants shall expire and all rights of the Holders of Warrant Certificates evidencing such Warrants shall automatically terminate and cease to exist, as of 5:00 p.m., New York time, on the Expiration Date. The “Expiration Date” shall mean the earlier to occur of (x) September 1, 2025 (the fifth (5th) anniversary of the Original Issue Date) or, if not a Business Day, then the next Business Day thereafter; (y) the date of consummation of a Transaction to which clause (ii) of Section 5.1(f) of the Warrant Agreement applies; and (z) a Winding Up.

In the event of the exercise of less than all of the Warrants evidenced hereby, a new Warrant Certificate of the same tenor and for the number of Warrants which are not exercised shall be issued by the Company in the name or upon the written order of the Holder of this Warrant Certificate upon the cancellation hereof.

 

A-4


The Warrant Certificates are issuable only in registered form in denominations of whole numbers of Warrants. Upon surrender at the office of the Warrant Agent and payment of the charges specified herein and in the Warrant Agreement, this Warrant Certificate may be exchanged for Warrant Certificates in other authorized denominations or the transfer hereof may be registered in whole or in part in authorized denominations to one or more designated transferees; provided, however, that such other Warrant Certificates issued upon exchange or registration of transfer shall evidence the same aggregate number of Warrants as this Warrant Certificate. The Company shall cause to be kept at the office or offices of the Warrant Agent the Warrant Register in which, subject to such reasonable regulations as the Warrant Agent may prescribe and such regulations as may be prescribed by law, the Company shall provide for the registration of Warrant Certificates and of transfers or exchanges of Warrant Certificates. No service charge shall be made for any registration of transfer or exchange of Warrant Certificates; provided, however, the Company may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any registration of transfer or exchange of Warrant Certificates.

Prior to due presentment of this Warrant Certificate for registration of transfer, the Company, the Warrant Agent and any agent of the Company or the Warrant Agent may treat the Person in whose name this Warrant Certificate is registered as the owner hereof for all purposes, and neither the Company, the Warrant Agent nor any such agent shall be affected by notice to the contrary.

The Warrant Agreement permits, with certain exceptions as therein provided, the amendment thereof and the modification of the rights and obligations of the Company and the rights of the Holders of Warrant Certificates under the Warrant Agreement at any time by the Company and the Warrant Agent with the consent of the Required Warrant Holders.

Until the exercise of any Warrant, subject to the provisions of the Warrant Agreement and except as may be specifically provided for in the Warrant Agreement, (i) no Holder of a Warrant Certificate evidencing any Warrant shall have or exercise any rights by virtue hereof as a holder of Common Stock of the Company, including, without limitation, the right to vote, to receive dividends and other distributions or to receive notice of, or attend meetings of, stockholders or any other proceedings of the Company; (ii) the consent of any such Holder shall not be required with respect to any action or proceeding of the Company; (iii) except as provided with respect to a Winding Up of the Company, no such Holder, by reason of the ownership or possession of a Warrant or the Warrant Certificate representing the same, shall have any right to receive any cash dividends, stock dividends, allotments or rights or other distributions (except as specifically provided in the Warrant Agreement), paid, allotted or distributed or distributable to the stockholders of the Company prior to or for which the relevant record date preceded the date of the exercise of such Warrant; and (iv) no such Holder shall have any right not expressly conferred by the Warrant or Warrant Certificate held by such Holder.

This Warrant Certificate, each Warrant evidenced thereby and the Warrant Agreement shall be governed by and construed in accordance with the laws of the State of New York.

 

A-5


All terms used in this Warrant Certificate which are defined in the Warrant Agreement shall have the meanings assigned to them in the Warrant Agreement. In the event of any conflict between this Warrant Certificate and the Warrant Agreement, the Warrant Agreement shall control.

 

A-6


Exercise Form for Series B Warrant Certificate

Computershare Trust Company, N.A.

250 Royall Street

Canton, MA 02021

Attention: Corporate Actions

Re: Whiting Petroleum Corporation Warrant Agreement, dated as of September 1, 2020

In accordance with and subject to the terms and conditions hereof and of the Warrant Agreement, the undersigned registered Holder of this Warrant Certificate hereby irrevocably elects to exercise                      Warrants evidenced by this Warrant Certificate.

The undersigned requests that the shares of Common Stock issuable upon exercise be in fully registered form in such denominations and registered in such names and delivered, together with any other property receivable upon exercise, in such manner as is specified in the instructions set forth below.

If the number of Warrants exercised is less than all of the Warrants evidenced hereby, (i) if this Warrant Certificate is a Global Warrant Certificate, the Warrant Agent shall endorse the “Schedule of Decreases in Warrants” attached hereto to reflect the Warrants being exercised or (ii) if this Warrant Certificate is a Definitive Warrant Certificate, the undersigned requests that a new Definitive Warrant Certificate representing the remaining Warrants evidenced hereby be issued and delivered to the undersigned unless otherwise specified in the instructions below.

 

A-7


Dated:  

                    

    Name:  

                    

 

    (Please Print)
 

(Insert Social Security or Other

Identifying Number of Holder)

    Address:  

                    

     

 

     

 

      Signature
      (Signature must conform in all respects to name of Holder as specified on the face of this Warrant Certificate and must bear a signature guarantee by a bank, trust company or member firm of a U.S. national securities exchange.)

Signature Guaranteed:

Instructions (i) as to denominations and names of Common Stock issuable upon exercise and as to delivery of such securities and any other property issuable upon exercise and (ii) if applicable, as to Definitive Warrant Certificates evidencing unexercised Warrants:

Assignment

(Form of Assignment To Be Executed If Holder Desires To Transfer Warrant Certificate)

FOR VALUE RECEIVED                                          hereby sells, assigns and transfers unto

Please insert social security or

other identifying number

(Please print name and address including zip code)

the Warrants represented by the within Warrant Certificate and does hereby irrevocably constitute and appoint                      Attorney, to transfer said Warrant Certificate on the books of the within-named Company with full power of substitution in the premises.

 

Dated:                                                 Signature  

                    

      (Signature must conform in all respects to name of Holder as specified on the face of this Warrant Certificate and must bear a signature guarantee by a bank, trust company or member firm of a U.S. national securities exchange.)

 

A-8


[SCHEDULE A

SCHEDULE OF DECREASES IN WARRANTS

The following decreases in the number of Warrants evidenced by this Global Warrant Certificate have been made:

 

Date

   Amount of decrease in
number of Warrants
evidenced by this Global
Warrant Certificate
     Number of Warrants
evidenced by this Global
Warrant Certificate
following such decrease
     Signature of authorized
signatory]4
 
        
        
        
        
        

 

4 

Include only on Global Warrant Certificate.

 

A-9

Exhibit 10.4

WHITING PETROLEUM CORPORATION

2020 EQUITY INCENTIVE PLAN

 

1.

Purpose and Effective Date

(a)    Purpose. The purpose of the Whiting Petroleum Corporation 2020 Equity Incentive Plan (the “Plan”) is to promote the best interests of Whiting Petroleum Corporation (together with any successor thereto, the “Company”) and its stockholders by providing key employees and non-employee directors of the Company and its Affiliates (as defined below) with an opportunity to acquire a proprietary interest in the Company, receive monetary payments based on the value of the Company’s shares, or receive other incentive compensation. It is intended that the Plan will promote continuity of management and increased incentive and personal interest in the welfare of the Company by those key employees who are primarily responsible for shaping and carrying out the long-range plans of the Company and securing the Company’s continued growth and financial success. In addition, by encouraging stock ownership by directors who are not employees of the Company or its Affiliates, the Company seeks to attract and retain on its Board of Directors persons of exceptional competence and to provide a further incentive to serve as a director of the Company.

(b)    Effective Date. The effective date of the Plan is September 1, 2020 (the “Effective Date”).

 

2.

Definitions

As used in the Plan, the following terms shall have the respective meanings set forth below:

(a)    “10% Stockholder” shall mean a Participating Key Employee who, as of the date an Incentive Stock Option is granted to such individual, owns more than ten percent (10%) of the total combined voting power of all classes of stock then issued by the Company or a subsidiary corporation.

(b)    “Act” shall mean the Securities Act of 1933, as amended.

(c)    “Affiliate” shall mean any entity that, directly or through one or more intermediaries, is controlled by, controls, or is under common control with, the Company within the meaning of Code Section 414(b) or (c); provided that, in applying such provisions, the phrase “at least 50 percent” shall be used in place of “at least 80 percent” each place it appears therein.

(d)    “Award” shall mean any Option, Stock Appreciation Right, Restricted Stock, Restricted Stock Unit, Performance Share, Performance Unit or Annual Incentive Award granted under the Plan.

(e)    “Award Agreement” shall mean any written agreement, contract, or other instrument or document evidencing any Award granted under the Plan.


(f)    “Beneficial Ownership” shall mean a Person’s beneficial ownership of any securities:

(i)    which such Person or any of such Person’s Affiliates has the right to acquire (whether such right is exercisable immediately or only after the passage of time) pursuant to any agreement, arrangement or understanding, or upon the exercise of conversion rights, exchange rights, rights, warrants or options, or otherwise; provided, however, that a Person shall not be deemed the Beneficial Owner of, or to beneficially own, (A) securities tendered pursuant to a tender or exchange offer made by or on behalf of such Person or any of such Person’s Affiliates until such tendered securities are accepted for purchase, or (B) securities issuable upon exercise of rights issued pursuant to the terms of any Rights Agreement of the Company, at any time before the issuance of such securities;

(ii)    which such Person or any of such Person’s Affiliates, directly or indirectly, has the right to vote or dispose of or has “beneficial ownership” of (as determined pursuant to Rule 13d-3 of the General Rules and Regulations under the Act), including pursuant to any agreement, arrangement or understanding; provided, however, that a Person shall not be deemed the Beneficial Owner of, or to beneficially own, any security under this clause (ii) as a result of an agreement, arrangement or understanding to vote such security if the agreement, arrangement or understanding: (A) arises solely from a revocable proxy or consent given to such Person in response to a public proxy or consent solicitation made pursuant to, and in accordance with, the applicable rules and regulations under the Act and (B) is not also then reportable on a Schedule 13D under the Act (or any comparable or successor report); or

(iii)    which are beneficially owned, directly or indirectly, by any other Person with which such Person or any of such Person’s Affiliates has any agreement, arrangement or understanding for the purpose of acquiring, holding, voting (except pursuant to a revocable proxy as described in clause (ii) above) or disposing of any voting securities of the Company.

(g)    “Board” shall mean the Board of Directors of the Company.

(h)    “Change in Control” shall mean the occurrence of any of the following:

(i)    any Person (other than (A) the Company or any of its subsidiaries, (B) a trustee or other fiduciary holding securities under any employee benefit plan of the Company or any of its subsidiaries, (C) an underwriter temporarily holding securities pursuant to an offering of such securities or (D) a corporation owned, directly or indirectly, by the shareholders of the Company in substantially the same proportions as their ownership of stock in the Company (“Excluded Persons”)) is or becomes the Beneficial Owner, directly or indirectly, of securities of the Company (not including in the securities beneficially owned by such Person any securities acquired directly from the Company or its Affiliates after the Effective Date, pursuant to express authorization by the Board that refers to this exception) representing 50% or more of either the then outstanding shares of common stock of the Company or the combined Voting Power of the Company’s then outstanding voting securities; or

 

2


(ii)    the following individuals cease for any reason to constitute a majority of the number of directors of the Company then serving: (A) individuals who, on the Effective Date constituted the Board and (B) any new director (other than a director whose initial assumption of office is in connection with an actual or threatened election contest, including but not limited to a consent solicitation, relating to the election of directors of the Company) whose appointment or election by the Board or nomination for election by the Company’s shareholders was approved by a vote of a majority of the directors then still in office who either were directors on the Effective Date, or whose appointment, election or nomination for election was previously so approved (collectively the “Continuing Directors”); or

(iii)    the consummation of a merger, consolidation or share exchange of the Company with any other corporation or the issuance of voting securities of the Company in connection with a merger, consolidation or share exchange of the Company (or any direct or indirect subsidiary of the Company) pursuant to applicable stock exchange requirements, other than (A) a merger, consolidation or share exchange which would result in the voting securities of the Company outstanding immediately prior to such merger, consolidation or share exchange continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity or any parent thereof) at least 50% of the combined Voting Power of the voting securities of the Company or such surviving entity or any parent thereof outstanding immediately after such merger, consolidation or share exchange, or (B) a merger, consolidation or share exchange effected to implement a recapitalization of the Company (or similar transaction) in which no Person (other than an Excluded Person) is or becomes the Beneficial Owner, directly or indirectly, of securities of the Company (not including in the securities beneficially owned by such Person any securities acquired directly from the Company or its Affiliates after the Effective Date, pursuant to express authorization by the Board that refers to this exception) representing 50% or more of either the then outstanding shares of common stock of the Company or the combined Voting Power of the Company’s then outstanding voting securities; or

(iv)    a complete liquidation or dissolution of the Company is effected or there is a sale or disposition by the Company of all or substantially all of the Company’s assets (in one transaction or a series of related transactions within any period of 12 consecutive months), other than a sale or disposition by the Company of all or substantially all of the Company’s assets to an entity at which the majority of the combined Voting Power of the voting securities are owned by Persons in substantially the same proportions as their ownership of the Company immediately prior to such sale.

Notwithstanding the foregoing, (1) no “Change in Control” shall be deemed to have occurred if there is consummated any transaction or series of integrated transactions

 

3


immediately following which the record holders of the Stock immediately prior to such transaction or series of transactions continue to own, directly or indirectly, in the same proportions as their ownership in the Company, an entity that owns all or substantially all of the assets or voting securities of the Company immediately following such transaction or series of transactions and (2) with respect to an Award that is or may be considered deferred compensation subject to Code Section 409A, the definition of “Change in Control” herein shall be amended and interpreted in a manner that allows the definition to satisfy the requirements of a change of control under Code Section 409A solely for purposes of complying with the requirements of Code Section 409A.

(i)    “Code” shall mean the Internal Revenue Code of 1986, as amended from time to time. Any reference to a specific provision of the Code shall also be deemed a reference to any successor provision thereto.

(j)    “Commission” shall mean the United States Securities and Exchange Commission or any successor agency.

(k)    “Committee” shall mean a committee of the Board of Directors of the Company or a subcommittee thereof designated by such Board to administer the Plan and comprised solely of not less than two directors, each of whom will be a “non-employee director” within the meaning of Rule 16b-3; provided that the mere fact that the Committee shall fail to qualify under the foregoing requirements shall not invalidate any Award made by the Committee that is otherwise validly made under the Plan, unless the Committee is aware at the time of the Award’s grant of the Committee’s failure to so qualify.

(l)    “Dividend Equivalent” shall mean a right, granted to a Participating Key Employee or Non-Employee Director under the Plan, to receive cash equal to the cash dividends paid with respect to a specified number of Shares. Dividend Equivalents shall not be deemed to be Awards under the Plan.

(m)    “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended from time to time.

(n)    “Excluded Items” shall mean any items which the Committee determines shall be excluded in fixing Performance Goals, including, without limitation, any gains or losses from discontinued operations, any extraordinary gains or losses and the effects of accounting changes.

(o)    “Fair Market Value” shall mean, with respect to a Share on a particular date: (i) the last sales price on such date on the New York Stock Exchange, as reported in The Wall Street Journal, or if no sales of Shares occur on the date in question, on the last preceding date on which there was a sale on such market; (ii) if the Shares are not listed on the New York Stock Exchange, but are traded on another national securities exchange or in an over-the-counter market, the last sales price (or, if there is no last sales price reported, the average of the closing bid and asked prices) for the Shares on the particular date, or on the last preceding date on which there was a sale of Shares on that exchange or market; or (iii) if the Shares are neither listed on a national securities exchange nor traded in an over-the-counter market, the price determined by

 

4


the Committee. With respect to any property other than Shares, Fair Market Value shall mean the fair market value of such property determined by such methods or procedures as shall be established from time to time by the Committee.

(p)    “Incentive Award” shall mean the right to receive a cash payment to the extent Performance Goals are achieved, and shall include “Annual Incentive Awards” as described in Section 6(f) of the Plan.

(q)    “Incentive Stock Option” shall mean an option granted under Section 6(a) of the Plan that is intended to meet the requirements of Section 422 of the Code.

(r)    “Key Employee” shall mean any officer or other key employee of the Company or of any Affiliate who is responsible for or contributes to the management, growth or profitability of the business of the Company or any Affiliate as determined by the Committee.

(s)    “Non-Employee Director” shall mean a director of the Company or any Affiliate who is not an employee of the Company or any Affiliate.

(t)    “Non-Qualified Stock Option” shall mean an option granted under Section 6(a) of the Plan that is not intended to be an Incentive Stock Option.

(u)    “Option” shall mean an Incentive Stock Option or a Non-Qualified Stock Option.

(v)    “Participant” shall mean a Participating Key Employee or a Non-Employee Director who is selected by the Committee to receive an Award under the Plan.

(w)    “Participating Key Employee” shall mean a Key Employee designated to be granted an Award under the Plan.

(x)    “Performance Goals” shall mean each of, or a combination of one or more of the performance metrics selected by the Committee as the basis for the vesting or payment of an Award, subject to such terms and conditions as the Committee determines in its discretion.

(y)    “Performance Period” shall mean, in relation to Performance Shares or Performance Units, any period for which a Performance Goal or Goals have been established; provided, however, that such period shall not be less than one year.

(z)    “Performance Share” shall mean any right granted under Section 6(e) of the Plan that will be paid out in cash, as a Share (which, in specified circumstances, may be a Share of Restricted Stock) or as a Restricted Stock Unit, which right is contingent on the achievement of one or more Performance Goals during a specified Performance Period.

(aa)    “Performance Unit” shall mean any right granted under Section 6(e) of the Plan to receive a designated dollar value amount in cash, Shares (which, in specified circumstances, may be a designated dollar value amount of Shares of Restricted Stock) or Restricted Stock Units, which right is contingent on the achievement of one or more Performance Goals during a specified Performance Period.

 

5


(bb)    “Person” shall mean any individual, corporation, partnership, association, joint-stock company, trust, unincorporated organization, or government or political subdivision thereof.

(cc)    “Released Securities” shall mean Shares of Restricted Stock with respect to which all applicable restrictions have expired, lapsed, or been waived.

(dd)    “Restricted Securities” shall mean Awards of Restricted Stock or other Awards under which issued and outstanding Shares are held subject to certain restrictions.

(ee)    “Restricted Stock” shall mean any Share granted under Section 6(c) of the Plan or, in specified circumstances, a Share paid in connection with another Award, with such Share subject to risk of forfeiture and restrictions on transfer or other restrictions that will lapse upon the achievement of one or more goals relating to completion of service by the Key Employee or Non-Employee Director or the achievement of performance or other objectives, as determined by the Committee.

(ff)    “Restricted Stock Unit” shall mean any right to receive Shares in the future granted under Section 6(d) of the Plan or paid in connection with another Award, with such right subject to risk of forfeiture and restrictions on transfer or other restrictions that will lapse upon the achievement of one or more goals relating to completion of service by the Key Employee or Non-Employee Director or the achievement of performance or other objectives, as determined by the Committee.

(gg)    “Rule 16b-3” shall mean Rule 16b-3 as promulgated by the Commission under the Exchange Act, or any successor rule or regulation thereto.

(hh)    “Shares” shall mean shares of common stock of the Company, $.001 par value, and such other securities or property as may become subject to Awards pursuant to an adjustment made under Section 4(b) of the Plan.

(ii)    “Stock Appreciation Right” shall mean any right granted under Section 6(b) of the Plan.

(jj)    “Voting Power” means the voting power of the outstanding securities of the Company having the right under ordinary circumstances to vote at an election of the Board of Directors of the Company.

 

3.

Administration

The Plan shall be administered by the Committee; provided, however, that if at any time the Committee shall not be in existence, the functions of the Committee as specified in the Plan shall be exercised by a committee consisting of those members of the Board of Directors of the Company who qualify as “non-employee directors” under Rule 16b-3. To the extent permitted by applicable law, the Committee may delegate to one or more executive officers of the Company any or all of the authority and responsibility of the Committee with respect to the Plan, other than with respect to Persons who are subject to Section 16 of the Exchange Act. To the extent the Committee has so delegated to one or more executive officers the authority and responsibility of the Committee, all references to the Committee herein shall include such officer or officers.

 

6


Subject to the terms of the Plan and without limitation by reason of enumeration, the Committee shall have full discretionary power and authority to: (i) designate Participating Key Employees and select Non-Employee Directors to be participants under the Plan; (ii) determine the type or types of Awards to be granted to each Participating Key Employee and Non-Employee Director under the Plan; (iii) determine the number of Shares to be covered by (or with respect to which payments, rights, or other matters are to be calculated in connection with), or the amount of cash to be earned pursuant to, Awards granted to Participating Key Employees and Non-Employee Directors; (iv) determine the terms and conditions of any Award granted to a Participating Key Employee or Non-Employee Director; (v) determine whether, to what extent, and under what circumstances Awards granted to Participating Key Employees or Non-Employee Director may be settled or exercised in cash, Shares, other securities, other Awards, or other property, and the method or methods by which Awards may be settled, exercised, cancelled, forfeited, or suspended; (vi) determine whether, to what extent, and under what circumstances cash, Shares, other Awards, and other amounts payable with respect to an Award granted to Participating Key Employees and Non-Employee Directors under the Plan shall be deferred either automatically or at the election of the holder thereof or of the Committee; (vii) interpret and administer the Plan and any instrument or agreement relating to, or Award made under, the Plan (including, without limitation, any Award Agreement); (viii) establish, amend, suspend, or waive such rules and regulations and appoint such agents as it shall deem appropriate for the proper administration of the Plan; and (ix) make any other determination and take any other action that the Committee deems necessary or desirable for the administration of the Plan. Unless otherwise expressly provided in the Plan, all designations, determinations, interpretations, and other decisions under or with respect to the Plan or any Award shall be within the sole discretion of the Committee, may be made at any time, and shall be final, conclusive, and binding upon all Persons, including the Company, any Affiliate, any Participating Key Employee, any Non-Employee Director, any holder or beneficiary of any Award, any stockholder, and any employee of the Company or of any Affiliate.

The Company will indemnify and hold harmless each member of the Committee and the Board of Directors of the Company and each executive officer or member of any other committee to whom a delegation under this Section 3 has been made, as to any acts or omissions with respect to this Plan or any Award to the maximum extent that the law and the Company’s by-laws permit.

 

4.

Shares Available for Award

(a)    Shares Available. Subject to adjustment as provided in Section 4(f), the number of Shares with respect to which Awards may be granted under the Plan shall be 4,035,885 (the “Plan Reserve”). To the extent an Award provides that it shall be paid in the form of cash, then the Shares underlying such Award (which serve as the basis for determining the cash payment that may be due thereunder) shall not deplete the Plan Reserve. In addition, if (A) an Award lapses, expires, terminates or is cancelled without the issuance of Shares thereunder (whether on a current or deferred basis), (B) it is determined during or at the conclusion of the term of an Award that all or some portion of the Shares with respect to which the Award was

 

7


granted will not be issuable on the basis that the conditions for such issuance will not be satisfied, (C) Shares are forfeited under an Award or (D) Shares are issued under any Award and the Company subsequently reacquires them pursuant to rights reserved upon the issuance of the Shares, then such Shares shall be recredited to the Plan Reserve and may again be used for new Awards under the Plan, but Shares recredited to the Plan Reserve pursuant to clause (D) may not be issued pursuant to Incentive Stock Options. Notwithstanding the foregoing, in no event shall the following Shares be recredited to the Plan Reserve: Shares tendered in payment of the exercise price of an Option; Shares withheld to satisfy federal, state or local tax withholding obligations; Shares purchased by the Company using proceeds from Option exercises; and Shares subject to a stock-settled Stock Appreciation Right that are not issued in connection with the stock settlement of the Stock Appreciation Right upon its exercise.

(b)    Limitation on Non-Employee Director Awards. No Non-Employee Director shall be granted, during any calendar year, Awards having a grant date fair value in excess of $500,000.

(c)    Accounting for Awards. The number of Shares covered by an Award under the Plan shall be counted on the date of grant of such Award against the number of Shares available for granting Awards under the Plan.

(d)    Sources of Shares Deliverable Under Awards. Any Shares delivered pursuant to an Award may consist, in whole or in part, of authorized and unissued Shares or of treasury Shares.

(e)    Adjustments; Change in Control. If: (i) the Company shall at any time be involved in a merger or other transaction in which the Shares are changed or exchanged; (ii) the Company shall subdivide or combine the Shares or the Company shall declare a dividend payable in Shares, other securities or other property; (iii) the Company shall effect a cash dividend the amount of which, on a per Share basis, exceeds ten percent (10%) of the Fair Market Value of a Share at the time the dividend is declared, or the Company shall effect any other dividend or other distribution on the Shares in the form of cash, or a repurchase of Shares, that the Board determines by resolution is special or extraordinary in nature or that is in connection with a transaction that the Company characterizes publicly as a recapitalization or reorganization involving the Shares; or (iv) any other event shall occur, which, in the case of this clause (iv), in the judgment of the Committee necessitates an adjustment to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under this Plan, then the Committee shall, in such manner as it may deem equitable to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under this Plan, adjust as applicable: (A) the number and type of Shares subject to the Plan Reserve (including the number and type of Shares described in Section 4(a)(i) and (ii), and which may after the event be made the subject of Awards); (B) the number and type of Shares subject to outstanding Awards; (C) the grant, purchase, or exercise price with respect to any Award; and (D) the Performance Goals of an Award; or, if deemed appropriate, make provision for a cash payment in an amount determined by the Committee to the holder of an outstanding Award in exchange for cancellation of some or all of such Award (without the consent of the holder of an Award) effective at such time as the Committee specifies (which may be the time such transaction or event is effective) or in lieu of any or all of the foregoing adjustments; provided, however, in

 

8


each case, that with respect to Awards of Incentive Stock Options no such adjustment shall be authorized to the extent that such authority would cause the Plan to violate Section 422(b) of the Code; and provided further that the number of Shares subject to any Award payable or denominated in Shares shall always be a whole number. In any event, previously granted Options or Stock Appreciation Rights are subject only to such adjustments as are necessary to maintain the relative proportionate interest the Options and Stock Appreciation Rights represented immediately prior to any such event and to preserve, without exceeding, the value of such Options or Stock Appreciation Rights.

Without limitation, in the event of any reorganization, merger, consolidation, combination or other similar corporate transaction or event, the Committee may substitute, on an equitable basis as the Committee determines, for each Share then subject to an Award and the Shares subject to this Plan (if the Plan will continue in effect), the number and kind of shares of stock, other securities, cash or other property to which holders of Shares are or will be entitled in respect of each Share pursuant to the transaction.

Notwithstanding the foregoing, in the case of a stock dividend (other than a stock dividend declared in lieu of an ordinary cash dividend) or subdivision or combination of the Shares (including a reverse stock split), if no action is taken by the Committee, adjustments contemplated by this subsection that are proportionate shall nevertheless automatically be made as of the date of such stock dividend or subdivision or combination of the Shares.

In order to preserve a Participant’s rights under an Award in the event of (i) a Change in Control and (ii) termination within 12 months of such Change in Control, the Committee in its discretion may, at the time an Award is granted or at any time thereafter, take one or more of the following actions with respect to a Change in Control: (a) provide for the acceleration of any time period relating to the Award or the exercise of the Award in connection with a Change in Control; (b) provide for the cancellation of the Award upon or immediately prior to the Change in Control in exchange for an amount of cash or other property equal to the value of the Award or the value that could have been received upon the exercise of the Award had the Award then been vested and/or exercisable; (c) adjust the terms of the Award in the manner determined by the Committee to be appropriate to reflect the Change in Control; (d) cause the Award to be assumed, or new right substituted therefor, by another entity; or (e) make such other provision as the Committee may consider equitable and in the best interests of the Company in connection with a Change in Control.

In addition, except as otherwise specifically provided in a stock certificate, the Company is authorized to make adjustments in the terms and conditions of, and the criteria included in, Awards (including, without limitation, cancellation of vested Awards in exchange for a payment in cash or other equity interests, securities, or property, or any combination thereof equal to the excess, if any, of the Fair Market Value of the options, stocks or units subject to such cancelled Awards over the exercise price of such Awards (if applicable), cancellation of unvested and/or out-of-the-money or at-the-money Awards for no consideration, substitution of Awards using securities of a successor or other entity, acceleration of the time that Awards vest or expire, or adjustment of performance targets) in recognition of unusual or nonrecurring events.

 

9


(f)    Issuance or Assumption. Notwithstanding any other provision of this Plan, and without affecting the number of Shares otherwise reserved or available under this Plan, in connection with any merger, consolidation, acquisition of property or stock, or reorganization, the Committee may authorize the issuance or assumption of awards under this Plan upon such terms and conditions as it may deem appropriate.

 

5.

Eligibility

The Committee may designate any Key Employee as a Participating Key Employee. All Non-Employee Directors shall be eligible to receive, at the discretion of the Committee, Awards of Non-Qualified Stock Options pursuant to Section 6(a), Stock Appreciation Rights pursuant to Section 6(b), Restricted Stock pursuant to Section 6(c) and Restricted Stock Units pursuant to Section 6(d). The Committee’s granting of an Award to a Participant will not require the Committee to grant an Award to such individual at any future time. The Committee’s granting of a particular type of Award to a Participant will not require the Committee to grant any other type of Award to such individual.

 

6.

Awards

(a)    Option Awards. The Committee may grant Options to Key Employees and Non-Employee Directors with the terms and conditions as set forth below and with such additional terms and conditions, in either case not inconsistent with the provisions of the Plan, as the Committee shall determine.

(i)    Type of Option. The Committee shall determine whether an Option granted to a Participating Key Employee is to be an Incentive Stock Option or Non-Qualified Stock Option; provided, however, that Incentive Stock Options may be granted only to Key Employees of the Company, a parent corporation (within the meaning of Code Section 424(e)) or a subsidiary corporation (within the meaning of Code Section 424(f)). All Options granted to Non-Employee Directors shall be Non-Qualified Stock Options.

(ii)    Exercise Price. The exercise price per Share of an Option granted pursuant to this Section 6(a) shall be determined by the Committee; provided, however, that such exercise price shall not be less than 100% of the Fair Market Value of a Share on the date of grant of such Option; and provided further that an Incentive Stock Option granted to a 10% Stockholder must have an exercise price at least equal to 110% of the Fair Market Value of the Shares subject to the Option as determined on the date of grant.

(iii)    Option Term. The term of each Option shall be fixed by the Committee; provided, however, that in no event shall the term of any Option exceed a period of ten years from the date of its grant; and provided further that each Incentive Stock Option granted to a 10% Stockholder must terminate no later than five years after the date of its grant.

 

10


(iv)    Grant Date. The date of grant of each Option shall be fixed by the Committee; provided, however, that such date of grant may not be prior to the date of the Committee’s approval of the grant.

(v)    Vesting, Exercisability and Method of Exercise. An Option shall become vested and exercisable in such manner and within such period or periods and in such installments or otherwise as shall be determined by the Committee. The Committee also shall determine the method or methods by which, and the form or forms, including, without limitation, cash, Shares, other securities, other Awards, or other property, or any combination thereof, having a Fair Market Value on the exercise date equal to the relevant exercise price, in which payment of the exercise price with respect to any Option may be made or deemed to have been made.

