8-K
INFINITY NATURAL RESOURCES, INC. (INR)
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): February 18, 2026
INFINITY NATURAL RESOURCES, INC.
(Exact name of registrant as specified in its charter)
| Delaware | 001-42499 | 99-3407012 |
|---|---|---|
| (State or other jurisdiction<br> <br>of incorporation) | (Commission<br> <br>File Number) | (I.R.S. Employer<br> <br>Identification No.) |
2605 Cranberry Square
Morgantown, WV 26508
(Address of principal executive offices, including zip code)
(304) 212-2350
(Registrant’s telephone number, including area code)
Not Applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ☐ | 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) |
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| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
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| ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
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Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading<br> <br>Symbol(s) | Name of each exchange<br> <br>on which registered |
|---|---|---|
| Class A common stock, par value $0.01 per share | INR | The 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. ☐
INTRODUCTORY NOTE
On February 23, 2026, Infinity Natural Resources, LLC (“INR Holdings”) and Northern Oil and Gas Inc. (“Northern” and, together with INR Holdings, the “Buyers”) completed their previously announced acquisitions (the “Antero Acquisitions”) of (i) certain rights, title and interests in upstream oil and gas properties, rights and related assets located in the State of Ohio (the “Upstream Assets”) from Antero Resources Corporation, Antero Minerals LLC and Monroe Pipeline LLC (collectively, the “Upstream Sellers”), pursuant to that certain purchase and sale agreement (the “Upstream Purchase Agreement”), dated December 5, 2025, by and among INR Holdings, Northern and the Upstream Sellers, for a combined cash purchase price of approximately $800 million and (ii) certain gathering, compression and transportation systems, water facilities and systems, equipment and related assets located in the counties of Belmont, Guernsey, Monroe, Noble and Washington, Ohio (the “Midstream Assets” and, together with the Upstream Assets, the “Antero Assets”) from Antero Midstream LLC, Antero Water LLC and Antero Treatment LLC (collectively, the “Midstream Sellers”) pursuant to that certain purchase and sale agreement (the “Midstream Purchase Agreement” and, together with the Upstream Purchase Agreement, the “Antero Purchase Agreements”), dated December 5, 2025, by and among INR Holdings, Northern and the Midstream Sellers, for a combined cash purchase price of approximately $400 million.
The foregoing descriptions of the Upstream Purchase Agreement and Midstream Purchase Agreement and the transactions contemplated thereby are not complete and are qualified in their entirety by reference to the full text of each of the Upstream Purchase Agreement and Midstream Purchase Agreement, copies of which were attached as Exhibit 2.1 and Exhibit 2.2, respectively, to Infinity Natural Resources, Inc.’s (the “Company”) Current Report on Form 8-K filed with the Securities and Exchange Commission (the “SEC”) on December 8, 2025. The summary of the Antero Acquisitions and the Antero Purchase Agreements set forth under Item 1.01 of the Company’s Current Report on Form 8-K filed with the SEC on December 8, 2025 is incorporated herein by reference.
Item 1.01 Entry into a Material Definitive Agreement.
Antero Upstream Purchase Agreement Amendment
Under the Upstream Purchase Agreement, INR Holdings was to acquire an undivided 51% interest, and Northern was to acquire an undivided 49% interest, in the Upstream Assets. On February 22, 2026, the Buyers and Upstream Sellers entered into an amendment to the Upstream Purchase Agreement (the “Upstream Amendment”), pursuant to which, among other amendments, INR Holdings will acquire an undivided 60% interest, and Northern will acquire an undivided 40% interest, in the Upstream Assets. As a result of the Upstream Amendment, INR Holdings’ share of the unadjusted purchase price for the Upstream Assets is $480 million, and Northern’s share of the purchase price for the Upstream Assets is $320 million (in each case, subject to adjustment in accordance with the terms of the Upstream Purchase Agreement).
Antero Midstream Purchase Agreement Amendment
Under the Midstream Purchase Agreement, INR Holdings was to acquire an undivided 51% interest, and Northern was to acquire an undivided 49% interest, in the Midstream Assets. On February 22, 2026, the Buyers and Midstream Sellers entered into an amendment to the Midstream Purchase Agreement (the “Midstream Amendment” and, together with the Upstream Amendment, the “Antero Purchase Agreements Amendments”), pursuant to which, among other amendments, INR Holdings will acquire an undivided 60% interest, and Northern will acquire an undivided 40% interest, in the Midstream Assets. As a result of the Midstream Amendment, INR Holdings’ share of the unadjusted purchase price for the Midstream Assets is $240 million, and Northern’s share of the purchase price for the Midstream Assets is $160 million (in each case, subject to adjustment in accordance with the terms of the Midstream Purchase Agreement).
The foregoing descriptions of the Upstream Amendment and Midstream Amendment and the transactions contemplated thereby are not complete and are qualified in their entirety by reference to the full text of each of the Upstream Amendment and Midstream Amendment, copies of which are filed herewith as Exhibit 2.3 and Exhibit 2.4, respectively, and are incorporated herein by reference.
Securities Purchase Agreement
On February 18, 2026, the Company entered into a Securities Purchase Agreement (the “Securities Purchase Agreement”) with affiliates of Quantum Capital Group (“Quantum”) and affiliates of Carnelian Energy Capital Management, L.P. (“Carnelian”) (each a “Preferred Purchaser” and, collectively, the “Preferred Purchasers”), to issue and sell at the Preferred Closing (as defined below) 350,000 shares of newly designated Series A Convertible Preferred Stock of the Company, par value $0.01 per share (the “Series A Preferred Stock”), at a price of $1,000 per share (the “Initial Liquidation Preference”) for an aggregate purchase price of $350 million (the “Preferred Investment”). The Securities Purchase Agreement contains customary representations, warranties and covenants of the Company and the Preferred Purchasers.
The foregoing description of the Securities Purchase Agreement does not purport to be complete and is subject to, and qualified in its entirety by, the full text of the Securities Purchase Agreement, which is attached hereto as Exhibit 10.1, and is incorporated herein by reference.
The Securities Purchase Agreement has been filed to provide investors and securityholders with information regarding their terms and conditions. It is not intended to provide any other information about the Preferred Purchasers or the Company. The Securities Purchase Agreement contains representations, warranties, and covenants of the parties thereto made to and solely for the benefit of each other, and such representations, warranties and covenants may be subject to materiality and other qualifiers applicable to the contracting parties that differ from those that may be viewed as material to investors. Accordingly, investors and securityholders should not rely on the representations, warranties, and covenants as characterizations of the actual state of facts. Moreover, information concerning the subject matter of the representations, warranties, and covenants may change after the date of the Securities Purchase Agreement, which subsequent information may or may not be fully reflected in the Company’s public disclosures.
Issuance of Preferred Stock
On February 23, 2026, the Company issued and sold an aggregate 350,000 shares of Series A Preferred Stock to the Preferred Purchasers. Quantum acquired 275,000 shares of Series A Preferred Stock and Carnelian acquired 75,000 shares of Series A Preferred Stock, in each case pursuant to the Securities Purchase Agreement (the “Preferred Closing”). The Company used the proceeds of the Preferred Investment to fund a portion of the Antero Acquisitions and will use any remaining proceeds for general corporate purposes.
Certificate of Designation
Each share of Series A Preferred Stock has the powers, designations, preferences, and other rights of the shares of such series as are set forth in the Certificate of Designation of the Series A Preferred Stock filed by the Company with the Secretary of State of the State of Delaware on February 23, 2026 (the “Certificate of Designation”). Holders of Series A Preferred Stock are entitled to dividends (i) at the
rate of 8% per annum until but excluding the five year anniversary of the Preferred Closing, and (ii) at the rate of 12% per annum on and after the five year anniversary of the Preferred Closing. Holders of Series A Preferred Stock will also be entitled to participate in any dividends or other distributions declared or paid in cash on the shares of Class A common stock of the Company, par value $0.01 per share (“Class A Common Stock”), on an as-converted basis. Dividends are payable quarterly in arrears, and dividends accrued through and including the second anniversary of the Preferred Closing may be paid, at the Company’s option, in cash or by increasing the Initial Liquidation Preference of each share of Series A Preferred Stock by the amount of the applicable dividend. After the second anniversary of the Preferred Closing, dividends must be paid in cash; however, to the extent the Company is restricted from paying dividends in cash, dividends will accrue as an increase to the Initial Liquidation Preference and will incur a 2% per annum increase to the regular dividend rate then in effect. In each case, the Company’s ability to pay cash dividends is subject to the restrictions under the Credit Agreement (as defined below). The Series A Preferred Stock rank senior to the Class A Common Stock with respect to distribution rights and rights upon liquidation, dissolution or winding up of the Company (“Liquidation”), on parity with any class or series of capital stock of the Company expressly designated as ranking on parity with the Series A Preferred Stock with respect to distribution rights and rights upon Liquidation, junior to any class or series of capital stock of the Company expressly designated as ranking junior to the Series A Preferred Stock with respect to distribution rights and rights upon Liquidation and junior in right of payment to the Company’s existing and future indebtedness. Upon a Liquidation, each share of Series A Preferred Stock is entitled to receive an amount equal to the greater of (i) a liquidation preference equal to the greater of (A) an internal rate of return of 13% per annum on the Initial Liquidation Preference or (B) a 1.3x return on the Initial Liquidation Preference and (ii) the amount such holder would have received in respect of the number of shares of Class A Common Stock that would be issuable upon conversion of such share of Series A Preferred Stock.
Conversion Rights
Each holder of Series A Preferred Stock has the right, at its option, to convert its Series A Preferred Stock, in whole or in part, into fully paid and non-assessable shares of Class A Common Stock at a conversion price equal to $21.39 per share, subject to certain customary adjustments; provided that Quantum does not have the ability to convert prior to the expiration or early termination of the applicable waiting period, if any, under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules and regulations promulgated thereunder (the “HSR Act”).
Additionally, until receipt of the stockholder approvals contemplated by Section 312.03 of the New York Stock Exchange (“NYSE”) Listed Company Manual with respect to the issuance of shares of Class A Common Stock upon conversion of the Series A Preferred Stock in excess of the limitations imposed by such rules, the aggregate number of shares of Class A Common Stock issuable or deliverable upon conversion of any Series A Preferred Stock, together with any shares of Class A Common Stock held by the Purchasers on the date of the Preferred Closing (subject to proportionate adjustment for stock dividends, stock splits or stock combinations with respect to the Class A Common Stock), is capped at 19.9% of the shares of Class A Common Stock issued and outstanding immediately prior to the Preferred Closing.
Finally, the Company has the right beginning three years after the Preferred Closing to convert any shares of Series A Preferred Stock into fully paid and non-assessable shares of Class A Common Stock if the last reported sales price of its Class A Common Stock for any 20 of the last 30 trading days exceeds 140% of the conversion price.
Redemption and Repurchase Rights
The Company may, at its option, redeem all or any of the Series A Preferred Stock for cash at any time beginning five years after the Preferred Closing at a price resulting in the holders of Series A Preferred Stock achieving an internal rate of return of 15% per annum on the Initial Liquidation Preference. Upon a change of control of the Company, any share of Series A Preferred Stock to be repurchased would be entitled to receive an amount in cash equal to the greater of (i) an internal rate of return of 13% per annum on the Initial Liquidation Preference or (ii) a 1.3x return on the Initial Liquidation Preference.
Voting and Consent Rights
Holders of Series A Preferred Stock generally are entitled to vote with the holders of the shares of Class A Common Stock on all matters submitted for a vote of holders of shares of Class A Common Stock (voting together with the holders of shares of Class A Common Stock as one class) on an as-converted basis; provided that no holder of the Series A Preferred Stock will have voting rights with respect to any such shares held by such holder in respect of election of members of the Company’s board of directors (the “Board”) prior to the expiration or early termination of the applicable waiting period, if any, under the HSR Act.
Additionally, subject to certain exceptions and ownership thresholds, the consent of the holders of Series A Preferred Stock holding a majority of the then outstanding shares of Series A Preferred Stock is required for, among other things, certain amendments to the Company’s organizational documents, issuances of senior or parity securities, payment of dividends, delisting from the NYSE or deregistration from Section 12 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), formation of non-wholly owned subsidiaries, the incurrence of debt up to a certain threshold and any deviation from certain enumerated hedging requirements.
Registration Rights Agreement
On February 23, 2026, the Company and the Preferred Purchasers entered into a Registration Rights Agreement (the “Registration Rights Agreement”), pursuant to which the Preferred Purchasers have certain customary registration rights, including rights with respect to the filing of a shelf registration statement, underwritten offering rights and piggyback rights with respect to any shares of Class A Common Stock of the Company issuable upon conversion of the Series A Preferred Stock.
The foregoing description of the Registration Rights Agreement does not purport to be complete and is subject to, and qualified in its entirety by, the full text of the Registration Rights Agreement, which is attached hereto as Exhibit 4.1, and is incorporated herein by reference.
Amendment to INR Holdings LLC Agreement
On February 23, 2026, INR Holdings entered into Amendment No. 1 to the Second Amended and Restated Limited Liability Company Agreement of INR Holdings, dated as of January 30, 2025 (the “LLC Agreement Amendment”) to, among other things, create a class of convertible preferred units with rights, preferences and privileges that mirror the Series A Preferred Stock. The convertible preferred units were created in connection with the Preferred Closing. The LLC Agreement Amendment became effective the same day.
The description of the LLC Agreement Amendment does not purport to be complete and is subject to, and qualified in its entirety by reference to, the LLC Agreement Amendment, a copy of which is attached hereto as Exhibit 10.2 and is incorporated herein by reference.
Amendment to Credit Agreement
On February 23, 2026, INR Holdings entered into that certain Fourth Amendment to Credit Agreement (the “Credit Agreement Amendment”), which amends that certain Credit Agreement, dated as of September 25, 2024, by and among INR Holdings, the lenders from time to time party thereto and Citibank, N.A., as the administrative agent, collateral agent and an issuing bank (as previously amended, the “Existing Agreement” and, as amended by the Credit Agreement Amendment, the “Credit Agreement”).
The Credit Agreement Amendment, among other things, amends certain provisions to (i) increase the aggregate elected commitment amount from $375,000,000 to $875,000,000, (ii) increase the borrowing base from $375,000,000 to $875,000,000 and (iii) remove the credit spread adjustment that was previously applicable to all SOFR borrowings under the Credit Agreement.
The description of the Credit Agreement Amendment does not purport to be complete and is subject to, and qualified in its entirety by reference to, the Credit Agreement Amendment, a copy of which is attached hereto as Exhibit 10.3 and is incorporated herein by reference.
Item 2.01 Completion of Acquisition or Disposition of Assets
The information set forth in the Introductory Note and Item 1.01 of this Current Report on Form 8-K is incorporated by reference into this Item 2.01.
Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of the Registrant.
The information set forth under Item 1.01 of this Current Report on Form 8-K under “Amendment to Credit Agreement” is incorporated herein by reference.
Item 3.02 Unregistered Sales of Equity Securities.
The information contained in Item 1.01 of this Current Report is incorporated herein by reference.
As described in Item 1.01 of this Current Report, the Company issued shares of Series A Preferred Stock to the Preferred Purchasers. This issuance and sale of the Series A Preferred Stock was in reliance upon an exemption from the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”) pursuant to Section 4(a)(2) and/or Rule 506 of Regulation D as a transaction by an issuer not involving any public offering. The Company’s reliance on Section 4(a)(2) of the Securities Act and/or Rule 506 of Regulation D is based upon the following factors: (a) the issuance of the shares of Series A Preferred Stock was an isolated private transaction by the Company that did not involve a public offering, (b) there were only two recipients and (c) representations from each Preferred Purchaser to support such exemption, including with respect to each Preferred Purchaser’s status as an “accredited investor” (as that term is defined in Rule 501(a) of Regulation D promulgated under Section 4(a)(2) of the Securities Act) and that the shares of Series A Preferred Stock were acquired for investment purposes and not with a view to or for sale in connection with any distribution thereof.
Item 3.03 Material Modifications to Rights of Security Holders.
The information set forth in Items 1.01 and 5.03 of this Current Report on Form 8-K is incorporated herein by reference.
Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
Director Appointment
In connection with the Preferred Investment, Carnelian is entitled to appoint one individual to the Board. Carnelian will have the exclusive right to appoint and elect one director to the Board for so long as Carnelian (i) owns, of record or beneficially, all of the shares of Series A Preferred Stock issued to Carnelian at the Preferred Closing and (ii) holds of record and beneficially owns (within the meaning of Rule 13d-3 under the Exchange Act) more than 3% of the outstanding shares of Class A Common Stock and the Class B common stock, par value $0.01 per share, of the Company, on a fully diluted basis, including the shares of Class A Common Stock issuable upon conversion of shares of Series A Preferred Stock.
In connection with the Preferred Investment and pursuant to the Certificate of Designation, Carnelian nominated Matthew Kelly to serve on the Board, and Mr. Kelly was appointed to the Board effective February 23, 2026.
Matthew Kelly is a Managing Director at Carnelian Energy Capital Management, L.P., where he is responsible for leading investment sourcing regions, transaction due diligence and execution and monitoring active portfolio companies. Mr. Kelly joined Carnelian in 2015 and has more than a decade of experience in the energy industry. In his time with Carnelian, Mr. Kelly has worked directly with more than 15 upstream and midstream companies throughout the investment lifecycle and focused across numerous North American oil and gas basins under a variety of investment strategies. Prior to Carnelian, Mr. Kelly was an Investment Banking Analyst with Wells Fargo Securities’ Energy & Power Investment Banking Group from June 2013 to February 2015, where he focused on mergers and acquisitions, capital markets financings and strategic advisory assignments for clients across the upstream, midstream and oilfield services sectors. Mr. Kelly received a B.B.A. and an M.P.A. in Accounting in 2013 from The University of Texas at Austin.
Mr. Kelly will not receive any compensation for his services as a director. Mr. Kelly entered into the Company’s standard form of indemnification agreement, the form of which has been filed with the Company’s Annual Report on Form 10-K for the year ended December 31, 2024. The Board affirmatively determined that Mr. Kelly is an independent director within the meaning of the New York Stock Exchange listing standards. There are no family relationships between Mr. Kelly and any other Board member or executive officer. Mr. Kelly is not a party to any transaction with any related person required to be disclosed pursuant to Item 404(a) of Regulation S-K other than the transactions contemplated by the Securities Purchase Agreement.
Director Resignations
On February 23, 2026, Brian Seline and Sarah James each resigned, effective immediately, as a director of the Board. Mr. Seline’s and Ms. James’ resignation was not because of any disagreement with the Company on any matter relating to the Company’s operations, policies or practices.
Item 5.03 Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year.
In connection with the issuance of Series A Preferred Stock, on February 23, 2026, the Company filed the Certificate of Designation with respect to the Series A Preferred Stock with the Secretary of State of the State of Delaware. The Certificate of Designation became effective that same day.
Item 1.01 of this Current Report on Form 8-K contains a summary of the terms of the Series A Preferred Stock and the Certificate of Designation, which is incorporated into this Item 5.03 by reference.
A copy of the Certificate of Designation is attached hereto as Exhibit 3.1 and is incorporated herein by reference.
Item 7.01 Regulation FD Disclosure.
On February 23, 2026, the Company issued a press release announcing the closing of the Antero Acquisitions and the Preferred Investment. A copy of the press release is furnished as Exhibit 99.1 hereto and incorporated herein by reference.
The information furnished in this Current Report pursuant to Item 7.01, including Exhibit 99.1, shall not be deemed “filed” for any purpose, including for purposes of Section 18 of the Exchange Act or otherwise be subject to the liabilities of that Section, nor shall it be deemed to be incorporated by reference in any filing of the Company under the Securities Act or the Exchange Act, except as expressly set forth by specific reference in such filing.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
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.
| INFINITY NATURAL RESOURCES, INC. | |
|---|---|
| By: | /s/ Zack Arnold |
| Zack Arnold | |
| President and Chief Executive Officer |
Dated: February 23, 2026
EX-2.3
Exhibit 2.3
FIRST AMENDMENT TO PURCHASE AND SALE AGREEMENT
This FIRST AMENDMENT TO PURCHASE AND SALE AGREEMENT (this “Amendment”) is dated as of February 22, 2026, by and between Antero Resources Corporation, a Delaware corporation (“Antero Resources”), Antero Minerals LLC, a Delaware limited liability company (“Antero Minerals”) and Monroe Pipeline LLC, a Delaware limited liability company (“Monroe Pipeline” and together with Antero Resources and Antero Minerals, collectively, “Seller”), on the one hand, Infinity Natural Resources LLC, a Delaware limited liability company (“Infinity”), and Northern Oil and Gas, Inc., a Delaware corporation (“NOG”, and together with Infinity, collectively, “Buyer”), on the other hand. Seller, Infinity and NOG are each a “Party”, and collectively the “Parties”. Capitalized terms used but not defined in this Amendment shall have the meanings given to such terms in the Purchase Agreement (as hereinafter defined).
RECITALS
WHEREAS, the Parties entered into that certain Purchase and Sale Agreement, dated December 5, 2025 (as amended by this Amendment, and as may be further amended from time to time, the “Purchase Agreement”), whereby, among other things, Seller agreed to sell, and Buyer agreed to purchase, the Assets.
WHEREAS, the Parties desire to amend the Purchase Agreement as more specifically set forth in this Amendment.
AGREEMENT
NOW, THEREFORE, in consideration of the premises and of the mutual promises, representations, warranties, covenants, conditions, and agreements contained herein, and for other valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties, intending to be legally bound by the terms hereof, agree as follows:
| 1. | Amendment to Section 1.1. Effective as of the original Execution Date,<br>Section 1.1 (Defined Terms) to the Purchase Agreement is hereby amended as follows: |
|---|---|
| (a). | The definition of “Buyer Pro Rata Share” is hereby amended and restated in its entirety with the<br>following: ““Buyer Pro Rata Share” means, with respect to (a) Infinity, 60%, and (b) NOG, 40%.” |
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| (b). | The definition of “Infinity Assets” is hereby amended and restated in its entirety with the<br>following: ““Infinity Assets” means (a) an undivided 60% of all right, title and interest in and to the Specified Assets, and (b) all right, title and interest in and to the Infinity Only Assets.”<br> |
| --- | --- |
| (c). | The definition of “NOG Assets” is hereby amended and restated in its entirety with the following:<br>““NOG Assets” means an undivided 40% of all right, title and interest in and to the Specified Assets.” |
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| (d). | The definition of “Assets” is hereby amended by adding the following as the final two subparts of<br>such definition: |
| --- | --- |
| i. | “(s) all lessor royalties, overriding royalty interest,<br>non-participating royalty interests, production payments, net profits interests, carried interests, reversionary interests and all other Royalties and any other similar interests located within the Sale Area,<br>including those set forth on Exhibit A-1; and |
| --- | --- |
| ii. | (t) the spill response trailers located on the Andes pad and Krupa pad.” |
| --- | --- |
| 2. | Amendment to Section 7.1(f). Effective as of the original Execution Date,<br>Section 7.1(f) (Conduct of Business) to the Purchase Agreement is hereby amended and restated in its entirety with the provision set forth on Annex I. |
| --- | --- |
| 3. | Amendment to Exhibit A-1. Effective as of the original Execution<br>Date, Exhibit A-1 (Leases; Mineral Interests) to the Purchase Agreement is hereby amended by adding the overriding royalty interests listed on Annex II Part 1 and the leases on Annex II Part<br>2. |
| --- | --- |
| 4. | Amendment to Exhibit B. Effective as of the original Execution Date, Exhibit B (Wells; Well PadLocations) to the Purchase Agreement is hereby amended by adding the Wells listed on Annex III Part 1. |
| --- | --- |
| 5. | Amendment to Exhibit B. Effective as of the original Execution Date, Exhibit B (P&A Wells) to<br>the Purchase Agreement is hereby amended by adding the Wells listed on Annex III Part 2. |
| --- | --- |
| 6. | Amendment to Exhibit E. Effective as of the original Execution Date, Exhibit E (TransferredVehicles) to the Purchase Agreement is hereby amended by adding the Transferred Vehicles listed on Annex IV. |
| --- | --- |
| 7. | Amendment to Exhibit O. Effective as of the original Execution Date, Exhibit O (Certain ApplicableContracts) to the Purchase Agreement is hereby amended by deleting the contracts listed on Annex V. |
| --- | --- |
| 8. | Amendment to Schedule 1.1(cc). Effective as of the original Execution Date, Schedule 1.1(cc) (CertainExcluded Assets) to the Purchase Agreement is hereby amended as set forth on Annex VI. |
| --- | --- |
| 9. | Amendment to Schedule 7.5. Effective as of the original Execution Date, the Purchase Agreement is hereby<br>amended by adding Annex VII as Schedule 7.5 (Assumed Litigation) to the Purchase Agreement. |
| --- | --- |
| 10. | Amendment to Schedule 8.4. Effective as of the original Execution Date, Schedule 8.4 (Consents)<br>to the Purchase Agreement is hereby amended by deleting the contracts listed on Annex VIII. |
| --- | --- |
| 11. | Amendment to Schedules 8.7 (Litigation) and 8.18(a) (Royalties and WorkingInterest Payments). Schedule 8.7 (Litigation) and Schedule 8.18(a) (Royalties and Working Interest Payments) to the Purchase Agreement is hereby amended to add the matter set forth on Annex IX.<br> |
| --- | --- |
| 12. | Amendment to Schedule 8.8(a). Effective as of the original Execution Date, Schedule 8.8(a) (MaterialContracts) to the Purchase Agreement is hereby amended as set forth on Annex X. |
| --- | --- |
| 13. | Direction Under Section 16.4 of the Purchase Agreement. The Parties acknowledge and<br>agree that Infinity hereby directs Seller pursuant to Section 16.4 of the Purchase Agreement to convey certain Assets to INR Ohio, LLC pursuant to the Instruments of Conveyance, and further pursuant to the terms thereof that Infinity and INR<br>Ohio, LLC shall be jointly and severally liable for any and all obligations of Infinity as Buyer under the Purchase Agreement with respect thereto. |
| --- | --- |
| 14. | Compliance with the Purchase Agreement. The Parties acknowledge and agree that this Amendment is in<br>compliance with the Purchase Agreement, having been prepared pursuant to Section 16.12 of the Purchase Agreement, and constitutes a valid amendment, binding on the Parties. |
| --- | --- |
| 15. | Incorporation by Reference. Sections 1.2 (References and Rules of Construction), 16.1<br>(Exhibits and Schedules), 16.4 (Assignment), 16.10 (Entire Agreement; Conflicts), 16.11 (Parties in Interest), 16.12 (Amendment), 16.13 (Waiver; Rights Cumulative), 16.14 (Conflict of Law Jurisdiction,Venue; Jury Waiver), 16.16 (Severability) and 16.17 (Counterparts) of the Purchase Agreement are incorporated herein by reference and shall apply to the terms and provisions of this Amendment and the Parties mutatismutandis. |
| --- | --- |
[Signature Pages Follow]
IN WITNESS WHEREOF, the Parties have executed this Amendment as of the date first set forth above.
| SELLER: | |
|---|---|
| ANTERO RESOURCES CORPORATION | |
| Name: | /s/ Brendan Krueger |
| By: | Brendan Krueger |
| Title: | Chief Financial Officer and Treasurer |
| ANTERO MINERALS LLC | |
| Name: | /s/ Brendan Krueger |
| By: | Brendan Krueger |
| Title: | Chief Financial Officer and Treasurer |
| MONROE PIPELINE LLC | |
| Name: | /s/ Brendan Krueger |
| By: | Brendan Krueger |
| Title: | Chief Financial Officer and Treasurer |
Signature Page toFirst Amendment to Purchase and Sale Agreement
| BUYER: | |
|---|---|
| INFINITY NATURAL RESOURCES LLC | |
| Name: | /s/ Zack Arnold |
| By: | Zack Arnold |
| Title: | President and Chief Executive Officer |
| NORTHERN OIL AND GAS, INC. | |
| Name: | /s/ Nicholas O’Grady |
| By: | Nicholas O’Grady |
| Title: | Chief Executive Officer |
Signature Page toFirst Amendment to Purchase and Sale Agreement
EX-2.4
Exhibit 2.4
FIRST AMENDMENT TO PURCHASE AND SALE AGREEMENT
This FIRST AMENDMENT TO PURCHASE AND SALE AGREEMENT (this “Amendment”) is dated as of February 22, 2026, by and between Antero Midstream LLC, a Delaware limited liability company (“Antero Midstream”), Antero Water LLC, a Delaware limited liability company (“Antero Water”), and Antero Treatment LLC, a Delaware limited liability company (“Antero Treatment” and together with Antero Midstream and Antero Water, collectively, “Seller”), on the one hand, Infinity Natural Resources LLC, a Delaware limited liability company (“Infinity”), and Northern Oil and Gas, Inc., a Delaware corporation (“NOG”, and together with Infinity, collectively, “Buyer”), on the other hand. Seller, Infinity and NOG are each a “Party”, and collectively the “Parties”. Capitalized terms used but not defined in this Amendment shall have the meanings given to such terms in the Purchase Agreement (as hereinafter defined).