(vi)    Incentive Stock Options. The terms of any Incentive Stock Option granted to a Key Employee under the Plan shall comply in all respects with the provisions of Section 422 of the Code and any regulations promulgated thereunder. Notwithstanding any provision in the Plan to the contrary, no Incentive Stock Option may be granted hereunder after the tenth anniversary of the Effective Date. If the aggregate Fair Market Value of the Shares subject to all Incentive Stock Options granted to a Participating Key Employee (as determined on the date of grant of each such Option) that become exercisable during a calendar year exceed $100,000, or if Options that are intended to be Incentive Stock Options otherwise fail to meet the applicable requirements of the Code, then such Incentive Stock Options shall be treated as a Non-Qualified Stock Options to the extent such $100,000 limitation is exceeded or to the extent of such other failure.

(b)    Stock Appreciation Rights. The Committee may grant Stock Appreciation Rights to Key Employees or Non-Employee Directors. Subject to the terms of the Plan and any applicable Award Agreement, a Stock Appreciation Right granted under the Plan shall confer on the holder thereof a right to receive, upon exercise thereof, the excess of (i) the Fair Market Value of one Share on the date of exercise over (ii) the grant price of the Stock Appreciation Right as specified by the Committee, which shall not be less than 100% of the Fair Market Value of one Share on the date of grant of the Stock Appreciation Right. Subject to the terms of the Plan, the grant price, grant date (which may not be prior to the date of the Committee’s approval of the grant), term (which may not extend more than ten years from the date of the grant), methods of exercise, methods of settlement (including whether the Participating Key Employee or Non-Employee Director will be paid in cash, Shares, other securities, other Awards, or other property, or any combination thereof), and any other terms and conditions of any Stock Appreciation Right shall be determined by the Committee. The Committee shall also determine the vesting provisions of Stock Appreciation Rights. The Committee may impose such conditions or restrictions on the exercise of any Stock Appreciation Right as it may deem appropriate.

 

11


(c)    Restricted Stock Awards.

(i)    Issuance. The Committee may grant Awards of Restricted Stock to Key Employees and Non-Employee Directors.

(ii)    Restrictions. Shares of Restricted Stock granted to Participating Key Employees and Non-Employee Directors shall be subject to such restrictions as the Committee may impose (including, without limitation, any limitation on the right to vote a Share of Restricted Stock or the right to receive any dividend or other right or property), which restrictions may lapse separately or in combination at such time or times, in such installments or otherwise, as the Committee may deem appropriate, provided that Shares of Restricted Stock may not be granted with a vesting period shorter than one year (other than Shares of Restricted Stock that, in combination with the Shares relating to all other Awards granted with a vesting period shorter than one year, do not exceed 5% of the total Shares authorized under Section 4(a)).

(iii)    Registration. Any Restricted Stock granted under the Plan to a Participating Key Employee or Non-Employee Director may be evidenced in such manner as the Committee may deem appropriate, including, without limitation, book-entry registration or issuance of a stock certificate or certificates. In the event any stock certificate is issued in respect of Shares of Restricted Stock granted under the Plan to a Participating Key Employee or Non-Employee Director, such certificate shall be registered in the name of the Participating Key Employee or Non-Employee Director and shall bear an appropriate legend (as determined by the Committee) referring to the terms, conditions, and restrictions applicable to such Restricted Stock.

(iv)    Payment of Restricted Stock. At the end of the applicable restriction period relating to Restricted Stock granted to a Participating Key Employee or Non-Employee Director, one or more stock certificates for the appropriate number of Shares, free of restrictions imposed under the Plan, shall be delivered to the Participating Key Employee or Non-Employee Director, or, if the Participating Key Employee or Non-Employee Director received stock certificates representing the Restricted Stock at the time of grant, the legends placed on such certificates to describe the restrictions imposed under the Plan shall be removed.

(v)    Forfeiture. Except as otherwise determined by the Committee, upon termination of employment of a Participating Key Employee or service as a director of a Non-Employee Director (as determined under criteria established by the Committee) for any reason during the applicable restriction period, all Shares of Restricted Stock still subject to restriction shall be forfeited by the Participating Key Employee or Non-Employee Director; provided, however, that the Committee may, when it finds that a waiver would be in the best interests of the Company, waive in whole or in part any or all remaining restrictions with respect to Shares of Restricted Stock held by a Participating Key Employee or Non-Employee Director.

 

12


(d)    Restricted Stock Units.

(i)    Issuance. The Committee may grant Awards of Restricted Stock Units to Key Employees or Non-Employee Directors.

(ii)    Restrictions. Restricted Stock Units granted to Participating Key Employees or Non-Employee Directors shall be subject to such restrictions as the Committee may impose, which restrictions may lapse separately or in combination at such time or times, in such installments or otherwise, as the Committee may deem appropriate.

(iii)    Payment of Shares. The Committee shall determine whether to settle Restricted Stock Units in cash, in Shares, or a combination thereof at end of any applicable restriction period; provided, however, that the Committee may defer, or make available such deferral elections with respect to, the settlement of Restricted Stock Units as it deems appropriate, subject in each case to the requirements of Code Section 409A.

(iv)    Forfeiture. Except as otherwise determined by the Committee, upon termination of employment of a Participating Key Employee or service as a director of a Non-Employee Director (as determined under criteria established by the Committee) for any reason during the applicable restriction period, all unvested Restricted Stock Units shall be forfeited by the Participating Key Employee or Non-Employee Director; provided, however, that the Committee may, when it finds that a waiver would be in the best interests of the Company, waive in whole or in part any or all remaining restrictions with respect to Restricted Stock Units held by a Participating Key Employee or Non-Employee Director.

(e)    Performance Shares and Performance Units.

(i)    Issuance. The Committee may grant Awards of Performance Shares and/or Performance Units to Key Employees. Non-Employee Directors are not eligible to be granted Performance Shares or Performance Units under the Plan.

(ii)    Performance Goals and Other Terms. The Committee shall determine the Performance Period, the Performance Goal or Goals (and the performance level or levels related thereto) to be achieved during any Performance Period, the proportion of payments, if any, to be made for performance between the minimum and full performance levels for any Performance Goal and, if applicable, the relative percentage weighting given to each of the selected Performance Goals. The Committee shall also determine the restrictions applicable to Shares of Restricted Stock or Restricted Stock Units received upon payment of Performance Shares or Performance Units if Performance Shares or Performance Units are paid in such manner, and any other terms, conditions and rights relating to a grant of Performance Shares or Performance Units. The Committee shall have sole discretion to determine the Performance Goals applicable to any Award.

 

13


(iii)    No Voting Rights. Participating Key Employees shall have no voting rights with respect to Performance Shares or Shares underlying Performance Units held by them during the applicable Performance Period.

(iv)    Payment. As soon as is reasonably practicable following the end of the applicable Performance Period, subject to the Committee approving the satisfaction of the applicable Performance Goal if such Committee approval is required by the terms of the Award, payment of earned Performance Shares and/or Performance Units shall be made. The Committee, in its sole discretion, may pay earned Performance Shares and Performance Units in the form of cash, Shares (which may be Shares of Restricted Stock), Restricted Stock Units or a combination of cash, Shares (which may be Shares of Restricted Stock) and/or Restricted Stock Units, which have an aggregate Fair Market Value equal to the value of the earned Performance Shares and Shares underlying earned Performance Units at the close of the applicable Performance Period. Any Shares of Restricted Stock payable in connection with Performance Shares or Performance Units shall, pending the expiration, lapse, or waiver of the applicable restrictions, be evidenced in the manner as set forth in Section 6(c)(iii) hereof.

(f)    Annual Incentive Awards. Subject to the terms of this Plan, the Committee may grant Annual Incentive Awards to Key Employees. Non-Employee Directors are not eligible to be granted Annual Incentive Awards. The Committee shall determine all terms and conditions of an Annual Incentive Award, including but not limited to the Performance Goals, performance period, the potential amount payable, and the timing of payment.

(g)    General.

(i)    No Consideration for Awards. Awards shall be granted to Participating Key Employees and Non-Employee Directors for no cash consideration unless otherwise determined by the Committee.

(ii)    Award Agreements. Each Award granted under the Plan shall be evidenced by an Award Agreement in such form (consistent with the terms of the Plan) as shall have been approved by the Committee.

(iii)    Awards May Be Granted Separately or Together. Awards to Participating Key Employees under the Plan may be granted either alone or in addition to, in tandem with, or (subject to the limitations of Section 6(j)) in substitution for any other Award or any award granted under any other plan of the Company or any Affiliate. Awards granted in addition to or in tandem with other Awards, or in addition to or in tandem with awards granted under any other plan of the Company or any Affiliate, may be granted either at the same time as or at a different time from the grant of such other Awards or awards.

(iv)    Forms of Payment Under Awards. Subject to the terms of the Plan and of any applicable Award Agreement, payments or transfers to be made by the Company or an Affiliate upon the grant, exercise, or payment of an Award

 

14


to a Participating Key Employee or Non-Employee Director may be made in such form or forms as the Committee shall determine, and may be made in a single payment or transfer, in installments, or on a deferred basis, in each case in accordance with rules and procedures established by the Committee. Such rules and procedures may include, without limitation, provisions for the payment or crediting of interest on installment or deferred payments.

(v)    Limits on Transfer of Awards. Except as otherwise provided by the Committee, no Award (other than Released Securities), and no right under any such Award, shall be assignable, alienable, saleable, or transferable by a Participating Key Employee or Non-Employee Director otherwise than by will or by the laws of descent and distribution (or, in the case of an Award of Restricted Securities, to the Company); provided, however, that a Participating Key Employee or Non-Employee Director at the discretion of the Committee may be entitled, in the manner established by the Committee, to designate a beneficiary or beneficiaries to exercise his or her rights, and to receive any property distributable, with respect to any Award upon the death of the Participating Key Employee or Non-Employee Director, as the case may be. Each Award, and each right under any Award, shall be exercisable, during the lifetime of the Participating Key Employee or Non-Employee Director, only by such individual or, if permissible under applicable law, by such individual’s guardian or legal representative. Except as otherwise provided by the Committee, no Award (other than Released Securities), and no right under any such Award, may be pledged, alienated, attached, or otherwise encumbered, and any purported pledge, alienation, attachment, or encumbrance thereof shall be void and unenforceable against the Company or any Affiliate.

(vi)    Term of Awards. Except as otherwise provided in the Plan, the term of each Award shall be for such period as may be determined by the Committee.

(vii)    Share Certificates; Representation. In addition to the restrictions imposed pursuant to Section 6(c) and Section 6(e) hereof, all certificates for Shares delivered under the Plan pursuant to any Award or the exercise thereof shall be subject to such stop transfer orders and other restrictions as the Committee may deem advisable under the Plan or the rules, regulations, and other requirements of the Commission, any stock exchange or other market upon which such Shares are then listed or traded, and any applicable federal or state securities laws, and the Committee may cause a legend or legends to be put on any such certificates to make appropriate reference to such restrictions. The Committee may require each Participating Key Employee, Non-Employee Director or other Person who acquires Shares under the Plan by means of an Award originally made to a Participating Key Employee or Non-Employee Director to represent to the Company in writing that such Participating Key Employee, Non-Employee Director or other Person is acquiring the Shares without a view to the distribution thereof.

 

15


(h)    Dividends and Dividend Equivalents. In addition to Awards granted under the Plan, the Committee may grant Dividend Equivalents to Participating Key Employees and Non-Employee Directors, entitling the Participating Key Employees and Non-Employee Directors to receive cash equal to cash dividends paid with respect to a specified number of Shares. Dividend Equivalents may only be granted in connection with “full-value” Awards granted to the Participating Key Employee or Non-Employee Director under the Plan. For this purpose, a “full-value” Award includes Restricted Stock, Restricted Stock Units, Performance Shares, Performance Units (valued in relation to a Share) and any other similar Award under which the value of the Award is measured as the full value of a Share, rather than the increase in the value of a Share. The Committee may provide that Dividend Equivalents shall be paid or distributed when accrued or shall be deemed to have been reinvested in such investment vehicles as determined by the Committee, subject to such restrictions and risks of forfeiture as the Committee may impose. Notwithstanding anything to the contrary in the Plan, no dividends or Dividend Equivalents may be paid to a Participant with respect to an Award prior to the vesting of such Award.

(i)    No Repricing or Backdating of Options of Stock Appreciation Rights. Except for adjustments made pursuant to Section 4(b), neither the Committee nor any other person may decrease the exercise or grant price for any outstanding Option or Stock Appreciation Right after the date of grant, cancel an outstanding Option or Stock Appreciation Right in exchange for cash or other Awards (other than cash or other Awards with a value equal to the excess of the Fair Market Value of the Shares subject to such Option or Stock Appreciation Right at the time of cancellation over the exercise or grant price for such Shares) or allow a Participant to surrender an outstanding Option or Stock Appreciation Right to the Company as consideration for the grant of a new Option or Stock Appreciation Right with a lower exercise price. In addition, the Committee may not make a grant of an Option or Stock Appreciation Right with a grant date that is effective prior to the date the Committee takes action to approve such Award.

(j)    Code Section 409A. 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 structured in a manner that will comply with or be exempt from 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. The Company shall have no liability to a Participant, or any other Person, if an Award that is intended to be exempt from, or compliant with, Section 409A of the Code is not so exempt therefrom or compliant therewith 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” (as defined under Section 409A of the Code, and excluding any payments that are 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

 

16


the specified employee) and shall instead be paid (in a manner set forth in the Award Agreement) upon expiration of such six (6)-month delay period. Furthermore, notwithstanding any contrary provision of the Plan or Award Agreement, any payment of “nonqualified deferred compensation” (within the meaning of Section 409A of the Code) under the Plan that may be made in installment shall be treated as a right to receive a series of separate and distinct payments.

 

7.

Amendment and Termination of the Plan; Correction of Defects and Omissions

(a)    Amendments to and Termination of the Plan. Except as otherwise provided herein, the Board of Directors of the Company or the Committee may at any time amend, alter, suspend, discontinue, or terminate the Plan; provided, however, that:

(i)    approval by the Board of Directors shall be required for any such action to the extent the Company determines such approval is required by: (A) prior action of the Board, (B) applicable corporate law, or (C) any other applicable law;

(ii)    stockholder approval of any amendment of the Plan shall also be obtained to the extent the Company determines such approval is required by: (A) Section 16 of the Exchange Act, (B) the Code, (C) the listing requirements of any principal securities exchange or market on which the Shares are then traded, or (D) any other applicable law; and

(iii)    stockholder approval is required for any of the following Plan amendments: (A) an amendment to materially increase any number of Shares or limits specified in Section 4(a) (except as contemplated by Section 4(b)), (B) an amendment to expand the group of individuals that may become Participants, or (C) an amendment that would diminish the protections afforded by Section 6(j) or that would materially change the minimum vesting and performance requirements of an Award as required in the Plan.

(b)    Amendment, Modification or Cancellation of Awards. Subject to the requirements of this Plan, the Committee may modify, amend or cancel any Award, or waive any restrictions or conditions applicable to any Award or the exercise of the Award, provided that any modification or amendment that materially diminishes the rights of the Participant, or any cancellation of an Award, shall be effective only if agreed to by the Participant or any other person(s) as may then have an interest in the Award, but the Committee need not obtain Participant (or other interested party) consent for the adjustment or cancellation of an Award pursuant to the provisions of Section 4(b) or the modification of an Award to the extent deemed necessary to comply with any applicable law, the listing requirements of any principal securities exchange or market on which the Shares are then traded, or to preserve favorable accounting or tax treatment of any Award for the Company. Notwithstanding the foregoing, unless determined otherwise by the Committee, any such amendment shall be made in a manner that will enable an Award intended to be exempt from Code Section 409A to continue to be so exempt, or to enable an Award intended to comply with Code Section 409A to continue to so comply.

 

17


(c)    Clawback/ Forfeiture/ Recoupment of Awards. Any Awards granted pursuant to this Plan, and any Stock issued or cash paid pursuant to an Award, shall be subject to (i) any recoupment, clawback, forfeiture, equity holding, stock ownership or similar policies adopted by the Company from time to time and (ii) any recoupment, clawback, forfeiture, equity holding, stock ownership or similar requirements made applicable by law, regulation or listing standards to the Company from time to time. Notwithstanding anything to the contrary contained herein, the Committee may cancel an Award if the Participant, without the consent of the Company, (A) has engaged in or engages in activity that is in conflict with or adverse to the interests of the Company or any Affiliate while employed by or providing services to the Company or any Affiliate, including fraud or conduct contributing to any financial restatements or irregularities, (B) violates a non-competition, non-solicitation, non-disparagement or non-disclosure covenant or agreement with the Company or any Affiliate, as determined by the Committee, or (C) if the Participant’s employment or service is terminated for Cause (as defined in the applicable Award Agreement). The Committee may also provide in an Award Agreement that in such event the Participant will forfeit any compensation, gain or other value realized thereafter on the vesting, exercise or settlement of such Award, the sale or other transfer of such Award, or the sale of Shares acquired in respect of such Award, and must promptly repay such amounts to the Company. The Committee may also provide in an Award Agreement that if the Participant receives any amount in excess of what the Participant should have received under the terms of the Award for any reason (including without limitation by reason of a financial restatement, mistake in calculations or other administrative error), all as determined by the Committee, then the Participant shall be required to promptly repay any such excess amount to the Company. In addition, the Company shall retain the right to bring an action at equity or law to enjoin the Participant’s activity and recover damages resulting from such activity.

(d)    Correction of Defects, Omissions and Inconsistencies. The Committee may correct any defect, supply any omission, or reconcile any inconsistency in the Plan, any Award or any Award Agreement in the manner and to the extent it shall deem desirable to carry the Plan into effect.

(e)    Survival Of Awards. Termination of the Plan shall not affect the rights of Participating Key Employees or Non-Employee Directors with respect to Awards previously granted to them, and all unexpired Awards shall continue in force and effect after termination of the Plan except as they may lapse or be terminated by their own terms and conditions. Notwithstanding the foregoing, the authority of the Board and the Committee under this Section 7 and to otherwise administer the Plan will extend beyond the date of this Plan’s termination.

 

8.

General Provisions

(a)    No Rights to Awards. No Key Employee, Participating Key Employee, Non-Employee Director or other Person shall have any claim to be granted any Award under the Plan, and there is no obligation for uniformity of treatment of Key Employees, Participating Key Employees, Non-Employee Directors or holders or beneficiaries of Awards under the Plan. The terms and conditions of Awards need not be the same with respect to each Participating Key Employee or Non-Employee Director.

 

18


(b)    Withholding. No later than the date as of which tax withholding is first required with respect to any Award under the Plan, the Participating Key Employee shall pay to the Company, or make arrangements satisfactory to the Company regarding the payment of, any federal, state, local or foreign taxes of any kind required by law to be withheld with respect to such amount. Unless otherwise determined by the Committee, withholding obligations arising with respect to Awards to Participating Key Employees under the Plan may be settled with Shares (other than Restricted Securities), including Shares that are part of, or are received upon exercise of, the Award that gives rise to the withholding requirement; provided, however, that the amount to be withheld may not exceed the total maximum statutory tax rates associated with the transaction to the extent needed for the Company to avoid adverse accounting treatment. The obligations of the Company under the Plan shall be conditional on such payment or arrangements, and the Company and any Affiliate shall, to the extent permitted by law, have the right to deduct any such taxes from any payment otherwise due to the Participating Key Employee. The Committee may establish such procedures as it deems appropriate for the settling of withholding obligations with Shares, including, without limitation, the establishment of such procedures as may be necessary to satisfy the requirements of Rule 16b-3.

(c)    No Guarantee of Tax Treatment. Notwithstanding any provisions of the Plan, the Company does not guarantee to any Participant or any other Person with an interest in an Award that (i) any Award intended to be exempt from Code Section 409A shall be so exempt, (ii) any Award intended to comply with Code Section 409A or Code Section 422 shall so comply, or (iii) any Award shall otherwise receive a specific tax treatment under any other applicable tax law, nor in any such case will the Company or any Affiliate indemnify, defend or hold harmless any individual with respect to the tax consequences of any Award.

(d)    No Limit on Other Compensation Arrangements. Nothing contained in the Plan shall prevent the Company or any Affiliate from adopting or continuing in effect other or additional compensation arrangements, and such arrangements may be either generally applicable or applicable only in specific cases.

(e)    Rights and Status of Recipients of Awards. The grant of an Award shall not be construed as giving a Participating Key Employee the right to be retained in the employ of the Company or any Affiliate. Further, the Company or any Affiliate may at any time dismiss a Participating Key Employee from employment, free from any liability, or any claim under the Plan, unless otherwise expressly provided in the Plan or in any Award Agreement. The grant of an Award to a Non-Employee Director pursuant to Section 6(a) of the Plan shall confer no right on such Non-Employee Director to continue as a director of the Company or any Affiliate. Except for rights accorded under the Plan and under any applicable Award Agreement, Participating Key Employees and Non-Employee Directors shall have no rights as holders of Shares as a result of the granting of Awards hereunder.

(f)    No Compensation for Benefit Plans. No Award payable under this Plan shall be deemed salary or compensation for the purpose of computing benefits under any benefit plan or other arrangement of the Company or any Affiliate for the benefit of its employees or directors unless the Company or appropriate Affiliate shall determine otherwise.

 

19


(g)    Unfunded Status of the Plan. Unless otherwise determined by the Committee, the Plan shall be unfunded and shall not create (or be construed to create) a trust or a separate fund or funds. The Plan shall not establish any fiduciary relationship between the Company and any Participating Key Employee, Non-Employee Director or other Person. To the extent any Person holds any right by virtue of a grant under the Plan, such right (unless otherwise determined by the Committee) shall be no greater than the right of a general unsecured creditor of the Company.

(h)    Governing Law; Limitations on Actions. The validity, construction, and effect of the Plan and any rules and regulations relating to the Plan shall be determined in accordance with the internal laws of the State of Delaware, without reference to conflict of law principles thereof, and applicable federal law. Any action or other legal proceeding with respect to the Plan or any Award may be brought only within the period ending on the earlier of (i) one year after the date the claimant in such action or proceeding knows or with the exercise of reasonable care should have known of the facts giving rise to the claim, or (ii) the expiration of the applicable statute of limitations period under applicable law. Exclusive jurisdiction over any such actions or legal proceedings shall reside in the courts of the State of Colorado and the United States District Court located in Denver, Colorado.

(i)    Severability. If any provision of the Plan or any Award Agreement or any Award is or becomes or is deemed to be invalid, illegal, or unenforceable in any jurisdiction, or as to any Person or Award, or would disqualify the Plan, any Award Agreement or any Award under any law deemed applicable by the Committee, such provision shall be construed or deemed amended to conform to applicable laws, or if it cannot be so construed or deemed amended without, in the determination of the Committee, materially altering the intent of the Plan, any Award Agreement or the Award, such provision shall be stricken as to such jurisdiction, Person, or Award, and the remainder of the Plan, any such Award Agreement and any such Award shall remain in full force and effect.

(j)    No Fractional Shares. No fractional Shares or other securities shall be issued or delivered pursuant to the Plan, any Award Agreement or any Award, and the Committee shall determine (except as otherwise provided in the Plan) whether cash, other securities, or other property shall be paid or transferred in lieu of any fractional Shares or other securities, or whether such fractional Shares or other securities or any rights thereto shall be cancelled, terminated, or otherwise eliminated.

(i)    Whistleblower Acknowledgments. Notwithstanding anything to the contrary herein, nothing in this Plan or any Award Agreement will (i) prohibit a Participant from making reports of possible violations of federal law or regulation to any governmental agency or entity in accordance with the provisions of and rules promulgated under Section 21F of the Exchange Act or Section 806 of the Sarbanes-Oxley Act of 2002, or of any other whistleblower protection provisions of federal law or regulation, or (ii) require prior approval by the Company or any of its Affiliates of any reporting described in clause (i).

(k)    Headings. Headings are given to the Sections and subsections of the Plan solely as a convenience to facilitate reference. Such headings shall not be deemed in any way material or relevant to the construction or interpretation of the Plan or any provision thereof.

 

20

Exhibit 10.5

EXECUTIVE EMPLOYMENT AND SEVERANCE AGREEMENT

This Executive Employment and Severance Agreement (this “Agreement”) is between Lynn Peterson (“Executive”) and Whiting Petroleum Corporation (“Whiting” and, together with its subsidiaries, the “Company”) and is effective as of September 1, 2020 (the “Effective Date”).

WHEREAS, the Company desires to employ Executive in a key employee capacity and expects that Executive’s services will be valuable to the conduct of the business of the Company;

WHEREAS, Whiting and Executive desire to specify the terms and conditions on which Executive will be employed on and after the Effective Date, and under which Executive will receive severance in the event that Executive separates from service with the Company under the circumstances described in this Agreement; and

NOW, THEREFORE, for the consideration described above and other good and valuable consideration, the parties agree as follows:

1. Effective Date; Term. This Agreement shall become effective on the Effective Date and continue until the date that is two years after the Effective Date (the “Initial Term”). Thereafter, this Agreement shall renew automatically for successive one-year renewal periods unless and until either party provides written notice to the other party of the intent not to renew this Agreement at least 180 days prior to the end of the Initial Term or any subsequent term. The period between the Effective Date and the Termination Date shall be referred to herein as the “Employment Term.” Expiration of this Agreement will not affect the rights or obligations of the parties hereunder arising out of, or relating to, circumstances occurring prior to the expiration of this Agreement, which rights and obligations will survive the expiration of this Agreement.

2. Definitions. For purposes of this Agreement, the following terms shall have the meanings ascribed to them:

(a) “Accrued Benefits” shall mean the following amounts, payable as described herein: (i) all base salary for the time period ending with the Termination Date; (ii) reimbursement for any and all monies advanced in connection with Executive’s employment for reasonable and necessary expenses incurred by Executive on behalf of the Company for the time period ending with the Termination Date in accordance with company policy and (iii) all other payments and benefits to which Executive (or in the event of Executive’s death, Executive’s surviving spouse or other beneficiary) is entitled on the Termination Date under the terms of any benefit plan of the Company, excluding severance payments under any Company severance policy, practice or agreement in effect on the Termination Date.

(b) “Affiliate” shall mean, with respect to any person, any person that, directly or through one or more intermediaries, is controlled by, controls or is under common control with, such Person.

(c) “Base Salary” shall mean Executive’s annual base salary with the Company as in effect from time to time.

(d) “Board” shall mean the board of directors of Whiting or a committee of such Board authorized to act on its behalf in certain circumstances, including the Compensation Committee of the Board.

(e) “Cause” shall mean a good faith finding by the Board that Executive has (i) willfully failed, grossly neglected or refused to perform the lawful employment duties related to his position or as from time to time assigned to him (other than due to Disability); (ii) committed any willful, intentional or grossly negligent misconduct having the effect of injuring the interest, business or reputation of the Company; (iii) violated or failed to comply in any material respect with the Company’s published rules, regulations or policies, as in effect or amended from time to time; (iv) been indicted for, convicted of, or plead guilty or nolo contendere to a felony or misdemeanor involving moral turpitude, or performed any act


of fraud, material theft or material dishonesty; (v) misappropriated or embezzled any property of the Company (whether or not an act constituting a felony or misdemeanor) or (vi) breached any material provision of this Agreement or any other applicable confidentiality, non-compete, non-solicit, general release, covenant not-to-sue or other agreement with the Company.

(f) “COBRA shall mean the provisions of Code Section 4980B.

(g) “Code” shall mean the Internal Revenue Code of 1986, as amended, as interpreted by rules and regulations issued pursuant thereto, all as amended and in effect from time to time. Any reference to a specific provision of the Code shall be deemed to include reference to any successor provision thereto.

(h) “Disability” shall mean, subject to applicable law, any medically determinable physical or mental impairment that (i) renders Executive unable to perform the duties of his position with the Company and (ii) is expected to last for a continuous period of not less than six months, all as certified by a physician reasonably acceptable to the Company or its Successor.

(i) “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended, as interpreted by rules and regulations issued pursuant thereto, all as amended and in effect from time to time. Any reference to a specific provision of the Exchange Act shall be deemed to include reference to any successor provision thereto.

(j) “Good Reason” shall mean the occurrence of any of the following without the consent of Executive: (i) a material diminution in Executive’s title, duties or responsibilities; (ii) a requirement that Executive relocate Executive’s principal place of work to a location that increases his one-way commute by more than 40 miles from its location on the date of this Agreement; (iii) a reduction in Executive’s Base Salary or annual bonus target percentage, unless such reduction applies across the board to other senior executives; (iv) a material breach by Whiting of any provisions of this Agreement; or (v) the removal of Executive from the Board by Whiting (other than for Cause or as a result of his death, disability or voluntary resignation) or the failure to re-nominate Executive to serve on the Board. Notwithstanding the foregoing, Executive will not be deemed to have Good Reason unless (x) Executive first provides Whiting with written notice of the condition giving rise to Good Reason within 30 days of its initial occurrence and (y) Whiting fails to cure such condition within 30 days after receiving such written notice.

(k) “Separation from Service” shall mean Executive’s termination of employment from Whiting and each entity that is required to be included in Whiting’s controlled group of corporations within the meaning of Code Section 414(b), or that is under common control with Whiting within the meaning of Code Section 414(c) (collectively, “409A affiliates”). Notwithstanding the foregoing:

(i) If Executive takes a leave of absence for purposes of military leave, sick leave or other bona fide leave of absence, Executive will not be deemed to have incurred a Separation from Service for the first six months of the leave of absence, or if longer, for so long as Executive’s right to reemployment is provided either by statute or by contract.

(ii) Subject to paragraph (i), Executive shall incur a Separation from Service when the level of bona fide services provided by Executive to Whiting and its 409A Affiliates permanently decreases to a level of 20% or less of the level of services rendered by Executive, on average, during the immediately preceding 36 months of employment.

(iii) If, following Executive’s termination of employment, Executive continues to provide services to the Company or a 409A Affiliate in a capacity other than as an employee, Executive will not be deemed to have Separated from Service as long as Executive is providing bona fide services at a rate that is greater than 20% of the level of services rendered by Executive, on average, during the immediately preceding 36 months of service.

 

2


(l) “Successor” shall mean the person to which this Agreement is assigned upon a sale of business.

(m) “Termination Date” shall mean the date of Executive’s termination of employment from the Company, as further described in Section 4.

3. Employment of Executive.

(a) Position.

(i) Executive shall serve in the position of Chief Executive Officer in a full-time capacity. In such position, Executive shall have such duties and authority as is customarily associated with such position and shall have such other titles, duties and responsibilities, consistent with Executive’s position, as may be assigned from time to time by the Board, and upon request of the Board, Executive shall serve as an officer or director of any Company affiliates. Executive will be based at the Company’s headquarters in Denver, Colorado, subject to reasonable required travel on the Company’s business.

(ii) Whiting shall take such action as may be necessary to cause Executive to become a member of the Board as of the Effective Date, or if later, as of the date on which the Company receives its discharge in bankruptcy and appoints a new Board or Directors. Thereafter, during the Employment Term, the Board shall nominate Executive for re-election as a member of the Board at the expiration of the then current term, provided that the foregoing shall not be required to the extent prohibited by legal or regulatory requirements.

(iii) Executive shall devote Executive’s full business time and best efforts to the performance of Executive’s duties hereunder and will not engage in any other business, profession or occupation for compensation or otherwise which would conflict or interfere with the rendition of such services either directly or indirectly, without the prior written consent of the Board; provided that nothing herein shall preclude Executive, subject to the prior approval of the Board, from accepting appointment to or continuing to serve on any board of directors or trustees of any business corporation or any charitable organization, serving on civic and charitable institutions and managing Executive’s personal financial affairs; further provided in each case, and in the aggregate, that such activities do not conflict or unreasonably interfere with the performance of Executive’s duties hereunder or conflict with Section 7. Notwithstanding anything to the contrary herein, during the Employment Term, Executive may continue to serve as a member of the Board of Directors of Denbury Resources Inc.