RECITALS
WHEREAS, the Parties entered into that certain Purchase and Sale Agreement, dated December 5, 2025 (as amended by this Amendment, and as may be further amended from time to time, the “Purchase Agreement”), whereby, among other things, Seller agreed to sell, and Buyer agreed to purchase, the Assets.
WHEREAS, the Parties desire to amend the Purchase Agreement as more specifically set forth in this Amendment.
AGREEMENT
NOW, THEREFORE, in consideration of the premises and of the mutual promises, representations, warranties, covenants, conditions, and agreements contained herein, and for other valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties, intending to be legally bound by the terms hereof, agree as follows:
| 1. | Amendment to Section 1.1. Effective as of the original Execution Date,<br>Section 1.1 (Defined Terms) to the Purchase Agreement is hereby amended as follows: |
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| (a). | The definition of “Buyer Pro Rata Share” is hereby amended and restated in its entirety with the<br>following: ““Buyer Pro Rata Share” means, with respect to (a) Infinity, 60%, and (b) NOG, 40%.” |
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| (b). | The definition of “Infinity Assets” is hereby amended and restated in its entirety with the<br>following: ““Infinity Assets” means (a) an undivided 60% of all right, title and interest in and to the Specified Assets, and (b) all right, title and interest in and to the Infinity Only Assets.”<br> |
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| (c). | The definition of “NOG Assets” is hereby amended and restated in its entirety with the following:<br>““NOG Assets” means an undivided 40% of all right, title and interest in and to the Specified Assets.” |
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| 2. | Amendment to Section 5.1(c). Effective as of the original Execution Date,<br>Section 5.1(c) (Conduct of Business) to the Purchase Agreement is hereby amended and restated in its entirety with the language set forth on Annex I – Part I. |
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| 3. | Amendment to Section 5.5. Effective as of the original Execution Date,<br>Section 5.5 (Reserved) to the Purchase Agreement is hereby amended and restated in its entirety with the provision set forth on Annex I – Part II. |
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| 4. | Amendment to Exhibit E. Effective as of the original Execution Date, Exhibit E (TransferredVehicles) to the Purchase Agreement is hereby amended by adding the Transferred Vehicles listed on Annex II |
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| 5. | Amendment to Schedule 5.2. Effective as of the original Execution Date, Schedule 5.2 (GovernmentalBonds) to the Purchase Agreement is hereby amended and restated in its entirety as set forth on Annex III. |
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| 6. | Amendment to Schedule 6.8(a). Effective as of the original Execution Date, Schedule 6.8(a) (MaterialContracts) to the Purchase Agreement is hereby amended by adding the contract listed on Annex IV. |
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| 7. | Amendment to Schedule 6.30(a). Effective as of the original Execution Date, Schedule 6.30(a) (Laborand Employment Matters) to the Purchase Agreement is hereby amended by adding the employees listed on Annex V. |
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| 8. | Amendment to Schedule 14.1. Effective as of the original Execution Date, Schedule 14.1 (BusinessEmployees) to the Purchase Agreement is hereby amended by adding the employees listed on Annex V. |
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| 9. | Direction Under Section 15.4 of the Purchase Agreement. The Parties acknowledge and<br>agree that Infinity hereby directs Seller pursuant to Section 15.4 of the Purchase Agreement to convey certain Assets to INR Midstream, LLC pursuant to the Instruments of Conveyance, and further pursuant to the terms thereof that Infinity and<br>INR Midstream, LLC shall be jointly and severally liable for any and all obligations of Infinity as Buyer under the Purchase Agreement with respect thereto. |
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| 10. | Compliance with the Purchase Agreement. The Parties acknowledge and agree that this Amendment is in<br>compliance with the Purchase Agreement, having been prepared pursuant to Section 15.12 of the Purchase Agreement, and constitutes a valid amendment, binding on the Parties. |
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| 11. | Incorporation by Reference. Sections 1.2 (References and Rules of Construction), 15.1<br>(Exhibits and Schedules), 15.4 (Assignment), 15.10 (Entire Agreement; Conflicts), 15.11 (Parties in Interest), 15.12 (Amendment), 15.13 (Waiver; Rights Cumulative), 15.14 (Conflict of Law Jurisdiction,Venue; Jury Waiver), 15.16 (Severability) and 15.17 (Counterparts) of the Purchase Agreement are incorporated herein by reference and shall apply to the terms and provisions of this Amendment and the Parties mutatismutandis. |
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[Signature Pages Follow]
IN WITNESS WHEREOF, the Parties have executed this Amendment as of the date first set forth above.
| SELLER: | |
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| ANTERO MIDSTREAM LLC | |
| Name: | /s/ Justin Agnew |
| By: | Justin Agnew |
| Title: | Chief Financial Officer and Vice President – Finance |
| ANTERO WATER LLC | |
| Name: | /s/ Justin Agnew |
| By: | Justin Agnew |
| Title: | Chief Financial Officer and Vice President – Finance |
| ANTERO TREATMENT LLC | |
| Name: | /s/ Justin Agnew |
| By: | Justin Agnew |
| Title: | Chief Financial Officer and Vice President – Finance |
Signature Page toFirst Amendment to Purchase and Sale Agreement
| BUYER: | |
|---|---|
| INFINITY NATURAL RESOURCES LLC | |
| Name: | /s/ Zack Arnold |
| By: | Zack Arnold |
| Title: | President and Chief Executive Officer |
| NORTHERN OIL AND GAS, INC. | |
| Name: | /s/ Nicholas O’Grady |
| By: | Nicholas O’Grady |
| Title: | Chief Executive Officer |
Signature Page toFirst Amendment to Purchase and Sale Agreement
EX-3.1
Exhibit 3.1
Final Version
CERTIFICATE OF DESIGNATION
OF
SERIES A CONVERTIBLEPREFERRED STOCK
OF
INFINITY NATURAL RESOURCES, INC.
(Pursuant to Section 151 of the General Corporation Law of the State of Delaware)
Infinity Natural Resources, Inc., a corporation organized and existing under the General Corporation Law of the State of Delaware (hereinafter, the “Corporation”), hereby certifies that the following resolution was duly adopted by the Board of Directors of the Corporation (or a duly authorized committee thereof) as required by Section 151 of the General Corporation Law of the State of Delaware:
NOW, THEREFORE, BE IT RESOLVED, that pursuant to the authority expressly granted to and vested in the Board of Directors of the Corporation in accordance with the provisions of the certificate of incorporation of the Corporation, there is hereby created and provided out of the authorized but unissued preferred stock, par value $0.01 per share, of the Corporation (“Preferred Stock”), a new series of Preferred Stock, and there is hereby stated and fixed the number of shares constituting such series and the designation of such series and the powers (including voting powers), if any, of such series and the preferences and relative, participating, optional, special or other rights, if any, and the qualifications, limitations or restrictions, if any, of such series as follows:
TABLE OF CONTENTS
| Page | |||
|---|---|---|---|
| Section 1. | Designation; Par Value; Number of Authorized Shares | 1 | |
| (a) | Designation; Par Value | 1 | |
| (b) | Number of Authorized Shares | 1 | |
| Section 2. | Definitions | 1 | |
| Section 3. | Rules of Construction | 16 | |
| Section 4. | Records; Registration | 16 | |
| (a) | Form, Dating and Denominations | 16 | |
| (b) | Execution, Countersignature and Delivery | 18 | |
| (c) | Method of Payment; Delay When Payment Date is Not a Business Day | 18 | |
| (d) | Transfer Agent, Registrar, Paying Agent and Conversion Agent | 19 | |
| (e) | Legends | 20 | |
| (f) | Transfers and Exchanges; Transfer Taxes; Certain Transfer Restrictions | 21 | |
| (g) | Exchange and Cancellation of Convertible Preferred Stock to Be Converted or to Be Repurchased Pursuant to a<br>Repurchase Upon Change of Control or a Redemption | 23 | |
| (h) | Status of Converted, Redeemed or Repurchased Shares of Convertible Preferred Stock | 24 | |
| (i) | Replacement Certificates | 24 | |
| (j) | Registered Holders | 25 | |
| (k) | Cancellation | 25 | |
| (l) | Shares Held by the Corporation or its Subsidiaries | 25 | |
| (m) | Outstanding Shares | 25 | |
| (n) | Notations and Exchanges | 26 | |
| Section 5. | Ranking | 26 | |
| Section 6. | Dividends | 27 | |
| (a) | Regular Dividends | 27 | |
| (b) | Calculation of Dividends | 28 | |
| (c) | Participating Dividends | 28 | |
| (d) | Treatment of Dividends Upon Redemption, Repurchase Upon Change of Control or Conversion | 29 | |
| Section 7. | Rights Upon Liquidation, Dissolution or Winding Up | 29 | |
| (a) | Generally | 29 | |
| (b) | Certain Business Combination Transactions Deemed Not to Be a Liquidation | 30 | |
| (c) | Treatment of Convertible Preferred Stock | 30 | |
| Section 8. | Right of the Corporation to Redeem the Convertible Preferred Stock | 30 | |
| (a) | Right to Redeem On or After the Five-Year Anniversary | 30 | |
| (b) | Redemption Prohibited in Certain Circumstances | 31 |
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TABLE OF CONTENTS
(cont’d)
| Page | |||
|---|---|---|---|
| (c) | Redemption Date | 31 | |
| (d) | Redemption Price | 31 | |
| (e) | Redemption Notice | 31 | |
| (f) | Payment of the Redemption Price | 32 | |
| Section 9. | Right of Holders to Require the Corporation to Repurchase Convertible Preferred Stock Upon a Change of<br>Control | 32 | |
| (a) | Change of Control Repurchase Right | 32 | |
| (b) | Funds Legally Available for Payment of Change of Control Repurchase Price; Covenant Not to Take Certain<br>Actions | 32 | |
| (c) | Change of Control Repurchase Date | 33 | |
| (d) | Change of Control Repurchase Price | 33 | |
| (e) | Initial Change of Control Notice | 34 | |
| (f) | Change of Control Notice | 34 | |
| (g) | Procedures to Exercise the Change of Control Repurchase Right | 35 | |
| (h) | Payment of the Change of Control Repurchase Price | 36 | |
| (i) | Third Party May Conduct Repurchase Offer In Lieu of the Corporation | 36 | |
| (j) | Change of Control Agreements | 36 | |
| Section 10. | Voting Rights | 37 | |
| (a) | Generally | 37 | |
| (b) | Series A Director. | 37 | |
| (c) | Voting and Consent Rights with Respect to Specified Matters | 39 | |
| (d) | Procedures for Voting and Consents | 42 | |
| Section 11. | Conversion | 43 | |
| (a) | Generally | 43 | |
| (b) | Conversion at the Option of the Holders | 43 | |
| (c) | Mandatory Conversion at the Corporation’s Election | 44 | |
| (d) | Conversion Procedures | 46 | |
| (e) | Settlement upon Conversion | 47 | |
| (f) | Conversion Price Adjustments | 47 | |
| (g) | Voluntary Conversion Price Decreases | 55 | |
| (h) | Restriction on Conversions | 55 | |
| (i) | Effect of Class A Common Stock Change Event | 56 | |
| Section 12. | Certain Provisions Relating to the Issuance of Class A Common Stock | 58 | |
| (a) | Equitable Adjustments to Prices | 58 | |
| (b) | Status of Shares of Class A Common Stock | 58 | |
| Section 13. | Taxes | 58 | |
| Section 14. | Term | 59 | |
| Section 15. | Calculations | 59 |
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TABLE OF CONTENTS
(cont’d)
| Page | |||
|---|---|---|---|
| (a) | Responsibility; Schedule of Calculations | 59 | |
| (b) | Calculations Aggregated for Each Holder | 59 | |
| Section 16. | Notices | 59 | |
| Section 17. | Facts Ascertainable | 59 | |
| Section 18. | Waiver | 59 | |
| Section 19. | Severability | 60 | |
| Section 20. | No Other Rights | 60 |
Exhibits
| Exhibit A: Form of Preferred Stock Certificate | A-1 |
|---|---|
| Exhibit B: Form of Legends | B-1 |
| Exhibit C: Minimum Hedging | C-1 |
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Section 1. Designation; Par Value; Number of AuthorizedShares.
(a) Designation; Par Value. The shares of such series shall be designated as the “Series A Convertible Preferred Stock” par value $0.01 per share, of the Corporation (the “Convertible Preferred Stock”).
(b) Number of Authorized Shares. The total authorized number of shares of Convertible Preferred Stock is three hundred and fifty thousand (350,000); provided, however, that, subject to Section 10(c)(i)(2), by resolution of the Board of Directors, or any duly authorized committee thereof, the total number of authorized shares of Convertible Preferred Stock may be increased (but not above the total number of authorized shares of Preferred Stock) or decreased (but not below the number of shares thereof then outstanding) in accordance with the General Corporation Law of the State of Delaware. The Corporation shall not have the authority to issue fractional shares of Convertible Preferred Stock.
Section 2. Definitions.
“Affiliate” of any Person means any Person, directly or indirectly, Controlling, Controlled by or under common Control with such Person; provided, however, that (i) the Corporation and its Subsidiaries, on the one hand, and any Purchaser Party or any of its Affiliates, on the other hand, shall not be deemed to be Affiliates, (ii) “portfolio companies” (as such term is customarily used among institutional investors) in which any Purchaser Party or any of its Affiliates has an investment (whether as debt or equity) shall not be deemed an Affiliate of such Purchaser Party and (iii) the Excluded Sponsor Parties (as such term is defined in the Purchase Agreement) shall not be deemed to be Affiliates of any Purchaser Party, the Corporation or any of the Corporation’s Subsidiaries.
“Average Price” means, in respect of shares of Class A Common Stock or any other securities, as of any date or relevant period (as applicable): (i) the volume weighted average price for such security on the NYSE for such date or relevant period as reported by Bloomberg through its “Volume at Price” functions; (ii) if the Board of Directors determines in its discretion that the NYSE is not the principal securities exchange or trading market for that security, the volume weighted average price of that security for such date or relevant period on the principal securities exchange or trading market on which that security is listed or traded as reported by Bloomberg through its “Volume at Price” functions; (iii) if the foregoing do not apply, the last closing trade price (or average of the last closing trade price for each Trading Day in the relevant period) of that security in the over-the-counter market on the electronic bulletin board for that security as reported by Bloomberg; or (iv) if no last closing trade price is reported for that security by Bloomberg, the last closing ask price (or average of the last closing ask price for each Trading Day in the relevant period) of that security as reported by Bloomberg. If the Average Price cannot be calculated for that security on that date or relevant period on any of the foregoing bases, the Average Price of that security on such date or relevant period shall be the fair market value as mutually determined by the Corporation and the holders of at least a majority in voting power of the then outstanding shares of Convertible Preferred Stock (acting reasonably), voting or consenting separately as a single series.
“Bloomberg” means Bloomberg Financial Markets, together with the primary successor to the business of Bloomberg Financial Markets.
“Board of Directors” means the Corporation’s board of directors or a committee of such board duly authorized to act with the authority of such board.
“Business Day” means any day other than a Saturday, a Sunday or any day on which the Federal Reserve Bank of New York is authorized or required by law or executive order to close or be closed.
“Bylaws” means the Amended and Restated Bylaws of the Corporation, as the same may be amended or amended and restated from time to time.
“Capital Stock” of any Person means any and all shares of, interests in, rights to purchase, warrants or options for, participations in, or other equivalents of, in each case however designated, the equity of such Person, but excluding any debt securities convertible into such equity.
“Carnelian” means Etineles Holdings V, LLC, a Delaware limited liability company, and its Affiliates.
“Cash Dividend Date” means the two (2) year anniversary of the Initial Issue Date.
“Certificate” means a Physical Certificate or an Electronic Certificate.
“Certificate of Designation” means this Certificate of Designation, as amended or amended and restated from time to time.
“Certificate of Incorporation” means the Amended and Restated Certificate of Incorporation of the Corporation, as the same has been and may be amended or amended and restated from time to time.
“Change of Control” means the occurrence of any of the following events after the Initial Issue Date, whether in a single transaction or a series of related transactions:
(a) a “person” or “group” (within the meaning of Section 13(d) and 14(d) of the Exchange Act), other than one or more Permitted Holders, is or becomes the direct or indirect “beneficial owner” (as defined below) of more than fifty percent (50.0%) of the Corporation’s Voting Stock (as defined below); provided, however, that in connection with a transaction pursuant to which the Persons that directly or indirectly “beneficially owned” (as defined below) one hundred percent (100.0%) of the Corporation’s Voting Stock immediately before such transaction directly or indirectly “beneficially own,” immediately after such transaction, more than fifty percent (50.0%) of the Voting Stock of a Person that is, or becomes, a direct or indirect parent of the Corporation (a “Parent Company”) in substantially the same proportions vis-à-vis each other as immediately before such transaction, no person shall be deemed to be or become a beneficial owner of more than fifty percent (50.0%) of the total voting power of the Voting Stock of the Corporation unless such person shall be or become a beneficial owner of more than fifty percent (50.0%) of the Voting Stock of such Parent Company (other than a Parent Company that is a Subsidiary of another Parent Company); provided, further, that (x) if a majority of the members of
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the board of directors of each Parent Company (other than a Parent Company that is a Subsidiary of another Parent Company) were members of the Board of Directors immediately prior to the consummation of such transaction and (y) the Corporation’s President and Chief Executive Officer and Executive Vice President and Chief Financial Officer are members of the executive management team in substantially similar roles of the Parent Company immediately after the consummation of the transaction pursuant to which the Corporation becomes a Subsidiary of a Parent Company, then such transaction will be deemed not to be a Change of Control pursuant to any transaction or event described in clause (a);
(b) the consummation of (i) any sale, lease or other transfer, in one transaction or a series of transactions, of all or substantially all of the assets of the Corporation and its Subsidiaries, taken as a whole, to any Person or group (within the meaning of Section 13(d) and 14(d) of the Exchange Act), other than any of the Corporation’s Wholly Owned Subsidiaries or OpCo’s Wholly Owned Subsidiaries; or (ii) any transaction or series of related transactions in connection with which (whether by means of merger, consolidation, share exchange, combination, reclassification, recapitalization, acquisition, liquidation or otherwise) all of the Class A Common Stock is exchanged for, converted into, acquired for, or constitutes solely the right to receive, other securities, cash or other property; provided, however, that any transaction pursuant to which the Persons that directly or indirectly “beneficially owned” (as defined below) one hundred percent (100.0%) of the Corporation’s Voting Stock immediately before such transaction directly or indirectly “beneficially own,” immediately after such transaction, more than fifty percent (50.0%) of the Voting Stock of the surviving, continuing or acquiring company or other transferee, as applicable, or the parent thereof, in substantially the same proportions vis-à-vis each other as immediately before such transaction, will be deemed not to be a Change of Control pursuant to this clause (b)(i) and clause (b)(ii); provided, further, that (x) if a majority of the members of the board of directors of the surviving, continuing or acquiring company or other transferee, as applicable, or the Parent Company thereof, were members of the Board of Directors immediately prior to the consummation of such transaction and (y) the Corporation’s President and Chief Executive Officer and Executive Vice President and Chief Financial Officer are members of the executive management team in substantially similar roles of the surviving, continuing or acquiring company or other transferee, as applicable, or the Parent Company thereof, immediately after the consummation of such transaction, then such transaction will be deemed not to be a Change of Control pursuant to any transaction or event described in clause (b)(i) and clause (b)(ii); or
(c) neither shares of Class A Common Stock nor shares of any other Capital Stock into which the Convertible Preferred Stock is convertible are listed for trading on any National Securities Exchange.
For the purposes of this definition, whether a Person is a “beneficial owner”, whether shares are “beneficially owned”, and percentage beneficial ownership, will be determined in accordance with Rules 13d-3 and 13d-5 under the Exchange Act.
Notwithstanding the preceding or any provision of Section 13(d)-3 of the Exchange Act, a Person or group shall not be deemed to beneficially own Voting Stock subject to a stock or asset purchase agreement, merger agreement, option agreement, warrant agreement or similar agreement (or voting or option or similar agreement related thereto) until the consummation of the acquisition of the Voting Stock in connection with the transactions contemplated by such agreement.
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“Change of Control Notice” has the meaning set forth in Section 9(f).
“Change of Control Repurchase Date” means the date specified in****Section 9(c) for the repurchase of any Convertible Preferred Stock by the Corporation pursuant to a Repurchase Upon Change of Control.
“Change of Control Repurchase Notice” means a notice (including a notice substantially in the form of the “Change of Control Repurchase Notice” set forth in Exhibit A) containing the information, or otherwise complying with the requirements, set forth in Section 9(g)(i) and Section 9(g)(ii).
“Change of Control Repurchase Price” means the cash price payable by the Corporation to repurchase any share of Convertible Preferred Stock upon its Repurchase Upon Change of Control, calculated pursuant to Section 9(d).
“Change of Control Repurchase Right” has the meaning set forth in Section 9(a).
“Class A Common Stock” means the Class A common stock, par value $0.01 per share, of the Corporation.
“Class A Common Stock Change Event” has the meaning set forth in Section 11(i)(i).
“Class A Common Stock Liquidity Conditions” will be satisfied with respect to a Mandatory Conversion if:
(a) the offer and sale of such share of Class A Common Stock by such Holder are registered pursuant to an effective registration statement under the Securities Act and such registration statement is reasonably expected by the Corporation to remain effective and usable, by the Holder to sell such share of Class A Common Stock, continuously during the period from, and including, the date the related Mandatory Conversion Notice is sent to, and including, the one (1) year anniversary after the date such share of Class A Common Stock is issued;
(b) each share of Class A Common Stock referred to in clause (a) above (i) will, when issued and when sold or otherwise transferred pursuant to the registration statement referred to in such clause (a), unless sold to the Corporation or an Affiliate of the Corporation, not be evidenced by any Certificate that bears a legend referring to transfer restrictions under the Securities Act or other securities laws; and (ii) will, when issued, be listed and admitted for trading, without suspension or material limitation on trading, on any of the NYSE, The NYSE American, The NASDAQ Capital Market, The NASDAQ Global Market or The NASDAQ Global Select Market (or any of their respective successors);
(c) (i) the Corporation has not received any written threat or notice of delisting or suspension by the applicable exchange referred to in clause (b)(ii) **** above with a reasonable prospect of delisting, after giving effect to all applicable notice and appeal periods; and (ii) no such delisting or suspension is reasonably likely to occur or is pending based on the Corporation falling below the minimum listing maintenance requirements of such exchange;
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(d) the conversion of all shares of Convertible Preferred Stock pursuant to such Mandatory Conversion or that are subject to such Redemption, as applicable, would not be limited or otherwise restricted by Section 11(h);
(e) the average daily trading volume of the Class A Common Stock on the principal National Securities Exchange on which the Class A Common Stock is then listed for, or admitted to, trading must exceed 138,000 shares (as such amount may be adjusted to reflect any split, combination or similar event with respect to the Class A Common Stock) for the thirty (30) Trading Days immediately preceding the Mandatory Conversion Notice Date; and
(f) the Corporation shall not have repurchased on any day in the 30-Trading Day period immediately preceding the Mandatory Conversion Notice Date more than ten percent (10.0%) of the 30-day trailing average trading volume of the Class A Common Stock on the principal National Securities Exchange on which the Class A Common Stock is then listed for, or admitted to, trading (calculated as of the Mandatory Conversion Notice Date).
“Class B Common Stock” means the Class B common stock, par value $0.01 per share, of the Corporation.