(b) Base Salary. Whiting shall pay Executive a Base Salary in regular installments in accordance with the Company’s usual payroll practices. The Base Salary shall be an amount equal to the annual rate of $650,000, subject to increase, but not decrease, from time to time as determined by the Board.

(c) Bonus. Executive shall be entitled to participate in the Company’s annual bonus plan with a threshold bonus of 25% of Base Salary, target bonus of 75% of Base Salary and a maximum bonus of 150% of Base Salary based upon achievement of the performance goals under such plans. The bonus for 2020 will be pro-rated based on a fraction equal to the number of days the Executive was employed starting on the Effective Date through December 31, 2020 divided by 365 (the “Pro Rata Amount”) and shall be no less than the target bonus multiplied by the Pro Rata Amount.

(d) Equity. As soon as practicable and within 45 days after the Effective Date, the Executive will be granted restricted stock units under the Company’s 2020 Equity Plan (the “Equity Plan”) with a grant date fair value equal to $650,000 (the “Initial Grant”). The stock price used to determine the number of shares shall for the Initial Grant shall be equal to the volume weight average price for the 15 trading days commencing on the day after the Effective Date. The Executive will also be granted $1,950,000 in early 2021 (the “2021 Grant”) in conjunction with the annual issuance of long-term incentives to other senior employees. The Initial Grant will vest ratably on the first, second and third year anniversaries of the Effective Date and fifty percent of the 2021 Grant shall vest ratably on the first, second and third year anniversaries of the grant date and fifty percent shall vest based on the achievement of performance in each case, subject to continued employment and as further set forth in the award agreements and the Equity Plan.

 

3


(e) Special Equity. As soon as practicable and within 45 days after the Effective Date, the Executive will be granted a special one-time equity grant of 94,500 RSUs under the Equity Plan. The award will vest as follows: 50% will vest if the daily volume weighted average price (“VWAP”) exceeds $32.57 per share for 20 consecutive trading days, an additional 25% if the daily VWAP exceeds $48.86 per share for 20 consecutive trading days and the final 25% if the daily VWAP exceeds $65.14 per share for 20 consecutive trading days, This award will vest only if the Executive is employed by the Company during the 20 day period when the daily VWAP equals or exceeds the targets outlined above (provided, that vesting will occur if Executive is terminated without Cause/or resigns for Good Reason within three months prior to achieving such targets) The award will be subject to the terms and conditions of the award agreement and the Equity Plan.

(f) Employee Benefits. Executive shall be entitled to participate in the Company’s employee benefit plans (other than annual and/or long-term incentive programs, which are addressed in Section 3(c) and (d)) as in effect from time to time; provided that nothing contained herein shall prevent the Company from amending, modifying, suspending or terminating any such benefit plans or arrangements at any time and from time to time in its sole discretion.

(g) Business Expenses. The reasonable business expenses incurred by Executive in the performance of Executive’s duties hereunder shall be reimbursed by the Company in accordance with Company policies.

(h) Vacation. Executive shall be entitled to four weeks of vacation per full year.

4. Termination of Employment. Executive’s employment with the Company will terminate during the term of this Agreement, and this Agreement will terminate on the date of such termination, as follows:

(a) Executive’s employment will terminate upon Executive’s death.

(b) If Executive is Disabled, and if within 30 days after Whiting notifies Executive in writing that it intends to terminate Executive’s employment, Executive shall not have returned to the performance of Executive’s duties hereunder on a full-time basis, Whiting may terminate Executive’s employment, effective immediately following the end of such 30-day period.

(c) Whiting may terminate Executive’s employment with or without Cause (other than as a result of Disability which is governed by Section 4(b)) by providing at least 30 days’ prior written notice (or pay in lieu thereof) to Executive that indicates in reasonable detail the facts and circumstances alleged to provide a basis for such termination. If the termination is without Cause, Executive’s employment will terminate on the date specified in the written notice of termination. If the termination is for Cause, Executive shall have 15 days from the date the written notice is provided, to cure any conduct or act, if curable, alleged to provide grounds for termination of Executive’s employment for Cause. If the alleged conduct or act constituting Cause is not curable, Executive’s employment will terminate on the date specified in the written notice of termination. If the alleged conduct or act constituting Cause is curable but Executive does not cure such conduct or act within the specified time period, Executive’s employment will terminate on the date immediately following the end of the cure period. Unless otherwise directed by Whiting, from and after the date of the written notice of proposed termination, Executive shall be relieved of his duties and responsibilities and shall be considered to be on a paid leave of absence pending any final action by Whiting or the board of directors of the Successor.

 

4


(d) Executive may terminate his employment for or without Good Reason by providing written notice of termination to Whiting that indicates in reasonable detail the facts and circumstances alleged to provide a basis for such termination; provided that Executive agrees to provide Whiting with at least 90 days’ written notice of his intent to voluntarily resign from employment for any reason; further provided that Whiting may waive all or any portion of such notice period and accelerate the effective date of Executive’s voluntary resignation without re-characterizing the nature of such termination. If Executive is alleging a termination for Good Reason, Executive must provide written notice to Whiting of the existence of the condition constituting Good Reason within 60 days of the initial existence of such condition, and Whiting must have a period of at least 30 days following receipt of such notice to cure such condition. If such condition is not cured by Whiting within such 30-day period, Executive’s termination of employment shall be effective on the date immediately following the end of such cure period.

(e) If the Executive provides notice of termination, Whiting may elect to place Executive on “garden leave” for up to 90 days or such shorten period as determined by the Company during which period Executive will continue to receive all of Executive’s compensation and benefits hereunder as if an active employee but during which period Whiting will not be obligated to assign to Executive any powers or duties or to permit Executive to provide any work for Whiting or provide Executive access to Whiting’s facilities (but Executive will be required to be available as requested by Whiting). The implementation of any such leave shall not be regarded as a termination of employment nor will it give Executive a right to terminate employment for Good Reason. During any such period of “garden leave,” Executive shall remain reasonably available at Whiting’s reasonable request (taking into account Executive’s other professional commitments, if any, during such period) to consult on matters related to the business of the Company or the transition of Executive’s duties to his successor, and Executive acknowledges and agrees that during and following such period he will continue to be bound by the covenants contained in Section 7 hereof in accordance with their terms and any other restrictive covenants or professional obligations contained herein or in any other written agreement with the Company.

(f) Upon Executive’s termination of employment for any reason, whether voluntarily or involuntarily, Executive shall be deemed to have resigned from all positions, directorships and memberships held with the Company, whether as an employee, officer, director, trustee, consultant or otherwise, and such resignations shall be effective upon such termination of employment without any other action required by Executive. Executive hereby agrees to execute all documentation reasonably requested by the Company to effectuate the foregoing. Further, except as required by law or as otherwise set forth expressly herein, Executive’s participation in, and eligibility for participation in, the benefit plans and programs of the Company shall cease as of the effective date of any termination of Executive’s employment with the Company.

5. Payments upon Termination.

(a) Entitlement to Severance. Subject to the other terms and conditions of this Agreement, Executive shall be entitled to the Accrued Benefits, and to the severance benefits described in Section 5(b), in the following circumstances while this Agreement is in effect:

(i) Executive’s employment is terminated by the Company without Cause, except in the case of death or Disability;

(ii) Executive’s employment is terminated due to the Company’s notice of non-renewal of the Employment Term pursuant to Section 1 hereof; or

(iii) Executive terminates his employment with the Company for Good Reason.

For the avoidance of doubt, if Executive dies or becomes Disabled after receiving a notice by the Company (i) that Executive is being terminated without Cause or (ii) of non-renewal of the Employment Term, or after providing notice of termination for Good Reason, then Executive’s estate, heirs and beneficiaries, in the case of Executive’s death, or Executive or his personal representative, in the case of Executive’s Disability, shall be entitled to the Accrued Benefits and the severance benefits described in Section 5(b) at the same time such amounts would have been paid or benefits provided to Executive had he lived or not become Disabled.

 

5


(b) Severance Benefits; Timing and Form of Payment. Subject to the limitations imposed by Section 6, if Executive is entitled to severance benefits, then:

(i) The Company shall pay Executive an amount equal to the sum of Executive’s Base Salary and the annual bonus (equal to 75% of Base Salary), payable in equal installments over the 12 month period after the date of termination.

(ii) Until the earlier of 18 months after the date of Executive’s Separation from Service or such time as Executive has obtained new employment and is covered by benefits which in the aggregate are at least equal in value to the following benefits, Executive shall continue to be covered, at the expense of the Company, by the same or equivalent, medical, dental and vision coverage as Executive received (immediately prior to Executive’s Separation from Service), subject to the following:

(A) Following the end of the COBRA continuation period, if such medical or dental coverage is provided under a health plan that is subject to Section 105(h) of the Code, benefits payable under such health plan shall comply with the requirements of Treasury regulation section 1.409A-3(i)(1)(iv) and, if necessary, the Employer shall amend such health plan to comply therewith.

(B) If provision of any such health benefits would subject the Company or its benefits arrangements to a penalty or adverse tax treatment, then the Company shall provide a cash payment to Executive in an amount reasonably determined by the Company to be equivalent to the COBRA premiums for similar benefit without any gross-up or make wholes.

(C) During the first six months following Executive’s Separation from Service, Executive shall pay the Company for any life insurance coverage that provides a benefit in excess of $50,000 under a group term life insurance policy. After the end of such six month period, the Company shall make a cash payment to Executive equal to the aggregate premiums paid by Executive for such coverage, and thereafter such coverage shall be provided at the expense of the Company for the remainder of the period as set forth above.

All payments shall be subject to payroll taxes and other withholdings in accordance with the Company’s (or the applicable employer of record’s) standard payroll practices and applicable law.

(c) Severance Following a Change of Control. If Executive’s employment is terminated by the Company without Cause, except in the case of death or Disability; or if the Company provides Executive with a notice of non-renewal of the Employment Term pursuant to Section 1 hereof; or Executive terminates his employment with the Company for Good Reason, in each case within 3 months prior to or 12 months following a Change of Control (as defined in the Equity Plan), then, in addition to the severance payments and benefits payable to Executive pursuant to Section 5(b), Executive will receive an additional severance payment equal to the sum of Executive’s Base Salary and the Target annual bonus (equal to 75% of Base Salary) (collectively, the “Enhanced Severance”), payable in a lump sum on the 60th day following such termination (provided, that if the termination occurs prior to the Change of Control, then payment shall be made on or within 60 days following the Change of Control), subject to Executive’s compliance with his post-employment obligations and conditioned on Executive’s execution of the release as set forth below.

(d) Other Termination of Employment. If Executive’s employment terminates for any reason other than those described in Section 5(a), Executive (or Executive’s estate in the event of his death), shall be entitled to receive only the Accrued Benefits.

 

6


(e) Release and Post-Employment Obligations. Executive’s right to receive and retain the severance payments and benefits (and the Enhanced Severance, if applicable) shall be conditioned upon (i) Executive’s continued compliance with the post-employment obligations set forth in Section 7 below and (ii) Executive execution and non-revocation of a release of claims against the Company and affiliated parties in substantially the form attached as Exhibit B hereto. Such release must be executed and become effective and irrevocable within 60 days after the Termination Date. In the event that Executive fails to timely execute the release of claims (or timely revokes his execution thereof), Executive shall repay to the Company any severance payments or benefits previously received and the Company shall have any further obligations to Executive in respect thereof.

6. Limitations on Severance Payments and Benefits. Notwithstanding any other provision of this Agreement, if any portion of the severance payments and benefits ( including the Enhanced Severance , if applicable) or any other payment under this Agreement, or under any other agreement with or plan of the Company (in the aggregate “Total Payments”), would constitute an “excess parachute payment,” then the Total Payments to be made to Executive shall be reduced such that the value of the aggregate Total Payments that Executive is entitled to receive shall be one dollar ($1) less than the maximum amount which Executive may receive without becoming subject to the tax imposed by Code Section 4999 or which the Company may pay without loss of deduction under Code Section 280G(a); provided that the foregoing reduction in the amount of Total Payments shall not apply if the after-tax value to Executive of the Total Payments prior to reduction in accordance herewith is greater than the after-tax value to Executive if Total Payments are reduced in accordance herewith. For purposes of this Agreement, the terms “excess parachute payment” and “parachute payments” shall have the meanings assigned to them in Code Section 280G, and such “parachute payments” shall be valued as provided therein. Present value for purposes of this Agreement shall be calculated in accordance with Code Section 1274(b)(2).

7. Covenants by Executive.

(a) Confidentiality. In consideration for Executive’s employment by the Company, Executive agrees that Executive shall, during Executive’s employment with the Company and thereafter, maintain the confidentiality of any and all information about the Company which is not generally known or available outside the Company, including without limitation, strategic plans, technical and operating know-how, business strategy, trade secrets, customer information, business operations and other proprietary information (“Confidential Information”), and Executive will not, directly or indirectly, disclose any Confidential Information to any person or entity, or use any Confidential Information, whether for Executive’s own benefit, the benefit of any new employer or any other person or entity or any other purpose, in any manner. The foregoing shall not apply to information that (i) was known to the public prior to its disclosure to Executive; (ii) becomes generally known to the public subsequent to disclosure to Executive through no wrongful act of Executive or any representative of Executive; or (iii) Executive is required to disclose by applicable law, regulation or legal process (provided that Executive provides the Company with prior notice of the contemplated disclosure and cooperates with the Company at its expense in seeking a protective order or other appropriate protection of such information).

(b) Return of Company Documents and Property. Executive shall deliver and return to the Company within 24 hours after termination of Executive’s employment with the Company for any reason (whether voluntary or involuntary), or at any other time the Company may request, all memoranda, notes, plans, records, reports, computer tapes, printouts, software and other documents, materials, information, drafts and data (and copies thereof) relating to work product or the business of any member of the Company, and all computers, mobile devices and other electronic hardware or work devices that he may then possess or have under his control. Executive will not keep in Executive’s possession, recreate or deliver to anyone else any such documents or property. Executive agrees, during the term of any restriction contained in this Agreement, to disclose this Agreement to any Person which offers employment to Executive. Executive further agrees that the Company may send a copy of this Agreement to, or otherwise make the provisions hereof known to, any of Executive’s potential employers. For the avoidance of doubt, upon any such termination, Executive may make and retain an electronic copy of Executive’s contacts list and calendar.

 

7


(c) Non-Competition/Non-Solicitation.

(i) During Executive’s employment with the Company and for a period of one year following Executive’s Termination Date if such Termination Date occurs prior to a Change of Control or two years following Executive’s Termination Date if such Termination Date occurs after a Change of Control (each, a “Restricted Period”), Executive agrees that Executive shall not, directly or indirectly, manage, operate, join, control, be employed by or participate in the management, operation or control of, or be connected in any manner with, including, without limitation, holding any position as a stockholder, director, officer, consultant, independent contractor, employee, partner or investor in, any operations of a business that are in competition with the business of the Company in the material plays or fields in which the Company has or proposes to have operations as set forth on Exhibit A to this Agreement, which Exhibit A may be modified prior to the time of Executive’s termination of employment by the Board upon written notification of such modification to Executive (the “Whiting Plays and Fields”); provided, however, that nothing in this Section 7(c) shall prohibit Executive from (A) participating in operations of a business to the extent such operations are not in competition with the business of the Company in the Whiting Plays and Fields, (B) participating solely as a passive investor in oil wells or similar investments, owning 3% or less of the outstanding securities of any class of any issuer whose securities are registered under the Exchange Act or making passive investments in any hedge, private equity or mutual fund or similar investment vehicle, (C) serving as a director of an entity that has less than 5% of its assets located in the Whiting Fields and Plays, or (D) serving as a director of Denbury Resources Inc.

(ii) During Executive’s employment with the Company and during the applicable Restricted Period, Executive agrees not to, in any form or manner, directly or indirectly, on his own behalf or in combination with others (A) solicit, induce or influence any customer, supplier, lender, lessor or any other person with a business relationship with the Company to discontinue or reduce the extent of such business relationship or (B) recruit, solicit or otherwise induce or influence any employee of the Company to discontinue their employment with the Company.

(d) Disclosure and Assignment to the Company of Inventions and Innovations.

(i) Executive agrees to disclose and assign to the Company as the Company’s exclusive property, all inventions and technical or business innovations, including but not limited to all patentable and copyrightable subject matter (collectively, the “Innovations”) developed, authored or conceived by Executive solely or jointly with others during the period of Executive’s employment, including during Executive’s employment prior to the date of this Agreement, (A) that are along the lines of the business, work or investigations of the Company to which Executive’s employment relates or as to which Executive may receive information due to Executive’s employment with the Company, (B) that result from or are suggested by any work which Executive may do for the Company or (C) that are otherwise made through the use of Company time, facilities or materials. To the extent any of the Innovations is copyrightable, each such Innovation shall be considered a “work for hire.”

(ii) Executive agrees to execute all necessary papers and otherwise provide proper assistance (at the Company’s expense), during and subsequent to Executive’s employment, to enable the Company to obtain for itself or its nominees, all right, title and interest in and to patents, copyrights, trademarks or other legal protection for such Innovations in any and all countries.

(iii) Executive agrees to make and maintain for the Company adequate and current written records of all such Innovations.

(iv) In the event the Company is unable for any reason whatsoever to secure Executive’s signature to any lawful and necessary documents required, including those necessary for the assignment of, application for or prosecution of any United States or foreign application for letters patent or copyright for any Innovation, Executive hereby irrevocably designates and appoints the Company and its duly authorized officers and agents as Executive’s agent and attorney-in-fact, to act for and in Executive’s behalf and stead to execute and file any such applications and to do all other lawfully permitted acts to further the assignment, prosecution and issuance of letters patent or registration of copyright thereon with the same legal force and effect as if executed by Executive. Executive hereby waives and quitclaims to the Company any and all claims, of any nature whatsoever, which Executive may now have or may hereafter have for infringement of any patent or copyright resulting from any such application.

 

8


(v) 18 U.S.C. § 1833(b) provides: “An individual shall not be held criminally or civilly liable under any Federal or State trade secret law for the disclosure of a trade secret that—(A) is made—(i) in confidence to a Federal, State, or local government official, either directly or indirectly, or to an attorney; and (ii) solely for the purpose of reporting or investigating a suspected violation of law; or (B) is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal.” Nothing in this Agreement is intended to conflict with 18 U.S.C. § 1833(b) or create liability for disclosures of trade secrets that are expressly allowed by 18 U.S.C. § 1833(b). Accordingly, the parties to this Agreement have the right to disclose in confidence trade secrets to federal, state, and local government officials, or to an attorney, for the sole purpose of reporting or investigating a suspected violation of law. The parties also have the right to disclose trade secrets in a document filed in a lawsuit or other proceeding, but only if the filing is made under seal and protected from public disclosure.

(e) Nondisparagement. Executive shall not, whether in writing (electronically or otherwise) or orally malign, denigrate or disparage the Company or any of its respective predecessors or successors, or any of their respective current or former directors, officers, employees, shareholders, partners, members, agents or representatives, with respect to any of their respective past or present activities, or otherwise publish, whether in writing (electronically or otherwise) or orally statements that malign, denigrate or disparage any of the aforementioned parties. The Company agrees to instruct its senior officers and directors not to disparage the Executive. The foregoing shall not be violated by truthful statements in response to legal process, required governmental testimony or filings, or administrative or arbitral proceedings (including, without limitation, depositions in connection with such proceedings), and the foregoing limitation on the Company’s executives and directors shall not be violated by statements that they in good faith believe are necessary or appropriate to make in connection with performing their duties and obligations to the Company.

(f) Remedies Not Exclusive. In the event that Executive breaches any terms of this Section 7, Executive acknowledges and agrees that said breach may result in the immediate and irreparable harm to the business and goodwill of the Company and that damages, if any, and remedies of law for such breach may be inadequate and indeterminable. The Company, upon Executive’s breach of this Section 7, shall therefore be entitled (in addition to and without limiting any other remedies that the Company may seek under this Agreement or otherwise at law or in equity) to seek from any court of competent jurisdiction equitable relief by way of temporary or permanent injunction and without being required to post a bond, to restrain any violation of this Section 7, and for such further relief as the court may deem just or proper in law or equity. Executive shall reimburse the Company’s legal fees upon any breach by Executive.

(g) Severability of Provisions. If any restriction, limitation or provision of this Section 7 is deemed to be unreasonable, onerous or unduly restrictive by a court of competent jurisdiction, it shall not be stricken in its entirety and held totally void and unenforceable, but shall remain effective to the maximum extent possible within the bounds of the law. If any phrase, clause or provision of this Section 7 is declared invalid or unenforceable by a court of competent jurisdiction, such phrase, clause or provision shall be deemed severed from this Section 7, but will not affect any other provision of this Section 7, which shall otherwise remain in full force and effect. The provisions of this Section 7 are each declared to be separate and distinct covenants by Executive.

(h) Tolling. The periods during which the covenants set forth in this Section 7 shall survive a termination of employment hereunder shall be tolled during (and shall be deemed automatically extended by) any period during which Executive is in violation of any such post-employment covenants, to the extent permitted by law.

8. Additional Executive Representations, Warranties and Covenants.

(a) Authority; No Conflicts. Executive represents, warrants, and covenants that as of the date hereof, (i) Executive has the full right, authority and capacity to enter into this Agreement and perform his obligations hereunder, (ii) Executive is not bound by any agreement that conflicts with or prevents or restricts the full performance of his duties and obligations hereunder during or after the Term, (iii) the execution and delivery of this Agreement shall not result in any breach or violation of, or a

 

9


default under, any existing obligation, commitment or agreement to which Executive is subject and (iv) Executive has not violated, and in connection with his employment with the Company will not violate, any non-solicitation, non-competition or other similar covenant or agreement of a prior employer by which he is or may be bound, and in connection with his employment with the Company, Executive will not use any confidential or proprietary information he may have obtained in connection with employment with any prior employer in contravention of any confidentiality obligations that Executive has to such prior employer.

(b) Advice of Counsel. Prior to execution of this Agreement, Executive was advised by the Company of his right to seek independent advice from an attorney of Executive’s own selection regarding this Agreement. Executive acknowledges that he has entered into this Agreement knowingly and voluntarily and with full knowledge and understanding of the provisions of this Agreement after being given the opportunity to consult with counsel.

(c) No Reliance on Company Statements. Executive represents further that in entering into this Agreement, Executive is not relying on any statements or representations made by any director, officer, employee or agent of any member of the Company that is not expressly set forth herein, and that Executive is relying only upon his own judgment and any advice provided by his attorney.

9. Taxes.

(a) Withholding. The Company may withhold from any payments of compensation or benefits made to Executive all applicable taxes, including but not limited to income, employment and social insurance taxes, as required by law. Executive acknowledges and represents that the Company has not provided any tax advice to him in connection with this Agreement and that he has been advised by the Company to seek tax advice from his own tax advisors regarding this Agreement and the payments that may be made to him pursuant to this Agreement, including, specifically, regarding the application of the provisions of Section 409A of the Code.

(b) Section 409A of the Code. It is intended that the provisions of this Agreement comply with or be exempt from Section 409A of the Code, and all provisions of this Agreement will be construed and interpreted in a manner consistent with the requirements for avoiding taxes or penalties under Section 409A of the Code. The Company cannot make any representations or guarantees with respect to compliance with such requirements, and neither the Company nor any affiliate will have any obligation to indemnify Executive or otherwise hold him harmless from any or all of such taxes or penalties. For purposes of Section 409A of the Code, each installment payment hereunder will be deemed a “separate payment” within the meaning of Treas. Reg. Section 1.409A-2(b)(iii). With respect to the timing of payments of any deferred compensation payable upon a termination of employment hereunder, references in this Agreement to “termination of employment” (and substantially similar phrases) mean “separation from service” within the meaning of Section 409A of the Code. For the avoidance of doubt, it is intended that any expense reimbursement made to Executive hereunder is exempt from Section 409A of the Code; however, if any expense reimbursement hereunder is determined to be deferred compensation within the meaning of Section 409A of the Code, then (i) the amount of the expense reimbursement during one taxable year will not affect the amount of the expense reimbursement during any other taxable year, (ii) the expense reimbursement will be made on or before the last day of the year following the year in which the expense was incurred and (iii) the right to expense reimbursement hereunder will not be subject to liquidation or exchange for another benefit. Notwithstanding any provision to the contrary in this Agreement: (i) no amount shall be payable pursuant to Section 5 unless the termination of the Executive’s employment constitutes a “separation from service” within the meaning of Section 1.409A-1(h) of the Department of Treasury Regulations; (ii) if the Executive is deemed at the time of his separation from service to be a “specified employee” for purposes of Section 409A(a)(2)(B)(i) of the Code, to the extent that delayed commencement of any portion of the termination benefits to which the Executive is entitled under this Agreement (after taking into account all exclusions applicable to such termination benefits under Section 409A), including, without limitation, any portion of the additional compensation awarded pursuant

 

10


to Section 5, is required in order to avoid a prohibited distribution under Section 409A(a)(2)(B)(i) of the Code, such portion of the Executive’s termination benefits shall not be provided to the Executive prior to the earlier of (A) the expiration of the six-month period measured from the date of the Executive’s “separation from service” with the Company (as such term is defined in the Department of Treasury Regulations issued under Section 409A) and (B) the date of the Executive’s death; provided that upon the earlier of such dates, all payments deferred pursuant to this Section 9 b shall be paid to the Executive in a lump sum, and any remaining payments due under this Agreement shall be paid as otherwise provided herein; (iii) the determination of whether the Executive is a “specified employee” for purposes of Section 409A(a)(2)(B)(i) of the Code as of the time of his separation from service shall be made by the Company in accordance with the terms of Section 409A and applicable guidance thereunder (including, without limitation, Section 1.409A-1(i) of the Department of Treasury Regulations and any successor provision thereto.

10. Future Cooperation. Executive agrees to reasonably cooperate with Whiting Petroleum in the future and to provide to Whiting truthful information, testimony or affidavits requested in connection with any matter that arose during Executive’s employment. This cooperation may be performed at reasonable times and places and in a manner as to not interfere with any other employment or business activities that Executive may have at the time of request. Whiting agrees to reimburse Executive for expenses incurred in providing such cooperation, so long as such expenses are approved in advance by Whiting.

11. Permissible Disclosure. Notwithstanding anything to the contrary contained herein, nothing in this Agreement shall prohibit the Executive from reporting possible violations of federal law or regulation to or otherwise cooperating with or providing information requested by any governmental agency or entity, including, but not limited to, the Department of Justice, the Securities and Exchange Commission, the Congress and any agency Inspector General, or making other disclosures that are protected under the whistleblower provisions of federal law or regulation. The Executive does not need the prior authorization of the Company to make any such reports or disclosures and the Executive is not required to notify the Company that the Executive has made such reports or disclosures.

12. Notice. Any notice, request, demand or other communication required or permitted herein will be deemed to be properly given when personally served in writing or when deposited in the United States mail, postage prepaid, addressed to Executive at the address appearing at the end of this Agreement and to the Company with attention to the General Counsel of Whiting. Either party may change its address by written notice in accordance with this paragraph.

13. Set Off. The Company’s obligation to pay Executive the amounts and to provide the benefits hereunder shall be subject to set-off, counterclaim or recoupment of amounts owed by Executive to the Company.

14. Assignment; Benefit of Agreement. This Agreement is personal and shall not be assignable by Executive. It shall be binding upon and shall inure to the benefit of the members of the Company and its respective successors and assigns and its economic rights and benefits shall inure to the benefit of Executive and his heirs or duly constituted legal representatives. For the avoidance of doubt, the Company may assign its rights, obligations and interests hereunder to any other member of the Company or its affiliates or to the acquirer of the business or all or substantially all of the assets of the Company, whether by merger, stock sale, asset sale or otherwise, in either case, without Executive’s consent.

15. Arbitration. Any controversy or claim arising out of or relating to this Agreement or the breach of this Agreement that cannot be mutually resolved by Executive and the Company, shall be submitted to arbitration in Colorado in accordance with the procedures of the American Arbitration Association. The determination of the arbitrator shall be conclusive and binding on the Company and Executive, and judgment may be entered on the arbitrator’s award in any court having jurisdiction.

16. Applicable Law and Jurisdiction. This Agreement is to be governed by and construed under the laws of the United States and of the State of Colorado without resort to Colorado’s choice of law rules. Each party hereby agrees that the forum and venue for any legal or equitable action or proceeding arising out of, or in connection with, this Agreement will lie in the appropriate federal or state courts in the State of Colorado and specifically waives any and all objections to such jurisdiction and venue.

 

11


17. Drafting. The parties acknowledge and confirm that each of their respective attorneys has participated jointly in the review and revision of this Agreement and that it has not been written solely by counsel for one party. The parties therefore stipulate and agree that the rule of construction to the effect that any ambiguities are to be or may be resolved against the drafting party shall not be employed in the interpretation of this Agreement to favor any party against another.

18. Captions and Paragraph Headings. The captions and paragraph headings set forth under each of the sections and subsections of this Agreement are for convenience of reference and shall not be construed or interpreted to define, limit, abridge or assist in the interpretation or scope or intent of this Agreement, which must be read in its entirety.

19. Invalid Provisions. Subject to Section 7(g), should any provision of this Agreement for any reason be declared invalid, void or unenforceable by a court of competent jurisdiction, the validity and binding effect of any remaining portion will not be affected, and the remaining portions of this Agreement will remain in full force and effect as if this Agreement had been executed with said provision eliminated.

20. No Waiver. The failure of a party to insist upon strict adherence to any term of this Agreement on any occasion shall not be considered a waiver of such party’s rights or deprive such party of the right thereafter to insist upon strict adherence to that term or any other term of this Agreement.

21. Entire Agreement. This Agreement contains the entire agreement of the parties with respect to the subject matter of this Agreement except where other agreements are specifically noted, adopted or incorporated by reference. This Agreement otherwise supersedes any and all other agreements, either oral or in writing, between the parties hereto with respect to the employment of Executive by Company, and all such agreements shall be void and of no effect. Each party to this Agreement acknowledges that no representations, inducements, promises or agreements, oral or otherwise, have been made by any party, or anyone acting on behalf of any party, which are not embodied herein, and that no other agreement, statement or promise not contained in this Agreement will be valid or binding.

22. Modification. This Agreement may not be modified or amended by oral agreement, but only by an agreement in writing signed by Whiting and Executive.

23. Counterparts. This Agreement may be signed in counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument.

24. Reimbursement of Attorneys’ Fees. Whiting shall promptly reimburse Executive for any expenses (including reasonable attorneys’ fees) incurred by Executive in connection with the drafting and negotiation of this Agreement and any incentive equity arrangements, up to an amount not exceeding $10,000.

 

12


IN WITNESS WHEREOF, the parties hereto have executed, or caused to be executed, this Agreement on the Effective Date.

 

EXECUTIVE: LYNN PETERSON

/s/ Lynn A. Peterson

Signature

WHITING PETROLEUM CORPORATION
By:  

/s/ Kevin S. McCarthy

Chairman of the Board

Title

 

13


EXHIBIT A

WHITING PLAYS AND FIELDS

Bakken Play in Mountrail, McKenzie, Stark, Dunn, Golden Valley, Billings, Williams, Divide and McClean Counties, North Dakota and Richland and Roosevelt Counties, Montana.

Niobrara Play in Weld County, Colorado.


EXHIBIT B

FORM OF GENERAL RELEASE

This Separation Agreement and General Release (“Agreement”) is between Whiting Petroleum Corporation, which in this Agreement is referred to as the “Whiting” or the “Company” or the Employer, and [ LP], who is referred to as Executive.