“Close of Business” means 5:00 p.m., New York City time.
“Common Stock” means the Class A Common Stock together with the Class B Common Stock.
“Common Stock Dividend” has the meaning set forth in Section 6(c)(i).
“Common Stock Participating Dividend” has the meaning set forth in Section 6(c)(i).
“Common Unit” has the meaning ascribed to such term in the OpCo LLCA.
“Continuing Share Reserve Requirement” means, as of any time, a number of shares of Class A Common Stock equal to the product of (a) one and one-half (1.5); and (b) the number of shares of Class A Common Stock that would be issuable (without regard to Section 11(h)) upon conversion of all Convertible Preferred Stock outstanding as of such time (assuming such conversion occurred as of such time); provided that, absent a written request from a Holder, the Board of Directors shall have no obligation to call a special meeting or to act by written consent outside of a regularly scheduled meeting of the Board of Directors to reserve additional shares of Class A Common Stock in connection with the Continuing Share Reserve Requirement.
“Control” (including its correlative meanings “under common Control with” and “Controlled by”) means, with respect to any Person, the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of such Person, whether through ownership of securities or partnership or other interests, by contract or otherwise.
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“Controlled Investment Affiliate” means, as to any Person, any other Person, other than any Investor (as defined below), which directly or indirectly is in control of, is controlled by, or is under common control with such Person and is organized by such Person (or any Person controlling such Person) primarily for making direct or indirect equity or debt investments in the Corporation and/or other companies.
“Conversion Agent” has the meaning set forth in Section 4(d)(i).
“Conversion Consideration” means, with respect to the conversion of any Convertible Preferred Stock, the type and amount of consideration payable to settle such conversion, determined in accordance with Section 11.
“Conversion Date” means an Optional Conversion Date or a Mandatory Conversion Date, as applicable.
“Conversion Price” initially means $21.39 per share of Class A Common Stock; provided, however, that aforesaid initial Conversion Price is subject to adjustment pursuant to Sections 11(f) and 11(g). Each reference in this Certificate of Designation to the Conversion Price as of a particular date without setting forth a particular time on such date will be deemed to be a reference to the Conversion Price immediately before the Close of Business on such date.
“Conversion Share” means any share of Class A Common Stock issued or issuable upon conversion of any Convertible Preferred Stock.
“Convertible Preferred Stock” has the meaning set forth in Section 1(a).
“Corporation” means Infinity Natural Resources, Inc., a Delaware corporation, as such name may be changed from time to time in accordance with the General Corporation Law of the State of Delaware.
“Credit Agreement” means that certain credit agreement, dated as of September 25, 2024, by and among, Infinity Natural Resources, LLC, the lenders from time to time party thereto and Citibank, N.A., as the administrative agent and an issuing bank, as the same may be amended, restated, supplemented, refinanced, replaced or otherwise modified from time to time, unless otherwise expressly specified herein.
“Credit Agreement Prohibited Dividend” has the meaning set forth in Section 6(a)(ii).
“Credit Agreement Prohibited Dividend Redemption” has the meaning set forth in Section 6(a)(ii).
“Daily VWAP” means, for any VWAP Trading Day, the per share volume-weighted average price of the Class A Common Stock as displayed under the heading “Bloomberg VWAP” on Bloomberg page “INR <EQUITY> AQR” (or, if such page is not available, its equivalent successor page) in respect of the period from the scheduled open of trading until the scheduled close of trading of the primary trading session on such VWAP Trading Day (or, if such volume-weighted average price is unavailable, the market value of one (1) share of Class A Common Stock on such VWAP Trading Day, determined, using a volume-weighted average price method, by a nationally recognized independent investment banking firm the Corporation selects). The Daily VWAP will be determined without regard to after-hours trading or any other trading outside of the regular trading session.
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“Dividend” means any Regular Dividend or Participating Dividend.
“Dividend Junior Stock” means any class or series of the Corporation’s Capital Stock, including preferred stock, the terms of which would result in such class or series ranking junior to the Convertible Preferred Stock with respect to the payment of dividends (without regard to whether or not dividends accumulate cumulatively). Dividend Junior Stock includes the Class A Common Stock.
“Dividend Parity Stock” means any class or series of the Corporation’s Capital Stock, including preferred stock (other than the Convertible Preferred Stock), the terms of which would result in such class or series ranking equally with the Convertible Preferred Stock with respect to the payment of dividends (without regard to whether or not dividends accumulate cumulatively).
“Dividend Payment Date” means each Regular Dividend Payment Date with respect to a Regular Dividend and each date on which any declared Participating Dividend is scheduled to be paid on the Convertible Preferred Stock with respect to a Participating Dividend.
“Dividend Senior Stock” means any class or series of the Corporation’s Capital Stock, including preferred stock, the terms of which would result in such class or series ranking senior to the Convertible Preferred Stock with respect to the payment of dividends (without regard to whether or not dividends accumulate cumulatively).
“Electronic Certificate” means, if the Board of Directors has provided by resolution that the Convertible Preferred Stock shall be uncertificated, any electronic book entry maintained by the Transfer Agent that evidences any share(s) of Convertible Preferred Stock.
“Exchange Act” means the U.S. Securities Exchange Act of 1934, as amended.
“Expiration Date” has the meaning set forth in Section 11(f)(i)(2).
“Expiration Time” has the meaning set forth in Section 11(f)(i)(2).
“Holder” means a person in whose name any Convertible Preferred Stock is registered on the Registrar’s books.
“HSR Act” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules and regulations promulgated thereunder.
“Immediate Family Members” means with respect to any individual, such individual’s child, stepchild, grandchild or more remote descendant, parent, stepparent, grandparent, spouse, former spouse, qualified domestic partner, sibling, mother-in-law, father-in-law, son-in-law and daughter-in-law (including, in each case, adoptive relationships) and any trust, partnership or other bona fide estate-planning vehicle the only beneficiaries of which are any of the foregoing individuals or any private foundation or fund that is controlled by any of the foregoing individuals or any donor-advised fund of which any such individual is the donor.
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“Initial Change of Control Notice” has the meaning set forth in Section 9(e).
“Initial Issue Date” means the Closing Date as defined in the Purchase Agreement.
“Initial Liquidation Preference” means one thousand dollars ($1,000.00) per share of Convertible Preferred Stock.
“Initial Share Reserve Requirement” means a number of shares of Class A Common Stock equal to the product of: (a) two (2); and (b) the number of shares of Class A Common Stock that would be issuable (without regard to Section 11(h)) upon conversion of all shares of Convertible Preferred Stock outstanding as of the Initial Issue Date (assuming such conversion occurred on the Initial Issue Date).
“Issuance Limitation” has the meaning set forth in Section 11(h)(i).
“Last Reported Sale Price” of the Class A Common Stock for any Trading Day means the closing sale price per share (or, if no closing sale price is reported, the average of the last bid price and the last ask price per share or, if more than one in either case, the average of the average last bid prices and the average last ask prices per share) of the Class A Common Stock on such Trading Day as reported in composite transactions for the principal U.S. national or regional securities exchange on which the Class A Common Stock is then listed. If the Class A Common Stock is not listed on a U.S. national or regional securities exchange on such Trading Day, then the Last Reported Sale Price will be the last quoted bid price per share of Class A Common Stock on such Trading Day in the over-the-counter market as reported by OTC Markets Group Inc. or a similar organization. If the Class A Common Stock is not so quoted on such Trading Day, then the Last Reported Sale Price will be the average of the mid-point of the last bid price and the last ask price per share of Class A Common Stock on such Trading Day from a nationally recognized independent investment banking firm the Corporation selects.
“Liquidation Junior Stock” means any class or series of the Corporation’s Capital Stock, including preferred stock, the terms of which would result in such class or series ranking junior to the Convertible Preferred Stock with respect to the distribution of assets upon the Corporation’s liquidation, dissolution or winding up. Liquidation Junior Stock includes the Class A Common Stock.
“Liquidation Parity Stock” means any class or series of the Corporation’s Capital Stock, including preferred stock (other than the Convertible Preferred Stock), the terms of which would result in such class or series ranking equally with the Convertible Preferred Stock with respect to the distribution of assets upon the Corporation’s liquidation, dissolution or winding up.
“Liquidation Preference” means, with respect to any share of Convertible Preferred Stock, an amount equal to (i) the Initial Liquidation Preference per share of Convertible Preferred Stock, plus (ii) any accumulated and unpaid dividends (including Regular Dividends and Participating Dividends) on such share of Convertible Preferred Stock to, but excluding, the date of payment of such amount (including any Liquidation Preference Dividends).
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“Liquidation Preference Dividend” has the meaning set forth in Section 6(a)(i).
“Liquidation Senior Stock” means any class or series of the Corporation’s Capital Stock, including preferred stock, the terms of which would result in such class or series ranking senior to the Convertible Preferred Stock with respect to the distribution of assets upon the Corporation’s liquidation, dissolution or winding up.
“Majority Holders” means the Holders holding at least a majority of the outstanding voting power of the Convertible Preferred Stock; provided that for purposes of Section 10(c) only the shares of Convertible Common Stock held by Holders that are entitled to vote on such action shall be counted for purposes of calculating a majority for this definition.
“Management Stockholders” means (a) the directors, managers, executive officers and other members of management (and their Controlled Investment Affiliates and Immediate Family Members and any permitted transferees thereof) of the Corporation who are holders of equity interests of the Corporation on the Initial Issue Date together with (b) (i) any new directors or managers whose election by such boards of directors or managers or whose nomination for election by the equity holders of the Corporation was approved by a vote of a majority of the directors or managers of the Corporation then still in office who were either directors or managers on the Initial Issue Date or whose election or nomination was previously so approved and (ii) executive officers and other management personnel of the Corporation hired at a time when the directors or managers on the Initial Issue Date together with the directors or managers so approved constituted a majority of the directors or managers of the Corporation.
“Mandatory Conversion” has the meaning set forth in Section 11(c)(i).
“Mandatory Conversion Date” means a Conversion Date designated with respect to any Convertible Preferred Stock pursuant to Section 11(c)(i) and Section 11(c)(iii).
“Mandatory Conversion Notice” has the meaning set forth in Section 11(c)(iv).
“Mandatory Conversion Notice Date” means, with respect to a Mandatory Conversion, the date on which the Corporation sends the Mandatory Conversion Notice for such Mandatory Conversion pursuant to Section 11(c)(iv).
“Mandatory Conversion Right” has the meaning set forth in Section 11(c)(i).
“Market Disruption Event” means, with respect to any date, the occurrence or existence, during the one-half hour period ending at the scheduled close of trading on such date on the principal U.S. national or regional securities exchange or other market on which the Class A Common Stock is listed for trading or trades, of any material suspension or limitation imposed on trading (by reason of movements in price exceeding limits permitted by the relevant exchange or otherwise) in the Class A Common Stock or in any options contracts or futures contracts relating to the Class A Common Stock.
“Midstream Assets” means (i) assets used primarily for gathering, transmission, compression, storage, processing, marketing, fractionation, dehydration, stabilization, sourcing, disposal, transportation or treatment of hydrocarbons, carbon dioxide or water and (ii) equity interests of any person whose assets consist, in all material respects, of assets referred to in clause (i).
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“National Securities Exchange” means the NYSE, The NYSE American, The NASDAQ Capital Market, The NASDAQ Global Market or The NASDAQ Global Select Market (or any of their respective successors).
“Non-Wholly Owned Permitted Subsidiary” means a Subsidiary of the Corporation (a) substantially all of whose assets consist of (i) Midstream Assets, (ii) mineral or royalty assets or (iii) cash to fund operations and (b) whose equity interests consist entirely of common equity interests.
“Number of Reserved Shares” means, as of any time, the number of shares of Class A Common Stock that, at such time, the Corporation has reserved (out of its authorized but unissued shares of Class A Common Stock that are not reserved for any other purpose) for delivery upon conversion of the Convertible Preferred Stock.
“NYSE” means The New York Stock Exchange.
“Officer” means the President and Chief Executive Officer, the Executive Vice President and Chief Financial Officer, the General Counsel and Secretary, the Chief Accounting Officer or any Senior Vice President of the Corporation.
“OpCo” means Infinity Natural Resources, LLC, a Delaware limited liability company.
“OpCo LLCA” means the Second Amended and Restated Limited Liability Company Agreement of OpCo, dated as of January 30, 2025, as in effect on the Initial Issue Date, as amended.
“Open of Business” means 9:00 a.m., New York City time.
“Optional Conversion” means the conversion of any outstanding shares of Convertible Preferred Stock pursuant to Section 11, other than a Mandatory Conversion.
“Optional Conversion Date” means, with respect to the Optional Conversion of any Convertible Preferred Stock, the first Business Day on which the requirements set forth in Section 11(d)(ii) for such conversion are satisfied.
“Optional Conversion Notice” means a notice substantially in the form of the “Optional Conversion Notice” set forth in Exhibit A.
“Parity Issuance Redemption” has the meaning set forth in Section 10(c)(i)(3).
“Parity Leverage Threshold” has the meaning set forth in Section 10(c)(i)(3).
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“Parity Redemption Price” means the greater of: (x) an amount in cash that, when taken together with any cash Dividends or other cash payments received by the Holder in respect of such share of Convertible Preferred Stock, as of the applicable time of determination, results in the Holder having received an aggregate amount of cash with respect to such share of Convertible Preferred Stock yielding an internal rate of return (calculated using the XIRR function of Microsoft Excel or any successor function) of fifteen percent (15.0%) per annum on the Initial Liquidation Preference from the Initial Issue Date of such share of Convertible Preferred Stock to the date immediately prior to the date of determination; and (y) a return on investment with respect to such share of Convertible Preferred Stock of 1.50x, calculated as the quotient of (1) the aggregate amount of cash, including cash Dividends, received by the Holder in respect of such share of Convertible Preferred Stock as of the applicable time of determination divided by (2) the Initial Liquidation Preference.
“Participating Dividend” has the meaning set forth in Section 6(c)(i).
“Paying Agent” has the meaning set forth in Section 4(d)(i).
“Permitted Dividend” means (i) any dividends or distributions in which the Holders participate pursuant to Section 6(c), (ii) any tax distributions required to be paid by OpCo pursuant to Section 4.01(b) of the OpCo LLCA; provided, that, the Corporation shall determine in good faith the portion of any such tax distributions that are to be paid with respect to the Common Units of OpCo and the portion of any such tax distributions that are to be paid with respect to the Series A Convertible Preferred Units of OpCo, or (iii) any dividends or distributions payable on the Class A Common Stock in shares of Class A Common Stock; provided that dividends or distributions pursuant to clause (i) shall be permitted only to the extent (A) such dividend or distribution, when aggregated with other dividends or distributions made pursuant to this clause (A), does not exceed the aggregate amount of net cash provided by operating activities of the Corporation and its consolidated subsidiaries (as determined in accordance with GAAP) generated subsequent to January 1, 2026 or (B) both (y) the Consolidated Total Net Leverage Ratio (as defined in the Credit Agreement in effect as of the Initial Issue Date), calculated on a pro forma basis at the time of such payment does not exceed 1.5 to 1.00 and (z) the Parity Leverage Threshold (inclusive of the Convertible Preferred Stock), calculated on a pro forma basis at the time of such payment, does not exceed 2.75 to 1.00.
“Permitted Holder” means any of (A) Pearl Energy Investments, L.P., PEI INR Holdings, L.P., Pearl Energy Investments III, L.P., PEI Infinity-S, LP, PEI INR Co-Invest-B Corp., NGP XI US Holdings, L.P. and/or their respective Affiliates (including the funds, partnerships or other co-investment vehicles managed, advised or controlled by them or their respective Affiliates) (individually or collectively, “Investor”) and (B) Management Stockholders.
“Permitted Payment” means a redemption, repurchase or other acquisition of: (i) shares of Class B Common Stock and Common Units of OpCo in accordance with Article XI of the OpCo LLCA, but solely to the extent made in connection with the exchange of the underlying Class A Common Stock by the holders thereof, or indirectly by the Corporation on their behalf; (ii) shares of Class A Common Stock pursuant to the Corporation’s share repurchase program announced on November 10, 2025, of up to seventy-five million dollars ($75,000,000); (iii) in any 12-month period after the exhaustion or termination of the share repurchase program in clause (ii), shares of Class A Common Stock equal to the greater of (a) twenty-five million dollars ($25,000,000) and (b) ten percent (10.0%) of Consolidated EBITDAX (as defined in the Credit Agreement as of the Initial Issue Date) on a pro forma basis, to the extent the Consolidated Total Net Leverage Ratio
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(as defined in the Credit Agreement in effect as of the Initial Issue Date), calculated on a pro forma basis at the time of such repurchase, does not exceed 1.5 to 1.00; and (iv) shares of Class A Common Stock in connection with the administration of any employee benefit plan in the ordinary course of business, including, without limitation, the forfeiture of unvested shares of restricted stock or share withholdings upon exercise, delivery or vesting of equity awards granted to officers, directors and employees.
“Permitted Redemption” has the meaning set forth in Section 8(a).
“Person” or “person” means any individual, corporation, partnership, limited liability company, joint venture, association, joint-stock company, trust, unincorporated organization or government or other agency or political subdivision thereof. Any division or series of a limited liability company, limited partnership or trust will constitute a separate “person” under this Certificate of Designation.
“Physical Certificate” means, if the Board of Directors has not provided by resolution that the Convertible Preferred Stock shall be uncertificated, any certificate (other than an Electronic Certificate) evidencing any share(s) of Convertible Preferred Stock, which certificate is substantially in the form set forth in Exhibit A, registered in the name of the Holder of such share(s) and duly executed by the Corporation and countersigned by the Transfer Agent.
“Purchase Agreement” means that certain Securities Purchase Agreement, dated as of February 18, 2026, by and between the Corporation and the Purchasers (as defined therein), as the same may be amended or amended and restated from time to time.
“Purchaser Parties” has the meaning set forth in the Purchase Agreement.
“Quantum” means INR (II) Investments, LLC, a Delaware limited liability company, and its Affiliates.
“Record Date” means, with respect to any dividend or distribution on, or issuance to holders of, Convertible Preferred Stock or Class A Common Stock, the date fixed (whether by applicable law, applicable provision of the Certificate of Incorporation or Bylaws, resolution of the Board of Directors or otherwise) to determine the Holders or the holders of Class A Common Stock, as applicable, that are entitled to such dividend, distribution or issuance.
“Redemption” has the meaning set forth in Section 8(a).
“Redemption Date” means the date fixed, pursuant to Section 8(c), for the settlement of the redemption of the Convertible Preferred Stock by the Corporation pursuant to a Redemption.
“Redemption Notice” has the meaning set forth in Section 8(e).
“Redemption Notice Date” means, with respect to a Redemption, the date on which the Corporation sends the Redemption Notice for such Redemption pursuant to Section 8(e).
“Redemption Price” means the consideration payable by the Corporation to repurchase any Convertible Preferred Stock upon its Redemption, calculated pursuant to Section 8(d).
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“Reference Property” has the meaning set forth in Section 11(i)(i).
“Reference Property Unit” has the meaning set forth in Section 11(i)(i).
“Register” has the meaning set forth in Section 4(d)(ii).
“Registrar” has the meaning set forth in Section 4(d)(i).
“Regular Dividend Payment Date” means, with respect to any share of Convertible Preferred Stock, each March 31, June 30, September 30 and December 31 of each year, beginning on the first of the foregoing dates occurring after the Initial Issue Date.
“Regular Dividend Period” means each period from, and including, a Regular Dividend Payment Date (or, in the case of the first Regular Dividend Period, from, and including, the Initial Issue Date) to, but excluding, the next Regular Dividend Payment Date, or, if such day is not a Business Day, the first Business Day following such day.
“Regular Dividend Rate” means (i) until, but excluding, the five (5) year anniversary of the Initial Issue Date, eight percent (8.0%) per annum and (ii) on and after the five (5) year anniversary of the Initial Issue Date, twelve percent (12.0%) per annum; provided that, if any Regular Dividends are accrued as a Liquidation Preference Dividend at any time on or after the Cash Dividend Date, the otherwise applicable Regular Dividend Rate shall be subject to an automatic increase of two percent (2.0%) per annum for such Regular Dividend and continuing for all subsequent Regular Dividends until all Credit Agreement Prohibited Dividends have been paid in cash pursuant to Section 6(a)(ii), which, for the avoidance of doubt, such automatic increase will represent a maximum aggregate increase of two percent (2.0%) on the otherwise applicable Regular Dividend Rate.
“Regular Dividend Record Date” means the Close of Business on either: (a) March 15^th^, in the case of a Regular Dividend Payment Date occurring on March 31^st^; (b) June 15^th^, in the case of a Regular Dividend Payment Date occurring on June 30^th^; (c) September 15^th^, in the case of a Regular Dividend Payment Date occurring on September 30th; and (d) December 15^th^, in the case of a Regular Dividend Payment Date occurring on December 31^st^, or, if such day is not a Business Day, the first Business Day following such day.
“Regular Dividends” has the meaning set forth in Section 6(a)(i).
“Repayment Condition” has the meaning set forth in Section 9(b).
“Repurchase Upon Change of Control” means the repurchase of any Convertible Preferred Stock by the Corporation pursuant to Section 9.
“Requisite Stockholder Approval” means the stockholder approvals contemplated by Section 312.03 of the NYSE Listed Company Manual, as applicable, with respect to the issuance of shares of Class A Common Stock upon conversion of the Convertible Preferred Stock in excess of the limitations imposed by such rule.
“Restricted Stock Legend” means a legend substantially in the form set forth in Exhibit B.
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“Rule 144” means Rule 144 under the Securities Act (or any successor rule thereto), as the same may be amended from time to time.
“Securities Act” means the U.S. Securities Act of 1933, as amended.
“Security” means any Convertible Preferred Stock or Conversion Share.
“Series A Convertible Preferred Unit” has the meaning ascribed to such term in the OpCo LLCA.
“Series A Director” has the meaning set forth in Section 10(b)(i).
“Share Agent” means the Transfer Agent or any Registrar, Paying Agent or Conversion Agent.
“Spin-Off” has the meaning set forth in Section 11(f)(i)(4)(B).
“Spin-Off Valuation Period” has the meaning set forth in Section 11(f)(i)(4)(B).
“Subsidiary” means, with respect to any Person: (a) any corporation, association or other business entity (other than a partnership or limited liability company) of which more than fifty percent (50.0%) of the Voting Stock is owned or controlled, directly or indirectly, by such Person or one or more of the other Subsidiaries of such Person; and (b) any partnership or limited liability company where (x) more than fifty percent (50.0%) of the capital accounts, distribution rights, equity and voting interests, or of the general and limited partnership interests, as applicable, of such partnership or limited liability company are owned or controlled, directly or indirectly, by such Person or one or more of the other Subsidiaries of such Person, whether in the form of membership, general, special or limited partnership or limited liability company interests or otherwise, or (y) such Person or any one or more of the other Subsidiaries of such Person is a controlling general partner or managing member of, or otherwise controls, such partnership or limited liability company.
“Successor Person” has the meaning set forth in Section 11(i)(iii).
“Tender/Exchange Offer Valuation Period” has the meaning set forth in Section 11(f)(i)(2).
“Trading Day” means any day on which: (a) trading in the Class A Common Stock generally occurs on the principal U.S. national or regional securities exchange on which the Class A Common Stock is then listed or, if the Class A Common Stock is not then listed on a U.S. national or regional securities exchange, on the principal other market on which the Class A Common Stock is then traded; and (b) there is no Market Disruption Event. If the Class A Common Stock is not so listed or traded, then “Trading Day” means a Business Day.
“Transfer Agent” means Equiniti Trust Company, LLC or its successor.
“Transfer Restrictions Legend” means a legend substantially in the form set forth in Exhibit B.
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“Transfer-Restricted Security” means any Security that constitutes a “restricted security” (as defined in Rule 144); provided, however, that such Security will cease to be a Transfer-Restricted Security upon the earliest to occur of the following events:
(a) such Security is sold or otherwise transferred to a Person (other than the Corporation or an Affiliate of the Corporation) pursuant to a registration statement that was effective under the Securities Act at the time of such sale or transfer;
(b) such Security is sold or otherwise transferred to a Person (other than the Corporation or an Affiliate of the Corporation) pursuant to an available exemption (including Rule 144) from the registration and prospectus-delivery requirements of, or in a transaction not subject to, the Securities Act and, immediately after such sale or transfer, such Security ceases to constitute a “restricted security” (as defined in Rule 144); or
(c) (i) such Security is eligible for resale, by a Person that is not an Affiliate of the Corporation and that has not been an Affiliate of the Corporation during the immediately preceding three (3) months, pursuant to Rule 144 without any limitations thereunder as to volume, manner of sale, availability of current public information or notice; and (ii) the Corporation has received such certificates or other documentation or evidence as the Corporation may reasonably require to determine that the Holder, holder or beneficial owner of such Security is not, and that has not been during the immediately preceding three (3) months, an Affiliate of the Corporation.
“Voting Rights” has the meaning set forth in Section 10(a).
“Voting Stock” of any Person as of any date means the Capital Stock of such Person that is at the time entitled to vote in the election of the board of directors or other governing body of such Person; provided that with respect to a limited partnership or other entity that does not have a board of directors, Voting Stock means the Capital Stock of the general partner of such limited partnership or other business entity with the ultimate authority to manage the business and operations of such Person.
“VWAP Market Disruption Event” means, with respect to any date: (a) the failure by the principal U.S. national or regional securities exchange on which the Class A Common Stock is then listed, or, if the Class A Common Stock is not then listed on a U.S. national or regional securities exchange, the principal other market on which the Class A Common Stock is then traded, to open for trading during its regular trading session on such date; or (b) the occurrence or existence, for more than one half hour period in the aggregate, of any suspension or limitation imposed on trading (by reason of movements in price exceeding limits permitted by the relevant exchange or otherwise) in the Class A Common Stock or in any options contracts or futures contracts relating to the Class A Common Stock, and such suspension or limitation occurs or exists at any time before 1:00 p.m., New York City time, on such date.
“VWAP Trading Day” means a day on which: (a) there is no VWAP Market Disruption Event; and (b) trading in the Class A Common Stock generally occurs on the principal U.S. national or regional securities exchange on which the Class A Common Stock is then listed or, if the Class A Common Stock is not then listed on a U.S. national or regional securities exchange, on the principal other market on which the Class A Common Stock is then traded. If the Class A Common Stock is not so listed or traded, then “VWAP Trading Day” means a Business Day.
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“Wholly Owned Subsidiary” means any Subsidiary of such Person all of the outstanding Capital Stock or other ownership interests of which (other than directors’ qualifying shares) are owned by such Person or one or more Wholly Owned Subsidiaries of such Person; provided that units of OpCo held by holders other than the Corporation as of the date of the Purchase Agreement shall be disregarded for purposes of this definition.
Section 3. Rules of Construction. For purposes of this Certificate of Designation:
(a) “or” is not exclusive;
(b) “including” means “including without limitation”;
(c) “will” expresses a command;
(d) the “average” of a set of numerical values refers to the arithmetic average of such numerical values;
(e) a merger involving, or a transfer of assets by, a limited liability company, limited partnership or trust will be deemed to include any division of or by, or an allocation of assets to a series of, such limited liability company, limited partnership or trust, or any unwinding of any such division or allocation;
(f) words in the singular include the plural and words in the plural include the singular, unless the context requires otherwise;
(g) “herein,” “hereof” and other words of similar import refer to this Certificate of Designation as a whole and not to any particular Section or other subdivision of this Certificate of Designation, unless the context requires otherwise;
(h) references to currency mean the lawful currency of the United States of America, unless the context requires otherwise; and
(i) the exhibits, schedules and other attachments to this Certificate of Designation are deemed to form part of this Certificate of Designation.
Section 4. Records; Registration.
(a) Form, Dating and Denominations.
(i) Form and Date of Certificates Evidencing Convertible Preferred Stock. Each Certificate evidencing any Convertible Preferred Stock will: (1) be substantially in the form set forth in Exhibit A; (2) bear the legends required by Section 4(e) or by any provision of the Bylaws or agreement to which the Holder of such Certificate is a party or is otherwise bound and may bear notations, legends or endorsements required by the General Corporation Law of the State of Delaware, any other applicable law, stock exchange rule or usage, as applicable; and (3) be dated as of the date it is countersigned by the Transfer Agent.
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(ii) Electronic Certificates; Physical Certificates. Provided that the Board of Directors has provided by resolution that the Convertible Preferred Stock shall be uncertificated, the Convertible Preferred Stock will be originally issued initially in the form of one or more Electronic Certificates. Subject to receiving the Corporation’s written consent, Electronic Certificates may be exchanged for Physical Certificates, and Physical Certificates may be exchanged for Electronic Certificates, upon request by the Holder thereof pursuant to customary procedures, subject to Section 4(f).
(iii) Electronic Certificates; Interpretation. For purposes of this Certificate of Designation: (1) each Electronic Certificate will be deemed to include the text of the stock certificate set forth in Exhibit A; (2) any legend or other notation that is required to be included on a Certificate will be deemed to be affixed to any Electronic Certificate notwithstanding that such Electronic Certificate may be in a form that does not permit affixing legends thereto; (3) any reference in this Certificate of Designation to the “delivery” of any Electronic Certificate will be deemed to be satisfied upon the registration of the electronic book entry representing such Electronic Certificate in the name of the applicable Holder; (4) upon satisfaction of any applicable requirements of the General Corporation Law of the State of Delaware, the Certificate of Incorporation and the Bylaws of the Corporation, and any related requirements of the Transfer Agent, in each case for the issuance of Convertible Preferred Stock in the form of one or more Electronic Certificates, such Electronic Certificates will be deemed to be executed by the Corporation and countersigned by the Transfer Agent.
(iv) Appointment of Depositary. If any Convertible Preferred Stock is admitted to the book-entry clearance and settlement facilities of any electronic depositary, then, notwithstanding anything to the contrary in this Certificate of Designation, each reference in this Certificate of Designation to the delivery of, or payment on, any such Convertible Preferred Stock, or the delivery of any related notice or demand, will be deemed to be satisfied to the extent the applicable procedures of such depositary governing such delivery or payment, as applicable, are satisfied.
(v) No Bearer Certificates; Denominations. The Convertible Preferred Stock will be issued only in registered form and only in whole numbers of shares.
(vi) Registration Numbers. Each Certificate evidencing any share of Convertible Preferred Stock will bear a unique registration number that is not affixed to any other Certificate evidencing any other then-outstanding shares of Convertible Preferred Stock.
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(b) Execution, Countersignature and Delivery.
(i) Due Execution by the Corporation. At least two (2) duly authorized Officers will sign each Certificate evidencing any Convertible Preferred Stock on behalf of the Corporation by manual, facsimile or electronic signature. The validity of any Convertible Preferred Stock will not be affected by the failure of any Officer whose signature is on any Certificate evidencing such Convertible Preferred Stock to hold, at the time such Certificate is countersigned by the Transfer Agent, the same or any other office at the Corporation.
(ii) Countersignature by Transfer Agent. No Certificate evidencing any share of Convertible Preferred Stock is valid until such Certificate is countersigned by the Transfer Agent. Each Certificate will be deemed to be duly countersigned only when an authorized signatory of the Transfer Agent (or a duly appointed agent thereof) signs (by manual, facsimile or electronic signature) the countersignature block set forth in such Certificate.
(c) Method of Payment; Delay When Payment Date is Not a Business Day.
(i) Method of Payment.
(1) Electronic Certificates. The Corporation will pay (or cause the Paying Agent to pay) all cash amounts due with respect to any outstanding shares of Convertible Preferred Stock evidenced by an Electronic Certificate, out of funds legally available therefor, by wire transfer of immediately available funds.
(2) Physical Certificates. The Corporation will pay (or cause the Paying Agent to pay) all cash amounts due with respect to any outstanding shares of Convertible Preferred Stock evidenced by a Physical Certificate, out of funds legally available therefor, as follows:
(A) if the aggregate Liquidation Preference of the outstanding shares of Convertible Preferred Stock evidenced by such Physical Certificate is at least five million dollars ($5,000,000) (or such lower amount as the Corporation may choose in its sole and absolute discretion) and the Holder of such Convertible Preferred Stock entitled to such cash amount has delivered to the Paying Agent, no later than the time set forth in the next sentence, a written request to receive payment by wire transfer to an account of such Holder within the United States, by wire transfer of immediately available funds to such account; and
(B) in all other cases, by check mailed to the address of such Holder set forth in the Register.
To be timely, such written request must be delivered no later than the Close of Business on the following date: (x) with respect to the payment of any declared cash Dividend due on a Dividend Payment Date for the Convertible Preferred Stock, the related Record Date; and (y) with respect to any other payment, the date that is fifteen (15) calendar days immediately before the date such payment is due.
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(ii) Delay of Payment when Payment Date is Not a Business Day. If the due date for a payment on any outstanding share of Convertible Preferred Stock as provided in this Certificate of Designation is not a Business Day, then, notwithstanding anything to the contrary in this Certificate of Designation, such payment may be made on the immediately following Business Day and no interest, dividend or other amount will accrue or accumulate on such payment as a result of the related delay. Solely for purposes of the immediately preceding sentence, a day on which the applicable place of payment is authorized or required by applicable law or executive order to close or be closed will be deemed not to be a “Business Day.”
(d) Transfer Agent, Registrar, Paying Agent and Conversion Agent.
(i) Generally. The Corporation designates its principal U.S. executive offices, and any office of the Transfer Agent in the continental United States, as an office or agency where Convertible Preferred Stock may be presented for: (1) registration of transfer or for exchange (the “Registrar”); (2) payment (the “Paying Agent”); and (3) conversion (the “Conversion Agent”). At all times when any shares of Convertible Preferred Stock are outstanding, the Corporation will maintain an office in the continental United States constituting the Registrar, Paying Agent and Conversion Agent.
(ii) Maintenance of the Register. The Corporation will keep, or cause there to be kept, a record (the “Register”) of the names and addresses of the Holders, the number of shares of Convertible Preferred Stock held by each Holder and the transfer, exchange, repurchase, Redemption and conversion of the Convertible Preferred Stock. Absent manifest error, the entries in the Register will be conclusive and the Corporation and the Transfer Agent may treat each Person whose name is recorded as a Holder in the Register as a Holder for all purposes to the fullest extent permitted by applicable law. The Register will be in written form or kept on, or by means of, or in the form of, any information storage device, method or one or more electronic networks or databases; provided that the records so kept can be converted into clearly legible paper form within a reasonable time. The Corporation will promptly provide a copy of the Register to any Holder upon its written demand.
(iii) Subsequent Appointments. By notice to each Holder, the Corporation may, at any time, appoint any Person (including any Subsidiary of the Corporation) to act as Registrar, Paying Agent or Conversion Agent.
(iv) If the Corporation or any of its Subsidiaries acts as Paying Agent or Conversion Agent, then: (1) it will segregate for the benefit of the Holders all money and other property held by it as Paying Agent or Conversion Agent; and (2) references in this Certificate of Designation to the Paying Agent or Conversion Agent holding cash or other property, or to the delivery of cash or other property to the Paying Agent or Conversion Agent, in each case for payment or delivery to any Holders or with respect to the Convertible Preferred Stock, will be deemed to refer to cash or other property so segregated, or to the segregation of such cash or other property, respectively.
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(e) Legends.
(i) Restricted Stock Legend.
(1) Each Certificate evidencing any share of Convertible Preferred Stock that is a Transfer-Restricted Security will bear the Restricted Stock Legend.
(2) If any share of Convertible Preferred Stock is issued in exchange for, in substitution of, or to effect a partial conversion of, any other share(s) of Convertible Preferred Stock (such other share(s) being referred to as the “old share(s)” for purposes of this Section 4(e)(i)(2)), including pursuant to Sections 4(g) or 4(i), then the Certificate evidencing such share will bear the Restricted Stock Legend if the Certificate evidencing such old share(s) bore the Restricted Stock Legend at the time of such exchange or substitution, or on the related Conversion Date with respect to such conversion, as applicable; provided, however, that the Certificate evidencing such share need not bear the Restricted Stock Legend if such share does not constitute a Transfer-Restricted Security immediately after such exchange or substitution, or as of such Conversion Date, as applicable.
(ii) Transfer Restrictions Legend. Each Certificate evidencing a share of Convertible Preferred Stock will bear the Transfer Restrictions Legend and be subject to the restrictions on transfer contained in Sections 4.2(a) and 4.2(b) of the Purchase Agreement.
(iii) Other Legends. The Certificate evidencing any outstanding shares of Convertible Preferred Stock may bear any other legend or text, not inconsistent with this Certificate of Designation, as may be required by applicable law, by the rules of any applicable depositary for the Convertible Preferred Stock or by any securities exchange or automated quotation system on which such Convertible Preferred Stock is traded or quoted or as may be otherwise reasonably determined by the Corporation to be appropriate.
(iv) Acknowledgement and Agreement by the Holders. A Holder’s acceptance of any Convertible Preferred Stock evidenced by a Certificate bearing any legend required by this Section 4(e) will constitute such Holder’s acknowledgement of, and agreement to comply with, the restrictions set forth in such legend.
(v) Legends on Conversion Shares.
(1) Each Conversion Share will bear a legend substantially to the same effect as the Restricted Stock Legend if the Convertible Preferred Stock upon the conversion of which such Conversion Share was issued was (or would have been had it not been converted) a Transfer-Restricted Security at the time such Conversion Share was issued; provided, however, that such Conversion Share need not bear such a legend if the Corporation determines, in its reasonable discretion, that such Conversion Share need not bear such a legend.
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(2) Notwithstanding anything to the contrary in Section 4(e)(v)(1), a Conversion Share need not bear a legend pursuant to Section 4(e)(v)(1) if such Conversion Share is issued in an uncertificated form that does not permit affixing legends thereto; provided, however, that the Corporation may take measures (including the assignment thereto of a “restricted” CUSIP number) that it reasonably deems appropriate to enforce the transfer restrictions referred to in such legend.
(f) Transfers and Exchanges; Transfer Taxes; Certain Transfer Restrictions.
(i) Provisions Applicable to All Transfers and Exchanges.
(1) Generally. Subject to this Section 4(f) and Sections 4.1(a) and 4.1(b) of the Purchase Agreement, any outstanding share of Convertible Preferred Stock evidenced by any Certificate may be transferred or exchanged from time to time and, upon receiving an executed Assignment Form (in substantially the form set forth on Exhibit A hereto), the Corporation will cause the Registrar to record each such transfer or exchange in the Register.
(2) No Services Charge; Transfer Taxes. The Corporation and the Share Agents will not impose any service charge on any Holder for any transfer, exchange or conversion of any Convertible Preferred Stock, but the Corporation, the Transfer Agent, the Registrar and the Conversion Agent may require payment of a sum sufficient to cover any transfer tax or similar governmental charge that may be imposed in connection with any transfer, exchange or conversion of Convertible Preferred Stock, other than exchanges pursuant to Section 4(g) or Section 4(n) not involving any transfer (and; provided that (A) any such taxes or charges incurred in connection with the original issuance of the Convertible Preferred Stock shall be paid and borne by the Corporation; and (B) any such taxes or charges incurred in connection with a conversion of the Convertible Preferred Stock pursuant to Section 11 shall be paid and borne as provided in Section 13).
(3) No Transfers or Exchanges of Fractional Shares. Notwithstanding anything to the contrary in this Certificate of Designation, all transfers or exchanges of Convertible Preferred Stock must be in an amount representing a whole number of shares of Convertible Preferred Stock, and no fractional share of Convertible Preferred Stock may be transferred or exchanged.
(4) Legends. Each Certificate evidencing any share of Convertible Preferred Stock that is issued upon transfer of, or in exchange for, another share of Convertible Preferred Stock will bear each legend, if any, required by Section 4(e).
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(5) Settlement of Transfers and Exchanges. Upon satisfaction of the requirements of this Certificate of Designation to effect a transfer or exchange of any Convertible Preferred Stock, the Corporation will cause such transfer or exchange to be effected as soon as reasonably practicable but in no event later than the second (2nd) Business Day after the date of such satisfaction.
(6) Exchanges to Remove Transfer Restrictions. For the avoidance of doubt, and subject to the terms of this Certificate of Designation, as used in this Section 4(f), an “exchange” of a Certificate includes an exchange effected for the sole purpose of removing any Restricted Stock Legend affixed to such Certificate.
(ii) Transfers and Exchanges of Convertible Preferred Stock.
(1) Subject to this Section 4(f), a Holder of any Convertible Preferred Stock evidenced by a Certificate may (x) transfer any whole number of shares of such Convertible Preferred Stock to one or more other Person(s); and (y) exchange any whole number of shares of such Convertible Preferred Stock for an equal number of shares of Convertible Preferred Stock evidenced by one or more other Certificates; provided, however, that, to effect any such transfer or exchange, such Holder must, if such Certificate is a Physical Certificate, surrender such Physical Certificate to the office of the Transfer Agent or the Registrar, together with any endorsements or transfer instruments reasonably required by the Corporation, the Transfer Agent or the Registrar.
(2) Upon the satisfaction of the requirements of this Certificate of Designation to effect a transfer or exchange of any whole number of shares of a Holder’s Convertible Preferred Stock evidenced by a Certificate (such Certificate being referred to as the “old Certificate” for purposes of this Section 4(f)(ii)(2)):
(A) such old Certificate will be promptly cancelled pursuant to Section 4(k);
(B) if fewer than all of the shares of Convertible Preferred Stock evidenced by such old Certificate are to be so transferred or exchanged, then the Corporation will issue, execute and deliver, and cause the Transfer Agent to countersign, in each case in accordance with Section 4(b), one or more Certificates that (x) each evidence a whole number of shares of Convertible Preferred Stock and, in the aggregate, evidence a total number of shares of Convertible Preferred Stock equal to the number of shares of Convertible Preferred Stock evidenced by such old Certificate not to be so transferred or exchanged; (y) are registered in the name of such Holder; and (z) bear each legend, if any, required by Section 4(e);
(C) in the case of a transfer to a transferee, the Corporation will issue, execute and deliver, and cause the Transfer Agent to countersign, in each case in accordance with Section 4(b), one or more Certificates that (x) each evidence a whole number of shares of Convertible Preferred Stock and, in the aggregate, evidence a total number of shares of Convertible Preferred Stock equal to the number of shares of Convertible Preferred Stock to be so transferred; (y) are registered in the name of such transferee; and (z) bear each legend, if any, required by Section 4(e); and
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(D) in the case of an exchange, the Corporation will issue, execute and deliver, and cause the Transfer Agent to countersign, in each case in accordance with Section 4(b), one or more Certificates that (x) each evidence a whole number of shares of Convertible Preferred Stock and, in the aggregate, evidence a total number of shares of Convertible Preferred Stock equal to the number of shares of Convertible Preferred Stock to be so exchanged; (y) are registered in the name of the Person to whom such old Certificate was registered; and (z) bear each legend, if any, required by Section 4(e).
(iii) Transfers of Shares Subject to Redemption, Repurchase or Conversion. Notwithstanding anything to the contrary in this Certificate of Designation, the Corporation, the Transfer Agent and the Registrar will not be required to register the transfer of or exchange any share of Convertible Preferred Stock that has been surrendered for conversion.
(g) Exchange and Cancellation of Convertible Preferred Stock to Be Converted or to Be Repurchased Pursuant to a Repurchase Upon Change of Control or a Redemption.
(i) Partial Conversions of Physical Certificates and Partial Repurchases of Physical Certificates Pursuant to a Repurchase Upon Change of Control or a Redemption. If fewer than all of the shares of Convertible Preferred Stock evidenced by a Physical Certificate (such Physical Certificate being referred to as the “old Physical Certificate” for purposes of this Section 4(g)(i)) are to be converted pursuant to Section 11 or repurchased pursuant to a Repurchase Upon Change of Control or a Redemption, then, as soon as reasonably practicable after such Physical Certificate is surrendered for such conversion or repurchase, as applicable, the Corporation will cause such Physical Certificate to be exchanged, pursuant and subject to Section 4(f), for (1) one or more Physical Certificates that each evidence a whole number of shares of Convertible Preferred Stock and, in the aggregate, evidence a total number of shares of Convertible Preferred Stock equal to the number of shares of Convertible Preferred Stock evidenced by such old Physical Certificate that are not to be so converted or repurchased, as applicable, and deliver such Physical Certificate(s) to such Holder; and (2) a Physical Certificate evidencing a whole number of shares of Convertible Preferred Stock equal to the number of shares of Convertible Preferred Stock evidenced by such old Physical Certificate that are to be so converted or repurchased, as applicable, which Physical Certificate will be converted or repurchased, as applicable, pursuant to the terms of this Certificate of Designation; provided, however, that the Physical Certificate referred to in this clause (2) need not be issued at any time after which such shares subject to such conversion or repurchase, as applicable, are deemed to cease to be outstanding pursuant to Section 4(m).
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(ii) Cancellation of Convertible Preferred Stock that Is Converted and Convertible Preferred Stock that Is Repurchased Pursuant to a Repurchase Upon Change of Control or a Redemption. If shares of Convertible Preferred Stock evidenced by a Certificate (or any portion thereof that has not theretofore been exchanged pursuant to Section 4(g)(i)) (such Certificate being referred to as the “old Certificate” for purposes of this Section 4(g)(ii)) are to be converted pursuant to Section 11 or repurchased pursuant to a Repurchase Upon Change of Control or a Redemption, then, promptly after the later of the time such Convertible Preferred Stock is deemed to cease to be outstanding pursuant to Section 4(m) and the time such old Certificate is surrendered for such conversion or repurchase, as applicable, (1) such old Certificate will be cancelled pursuant to Section 4(k); and (2) in the case of a partial conversion or repurchase, the Corporation will issue, execute and deliver to such Holder, and cause the Transfer Agent to countersign, in each case in accordance with Section 4(b), one or more Certificates that (x) each evidence a whole number of shares of Convertible Preferred Stock and, in the aggregate, evidence a total number of shares of Convertible Preferred Stock equal to the number of shares of Convertible Preferred Stock evidenced by such old Certificate that are not to be so converted or repurchased, as applicable; (y) are registered in the name of such Holder; and (z) bear each legend, if any, required by Section 4(e).
(h) Status of Converted, Redeemed or Repurchased Shares of Convertible Preferred Stock. If any share of Convertible Preferred Stock is converted, redeemed, repurchased or otherwise acquired by the Corporation, in any manner whatsoever, the share of Convertible Preferred Stock so acquired shall, to the fullest extent permitted by applicable law, be retired and cancelled upon such acquisition, and shall not be reissued as a share of Convertible Preferred Stock. Any share of Convertible Preferred Stock so acquired shall, upon its retirement and cancellation, and upon the taking of any action required by applicable law, become an authorized but unissued share of Preferred Stock undesignated as to series and may be reissued a part of a new series of Preferred Stock, subject to the conditions and restrictions set forth in the Certificate of Incorporation or imposed by the General Corporation Law of the State of Delaware.
(i) Replacement Certificates. If a Holder of any Convertible Preferred Stock claims that the Certificate(s) evidencing such Convertible Preferred Stock have been mutilated, lost, stolen, destroyed or wrongfully taken, then the Corporation will issue, execute and deliver, and cause the Transfer Agent to countersign, in each case in accordance with Section 4(a), a replacement Certificate evidencing such Convertible Preferred Stock upon surrender to the Corporation or the Transfer Agent of such mutilated Certificate, or upon delivery to the Corporation or the Transfer Agent of evidence of such loss, taking, destruction or wrongful taking reasonably satisfactory to the Transfer Agent and the Corporation. In the case of a lost, stolen, destroyed or wrongfully taken Certificate evidencing Convertible Preferred Stock, the Corporation and the Transfer Agent may require the Holder or such Holder’s representative to provide the Corporation such security or indemnity that is reasonably satisfactory to the Corporation and the Transfer Agent to protect the Corporation and the Transfer Agent from any loss that any of them may suffer if such Certificate is replaced. Every replacement Certificate evidencing Convertible Preferred Stock issued pursuant to this Section 4(i) will, upon such replacement, be deemed to be evidence of outstanding share(s) of Convertible Preferred Stock, entitled to all of the benefits of this Certificate of Designation equally and ratably with all other shares of Convertible Preferred Stock then outstanding.
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(j) Registered Holders. Only the Holder of any share of Convertible Preferred Stock will have such powers (including voting powers), if any, and the preferences and relative, participating, optional, special or other rights, if any, and the qualifications, limitations or restrictions, if any, as set forth in this Certificate of Designation as the owner of such share of Convertible Preferred Stock.
(k) Cancellation. The Corporation may at any time deliver Certificates evidencing Convertible Preferred Stock, if any, to the Transfer Agent for cancellation. The Registrar, the Paying Agent and the Conversion Agent will forward to the Transfer Agent each share of Convertible Preferred Stock duly surrendered to them for transfer, exchange, payment or conversion. The Corporation will cause the Transfer Agent to promptly cancel all Certificates evidencing shares of Convertible Preferred Stock so surrendered to it in accordance with its customary procedures.
(l) Shares Held by the Corporation or its Subsidiaries. Without limiting the generality of Section 4(g) and Section 4(m), in determining whether the Holders of the required number of outstanding shares of Convertible Preferred Stock have concurred in any direction, waiver or consent, shares of Convertible Preferred Stock owned by the Corporation or any of its Subsidiaries will be deemed not to be outstanding.
(m) Outstanding Shares.
(i) Generally. The shares of Convertible Preferred Stock that are outstanding at any time will be deemed to be those shares indicated as outstanding in the Register, excluding those shares of Convertible Preferred Stock that have theretofore been: (1) cancelled by the Transfer Agent or delivered to the Transfer Agent for cancellation in accordance with Section 4(k); (2) paid in full upon their conversion or upon their repurchase pursuant to a Repurchase Upon Change of Control or upon their redemption pursuant to a Redemption in accordance with this Certificate of Designation; or (3) deemed to cease to be outstanding to the extent provided in, and subject to, clause (ii), (iii), (iv) or (v) of this Section 4(m).
(ii) Replaced Shares. If any Certificate evidencing any share of Convertible Preferred Stock is replaced pursuant to Section 4(i), then such share will cease to be outstanding at the time of such replacement, unless the Transfer Agent and the Corporation receive proof reasonably satisfactory to them that such share is held by a “bona fide purchaser” under applicable law.
(iii) Shares to Be Repurchased Pursuant to a Redemption. If, on a Redemption Date, the Paying Agent holds consideration in kind and amount that is sufficient to pay the aggregate Redemption Price due on such date, then (unless there occurs a default in the payment of the Redemption Price): (1) the shares of Convertible Preferred Stock to be redeemed on such date will be deemed, as of such date, to cease to be outstanding (without limiting the Corporation’s obligations pursuant to Section 6(d)); and (2) the rights of the Holders of such shares of Convertible Preferred Stock, as such, will terminate with respect to such Convertible Preferred Stock, other than the right to receive the Redemption Price as provided in Section 8 (and, if applicable, declared Dividends as provided in Section 6(d)).
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(iv) Shares to Be Repurchased Pursuant to a Repurchase Upon Change of Control. If, on a Change of Control Repurchase Date, the Paying Agent holds consideration in kind and amount that is sufficient to pay the aggregate Change of Control Repurchase Price due on such date, then (unless there occurs a default in the payment of the Change of Control Repurchase Price): (1) the shares of Convertible Preferred Stock to be repurchased on such date will be deemed, as of such date, to cease to be outstanding (without limiting the Corporation’s obligations pursuant to Section 6(d)); and (2) the rights of the Holders of such shares of Convertible Preferred Stock, as such, will terminate with respect to such Convertible Preferred Stock, other than the right to receive the Change of Control Repurchase Price as provided in Section 9 (and, if applicable, declared Dividends as provided in Section 6(d)).
(v) Shares to Be Converted. If any Convertible Preferred Stock is to be converted, then, at the Close of Business on the Conversion Date for such conversion (unless there occurs a default in the delivery of the Conversion Consideration due pursuant to Section 11 upon such conversion): (1) such shares of Convertible Preferred Stock will be deemed to cease to be outstanding (without limiting the Corporation’s obligations pursuant to Section 6(d)); and (2) the rights of the Holders of such shares of Convertible Preferred Stock, as such, will terminate with respect to such Convertible Preferred Stock, other than the right to receive such Conversion Consideration as provided in Section 11 (and, if applicable, declared Dividends as provided in Section 6(d)).