1. Background. Whiting and Executive acknowledge that Executive’s employment with Whiting is ending (or has ended), effective [Date]. Both Executive and Whiting desire an amicable separation and to fully and finally compromise and settle any differences that may exist between them on the terms set forth in this Agreement.

2. Employment Termination. Executive understands that his employment with Whiting is considered ended and his separation from service was effective [Date] (the “Separation Date”), based on reasons discussed between Executive and Whiting. Whiting and Executive are subject to an Executive Employment and Severance Agreement dated [Date] (“Employment Agreement”) that provides for Executive’s receipt of certain separation benefits if he executes an agreement with a general release of all claims that is acceptable to Whiting : this is that agreement.

3. Severance Pay and Benefits. In return for the execution of this Agreement, it becoming effective (see paragraph 18) and Executive honoring (and continuing to honor) all of its terms, Whiting will provide Executive with the severance pay and benefits in accordance with Section 5(b) [and 5(c)] of the Employment Agreement.

4. Acknowledgement. Executive understands that the severance pay and benefits identified in paragraph 3 above will not be paid or provided unless he accepts this Agreement, it becomes effective (see paragraph 18), and he honors (and continues to honor) all of its terms.

5. Release. Executive understands and agrees that his acceptance of this Agreement means that, except as stated in paragraph 7, he is forever waiving and giving up any and all claims he may have, whether known or unknown, against Whiting , its parent, subsidiaries, and related companies, their insurers, their officers, directors, employees and agents for any personal monetary relief for himself, benefits or remedies that are based on any act or failure to act that occurred on or before the date he signed this Agreement. Executive understands that this release and waiver of claims includes claims for or relating to: (a) his employment and the termination of his employment; (b) any Whiting policy, practice, contract or agreement, including, but not limited, to the Employment Agreement; (c) any tort or personal injury relating to Executive’s employment or termination of employment; (d) any policies, practices, laws or agreements governing the payment of wages, commissions or other compensation, including, but not limited, to the Colorado Wage Act, the Colorado Minimum Wage Order No. 30 and all terms for compensation under the Employment Agreement; (e) any laws governing employment discrimination or retaliation including (to the extent applicable), but not limited to, Title VII of the Civil Rights Act, the Employee Retirement Income Security Act, the Americans with Disabilities Act, the Age Discrimination in Employment Act (ADEA), the Older Worker Benefit Protection Act, the Genetic Information Nondiscrimination Act, the Family and Medical Leave Act, the National Labor Relations Act (NLRA), the Colorado Anti-Discrimination Act, C.R.S. 24-34-401 et seq., the City and County of Denver’s Anti-Discrimination Ordinance and any other applicable state or local laws; (f) any laws or agreements that provide for punitive, exemplary or statutory damages and (g) any laws or agreements that provide for the payment of attorney fees, costs or expenses.

6. Future Employment. Executive agrees that he] is not now or hereafter entitled to employment or reemployment with Whiting and he agrees not to knowingly seek such employment on any basis or through an employment agency. Executive further agrees and acknowledges that should he apply for any position in contradiction of this paragraph, Whiting may completely ignore such application and fail to consider it based on this paragraph.


7. Claims Not Waived. Executive understands that this Agreement does not waive any claims that he may have: (a) for compensation for illness or injury or medical expenses under any worker’s compensation statute; (b) for benefits under any plan currently maintained by Whiting that provides for retirement benefits (however, Executive agrees and acknowledges that the severance pay and benefits provided in paragraph 3 above shall not be considered or included for purposes of any retirement benefit contribution or plan) under this Agreement; (c) under this Agreement; (d) for indemnification as provided by the Company’s organizational documents, or claims under the Company’s D&O insurance coverage, or (e) that by law cannot be released or waived.

8. Government Cooperation. Nothing in this Agreement prohibits Executive from cooperating with any government agency, including the National Labor Relations Board or the Equal Employment Opportunity Commission, or any similar state agency. Further, Executive understands that nothing in this Agreement (including any obligation in Paragraphs 5 or 9) prohibit him from reporting a possible violation of federal, state or local law or regulation to any governmental agency or entity, including but not limited to the Department of Justice, the Securities and Exchange Commission, the United States Congress or any agency (including but not limited to the National Labor Relations Board or the Equal Employment Opportunity Commission) or inspector general, or making other disclosures that are protected under any whistleblower provision of federal, state or local law or regulation.

9. Prior Confidentiality Agreement(s). Executive agrees and understands that this Agreement does not supersede any obligation to which he was subject under a prior agreement while employed with Whiting that addresses confidentiality, noncompetition, patents or copyright. Executive acknowledges that and continues to be, subject to those obligations contained in the Employment Agreement, and that he is expressly re-affirming his commitment to those obligations by executing this Agreement, and acknowledging that his failure to abide by such obligations will constitute a material breach of this Agreement. Executive acknowledges and agrees that he is subject to the restrictive covenants and other obligations as set forth in the Employment Agreement.

9. Trade Secrets/Defend Trade Secrets Act. Nothing in this Agreement (or any prior agreement on confidentiality to which Executive may be subject) diminishes or limits any protection granted by law to trade secrets or relieves Executive of any duty not to disclose, use or misappropriate any information that is a trade secret, for as long as such information remains a trade secret. Additionally, nothing in this Agreement (or any prior agreement on confidentiality to which Executive may be subject) is intended to discourage Executive from reporting any theft of trade secrets to the appropriate government official pursuant to the Defend Trade Secrets Act of 2016 (“DTSA”) or other applicable state or federal law. Additionally, under the DTSA, a trade secret may be disclosed to report a suspected violation of law and/or in an anti-retaliation lawsuit, as follows:

a. An individual shall not be held criminally or civilly liable under any federal or state trade secret law for the disclosure of a trade secret that: (A) is made (1) in confidence to a federal, state or local government official, either directly or indirectly, or to an attorney and (2) solely for the purpose of reporting or investigating a suspected violation of law or (B) is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal.

b. An individual who files a lawsuit for retaliation by an employer for reporting a suspected violation of law may disclose the trade secret to the attorney of the individual and use the trade secret information in the court proceeding, if the individual: (A) files any document containing the trade secret under seal and (B) does not disclose the trade secret, except pursuant to court order. Nothing in this Agreement (or any prior agreement on confidentiality to which Executive may be subject) shall limit, curtail or diminish the Whiting ’s statutory rights under the DTSA, any applicable state law regarding trade secrets or common law.

10. Relinquishment Of Positions. As of the Separation Date, Executive acknowledges that he has fully and completely relinquished any and all officerships, directorships or other positions that he held with Whiting and any of its affiliates.


11. Nonadmission. Executive and Whiting both acknowledge and agree that nothing in this Agreement is meant to suggest that Whiting has violated any law or contract or that Executive has any claim against Whiting.

12. Voluntary Agreement. Executive acknowledges and states that he has entered into this Agreement knowingly and voluntarily.

13. Consulting An Attorney. Executive acknowledges that Whiting has told him]that he should consult an attorney of his own choice about this Agreement and every matter that it covers before signing this Agreement, and that he has been provided an meaningful opportunity for such consultation.

14. Obligation to Repay Upon Violation of Release. Executive understands and agrees that if he is found by a court of competent jurisdiction to have materially violated the commitments he has made in Section 5 of this Agreement, Whiting may recover any payments and/or the value of any benefits provided in this Agreement, with the exception of One Thousand Dollars ($1,000).

15. Complete Agreement. Executive understands and agrees that this document contains the entire agreement between him and Whiting relating to his employment and the termination of his employment, that this Agreement, except as provided in paragraph 9, supersedes and displaces any prior agreements and discussions relating to such matters and that he may not rely on any such prior agreements or discussions.

16. Effective Date. This Agreement shall not be effective until seven days after Executive signs it and returns it to Whiting ’s Vice President, General Counsel and Corporate Secretary. During that seven-day period, Executive may revoke his acceptance of this Agreement by delivering to Whiting ’s Vice President, General Counsel and Corporate Secretary a written statement stating he wishes to revoke this Agreement or not be bound by it.

17. Final and Binding Effect. Executive understands that if he signs this Agreement, returns it to Whiting and fails to revoke it consistent with this paragraph 18, it will have a final and binding effect and that by signing and returning this Agreement (and not revoking it) he may be giving up legal rights. Executive also acknowledges that this Agreement may be signed in counter-parts (meaning by him and Whiting separately) and that facsimile, copy or PDF copy signatures shall be treated as valid as original signatures.

18. Exclusive Jurisdiction and Venue. This Agreement is to be governed by and construed under the laws of the United States and of the State of Colorado without resort to Colorado’s choice of law rules. Whiting and Executive agree that the forum and venue for any legal or equitable action or proceeding arising out of, or in connection with, this Agreement will lie in the appropriate federal or state courts in the State of Colorado and each specifically waives any and all objections to such jurisdiction and venue.

19. Future Cooperation. Executive agrees to reasonably cooperate with Whiting in the future and to provide to Whiting truthful information, testimony or affidavits requested in connection with any matter that arose during Executive’s employment. This cooperation may be performed at reasonable times and places and in a manner as to not interfere with any other employment or business activities that Executive may have at the time of request. Whiting agrees to reimburse Executive for expenses incurred in providing such cooperation, so long as such expenses are approved in advance by Whiting , including, if applicable, any legal fees and expenses reasonably incurred by Executive if Executive and Whiting agree in good faith that Executive should retain counsel independent of the counsel for Whiting in order to cooperate as provided herein above.

20. Return of Property. Executive acknowledges an obligation and agrees to return all Whiting property, unless otherwise specified in this paragraph. This includes all files, memoranda, documents, records, credit cards, keys and key cards, computers, laptops, personal digital assistants, cellular telephones, Blackberry devices or similar instruments, other equipment of any sort, badges, vehicles and any other property of Whiting . In addition, Executive agrees to provide any and all access codes or


passwords necessary to gain access to any computer, program or other equipment that belongs to Whiting or is maintained by Whiting or on company property. Further, Executive acknowledges an obligation and agrees not to destroy, delete or disable any company property, including items, files and materials on computers and laptops.

21. Divisibility of Agreement or Modification by Court. Executive understands that, to the extent permitted by law, the invalidity of any provision of this Agreement will not and shall not be deemed to affect the validity of any other provision. Executive agrees that in the event that any provision of this Agreement is held to be invalid, it shall be, to the extent permitted by law, modified as necessary to be interpreted in a manner most consistent with the present terms of the provision, to give effect to the provision. Finally, in the event that any provision of this Agreement is held to be invalid and not capable of modification by a court, then Executive understands and agrees that such provision shall be considered expunged (eliminated), and he further agrees that the remaining provisions shall be treated as in full force and effect as if this Agreement had been executed by Executive after the expungement (elimination) of the invalid provision.

22. Representations. By signing this Agreement, Executive represents that he has read this entire document and understands all of its terms.

23. 21-Day Consideration Period. Executive may consider whether to sign and accept this Agreement for a period of 21 days from the day he received it. If this Agreement is not signed, dated and returned to Whiting ’s Vice President, General Counsel and Corporate Secretary within 22 days, the offer of severance payments and benefits described in paragraph 3 above will no longer be available. Executive acknowledges that should he sign and return this Agreement within the 21-day period identified in this paragraph, he is knowingly waiving whatever additional time he may have up to the conclusion of the 21-day period for consideration of this Agreement.

 

ACCEPTED:    ACCEPTED:
EXECUTIVE: LYNN PETERSON    WHITING PETROLEUM CORPORATION
                                                                 By:                                                                         
Dated:    Dated:

Date Agreement was originally given to Executive:

Exhibit 10.6

EXECUTIVE EMPLOYMENT AND SEVERANCE AGREEMENT

This Executive Employment and Severance Agreement (this “Agreement”) is between James Henderson (“Executive”) and Whiting Petroleum Corporation (“Whiting” and, together with its subsidiaries, the “Company”) and is effective as of September 1, 2020 (the “Effective Date”).

WHEREAS, the Company desires to employ Executive in a key employee capacity and expects that Executive’s services will be valuable to the conduct of the business of the Company;

WHEREAS, Whiting and Executive desire to specify the terms and conditions on which Executive will be employed on and after the Effective Date, and under which Executive will receive severance in the event that Executive separates from service with the Company under the circumstances described in this Agreement; and

NOW, THEREFORE, for the consideration described above and other good and valuable consideration, the parties agree as follows:

1. Effective Date; Term. This Agreement shall become effective on the Effective Date and continue until the date that is two years after the Effective Date (the “Initial Term”). Thereafter, this Agreement shall renew automatically for successive one-year renewal periods unless and until either party provides written notice to the other party of the intent not to renew this Agreement at least 180 days prior to the end of the Initial Term or any subsequent term. The period between the Effective Date and the Termination Date shall be referred to herein as the “Employment Term.” Expiration of this Agreement will not affect the rights or obligations of the parties hereunder arising out of, or relating to, circumstances occurring prior to the expiration of this Agreement, which rights and obligations will survive the expiration of this Agreement.

2. Definitions. For purposes of this Agreement, the following terms shall have the meanings ascribed to them:

(a) “Accrued Benefits” shall mean the following amounts, payable as described herein: (i) all base salary for the time period ending with the Termination Date; (ii) reimbursement for any and all monies advanced in connection with Executive’s employment for reasonable and necessary expenses incurred by Executive on behalf of the Company for the time period ending with the Termination Date in accordance with company policy and (iii) all other payments and benefits to which Executive (or in the event of Executive’s death, Executive’s surviving spouse or other beneficiary) is entitled on the Termination Date under the terms of any benefit plan of the Company, excluding severance payments under any Company severance policy, practice or agreement in effect on the Termination Date.

(b) “Affiliate” shall mean, with respect to any person, any person that, directly or through one or more intermediaries, is controlled by, controls or is under common control with, such Person.

(c) “Base Salary” shall mean Executive’s annual base salary with the Company as in effect from time to time.

(d) “Board” shall mean the board of directors of Whiting or a committee of such Board authorized to act on its behalf in certain circumstances, including the Compensation Committee of the Board.

(e) “Cause” shall mean a good faith finding by the Board that Executive has (i) willfully failed, grossly neglected or refused to perform the lawful employment duties related to his position or as from time to time assigned to him (other than due to Disability); (ii) committed any willful, intentional or grossly negligent misconduct having the effect of injuring the interest, business or reputation of the Company; (iii) violated or failed to comply in any material respect with the Company’s published rules, regulations or policies, as in effect or amended from time to time; (iv) been indicted for, convicted of, or plead guilty or nolo contendere to a felony or misdemeanor involving moral turpitude, or performed any act of fraud, material theft or material dishonesty; (v) misappropriated or embezzled any property of the Company (whether or not an act constituting a felony or misdemeanor) or (vi) breached any material provision of this Agreement or any other applicable confidentiality, non-compete, non-solicit, general release, covenant not-to-sue or other agreement with the Company.


(f) “COBRA shall mean the provisions of Code Section 4980B.

(g) “Code” shall mean the Internal Revenue Code of 1986, as amended, as interpreted by rules and regulations issued pursuant thereto, all as amended and in effect from time to time. Any reference to a specific provision of the Code shall be deemed to include reference to any successor provision thereto.

(h) “Disability” shall mean, subject to applicable law, any medically determinable physical or mental impairment that (i) renders Executive unable to perform the duties of his position with the Company and (ii) is expected to last for a continuous period of not less than six months, all as certified by a physician reasonably acceptable to the Company or its Successor.

(i) “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended, as interpreted by rules and regulations issued pursuant thereto, all as amended and in effect from time to time. Any reference to a specific provision of the Exchange Act shall be deemed to include reference to any successor provision thereto.

(j) “Good Reason” shall mean the occurrence of any of the following without the consent of Executive: (i) a material diminution in Executive’s title, duties or responsibilities; (ii) a requirement that Executive relocate Executive’s principal place of work to a location that increases his one-way commute by more than 40 miles from its location on the date of this Agreement; (iii) a reduction in Executive’s Base Salary or annual bonus target percentage, unless such reduction applies across the board to other senior executives; or (iv) a material breach by Whiting of any provisions of this Agreement. Notwithstanding the foregoing, Executive will not be deemed to have Good Reason unless (x) Executive first provides Whiting with written notice of the condition giving rise to Good Reason within 30 days of its initial occurrence and (y) Whiting fails to cure such condition within 30 days after receiving such written notice.

(k) “Separation from Service” shall mean Executive’s termination of employment from Whiting and each entity that is required to be included in Whiting’s controlled group of corporations within the meaning of Code Section 414(b), or that is under common control with Whiting within the meaning of Code Section 414(c) (collectively, “409A affiliates”). Notwithstanding the foregoing:

(i) If Executive takes a leave of absence for purposes of military leave, sick leave or other bona fide leave of absence, Executive will not be deemed to have incurred a Separation from Service for the first six months of the leave of absence, or if longer, for so long as Executive’s right to reemployment is provided either by statute or by contract.

(ii) Subject to paragraph (i), Executive shall incur a Separation from Service when the level of bona fide services provided by Executive to Whiting and its 409A Affiliates permanently decreases to a level of 20% or less of the level of services rendered by Executive, on average, during the immediately preceding 36 months of employment.

(iii) If, following Executive’s termination of employment, Executive continues to provide services to the Company or a 409A Affiliate in a capacity other than as an employee, Executive will not be deemed to have Separated from Service as long as Executive is providing bona fide services at a rate that is greater than 20% of the level of services rendered by Executive, on average, during the immediately preceding 36 months of service.

(l) “Successor” shall mean the person to which this Agreement is assigned upon a sale of business.

 

2


(m) “Termination Date” shall mean the date of Executive’s termination of employment from the Company, as further described in Section 4.

3. Employment of Executive.

(a) Position.

(i) Executive shall serve in the position of Chief Financial Officer in a full-time capacity. In such position, Executive shall have such duties and authority as is customarily associated with such position and shall have such other titles, duties and responsibilities, consistent with Executive’s position, as may be assigned from time to time by the Board or the Chief Executive Officer, and upon request of the Board, Executive shall serve as an officer or director of any Company affiliates. Executive will be based at the Company’s headquarters in Denver, Colorado, subject to reasonable required travel on the Company’s business.

(ii) Executive shall devote Executive’s full business time and best efforts to the performance of Executive’s duties hereunder and will not engage in any other business, profession or occupation for compensation or otherwise which would conflict or interfere with the rendition of such services either directly or indirectly, without the prior written consent of the Board; provided that nothing herein shall preclude Executive, subject to the prior approval of the Board, from accepting appointment to or continuing to serve on any board of directors or trustees of any business corporation or any charitable organization, serving on civic and charitable institutions and managing Executive’s personal financial affairs; further provided in each case, and in the aggregate, that such activities do not conflict or unreasonably interfere with the performance of Executive’s duties hereunder or conflict with Section 7.

(b) Base Salary. Whiting shall pay Executive a Base Salary in regular installments in accordance with the Company’s usual payroll practices. The Base Salary shall be an amount equal to the annual rate of $ 425,000 subject to increase, but not decrease, from time to time as determined by the Board.

(c) Bonus. Executive shall be entitled to participate in the Company’s annual bonus plan with a threshold bonus of 25 % of Base Salary, target bonus of 75% of Base Salary and a maximum bonus of 150% of Base Salary based upon achievement of the performance goals under such plans. The bonus for 2020 will be pro-rated based on a fraction equal to the number of days the Executive was employed starting on the Effective Date through December 31, 2020 divided by 365 (the “Pro Rata Amount”) and shall be no less than the target bonus multiplied by the Pro Rata Amount.

(d) Equity. As soon as practicable and within 45 days after the Effective Date, the Executive will be granted restricted stock units under the Company’s 2020 Equity Plan (the “Equity Plan”) with a grant date fair value equal to $371,875 (the “Initial Grant”). The stock price used to determine the number of shares for the Initial Grant shall be equal to the volume weight average price for the 15 trading days commencing on the day after the Effective Date. The Executive will also be granted $1,115,625 in early 2021 (the “2021 Grant”) in conjunction with the annual issuance of long-term incentives to other senior employees. The Initial Grant will vest ratably on the first, second and third year anniversaries of the Effective Date and fifty percent of the 2021 Grant shall vest ratably on the first, second and third year anniversaries of the grant date and fifty percent shall vest based on the achievement of performance in each case, subject to continued employment and as further set forth in the award agreements and the Equity Plan.

(e) Special Equity. As soon as practicable and within 45 days after the Effective Date, the Executive will be granted a special one-time equity grant of 46,300 RSUs under the Equity Plan. The award will vest as follows: 50% will vest if the daily volume weighted average price (“VWAP”) exceeds $32.57 per share for 20 consecutive trading days, an additional 25% if the daily VWAP exceeds $48.86 per share for 20 consecutive trading days and the final 25% if the daily VWAP exceeds $65.14 per share for 20 consecutive trading days, This award will vest only if the Executive is employed by the Company during the 20 day period when the daily VWAP equals or exceeds the targets outlined above (provided, that vesting will occur if Executive is terminated without Cause/or resigns for Good Reason within three months prior to achieving such targets) The award will be subject to the terms and conditions of the award agreement and the Equity Plan.

 

3


(f) Employee Benefits. Executive shall be entitled to participate in the Company’s employee benefit plans (other than annual and/or long-term incentive programs, which are addressed in Section 3(c) and (d)) as in effect from time to time; provided that nothing contained herein shall prevent the Company from amending, modifying, suspending or terminating any such benefit plans or arrangements at any time and from time to time in its sole discretion.

(g) Business Expenses. The reasonable business expenses incurred by Executive in the performance of Executive’s duties hereunder shall be reimbursed by the Company in accordance with Company policies.

(h) Vacation. Executive shall be entitled to four weeks of vacation per full year.

4. Termination of Employment. Executive’s employment with the Company will terminate during the term of this Agreement, and this Agreement will terminate on the date of such termination, as follows:

(a) Executive’s employment will terminate upon Executive’s death.

(b) If Executive is Disabled, and if within 30 days after Whiting notifies Executive in writing that it intends to terminate Executive’s employment, Executive shall not have returned to the performance of Executive’s duties hereunder on a full-time basis, Whiting may terminate Executive’s employment, effective immediately following the end of such 30-day period.

(c) Whiting may terminate Executive’s employment with or without Cause (other than as a result of Disability which is governed by Section 4(b)) by providing at least 30 days’ prior written notice (or pay in lieu thereof) to Executive that indicates in reasonable detail the facts and circumstances alleged to provide a basis for such termination. If the termination is without Cause, Executive’s employment will terminate on the date specified in the written notice of termination. If the termination is for Cause, Executive shall have 15 days from the date the written notice is provided, to cure any conduct or act, if curable, alleged to provide grounds for termination of Executive’s employment for Cause. If the alleged conduct or act constituting Cause is not curable, Executive’s employment will terminate on the date specified in the written notice of termination. If the alleged conduct or act constituting Cause is curable but Executive does not cure such conduct or act within the specified time period, Executive’s employment will terminate on the date immediately following the end of the cure period. Unless otherwise directed by Whiting, from and after the date of the written notice of proposed termination, Executive shall be relieved of his duties and responsibilities and shall be considered to be on a paid leave of absence pending any final action by Whiting or the board of directors of the Successor.

(d) Executive may terminate his employment for or without Good Reason by providing written notice of termination to Whiting that indicates in reasonable detail the facts and circumstances alleged to provide a basis for such termination; provided that Executive agrees to provide Whiting with at least 90 days’ written notice of his intent to voluntarily resign from employment for any reason; further provided that Whiting may waive all or any portion of such notice period and accelerate the effective date of Executive’s voluntary resignation without re-characterizing the nature of such termination. If Executive is alleging a termination for Good Reason, Executive must provide written notice to Whiting of the existence of the condition constituting Good Reason within 60 days of the initial existence of such condition, and Whiting must have a period of at least 30 days following receipt of such notice to cure such condition. If such condition is not cured by Whiting within such 30-day period, Executive’s termination of employment shall be effective on the date immediately following the end of such cure period.

 

4


(e) If the Executive provides notice of termination, Whiting may elect to place Executive on “garden leave” for up to 90 days or such shorten period as determined by the Company during which period Executive will continue to receive all of Executive’s compensation and benefits hereunder as if an active employee but during which period Whiting will not be obligated to assign to Executive any powers or duties or to permit Executive to provide any work for Whiting or provide Executive access to Whiting’s facilities (but Executive will be required to be available as requested by Whiting). The implementation of any such leave shall not be regarded as a termination of employment nor will it give Executive a right to terminate employment for Good Reason. During any such period of “garden leave,” Executive shall remain reasonably available at Whiting’s reasonable request (taking into account Executive’s other professional commitments, if any, during such period) to consult on matters related to the business of the Company or the transition of Executive’s duties to his successor, and Executive acknowledges and agrees that during and following such period he will continue to be bound by the covenants contained in Section 7 hereof in accordance with their terms and any other restrictive covenants or professional obligations contained herein or in any other written agreement with the Company.

(f) Upon Executive’s termination of employment for any reason, whether voluntarily or involuntarily, Executive shall be deemed to have resigned from all positions, directorships and memberships held with the Company, whether as an employee, officer, director, trustee, consultant or otherwise, and such resignations shall be effective upon such termination of employment without any other action required by Executive. Executive hereby agrees to execute all documentation reasonably requested by the Company to effectuate the foregoing. Further, except as required by law or as otherwise set forth expressly herein, Executive’s participation in, and eligibility for participation in, the benefit plans and programs of the Company shall cease as of the effective date of any termination of Executive’s employment with the Company.

5. Payments upon Termination.

(a) Entitlement to Severance. Subject to the other terms and conditions of this Agreement, Executive shall be entitled to the Accrued Benefits, and to the severance benefits described in Section 5(b), in the following circumstances while this Agreement is in effect:

(i) Executive’s employment is terminated by the Company without Cause, except in the case of death or Disability;

(ii) Executive’s employment is terminated due to the Company’s notice of non-renewal of the Employment Term pursuant to Section 1 hereof; or

(iii) Executive terminates his employment with the Company for Good Reason.

For the avoidance of doubt, if Executive dies or becomes Disabled after receiving a notice by the Company (i) that Executive is being terminated without Cause or (ii) of non-renewal of the Employment Term, or after providing notice of termination for Good Reason, then Executive’s estate, heirs and beneficiaries, in the case of Executive’s death, or Executive or his personal representative, in the case of Executive’s Disability, shall be entitled to the Accrued Benefits and the severance benefits described in Section 5(b) at the same time such amounts would have been paid or benefits provided to Executive had he lived or not become Disabled.

(b) Severance Benefits; Timing and Form of Payment. Subject to the limitations imposed by Section 6, if Executive is entitled to severance benefits, then:

(i) The Company shall pay Executive an amount equal to the sum of Executive’s Base Salary and the annual bonus (equal to 75% of Base Salary), payable in equal installments over the 12 month period after the date of termination.

(ii) Until the earlier of 18 months after the date of Executive’s Separation from Service or such time as Executive has obtained new employment and is covered by benefits which in the aggregate are at least equal in value to the following benefits, Executive shall continue to be covered, at the expense of the Company, by the same or equivalent, medical, dental and vision coverage as Executive received (immediately prior to Executive’s Separation from Service), subject to the following:

 

5


(A) Following the end of the COBRA continuation period, if such medical or dental coverage is provided under a health plan that is subject to Section 105(h) of the Code, benefits payable under such health plan shall comply with the requirements of Treasury regulation section 1.409A-3(i)(1)(iv) and, if necessary, the Employer shall amend such health plan to comply therewith.

(B) If provision of any such health benefits would subject the Company or its benefits arrangements to a penalty or adverse tax treatment, then the Company shall provide a cash payment to Executive in an amount reasonably determined by the Company to be equivalent to the COBRA premiums for similar benefit without any gross-up or make wholes.

(C) During the first six months following Executive’s Separation from Service, Executive shall pay the Company for any life insurance coverage that provides a benefit in excess of $50,000 under a group term life insurance policy. After the end of such six month period, the Company shall make a cash payment to Executive equal to the aggregate premiums paid by Executive for such coverage, and thereafter such coverage shall be provided at the expense of the Company for the remainder of the period as set forth above.

All payments shall be subject to payroll taxes and other withholdings in accordance with the Company’s (or the applicable employer of record’s) standard payroll practices and applicable law.

(c) Severance Following a Change of Control. If Executive’s employment is terminated by the Company without Cause, except in the case of death or Disability; or if the Company provides Executive with a notice of non-renewal of the Employment Term pursuant to Section 1 hereof; or Executive terminates his employment with the Company for Good Reason, in each case within 3 months prior to or 12 months following a Change of Control (as defined in the Equity Plan), then, in addition to the severance payments and benefits payable to Executive pursuant to Section 5(b), Executive will receive an additional severance payment equal to the sum of Executive’s Base Salary and the Target annual bonus (equal to 75% of Base Salary) (collectively, the “Enhanced Severance”), payable in a lump sum on the 60th day following such termination (provided, that if the termination occurs prior to the Change of Control, then payment shall be made on or within 60 days following the Change of Control), subject to Executive’s compliance with his post-employment obligations and conditioned on Executive’s execution of the release as set forth below.

(d) Other Termination of Employment. If Executive’s employment terminates for any reason other than those described in Section 5(a), Executive (or Executive’s estate in the event of his death), shall be entitled to receive only the Accrued Benefits.

(e) Release and Post-Employment Obligations. Executive’s right to receive and retain the severance payments and benefits (and the Enhanced Severance, if applicable) shall be conditioned upon (i) Executive’s continued compliance with the post-employment obligations set forth in Section 7 below and (ii) Executive execution and non-revocation of a release of claims against the Company and affiliated parties in substantially the form attached as Exhibit B hereto. Such release must be executed and become effective and irrevocable within 60 days after the Termination Date. In the event that Executive fails to timely execute the release of claims (or timely revokes his execution thereof), Executive shall repay to the Company any severance payments or benefits previously received and the Company shall have any further obligations to Executive in respect thereof.

 

6


6. Limitations on Severance Payments and Benefits. Notwithstanding any other provision of this Agreement, if any portion of the severance payments and benefits (including the Enhanced Severance, if applicable) or any other payment under this Agreement, or under any other agreement with or plan of the Company (in the aggregate “Total Payments”), would constitute an “excess parachute payment,” then the Total Payments to be made to Executive shall be reduced such that the value of the aggregate Total Payments that Executive is entitled to receive shall be one dollar ($1) less than the maximum amount which Executive may receive without becoming subject to the tax imposed by Code Section 4999 or which the Company may pay without loss of deduction under Code Section 280G(a); provided that the foregoing reduction in the amount of Total Payments shall not apply if the after-tax value to Executive of the Total Payments prior to reduction in accordance herewith is greater than the after-tax value to Executive if Total Payments are reduced in accordance herewith. For purposes of this Agreement, the terms “excess parachute payment” and “parachute payments” shall have the meanings assigned to them in Code Section 280G, and such “parachute payments” shall be valued as provided therein. Present value for purposes of this Agreement shall be calculated in accordance with Code Section 1274(b)(2).

7. Covenants by Executive.

(a) Confidentiality. In consideration for Executive’s employment by the Company, Executive agrees that Executive shall, during Executive’s employment with the Company and thereafter, maintain the confidentiality of any and all information about the Company which is not generally known or available outside the Company, including without limitation, strategic plans, technical and operating know-how, business strategy, trade secrets, customer information, business operations and other proprietary information (“Confidential Information”), and Executive will not, directly or indirectly, disclose any Confidential Information to any person or entity, or use any Confidential Information, whether for Executive’s own benefit, the benefit of any new employer or any other person or entity or any other purpose, in any manner. The foregoing shall not apply to information that (i) was known to the public prior to its disclosure to Executive; (ii) becomes generally known to the public subsequent to disclosure to Executive through no wrongful act of Executive or any representative of Executive; or (iii) Executive is required to disclose by applicable law, regulation or legal process (provided that Executive provides the Company with prior notice of the contemplated disclosure and cooperates with the Company at its expense in seeking a protective order or other appropriate protection of such information).