(n) Notations and Exchanges. Without limiting any rights of Holders pursuant to Section 10, if any valid amendment, supplement or waiver to the Certificate of Incorporation or this Certificate of Designation changes the powers (including voting powers), if any, and the preferences and relative, participating, optional, special or other rights, if any, and the qualifications, limitations or restrictions, if any, of the Convertible Preferred Stock, then the Corporation may, in its discretion, require the Holder of the Certificate evidencing such Convertible Preferred Stock to deliver such Certificate to the Transfer Agent so that the Transfer Agent may place an appropriate notation prepared by the Corporation on such Certificate and return such Certificate to such Holder. Alternatively, at its discretion, the Corporation may, in exchange for such Convertible Preferred Stock, issue, execute and deliver, and cause the Transfer Agent to countersign, in each case in accordance with Section 4(a), a new Certificate evidencing such Convertible Preferred Stock that reflects the changed powers (including voting powers), if any, and the preferences and relative, participating, optional, special or other rights, if any, and the qualifications, limitations or restrictions, if any. The failure to make any appropriate notation or issue a new Certificate evidencing any Convertible Preferred Stock pursuant to this Section 4(n) will not impair or affect the validity of such amendment, supplement or waiver.
Section 5. Ranking. The Convertible Preferred Stock will rank (a) senior to (i) Dividend Junior Stock with respect to the payment of dividends; and (ii) Liquidation Junior Stock with respect to the distribution of assets upon the Corporation’s liquidation, dissolution or winding up; (b) equally with (i) Dividend Parity Stock with respect to the payment of dividends; and (ii) Liquidation Parity Stock with respect to the distribution of assets upon the Corporation’s liquidation, dissolution or winding up; and (c) junior to (i) Dividend Senior Stock with respect to the payment of dividends; and (ii) Liquidation Senior Stock with respect to the distribution of assets upon the Corporation’s liquidation, dissolution or winding up.
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Section 6. Dividends.
(a) Regular Dividends.
(i) Generally. The Convertible Preferred Stock shall accumulate cumulative dividends at a rate per annum equal to the applicable Regular Dividend Rate on the Liquidation Preference thereof (calculated in accordance with Section 6(a)(iii)), regardless of whether or not declared or assets are legally available for their payment (such dividends that accumulate on the Convertible Preferred Stock pursuant to this sentence, “Regular Dividends”). Regular Dividends shall accrue quarterly in arrears on each Regular Dividend Payment Date with respect to the Convertible Preferred Stock to the Holders as of the immediately preceding Regular Dividend Record Date and such Regular Dividends shall accrue regardless of whether they have been declared. In the Corporation’s sole discretion, any Regular Dividends may be paid (A) in cash, when, as and if declared by the Board of Directors or (B) if a cash dividend is not declared and paid in cash on a Regular Dividend Payment Date, by adding the dollar amount (expressed as an amount per share of Convertible Preferred Stock) of such Regular Dividend (or, if applicable, portion thereof) not paid in cash (without duplication), effective immediately before the Close of Business on the related Regular Dividend Payment Date, to the Liquidation Preference of each share of Convertible Preferred Stock outstanding as of such time, which addition shall occur automatically, without the need of any action on the part of the Corporation or any other Person (such an increase in the Liquidation Preference, a “Liquidation Preference Dividend”). Dividends on the Convertible Preferred Stock shall accumulate daily in arrears from, and including, the last date on which Dividends have been accrued or paid (or, if no Dividends have been paid, from, and including, the Initial Issue Date) to, but excluding, the next Regular Dividend Payment Date. If a Regular Dividend is declared by the Board of Directors, then such Regular Dividend shall be paid in cash. The Corporation shall not be required to declare any Regular Dividend, and any declaration of a Regular Dividend shall be solely at the discretion of the Board of Directors.
(ii) Cash Dividend Date. Notwithstanding anything else in this Certificate of Designation, on and after the Cash Dividend Date, Regular Dividends must be paid in cash; provided that the Corporation shall not be required to pay any such Regular Dividends in cash (1) unless the Credit Agreement would not prohibit the payment of such Regular Dividends in cash and (2) for so long as the Convertible Preferred Stock would constitute Disqualified Stock (as defined in the Credit Agreement) under the Credit Agreement if Regular Dividends are required to be paid in cash, if the Restricted Payment Conditions (as defined in the Credit Agreement) could not be satisfied with respect to such Regular Dividend payment in cash. For the avoidance of doubt, if the Corporation does not pay such Regular Dividends in cash for any period on or after the Cash Dividend Date as a result of such Credit Agreement prohibition, then a Liquidation Preference Dividend (a “Credit Agreement Prohibited Dividend”) shall automatically accrue with respect to such period. In the event of accrual of a Credit Agreement Prohibited Dividend, the Corporation shall promptly use commercially reasonable efforts to seek an amendment, restatement or other modification of the Credit Agreement that would not prohibit the payment of Regular Dividends in cash. Upon removal of such prohibition on the payment of Regular Dividends in cash, the Corporation shall be permitted, but not required, to redeem for cash an aggregate portion of the Liquidation Preference of the Convertible Preferred Stock equal to the dollar amount of the Credit Agreement Prohibited Dividends accrued (a “Credit Agreement Prohibited Dividend Redemption”) pursuant to and in accordance with Section 8.
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(iii) Computation of Regular Dividends. Regular Dividends shall be computed on the basis of a 360-day year comprised of twelve 30-day months. Regular Dividends on each share of Convertible Preferred Stock shall accrue on the Liquidation Preference of such share as of immediately before the preceding Regular Dividend Payment Date (or, if there is no preceding Regular Dividend Payment Date, on the Initial Issue Date of such share).
(b) Calculation of Dividends. Notwithstanding anything to the contrary in the foregoing, if upon any Regular Dividend Payment Date subsequent to July 31, 2026, the Liquidation Preference Dividend or any portion thereof would result in the number of shares of Common Stock into which the outstanding Convertible Preferred Stock could be converted to contravene the Issuance Limitation prior to the date the Requisite Stockholder Approval is obtained, then the Corporation must either (i) make each dividend payment or any portion thereof on the Convertible Preferred Stock on each such Regular Dividend Payment Date in cash or (ii) make a Liquidation Preference Dividend at a rate per annum equal to the otherwise applicable Regular Dividend Rate plus a one-time automatic increase of two percent (2.0%) per annum for such Regular Dividend and all subsequent Regular Dividends until the Requisite Stockholder Approval is obtained, which, for the avoidance of doubt, such automatic increase will represent a maximum aggregate increase of two percent (2.0%) on the otherwise applicable Regular Dividend Rate.
(c) Participating Dividends.
(i) Generally. Subject to the rights of the holders of any Dividend Senior Stock, on parity with the holders of any Dividend Parity Stock and subject to Section 6(c)(ii), no dividends or other distribution on the Class A Common Stock will be declared or paid in cash on the Common Stock (a “Common Stock Dividend”) unless, at the time of such declaration and payment, an equivalent dividend or distribution is declared and paid, respectively, on the Convertible Preferred Stock (such a dividend or distribution on the Convertible Preferred Stock, a “Participating Dividend,” and such corresponding dividend or distribution on the Common Stock, the “Common Stock Participating Dividend”), such that: (1) the Record Date and the payment date for such Participating Dividend occur on the same dates as the Record Date and payment date, respectively, for such Common Stock Participating Dividend; and (2) the kind and amount of consideration payable per share of Convertible Preferred Stock in such Participating Dividend is the same kind and amount of consideration that would be payable in the Common Stock Participating Dividend in respect of a number of shares of Common Stock equal to the number of shares of Common Stock that would be issuable (determined in accordance with Section 11 but without regard to Section 11(h)) in respect of one (1) share of Convertible Preferred Stock if such share of Convertible Preferred Stock was converted as of an Optional Conversion Date occurring immediately prior to such Record Date.
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(ii) Class A Common Stock Change Events. Section 6(c)(i) will not apply to, and no Participating Dividend will be required to be declared or paid on the Convertible Preferred Stock in respect of a Class A Common Stock Change Event, as to which Section 11(i) will apply.
(d) Treatment of Dividends Upon Redemption, Repurchase Upon Change of Control or Conversion. If the Redemption Date, Change of Control Repurchase Date or Conversion Date with respect to any share of Convertible Preferred Stock is after a Record Date for a declared Dividend on the Convertible Preferred Stock and on or before the next Dividend Payment Date, then the Holder of such share at the Close of Business on such Record Date will be entitled, notwithstanding the related Redemption, Repurchase Upon Change of Control or conversion, as applicable, to receive, on or, at the Corporation’s election, before such Dividend Payment Date, such declared Dividend on such share.
Section 7. Rights Upon Liquidation, Dissolution or Winding Up.
(a) Generally. If the Corporation liquidates, dissolves or winds up, whether voluntarily or involuntarily, then, subject to the rights of any of the Corporation’s creditors or holders of any outstanding Liquidation Senior Stock and on parity with the holders of any outstanding Liquidation Parity Stock, each share of Convertible Preferred Stock shall entitle the Holder thereof to receive payment for the greater of the amounts set forth in clause (i) and (ii) below out of the Corporation’s assets or funds legally available for distribution to the Corporation’s stockholders, before any such assets or funds are distributed to, or set aside for the benefit of, any Liquidation Junior Stock:
(i) a liquidation preference equal to the greater of: (x) an amount in cash that, when taken together with any cash Dividends or other cash payments received by the Holder in respect of such share of Convertible Preferred Stock, as of the applicable time of determination, results in the Holder having received an aggregate amount of cash with respect to such share of Convertible Preferred Stock yielding an internal rate of return (calculated using the XIRR function of Microsoft Excel or any successor function) of thirteen percent (13.0%) per annum on the Initial Liquidation Preference from the Initial Issue Date of such share of Convertible Preferred Stock to the date immediately prior to the date of determination; and (y) a return on investment with respect to such share of Convertible Preferred Stock of 1.30x, calculated as the quotient of (1) the aggregate amount of cash, including cash Dividends, received by the Holder in respect of such share of Convertible Preferred Stock as of the applicable time of determination divided by (2) the Initial Liquidation Preference; and
(ii) the amount such Holder would have received in respect of the number of shares of Class A Common Stock that would be issuable upon conversion of such share of Convertible Preferred Stock in connection with an Optional Conversion pursuant to Section 11 assuming the Conversion Date of such conversion occurs on the date of such payment, without regard to any of the limitations on convertibility contained in Section 11(h).
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Upon payment of such amount in full on the outstanding Convertible Preferred Stock pursuant to the foregoing provisions of this Section 7(a), Holders will have no rights to the Corporation’s remaining assets or funds, if any. If such assets or funds are insufficient to fully pay such amount on all outstanding shares of Convertible Preferred Stock and the corresponding amounts payable in respect of all outstanding shares of Liquidation Parity Stock, if any, then, subject to the rights of any of the Corporation’s creditors or holders of any outstanding Liquidation Senior Stock, such assets or funds will be distributed ratably on the outstanding shares of Convertible Preferred Stock and Liquidation Parity Stock in proportion to the full respective distributions to which such shares would otherwise be entitled. For the avoidance of doubt, a reorganization or liquidation pursuant to applicable federal, state or local bankruptcy or insolvency law shall be deemed to constitute a liquidation, dissolution, or winding up of the affairs of the Corporation.
(b) Certain Business Combination Transactions Deemed Not to Be a Liquidation. For purposes of Section 7(a), the Corporation’s consolidation or combination with, or merger with or into, or the sale, lease or other transfer of all or substantially all of the Corporation’s assets (other than a sale, lease or other transfer in connection with the Corporation’s liquidation, dissolution or winding up) to, another Person will not, in itself, constitute the Corporation’s liquidation, dissolution or winding up, even if, in connection therewith, the Convertible Preferred Stock is converted into, or is exchanged for, or represents solely the right to receive, other securities, cash or other property, or any combination of the foregoing.
(c) Treatment of Convertible Preferred Stock. Notwithstanding anything to the contrary herein, any redemption, repurchase, distribution in respect of a liquidation, dissolution or winding up, conversion-related payment or delivery of consideration, or any other payment or delivery of consideration with respect to, or in exchange for, the Convertible Preferred Stock pursuant to the terms of this Certificate of Designation shall be made on the same terms and for the same per share amount and form of consideration to each outstanding share of Convertible Preferred Stock, and any such action pursuant to the terms of this Certificate of Designation involving fewer than all outstanding shares shall be effected on a pro rata basis among all Holders based on the number of shares then held by each such Holder (or, if required by applicable law, by lot). If any election or choice is offered as to the form of consideration, such election shall be made available to all Holders on a uniform, per share basis. No consideration or other benefit (including any agreement, waiver, amendment or side letter) shall be offered, paid or delivered to any Holder in connection with any of the foregoing unless the same consideration or benefit, in form and value, on a per share basis, is concurrently offered, paid or delivered to all Holders.
Section 8. Right of the Corporation to Redeem the Convertible Preferred Stock.
(a) Right to Redeem On or After the Five-Year Anniversary. Subject to the terms of this Section 8, the Corporation has the right, at its election, to redeem, subject to the right of the Holders to convert the Convertible Preferred Stock pursuant to Section 11 prior to such redemption, any or all of the Convertible Preferred Stock, at any time, on a Redemption Date beginning on or after the five (5) year anniversary of the Initial Issue Date, for a cash purchase price equal to the Redemption Price (each such redemption, a “Permitted Redemption” and, together with any Credit Agreement Prohibited Dividend Redemption and any Parity Issuance Redemption, a “Redemption”); provided that, with respect to any Holder so redeemed, and unless otherwise consented to by such Holder in writing, such Permitted Redemption results in such Holder holding less than eighty percent (80.0%) of the Corporation’s voting stock held by such Holder prior to
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such Permitted Redemption as determined for purposes of Section 302(b)(2) of the Internal Revenue Code of 1986, as amended; provided, further, that the Corporation shall not effect a partial Permitted Redemption in an amount that would cause the aggregate number of shares of Convertible Preferred Stock outstanding, after giving effect to such Permitted Redemption, to be less than 100,000.
(b) Redemption Prohibited in Certain Circumstances. The Corporation will not elect a Redemption of, or otherwise send a Redemption Notice in respect of a Redemption of, any Convertible Preferred Stock pursuant to this Section 8 unless the Corporation has sufficient funds legally available, and is permitted under the terms of its indebtedness for borrowed money, to fully pay the Redemption Price in respect of all shares of Convertible Preferred Stock called for Redemption.
(c) Redemption Date. The Redemption Date for a Redemption will be a Business Day chosen by the Board of Directors that is no more than twenty (20), nor less than ten (10), calendar days after the Redemption Notice Date for such Redemption.
(d) Redemption Price. The Redemption Price for any share of Convertible Preferred Stock to be repurchased pursuant to a Permitted Redemption shall be an amount in cash that, when taken together with any cash Dividends or other cash payments received by the Holder in respect of such share of Convertible Preferred Stock, as of the applicable time of determination, results in the Holder having received an aggregate amount of cash with respect to such share of Convertible Preferred Stock yielding an internal rate of return (calculated using the XIRR function of Microsoft Excel or any successor function) of fifteen percent (15.0%) per annum on the Initial Liquidation Preference from the Initial Issue Date of such share of Convertible Preferred Stock to the date immediately prior to the applicable Redemption Date.
(e) Redemption Notice. To elect the Redemption of any share of Convertible Preferred Stock, the Corporation must send to the Holder of such share a notice of such Redemption (a “Redemption Notice”), which Redemption Notice must state:
(i) that such share has been called for Redemption under this Certificate of Designation;
(ii) the Redemption Date for such Redemption;
(iii) the Redemption Price per share of Convertible Preferred Stock;
(iv) if the Redemption Date is after a Record Date for a declared Dividend on the Convertible Preferred Stock and on or before the next Dividend Payment Date, that such Dividend will be paid in accordance with Section 6(d);
(v) the name and address of the Transfer Agent and the Conversion Agent, as well as instructions whereby the Holder may surrender the Physical Certificate evidencing such share (if a Physical Certificate has been issued in respect of such share) to the Transfer Agent or Conversion Agent;
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(vi) that the share of Convertible Preferred Stock called for Redemption may be converted pursuant to Section 11, at any time before the Close of Business on the Business Day immediately before the Redemption Date (or, if the Corporation fails to pay the Redemption Price due on such Redemption Date in full, at any time until such time as the Corporation pays such Redemption Price in full); and
(vii) the Conversion Price in effect on the Redemption Notice Date for such Redemption;
provided that any such Redemption Notice delivered by the Corporation may, at the Corporation’s discretion, be subject to one or more conditions precedent, including, but not limited to, refinancing or replacing the Credit Agreement or certain related transactions or events, as the case may be; provided, further, that if the Redemption Date is delayed, the Corporation shall deliver an updated Redemption Notice at least three (3) Business Days prior to the new Redemption Date.
(f) Payment of the Redemption Price. The Corporation will cause the Redemption Price for each share of Convertible Preferred Stock subject to Redemption to be paid to the Holder thereof on the applicable Redemption Date.
Section 9. Right of Holders to Require the Corporation to Repurchase Convertible Preferred Stock Upon a Change of Control.
(a) Change of Control Repurchase Right. Subject to the other terms of this Section 9, if a Change of Control occurs, then each Holder may, at its election, effective as of immediately prior to the Change of Control, either (i) convert (which conversion shall be mandatory and binding on the Corporation) all, or any whole number of shares that is less than all, of such Holder’s shares of Convertible Preferred Stock pursuant to Section 11 at the then-current Conversion Price or (ii) require the Corporation to repurchase (which repurchase shall be mandatory and binding on the Corporation and shall occur prior to the consummation of such Change of Control) (the “Change of Control Repurchase Right”) all, or any whole number of shares that is less than all, of such Holder’s shares of Convertible Preferred Stock that have not been converted pursuant to the foregoing clause (i) on the Change of Control Repurchase Date for such Change of Control, out of funds legally available therefor, for a cash purchase price equal to the Change of Control Repurchase Price.
(b) Funds Legally Available for Payment of Change of Control Repurchase Price; Covenant Not to Take Certain Actions. If the Corporation does not have sufficient funds legally available to pay the Change of Control Repurchase Price of all shares of Convertible Preferred Stock that are to be repurchased pursuant to a Repurchase Upon Change of Control, then the Corporation shall: (1) pay the maximum amount of such Change of Control Repurchase Price that can be paid out of funds legally available for payment, which payment will be made pro rata to each Holder based on the total number of shares of Convertible Preferred Stock of such Holder that were otherwise to be repurchased pursuant to such Repurchase Upon Change of Control; and (2) purchase any shares of Convertible Preferred Stock not purchased because of the foregoing limitations at the applicable Change of Control Repurchase Price as soon as practicable after the Corporation is able to make such purchase out of funds legally available for the purchase of such
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shares of Convertible Preferred Stock. The inability of the Corporation (or its successor) to make a purchase payment for any reason shall not relieve the Corporation (or its successor) from its obligation to effect any required purchase when, as and if permitted by applicable law. If the Corporation fails to pay the Change of Control Repurchase Price in full when due in accordance with this Section 9 in respect of some or all of the shares or Convertible Preferred Stock to be repurchased pursuant to the Change of Control Repurchase Right, the Corporation will pay Dividends on such shares not repurchased at the applicable Regular Dividend Rate until such shares are repurchased, payable quarterly in arrears, out of funds legally available, on each Dividend Payment Date, for the period from and including the first Dividend Payment Date (or the Initial Issue Date, as applicable) upon which the Corporation fails to pay the Change of Control Repurchase Price in full when due in accordance with this Section 9 through but not including the latest of the day upon which the Corporation pays the Change of Control Repurchase Price in full in accordance with this Section 9. For the avoidance of doubt, the Change of Control Repurchase Price shall not be required to be paid in cash unless Payment in Full (as defined in the Credit Agreement) under the Credit Agreement has occurred (the “Repayment Condition”); provided that if the proceeds of any transaction or series of related transactions constituting the Change of Control would be sufficient to both (x) satisfy the Repayment Condition and (y) pay all or any portion of the Change of Control Repurchase Price, the Corporation shall be obligated to satisfy the Repayment Condition such that the Corporation shall not be restricted from repaying the Change of Control Repurchase Price in whole or in part on the Change of Control Repurchase Date. Notwithstanding the foregoing, in the event a Holder exercises a Change of Control Repurchase Right pursuant to this Section 9 at a time when the Corporation is restricted or prohibited (contractually or otherwise, including under the Credit Agreement) from repurchasing some or all of the Convertible Preferred Stock subject to the Change of Control Repurchase Right, the Corporation will use its commercially reasonable efforts to obtain the requisite consents to remove or obtain an exception or waiver to such restrictions or prohibition. Nothing herein shall limit a Holder’s right to pursue any other remedies available to such Holder under this Certificate of Designation, at law or in equity, including, without limitation, a decree of specific performance and/or injunctive relief with respect to the Corporation’s failure to comply with its obligations under this Section 9. The Corporation will not voluntarily take any action, or voluntarily engage in any transaction, that would result in a Change of Control unless the Corporation will have sufficient funds legally available to fully pay the maximum aggregate Change of Control Repurchase Price that would be payable in respect of such Change of Control on all shares of Convertible Preferred Stock then outstanding.
(c) Change of Control Repurchase Date. The “Change of Control Repurchase Date” for any Change of Control will be on or prior to the date of the effectiveness of the Change of Control.
(d) Change of Control Repurchase Price. The Change of Control Repurchase Price for any share of Convertible Preferred Stock to be repurchased upon a Repurchase Upon Change of Control following a Change of Control is an amount in cash equal to the greater of: (i) an amount in cash that, when taken together with any cash Dividends or other cash payments received by the Holder in respect of such share of Convertible Preferred Stock, as of the applicable time of determination, results in the Holder having received an aggregate amount of cash with respect to such share of Convertible Preferred Stock yielding an internal rate of return (calculated using the XIRR function of Microsoft Excel or any successor function) of thirteen percent (13.0%) per annum on the Initial Liquidation Preference from the Initial Issue Date of such share of
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Convertible Preferred Stock to the date immediately prior to the applicable Change of Control Repurchase Date; and (ii) a return on investment with respect to such share of Convertible Preferred Stock of 1.30x, calculated as the quotient of (A) the aggregate amount of cash, including cash Dividends, received by the Holder in respect of such share of Convertible Preferred Stock as of the applicable time of determination divided by (B) the Initial Liquidation Preference.
(e) Initial Change of Control Notice. No less than twenty (20) Business Days prior to the date on which the Corporation reasonably anticipates consummating a Change of Control (or, if the Corporation discovers that a Change of Control may occur within less than twenty (20) Business Days, promptly after such discovery by the Corporation but in any case no less than ten (10) Business Days prior to the consummation of a Change of Control), an initial written notice (the “Initial Change of Control Notice”) shall be sent by or on behalf of the Corporation to the Holders as they appear in the records of the Corporation, which notice shall contain the date on which the Change of Control is anticipated to be effected (the “Anticipated Change of Control Date”). If the Corporation determines after delivery of an Initial Change of Control Notice that it will not consummate the Change of Control on the Anticipated Change of Control Date, the Corporation will promptly (but in any case no less than ten (10) Business Days prior to the consummation of a Change of Control) deliver an updated Initial Change of Control Notice.
(f) Change of Control Notice. No less than ten (10) Business Days prior to the effective date of a Change of Control, the Corporation will send to each Holder a final written notice of such Change of Control (a “Change of Control Notice”). Such Change of Control Notice must state:
(i) briefly, the events causing such Change of Control;
(ii) the effective date of such Change of Control;
(iii) the procedures that a Holder must follow to require the Corporation to repurchase its Convertible Preferred Stock pursuant to this Section 9;
(iv) the Change of Control Repurchase Date for such Change of Control;
(v) the Change of Control Repurchase Price per share of Convertible Preferred Stock, including reasonable detail of the calculation thereof;
(vi) if the Change of Control Repurchase Date is after a Record Date for a declared Dividend on the Convertible Preferred Stock and on or before the next Dividend Payment Date, that such Dividend will be paid in accordance with Section 6(a);
(vii) the name and address of the Transfer Agent and the Conversion Agent;
(viii) the Conversion Price in effect on the date of such Change of Control Notice and a description and quantification of any adjustments to the Conversion Price that may result from such Change of Control;
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(ix) that Convertible Preferred Stock may be converted pursuant to Section 11 at any time before the Close of Business on the Business Day immediately before the related Change of Control Repurchase Date (or, if the Corporation fails to pay the Change of Control Repurchase Price due on such Change of Control Repurchase Date in full, at any time until such time as the Corporation pays such Change of Control Repurchase Price in full);
(x) that shares of Convertible Preferred Stock for which a Change of Control Repurchase Notice has been duly tendered and not duly withdrawn must be delivered to the Paying Agent for the Holder thereof to be entitled to receive the Change of Control Repurchase Price; and
(xi) that shares of Convertible Preferred Stock that are subject to a Change of Control Repurchase Notice that has been duly tendered may be converted only if such Change of Control Repurchase Notice is withdrawn in accordance with this Certificate of Designation.
Within five (5) Business Days of receipt of a Change of Control Notice, any Holder that desires to exercise its rights pursuant to Section 9(a) shall notify the Corporation in writing thereof and shall specify (x) whether such Holder is electing to exercise its rights pursuant to clause (i) or (ii) of Section 9(a) and (y) the number of shares of Convertible Preferred Stock subject thereto.
For the avoidance of doubt, the Corporation shall not consummate a Change of Control on a date that is less than five (5) Business Days after delivery of a Change of Control Notice to the Holders.
(g) Procedures to Exercise the Change of Control Repurchase Right.
(i) Delivery of Change of Control Repurchase Notice and Shares of Convertible Preferred Stock to Be Repurchased. To exercise its Change of Control Repurchase Right for any share(s) of Convertible Preferred Stock, the Holder thereof must deliver to the Paying Agent:
(1) before the Close of Business on the Business Day immediately before the related Change of Control Repurchase Date (or such later time as may be required by applicable law), a duly completed, written Change of Control Repurchase Notice with respect to such share(s); and
(2) such share(s), duly endorsed for transfer (to the extent such share(s) are evidenced by one or more Physical Certificates).
(ii) Contents of Change of Control Repurchase Notices. Each Change of Control Repurchase Notice with respect to any share(s) of Convertible Preferred Stock must state:
(1) if such share(s) are evidenced by one or more Physical Certificates, the certificate number(s) of such Physical Certificate(s);
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(2) the number of shares of Convertible Preferred Stock to be repurchased, which must be a whole number; and
(3) that such Holder is exercising its Change of Control Repurchase Right with respect to such share(s).
(iii) Withdrawal of Change of Control Repurchase Notice. A Holder that has delivered a Change of Control Repurchase Notice with respect to any share(s) of Convertible Preferred Stock may withdraw such Change of Control Repurchase Notice by delivering a written notice of withdrawal to the Paying Agent at any time before the Close of Business on the Business Day immediately before the related Change of Control Repurchase Date. Such withdrawal notice must state:
(1) if such share(s) are evidenced by one or more Physical Certificates, the certificate number(s) of such Physical Certificate(s);
(2) the number of shares of Convertible Preferred Stock to be withdrawn, which must be a whole number; and
(3) the number of shares of Convertible Preferred Stock, if any, that remain subject to such Change of Control Repurchase Notice, which must be a whole number.
If any Holder delivers to the Paying Agent any such withdrawal notice withdrawing any share(s) of Convertible Preferred Stock from any Change of Control Repurchase Notice previously delivered to the Paying Agent, and such share(s) have been surrendered to the Paying Agent, then such share(s) will be returned to the Holder thereof.
(h) Payment of the Change of Control Repurchase Price. Subject to Section 9(b), the Corporation will cause the Change of Control Repurchase Price for each share of Convertible Preferred Stock to be repurchased pursuant to a Repurchase Upon Change of Control to be paid to the Holder thereof on the applicable Change of Control Repurchase Date and, for the avoidance of doubt, not after consummation of the Change of Control.
(i) Third Party May Conduct Repurchase Offer In Lieu of the Corporation. Notwithstanding anything to the contrary in this Section 9, the Corporation will be deemed to satisfy its obligations under this Section 9 if one or more third parties conduct any Repurchase Upon Change of Control and related offer to repurchase Convertible Preferred Stock otherwise required by this Section 9 in a manner that would have satisfied the requirements of this Section 9 if conducted directly by the Corporation.
(j) Change of Control Agreements. To the fullest extent permitted by applicable law, the Corporation shall not enter into any agreement for a transaction constituting a Change of Control unless (i) such agreement provides for, or does not interfere with or prevent (as applicable), the exercise by the Holders of their Change of Control Repurchase Right in a manner that is consistent with, and gives effect to, this Section 9 and (ii) the acquiring or surviving Person in such Change of Control represents and covenants, in form and substance reasonably satisfactory to the Board
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of Directors acting in good faith, that at the closing of such Change of Control that such Person shall have sufficient funds (which may include, without limitation, cash and cash equivalents on the Corporation’s balance sheet, the proceeds of any debt or equity financing, available lines of credit or uncalled capital commitments) to consummate such Change of Control and the payment of the Change of Control Repurchase Price in respect of all outstanding shares of Convertible Preferred Stock prior to the Change of Control Repurchase Date pursuant to this Section 9.
Section 10. Voting Rights.
(a) Generally. Except as provided by this Certificate of Designation or applicable law, the Holders will have the right to vote (in their capacity as Holders) together as a single class with the holders of the Common Stock on each matter submitted for a vote or consent by the holders of the Common Stock (“Voting Rights”), and, for these purposes, (i) the Convertible Preferred Stock of each Holder will entitle such Holder to be treated as if such Holder were the holder of record, as of the Record Date or other relevant date for such matter, of a number of shares of Class A Common Stock equal to the number of shares of Class A Common Stock that would be issuable (determined in accordance with Section 11(e)) upon conversion of such Convertible Preferred Stock assuming such Convertible Preferred Stock were converted with a Conversion Date occurring on such Record Date or other relevant date, and (ii) the Holders will be entitled to notice of all stockholder meetings or proposed actions by written consent in accordance with the Certificate of Incorporation, the Bylaws and the General Corporation Law of the State of Delaware as if the Holders were holders of Class A Common Stock. Notwithstanding the foregoing: (i) no Holder of Convertible Preferred Stock will have Voting Rights with respect to the election of members to the Board of Directors prior to the expiration or early termination of the applicable waiting period, if any, under the HSR Act; and (ii) the aggregate voting power of the Convertible Preferred Stock when voting with the holders of the Common Stock shall be limited to the extent necessary to comply with the rules set forth in the NYSE Listed Company Manual, as applicable, and any resulting limitation on the voting rights of the Convertible Preferred Stock shall apply pro rata among the Holders thereof.
(b) Series A Director.
(i) Generally. For so long as Carnelian holds record and beneficial ownership (within the meaning of Rule 13d-3 under the Exchange Act) of (x) all of the shares of Convertible Preferred Stock (which, for the avoidance of doubt, shall cease to be the case upon the conversion of any share of Convertible Preferred Stock) issued to Carnelian on the Initial Issue Date and (y) more than three percent (3.0%) of the outstanding shares of the Corporation’s Common Stock (which shall be determined assuming the conversion of all of the shares of Convertible Preferred Stock, without regard to any of the limitations on convertibility contained in Section 11(b)), the Holders of outstanding shares of Convertible Preferred Stock entitled to vote thereon, voting separately as a single class, shall have the exclusive right to appoint and elect one (1) individual to the Board of Directors (such individual, the “Series A Director”), subject to the approval of the Board of Directors (such approval not to be unreasonably withheld, conditioned, delayed); provided, that (A) the shares of Convertible Preferred Stock held by Carnelian shall be the only shares of Convertible Preferred Stock entitled to vote, and (B) the initial Series A Director shall be Matthew Kelly, who is hereby deemed approved by
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the Board of Directors and shall be appointed to the Board of Directors as of the Initial Issue Date. Notwithstanding anything to the contrary set forth herein or otherwise, for so long as Holders of outstanding shares of Convertible Preferred Stock have the right to appoint the Series A Director, the shares of Convertible Preferred Stock held by Carnelian shall be the only shares of Convertible Preferred Stock entitled to vote on or consent to the removal without cause of such Series A Director, and the shares of Convertible Preferred Stock owned by any other Holders as of the record date for determining stockholders entitled to vote thereon shall have no voting rights with respect to such matter. In the event that a vacancy is created on the Board of Directors at any time due to the death, disability, retirement, resignation, or removal of a Series A Director, then Carnelian, voting on behalf of the Holders of outstanding shares of Convertible Preferred Stock entitled to vote thereon, voting separately as a single class, shall have the exclusive right to appoint an individual to fill such vacancy, and the shares of Convertible Preferred Stock owned by any other Holders as of the record date for determining stockholders entitled to vote thereon shall have no voting rights with respect to such matter; provided that such replacement appointee shall be an employee of Carnelian and shall be subject to the approval of the Board of Directors (such approval not to be unreasonably withheld, conditioned, delayed). In the event that Carnelian shall fail to appoint in writing a representative to fill the vacant Series A Director seat on the Board of Directors, and such Board of Directors seat shall remain vacant until such time as Carnelian elects an individual to fill such seat in accordance with this Section 10(b), and during any period where such seat remains vacant, the Board of Directors nonetheless shall be deemed duly constituted. For the avoidance of doubt and notwithstanding anything to the contrary in this Certificate of Designation, Carnelian’s rights under this Section 10(b) shall be non-transferable.
(ii) Indemnification. The Series A Director shall be entitled to advancement of expenses and indemnification in the same manner and to the same extent as the other non-executive members of the Board of Directors under the Corporation’s organizational documents, the General Corporation Law of the State of Delaware and any indemnification agreements. Any director minimum ownership requirements of the board policies shall be deemed satisfied in respect of the Series A Director, by the shares of Convertible Preferred Stock purchased pursuant to the Purchase Agreement, or any Conversion Shares, as applicable, held by Carnelian. The Corporation acknowledges and agrees that it is the indemnitor of first resort (i.e., its obligations to the Series A Director are primary and any obligation of Carnelian to advance expenses or to provide indemnification for the same expenses or liabilities incurred by the Series A Director are secondary).
(iii) Policies; Expenses. The Series A Director shall comply with the corporate governance principles and practices of the Corporation as in effect from time to time and applicable to directors generally, including the Corporation’s Corporate Governance Guidelines, the Corporation’s Code of Ethics and the Corporation’s Insider Trading Policy. The Series A Director shall be entitled to reimbursement of out-of-pocket expenses in the same manner and to the same extent as the other non-executive members of the Board of Directors, subject to the Corporation’s expense reimbursement policies as in effect from time to time.
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(iv) Board Size. The size of the Board of Directors shall be increased as of the date hereof to give effect to the appointment of the Series A Director to the Board of Directors; provided that, as a condition to the appointment of the Series A Director, the Series A Director appointee shall submit to the Board of Directors an irrevocable resignation letter in a form reasonably acceptable to the Board of Directors which shall state that the Series A Director resigns upon the lapsing of the right to appoint a Series A Director contained in this Section 10(b) (the “Resignation Letter”), which the Board of Directors shall have the right to accept or reject upon such future date. Notwithstanding the foregoing, at the time when Carnelian ceases to be entitled to appoint and elect a Series A Director pursuant to Section 10(b) as a result of Carnelian either ceasing to hold (x) all of the shares of Convertible Preferred Stock issued to Carnelian on the Initial Issue Date or (y) at least three percent (3.0%) of the Corporation’s issued and outstanding shares of Common Stock (which shall be determined assuming the conversion of all of the shares of Convertible Preferred Stock, without regard to any of the limitations on convertibility contained in Section 11(b)), the right of Carnelian to appoint and elect a Series A Director shall permanently terminate and from and after such time and, subject to acceptance of the Resignation Letter by the Board of Directors, the Series A Director shall cease to be qualified to serve as a director, such directorship shall terminate and the size of the Board of Directors shall automatically be reduced (unless the Board of Directors, in its sole discretion, elects to fill such vacancy with another director).
(c) Voting and Consent Rights with Respect to Specified Matters.
(i) Generally. Subject to the other provisions of this Section 10(c), so long as any shares of Convertible Preferred Stock remain outstanding, the Corporation shall not, and shall not permit any of its Subsidiaries to, without, the affirmative vote or written consent of the Majority Holders, voting separately as a single series, take any of the following actions:
(1) any amendment, modification, repeal or waiver of any provision of the Certificate of Incorporation, this Certificate of Designation, the Bylaws, or the OpCo LLCA in a manner that adversely affects the rights, preferences and privileges or powers, or otherwise amends the terms, of the Convertible Preferred Stock (other than an amendment, modification or repeal permitted by Section 10(c)(ii)); provided that any change to the size of the Board of Directors will not be deemed to adversely affect the rights, preferences and privileges or powers, of the Convertible Preferred Stock so long as such change does not adversely affect the rights of the Holders to designate, elect, remove or replace the Series A Director;
(2) any increase or decrease to the authorized number of shares of Convertible Preferred Stock;
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(3) any issuances by the Corporation of shares of Dividend Parity Stock, Liquidation Parity Stock, Dividend Senior Stock or Liquidation Senior Stock or other securities or equity interests that would have or that do have preferences or relative, participating, option, special or other rights senior to or on parity with the Convertible Preferred Stock; provided that the Corporation will be permitted to issue shares of Dividend Parity Stock and Liquidation Parity Stock for so long as the Consolidated Total Net Leverage Ratio (as defined in the Credit Agreement in effect as of the Initial Issue Date, but including the Convertible Preferred Stock and the proposed issuances of any such Dividend Parity Stock or Liquidation Parity Stock, as applicable, in the numerator of such ratio), calculated on a pro forma basis at the time of such issuance, does not exceed 2.75 to 1.00 (the “Parity Leverage Threshold”); provided, further, that if the Majority Holders do not vote or consent in favor of such issuance pursuant to this Section 10(c)(i)(3), then the Corporation shall have the right to redeem (a “Parity Issuance Redemption”), pursuant to and in accordance with Section 8 (subject to the right of the Holders to convert the Convertible Preferred Stock pursuant to Section 11 prior to such redemption), all of Convertible Preferred Stock and the issuance of such Dividend Parity Stock or Liquidation Parity Stock must be conditioned on the substantially simultaneous redemption of all of the shares of Convertible Preferred Stock then outstanding at the Parity Redemption Price and the Corporation may not waive such condition; provided, further, that (i) to the extent any Dividend Parity Stock or Liquidation Parity Stock is issued with a regular dividend rate higher than the equivalent rate provided in this Certificate of Designation, appropriate adjustment shall be made to this Certificate of Designation to increase the Regular Dividend Rate to such higher rate and (ii) to the extent any Dividend Parity Stock or Liquidation Parity Stock is issued with a liquidation preference with better economic terms than that provided in this Certificate of Designation in Section 7(a), appropriate adjustment shall be made to this Certificate of Designation to adjust the economic terms of the liquidation preference herein to such better economic terms; provided, further that in no event may the stated use of proceeds of issuances made pursuant to this Section 10(c)(i)(3) be to fund a distribution.
(4) create (by reclassification or otherwise) any new class or series of stock of the Corporation or units of OpCo (other than the Series A Convertible Preferred Units issued by OpCo to the Corporation in connection with issuance of the Convertible Preferred Stock and the accrual of any Liquidation Preference Dividends) having preferences or relative participating, option, special or other rights senior to the Convertible Preferred Stock (or, in the case of OpCo, senior to the Series A Convertible Preferred Units);
(5) (A) declare, pay or set apart for payment any dividends or distributions on Dividend Junior Stock, Liquidation Junior Stock or Common Units of OpCo (other than a Permitted Dividend) or (B) repurchase, redeem or otherwise acquire any Dividend Junior Stock, Liquidation Junior Stock or Common Unit of OpCo (other than a Permitted Payment);
(6) any action to deregister the Class A Common Stock under Section 12 of the Exchange Act or voluntarily delist such Class A Common Stock from a National Securities Exchange, other than as a result of a Change of Control in which the Corporation has complied with the terms of Section 9 of this Certificate of Designation;
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(7) incur or otherwise become liable for any Indebtedness (as defined in the Credit Agreement in effect as of the Initial Issue Date) in an amount that would cause either (i) the Consolidated Total Net Leverage Ratio (as defined in the Credit Agreement in effect as of the Initial Issue Date), calculated on a pro forma basis at the time of such incurrence, to exceed 2.25 to 1.00 or (ii) the Parity Leverage Threshold (excluding for purposes of such calculation, the Convertible Preferred Stock), calculated on a pro forma basis at the time of such incurrence, to exceed 2.75 to 1.00;
(8) cease to comply with the minimum hedging requirements specified on Exhibit C;
(9) form, create or suffer to exist any Subsidiaries of the Corporation other than (i) Wholly Owned Subsidiaries of the Corporation and OpCo or (ii) Non-Wholly Owned Permitted Subsidiaries for a bona fide business purpose, the terms of which are on an arm’s length basis determined by the independent members of the Board of Directors; or
(10) agree, authorize or commit to do any of the foregoing;
provided that only Holders who, as of the time upon which such Holder is called to vote or give their consent, hold, together with such Holder’s Affiliates, record and beneficial ownership (within the meaning of Rule 13d-3 under the Exchange Act) of at least 60,000 shares of Convertible Preferred Stock will have the right to vote with respect to the consent rights enumerated in Section 10(c)(i)(3), Section 10(c)(i)(7), Section 10(c)(i)(8), Section 10(c)(i)(9) and, solely to the extent related to such enumerated consent rights, Section 10(c)(i)(10); provided, further, that the voting and consent rights enumerated in Section 10(c)(i)(3), Section 10(c)(i)(7), Section 10(c)(i)(8), Section 10(c)(i)(9) and, solely to the extent related to such enumerated consent rights, Section 10(c)(i)(10), shall terminate automatically without any action required on behalf of the Corporation or the Holders on the date when, in the aggregate, less than 100,000 shares of Convertible Preferred Stock remain outstanding; provided, further, that, to the extent not already terminated pursuant to the immediately preceding proviso, if, at any time when at least 100,000 shares of Convertible Preferred Stock remain outstanding, Carnelian and Quantum collectively beneficially own (within the meaning of Rule 13d-3 under the Exchange Act) less than a majority of the then outstanding shares of Convertible Preferred Stock, then (1) for so long as Carnelian beneficially owns at least 60,000 shares of Convertible Preferred Stock, any action pursuant to Section 10(c)(i)(3) or Section 10(c)(i)(7) shall also require Carnelian’s prior written consent, which consent right shall be non-transferable and shall automatically terminate upon Carnelian beneficially owning fewer than 60,000 shares of Convertible Preferred Stock and (2) for so long as Quantum beneficially owns at least 60,000 shares of Convertible Preferred Stock, any action pursuant to Section 10(c)(i)(3) or Section 10(c)(i)(7) shall also require Quantum’s prior written consent, which consent right shall be non-transferable and shall automatically terminate upon Quantum beneficially owning fewer than 60,000 shares of Convertible Preferred Stock.
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In addition, any action that would adversely affect (i) the Conversion Price, Liquidation Preference, the Mandatory Conversion Right, or Change of Control Repurchase Price, or (ii) any right, preference, privilege or power of any Holder of Convertible Preferred Stock, in each case, in a manner that is disproportionate to one Holder (or group of Holders) relative to the other Holders of Convertible Preferred Stock shall require the prior written consent of such affected Holder. No consideration (including any modification of this Certificate of Designation or related transaction document) shall be offered or paid to any person or entity to amend or consent to a waiver or modification of any provision of this Certificate of Designation or related transaction document unless the same consideration is also offered to all of holders of the outstanding shares of Convertible Preferred Stock. For clarification purposes, this provision is intended for the Corporation to treat all Holders as a single class and shall not in any way be construed as such Holders acting in concert or as a group with respect to the purchase, disposition or voting of the Convertible Preferred Stock or otherwise. In connection with seeking the affirmative vote or written consent of the Majority Holders pursuant to this Section 10(c) that relates to a transaction where the parties include the Corporation or any Subsidiary, on the one hand, and a Holder or its Affiliate (other than solely in such Person’s capacity as a holder of Convertible Preferred Stock or Common Stock), on the other hand, such conflicted Holder shall be deemed non-voting.
(ii) Certain Amendments Permitted Without Consent. Notwithstanding anything to the contrary in Section 10(c)(i)(1), the Corporation may amend, modify or repeal any of provision of the Certificate of Incorporation, this Certificate of Designation or the Bylaws without the vote or consent of any Holder to amend or correct the Certificate of Incorporation, this Certificate of Designation or the Bylaws to cure any ambiguity or correct any omission, defect or inconsistency.
(d) Procedures for Voting and Consents.
(i) Rules and Procedures Governing Votes and Consents. If any vote or consent of the Holders will be held or solicited, including at an annual meeting or a special meeting of stockholders, then: (1) the Board of Directors will adopt customary rules and procedures at its discretion to govern such vote or consent, subject to the other provisions of this Section 10; and (2) such rules and procedures may include fixing a record date to determine the Holders that are entitled to vote or provide consent, as applicable, rules governing the solicitation and use of proxies or written consents and customary procedures for the nomination by Holders, of directors for election.
(ii) Voting Power of the Convertible Preferred Stock. Each share of Convertible Preferred Stock will entitle the holder thereof to one (1) vote on each matter on which the Holders of the Convertible Preferred Stock are entitled to vote separately as a series and not together with the holders of any other class or series of stock.
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(iii) Written Consent in Lieu of Stockholder Meeting. Notwithstanding anything to the contrary set forth in the Certificate of Incorporation, any action required or permitted to be taken at a meeting of the holders of the Convertible Preferred Stock may be taken without a meeting, without prior notice and without a vote, if a consent or consents in writing, setting forth the action so taken, shall be signed by the Holders having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares of Convertible Preferred Stock then outstanding were present and voted and shall be delivered to the Corporation (a) by delivery to its registered agent in the State of Delaware, its principal place of business, or an officer or agent of the Corporation having custody of the book in which minutes of proceedings of stockholders are recorded or (b) by electronic mail to the Corporation at the e-mail address specified for notices pursuant to Section 16 (or such other e-mail address as the Corporation may designate by notice in accordance with Section 16). The Holders initiating or approving any action by less than unanimous consent shall use reasonable efforts to promptly notify the other Holders prior to such approval. Delivery and effectiveness of any consent delivered by electronic mail shall be governed by Section 16. Delivery made to the Corporation’s registered office shall be by hand or by certified or registered mail, return receipt requested. Prompt notice of the taking of corporate action without a meeting by less than unanimous consent of the Holders shall be given to those Holders who have not consented and who, if the action had been taken at a meeting, would have been entitled to notice of the meeting if the record date for notice of such meeting had been the date that consents signed by a sufficient number of Holders to take the action were delivered to the Corporation. Notwithstanding anything to the contrary herein, the consent of the Majority Holders shall be deemed given in respect of any request for a written consent of the Majority Holders made by the Corporation for the matters enumerated in Section 10(c) if a response is not received by the Corporation from the Majority Holders within ten (10) Business Days of the delivery of such consent request.
Section 11. Conversion.
(a) Generally. Subject to the provisions of this Section 11, the Convertible Preferred Stock may be converted only pursuant to a Mandatory Conversion or an Optional Conversion.
(b) Conversion at the Option of the Holders.
(i) Conversion Right; When Shares May Be Submitted for Optional Conversion. Holders will have the right to convert (each, an “Optional Conversion”) all, or any whole number of shares that is less than all, of their shares of Convertible Preferred Stock pursuant to an Optional Conversion at any time; provided, however, that, notwithstanding anything to the contrary in this Certificate of Designation:
(1) if a Change of Control Repurchase Notice is validly delivered pursuant to Section 9(g)(i) **** with respect to any share of Convertible Preferred Stock, then, beginning on the Business Day prior to the consummation of the Change of Control, such share may not be submitted for Optional Conversion, except to the extent (A) such share is not subject to such notice, (B) such notice is withdrawn in accordance with Section 9(g)(iii), or (C) the Corporation fails to pay the Change of Control Repurchase Price for such share in accordance with this Certificate of Designation;
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(2) no Convertible Preferred Stock may be submitted for Optional Conversion to the extent limited by Section 11(h);
(3) shares of Convertible Preferred Stock that are called for Redemption in accordance with Section 8 may not be submitted for Optional Conversion after the Close of Business on the Business Day immediately before the related Redemption Date;
(4) shares of Convertible Preferred Stock that are subject to Mandatory Conversion may not be submitted for Optional Conversion after the Close of Business on the Business Day immediately before the related Mandatory Conversion Date; and
(5) no conversion by any Holder will be permitted until the expiration or early termination of the waiting period applicable to such Holder, if any, under the HSR Act with respect to any conversion of the Convertible Preferred Stock by such Holder.
(ii) Conversions of Fractional Shares Not Permitted. Notwithstanding anything to the contrary in this Certificate of Designation, in no event will any Holder be entitled to convert a number of shares of Convertible Preferred Stock that is not a whole number.
(c) Mandatory Conversion at the Corporation’s Election.
(i) Mandatory Conversion Right. Subject to the provisions of this Section 11, on or after the first Trading Day after the three (3) year anniversary of the Initial Issue Date, the Corporation will have the right (the “Mandatory Conversion Right”), exercisable at its election, to designate any Business Day as a Conversion Date for the conversion (such a conversion, a “Mandatory Conversion”) of any or all of the outstanding shares of Convertible Preferred Stock, but only if the Last Reported Sale Price of the Class A Common Stock for any 20 Trading Days in a 30 Trading Day window before the Mandatory Conversion Notice Date for such Mandatory Conversion, exceeds one hundred and forty percent (140.0%) of the Conversion Price (without giving effect to any decrease in the Conversion Price effected pursuant to Section 11(g)(i)). If the Corporation elects to cause less than all the outstanding shares of the Convertible Preferred Stock to be converted, the Corporation shall select the Convertible Preferred Stock to be converted from each holder of Convertible Preferred Stock on a pro rata basis.
(ii) Mandatory Conversion Prohibited in Certain Circumstances. The Corporation will not exercise its Mandatory Conversion Right, or otherwise send a Mandatory Conversion Notice, with respect to any Convertible Preferred Stock pursuant to this Section 11(c) **** unless the Class A Common Stock Liquidity Conditions are satisfied on the applicable Mandatory Conversion Notice Date. Notwithstanding anything to the contrary in this Section 11(c), the Corporation’s exercise of its Mandatory Conversion Right, and any related Mandatory Conversion Notice, will not apply to any share of Convertible Preferred Stock as to which a Change of Control Repurchase Notice has been duly delivered, and not withdrawn, pursuant to Section 9(g). Notwithstanding anything to the contrary in this Section 11(c), the Corporation cannot exercise its Mandatory Conversion Right with respect to any shares of Convertible Preferred Stock to the extent limited by Section 11(h).
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(iii) Mandatory Conversion Date. The Mandatory Conversion Date for any Mandatory Conversion will be a Business Day of the Corporation’s choosing that is no more than twenty (20), nor less than ten (10), Business Days after the Mandatory Conversion Notice Date for such Mandatory Conversion.
(iv) Mandatory Conversion Notice. To exercise its Mandatory Conversion Right with respect to shares of Convertible Preferred Stock, the Corporation must send to the Holders a written notice of such exercise (a “Mandatory Conversion Notice”).
(v) Such Mandatory Conversion Notice must state:
(1) that the Class A Common Stock Liquidity Conditions are satisfied as of the Mandatory Conversion Notice Date;
(2) that the Corporation has exercised its Mandatory Conversion Right to cause the Mandatory Conversion of the shares of Convertible Preferred Stock under this Certificate of Designation;
(3) the Mandatory Conversion Date for such Mandatory Conversion and the date scheduled for the settlement of such Mandatory Conversion;
(4) the name and address of the Paying Agent and the Conversion Agent, as well as instructions whereby the Holder may surrender such share to the Transfer Agent or Conversion Agent;
(5) that shares of Convertible Preferred Stock subject to Mandatory Conversion may be converted earlier at the option of the Holders thereof pursuant to an Optional Conversion at any time before the Close of Business on the Business Day immediately before the Mandatory Conversion Date; and
(6) the Conversion Price in effect on the Mandatory Conversion Notice Date for such Mandatory Conversion, the number of shares of Class A Common Stock to be issued to such Holder upon conversion of each share of Convertible Preferred Stock held by such Holder and, if applicable, the amount of accumulated and unpaid Regular Dividends, whether or not declared, in respect of such share of Convertible Preferred Stock as of the Mandatory Conversion Date.