(b) Return of Company Documents and Property. Executive shall deliver and return to the Company within 24 hours after termination of Executive’s employment with the Company for any reason (whether voluntary or involuntary), or at any other time the Company may request, all memoranda, notes, plans, records, reports, computer tapes, printouts, software and other documents, materials, information, drafts and data (and copies thereof) relating to work product or the business of any member of the Company, and all computers, mobile devices and other electronic hardware or work devices that he may then possess or have under his control. Executive will not keep in Executive’s possession, recreate or deliver to anyone else any such documents or property. Executive agrees, during the term of any restriction contained in this Agreement, to disclose this Agreement to any Person which offers employment to Executive. Executive further agrees that the Company may send a copy of this Agreement to, or otherwise make the provisions hereof known to, any of Executive’s potential employers. For the avoidance of doubt, upon any such termination, Executive may make and retain an electronic copy of Executive’s contacts list and calendar.

(c) Non-Competition/Non-Solicitation.

(i) During Executive’s employment with the Company and for a period of one year following Executive’s Termination Date if such Termination Date occurs prior to a Change of Control or two years following Executive’s Termination Date if such Termination Date occurs after a Change of Control (each, a “Restricted Period”), Executive agrees that Executive shall not, directly or indirectly, manage, operate, join, control, be employed by or participate in the management, operation or control of, or be connected in any manner with, including, without limitation, holding any position as a stockholder, director, officer, consultant, independent contractor, employee, partner or investor in, any operations of a business that are in competition with the business of the Company in the material plays or fields in which the Company has or proposes to have operations as set forth on Exhibit A to this Agreement, which Exhibit A may be modified prior to the time of Executive’s termination of employment by the Board upon written notification of such modification to Executive (the “Whiting Plays and Fields”); provided, however, that

 

7


nothing in this Section 7(c) shall prohibit Executive from (A) participating in operations of a business to the extent such operations are not in competition with the business of the Company in the Whiting Plays and Fields, (B) participating solely as a passive investor in oil wells or similar investments, owning 3% or less of the outstanding securities of any class of any issuer whose securities are registered under the Exchange Act or making passive investments in any hedge, private equity or mutual fund or similar investment vehicle, or (C) serving as a director of an entity that has less than 5% of its assets located in the Whiting Fields and Plays.

(ii) During Executive’s employment with the Company and during the applicable Restricted Period, Executive agrees not to, in any form or manner, directly or indirectly, on his own behalf or in combination with others (A) solicit, induce or influence any customer, supplier, lender, lessor or any other person with a business relationship with the Company to discontinue or reduce the extent of such business relationship or (B) recruit, solicit or otherwise induce or influence any employee of the Company to discontinue their employment with the Company.

(d) Disclosure and Assignment to the Company of Inventions and Innovations.

(i) Executive agrees to disclose and assign to the Company as the Company’s exclusive property, all inventions and technical or business innovations, including but not limited to all patentable and copyrightable subject matter (collectively, the “Innovations”) developed, authored or conceived by Executive solely or jointly with others during the period of Executive’s employment, including during Executive’s employment prior to the date of this Agreement, (A) that are along the lines of the business, work or investigations of the Company to which Executive’s employment relates or as to which Executive may receive information due to Executive’s employment with the Company, (B) that result from or are suggested by any work which Executive may do for the Company or (C) that are otherwise made through the use of Company time, facilities or materials. To the extent any of the Innovations is copyrightable, each such Innovation shall be considered a “work for hire.”

(ii) Executive agrees to execute all necessary papers and otherwise provide proper assistance (at the Company’s expense), during and subsequent to Executive’s employment, to enable the Company to obtain for itself or its nominees, all right, title and interest in and to patents, copyrights, trademarks or other legal protection for such Innovations in any and all countries.

(iii) Executive agrees to make and maintain for the Company adequate and current written records of all such Innovations.

(iv) In the event the Company is unable for any reason whatsoever to secure Executive’s signature to any lawful and necessary documents required, including those necessary for the assignment of, application for or prosecution of any United States or foreign application for letters patent or copyright for any Innovation, Executive hereby irrevocably designates and appoints the Company and its duly authorized officers and agents as Executive’s agent and attorney-in-fact, to act for and in Executive’s behalf and stead to execute and file any such applications and to do all other lawfully permitted acts to further the assignment, prosecution and issuance of letters patent or registration of copyright thereon with the same legal force and effect as if executed by Executive. Executive hereby waives and quitclaims to the Company any and all claims, of any nature whatsoever, which Executive may now have or may hereafter have for infringement of any patent or copyright resulting from any such application.

(v) 18 U.S.C. § 1833(b) provides: “An individual shall not be held criminally or civilly liable under any Federal or State trade secret law for the disclosure of a trade secret that—(A) is made—(i) in confidence to a Federal, State, or local government official, either directly or indirectly, or to an attorney; and (ii) solely for the purpose of reporting or investigating a suspected violation of law; or (B) is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal.” Nothing in this Agreement is intended to conflict with 18 U.S.C. § 1833(b) or create liability for disclosures of trade secrets that are expressly allowed by 18 U.S.C. § 1833(b). Accordingly, the parties to this Agreement have the right to disclose in confidence trade secrets to federal, state, and local government officials, or to an attorney, for the sole purpose of reporting or investigating a suspected violation of law.

 

8


The parties also have the right to disclose trade secrets in a document filed in a lawsuit or other proceeding, but only if the filing is made under seal and protected from public disclosure.

(e) Nondisparagement. Executive shall not, whether in writing (electronically or otherwise) or orally malign, denigrate or disparage the Company or any of its respective predecessors or successors, or any of their respective current or former directors, officers, employees, shareholders, partners, members, agents or representatives, with respect to any of their respective past or present activities, or otherwise publish, whether in writing (electronically or otherwise) or orally statements that malign, denigrate or disparage any of the aforementioned parties. The Company agrees to instruct its senior officers and directors not to disparage the Executive. The foregoing shall not be violated by truthful statements in response to legal process, required governmental testimony or filings, or administrative or arbitral proceedings (including, without limitation, depositions in connection with such proceedings), and the foregoing limitation on the Company’s executives and directors shall not be violated by statements that they in good faith believe are necessary or appropriate to make in connection with performing their duties and obligations to the Company.

(f) Remedies Not Exclusive. In the event that Executive breaches any terms of this Section 7, Executive acknowledges and agrees that said breach may result in the immediate and irreparable harm to the business and goodwill of the Company and that damages, if any, and remedies of law for such breach may be inadequate and indeterminable. The Company, upon Executive’s breach of this Section 7, shall therefore be entitled (in addition to and without limiting any other remedies that the Company may seek under this Agreement or otherwise at law or in equity) to seek from any court of competent jurisdiction equitable relief by way of temporary or permanent injunction and without being required to post a bond, to restrain any violation of this Section 7, and for such further relief as the court may deem just or proper in law or equity. Executive shall reimburse the Company’s legal fees upon any breach by Executive.

(g) Severability of Provisions. If any restriction, limitation or provision of this Section 7 is deemed to be unreasonable, onerous or unduly restrictive by a court of competent jurisdiction, it shall not be stricken in its entirety and held totally void and unenforceable, but shall remain effective to the maximum extent possible within the bounds of the law. If any phrase, clause or provision of this Section 7 is declared invalid or unenforceable by a court of competent jurisdiction, such phrase, clause or provision shall be deemed severed from this Section 7, but will not affect any other provision of this Section 7, which shall otherwise remain in full force and effect. The provisions of this Section 7 are each declared to be separate and distinct covenants by Executive.

(h) Tolling. The periods during which the covenants set forth in this Section 7 shall survive a termination of employment hereunder shall be tolled during (and shall be deemed automatically extended by) any period during which Executive is in violation of any such post-employment covenants, to the extent permitted by law.

8. Additional Executive Representations, Warranties and Covenants.

(a) Authority; No Conflicts. Executive represents, warrants, and covenants that as of the date hereof, (i) Executive has the full right, authority and capacity to enter into this Agreement and perform his obligations hereunder, (ii) Executive is not bound by any agreement that conflicts with or prevents or restricts the full performance of his duties and obligations hereunder during or after the Term, (iii) the execution and delivery of this Agreement shall not result in any breach or violation of, or a default under, any existing obligation, commitment or agreement to which Executive is subject and (iv) Executive has not violated, and in connection with his employment with the Company will not violate, any non-solicitation, non-competition or other similar covenant or agreement of a prior employer by which he is or may be bound, and in connection with his employment with the Company, Executive will not use any confidential or proprietary information he may have obtained in connection with employment with any prior employer in contravention of any confidentiality obligations that Executive has to such prior employer.

 

9


(b) Advice of Counsel. Prior to execution of this Agreement, Executive was advised by the Company of his right to seek independent advice from an attorney of Executive’s own selection regarding this Agreement. Executive acknowledges that he has entered into this Agreement knowingly and voluntarily and with full knowledge and understanding of the provisions of this Agreement after being given the opportunity to consult with counsel.

(c) No Reliance on Company Statements. Executive represents further that in entering into this Agreement, Executive is not relying on any statements or representations made by any director, officer, employee or agent of any member of the Company that is not expressly set forth herein, and that Executive is relying only upon his own judgment and any advice provided by his attorney.

9. Taxes.

(a) Withholding. The Company may withhold from any payments of compensation or benefits made to Executive all applicable taxes, including but not limited to income, employment and social insurance taxes, as required by law. Executive acknowledges and represents that the Company has not provided any tax advice to him in connection with this Agreement and that he has been advised by the Company to seek tax advice from his own tax advisors regarding this Agreement and the payments that may be made to him pursuant to this Agreement, including, specifically, regarding the application of the provisions of Section 409A of the Code.

(b) Section 409A of the Code. It is intended that the provisions of this Agreement comply with or be exempt from Section 409A of the Code, and all provisions of this Agreement will be construed and interpreted in a manner consistent with the requirements for avoiding taxes or penalties under Section 409A of the Code. The Company cannot make any representations or guarantees with respect to compliance with such requirements, and neither the Company nor any affiliate will have any obligation to indemnify Executive or otherwise hold him harmless from any or all of such taxes or penalties. For purposes of Section 409A of the Code, each installment payment hereunder will be deemed a “separate payment” within the meaning of Treas. Reg. Section 1.409A-2(b)(iii). With respect to the timing of payments of any deferred compensation payable upon a termination of employment hereunder, references in this Agreement to “termination of employment” (and substantially similar phrases) mean “separation from service” within the meaning of Section 409A of the Code. For the avoidance of doubt, it is intended that any expense reimbursement made to Executive hereunder is exempt from Section 409A of the Code; however, if any expense reimbursement hereunder is determined to be deferred compensation within the meaning of Section 409A of the Code, then (i) the amount of the expense reimbursement during one taxable year will not affect the amount of the expense reimbursement during any other taxable year, (ii) the expense reimbursement will be made on or before the last day of the year following the year in which the expense was incurred and (iii) the right to expense reimbursement hereunder will not be subject to liquidation or exchange for another benefit. Notwithstanding any provision to the contrary in this Agreement: (i) no amount shall be payable pursuant to Section 5 unless the termination of the Executive’s employment constitutes a “separation from service” within the meaning of Section 1.409A-1(h) of the Department of Treasury Regulations; (ii) if the Executive is deemed at the time of his separation from service to be a “specified employee” for purposes of Section 409A(a)(2)(B)(i) of the Code, to the extent that delayed commencement of any portion of the termination benefits to which the Executive is entitled under this Agreement (after taking into account all exclusions applicable to such termination benefits under Section 409A), including, without limitation, any portion of the additional compensation awarded pursuant to Section 5, is required in order to avoid a prohibited distribution under Section 409A(a)(2)(B)(i) of the Code, such portion of the Executive’s termination benefits shall not be provided to the Executive prior to the earlier of (A) the expiration of the six-month period measured from the date of the Executive’s “separation from service” with the Company (as such term is defined in the Department of Treasury Regulations issued under Section 409A) and (B) the date of the Executive’s death; provided that upon the earlier of such dates, all payments deferred pursuant to this Section 9(b) shall be paid to the Executive in a lump sum, and any remaining payments due under this Agreement shall be paid as otherwise provided herein; (iii) the determination of whether the Executive is a “specified employee” for purposes of Section 409A(a)(2)(B)(i) of the Code as of the time of his separation from service shall be made by the Company in accordance with the terms of Section 409A and applicable guidance thereunder (including, without limitation, Section 1.409A-1(i) of the Department of Treasury Regulations and any successor provision thereto.

 

10


10. Future Cooperation. Executive agrees to reasonably cooperate with Whiting Petroleum in the future and to provide to Whiting truthful information, testimony or affidavits requested in connection with any matter that arose during Executive’s employment. This cooperation may be performed at reasonable times and places and in a manner as to not interfere with any other employment or business activities that Executive may have at the time of request. Whiting agrees to reimburse Executive for expenses incurred in providing such cooperation, so long as such expenses are approved in advance by Whiting.

11. Permissible Disclosure. Notwithstanding anything to the contrary contained herein, nothing in this Agreement shall prohibit the Executive from reporting possible violations of federal law or regulation to or otherwise cooperating with or providing information requested by any governmental agency or entity, including, but not limited to, the Department of Justice, the Securities and Exchange Commission, the Congress and any agency Inspector General, or making other disclosures that are protected under the whistleblower provisions of federal law or regulation. The Executive does not need the prior authorization of the Company to make any such reports or disclosures and the Executive is not required to notify the Company that the Executive has made such reports or disclosures.

12. Notice. Any notice, request, demand or other communication required or permitted herein will be deemed to be properly given when personally served in writing or when deposited in the United States mail, postage prepaid, addressed to Executive at the address appearing at the end of this Agreement and to the Company with attention to the General Counsel of Whiting. Either party may change its address by written notice in accordance with this paragraph.

13. Set Off. The Company’s obligation to pay Executive the amounts and to provide the benefits hereunder shall be subject to set-off, counterclaim or recoupment of amounts owed by Executive to the Company.

14. Assignment; Benefit of Agreement. This Agreement is personal and shall not be assignable by Executive. It shall be binding upon and shall inure to the benefit of the members of the Company and its respective successors and assigns and its economic rights and benefits shall inure to the benefit of Executive and his heirs or duly constituted legal representatives. For the avoidance of doubt, the Company may assign its rights, obligations and interests hereunder to any other member of the Company or its affiliates or to the acquirer of the business or all or substantially all of the assets of the Company, whether by merger, stock sale, asset sale or otherwise, in either case, without Executive’s consent.

15. Arbitration. Any controversy or claim arising out of or relating to this Agreement or the breach of this Agreement that cannot be mutually resolved by Executive and the Company, shall be submitted to arbitration in Colorado in accordance with the procedures of the American Arbitration Association. The determination of the arbitrator shall be conclusive and binding on the Company and Executive, and judgment may be entered on the arbitrator’s award in any court having jurisdiction.

16. Applicable Law and Jurisdiction. This Agreement is to be governed by and construed under the laws of the United States and of the State of Colorado without resort to Colorado’s choice of law rules. Each party hereby agrees that the forum and venue for any legal or equitable action or proceeding arising out of, or in connection with, this Agreement will lie in the appropriate federal or state courts in the State of Colorado and specifically waives any and all objections to such jurisdiction and venue.

17. Drafting. The parties acknowledge and confirm that each of their respective attorneys has participated jointly in the review and revision of this Agreement and that it has not been written solely by counsel for one party. The parties therefore stipulate and agree that the rule of construction to the effect that any ambiguities are to be or may be resolved against the drafting party shall not be employed in the interpretation of this Agreement to favor any party against another.

18. Captions and Paragraph Headings. The captions and paragraph headings set forth under each of the sections and subsections of this Agreement are for convenience of reference and shall not be construed or interpreted to define, limit, abridge or assist in the interpretation or scope or intent of this Agreement, which must be read in its entirety.

 

11


19. Invalid Provisions. Subject to Section 7(g), should any provision of this Agreement for any reason be declared invalid, void or unenforceable by a court of competent jurisdiction, the validity and binding effect of any remaining portion will not be affected, and the remaining portions of this Agreement will remain in full force and effect as if this Agreement had been executed with said provision eliminated.

20. No Waiver. The failure of a party to insist upon strict adherence to any term of this Agreement on any occasion shall not be considered a waiver of such party’s rights or deprive such party of the right thereafter to insist upon strict adherence to that term or any other term of this Agreement.

21. Entire Agreement. This Agreement contains the entire agreement of the parties with respect to the subject matter of this Agreement except where other agreements are specifically noted, adopted or incorporated by reference. This Agreement otherwise supersedes any and all other agreements, either oral or in writing, between the parties hereto with respect to the employment of Executive by Company, and all such agreements shall be void and of no effect. Each party to this Agreement acknowledges that no representations, inducements, promises or agreements, oral or otherwise, have been made by any party, or anyone acting on behalf of any party, which are not embodied herein, and that no other agreement, statement or promise not contained in this Agreement will be valid or binding.

22. Modification. This Agreement may not be modified or amended by oral agreement, but only by an agreement in writing signed by Whiting and Executive.

23. Counterparts. This Agreement may be signed in counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument.

 

12


IN WITNESS WHEREOF, the parties hereto have executed, or caused to be executed, this Agreement on the Effective Date.

 

EXECUTIVE: JAMES HENDERSON

/s/ James P. Henderson

Signature

WHITING PETROLEUM CORPORATION

 

By:

 

/s/ Kevin S. McCarthy

Chairman of the Board

Title


EXHIBIT A

WHITING PLAYS AND FIELDS

Bakken Play in Mountrail, McKenzie, Stark, Dunn, Golden Valley, Billings, Williams, Divide and McClean Counties, North Dakota and Richland and Roosevelt Counties, Montana.

Niobrara Play in Weld County, Colorado.


EXHIBIT B

FORM OF GENERAL RELEASE

This Separation Agreement and General Release (“Agreement”) is between Whiting Petroleum Corporation, which in this Agreement is referred to as the “Whiting” or the “Company” or the Employer, and James Henderson, who is referred to as Executive.

1. Background. Whiting and Executive acknowledge that Executive’s employment with Whiting is ending (or has ended), effective [Date]. Both Executive and Whiting desire an amicable separation and to fully and finally compromise and settle any differences that may exist between them on the terms set forth in this Agreement.

2. Employment Termination. Executive understands that his employment with Whiting is considered ended and his separation from service was effective [Date] (the “Separation Date”), based on reasons discussed between Executive and Whiting. Whiting and Executive are subject to an Executive Employment and Severance Agreement dated [Date] (“Employment Agreement”) that provides for Executive’s receipt of certain separation benefits if he executes an agreement with a general release of all claims that is acceptable to Whiting : this is that agreement.

3. Severance Pay and Benefits. In return for the execution of this Agreement, it becoming effective (see paragraph 18) and Executive honoring (and continuing to honor) all of its terms, Whiting will provide Executive with the severance pay and benefits in accordance with Section 5(b) [and 5(c)] of the Employment Agreement.

4. Acknowledgement. Executive understands that the severance pay and benefits identified in paragraph 3 above will not be paid or provided unless he accepts this Agreement, it becomes effective (see paragraph 18), and he honors (and continues to honor) all of its terms.

5. Release. Executive understands and agrees that his acceptance of this Agreement means that, except as stated in paragraph 7, he is forever waiving and giving up any and all claims he may have, whether known or unknown, against Whiting, its parent, subsidiaries, and related companies, their insurers, their officers, directors, employees and agents for any personal monetary relief for himself, benefits or remedies that are based on any act or failure to act that occurred on or before the date he signed this Agreement. Executive understands that this release and waiver of claims includes claims for or relating to: (a) his employment and the termination of his employment; (b) any Whiting policy, practice, contract or agreement, including, but not limited, to the Employment Agreement; (c) any tort or personal injury relating to Executive’s employment or termination of employment; (d) any policies, practices, laws or agreements governing the payment of wages, commissions or other compensation, including, but not limited, to the Colorado Wage Act, the Colorado Minimum Wage Order No. 30 and all terms for compensation under the Employment Agreement; (e) any laws governing employment discrimination or retaliation including (to the extent applicable), but not limited to, Title VII of the Civil Rights Act, the Employee Retirement Income Security Act, the Americans with Disabilities Act, the Age Discrimination in Employment Act (ADEA), the Older Worker Benefit Protection Act, the Genetic Information Nondiscrimination Act, the Family and Medical Leave Act, the National Labor Relations Act (NLRA), the Colorado Anti-Discrimination Act, C.R.S. 24-34-401 et seq., the City and County of Denver’s Anti-Discrimination Ordinance and any other applicable state or local laws; (f) any laws or agreements that provide for punitive, exemplary or statutory damages and (g) any laws or agreements that provide for the payment of attorney fees, costs or expenses.

6. Future Employment. Executive agrees that he is not now or hereafter entitled to employment or reemployment with Whiting and he agrees not to knowingly seek such employment on any basis or through an employment agency. Executive further agrees and acknowledges that should he apply for any position in contradiction of this paragraph, Whiting may completely ignore such application and fail to consider it based on this paragraph.


7. Claims Not Waived. Executive understands that this Agreement does not waive any claims that he may have: (a) for compensation for illness or injury or medical expenses under any worker’s compensation statute; (b) for benefits under any plan currently maintained by Whiting that provides for retirement benefits (however, Executive agrees and acknowledges that the severance pay and benefits provided in paragraph 3 above shall not be considered or included for purposes of any retirement benefit contribution or plan) under this Agreement; (c) under this Agreement; (d) for indemnification as provided by the Company’s organizational documents, or claims under the Company’s D&O insurance coverage, or (e) that by law cannot be released or waived.

8. Government Cooperation. Nothing in this Agreement prohibits Executive from cooperating with any government agency, including the National Labor Relations Board or the Equal Employment Opportunity Commission, or any similar state agency. Further, Executive understands that nothing in this Agreement (including any obligation in Paragraphs 5 or 9) prohibit him from reporting a possible violation of federal, state or local law or regulation to any governmental agency or entity, including but not limited to the Department of Justice, the Securities and Exchange Commission, the United States Congress or any agency (including but not limited to the National Labor Relations Board or the Equal Employment Opportunity Commission) or inspector general, or making other disclosures that are protected under any whistleblower provision of federal, state or local law or regulation.

9. Prior Confidentiality Agreement(s). Executive agrees and understands that this Agreement does not supersede any obligation to which he was subject under a prior agreement while employed with Whiting that addresses confidentiality, noncompetition, patents or copyright. Executive acknowledges that and continues to be, subject to those obligations contained in the Employment Agreement, and that he is expressly re-affirming his commitment to those obligations by executing this Agreement, and acknowledging that his failure to abide by such obligations will constitute a material breach of this Agreement. Executive acknowledges and agrees that he is subject to the restrictive covenants and other obligations as set forth in the Employment Agreement.

9. Trade Secrets/Defend Trade Secrets Act. Nothing in this Agreement (or any prior agreement on confidentiality to which Executive may be subject) diminishes or limits any protection granted by law to trade secrets or relieves Executive of any duty not to disclose, use or misappropriate any information that is a trade secret, for as long as such information remains a trade secret. Additionally, nothing in this Agreement (or any prior agreement on confidentiality to which Executive may be subject) is intended to discourage Executive from reporting any theft of trade secrets to the appropriate government official pursuant to the Defend Trade Secrets Act of 2016 (“DTSA”) or other applicable state or federal law. Additionally, under the DTSA, a trade secret may be disclosed to report a suspected violation of law and/or in an anti-retaliation lawsuit, as follows:

a. An individual shall not be held criminally or civilly liable under any federal or state trade secret law for the disclosure of a trade secret that: (A) is made (1) in confidence to a federal, state or local government official, either directly or indirectly, or to an attorney and (2) solely for the purpose of reporting or investigating a suspected violation of law or (B) is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal.

b. An individual who files a lawsuit for retaliation by an employer for reporting a suspected violation of law may disclose the trade secret to the attorney of the individual and use the trade secret information in the court proceeding, if the individual: (A) files any document containing the trade secret under seal and (B) does not disclose the trade secret, except pursuant to court order. Nothing in this Agreement (or any prior agreement on confidentiality to which Executive may be subject) shall limit, curtail or diminish the Whiting’s statutory rights under the DTSA, any applicable state law regarding trade secrets or common law.

10. Relinquishment Of Positions. As of the Separation Date, Executive acknowledges that he has fully and completely relinquished any and all officerships, directorships or other positions that he held with Whiting and any of its affiliates.


11. Nonadmission. Executive and Whiting both acknowledge and agree that nothing in this Agreement is meant to suggest that Whiting has violated any law or contract or that Executive has any claim against Whiting.

12. Voluntary Agreement. Executive acknowledges and states that he has entered into this Agreement knowingly and voluntarily.

13. Consulting An Attorney. Executive acknowledges that Whiting has told him that he should consult an attorney of his own choice about this Agreement and every matter that it covers before signing this Agreement, and that he has been provided an meaningful opportunity for such consultation.

14. Obligation to Repay Upon Violation of Release. Executive understands and agrees that if he is found by a court of competent jurisdiction to have materially violated the commitments he has made in Section 5 of this Agreement, Whiting may recover any payments and/or the value of any benefits provided in this Agreement, with the exception of One Thousand Dollars ($1,000).

15. Complete Agreement. Executive understands and agrees that this document contains the entire agreement between him and Whiting relating to his employment and the termination of his employment, that this Agreement, except as provided in paragraph 9, supersedes and displaces any prior agreements and discussions relating to such matters and that he may not rely on any such prior agreements or discussions.

16. Effective Date. This Agreement shall not be effective until seven days after Executive signs it and returns it to Whiting’s Vice President, General Counsel and Corporate Secretary. During that seven-day period, Executive may revoke his acceptance of this Agreement by delivering to Whiting’s Vice President, General Counsel and Corporate Secretary a written statement stating he wishes to revoke this Agreement or not be bound by it.

17. Final and Binding Effect. Executive understands that if he signs this Agreement, returns it to Whiting and fails to revoke it consistent with this paragraph 18, it will have a final and binding effect and that by signing and returning this Agreement (and not revoking it) he may be giving up legal rights. Executive also acknowledges that this Agreement may be signed in counter-parts (meaning by him and Whiting separately) and that facsimile, copy or PDF copy signatures shall be treated as valid as original signatures.

18. Exclusive Jurisdiction and Venue. This Agreement is to be governed by and construed under the laws of the United States and of the State of Colorado without resort to Colorado’s choice of law rules. Whiting and Executive agree that the forum and venue for any legal or equitable action or proceeding arising out of, or in connection with, this Agreement will lie in the appropriate federal or state courts in the State of Colorado and each specifically waives any and all objections to such jurisdiction and venue.

19. Future Cooperation. Executive agrees to reasonably cooperate with Whiting in the future and to provide to Whiting truthful information, testimony or affidavits requested in connection with any matter that arose during Executive’s employment. This cooperation may be performed at reasonable times and places and in a manner as to not interfere with any other employment or business activities that Executive may have at the time of request. Whiting agrees to reimburse Executive for expenses incurred in providing such cooperation, so long as such expenses are approved in advance by Whiting, including, if applicable, any legal fees and expenses reasonably incurred by Executive if Executive and Whiting agree in good faith that Executive should retain counsel independent of the counsel for Whiting in order to cooperate as provided herein above.

20. Return of Property. Executive acknowledges an obligation and agrees to return all Whiting property, unless otherwise specified in this paragraph. This includes all files, memoranda, documents, records, credit cards, keys and key cards, computers, laptops, personal digital assistants, cellular telephones, Blackberry devices or similar instruments, other equipment of any sort, badges, vehicles and any other property of Whiting. In addition, Executive agrees to provide any and all access codes or


passwords necessary to gain access to any computer, program or other equipment that belongs to Whiting or is maintained by Whiting or on company property. Further, Executive acknowledges an obligation and agrees not to destroy, delete or disable any company property, including items, files and materials on computers and laptops.

21. Divisibility of Agreement or Modification by Court. Executive understands that, to the extent permitted by law, the invalidity of any provision of this Agreement will not and shall not be deemed to affect the validity of any other provision. Executive agrees that in the event that any provision of this Agreement is held to be invalid, it shall be, to the extent permitted by law, modified as necessary to be interpreted in a manner most consistent with the present terms of the provision, to give effect to the provision. Finally, in the event that any provision of this Agreement is held to be invalid and not capable of modification by a court, then Executive understands and agrees that such provision shall be considered expunged (eliminated), and he further agrees that the remaining provisions shall be treated as in full force and effect as if this Agreement had been executed by Executive after the expungement (elimination) of the invalid provision.

22. Representations. By signing this Agreement, Executive represents that he has read this entire document and understands all of its terms.

23. 21-Day Consideration Period. Executive may consider whether to sign and accept this Agreement for a period of 21 days from the day he received it. If this Agreement is not signed, dated and returned to Whiting’s Vice President, General Counsel and Corporate Secretary within 22 days, the offer of severance payments and benefits described in paragraph 3 above will no longer be available. Executive acknowledges that should he sign and return this Agreement within the 21-day period identified in this paragraph, he is knowingly waiving whatever additional time he may have up to the conclusion of the 21-day period for consideration of this Agreement.

 

ACCEPTED:               ACCEPTED:
EXECUTIVE: JAMES HENDERSON     

         WHITING PETROLEUM CORPORATION

   

        

   By:     

Dated:

     Dated:   

Date Agreement was originally given to

       

Executive:

       

Exhibit 10.7

AMENDMENT TO EMPLOYMENT AGREEMENT

This Amendment to the Employment Agreement (“Agreement”) is between Whiting Petroleum Corporation, which in this Agreement is referred to as “Whiting Petroleum” and Correne S. Loeffler, who is referred to as “Loeffler”, and amends the Executive Employment and Severance Agreement effective August 1, 2019 (“Employment Agreement”) in all respects.

 

  1.

Background. Whiting Petroleum and Loeffler acknowledge that Loeffler’s employment with Whiting Petroleum is ending effective on the Effective Date (as defined in Joint Chapter 11 Plan of Reorganization of Whiting Petroleum Corporation and Its Debtor Affiliates [Dkt. No. 711] (as amended, modified, or supplemented from time to time, the “Joint Plan”)) (such date referred to herein as the “Separation Date”). Both Loeffler and Whiting Petroleum desire an amicable separation and to fully and finally settle any obligations that may exist between them on the terms set forth in this Agreement. In addition, Whiting Petroleum and Loeffler desire that Loeffler continue to provide services (the “Transition Services”) to Whiting Petroleum as a special advisor during a three-month transition period (the “Transition Period”) following the Separation Date as set forth on Exhibit A. During the Transition Period, Loeffler shall reasonably cooperate and reasonably assist in the smooth transition of her duties and responsibilities to the new chief financial officer of Whiting Petroleum (the “New CFO”) as reasonably requested by the New CFO and the board of directors of Whiting Petroleum (the “Board”) and Loeffler shall use her reasonable best efforts to faithfully and diligently perform such services hereunder, provided that Loeffler shall not be obligated to expend any funds in connection with such services unless reimbursed by Whiting Petroleum. Loeffler’s services to Whiting Petroleum during the Transition Period will be at the level set forth on Exhibit A.

 

  2.

Employment Termination. Loeffler understands that her employment with Whiting Petroleum is ended and her separation from service will be effective as of the Separation Date, based on reasons discussed between Loeffler and Whiting Petroleum. The Employment Agreement provides for Loeffler’s receipt of certain separation benefits if she executes this Agreement containing a general release of all claims that is acceptable to Whiting Petroleum.

 

  3.

Severance Pay and Benefits. In return for the execution of this Agreement, it becoming effective (see paragraph 18), and Loeffler honoring (and continuing to honor) all of its terms, Whiting Petroleum will provide Loeffler with the severance pay and benefits in accordance with Section 5.c. of the Employment Agreement. Additionally, Whiting Petroleum will provide Loeffler with accrued benefits consisting of (i) all base salary earned but not paid for the time period ending with the Effective Date, (ii) reimbursement for any and all monies advanced in connection with Loeffler’s employment for reasonable and necessary expenses incurred by Loeffler on behalf of the Whiting Petroleum for the time period ending with the Effective Date in accordance with Witing Petroleum’s policies and (iii) any benefits to which Loeffler is entitled on the Effective Date under the terms of any 401(k) plan of Whiting Petroleum. For the avoidance of doubt, Loeffler understands and agrees that her acceptance of this Agreement mean that Loeffler will not, under any circumstances, (i) be paid or become entitled to the severance pay and benefits provided under Section 5.d. of the Employment Agreement or any other payment or benefits in connection with a Change of Control (as defined in the Employment Agreement) or (ii) be entitled to any equity or equity-based compensation (or acceleration thereof) in connection with her separation from service or Whiting Petroleum’s restructuring and/or anticipated emergence from chapter 11 pursuant to the Joint Plan (the “Emergence”).

 

  a.

For the further avoidance of doubt, Loeffler understands that the severance pay and benefits under Section 5.c. of the Employment Agreement includes only the following: (i) a lump sum payment equal to the sum of Loeffler’s base salary at the rate in effect as of immediately prior to the Separation Date and Loeffler’s 2020 target annual bonus, payable on the first day of the seventh month following the month in which the Separation Date occurs (equal to $880,000), (ii) at the expense of Whiting Petroleum and subject to


  Loeffler’s timely election under COBRA, continued coverage of the same or equivalent life insurance, hospitalization, medical, dental, and vision coverage as provided to Loeffler immediately prior to the Separation Date until the earlier of 18 months after the Separation Date or such time Loeffler has obtained new employment (the “Benefits Continuation Period”) and (iii) beginning after the expiration of the six-month period following the Separation Date, an amount equal to the aggregate amount of any premiums paid by Loeffler to maintain a group term life insurance policy providing a benefit in excess of $50,000 during the six-month period following the Separation Date and continuation of coverage of any such policy, at the expense of Whiting Petroleum, for the duration of the Benefits Continuation Period. Loeffler expressly acknowledges and agrees that she is not entitled to any bonus payment for 2020 or otherwise.

 

  4.

Acknowledgement. Loeffler understands that the severance pay and benefits identified in paragraph 3 above will not be paid or provided unless she accepts this Agreement, it becomes effective (see paragraph 18), and she honors (and continues to honor) all of its terms, and the continuing obligations set forth in the Employment Agreement, including without limitation, the restrictive covenants set forth in Section 7 of the Employment Agreement (Confidentiality; Non-Competition/Non-Solicitation; and Disclosure and Assignment to the Company of Inventions and Innovations) and the Transition Services. Loeffler further understands and agrees that her breach of any of her continuing obligations, including without limitation, those described herein, shall result in (a) the cessation of any of the payments and benefits that may be provided pursuant to Section 3 of this Agreement and (b) Loeffler’s being required to repay the value of any severance payments and benefits to Whiting Petroleum upon ten days’ written request; provided, however, that nothing in this Agreement shall require Loeffler to repay that certain prepaid variable compensation program award in the amount of $2,200,000 (or any portion thereof) that was paid to her prior to the Separation Date pursuant to the Executive Retention Bonus Agreement dated March 30, 2020 and notwithstanding anything in the Executive Retention Bonus Agreement, Loeffler shall be entitled to the payments set forth in 3(a) above subject to the terms and conditions of this Agreement.

 

  5.

Release. Loeffler understands and agrees that her acceptance of this Agreement means that, except as stated in paragraph 7, she is forever waiving and giving up any and all claims she may have, whether known or unknown, against Whiting Petroleum, its parent, subsidiaries, and related companies, their insurers, their officers, directors, employees and agents and the Ad Hoc Committee of Noteholders (as defined in the Joint Plan) for any personal monetary relief for herself, benefits or remedies that are based on any act or failure to act that occurred before she signed this Agreement. Loeffler understands that this release and waiver of claims includes claims for or relating to: (a) her employment and the termination of her employment; (b) any Whiting Petroleum policy, practice, contract or agreement, including, but not limited, to the Employment Agreement; (c) the Emergence, (d) any tort or personal injury relating to Loeffler’s employment or termination of employment; (e) any policies, practices, laws or agreements governing the payment of wages, commissions or other compensation, including, but not limited, to the Colorado Wage Act, the Colorado Minimum Wage Order No. 30, and all terms for compensation under the Employment Agreement; (f) any laws governing employment discrimination or retaliation including (to the extent applicable), but not limited to, Title VII of the Civil Rights Act, the Employee Retirement Income Security Act, the Americans with Disabilities Act, the Age Discrimination in Employment Act (ADEA), the Older Worker Benefit Protection Act, the Genetic Information Nondiscrimination Act, the Family and Medical Leave Act, the National Labor Relations Act (NLRA), the Colorado Anti-Discrimination Act, C.R.S. 24-34-401 et seq., the City and County of Denver’s Anti-Discrimination Ordinance, and any other applicable state or local laws; (g) any laws or agreements that provide for punitive, exemplary or statutory damages; and (h) any laws or agreements that provide for the payment of attorney fees, costs or expenses.

 

  6.

Future Employment. Loeffler agrees that she is not now or hereafter entitled to employment or reemployment with Whiting Petroleum.


  7.

Claims Not Waived. Loeffler understands that this Agreement does not waive any claims that she may have: (a) for compensation for illness or injury or medical expenses under any worker’s compensation statute; (b) for benefits under any plan currently maintained by Whiting Petroleum that provides for retirement benefits (however, Loeffler agrees and acknowledges that the severance pay and benefits provided in paragraph 3 above shall not be considered or included for purposes of any retirement benefit contribution or plan); (c) under any law or any policy or plan currently maintained by Whiting Petroleum that provides health insurance continuation or conversion rights; (d) to indemnity, defense or insurance coverage for acts undertaken by her within the scope and course of her employment pursuant to applicable directors and officers insurance coverage, laws requiring indemnification for such acts, or the bylaws of the Company that require such indemnification; (e) under this Agreement; or (f) that by law cannot be released or waived.

 

  8.

Government Cooperation. Nothing in this Agreement prohibits Loeffler from cooperating with any government agency, including the National Labor Relations Board or the Equal Employment Opportunity Commission, or any similar State agency. Further, Loeffler understands that nothing in this Agreement (including any obligation in Paragraphs 5 or 9) prohibit her from reporting a possible violation of federal, state, or local law or regulation to any governmental agency or entity, including but not limited to the Department of Justice, the Securities and Exchange Commission, the Congress, or any agency (including but not limited to the National Labor Relations Board or the Equal Employment Opportunity Commission) or Inspector General, or making other disclosures that are protected under any whistleblower provision of federal, state, or local law or regulation.

 

  9.

Prior Confidentiality Agreement(s). Loeffler agrees and understands that this Agreement does not supersede any obligation to which she was subject under a prior agreement while employed with Whiting Petroleum that addresses confidentiality, noncompetition, patents or copyright. Loeffler acknowledges that she was, and continues to be, subject to those obligations contained in Section 7, and all subsections to Section 7, of the Employment Agreement, and that she is expressly re-affirming her commitment to those obligations by executing this Agreement, and acknowledging that her failure to abide by such obligations will constitute a material breach of this Agreement.

 

  10.

Trade Secrets/Defend Trade Secrets Act. Nothing in this Agreement (or any prior agreement on confidentiality to which Loeffler may be subject) diminishes or limits any protection granted by law to trade secrets or relieves Loeffler of any duty not to disclose, use, or misappropriate any information that is a trade secret, for as long as such information remains a trade secret. Additionally, nothing in this Agreement (or any prior agreement on confidentiality to which Loeffler may be subject) is intended to discourage Loeffler from reporting any theft of trade secrets to the appropriate government official pursuant to the Defend Trade Secrets Act of 2016 (“DTSA”) or other applicable state or federal law. Additionally, under the DTSA, a trade secret may be disclosed to report a suspected violation of law and/or in an anti-retaliation lawsuit, as follows:

 

  a.

An individual shall not be held criminally or civilly liable under any Federal or State trade secret law for the disclosure of a trade secret that: (A) is made (1) in confidence to a Federal, State, or local government official, either directly or indirectly, or to an attorney; and (2) solely for the purpose of reporting or investigating a suspected violation of law; or (B) is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal.

 

  b.

An individual who files a lawsuit for retaliation by an employer for reporting a suspected violation of law may disclose the trade secret to the attorney of the individual and use the trade secret information in the court proceeding, if the individual: (A) files any document containing the trade secret under seal; and (B) does not disclose the trade secret, except pursuant to court order. Nothing in this Agreement (or any prior agreement on confidentiality to which Loeffler may be subject) shall limit, curtail or diminish the Whiting Petroleum’s statutory rights under the DTSA, any applicable state law regarding trade secrets or common law.


  11.

Relinquishment Of Positions. As of the Separation Date, Loeffler acknowledges that she has fully and completely relinquished any and all officerships, directorships or other positions that she held with Whiting Petroleum and any of its affiliates, including without limitation, Loeffler’s position as chief financial officer of Whiting Petroleum and any other positions (including, without limitation, as director, officer, manager, member or otherwise) with Whiting Petroleum and any of Whiting Petroleum’s subsidiaries, affiliates, joint ventures and other related entities. Loeffler agrees to execute any documents reasonably required to effectuate the foregoing.

 

  12.

Nonadmission. Loeffler and Whiting Petroleum both acknowledge and agree that nothing in this Agreement is meant to suggest that Whiting Petroleum has violated any law or contract or that Loeffler has any claim against Whiting Petroleum.

 

  13.

Voluntary Agreement. Loeffler acknowledges and states that she has entered into this Agreement knowingly and voluntarily.

 

  14.

Consulting An Attorney. Loeffler acknowledges that Whiting Petroleum has told her that she should consult an attorney of her own choice about this Agreement and every matter that it covers before signing this Agreement, and that she has been provided an meaningful opportunity for such consultation.

 

  15.

Attorney Fees and Costs.

 

  a.

Loeffler understands and agrees that if she violates the commitments she has made in this Agreement, Whiting Petroleum may seek to recover any payments and/or the value of any benefits provided in this Agreement, with the exception of One Thousand Dollars ($1,000), and that, except as provided in paragraph 16, she will be responsible for paying the actual attorney fees and costs incurred by Whiting Petroleum in enforcing this Agreement or in defending a claim released by paragraph 5.

 

  b.

Whiting Petroleum shall reimburse Loeffler in an amount up to Seven Thousand Dollars ($7,000) of reasonable and documented attorneys’ fees and expenses incurred by Loeffler in connection with the negotiation of this Agreement with such reimbursement to be made within sixty days after the Separation Agreement.

 

  16.

Exception to Attorney Fees Obligation. The obligation to pay Whiting Petroleum’s attorney fees and costs does not apply to an action by Loeffler regarding the validity of this Agreement under the ADEA.

 

  17.

Complete Agreement. Loeffler understands and agrees that this document contains the entire agreement between her and Whiting Petroleum relating to her employment and the termination of her employment, that this Agreement, except as provided in paragraph 9, supersedes and displaces any prior agreements and discussions relating to such matters and that she may not rely on any such prior agreements or discussions.

 

  18.

Effective Date. This Agreement shall not be effective until seven (7) days after Loeffler signs it and returns it to Whiting Petroleum’s Chief Administrative Officer, General Counsel and Secretary. During that seven (7)-day period, Loeffler may revoke her acceptance of this Agreement by delivering to Whiting Petroleum’s Chief Administrative Officer, General Counsel and Secretary a written statement stating she wishes to revoke this Agreement or not be bound by it.

 

  19.

Final and Binding Effect. Loeffler understands that if she signs this Agreement, returns it to Whiting Petroleum, and fails to revoke it consistent with paragraph 18, it will have a final and binding effect and that by signing and returning this Agreement (and not revoking it) she may be giving up legal rights. Loeffler also acknowledges that this Agreement may be signed in counter-parts (meaning by her and Whiting Petroleum separately) and that facsimile, copy or PDF copy signatures shall be treated as just as valid as original signatures.


  20.

Exclusive Jurisdiction and Venue. This Agreement is to be governed by and construed under the laws of the United States and of the State of Colorado without resort to Colorado’s choice of law rules. Whiting Petroleum and Loeffler agree that the forum and venue for any legal or equitable action or proceeding arising out of, or in connection with, this Agreement will lie in the appropriate federal or state courts in the State of Colorado and each specifically waives any and all objections to such jurisdiction and venue.

 

  21.

Future Cooperation. Loeffler agrees to reasonably cooperate with Whiting Petroleum in the future and to provide to Whiting Petroleum truthful information, testimony or affidavits requested in connection with any matter that arose during Loeffler’s employment. This cooperation may be performed at reasonable times and places and in a manner as to not interfere with any other employment or business activities that Loeffler may have at the time of request. Whiting Petroleum agrees to reimburse Loeffler for expenses incurred in providing such cooperation, so long as such expenses are approved in advance by Whiting Petroleum, including, if applicable, any legal fees and expenses reasonably incurred by Loeffler if Loeffler and Whiting Petroleum agree in good faith that Loeffler should retain counsel independent of the counsel for Whiting Petroleum in order to cooperate as provided hereinabove.

 

  22.

Return of Property. Loeffler acknowledges an obligation and agrees to return all Whiting Petroleum property, unless otherwise specified in this paragraph. This includes all files, memoranda, documents, records, credit cards, keys and key cards, computers, laptops, personal digital assistants, cellular telephones, Blackberry devices or similar instruments, other equipment of any sort, badges, vehicles, and any other property of Whiting Petroleum. In addition, Loeffler agrees to provide any and all access codes or passwords necessary to gain access to any computer, program or other equipment that belongs to Whiting Petroleum or is maintained by Whiting Petroleum or on company property. Further, Loeffler acknowledges an obligation and agrees not to destroy, delete or disable any company property, including items, files and materials on computers and laptops.

 

  23.

Nondisparagement. Loeffler shall not, whether in writing (electronically or otherwise) or orally malign, denigrate or disparage Whiting Petroleum or any of its respective predecessors or successors, or any of their respective current or former directors, officers, employees, shareholders, partners, members, agents or representatives, with respect to any of their respective past or present activities, or otherwise publish, whether in writing (electronically or otherwise) or orally statements that malign, denigrate or disparage any of the aforementioned parties. The Company agrees to instruct its senior officers and directors not to disparage Loeffler. The foregoing shall not be violated by truthful statements in response to legal process, required governmental testimony or filings, or administrative or arbitral proceedings (including, without limitation, depositions in connection with such proceedings), and the foregoing limitation on Whiting Petroleum’s executives and directors shall not be violated by statements that they in good faith believe are necessary or appropriate to make in connection with performing their duties and obligations to Whiting Petroleum.

 

  24.

Divisibility of Agreement or Modification by Court. Loeffler understands that, to the extent permitted by law, the invalidity of any provision of this Agreement will not and shall not be deemed to affect the validity of any other provision. Loeffler agrees that in the event that any provision of this Agreement is held to be invalid, it shall be, to the extent permitted by law, modified as necessary to be interpreted in a manner most consistent with the present terms of the provision, to give effect to the provision. Finally, in the event that any provision of this Agreement is held to be invalid and not capable of modification by a court, then Loeffler understands and agrees that such provision shall be considered expunged (eliminated), and she further agrees that the remaining provisions shall be treated as in full force and effect as if this Agreement had been executed by Loeffler after the expungement (elimination) of the invalid provision.

 

  25.

Representations. By signing this Agreement, Loeffler represents that she has read this entire document and understands all of its terms.


  26.

21-Day Consideration Period. Loeffler may consider whether to sign and accept this Agreement for a period of twenty-one (21) days from the day she received it. If this Agreement is not signed, dated and returned to Whiting Petroleum’s Chief Administrative Officer, General Counsel and Secretary within twenty-two (22) days, the offer of severance payments and benefits described in paragraph 3 above will no longer be available. Loeffler acknowledges that should she sign and return this Agreement within the 21-day period identified in this subparagraph, she is knowingly waiving whatever additional time she may have up to the conclusion of the 21-day period for consideration of this Agreement.

 

  27.

Withholding. Whiting Petroleum may withhold from any payments of compensation or benefits made to Loeffler all applicable taxes, including but not limited to income, employment and social insurance taxes, as required by law. Loeffler acknowledges and represents that Whiting Petroleum has not provided any tax advice to her in connection with this Agreement and that she has been advised by Whiting Petroleum to seek tax advice from her own tax advisors regarding this Agreement and the payments that may be made to her pursuant to this Agreement, including, specifically, regarding the application of the provisions of Section 409A of the Code.

 

  28.

Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties and their successors and permitted assigns. Loeffler acknowledges and agrees that all of Loeffler’s covenants and obligations to Whiting Petroleum, as well as the rights of Whiting Petroleum hereunder, shall run in favor of and shall be enforceable by Whiting Petroleum and any successor or assign to all or substantially all of Whiting Petroleum’s business or assets. Subject to the conditions precedent set forth herein, Whiting Petroleum hereby acknowledges and agrees that its obligations to Loeffler under Section 3.a. of this Agreement shall be performed by Whiting Petroleum or any successor or assign to all or substantially all of Whiting Petroleum’s business or assets.


ACCEPTED:
WHITING PETROLEUM CORPORATION
/s/ Bruce DeBoer
Name:   Bruce DeBoer
Title:   Chief Administrative Officer, General Counsel and Secretary
ACCEPTED:
/s/ Correne S. Loeffler
CORRENE S. LOEFFLER
Dated:   September 1, 2020
Date Agreement was originally given to Loeffler:
August 12, 2020      


Exhibit A

During the Transition Period, Loeffler shall assist with the smooth transition of her duties and responsibilities as requested by the New CFO and/or the Board and shall provide strategic or other financial assistance and consulting services upon request, and in consideration of the Transition Services, she will be entitled to compensation in respect of the Transition Services in an amount equal to $30,000 for the first full month, $30,000 for the second full month and $8,250 for the first full week in the third month (equal to $68,250 in the aggregate) after which she will not be required to provide additional Transition Services. During the Transition Period Loeffler acknowledges and agrees that she shall serve as a consultant and not as an employee and she shall be responsible for the payment of all taxes with respect to such payments. During the Transition Period Loeffler shall not contact any employees, customers, suppliers or vendors of Whiting Petroleum, unless requested to do so by the New CFO or the Board. It is the intent of the parties hereto that the level of services during the Transition Period shall not exceed 19.9% in the aggregate (as compared to services rendered prior to the Transition Period) such that she will experience a “separation of service” for purposes of Section 409A of the Internal Revenue Code of 1986, as amended. Whiting Petroleum acknowledges and agrees to indemnify Loeffler to the same level and extent as in effect prior to the Separation Date for actions taken by Loeffler during the Transition Period in respect of the Transition Services described herein; provided such actions are taken in good faith and consistent with Loeffler’s obligations under this Agreement.

Exhibit 10.8

EXECUTIVE EMPLOYMENT AND SEVERANCE AGREEMENT

This Executive Employment and Severance Agreement (this “Agreement”) is between Charles Rimer (“Executive”) and Whiting Petroleum Corporation (“Whiting” and, together with its subsidiaries, the “Company”) and is effective as of September 1, 2020 (the “Effective Date”).

WHEREAS, the Company and the Executive are parties to an employment and severance agreement dated as of November 15, 2018 ( the “Prior Agreement”);

WHEREAS, the Company desires to continue to employ Executive in a key employee capacity and expects that Executive’s services will be valuable to the conduct of the business of the Company;

WHEREAS, Whiting and Executive desire to specify the terms and conditions on which Executive will be employed on and after the Effective Date, and under which Executive will receive severance in the event that Executive separates from service with the Company under the circumstances described in this Agreement; and

NOW, THEREFORE, for the consideration described above and other good and valuable consideration, the parties agree as follows:

1. Effective Date; Term. This Agreement shall become effective on the Effective Date and continue until the date that is two years after the Effective Date (the “Initial Term”). Thereafter, this Agreement shall renew automatically for successive one-year renewal periods unless and until either party provides written notice to the other party of the intent not to renew this Agreement at least 180 days prior to the end of the Initial Term or any subsequent term. The period between the Effective Date and the Termination Date shall be referred to herein as the “Employment Term.” Expiration of this Agreement will not affect the rights or obligations of the parties hereunder arising out of, or relating to, circumstances occurring prior to the expiration of this Agreement, which rights and obligations will survive the expiration of this Agreement.

2. Definitions. For purposes of this Agreement, the following terms shall have the meanings ascribed to them:

(a) “Accrued Benefits” shall mean the following amounts, payable as described herein: (i) all base salary for the time period ending with the Termination Date; (ii) reimbursement for any and all monies advanced in connection with Executive’s employment for reasonable and necessary expenses incurred by Executive on behalf of the Company for the time period ending with the Termination Date in accordance with company policy and (iii) all other payments and benefits to which Executive (or in the event of Executive’s death, Executive’s surviving spouse or other beneficiary) is entitled on the Termination Date under the terms of any benefit plan of the Company, excluding severance payments under any Company severance policy, practice or agreement in effect on the Termination Date.

(b) “Affiliate” shall mean, with respect to any person, any person that, directly or through one or more intermediaries, is controlled by, controls or is under common control with, such Person.

(c) “Base Salary” shall mean Executive’s annual base salary with the Company as in effect from time to time.

(d) “Board” shall mean the board of directors of Whiting or a committee of such Board authorized to act on its behalf in certain circumstances, including the Compensation Committee of the Board.

(e) “Cause” shall mean a good faith finding by the Board that Executive has (i) willfully failed, grossly neglected or refused to perform the lawful employment duties related to his position or as from time to time assigned to him (other than due to Disability); (ii) committed any willful, intentional or grossly negligent misconduct having the effect of injuring the interest, business or reputation of the


Company; (iii) violated or failed to comply in any material respect with the Company’s published rules, regulations or policies, as in effect or amended from time to time; (iv) been indicted for, convicted of, or plead guilty or nolo contendere to a felony or misdemeanor involving moral turpitude, or performed any act of fraud, material theft or material dishonesty; (v) misappropriated or embezzled any property of the Company (whether or not an act constituting a felony or misdemeanor) or (vi) breached any material provision of this Agreement or any other applicable confidentiality, non-compete, non-solicit, general release, covenant not-to-sue or other agreement with the Company.

(f) “COBRA shall mean the provisions of Code Section 4980B.

(g) “Code” shall mean the Internal Revenue Code of 1986, as amended, as interpreted by rules and regulations issued pursuant thereto, all as amended and in effect from time to time. Any reference to a specific provision of the Code shall be deemed to include reference to any successor provision thereto.

(h) “Disability” shall mean, subject to applicable law, any medically determinable physical or mental impairment that (i) renders Executive unable to perform the duties of his position with the Company and (ii) is expected to last for a continuous period of not less than six months, all as certified by a physician reasonably acceptable to the Company or its Successor.

(i) “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended, as interpreted by rules and regulations issued pursuant thereto, all as amended and in effect from time to time. Any reference to a specific provision of the Exchange Act shall be deemed to include reference to any successor provision thereto.

(j) “Good Reason” shall mean the occurrence of any of the following without the consent of Executive: (i) a material diminution in Executive’s title, duties or responsibilities; (ii) a requirement that Executive relocate Executive’s principal place of work to a location that increases his one-way commute by more than 40 miles from its location on the date of this Agreement; (iii) a reduction in Executive’s Base Salary or annual bonus target percentage, unless such reduction applies across the board to other senior executives; or (iv) a material breach by Whiting of any provisions of this Agreement. Notwithstanding the foregoing, Executive will not be deemed to have Good Reason unless (x) Executive first provides Whiting with written notice of the condition giving rise to Good Reason within 30 days of its initial occurrence and (y) Whiting fails to cure such condition within 30 days after receiving such written notice.

(k) “Separation from Service” shall mean Executive’s termination of employment from Whiting and each entity that is required to be included in Whiting’s controlled group of corporations within the meaning of Code Section 414(b), or that is under common control with Whiting within the meaning of Code Section 414(c) (collectively, “409A affiliates”). Notwithstanding the foregoing:

(i) If Executive takes a leave of absence for purposes of military leave, sick leave or other bona fide leave of absence, Executive will not be deemed to have incurred a Separation from Service for the first six months of the leave of absence, or if longer, for so long as Executive’s right to reemployment is provided either by statute or by contract.

(ii) Subject to paragraph (i), Executive shall incur a Separation from Service when the level of bona fide services provided by Executive to Whiting and its 409A Affiliates permanently decreases to a level of 20% or less of the level of services rendered by Executive, on average, during the immediately preceding 36 months of employment.

(iii) If, following Executive’s termination of employment, Executive continues to provide services to the Company or a 409A Affiliate in a capacity other than as an employee, Executive will not be deemed to have Separated from Service as long as Executive is providing bona fide services at a rate that is greater than 20% of the level of services rendered by Executive, on average, during the immediately preceding 36 months of service.

 

2


(l) “Successor” shall mean the person to which this Agreement is assigned upon a sale of business.

(m) “Termination Date” shall mean the date of Executive’s termination of employment from the Company, as further described in Section 4.

3. Employment of Executive.

(a) Position.

(i) Executive shall serve in the position of Chief Operating Officer in a full-time capacity. In such position, Executive shall have such duties and authority as is customarily associated with such position and shall have such other titles, duties and responsibilities, consistent with Executive’s position, as may be assigned from time to time by the Board or the Chief Executive Officer, and upon request of the Board, Executive shall serve as an officer or director of any Company affiliates. Executive will be based at the Company’s headquarters in Denver, Colorado, subject to reasonable required travel on the Company’s business.

(ii) Executive shall devote Executive’s full business time and best efforts to the performance of Executive’s duties hereunder and will not engage in any other business, profession or occupation for compensation or otherwise which would conflict or interfere with the rendition of such services either directly or indirectly, without the prior written consent of the Board; provided that nothing herein shall preclude Executive, subject to the prior approval of the Board, from accepting appointment to or continuing to serve on any board of directors or trustees of any business corporation or any charitable organization, serving on civic and charitable institutions and managing Executive’s personal financial affairs; further provided in each case, and in the aggregate, that such activities do not conflict or unreasonably interfere with the performance of Executive’s duties hereunder or conflict with Section 7.

(b) Base Salary. Whiting shall pay Executive a Base Salary in regular installments in accordance with the Company’s usual payroll practices. The Base Salary shall be an amount equal to the annual rate of $ 450,000 subject to increase, but not decrease, from time to time as determined by the Board.

(c) Bonus. Beginning in 2021, Executive shall be entitled to participate in the Company’s annual bonus plan with a threshold bonus of 25 % of Base Salary, target bonus of 75% of Base Salary and a maximum bonus of 150% of Base Salary based upon achievement of the performance goals under such plans.

(d) Equity. The Executive will be granted $1,181,250 in early 2021 (the “2021 Grant”) in conjunction with the annual issuance of long-term incentives to other senior employees. Fifty percent of the 2021 Grant shall vest ratably on the first, second and third year anniversaries of the grant date and fifty percent shall vest based on the achievement of performance, subject to continued employment and as further set forth in the award agreement and the Company’s equity plan then in effect.

(e) Special Equity. As soon as practicable and within 45 days after the Effective Date, the Executive will be granted a special one-time equity grant of 49,100 RSUs under the Company’s 2020 Equity Plan (the “Equity Plan”). The award will vest as follows: 50% will vest if the daily volume weighted average price (“VWAP”) exceeds $32.57 per share for 20 consecutive trading days, an additional 25% if the daily VWAP exceeds $48.86 per share for 20 consecutive trading days and the final 25% if the daily VWAP exceeds $65.14 per share for 20 consecutive trading days, This award will vest only if the Executive is employed by the Company during the 20 day period when the daily VWAP equals or exceeds the targets outlined above (provided, that vesting will occur if Executive is terminated without Cause/or resigns for Good Reason within three months prior to achieving such targets) The award will be subject to the terms and conditions of the award agreement and the Equity Plan.

 

3


(f) Employee Benefits. Executive shall be entitled to participate in the Company’s employee benefit plans (other than annual and/or long-term incentive programs, which are addressed in Section 3(c) and (d)) as in effect from time to time; provided that nothing contained herein shall prevent the Company from amending, modifying, suspending or terminating any such benefit plans or arrangements at any time and from time to time in its sole discretion.

(g) Business Expenses. The reasonable business expenses incurred by Executive in the performance of Executive’s duties hereunder shall be reimbursed by the Company in accordance with Company policies.

(h) Vacation. Executive shall be entitled to four weeks of vacation per full year.

4. Termination of Employment. Executive’s employment with the Company will terminate during the term of this Agreement, and this Agreement will terminate on the date of such termination, as follows:

(a) Executive’s employment will terminate upon Executive’s death.

(b) If Executive is Disabled, and if within 30 days after Whiting notifies Executive in writing that it intends to terminate Executive’s employment, Executive shall not have returned to the performance of Executive’s duties hereunder on a full-time basis, Whiting may terminate Executive’s employment, effective immediately following the end of such 30-day period.

(c) Whiting may terminate Executive’s employment with or without Cause (other than as a result of Disability which is governed by Section 4(b)) by providing at least 30 days’ prior written notice (or pay in lieu thereof) to Executive that indicates in reasonable detail the facts and circumstances alleged to provide a basis for such termination. If the termination is without Cause, Executive’s employment will terminate on the date specified in the written notice of termination. If the termination is for Cause, Executive shall have 15 days from the date the written notice is provided, to cure any conduct or act, if curable, alleged to provide grounds for termination of Executive’s employment for Cause. If the alleged conduct or act constituting Cause is not curable, Executive’s employment will terminate on the date specified in the written notice of termination. If the alleged conduct or act constituting Cause is curable but Executive does not cure such conduct or act within the specified time period, Executive’s employment will terminate on the date immediately following the end of the cure period. Unless otherwise directed by Whiting, from and after the date of the written notice of proposed termination, Executive shall be relieved of his duties and responsibilities and shall be considered to be on a paid leave of absence pending any final action by Whiting or the board of directors of the Successor.

(d) Executive may terminate his employment for or without Good Reason by providing written notice of termination to Whiting that indicates in reasonable detail the facts and circumstances alleged to provide a basis for such termination; provided that Executive agrees to provide Whiting with at least 90 days’ written notice of his intent to voluntarily resign from employment for any reason; further provided that Whiting may waive all or any portion of such notice period and accelerate the effective date of Executive’s voluntary resignation without re-characterizing the nature of such termination. If Executive is alleging a termination for Good Reason, Executive must provide written notice to Whiting of the existence of the condition constituting Good Reason within 60 days of the initial existence of such condition, and Whiting must have a period of at least 30 days following receipt of such notice to cure such condition. If such condition is not cured by Whiting within such 30-day period, Executive’s termination of employment shall be effective on the date immediately following the end of such cure period.