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(d) Conversion Procedures.
(i) Mandatory Conversion. If the Corporation duly exercises, in accordance with Section 11(c), its Mandatory Conversion Right with respect to shares of Convertible Preferred Stock, then: (1) the Mandatory Conversion of such share(s) will occur automatically as of the Close of Business on the related Mandatory Conversion Date and without the need for any action on the part of the Holder(s) thereof; and (2) the shares of Class A Common Stock into which shares of Convertible Preferred Stock shall have been converted in such Mandatory Conversion and any cash payable in lieu of fractions of a share of Class A Common Stock pursuant to Section 11(e)(ii) will be registered in the name of, or paid to, the Holder(s) of such share of Convertible Preferred Stock as of the Close of Business on the related Mandatory Conversion Date.
(ii) Requirements for Holders to Exercise Optional Conversion Right.
(1) Generally. To convert any share of Convertible Preferred Stock evidenced by a Certificate pursuant to an Optional Conversion, the Holder of such share must: (w) complete, sign (by manual, facsimile or electronic signature) and deliver to the Conversion Agent an Optional Conversion Notice (at which time, in the case such Certificate is an Electronic Certificate, such Optional Conversion will become irrevocable); (x) if such Certificate is a Physical Certificate, deliver such Physical Certificate to the Conversion Agent (at which time such Optional Conversion will become irrevocable); (y) furnish any endorsements and transfer documents that the Corporation or the Conversion Agent may require; and (z) if applicable, pay any documentary or other taxes that are required to be paid by the Corporation as a result of a Holder requesting that shares be registered in a name other than such Holders’ name as described in Section 13.
(2) Optional Conversion Permitted Only During Business Hours. Convertible Preferred Stock will be deemed to be surrendered for Optional Conversion only after the Open of Business and before the Close of Business on a day that is a Business Day.
(iii) Treatment of Accumulated Dividends upon Conversion.
(1) No Adjustments for Accumulated Regular Dividends. Without limiting the operation of Section 11(c)(i), the Conversion Price will not be adjusted to account for any accrued and unpaid Regular Dividends on any shares of Convertible Preferred Stock being converted.
(2) Conversions Between a Record Date and a Dividend Payment Date. If the Conversion Date of any share of Convertible Preferred Stock to be converted is after a Record Date for a declared Dividend on the Convertible Preferred Stock and on or before the next Dividend Payment Date, then such Dividend will be paid pursuant to Section 6(d) notwithstanding such conversion.
(iv) When Holders Become Stockholders of Record of the Shares of Class A Common Stock Issuable Upon Conversion. The Person in whose name any share of Class A Common Stock is issuable upon conversion of any Convertible Preferred Stock will be deemed to become the holder of record of such share as of the Close of Business on the Conversion Date for such conversion.
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(e) Settlement upon Conversion.
(i) Generally. Subject to Section 11(e)(ii), Section 11(h) and Section 15(b), the consideration due upon settlement of the conversion of each share of Convertible Preferred Stock will consist of a number of shares of Class A Common Stock equal to the quotient obtained by dividing (I) the Liquidation Preference for such shares of Convertible Preferred Stock subject to conversion (plus all accrued and unpaid dividends to, but excluding, the Conversion Date) by (II) the Conversion Price, in each case, as of immediately after the Close of Business on such Conversion Date.
(ii) Payment of Cash in Lieu of any Fractional Share of Class A Common Stock. Subject to Section 15(b), in lieu of delivering any fractional share of Class A Common Stock otherwise due upon conversion of any Convertible Preferred Stock, the Corporation will, to the extent it is legally able to do so and permitted under the terms of its indebtedness, pay cash based on the Last Reported Sale Price per share of Class A Common Stock on the Conversion Date for such conversion (or, if such Conversion Date is not a Trading Day, the immediately preceding Trading Day).
(iii) Delivery of Conversion Consideration. Except as provided in Section 11(f)(i)(4)(B) and 11(i), the Corporation will pay or deliver, as applicable, the Conversion Consideration due upon conversion of any Convertible Preferred Stock on or before the second (2nd) Business Day immediately after the Conversion Date for such conversion.
(f) Conversion Price Adjustments.
(i) Events Requiring an Adjustment to the Conversion Price. The Conversion Price will be adjusted from time to time as follows:
(1) Stock Dividends, Stock Splits and Combinations. If the Corporation issues shares of Class A Common Stock as a dividend or distribution on all or substantially all shares of Class A Common Stock or if the Corporation effects a stock split or a stock combination of the Class A Common Stock (in each case excluding a Class A Common Stock Change Event, as to which Section 11(i) will apply), then the Conversion Price will be adjusted based on the following formula:
where:
| CP0 = | the Conversion Price in effect immediately before the Close of Business on the Record Date for such dividend or<br>distribution, or immediately before the Close of Business on the effective date of such stock split or stock combination, as applicable; |
|---|
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| CP1 = | the Conversion Price in effect immediately after the Close of Business on such Record Date or effective date,<br>as applicable; |
|---|---|
| OS0 = | the number of shares of Class A Common Stock outstanding immediately before the Close of Business on such<br>Record Date or effective date, as applicable, without giving effect to such dividend, distribution, stock split or stock combination; and |
| --- | --- |
| OS1 = | the number of shares of Class A Common Stock outstanding immediately after giving effect to such dividend,<br>distribution, stock split or stock combination. |
| --- | --- |
If any dividend, distribution, stock split or stock combination of the type described in this Section 11(f)(i)(1) is declared or announced, but not so paid or made, then the Conversion Price will be readjusted, effective as of the date the Board of Directors, or any Officer acting pursuant to authority conferred by the Board of Directors, determines not to pay such dividend or distribution or to effect such stock split or stock combination, to the Conversion Price that would then be in effect had such dividend, distribution, stock split or stock combination not been declared or announced.
(2) Tender Offers or Exchange Offers. If the Corporation or any of its Subsidiaries makes a payment in respect of a tender offer or exchange offer for shares of Class A Common Stock (other than solely pursuant to an odd-lot tender offer pursuant to Rule 13e-4(h)(5) under the Exchange Act), and the value (determined as of the Expiration Time by the Board of Directors in good faith) of the cash and other consideration paid per share of Class A Common Stock in such tender or exchange offer exceeds the Last Reported Sale Price per share of Class A Common Stock on the Trading Day immediately after the last date (the “Expiration Date”) on which tenders or exchanges may be made pursuant to such tender or exchange offer (as it may be amended), then the Conversion Price will be decreased based on the following formula:
where:
| CP 0 = | the Conversion Price in effect immediately before the time (the “Expiration Time”) such<br>tender or exchange offer expires; |
|---|---|
| CP 1 = | the Conversion Price in effect immediately after the Expiration Time; |
| --- | --- |
| SP = | the average of the Last Reported Sale Prices per share of Class A Common Stock over the ten<br>(10) consecutive Trading Day period (the “Tender/Exchange Offer Valuation Period”) beginning on, and including, the Trading Day immediately after the Expiration Date; |
| --- | --- |
| OS 0 = | the number of shares of Class A Common Stock outstanding immediately before the Expiration Time (including<br>all shares of Class A Common Stock accepted for purchase or exchange in such tender or exchange offer); |
| --- | --- |
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| AC = | the aggregate value (determined as of the Expiration Time by the Board of Directors in good faith) of all cash<br>and other consideration paid for shares of Class A Common Stock purchased or exchanged in such tender or exchange offer; and |
|---|---|
| OS 1 = | the number of shares of Class A Common Stock outstanding immediately after the Expiration Time (excluding<br>all shares of Class A Common Stock accepted for purchase or exchange in such tender or exchange offer); |
| --- | --- |
provided, however, that the Conversion Price will in no event be adjusted up pursuant to this Section 11(f)(i)(2), except to the extent provided in the immediately following paragraph. The adjustment to the Conversion Price pursuant to this Section 11(f)(i)(2) will be calculated as of the Close of Business on the last Trading Day of the Tender/Exchange Offer Valuation Period but will be given effect immediately after the Expiration Time, with retroactive effect. If the Conversion Date for any share of Convertible Preferred Stock to be converted occurs on the Expiration Date or during the Tender/Exchange Offer Valuation Period, then, notwithstanding anything to the contrary in this Certificate of Designation, the Corporation will, if necessary, delay the settlement of such conversion until the second (2nd) Business Day after the last Trading Day of the Tender/Exchange Offer Valuation Period.
To the extent such tender or exchange offer is announced but not consummated (including as a result of being precluded from consummating such tender or exchange offer under applicable law), or any purchases or exchanges of shares of Class A Common Stock in such tender or exchange offer are rescinded, the Conversion Price will be readjusted to the Conversion Price that would then be in effect had the adjustment been made on the basis of only the purchases or exchanges of shares of Class A Common Stock, if any, actually made, and not rescinded, in such tender or exchange offer.
(3) Rights, Options and Warrants. If the Corporation distributes, to all or substantially all holders of Class A Common Stock, rights, options or warrants (other than rights issued or otherwise distributed pursuant to a stockholder rights plan, as to which Section 11(f)(i)(4)(A) and Section 11(f)(iii) will apply) entitling such holders, for a period of not more than sixty (60) calendar days after the Record Date of such distribution, to subscribe for or purchase shares of Class A Common Stock at a price per share that is less than the average of the Last Reported Sale Prices per share of Class A Common Stock for the ten (10) consecutive Trading Days ending on, and including, the Trading Day immediately before the date such distribution is announced, then the Conversion Price will be decreased based on the following formula:
where:
| CP0 | = | the Conversion Price in effect immediately before the Close of Business on such Record Date; |
|---|
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| CP1 | = | the Conversion Price in effect immediately after the Close of Business on such Record Date; |
|---|---|---|
| OS | = | the number of shares of Class A Common Stock outstanding immediately before the Close of Business on such Record Date; |
| Y | = | a number of shares of Class A Common Stock obtained by dividing (x) the aggregate price payable to exercise such rights, options or warrants by (y) the average of the Last Reported Sale Prices per share of<br>Class A Common Stock for the ten (10) consecutive Trading Days ending on, and including, the Trading Day immediately before the date such distribution is announced; and |
| X | = | the total number of shares of Class A Common Stock issuable pursuant to such rights, options or warrants. |
To the extent such rights, options or warrants are not so distributed, the Conversion Price will be readjusted to the Conversion Price that would then be in effect had the decrease to the Conversion Price for such distribution been made on the basis of only the rights, options or warrants, if any, actually distributed. In addition, to the extent that shares of Class A Common Stock are not delivered after the expiration of such rights, options or warrants (including as a result of such rights, options or warrants not being exercised), the Conversion Price will be readjusted to the Conversion Price that would then be in effect had the decrease to the Conversion Price for such distribution been made on the basis of delivery of only the number of shares of Class A Common Stock actually delivered upon exercise of such rights, option or warrants.
For purposes of this Section 11(f)(i)(3), in determining whether any rights, options or warrants entitle holders of Class A Common Stock to subscribe for or purchase shares of Class A Common Stock at a price per share that is less than the average of the Last Reported Sale Prices per share of Class A Common Stock for the ten (10) consecutive Trading Days ending on, and including, the Trading Day immediately before the date the distribution of such rights, options or warrants is announced, and in determining the aggregate price payable to exercise such rights, options or warrants, there will be taken into account any consideration the Corporation receives for such rights, options or warrants and any amount payable on exercise thereof, with the value of such consideration, if not cash, to be determined by the Board of Directors in good faith.
(4) Spin-Offs and Other Distributed Property.
(A) Distributions Other than Spin-Offs. If the Corporation distributes shares of Capital Stock, evidences of the Corporation’s indebtedness or other assets or property of the Corporation, or rights, options or warrants to acquire the Corporation’s Capital Stock or other securities, to all or substantially all holders of the Class A Common Stock, excluding:
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(I) dividends, distributions, rights, options or warrants for which an adjustment to the Conversion Price is required pursuant to Section 11(f)(i)(1) or Section 11(f)(i)(3);
(II) rights issued or otherwise distributed pursuant to a stockholder rights plan, except to the extent provided in Section 11(f)(iii);
(III) Spin-Offs for which an adjustment to the Conversion Price is required pursuant to Section 11(f)(i)(4)(B);
(IV) a distribution solely pursuant to a tender offer or exchange offer for shares of Class A Common Stock, as to which Section 11(f)(i)(2) will apply; and
(V) a distribution solely pursuant to a Class A Common Stock Change Event, as to which Section 11(i) will apply,
then the Conversion Price will be decreased based on the following formula:
where:
| CP0 | = | the Conversion Price in effect immediately before the Close of Business on the Record Date for such distribution; |
|---|---|---|
| CP1 | = | the Conversion Price in effect immediately after the Close of Business on such Record Date; |
| SP | = | the average of the Last Reported Sale Prices per share of Class A Common Stock for the ten (10) consecutive Trading Days ending on, and including, the Trading Day immediately before the<br>ex-dividend date for such distribution; and |
| FMV | = | the fair market value (as determined by the independent members of the Board of Directors in good faith), as of such Record Date, of the shares of Capital Stock, evidences of indebtedness, assets, property, rights, options or<br>warrants distributed per share of Class A Common Stock pursuant to such distribution; |
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provided, however, that, if FMV is equal to or greater than SP, then, in lieu of the foregoing adjustment to the Conversion Price, each Holder will receive, for each share of Convertible Preferred Stock held by such Holder on such Record Date, at the same time and on the same terms as holders of Class A Common Stock the amount and kind of shares of Capital Stock, evidences of indebtedness, assets, property, rights, options or warrants that such Holder would have received in such distribution if such Holder had owned, on such Record Date, a number of shares of Class A Common Stock equal to the number of shares of Class A Common Stock that would be issuable (determined in accordance with Section 11(e)) in respect of one (1) share of Convertible Preferred Stock that is converted with a Conversion Date occurring on such Record Date (subject to the same arrangements, if any, in such distribution not to issue or deliver a fractional portion of any Capital Stock, evidences of indebtedness, assets, property, rights, options or warrants, but with such arrangement applying separately to each Holder and computed based on the total number of shares of Convertible Preferred Stock held by such Holder on such Record Date).
To the extent such distribution is not so paid or made, the Conversion Price will be readjusted to the Conversion Price that would then be in effect had the adjustment been made on the basis of only the distribution, if any, actually made or paid.
(B) Spin-Offs. If the Corporation distributes or dividends shares of Capital Stock of any class or series, or similar equity interests, of or relating to an Affiliate or Subsidiary or other business unit of the Corporation to all or substantially all holders of the Class A Common Stock (other than solely pursuant to (x) a Class A Common Stock Change Event, as to which Section 11(i) will apply, (y) a tender offer or exchange offer for shares of Class A Common Stock, as to which Section 11(f)(i)(2) will apply; or (z) rights, options or warrants, as to which Section 11(f)(i)(3) will apply), and such Capital Stock or equity interests are listed or quoted (or will be listed or quoted upon the consummation of the transaction) on a U.S. National Securities Exchange (a “Spin-Off”), then the Conversion Price will be decreased based on the following formula:
where:
| CP0 | = | the Conversion Price in effect immediately before the Close of Business on the Record Date for such Spin-Off; |
|---|---|---|
| CP1 | = | the Conversion Price in effect immediately after the Close of Business on such Record Date; |
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| SP | = | the average of the Last Reported Sale Prices per share of Class A Common Stock for each Trading Day in the Spin-Off Valuation Period (as defined below); and |
|---|---|---|
| FMV | = | the product of (x) the average of the Last Reported Sale Prices per share or unit of the Capital Stock or equity interests distributed in such Spin-Off over the ten (10) consecutive<br>Trading Day period (the “Spin-Off Valuation Period”) beginning on, and including, the ex-dividend date for such<br>Spin-Off (such average to be determined as if references to Class A Common Stock in the definitions of “Last Reported Sale Price,” “Trading Day” and “Market Disruption<br>Event” were instead references to such Capital Stock or equity interests); and (y) the number of shares or units of such Capital Stock or equity interests distributed per share of Class A Common Stock in such Spin-Off. |
The adjustment to the Conversion Price pursuant to this Section 11(f)(i)(4)(B) will be calculated as of the Close of Business on the last Trading Day of the Spin-Off Valuation Period but will be given effect immediately after the Close of Business on the Record Date for the Spin-Off, with retroactive effect. If the Conversion Date for any share of Convertible Preferred Stock to be converted occurs during the Spin-Off Valuation Period, then, notwithstanding anything to the contrary in this Certificate of Designation, the Corporation will, if necessary, delay the settlement of such conversion until the second (2nd) Business Day after the last Trading Day of the Spin-Off Valuation Period.
To the extent any dividend or distribution of the type described in Section 11(f)(i)(4)(B) is declared but not made or paid, the Conversion Price will be readjusted to the Conversion Price that would then be in effect had the adjustment been made on the basis of only the dividend or distribution, if any, actually made or paid.
(ii) No Adjustments in Certain Cases.
(1) Certain Events. Without limiting the operation of Section 11(e)(i), the Corporation will not be required to adjust the Conversion Price except pursuant to Section 11(f)(i). Notwithstanding anything to the contrary in this Certificate of Designation, and without limiting the foregoing, the Corporation will not be required to adjust the Conversion Price on account of:
(A) any declaration and/or payment of Dividends on the Convertible Preferred Stock pursuant to Section 6;
(B) upon the issuance of any shares of Class A Common Stock or options or rights to purchase such shares pursuant to any equity-based compensation plans and agreements maintained or sponsored by the Corporation or its Subsidiaries for the benefit of their respective current or former employees, directors, officers or other service providers, including, without limitation, the Infinity Natural Resources, Inc. Omnibus Incentive Plan;
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(C) upon the issuance of any shares of Class A Common Stock pursuant to any option, warrant, right, or exercisable, exchangeable or convertible security, including the Convertible Preferred Stock; or
(D) any declaration and/or payment of (1) any Common Stock Participating Dividend in cash on any shares of Class A Common Stock or (2) distributions in cash made by Infinity Natural Resources, LLC to the holders of its interests, including the Corporation.
(iii) Stockholder Rights Plans. If any shares of Class A Common Stock are to be issued upon conversion of any Convertible Preferred Stock and, at the time of such conversion, the Corporation has in effect any stockholder rights plan, then the Holder of such Convertible Preferred Stock will be entitled to receive, in addition to, and concurrently with the delivery of, the consideration otherwise due upon such conversion, the rights set forth in such stockholder rights plan, unless such rights have separated from the Class A Common Stock at such time, in which case, and only in such case, the Conversion Price will be adjusted pursuant to Section 11(f)(i)(4)(A) on account of such separation as if, at the time of such separation, the Corporation had made a distribution of the type referred to in such Section 11(f)(i)(4)(A) to all holders of Class A Common Stock, subject to readjustment pursuant to Section 11(f)(i)(4)(A) if such rights expire, terminate or are redeemed.
(iv) Determination of the Number of Outstanding Shares of Class A Common Stock. For purposes of Section 11(f)(i), the number of shares of Class A Common Stock outstanding at any time will: (1) include shares issuable in respect of scrip certificates issued in lieu of fractions of shares of Class A Common Stock; and (2) exclude shares of Class A Common Stock held in the Corporation’s treasury (unless the Corporation pays any dividend or makes any distributions on shares of Class A Common Stock held in its treasury).
(v) Calculations. All calculations with respect to the Conversion Price and adjustments thereto will be made to the nearest 1/100th of a cent (with 5/1,000ths rounded upward).
(vi) Notice of Conversion Price Adjustments. Upon the effectiveness of any adjustment to the Conversion Price pursuant to Section 11(f)(i), the Corporation will promptly send notice to the Holders containing: (1) a brief description of the transaction or other event on account of which such adjustment was made; (2) the Conversion Price in effect immediately after such adjustment; and (3) the effective time of such adjustment.
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(g) Voluntary Conversion Price Decreases.
(i) Generally. To the fullest extent permitted by applicable law and applicable stock exchange rules, the Corporation, from time to time, may (but is not required to) decrease the Conversion Price by any amount if: (1) the Board of Directors determines that such decrease is in the Corporation’s best interest or that such decrease is advisable to avoid or diminish the recognition of income or gain for U.S. federal (or applicable state or local) income tax purposes by the holders of Class A Common Stock or holders of rights to purchase Class A Common Stock as a result of any dividend or distribution of shares (or rights to acquire shares) of Class A Common Stock or any similar event; (2) such decrease is in effect for a period of at least twenty (20) Business Days; and (3) such decrease is irrevocable during such period; provided, however, that any such decrease that would be reasonably expected to result in the recognition of income or gain to any Holder (or its direct or indirect owners) for U.S. federal (or applicable state or local) income tax purposes shall require the affirmative vote or consent of the Majority Holders.
(ii) Notice of Voluntary Decrease. If the Board of Directors determines to decrease the Conversion Price pursuant to Section 11(g)(i), then, no later than the first Business Day of the related twenty (20) Business Day period referred to in Section 11(g)(i), the Corporation will send notice to each Holder, the Transfer Agent and the Conversion Agent of such decrease to the Conversion Price, the amount thereof and the period during which such decrease will be in effect.
(h) Restriction on Conversions.
(i) Limitation on Conversion Right. Notwithstanding anything to the contrary in this Certificate of Designation, unless and until the Requisite Stockholder Approval is obtained, the aggregate number of shares of Class A Common Stock issuable or deliverable upon conversion of any Convertible Preferred Stock (subject to proportionate adjustment for stock dividends, stock splits or stock combinations with respect to the Common Stock) shall be capped at nineteen point nine percent (19.9%) of the shares of Common Stock issued and outstanding as of the date hereof (subject to proportionate adjustment for stock dividends, stock splits or stock combinations with respect to the Class A Common Stock; the restriction set forth in this sentence, the “Issuance Limitation”). If any Conversion Consideration otherwise due upon the conversion of any Convertible Preferred Stock is not delivered as a result of the Issuance Limitation, then the Corporation’s obligation to deliver such Conversion Consideration will not be extinguished, and the Corporation will deliver such Conversion Consideration as soon as reasonably practicable after the Holder of such Convertible Preferred Stock provides written confirmation to the Corporation that such delivery will not contravene the Issuance Limitation. Any purported delivery of shares of Class A Common Stock upon conversion of any Convertible Preferred Stock will be void and have no effect to the extent, and only to the extent, that such delivery would contravene the Issuance Limitation.
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(ii) Share Reserve Provisions. On the Initial Issue Date, the Number of Reserved Shares is not less than the Initial Share Reserve Requirement. The Corporation shall at all times reserve and keep available a Number of Reserved Shares to be no less than the Continuing Share Reserve Requirement at any time when any Convertible Preferred Stock is outstanding (including, if applicable, and to the fullest extent permitted by applicable law, by seeking the approval of its stockholders to amend the Certificate of Incorporation to increase the number of authorized shares of Class A Common Stock).
(iii) Limitation on Certain Transactions. Notwithstanding anything in this Section 11(h) to the contrary, unless and until the Requisite Stockholder Approval is obtained, the Corporation may not decrease the Conversion Price pursuant to Section 11(g)(i) to the extent such decrease would cause the Issuance Limitation to be contravened.
(i) Effect of Class A Common Stock Change Event.
(i) Generally. If there occurs any:
(1) recapitalization, reclassification or change of the Class A Common Stock, other than (x) changes solely resulting from a stock split or a stock combination of the Class A Common Stock, (y) a change only in par value or from par value to no par value or no par value to par value or (z) recapitalization, reclassifications or change of the Class A Common Stock that do not involve the issuance of any other series or class of securities;
(2) consolidation, merger, business combination or binding or statutory share exchange involving the Corporation, including a transaction by which the Corporation becomes a Subsidiary of a Parent Company;
(3) sale, lease or other transfer of all or substantially all of the assets of the Corporation and its Subsidiaries, taken as a whole, to any Person; or
(4) other substantially similar event,
and, as a result of which, the Class A Common Stock is converted into, or is exchanged for, or represents solely the right to receive, other securities, cash or other property, or any combination of the foregoing (such an event, a “Class A Common Stock Change Event,” and such other securities, cash or property, the “Reference Property,” and the amount and kind of Reference Property that a holder of one (1) share of Class A Common Stock would be entitled to receive on account of such Class A Common Stock Change Event (without giving effect to any arrangement not to issue or deliver a fractional portion of any security or other property), a “Reference Property Unit”), then, notwithstanding anything to the contrary in this Certificate of Designation,
(A) from and after the effective time of such Class A Common Stock Change Event: (I) the consideration due upon conversion of any Convertible Preferred Stock will be determined in the same manner as if each reference to any number of shares of Class A Common Stock in this Section 11 or in Section 12, or in any related definitions, were instead a reference to the same number of Reference Property Units; (II) for purposes of Section 8, each reference to any number of shares of Class A Common Stock in such Sections (or in any related definitions) will instead be deemed to be a reference to the same number of Reference Property Units; and (III) for purposes of the definitions of “Change of Control,” the terms “Class A Common Stock”, “Common Stock” and “common equity” will be deemed to mean the common equity (including depositary receipts representing common equity), if any, forming part of such Reference Property; and
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(B) if such Reference Property Unit consists entirely of cash, then the Corporation will pay the cash due in respect of all conversions whose Conversion Date occurs on or after the effective date of such Class A Common Stock Change Event no later than the tenth (10th) Business Day after the relevant Conversion Date; and
(C) for these purposes: (I) the Daily VWAP of any Reference Property Unit or portion thereof that consists of a class of common equity securities will be determined by reference to the definition of “Daily VWAP,” substituting, if applicable, the Bloomberg page for such class of securities in such definition; and (II) the Daily VWAP of any Reference Property Unit or portion thereof that does not consist of a class of common equity securities, and the Last Reported Sale Price of any Reference Property Unit or portion thereof that does not consist of a class of securities, will be the fair market value of such Reference Property Unit or portion thereof, as applicable, determined in good faith by the independent members of the Board of Directors; provided, that the fair market value of cash denominated in U.S. dollars shall be the face amount thereof.