(e) If the Executive provides notice of termination, Whiting may elect to place Executive on “garden leave” for up to 90 days or such shorten period as determined by the Company during which period Executive will continue to receive all of Executive’s compensation and benefits hereunder as if an active employee but during which period Whiting will not be obligated to assign to Executive any powers or duties or to permit Executive to provide any work for Whiting or provide Executive access to Whiting’s facilities (but Executive will be required to be available as requested by Whiting). The implementation of any such leave shall not be regarded as a termination of employment nor will it give Executive a right to

 

4


terminate employment for Good Reason. During any such period of “garden leave,” Executive shall remain reasonably available at Whiting’s reasonable request (taking into account Executive’s other professional commitments, if any, during such period) to consult on matters related to the business of the Company or the transition of Executive’s duties to his successor, and Executive acknowledges and agrees that during and following such period he will continue to be bound by the covenants contained in Section 7 hereof in accordance with their terms and any other restrictive covenants or professional obligations contained herein or in any other written agreement with the Company.

(f) Upon Executive’s termination of employment for any reason, whether voluntarily or involuntarily, Executive shall be deemed to have resigned from all positions, directorships and memberships held with the Company, whether as an employee, officer, director, trustee, consultant or otherwise, and such resignations shall be effective upon such termination of employment without any other action required by Executive. Executive hereby agrees to execute all documentation reasonably requested by the Company to effectuate the foregoing. Further, except as required by law or as otherwise set forth expressly herein, Executive’s participation in, and eligibility for participation in, the benefit plans and programs of the Company shall cease as of the effective date of any termination of Executive’s employment with the Company.

5. Payments upon Termination.

(a) Entitlement to Severance. Subject to the other terms and conditions of this Agreement, Executive shall be entitled to the Accrued Benefits, and to the severance benefits described in Section 5(b), in the following circumstances while this Agreement is in effect:

(i) Executive’s employment is terminated by the Company without Cause, except in the case of death or Disability;

(ii) Executive’s employment is terminated due to the Company’s notice of non-renewal of the Employment Term pursuant to Section 1 hereof; or

(iii) Executive terminates his employment with the Company for Good Reason.

For the avoidance of doubt, if Executive dies or becomes Disabled after receiving a notice by the Company (i) that Executive is being terminated without Cause or (ii) of non-renewal of the Employment Term, or after providing notice of termination for Good Reason, then Executive’s estate, heirs and beneficiaries, in the case of Executive’s death, or Executive or his personal representative, in the case of Executive’s Disability, shall be entitled to the Accrued Benefits and the severance benefits described in Section 5(b) at the same time such amounts would have been paid or benefits provided to Executive had he lived or not become Disabled.

(b) Severance Benefits; Timing and Form of Payment. Subject to the limitations imposed by Section 6, if Executive is entitled to severance benefits, then:

(i) The Company shall pay Executive an amount equal to the sum of Executive’s Base Salary and the annual bonus (equal to 75% of Base Salary), payable in equal installments over the 12 month period after the date of termination.

(ii) Until the earlier of 18 months after the date of Executive’s Separation from Service or such time as Executive has obtained new employment and is covered by benefits which in the aggregate are at least equal in value to the following benefits, Executive shall continue to be covered, at the expense of the Company, by the same or equivalent, medical, dental and vision coverage as Executive received (immediately prior to Executive’s Separation from Service), subject to the following:

 

5


(A) Following the end of the COBRA continuation period, if such medical or dental coverage is provided under a health plan that is subject to Section 105(h) of the Code, benefits payable under such health plan shall comply with the requirements of Treasury regulation section 1.409A-3(i)(1)(iv) and, if necessary, the Employer shall amend such health plan to comply therewith.

(B) If provision of any such health benefits would subject the Company or its benefits arrangements to a penalty or adverse tax treatment, then the Company shall provide a cash payment to Executive in an amount reasonably determined by the Company to be equivalent to the COBRA premiums for similar benefit without any gross-up or make wholes.

(C) During the first six months following Executive’s Separation from Service, Executive shall pay the Company for any life insurance coverage that provides a benefit in excess of $50,000 under a group term life insurance policy. After the end of such six month period, the Company shall make a cash payment to Executive equal to the aggregate premiums paid by Executive for such coverage, and thereafter such coverage shall be provided at the expense of the Company for the remainder of the period as set forth above.

All payments shall be subject to payroll taxes and other withholdings in accordance with the Company’s (or the applicable employer of record’s) standard payroll practices and applicable law.

(c) Severance Following a Change of Control. If Executive’s employment is terminated by the Company without Cause, except in the case of death or Disability; or if the Company provides Executive with a notice of non-renewal of the Employment Term pursuant to Section 1 hereof; or Executive terminates his employment with the Company for Good Reason, in each case within 3 months prior to or 12 months following a Change of Control (as defined in the Equity Plan), then, in addition to the severance payments and benefits payable to Executive pursuant to Section 5(b), Executive will receive an additional severance payment equal to the sum of Executive’s Base Salary and the Target annual bonus (equal to 75% of Base Salary) (collectively, the “Enhanced Severance”), payable in a lump sum on the 60th day following such termination (provided, that if the termination occurs prior to the Change of Control, then payment shall be made on or within 60 days following the Change of Control), subject to Executive’s compliance with his post-employment obligations and conditioned on Executive’s execution of the release as set forth below.

(d) Other Termination of Employment. If Executive’s employment terminates for any reason other than those described in Section 5(a), Executive (or Executive’s estate in the event of his death), shall be entitled to receive only the Accrued Benefits.

(e) Release and Post-Employment Obligations. Executive’s right to receive and retain the severance payments and benefits (and the Enhanced Severance, if applicable) shall be conditioned upon (i) Executive’s continued compliance with the post-employment obligations set forth in Section 7 below and (ii) Executive execution and non-revocation of a release of claims against the Company and affiliated parties in substantially the form attached as Exhibit B hereto. Such release must be executed and become effective and irrevocable within 60 days after the Termination Date. In the event that Executive fails to timely execute the release of claims (or timely revokes his execution thereof), Executive shall repay to the Company any severance payments or benefits previously received and the Company shall have any further obligations to Executive in respect thereof.

6. Limitations on Severance Payments and Benefits. Notwithstanding any other provision of this Agreement, if any portion of the severance payments and benefits (including the Enhanced Severance, if applicable) or any other payment under this Agreement, or under any other agreement with or plan of the Company (in the aggregate “Total Payments”), would constitute an “excess parachute payment,” then the Total Payments to be made to Executive shall be reduced such that the value of the aggregate Total Payments that Executive is entitled to receive shall be one dollar ($1) less than the maximum amount which Executive may receive without becoming subject to the tax imposed by Code Section 4999 or which the Company may pay without loss of deduction under Code Section 280G(a); provided that the foregoing

 

6


reduction in the amount of Total Payments shall not apply if the after-tax value to Executive of the Total Payments prior to reduction in accordance herewith is greater than the after-tax value to Executive if Total Payments are reduced in accordance herewith. For purposes of this Agreement, the terms “excess parachute payment” and “parachute payments” shall have the meanings assigned to them in Code Section 280G, and such “parachute payments” shall be valued as provided therein. Present value for purposes of this Agreement shall be calculated in accordance with Code Section 1274(b)(2).

7. Covenants by Executive.

(a) Confidentiality. In consideration for Executive’s employment by the Company, Executive agrees that Executive shall, during Executive’s employment with the Company and thereafter, maintain the confidentiality of any and all information about the Company which is not generally known or available outside the Company, including without limitation, strategic plans, technical and operating know-how, business strategy, trade secrets, customer information, business operations and other proprietary information (“Confidential Information”), and Executive will not, directly or indirectly, disclose any Confidential Information to any person or entity, or use any Confidential Information, whether for Executive’s own benefit, the benefit of any new employer or any other person or entity or any other purpose, in any manner. The foregoing shall not apply to information that (i) was known to the public prior to its disclosure to Executive; (ii) becomes generally known to the public subsequent to disclosure to Executive through no wrongful act of Executive or any representative of Executive; or (iii) Executive is required to disclose by applicable law, regulation or legal process (provided that Executive provides the Company with prior notice of the contemplated disclosure and cooperates with the Company at its expense in seeking a protective order or other appropriate protection of such information).

(b) Return of Company Documents and Property. Executive shall deliver and return to the Company within 24 hours after termination of Executive’s employment with the Company for any reason (whether voluntary or involuntary), or at any other time the Company may request, all memoranda, notes, plans, records, reports, computer tapes, printouts, software and other documents, materials, information, drafts and data (and copies thereof) relating to work product or the business of any member of the Company, and all computers, mobile devices and other electronic hardware or work devices that he may then possess or have under his control. Executive will not keep in Executive’s possession, recreate or deliver to anyone else any such documents or property. Executive agrees, during the term of any restriction contained in this Agreement, to disclose this Agreement to any Person which offers employment to Executive. Executive further agrees that the Company may send a copy of this Agreement to, or otherwise make the provisions hereof known to, any of Executive’s potential employers. For the avoidance of doubt, upon any such termination, Executive may make and retain an electronic copy of Executive’s contacts list and calendar.

(c) Non-Competition/Non-Solicitation.

(i) During Executive’s employment with the Company and for a period of one year following Executive’s Termination Date if such Termination Date occurs prior to a Change of Control or two years following Executive’s Termination Date if such Termination Date occurs after a Change of Control (each, a “Restricted Period”), Executive agrees that Executive shall not, directly or indirectly, manage, operate, join, control, be employed by or participate in the management, operation or control of, or be connected in any manner with, including, without limitation, holding any position as a stockholder, director, officer, consultant, independent contractor, employee, partner or investor in, any operations of a business that are in competition with the business of the Company in the material plays or fields in which the Company has or proposes to have operations as set forth on Exhibit A to this Agreement, which Exhibit A may be modified prior to the time of Executive’s termination of employment by the Board upon written notification of such modification to Executive (the “Whiting Plays and Fields”); provided, however, that nothing in this Section 7(c) shall prohibit Executive from (A) participating in operations of a business to the extent such operations are not in competition with the business of the Company in the Whiting Plays and Fields, (B) participating solely as a passive investor in oil wells or similar investments, owning 3% or less of the outstanding securities of any class of any issuer whose securities are registered under the Exchange Act or making passive investments in any hedge, private equity or mutual fund or similar investment vehicle, or (C) serving as a director of an entity that has less than 5% of its assets located in the Whiting Fields and Plays.

 

7


(ii) During Executive’s employment with the Company and during the applicable Restricted Period, Executive agrees not to, in any form or manner, directly or indirectly, on his own behalf or in combination with others (A) solicit, induce or influence any customer, supplier, lender, lessor or any other person with a business relationship with the Company to discontinue or reduce the extent of such business relationship or (B) recruit, solicit or otherwise induce or influence any employee of the Company to discontinue their employment with the Company.

(d) Disclosure and Assignment to the Company of Inventions and Innovations.

(i) Executive agrees to disclose and assign to the Company as the Company’s exclusive property, all inventions and technical or business innovations, including but not limited to all patentable and copyrightable subject matter (collectively, the “Innovations”) developed, authored or conceived by Executive solely or jointly with others during the period of Executive’s employment, including during Executive’s employment prior to the date of this Agreement, (A) that are along the lines of the business, work or investigations of the Company to which Executive’s employment relates or as to which Executive may receive information due to Executive’s employment with the Company, (B) that result from or are suggested by any work which Executive may do for the Company or (C) that are otherwise made through the use of Company time, facilities or materials. To the extent any of the Innovations is copyrightable, each such Innovation shall be considered a “work for hire.”

(ii) Executive agrees to execute all necessary papers and otherwise provide proper assistance (at the Company’s expense), during and subsequent to Executive’s employment, to enable the Company to obtain for itself or its nominees, all right, title and interest in and to patents, copyrights, trademarks or other legal protection for such Innovations in any and all countries.

(iii) Executive agrees to make and maintain for the Company adequate and current written records of all such Innovations.

(iv) In the event the Company is unable for any reason whatsoever to secure Executive’s signature to any lawful and necessary documents required, including those necessary for the assignment of, application for or prosecution of any United States or foreign application for letters patent or copyright for any Innovation, Executive hereby irrevocably designates and appoints the Company and its duly authorized officers and agents as Executive’s agent and attorney-in-fact, to act for and in Executive’s behalf and stead to execute and file any such applications and to do all other lawfully permitted acts to further the assignment, prosecution and issuance of letters patent or registration of copyright thereon with the same legal force and effect as if executed by Executive. Executive hereby waives and quitclaims to the Company any and all claims, of any nature whatsoever, which Executive may now have or may hereafter have for infringement of any patent or copyright resulting from any such application.

(v) 18 U.S.C. § 1833(b) provides: “An individual shall not be held criminally or civilly liable under any Federal or State trade secret law for the disclosure of a trade secret that—(A) is made—(i) in confidence to a Federal, State, or local government official, either directly or indirectly, or to an attorney; and (ii) solely for the purpose of reporting or investigating a suspected violation of law; or (B) is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal.” Nothing in this Agreement is intended to conflict with 18 U.S.C. § 1833(b) or create liability for disclosures of trade secrets that are expressly allowed by 18 U.S.C. § 1833(b). Accordingly, the parties to this Agreement have the right to disclose in confidence trade secrets to federal, state, and local government officials, or to an attorney, for the sole purpose of reporting or investigating a suspected violation of law. The parties also have the right to disclose trade secrets in a document filed in a lawsuit or other proceeding, but only if the filing is made under seal and protected from public disclosure.

 

8


(e) Nondisparagement. Executive shall not, whether in writing (electronically or otherwise) or orally malign, denigrate or disparage the Company or any of its respective predecessors or successors, or any of their respective current or former directors, officers, employees, shareholders, partners, members, agents or representatives, with respect to any of their respective past or present activities, or otherwise publish, whether in writing (electronically or otherwise) or orally statements that malign, denigrate or disparage any of the aforementioned parties. The Company agrees to instruct its senior officers and directors not to disparage the Executive. The foregoing shall not be violated by truthful statements in response to legal process, required governmental testimony or filings, or administrative or arbitral proceedings (including, without limitation, depositions in connection with such proceedings), and the foregoing limitation on the Company’s executives and directors shall not be violated by statements that they in good faith believe are necessary or appropriate to make in connection with performing their duties and obligations to the Company.

(f) Remedies Not Exclusive. In the event that Executive breaches any terms of this Section 7, Executive acknowledges and agrees that said breach may result in the immediate and irreparable harm to the business and goodwill of the Company and that damages, if any, and remedies of law for such breach may be inadequate and indeterminable. The Company, upon Executive’s breach of this Section 7, shall therefore be entitled (in addition to and without limiting any other remedies that the Company may seek under this Agreement or otherwise at law or in equity) to seek from any court of competent jurisdiction equitable relief by way of temporary or permanent injunction and without being required to post a bond, to restrain any violation of this Section 7, and for such further relief as the court may deem just or proper in law or equity. Executive shall reimburse the Company’s legal fees upon any breach by Executive.

(g) Severability of Provisions. If any restriction, limitation or provision of this Section 7 is deemed to be unreasonable, onerous or unduly restrictive by a court of competent jurisdiction, it shall not be stricken in its entirety and held totally void and unenforceable, but shall remain effective to the maximum extent possible within the bounds of the law. If any phrase, clause or provision of this Section 7 is declared invalid or unenforceable by a court of competent jurisdiction, such phrase, clause or provision shall be deemed severed from this Section 7, but will not affect any other provision of this Section 7, which shall otherwise remain in full force and effect. The provisions of this Section 7 are each declared to be separate and distinct covenants by Executive.

(h) Tolling. The periods during which the covenants set forth in this Section 7 shall survive a termination of employment hereunder shall be tolled during (and shall be deemed automatically extended by) any period during which Executive is in violation of any such post-employment covenants, to the extent permitted by law.

8. Additional Executive Representations, Warranties and Covenants.

(a) Authority; No Conflicts. Executive represents, warrants, and covenants that as of the date hereof, (i) Executive has the full right, authority and capacity to enter into this Agreement and perform his obligations hereunder, (ii) Executive is not bound by any agreement that conflicts with or prevents or restricts the full performance of his duties and obligations hereunder during or after the Term, (iii) the execution and delivery of this Agreement shall not result in any breach or violation of, or a default under, any existing obligation, commitment or agreement to which Executive is subject and (iv) Executive has not violated, and in connection with his employment with the Company will not violate, any non-solicitation, non-competition or other similar covenant or agreement of a prior employer by which he is or may be bound, and in connection with his employment with the Company, Executive will not use any confidential or proprietary information he may have obtained in connection with employment with any prior employer in contravention of any confidentiality obligations that Executive has to such prior employer.

(b) Advice of Counsel. Prior to execution of this Agreement, Executive was advised by the Company of his right to seek independent advice from an attorney of Executive’s own selection regarding this Agreement. Executive acknowledges that he has entered into this Agreement knowingly and voluntarily and with full knowledge and understanding of the provisions of this Agreement after being given the opportunity to consult with counsel.

 

9


(c) No Reliance on Company Statements. Executive represents further that in entering into this Agreement, Executive is not relying on any statements or representations made by any director, officer, employee or agent of any member of the Company that is not expressly set forth herein, and that Executive is relying only upon his own judgment and any advice provided by his attorney.

9. Taxes.

(a) Withholding. The Company may withhold from any payments of compensation or benefits made to Executive all applicable taxes, including but not limited to income, employment and social insurance taxes, as required by law. Executive acknowledges and represents that the Company has not provided any tax advice to him in connection with this Agreement and that he has been advised by the Company to seek tax advice from his own tax advisors regarding this Agreement and the payments that may be made to him pursuant to this Agreement, including, specifically, regarding the application of the provisions of Section 409A of the Code.

(b) Section 409A of the Code. It is intended that the provisions of this Agreement comply with or be exempt from Section 409A of the Code, and all provisions of this Agreement will be construed and interpreted in a manner consistent with the requirements for avoiding taxes or penalties under Section 409A of the Code. The Company cannot make any representations or guarantees with respect to compliance with such requirements, and neither the Company nor any affiliate will have any obligation to indemnify Executive or otherwise hold him harmless from any or all of such taxes or penalties. For purposes of Section 409A of the Code, each installment payment hereunder will be deemed a “separate payment” within the meaning of Treas. Reg. Section 1.409A-2(b)(iii). With respect to the timing of payments of any deferred compensation payable upon a termination of employment hereunder, references in this Agreement to “termination of employment” (and substantially similar phrases) mean “separation from service” within the meaning of Section 409A of the Code. For the avoidance of doubt, it is intended that any expense reimbursement made to Executive hereunder is exempt from Section 409A of the Code; however, if any expense reimbursement hereunder is determined to be deferred compensation within the meaning of Section 409A of the Code, then (i) the amount of the expense reimbursement during one taxable year will not affect the amount of the expense reimbursement during any other taxable year, (ii) the expense reimbursement will be made on or before the last day of the year following the year in which the expense was incurred and (iii) the right to expense reimbursement hereunder will not be subject to liquidation or exchange for another benefit. Notwithstanding any provision to the contrary in this Agreement: (i) no amount shall be payable pursuant to Section 5 unless the termination of the Executive’s employment constitutes a “separation from service” within the meaning of Section 1.409A-1(h) of the Department of Treasury Regulations; (ii) if the Executive is deemed at the time of his separation from service to be a “specified employee” for purposes of Section 409A(a)(2)(B)(i) of the Code, to the extent that delayed commencement of any portion of the termination benefits to which the Executive is entitled under this Agreement (after taking into account all exclusions applicable to such termination benefits under Section 409A), including, without limitation, any portion of the additional compensation awarded pursuant to Section 5, is required in order to avoid a prohibited distribution under Section 409A(a)(2)(B)(i) of the Code, such portion of the Executive’s termination benefits shall not be provided to the Executive prior to the earlier of (A) the expiration of the six-month period measured from the date of the Executive’s “separation from service” with the Company (as such term is defined in the Department of Treasury Regulations issued under Section 409A) and (B) the date of the Executive’s death; provided that upon the earlier of such dates, all payments deferred pursuant to this Section 9(b) shall be paid to the Executive in a lump sum, and any remaining payments due under this Agreement shall be paid as otherwise provided herein; (iii) the determination of whether the Executive is a “specified employee” for purposes of Section 409A(a)(2)(B)(i) of the Code as of the time of his separation from service shall be made by the Company in accordance with the terms of Section 409A and applicable guidance thereunder (including, without limitation, Section 1.409A-1(i) of the Department of Treasury Regulations and any successor provision thereto.

10. Future Cooperation. Executive agrees to reasonably cooperate with Whiting Petroleum in the future and to provide to Whiting truthful information, testimony or affidavits requested in connection with any matter that arose during Executive’s employment. This cooperation may be performed at reasonable times and places and in a manner as to not interfere with any other employment or business activities that Executive may have at the time of request. Whiting agrees to reimburse Executive for expenses incurred in providing such cooperation, so long as such expenses are approved in advance by Whiting.

 

10


11. Permissible Disclosure. Notwithstanding anything to the contrary contained herein, nothing in this Agreement shall prohibit the Executive from reporting possible violations of federal law or regulation to or otherwise cooperating with or providing information requested by any governmental agency or entity, including, but not limited to, the Department of Justice, the Securities and Exchange Commission, the Congress and any agency Inspector General, or making other disclosures that are protected under the whistleblower provisions of federal law or regulation. The Executive does not need the prior authorization of the Company to make any such reports or disclosures and the Executive is not required to notify the Company that the Executive has made such reports or disclosures.

12. Notice. Any notice, request, demand or other communication required or permitted herein will be deemed to be properly given when personally served in writing or when deposited in the United States mail, postage prepaid, addressed to Executive at the address appearing at the end of this Agreement and to the Company with attention to the General Counsel of Whiting. Either party may change its address by written notice in accordance with this paragraph.

13. Set Off. The Company’s obligation to pay Executive the amounts and to provide the benefits hereunder shall be subject to set-off, counterclaim or recoupment of amounts owed by Executive to the Company.

14. Assignment; Benefit of Agreement. This Agreement is personal and shall not be assignable by Executive. It shall be binding upon and shall inure to the benefit of the members of the Company and its respective successors and assigns and its economic rights and benefits shall inure to the benefit of Executive and his heirs or duly constituted legal representatives. For the avoidance of doubt, the Company may assign its rights, obligations and interests hereunder to any other member of the Company or its affiliates or to the acquirer of the business or all or substantially all of the assets of the Company, whether by merger, stock sale, asset sale or otherwise, in either case, without Executive’s consent.

15. Arbitration. Any controversy or claim arising out of or relating to this Agreement or the breach of this Agreement that cannot be mutually resolved by Executive and the Company, shall be submitted to arbitration in Colorado in accordance with the procedures of the American Arbitration Association. The determination of the arbitrator shall be conclusive and binding on the Company and Executive, and judgment may be entered on the arbitrator’s award in any court having jurisdiction.

16. Applicable Law and Jurisdiction. This Agreement is to be governed by and construed under the laws of the United States and of the State of Colorado without resort to Colorado’s choice of law rules. Each party hereby agrees that the forum and venue for any legal or equitable action or proceeding arising out of, or in connection with, this Agreement will lie in the appropriate federal or state courts in the State of Colorado and specifically waives any and all objections to such jurisdiction and venue.

17. Drafting. The parties acknowledge and confirm that each of their respective attorneys has participated jointly in the review and revision of this Agreement and that it has not been written solely by counsel for one party. The parties therefore stipulate and agree that the rule of construction to the effect that any ambiguities are to be or may be resolved against the drafting party shall not be employed in the interpretation of this Agreement to favor any party against another.

18. Captions and Paragraph Headings. The captions and paragraph headings set forth under each of the sections and subsections of this Agreement are for convenience of reference and shall not be construed or interpreted to define, limit, abridge or assist in the interpretation or scope or intent of this Agreement, which must be read in its entirety.

 

11


19. Invalid Provisions. Subject to Section 7(g), should any provision of this Agreement for any reason be declared invalid, void or unenforceable by a court of competent jurisdiction, the validity and binding effect of any remaining portion will not be affected, and the remaining portions of this Agreement will remain in full force and effect as if this Agreement had been executed with said provision eliminated.

20. No Waiver. The failure of a party to insist upon strict adherence to any term of this Agreement on any occasion shall not be considered a waiver of such party’s rights or deprive such party of the right thereafter to insist upon strict adherence to that term or any other term of this Agreement.

21. Entire Agreement. This Agreement contains the entire agreement of the parties with respect to the subject matter of this Agreement except where other agreements are specifically noted, adopted or incorporated by reference. This Agreement otherwise supersedes any and all other agreements, either oral or in writing, (including, without limitation, the Prior Agreement) between the parties hereto with respect to the employment of Executive by Company, and all such agreements shall be void and of no effect. Each party to this Agreement acknowledges that no representations, inducements, promises or agreements, oral or otherwise, have been made by any party, or anyone acting on behalf of any party, which are not embodied herein, and that no other agreement, statement or promise not contained in this Agreement will be valid or binding.

22. Modification. This Agreement may not be modified or amended by oral agreement, but only by an agreement in writing signed by Whiting and Executive.

23. Counterparts. This Agreement may be signed in counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument.

 

12


IN WITNESS WHEREOF, the parties hereto have executed, or caused to be executed, this Agreement on the Effective Date.

 

EXECUTIVE: CHARLES RIMER

/s/ Charles Rimer

WHITING PETROLEUM CORPORATION
By:  

/s/ Kevin S. McCarthy

Chairman of the Board

Title

 


EXHIBIT A

WHITING PLAYS AND FIELDS

Bakken Play in Mountrail, McKenzie, Stark, Dunn, Golden Valley, Billings, Williams, Divide and McClean Counties, North Dakota and Richland and Roosevelt Counties, Montana.

Niobrara Play in Weld County, Colorado.


EXHIBIT B

FORM OF GENERAL RELEASE

This Separation Agreement and General Release (“Agreement”) is between Whiting Petroleum Corporation, which in this Agreement is referred to as the “Whiting” or the “Company” or the Employer, and Charles Rimer, who is referred to as Executive.

1. Background. Whiting and Executive acknowledge that Executive’s employment with Whiting is ending (or has ended), effective [Date]. Both Executive and Whiting desire an amicable separation and to fully and finally compromise and settle any differences that may exist between them on the terms set forth in this Agreement.

2. Employment Termination. Executive understands that his employment with Whiting is considered ended and his separation from service was effective [Date] (the “Separation Date”), based on reasons discussed between Executive and Whiting. Whiting and Executive are subject to an Executive Employment and Severance Agreement dated [Date] (“Employment Agreement”) that provides for Executive’s receipt of certain separation benefits if he executes an agreement with a general release of all claims that is acceptable to Whiting : this is that agreement.

3. Severance Pay and Benefits. In return for the execution of this Agreement, it becoming effective (see paragraph 18) and Executive honoring (and continuing to honor) all of its terms, Whiting will provide Executive with the severance pay and benefits in accordance with Section 5(b) [and 5(c)] of the Employment Agreement.

4. Acknowledgement. Executive understands that the severance pay and benefits identified in paragraph 3 above will not be paid or provided unless he accepts this Agreement, it becomes effective (see paragraph 18), and he honors (and continues to honor) all of its terms.

5. Release. Executive understands and agrees that his acceptance of this Agreement means that, except as stated in paragraph 7, he is forever waiving and giving up any and all claims he may have, whether known or unknown, against Whiting, its parent, subsidiaries, and related companies, their insurers, their officers, directors, employees and agents for any personal monetary relief for himself, benefits or remedies that are based on any act or failure to act that occurred on or before the date he signed this Agreement. Executive understands that this release and waiver of claims includes claims for or relating to: (a) his employment and the termination of his employment; (b) any Whiting policy, practice, contract or agreement, including, but not limited, to the Employment Agreement; (c) any tort or personal injury relating to Executive’s employment or termination of employment; (d) any policies, practices, laws or agreements governing the payment of wages, commissions or other compensation, including, but not limited, to the Colorado Wage Act, the Colorado Minimum Wage Order No. 30 and all terms for compensation under the Employment Agreement; (e) any laws governing employment discrimination or retaliation including (to the extent applicable), but not limited to, Title VII of the Civil Rights Act, the Employee Retirement Income Security Act, the Americans with Disabilities Act, the Age Discrimination in Employment Act (ADEA), the Older Worker Benefit Protection Act, the Genetic Information Nondiscrimination Act, the Family and Medical Leave Act, the National Labor Relations Act (NLRA), the Colorado Anti-Discrimination Act, C.R.S. 24-34-401 et seq., the City and County of Denver’s Anti-Discrimination Ordinance and any other applicable state or local laws; (f) any laws or agreements that provide for punitive, exemplary or statutory damages and (g) any laws or agreements that provide for the payment of attorney fees, costs or expenses.

6. Future Employment. Executive agrees that he is not now or hereafter entitled to employment or reemployment with Whiting and he agrees not to knowingly seek such employment on any basis or through an employment agency. Executive further agrees and acknowledges that should he apply for any position in contradiction of this paragraph, Whiting may completely ignore such application and fail to consider it based on this paragraph.


7. Claims Not Waived. Executive understands that this Agreement does not waive any claims that he may have: (a) for compensation for illness or injury or medical expenses under any worker’s compensation statute; (b) for benefits under any plan currently maintained by Whiting that provides for retirement benefits (however, Executive agrees and acknowledges that the severance pay and benefits provided in paragraph 3 above shall not be considered or included for purposes of any retirement benefit contribution or plan) under this Agreement; (c) under this Agreement; (d) for indemnification as provided by the Company’s organizational documents, or claims under the Company’s D&O insurance coverage, or (e) that by law cannot be released or waived.

8. Government Cooperation. Nothing in this Agreement prohibits Executive from cooperating with any government agency, including the National Labor Relations Board or the Equal Employment Opportunity Commission, or any similar state agency. Further, Executive understands that nothing in this Agreement (including any obligation in Paragraphs 5 or 9) prohibit him from reporting a possible violation of federal, state or local law or regulation to any governmental agency or entity, including but not limited to the Department of Justice, the Securities and Exchange Commission, the United States Congress or any agency (including but not limited to the National Labor Relations Board or the Equal Employment Opportunity Commission) or inspector general, or making other disclosures that are protected under any whistleblower provision of federal, state or local law or regulation.

9. Prior Confidentiality Agreement(s). Executive agrees and understands that this Agreement does not supersede any obligation to which he was subject under a prior agreement while employed with Whiting that addresses confidentiality, noncompetition, patents or copyright. Executive acknowledges that and continues to be, subject to those obligations contained in the Employment Agreement, and that he is expressly re-affirming his commitment to those obligations by executing this Agreement, and acknowledging that his failure to abide by such obligations will constitute a material breach of this Agreement. Executive acknowledges and agrees that he is subject to the restrictive covenants and other obligations as set forth in the Employment Agreement.

9. Trade Secrets/Defend Trade Secrets Act. Nothing in this Agreement (or any prior agreement on confidentiality to which Executive may be subject) diminishes or limits any protection granted by law to trade secrets or relieves Executive of any duty not to disclose, use or misappropriate any information that is a trade secret, for as long as such information remains a trade secret. Additionally, nothing in this Agreement (or any prior agreement on confidentiality to which Executive may be subject) is intended to discourage Executive from reporting any theft of trade secrets to the appropriate government official pursuant to the Defend Trade Secrets Act of 2016 (“DTSA”) or other applicable state or federal law. Additionally, under the DTSA, a trade secret may be disclosed to report a suspected violation of law and/or in an anti-retaliation lawsuit, as follows:

a. An individual shall not be held criminally or civilly liable under any federal or state trade secret law for the disclosure of a trade secret that: (A) is made (1) in confidence to a federal, state or local government official, either directly or indirectly, or to an attorney and (2) solely for the purpose of reporting or investigating a suspected violation of law or (B) is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal.

b. An individual who files a lawsuit for retaliation by an employer for reporting a suspected violation of law may disclose the trade secret to the attorney of the individual and use the trade secret information in the court proceeding, if the individual: (A) files any document containing the trade secret under seal and (B) does not disclose the trade secret, except pursuant to court order. Nothing in this Agreement (or any prior agreement on confidentiality to which Executive may be subject) shall limit, curtail or diminish the Whiting’s statutory rights under the DTSA, any applicable state law regarding trade secrets or common law.

10. Relinquishment Of Positions. As of the Separation Date, Executive acknowledges that he has fully and completely relinquished any and all officerships, directorships or other positions that he held with Whiting and any of its affiliates.


11. Nonadmission. Executive and Whiting both acknowledge and agree that nothing in this Agreement is meant to suggest that Whiting has violated any law or contract or that Executive has any claim against Whiting.

12. Voluntary Agreement. Executive acknowledges and states that he has entered into this Agreement knowingly and voluntarily.

13. Consulting An Attorney. Executive acknowledges that Whiting has told him that he should consult an attorney of his own choice about this Agreement and every matter that it covers before signing this Agreement, and that he has been provided an meaningful opportunity for such consultation.

14. Obligation to Repay Upon Violation of Release. Executive understands and agrees that if he is found by a court of competent jurisdiction to have materially violated the commitments he has made in Section 5 of this Agreement, Whiting may recover any payments and/or the value of any benefits provided in this Agreement, with the exception of One Thousand Dollars ($1,000).

15. Complete Agreement. Executive understands and agrees that this document contains the entire agreement between him and Whiting relating to his employment and the termination of his employment, that this Agreement, except as provided in paragraph 9, supersedes and displaces any prior agreements and discussions relating to such matters and that he may not rely on any such prior agreements or discussions.

16. Effective Date. This Agreement shall not be effective until seven days after Executive signs it and returns it to Whiting’s Vice President, General Counsel and Corporate Secretary. During that seven-day period, Executive may revoke his acceptance of this Agreement by delivering to Whiting’s Vice President, General Counsel and Corporate Secretary a written statement stating he wishes to revoke this Agreement or not be bound by it.

17. Final and Binding Effect. Executive understands that if he signs this Agreement, returns it to Whiting and fails to revoke it consistent with this paragraph 18, it will have a final and binding effect and that by signing and returning this Agreement (and not revoking it) he may be giving up legal rights. Executive also acknowledges that this Agreement may be signed in counter-parts (meaning by him and Whiting separately) and that facsimile, copy or PDF copy signatures shall be treated as valid as original signatures.

18. Exclusive Jurisdiction and Venue. This Agreement is to be governed by and construed under the laws of the United States and of the State of Colorado without resort to Colorado’s choice of law rules. Whiting and Executive agree that the forum and venue for any legal or equitable action or proceeding arising out of, or in connection with, this Agreement will lie in the appropriate federal or state courts in the State of Colorado and each specifically waives any and all objections to such jurisdiction and venue.

19. Future Cooperation. Executive agrees to reasonably cooperate with Whiting in the future and to provide to Whiting truthful information, testimony or affidavits requested in connection with any matter that arose during Executive’s employment. This cooperation may be performed at reasonable times and places and in a manner as to not interfere with any other employment or business activities that Executive may have at the time of request. Whiting agrees to reimburse Executive for expenses incurred in providing such cooperation, so long as such expenses are approved in advance by Whiting, including, if applicable, any legal fees and expenses reasonably incurred by Executive if Executive and Whiting agree in good faith that Executive should retain counsel independent of the counsel for Whiting in order to cooperate as provided herein above.

20. Return of Property. Executive acknowledges an obligation and agrees to return all Whiting property, unless otherwise specified in this paragraph. This includes all files, memoranda, documents, records, credit cards, keys and key cards, computers, laptops, personal digital assistants, cellular telephones, Blackberry devices or similar instruments, other equipment of any sort, badges, vehicles and any other property of Whiting. In addition, Executive agrees to provide any and all access codes or passwords necessary to gain access to any computer, program or other equipment that belongs to Whiting or is maintained by Whiting or on company property. Further, Executive acknowledges an obligation and agrees not to destroy, delete or disable any company property, including items, files and materials on computers and laptops.


21. Divisibility of Agreement or Modification by Court. Executive understands that, to the extent permitted by law, the invalidity of any provision of this Agreement will not and shall not be deemed to affect the validity of any other provision. Executive agrees that in the event that any provision of this Agreement is held to be invalid, it shall be, to the extent permitted by law, modified as necessary to be interpreted in a manner most consistent with the present terms of the provision, to give effect to the provision. Finally, in the event that any provision of this Agreement is held to be invalid and not capable of modification by a court, then Executive understands and agrees that such provision shall be considered expunged (eliminated), and he further agrees that the remaining provisions shall be treated as in full force and effect as if this Agreement had been executed by Executive after the expungement (elimination) of the invalid provision.

22. Representations. By signing this Agreement, Executive represents that he has read this entire document and understands all of its terms.

23. 21-Day Consideration Period. Executive may consider whether to sign and accept this Agreement for a period of 21 days from the day he received it. If this Agreement is not signed, dated and returned to Whiting’s Vice President, General Counsel and Corporate Secretary within 22 days, the offer of severance payments and benefits described in paragraph 3 above will no longer be available. Executive acknowledges that should he sign and return this Agreement within the 21-day period identified in this paragraph, he is knowingly waiving whatever additional time he may have up to the conclusion of the 21-day period for consideration of this Agreement.

 

ACCEPTED:    ACCEPTED:
EXECUTIVE: CHARLES RIMER    WHITING PETROLEUM CORPORATION
                                                                 By:                                                                         
Dated:    Dated:

Date Agreement was originally given to Executive:

Exhibit 99.2

 

LOGO

   

1700 Lincoln Street, Suite 4700

Denver, CO 80203 4547

Phone: 303 837 1661

FAX: 303 861 4023

  

News Release

 

 

Company Contact: Brandon Day    September 1, 2020
Title: Investor Relations Manager    For immediate release
Phone: 303.390.4969   
Email: Brandond@whiting.com   

Whiting Petroleum Completes Reorganization

Approximate $3.0 Billion Reduction in Funded Debt; Trading of New Common Stock to Commence

on NYSE under Ticker “WLL” on September 2, 2020

DENVER, September 1, 2020 — Whiting Petroleum Corporation (NYSE: WLL) (“Whiting” or the “Company”) today announced that it has successfully completed its financial restructuring and emerged from Chapter 11 protection. Whiting officially concluded its reorganization after completing all required actions and satisfying the remaining conditions to its Plan of Reorganization (the “Plan”).

“We are excited to begin our new chapter at Whiting, with a focus on capital discipline and free cash flow generation to create long-term value for our shareholders,” said Lynn Peterson, Chief Executive Officer of Whiting. “On behalf of the Company and newly appointed Board of Directors, I would like to thank our employees for their patience and dedication during this process.”

New Capital Structure Summary

Whiting’s new capital structure includes a new $750 million reserve based revolving credit facility (“New RBL Facility”) maturing in April 2024. Whiting’s unsecured claims, including holders of Whiting’s senior unsecured notes, received their proportionate distribution of 97% of Whiting’s newly issued common stock (subject to dilution). A summary of Whiting’s new capital structure is presented below:

Unrestricted Cash

 

   

Approximately $13 million, net of near-term working capital payments

New RBL Facility

 

   

$750 million borrowing base


   

Approximately $425 million drawn at emergence

 

   

First borrowing base redetermination scheduled for April 1, 2021

 

   

Matures April 1, 2024

 

   

LIBOR + 275-375 bps rate with 100 bps floor

New Common Equity

 

   

Approximately 38.1 million shares of common stock outstanding, with 500 million shares authorized at emergence

 

   

Current Whiting shareholders to receive 1 share of reorganized Whiting’s new common stock for approximately every 75 shares previously owned

 

   

Approximately 3.1 million incremental shares reserved for potential future distribution to certain general unsecured claimants whose claim values are pending

Warrants

 

   

Approximately 4.8 million Series A Warrants exercisable for one share of common stock per Series A Warrant at an initial exercise price of $73.44, expiring on September 1, 2024

 

   

Approximately 2.4 million Series B Warrants exercisable for one share of common stock per Series B Warrant at an initial exercise price of $83.45, expiring on September 1, 2025

 

2


Pro Forma Capital Structure Details

In accordance with the Plan, approximately $2.4 billion in pre-petition senior unsecured notes have been equitized. Pro forma for the reduced RBL facility balance, the restructuring resulted in a reduction of approximately $3.0 billion of debt. Details of the Company’s pro forma capital structure and liquidity are outlined here below:

 

Pro Forma Capital Structure after Emergence    $ Millions  
Debt at Principal Value    as of Mar 31, 2020      Restructuring     

Pro Forma

as of Sep 1, 2020

 

RBL Facility:

        

Old RBL Facility

   $ 1,070      ($ 1,070    $ —    

New RBL Facility

     —          425        425  
  

 

 

    

 

 

    

 

 

 

Sub-Total RBL Facility

   $ 1,070      ($ 645    $ 425  

Senior Unsecured Notes:

        

1.250% Convertible Senior Notes due 2020

   $ 187      ($ 187    $ —    

5.750% Senior Notes due 2021

     774        (774      —    

6.250% Senior Notes due 2023

     408        (408      —    

6.625% Senior Notes due 2026

     1,000        (1,000      —    
  

 

 

    

 

 

    

 

 

 

Sub-Total Senior Unsecured Notes

   $ 2,368      ($ 2,368    $ —    

Total Debt1

   $ 3,438      ($ 3,013    $ 425  

Liquidity

        

RBL Borrowing Base

   $ 1,750 2     ($ 1,000    $ 750  

(-) RBL Drawn

     (1,070      645        (425

(-) L/Cs Outstanding

     (2      —          (2

(+) Cash

     566        (553      13 3 
  

 

 

    

 

 

    

 

 

 

Total Liquidity

   $ 1,244      ($ 909    $ 336  

 

1 

Total debt figure excludes capital lease obligations and outstanding letters of credit.

2 

RBL Borrowing Base of $2,050 million with aggregate commitments of $1,750 million.

3 

Cash balance net of near-term working capital payments.

New Leadership and Board of Directors

As previously announced, Lynn Peterson has assumed the role of Chief Executive Officer effective today. Additionally, James Henderson has assumed the role of Chief Financial Officer effective today. Mr. Henderson succeeds Correne S. Loeffler, who has resigned to pursue other interests following the Company’s restructuring. Chip Rimer will continue to serve as Whiting’s Chief Operating Officer.

Mr. Henderson most recently served as Chief Financial Officer of SRC Energy, Inc. before its combination with PDC Energy, Inc. Prior to SRC Energy, Mr. Henderson was Chief Financial Officer of Kodiak Oil & Gas Corporation (“Kodiak”) before its combination with Whiting. Prior to Kodiak, he served as the Director of Finance for Aspect Holdings and the Director of Accounting Services at Anadarko Petroleum Corporation.

 

3


Pursuant to the Plan, Whiting has appointed a new Board of Directors effective today. The new Board of Directors consists of seven members including: Kevin McCarthy (Chairman), Lynn Peterson (CEO), Janet L. Carrig, Susan Cunningham, Paul Korus, Daniel Rice and Anne Taylor.

Listing on the NYSE

In connection with emergence from Chapter 11, all of the Company’s existing equity interests will be cancelled and will cease to exist, effective before the market opens on September 2, 2020. Shares of the Company’s new common stock will commence trading on the New York Stock Exchange under the ticker symbol “WLL,” on September 2, 2020.

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 which can be viewed on the Company’s website or the Securities and Exchange Commission’s (“SEC”) website at www.sec.gov.

*****

Moelis & Company acted as financial advisor for the Company, Kirkland & Ellis acted as legal advisor, Alvarez & Marsal acted as restructuring advisor and Jeffrey S. Stein of Stein Advisors LLC acted as the Company’s Chief Restructuring Officer.

PJT Partners acted as financial advisor for the Ad Hoc Committee of Noteholders and Paul, Weiss, Rifkind, Wharton & Garrison LLP and Porter Hedges LLP acted as legal advisors.

Court filings and other documents related to the restructuring are available on a separate website administered by the Company’s claims agent, Stretto, at cases.stretto.com/whitingpetroleum. For inquiries regarding the Company’s emergence, please call the hotline established by Stretto at (800) 330-2531 (toll-free domestic).

About Whiting Petroleum Corporation

Whiting Petroleum Corporation, a Delaware corporation, is an independent oil and gas company that develops, produces, acquires and explores for crude oil, natural gas and natural gas liquids primarily in the Rocky Mountain region of the United States. The Company’s largest projects are in the Bakken and Three Forks plays in North Dakota and Niobrara play in northeast Colorado. The Company trades publicly under the symbol WLL on the New York Stock Exchange. For further information, please visit http://www.whiting.com.

Forward-Looking Statements

This news release contains statements that we believe to be “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. All statements other than historical facts, including, without limitation, statements regarding our future financial position, business strategy, projected revenues, earnings, costs, capital expenditures and debt levels, and plans and objectives of management for future operations, are forward-looking statements. When used in this news release, words such as we “expect,” “intend,” “plan,” “estimate,” “anticipate,” “believe” or “should” or the negative thereof or variations thereon or similar terminology are generally intended to identify forward-looking statements. Such forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those expressed in, or implied by, such statements.

 

 

4


These risks and uncertainties include, but are not limited to: the effects of the Chapter 11 petitions (the “Chapter 11 Cases”) on the Company’s liquidity or results of operation or business prospects; the effects of the Chapter 11 Cases on the Company’s business and the interests of various constituents; declines in, or extended periods of low oil, NGL or natural gas prices; the Company’s level of success in exploration, development and production activities; the Company’s ability to generate sufficient cash flows from operations to meet the internally funded portion of its capital expenditures budget; the Company’s ability to obtain external capital to finance exploration and development operations; the Company’s inability to access oil and gas markets due to market conditions or operational impediments, including any court rulings which may result in the inability to transport oil on the Dakota Access Pipeline; the impact of negative shifts in investor sentiment towards the oil and gas industry; impacts resulting from the allocation of resources among the Company’s strategic opportunities; the geographic concentration of the Company’s operations; impacts to financial statements as a result of impairment write-downs and other cash and noncash charges; federal and state initiatives relating to the regulation of hydraulic fracturing and air emissions; revisions to reserve estimates as a result of changes in commodity prices, regulation and other factors; inaccuracies of the Company’s reserve estimates or assumptions underlying them; the timing of the Company’s exploration and development expenditures; risks relating to decreases in the Company’s credit rating; market availability of, and risks associated with, transport of oil and gas; the Company’s ability to successfully complete asset dispositions and the risks related thereto; the Company’s ability to drill producing wells on undeveloped acreage prior to its lease expiration; shortages of or delays in obtaining qualified personnel or equipment, including drilling rigs and completion services; weakened differentials impacting the price we receive for oil and natural gas; risks relating to any unforeseen liabilities of ours; the impacts of hedging on the Company’s results of operations; adverse weather conditions that may negatively impact development or production activities; uninsured or underinsured losses resulting from the Company’s oil and gas operations; lack of control over non-operated properties; failure of the Company’s properties to yield oil or gas in commercially viable quantities; the impact and costs of compliance with laws and regulations governing the Company’s oil and gas operations; the potential impact of changes in laws that could have a negative effect on the oil and gas industry; impacts of local regulations, climate change issues, negative public perception of the Company’s industry and corporate governance standards; the Company’s ability to replace its oil and natural gas reserves; negative impacts from litigation and legal proceedings; risks related to the Company’s level of indebtedness, the Company’s ability to comply with debt covenants, periodic redeterminations of the borrowing base under the Company’s credit agreement and the Company’s ability to generate sufficient cash flows from operations to service its indebtedness; unforeseen underperformance of or liabilities associated with acquired properties or other strategic partnerships or investments; competition in the oil and gas industry; any loss of the Company’s senior management or technical personnel; cybersecurity attacks or failures of the Company’s telecommunication and other information technology infrastructure; and other risks described under the caption “Risk Factors” in Item 1A of the Company’s Annual Report on Form 10-K for the period ended December 31, 2019 and subsequent filings with the SEC. We assume no obligation, and disclaim any duty, to update the forward-looking statements in this news release.

 

5

SLIDE 1

Whiting Petroleum Emergence Presentation September 2020 Exhibit 99.3


SLIDE 2

This presentation contains statements that Whiting believes to be “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. All statements other than historical facts, including, without limitation, statements regarding our future financial position, business strategy, projected revenues, earnings, costs, capital expenditures and debt levels, and plans and objectives of management for future operations, are forward-looking statements. Such forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those expressed in, or implied by, such statements. These risks and uncertainties include, but are not limited to: the effects of Whiting's voluntary cases under Chapter 11 of the United States Bankruptcy Code (the "Chapter 11 Cases") on Whiting’s liquidity or results of operations or business prospects; the effects of the Chapter 11 Cases on Whiting’s business and the interests of various constituents; declines in, or extended periods of low, oil, NGL or natural gas prices; Whiting’s level of success in exploration, development and production activities; the ability to generate sufficient cash flows from operations to meet the internally funded portion of Whiting’s capital expenditures budget; the ability to obtain external capital to finance exploration and development operations; Whiting’s inability to access oil and gas markets due to market conditions or operational impediments, including any court rulings which may result in the inability to transport oil on the Dakota Access Pipeline; the impact of negative shifts in investor sentiment towards the oil and gas industry; impacts resulting from the allocation of resources among Whiting’s strategic opportunities; the geographic concentration of Whiting’s operations; impacts to financial statements as a result of impairment write-downs and other cash and noncash charges; federal and state initiatives relating to the regulation of hydraulic fracturing and air emissions; revisions to reserve estimates as a result of changes in commodity prices, regulation and other factors; inaccuracies of Whiting’s reserve estimates or assumptions underlying them; the timing of exploration and development expenditures; risks relating to decreases in Whiting’s credit rating; market availability of, and risks associated with, transport of oil and gas; the ability to successfully complete asset dispositions and the risks related thereto; the ability to drill producing wells on undeveloped acreage prior to its lease expiration; shortages of or delays in obtaining qualified personnel or equipment, including drilling rigs and completion services; weakened differentials impacting the price Whiting receives for oil and natural gas; risks relating to any unforeseen liabilities; the impacts of hedging on Whiting’s results of operations; adverse weather conditions that may negatively impact development or production activities; uninsured or underinsured losses resulting from Whiting’s oil and gas operations; lack of control over non-operated properties; failure of Whiting’s properties to yield oil or gas in commercially viable quantities; the impact and costs of compliance with laws and regulations governing Whiting’s oil and gas operations; the potential impact of changes in laws that could have a negative effect on the oil and gas industry; impacts of local regulations, climate change issues, negative public perception of Whiting’s industry and corporate governance standards; the ability to replace Whiting’s oil and natural gas reserves; negative impacts from litigation and legal proceedings; risks related to Whiting’s level of indebtedness, ability to comply with debt covenants and periodic redeterminations of the borrowing base under Whiting’s credit agreement and Whiting’s ability to generate sufficient cash flow from operations to service its indebtedness; unforeseen underperformance of or liabilities associated with acquired properties or other strategic partnerships or investments; competition in the oil and gas industry; any loss of Whiting’s senior management or technical personnel; cybersecurity attacks or failures of Whiting’s telecommunication and other information technology infrastructure; and other risks described under the caption “Risk Factors” in Item 1A of Whiting’s Annual Report on Form 10-K for the period ended December 31, 2019 and subsequent reports on Form 10-Q. Whiting assumes no obligation, and disclaims any duty, to update the forward-looking statements in this presentation. Forward-Looking Statements


SLIDE 3

The “New” Whiting Petroleum MONTANA NORTH DAKOTA Logan Weld COLORADO WYOMING NEBRASKA DJ Basin Weld 490k net acres 89 Mboepd(1) 57 DUC locations(2) 74k net acres 9 Mboepd(1) Corporate HQ Denver Williston Basin North Dakota / Montana Focus on Shareholder Value Creation Morgan The “New” Whiting Petroleum framework for a leading us SHALE UPSTREAM independent After successfully emerging from its financial restructuring, taking proactive steps to refresh its leadership and laying the groundwork to capitalize on the strengths of its portfolio, Whiting Petroleum is positioned to become a leading independent upstream operator in the broader Rockies Refreshed Leadership Commitment to Safety and Sustainability Focus on Free Cash Flow Generation De-leveraged, Flexible Capital Structure Advantaged In-Basin Scale Predictable Asset Profile Daily production as of 2Q’20. DUC locations as of 6/30/20 reflect 12 drill-out wells that are drilled and completed, but not placed on production.


SLIDE 4

The Right Strategy to Create Shareholder Value Where Have Us SHALE Upstream Independents Gone Wrong? How Is The “New” Whiting Petroleum Differentiated? Business models dependent on outspending cash flow and continued access to capital markets Focus and commitment to reducing cost structure, optimizing free cash flow and maintaining disciplined capital outlay Poor capital allocation decisions focused on “growth for the sake of growth” Returns-based business model supported by a de-levered capital structure, with a goal to further de-lever Underperforming well results impacted by “parent-child” interference Well understood and predictable asset base sustained by a robust hedging program Focus on well-level, and not entity-level, returns and cash flows Plans to implement shareholder value-oriented metrics to drive financial (including leverage), operational and strategic initiatives High costs of capital driven by lack of scale Advancement of efficiencies with significant in-basin scale and an opportunistic approach to value-enhancing strategic alternatives Elevated G&A levels relative to cash flow generation, particularly in times of little-to-no development Strong focus on achieving best-in-class G&A per unit of production that aligns with the broader upstream sector outlook Management incentives and governance practices misaligned with shareholders’ best interests Executive management compensation reset and an independent, refreshed Board of Directors aligned with Whiting stakeholders


SLIDE 5

Key Management: Unique Track Record with the Portfolio Represents total shareholder return of Kodiak Oil & Gas from IPO in October 2009 until date of sale announcement on 7/13/14. Net wells completed based on year prior to sale. The new senior management team additions are uniquely positioned to manage the Whiting portfolio due to executive leadership roles with Kodiak Oil & Gas (“Kodiak”), a pure-play Williston operator, acquired by Whiting for approximately $6 billion in 2014 Previously, Mr. Peterson and Mr. Henderson served as the Co-Founder, Chairman & CEO and CFO, respectively, of Kodiak until the closing of the acquisition in December 2014 While in leadership positions at Kodiak, total shareholder returns of >500%(1) were achieved while operating a multi-rig program across the Williston Basin that included development programs of ~100 completed net wells per year(2) Most recently while at SRC Energy, this team managed operations across the DJ Basin, providing further insight into the current Whiting portfolio In addition, a collaboration with key existing operating executives provides continuity for a seamless transition upon emergence James Henderson Chief Financial Officer Served as the EVP and CFO of SRC Energy from 2015 until 2020 Prior to Kodiak, served as the Director of Finance for Aspect Holdings and the Director of Accounting Services at Anadarko Lynn Peterson President & Chief Executive Officer Served as CEO and Chairman of the Board for SRC Energy from 2015 until its acquisition by PDC Energy in January 2020 Prior to Kodiak, was the Co-Founder of CP Resources and began career at Deca Energy and Ernst & Young Currently serves on the Board of Directors for PDC Energy and Denbury Resources Chip Rimer Chief Operating Officer Has served as Whiting’s COO since November 2018 Served as the SVP of US Onshore for Noble Energy after joining in 2002 and serving in various operational roles Began career at ARCO Oil & Gas in 1983, working US onshore areas and held senior operations engineering positions at Vastar Resources and Aspect Resources


SLIDE 6

Fully Refreshed Board: Independent, Qualified and Diverse Vice Chairman, Kayne Anderson Capital Advisors Former Chief Executive Officer & Chairman, SRC Energy Former Senior Vice President, Legal, General Counsel, and Corporate Secretary, ConocoPhillips Founding Partner at Rice Investment Group Former Senior Vice President and Chief Financial Officer, Cimarex Former Vice Chairman / Managing Partner, Deloitte Former Executive Vice President, Environment, Health, Safety & Regulatory & New Frontiers, Noble Energy 36 years of energy investment banking and principal investing experience at Kayne Anderson, UBS, PaineWebber and Dean Witter 40 years of oil & gas industry and management experience at SRC Energy, Kodiak Energy and CP Resources 37 years of oil & gas industry and legal experience at various corporations and law firms 15 years of oil & gas management and investment experience at Rice Energy (CEO), TPH & Co, and Transocean 33 years of oil & gas industry and financial services experience at Cimarex, Apache and Petrie Parkman 31 years of experience at Deloitte and current public board experience at Southwestern Energy and Group 1 Automotive 37 years of oil & gas experience including management, operations and geology at Noble Energy, Chevron, Equinor and Amoco Kevin McCarthy Chairman, Nominating & Governance and Compensation Committee Janet L. Carrig Nominating & Governance Chair, Sustainability Committee Lynn Peterson CEO, Sustainability Committee Susan Cunningham Sustainability Chair, Audit Committee Paul Korus Audit Chair, Nominating & Governance Committee Daniel Rice Audit and Compensation Committee Prior Committee Experience Audit P P P Compensation P P P P P Nominating & Governance P P P P P Sustainability P P P Deep Sector Experience Anne Taylor Compensation Chair, Sustainability Committee Experienced new board: Other board positions by sector 25 Independent Director Diversity 6 Committee Roles


SLIDE 7

Environmental The safety of our employees, contractors and communities is our highest priority Created Workover Rig Taskforce to improve communication, safety and consistency on our locations Use safety performance and company values as a component in vendor selection Commitment to ESG and Safety Measures in Everything We Do Completed entire Board of Directors refreshment consisting of independent, cross-functional and diverse members Reset executive compensation cash salary and bonus targets Sustainability Committee led by independent directors focused on environmental, safety and social responsibility issues and impacts Continued focus on increasing employee and contractor diversity Paid volunteer hours for employees to volunteer at non-profits of their choice Commitment to Whiting values through quarterly awards program for employees living our values Committed to meeting gas capture requirements in North Dakota Implemented vehicle fleet management program, reducing emissions from Whiting vehicles Industry-leading Leak Detection and Repair program that exceeds regulations Safety Four Pillars Of Sustainability Governance Social


SLIDE 8

Mission to Deliver Capital Efficiency and Sustained Cash Flow Balance sheet resilience across cycles MAINTAIN CONSERVATE DEBT METRICS Returns-based business model Predictability: large Pdp resource in well understood basins CONTINUE TO ENHANCE LIQUIDITY portfolio optimization Sustain and Enhance in-basin scale / efficiencies Commitment to reduce costs to become the low-cost basin operator TRANSITION towards sustainable shareholder returns ROBUST HEDGING PROGRAM improved midstream contract terms in chapter 11 prudent capital discipline with full-cycle return focus


SLIDE 9

Repositioned as a Dominant Williston Basin Independent The Whiting Scale Advantage Williston Basin Peer Net Leverage Net Debt + Preferred Equity / LTM EBITDAX Williston Basin Net Acreage (000s) Williston Basin Daily Production (MBOEPD) Source: Company filings and presentations, Rystad, Enverus, Capital IQ. Note: LTM EBITDAX and production figures shown as of 6/30/20. Peers shown pro forma for acquisitions and exclude one-time charges. Peers include CLR, HES, MRO, OAS, OVV, QEP, WPX, NOG. Reflects book value of debt for latest filings. NOG reflects 7/31/20 announced acquisitions, stock for note exchanges, and common stock for preferred share exchanges. NOG Net debt shown as current net debt + preferred equity. OAS shown as E&P only. Reflects WLL post-emergence 9/1/20 net debt of $412mm / LTM EBITDAX. Net debt of $412mm excludes capital lease obligations and letters of credit. Cash balance net of near-term working capital payments. Reflects WLL pre-petition net debt (3/31/20) of $2.9bn / LTM EBITDAX. Net debt of $2.9bn excludes capital lease obligations and letters of credit. With one of the largest footprints in the Williston Basin, Whiting’s renewed focus on leveraging the benefits of scale to drive portfolio optimization and free cash flow Post-filing(1) Pre-Filing(2) Transformed capital structure relative to peers One of the largest footprints across the Williston Basin with blocky acreage across the play Top 3 largest producer in the Williston Basin among independent operators Larger scale allows for operating flexibility to enhance go-forward margins


SLIDE 10

Simplified and De-Levered Capital Structure $750mm RBL Initial borrowing base of $750 million Estimated $412 million net borrowing outstanding at emergence LIBOR + 275-375 with 1% LIBOR floor First borrowing base redetermination scheduled for April 1, 2021 Facility maturity April 1, 2024 65% of PDP oil and natural gas hedges in months 1-12 and 35% of PDP oil and natural gas hedges in months 13-24 following emergence Common Equity Approximately 38.1mm shares outstanding(2) and 500mm authorized at emergence Existing Whiting shareholders to receive 1 new share of common stock for approximately every 75 shares previously owned Source: WLL Disclosure Statement. Post-filing debt reflects most recent estimate as of September 1, 2020. Net debt reflects pre-filing cash of $566mm and post-filing cash of $13mm, which is net of near-term working capital payments. Net debt excludes capital lease obligations and letters of credit. Approximately 3.1mm incremental shares are reserved for potential future distribution to certain general unsecured claimants. Net Debt(1): $2,872 $412 ($ in millions) Total debt reduction of ~$3 billion with annual interest expense lowered by ~$140mm following Whiting’s reorganization Whiting capital struture at emegence Pre-Filing Post-Filing (1)


SLIDE 11

Opportunity-Rich Consolidation Landscape Value-Enhancing Opportunity Set Williston Basin Locator Map Whiting uniquely positioned to consider value-enhancing consolidation in the Williston Basin Low-leverage capital structure positions Whiting as a desirable M&A counterparty Would target Tier 1 Williston Basin acreage to enhance efficiencies in the Whiting portfolio Focused on protecting the balance sheet at all costs Deep M&A experience among management and Board of Directors, with a track record of leading successful transactions Commitment to maintaining a low-cost structure over the long-term to maximize margins and preserve capital Deliver long-term, repeatable growth via inventory at attractive breakeven pricing Consolidation to be viewed through the lens of increasing and accelerating the top priority of maximizing shareholder value Whiting Acreage Montana North Dakota Note: Southern Pronghorn Whiting acreage not shown Source: Enverus.


SLIDE 12

Downside Protection Enhances Cash Flow Visibility OIL NATURAL GAS


SLIDE 13

Business Plan Submitted on June 29, 2020 Benchmark pricing as of 5/26/20. Wells frac’d and placed on production (“POP”) in prior 2021 business plan reflect all DUC wells. NOTICE TO RECIPIENTS: The following is a summary of the 2021 business plan submitted on June 29, 2020. New management has not confirmed the reasonableness of such numbers and does not expect to provide guidance prior to the release of 3rd quarter earnings in early November 2020 Benchmark Pricing(1) WTI Oil ($/Bbl) $38.03 Mt. Belvieu Propane ($/Boe) $18.11 Henry Hub Gas ($/Mcf) $2.67 Realized Pricing WTI Oil ($/Bbl) $33.99 Mt. Belvieu Propane ($/Boe) $8.10 Henry Hub Gas ($/Mcf) $0.67 Operating Expenses ($mm) $320 Operating Expenses / Boe $10.10 Cash G&A ($mm) $62 Capital Expenditures ($mm) $44 Wells Spud / Frac’d / POP 0 / 13 / 13(2) Average Daily Production Oil (Mbo/d) 49 NGL (Mboe/d) 19 Gas (Mboe/d) 20 EBITDA ($mm) $300 Previous 2021E (calendar year) BUSINESS PLAN