If the Reference Property consists of more than a single type of consideration to be determined based in part upon any form of stockholder election, then the composition of the Reference Property Unit will be deemed to be the weighted average of the types and amounts of consideration actually received, per share of Class A Common Stock, by the holders of Class A Common Stock. The Corporation will notify the Holders of such weighted average as soon as practicable after such determination is made. For the avoidance of doubt, the Corporation shall be required to comply with Section 9 with respect to any Class A Common Stock Change Event that constitutes a Change of Control.
(ii) Compliance Covenant. The Corporation will not become a party to any Class A Common Stock Change Event unless its terms are consistent with this Section 11(i).
(iii) Execution of Supplemental Instruments. On or before the date the Class A Common Stock Change Event becomes effective, the Corporation and, if applicable, the resulting, surviving or transferee Person (if not the Corporation) of such Class A Common Stock Change Event (the “Successor Person”) will execute and deliver such supplemental instruments, if any, as the Corporation reasonably determines are necessary or desirable to: (1) provide for subsequent adjustments to the Conversion Price pursuant to Section 11(f)(i) in a manner consistent with this Section 11(i); and (2) give effect to such other provisions, if any, as the Corporation reasonably determines are
57
appropriate to preserve the economic interests of the Holders and to give effect to Section 11(i)(i). If the Reference Property includes shares of stock or other securities or assets of a Person other than the Successor Person, then such other Person will also execute such supplemental instrument(s), if any, and such supplemental instrument(s) will contain such additional provisions, if any, that the Corporation reasonably determines are appropriate to preserve the economic interests of Holders.
(iv) Notice of Class A Common Stock Change Event. The Corporation will provide notice of each Class A Common Stock Change Event to Holders by no less than five (5) Business Days prior to the effective date of the Class A Common Stock Change Event.
Section 12. Certain Provisions Relating to the Issuance ofClass A Common Stock.
(a) Equitable Adjustments to Prices. Whenever this Certificate of Designation requires the Corporation to calculate the average of the Last Reported Sale Prices or Daily VWAPs, or any function thereof, over a period of multiple days (including to calculate an adjustment to the Conversion Price), the Corporation will make appropriate adjustments, if any, to those calculations to account for any adjustment to the Conversion Price pursuant to Section 11(h)(i) that becomes effective, or any event requiring such an adjustment to the Conversion Price where effective date or Expiration Date, as applicable, of such event occurs, at any time during such period.
(b) Status of Shares of Class A Common Stock. Each share of Class A Common Stock delivered upon conversion of the Convertible Preferred Stock of any Holder will be a newly issued share and will be duly authorized and validly issued, fully paid, non-assessable, free from preemptive rights and free of any lien or adverse claim (except to the extent of any lien or adverse claim created by the action or inaction of such Holder or the Person to whom such share of Class A Common Stock will be delivered). If the Class A Common Stock is then listed on any securities exchange, or quoted on any inter-dealer quotation system, then the Corporation will cause each such share of Class A Common Stock, when so delivered, to be admitted for listing on such exchange or quotation on such system.
Section 13. Taxes. The Corporation shall pay any and all stock transfer, documentary, issue, stamp and similar taxes that may be payable in respect of any issuance or delivery of shares of Convertible Preferred Stock, shares of Class A Common Stock or other securities issued on account of Convertible Preferred Stock pursuant to this Certificate of Designation; provided, however, that in the case of conversion of Convertible Preferred Stock, the Corporation shall not be required to pay any such tax that may be payable in respect of any transfer involved in the issuance or delivery of shares of Convertible Preferred Stock, shares of Class A Common Stock or other securities to a beneficial owner other than the beneficial owner of the Convertible Preferred Stock immediately prior to such conversion, and shall not be required to make any such issuance, delivery or payment unless and until the Person otherwise entitled to such issuance, delivery or payment has paid to the Corporation the amount of any such tax or has established, to the reasonable satisfaction of the Corporation, that such tax has been paid or is not payable.
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Section 14. Term. Except as expressly provided in this Certificate of Designation, the shares of Convertible Preferred Stock shall not be redeemable or otherwise mature and the term of the Convertible Preferred Stock shall be perpetual.
Section 15. Calculations.
(a) Responsibility; Schedule of Calculations. Except as otherwise provided in this Certificate of Designation, the Corporation will be responsible for making all calculations called for under this Certificate of Designation, including determinations of the Conversion Price, the Daily VWAPs, the Last Reported Sale Prices and accumulated Regular Dividends on the Convertible Preferred Stock. The Corporation and the Board of Directors, as applicable, will make all calculations in good faith, and, absent manifest error, its calculations will be final and binding on all Holders to the fullest extent permitted by applicable law. The Corporation will provide a schedule of such calculations to any Holder upon written demand.
(b) Calculations Aggregated for Each Holder. The composition of the Conversion Consideration due upon conversion of the Convertible Preferred Stock of any Holder will be computed based on the total number of shares of Convertible Preferred Stock of such Holder being converted with the same Conversion Date. For these purposes, unless otherwise provided in this Certificate of Designation, any cash amounts due to such Holder in respect thereof will be rounded to the nearest cent.
Section 16. Notices. All notices and other communications pursuant to this Certificate of Designation shall be in writing and delivered personally, by facsimile or e-mail (with confirmation of receipt requested from the recipient, in the case of e-mail), or sent by a nationally recognized overnight courier service guaranteeing next day delivery, and (i) if to any Holder, to such Holder’s address shown on the Register, and (ii) if to the Corporation, to its principal executive offices and to the e-mail address designated by the Corporation by notice to the Holders as of the date hereof (as may be amended from time to time by notice to the Holders in accordance with this Section 16). Unless otherwise specified herein, all notices and communications hereunder shall be deemed to have been given upon the earlier of receipt thereof or three (3) Business Days after the mailing thereof if sent by registered or certified mail with postage prepaid, or by private courier service.
Section 17. Facts Ascertainable. When the terms of this Certificate of Designation refer to a specific agreement or other document to determine the meaning or operation of a provision hereof, the Corporation shall maintain a copy of such agreement or document at the principal executive offices of the Corporation and a copy thereof shall be provided free of charge to any Holder who makes a written demand therefore. The Corporation shall also maintain a written record of the Initial Issue Date, the number of shares of Convertible Preferred Stock issued to a Holder and the date of each such issuance, and shall furnish such written record free of charge to any Holder who makes a written demand therefor.
Section 18. Waiver. The powers (including voting powers), if any, of the Convertible Preferred Stock and the preferences and relative, participating, optional, special or other rights, if any, and the qualifications, limitations or restrictions, if any, of the Convertible Preferred Stock may be waived as to all shares of Convertible Preferred Stock in any instance (without the necessity of calling, noticing or holding a meeting of stockholders) by the written consent or agreement of the Majority Holders, consenting or agreeing separately as a single class.
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Section 19. Severability. If any term of the Convertible Preferred Stock set forth herein is invalid, unlawful or incapable of being enforced by reason of any rule of law or public policy, all other terms set forth herein which can be given effect without the invalid, unlawful or unenforceable term will, nevertheless and to the fullest extent permitted by applicable law, remain in full force and effect, and no term herein set forth will be deemed dependent upon any other such term unless so expressed herein.
Section 20. No Other Rights. The Convertible Preferred Stock will have no powers (including voting powers), if any, or preferences and relative, participating, optional, special or other rights, if any, or qualifications, limitations or restrictions, if any, except as provided in this Certificate of Designation or the Certificate of Incorporation or as required by applicable law.
[The Remainder of This Page Intentionally Left Blank; Signature Page Follows]
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IN WITNESS WHEREOF, the Corporation has caused this Certificate of Designation to be duly executed on this 23rd day of February, 2026.
| INFINITY NATURAL RESOURCES, INC. | |
|---|---|
| By: | /s/ Zack Arnold |
| Name: Zack Arnold | |
| Title: President and Chief Executive Officer |
[Signature Page to Certificate of Designation]
EXHIBIT A
FORM OF PREFERRED STOCK CERTIFICATE
[Insert Restricted Stock Legend, if applicable]
Infinity Natural Resources, Inc.
Series A Convertible Preferred Stock
Certificate No. [ ]
Infinity Natural Resources, Inc., a Delaware corporation (the “Corporation”), certifies that [ ] is the registered owner of [ ] shares of the Corporation’s Series A Convertible Preferred Stock, par value $0.01 per share (the “Convertible Preferred Stock”) evidenced by this certificate (this “Certificate”). The powers (including voting powers), if any, or preferences and relative, participating, optional, special or other rights, if any, or qualifications, limitations or restrictions, if any, are set forth in the Certificate of Designation of the Corporation establishing the Convertible Preferred Stock (as the same may be amended or amended and restated, the “Certificate of Designation”). Capitalized terms used in this Certificate without definition have the respective meanings ascribed to them in the Certificate of Designation.
Additional terms of this Certificate are set forth on the other side of this Certificate.
[The Remainder of This Page Intentionally Left Blank; Signature Page Follows]
A-1
IN WITNESS WHEREOF, Infinity Natural Resources, Inc. has caused this instrument to be duly executed as of the date set forth below.
| INFINITY NATURAL RESOURCES, INC. | |
|---|---|
| Date: | By: |
| Name: | |
| Title: | |
| Date: | By: |
| Name: | |
| Title: |
A-2
TRANSFER AGENT’S COUNTERSIGNATURE
Equiniti Trust Company, LLC, as Transfer Agent, certifies that this Certificate evidences shares of Convertible Preferred Stock referred to in the within-mentioned Certificate of Designation.
| Date: | By: | |
|---|---|---|
| Authorized Signatory |
A-3
INFINITY NATURAL RESOURCES, INC.
Series A Convertible Preferred Stock
This Certificate evidences duly authorized, issued and outstanding shares of Convertible Preferred Stock. Notwithstanding anything to the contrary in this Certificate, to the extent that any provision of this Certificate conflicts with the provisions of the Certificate of Designation or the Certificate of Incorporation, the provisions of the Certificate of Designation or the Certificate of Incorporation, as applicable, will control.
- Countersignature. This Certificate will not be valid until countersigned by the Transfer Agent.
2. Abbreviations. Customary abbreviations may be used in the name of a Holder or its assignee, such as TEN COM (tenants in common), TENENT (tenants by the entireties), JT TEN (joint tenants with right of survivorship and not as tenants in common), CUST (custodian), and U/G/M/A (Uniform Gift to Minors Act).
* * *
To request a copy of the Certificate of Designation, which the Corporation will provide to any Holder at no charge, please send a written demand to the following address:
Infinity Natural Resources, Inc.
2605 Cranberry Square
Morgantown, WV 26508
Attention: Secretary
A-4
OPTIONAL CONVERSION NOTICE
Infinity Natural Resources, Inc.
Series A Convertible Preferred Stock
Subject to the terms of the Certificate of Designation, by executing and delivering this Optional Conversion Notice, the undersigned Holder of the Convertible Preferred Stock identified below directs the Corporation to convert (check one):
| ☐ | all of the shares of Convertible Preferred Stock |
|---|---|
| ☐ | __________________* shares of Convertible Preferred Stock |
| --- | --- |
evidenced by Certificate No. _______________.
| Date: | |
|---|---|
| (Legal Name of Holder) | |
| By: | |
| Name: | |
| Title: |
___________________________
| * | Must be a whole number. |
|---|
A-5
CHANGE OF CONTROL REPURCHASE NOTICE
Infinity Natural Resources, Inc.
Series A Convertible Preferred Stock
Subject to the terms of the Certificate of Designation, by executing and delivering this Change of Control Repurchase Notice, the undersigned Holder of the Convertible Preferred Stock identified below is exercising its Change of Control Repurchase Right with respect to (check one):
| ☐ | all of the shares of Convertible Preferred Stock |
|---|---|
| ☐ | __________________* shares of Convertible Preferred Stock |
| --- | --- |
evidenced by Certificate No. _______________.
The undersigned acknowledges that Certificate identified above, duly endorsed for transfer, must be delivered to the Paying Agent before the Change of Control Repurchase Price will be paid.
| Date: | |
|---|---|
| (Legal Name of Holder) | |
| By: | |
| Name: | |
| Title: |
___________________________
| * | Must be a whole number. |
|---|
A-6
ASSIGNMENT FORM
Infinity Natural Resources, Inc.
Series A Convertible Preferred Stock
Subject to the terms of the Certificate of Designation, the undersigned Holder of the within Convertible Preferred Stock assigns to:
| Name: |
|---|
| Address: |
| Social security or tax identification number: |
the within Convertible Preferred Stock and all rights thereunder irrevocably appoints:
as agent to transfer the within Convertible Preferred Stock on the books of the Corporation. The agent may substitute another to act for him/her.
| Date: | |
|---|---|
| (Legal Name of Holder) | |
| By: | |
| Name: | |
| Title: |
A-7
EXHIBIT B
FORM OF RESTRICTED STOCK LEGEND
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR ANY STATE SECURITIES LAWS. THESE SECURITIES MAY NOT BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, REGISTRATION.
FORM OF TRANSFER RESTRICTIONS LEGEND
THE SECURITIES REPRESENTED HEREBY ARE SUBJECT TO RESTRICTIONS ON TRANSFER AS PURSUANT TO SECTIONS 4.2(A) AND 4.2(B) OF THAT CERTAIN SECURITIES PURCHASE AGREEMENT, DATED AS OF [•], 2026, BY AND AMONG THE COMPANY AND THE PURCHASERS THERETO GOVERNING THE INITIAL ISSUANCE OF THE SERIES A CONVERTIBLE PREFERRED STOCK OF THE COMPANY.
B-1
EXHIBIT C
MINIMUM HEDGING
As of the last day of any fiscal quarter (each such last day of any fiscal quarter, a “Minimum Hedging Requirement Date”), the Company shall, or shall cause its applicable Subsidiary to, maintain commodity hedging agreements hedging aggregate notional volumes of crude oil, natural gas, and natural gas liquids covering at least fifty percent (50.0%) of the reasonably projected total production on a net boe (barrel of oil equivalent) basis of crude oil, natural gas (measured on a 1:6 basis with crude oil), and natural gas liquids from proved developed producing oil and gas properties evaluated in the Reserve Report most recently delivered to the Purchasers pursuant to Section 4.4 of the Purchase Agreement for each full calendar month during the period of twenty-four (24) full calendar months following such Minimum Hedging Requirement Date.
To the extent that, as of any Minimum Hedging Requirement Date, additional commodity hedging agreements are required to satisfy the foregoing requirements, then the Company shall, or shall cause its applicable Subsidiary to, enter into such additional commodity hedging agreements within sixty (60) days following such Minimum Hedging Requirement Date.
Upon request of Quantum, the Company shall deliver to Quantum a report or other evidence reasonably satisfactory to Quantum that the Company has complied with the commodity hedging requirements set forth on this Exhibit C.
C-1
EX-4.1
Exhibit 4.1
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (as may be amended, restated, supplemented or otherwise modified from time to time, this “Agreement”) is dated as of February 23, 2026, by and among Infinity Natural Resources, Inc., a Delaware corporation (the “Company”), and the undersigned holders of Registrable Securities (as defined below), and such other holders of Registrable Securities that join this Agreement pursuant to the provisions herein. Such holders of Registrable Securities party hereto are collectively referred to herein as the “Securityholders.”
WHEREAS, this Agreement is entered into in connection with the closing (the “Closing”) of the issuance of an aggregate 350,000 shares of the Series A Convertible Preferred Stock (as defined below) pursuant to the Securities Purchase Agreement, dated as of February 18, 2026, by and among the Company and the Securityholders (the “Securities Purchase Agreement”), which are convertible into shares of Class A Common Stock (as defined below);
WHEREAS, as a condition to each of the parties’ obligations under the Securities Purchase Agreement, the Company and the Securityholders are entering into this Agreement for the purpose of granting certain registration rights to the Securityholders; and
WHEREAS, in consideration of the premises and the mutual representations, warranties, covenants and agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties agree as follows:
ARTICLE I
DEFINITIONS
In this Agreement:
“Affiliate” has the meaning ascribed thereto in Rule 12b-2 promulgated under the Exchange Act, as in effect on the date hereof.
“Agreement” has the meaning set forth in the Preamble.
“Business Day” means a day other than a Saturday, Sunday or other day on which commercial banks are authorized or required by applicable law to be closed in New York, New York.
“Carnelian” means Etineles Holdings V, LLC, a Delaware limited liability company, and its Affiliates.
“Certificate of Designation” means the Certificate of Designation relating to the Series A Convertible Preferred Stock, as it may be amended or amended and restated from time to time.
“Class A Common Stock” means the shares of Class A common stock, par value $0.01 per share, of the Company, and any other capital stock of the Company into which such common stock is reclassified or reconstituted.
“Closing” has the meaning set forth in the Preamble.
“Company” has the meaning set forth in the Preamble.
“Control” (including its correlative meanings, “Controlled by” and “under common Control with”) means possession, directly or indirectly, of the power to direct or cause the direction of management or policies (whether through ownership of securities or partnership or other ownership interests, by contract or otherwise) of a Person.
“Demand Notice” has the meaning set forth in Section 3.1 hereof.
“Effectiveness Period” has the meaning set forth in Section 2.2.
“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder, as the same may be amended from time to time.
“Existing Registration Rights Agreement” means that certain Registration Rights Agreement, dated February 3, 2025, by and among the Company and each of the other signatories from time to time party thereto.
“Existing RRA Holders” means the “Securityholders” as defined in the Existing Registration Rights Agreement.
“FINRA” means the Financial Industry Regulatory Authority, Inc.
“Person” means an individual, a partnership, a corporation, a limited liability company, an association, a joint stock company, a trust, a joint venture, a cooperative, an unincorporated organization or other form of business organization, whether or not regarded as a legal entity under applicable law, or any governmental authority or any department, agency or political subdivision thereof.
“Quantum” means INR (II) Investments, LLC, a Delaware limited liability company, and its Affiliates.
“Recognized Exchange” means The New York Stock Exchange, the Nasdaq Stock Market or any securities exchange on which similar securities of the Company are then listed.
“Registrable Securities” means (a) any shares of Class A Common Stock issuable upon the conversion of the Series A Convertible Preferred Stock in accordance with the Certificate of Designation and (b) any other securities issued or issuable with respect to any such shares of Class A Common Stock by way of share split, share dividend (including dividends paid in kind), distribution, recapitalization, merger, exchange––, replacement or similar event or otherwise. For purposes of this Agreement, Registrable Securities shall cease to be Registrable Securities when (a) a registration statement covering the resale of such Registrable Securities has been declared effective under the Securities Act by the SEC and such Registrable Securities have been sold, transferred, disposed of or exchanged pursuant to such effective registration statement; (b) such Registrable Securities have been sold pursuant to Rule 144 or Rule 145 (or any successor rules or regulations then in force); (c) such Registrable Securities cease to be outstanding (or issuable upon exchange); or (d) such Registrable Securities become eligible for resale without volume or manner-of-sale restrictions and without current public information pursuant to Rule 144 and the Securityholder beneficially owns less than 3% of the outstanding shares of Class A Common Stock (determined assuming the conversion of all shares of Series A Convertible Preferred Stock).
2
“Registration Expenses” means any and all expenses incurred in connection with the performance of or compliance with this Agreement, including:
(a) all SEC, stock exchange or FINRA registration and filing fees (including, if applicable, the fees and expenses of any “qualified independent underwriter,” as such term is defined in Rule 5121 of FINRA, and of its counsel);
(b) all fees and expenses of complying with securities or blue sky laws (including fees and disbursements of counsel for the underwriters in connection with blue sky qualifications of the Registrable Securities);
(c) all printing, messenger and delivery expenses;
(d) all fees and expenses incurred in connection with the listing of the Registrable Securities on any Recognized Exchange or FINRA and all rating agency fees;
(e) the reasonable fees and disbursements of counsel for the Company and of its independent public accountants, including the expenses of any special audits and/or comfort letters required by or incident to such performance and compliance (including, without limitation, any such audits and comfort letters relating to financial statements pursuant to Rule 3-05 of Regulation S-X and Article 11 thereunder);
(f) any fees and disbursements of underwriters customarily paid by the issuers or sellers of Securities, including liability or similar insurance if the Company so desires or if the underwriters so require, and the reasonable fees and expenses of any special experts retained in connection with the requested registration, but, for the avoidance of doubt, excluding underwriting discounts, selling commissions and transfer taxes, if any;
(g) the costs and expenses of the Company relating to analyst and investor presentations or any “road show” undertaken in connection with the registration and/or marketing of the Registrable Securities (including the reasonable out-of-pocket expenses of the Securityholders); and
(h) any other fees and disbursements customarily paid by the issuers of Securities;
provided, however, that Registration Expenses shall not include any Selling Expenses.
“SEC” means the U.S. Securities and Exchange Commission or any successor agency.
“Securities” means capital stock, limited partnership interests, limited liability company interests, beneficial interests, warrants, options, notes, bonds, debentures and other securities, equity interests, ownership interests and similar obligations of every kind and nature of any Person.
3
“Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder, as the same may be amended from time to time.
“Securities Purchase Agreement” has the meaning set forth in the Preamble.
“Securityholders” has the meaning set forth in the Preamble.
“Selling Expenses” means all underwriting discounts, fees, selling commissions and stock transfer taxes applicable to the securities registered by the Securityholders, in addition to legal fees incurred by Securityholders in connection with the Company’s performance of its obligations under this Agreement.
“Series A Convertible Preferred Stock” means the Company’s Series A Convertible Preferred Stock, par value $0.01 per share.
“Shares” means shares of Class A Common Stock of the Company. Shares held by or on behalf of a Securityholder, the certificate for which does not bear a Securities Act restrictive legend, which Shares may be resold freely without registration under the Securities Act, will not be considered Shares for purposes of the demand and piggyback provisions of this Agreement.
“Shelf Registration” has the meaning set forth in Section 2.1.
“Shelf Registration Statement” has the meaning set forth in Section 2.1.
“Subsidiary” means, with respect to any Person, any corporation, limited liability company, partnership, association or other business entity of which: (a) if a corporation, a majority of the total voting power of shares of stock entitled (without regard to the occurrence of any contingency) to vote in the election of directors, representatives or trustees thereof is at the time owned or Controlled, directly or indirectly, by that Person or one or more of the other Subsidiaries of that Person or a combination thereof; or (b) if a limited liability company, partnership, association or other business entity, a majority of the total voting power of stock (or equivalent ownership interest) of the limited liability company, partnership, association or other business entity is at the time owned or Controlled, directly or indirectly, by any Person or one or more Subsidiaries of that Person or a combination thereof. For purposes hereof, a Person or Persons shall be deemed to have a majority ownership interest in a limited liability company, partnership, association or other business entity if such Person or Persons shall be allocated a majority of limited liability company, partnership, association or other business entity gains or losses or shall be or Control the managing director or general partner of such limited liability company, partnership, association or other business entity.
“Underwritten Offering” means an offering (including an offering pursuant to a Shelf Registration Statement) in which Shares are issued and allotted to investors and/or to an underwriter on a firm commitment basis for reoffering to the public.
“WKSI” means a well-known seasoned issuer, as defined in Rule 405 under the Securities Act.
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ARTICLE II
SHELF REGISTRATION
2.1 Shelf Registration Statement. Subject to the other applicable provisions of this Agreement, the Company shall file within 60 days of the date hereof, and use its commercially reasonable efforts to cause to go effective as promptly as practicable thereafter, a registration statement covering (or amend an existing registration statement to cover) the sale or distribution from time to time by the Securityholders, on a delayed or continuous basis pursuant to Rule 415 of the Securities Act (or any similar provision adopted by the SEC then in effect), of all of the Registrable Securities on Form S-3 (except if the Company is not then eligible to register for resale the Registrable Securities on Form S-3, then such registration shall be on another appropriate form (including Form S-1) and shall provide for the registration of such Registrable Securities for resale by such Securityholders in accordance with any reasonable method of distribution elected by the Securityholders and provided for in such registration statement) (the “Shelf Registration Statement” and such registration, the “Shelf Registration”), and, at the Company’s option, if the Company is a WKSI as of the filing date, the Shelf Registration Statement may be an Automatic Shelf Registration Statement, or a prospectus supplement to an effective Automatic Shelf Registration Statement that shall become effective upon filing with the SEC pursuant to Rule 462(e).
2.2 Effectiveness Period. Once effective, the Company shall, subject to the other applicable provisions of this Agreement, use its commercially reasonable efforts to cause the Shelf Registration Statement to be continuously effective (including by filing a new Shelf Registration Statement, if necessary) and usable until the earlier of (a) the date on which all Registrable Securities included in such registration have been sold or distributed pursuant to the Shelf Registration Statement, (b) the date as of which there are no longer in existence any Registrable Securities covered by the Shelf Registration Statement, and (c) an earlier date agreed to in writing by the Securityholders of a majority of the Registrable Securities (the “Effectiveness Period”).
ARTICLE III
DEMAND ANDPIGGYBACK RIGHTS
3.1 Demand and Piggyback Rights for Shelf Takedowns. Upon the receipt of a written demand of any Securityholder made at least six months after Closing (assuming the Shelf Registration Statement is effective) (a “Demand Notice”), the Company will facilitate in the manner described in this Agreement an Underwritten Offering of Registrable Securities off of the Shelf Registration Statement; provided that (a) the market value, based on the closing price of the Class A Common Stock on the Business Day immediately preceding the date of the Demand Notice, of the aggregate amount of Registrable Securities requested to be included by the demanding Securityholder in such Underwritten Offering is at least $75 million, and (b) the Company shall not be obligated to effect more than four such Underwritten Offering demands in any twelve-month period; provided, that any Underwritten Offering demanded by the Existing RRA Holders for which the Securityholders can piggyback shall count towards the limitation set forth in clause (b) as long as such Underwritten Offering is consummated. In connection with any Underwritten Offering (whether pursuant to the exercise of such demand rights by any Securityholder, the Existing RRA Holders or at the initiative of the Company), the Securityholders may exercise piggyback rights to have included in such takedown Registrable Securities held by them that are registered on such shelf.
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3.2 Limitations on Demand and Piggyback Rights.
(a) Any demand for an Underwritten Offering, and the exercise of any piggyback registration rights, will be subject to the constraints of any applicable lockup arrangements, and any such demand must be deferred until such lockup arrangements no longer apply. If a demand has been made for an Underwritten Offering, no further demands may be made so long as the related offering is still being pursued. Notwithstanding anything in this Agreement to the contrary, the Securityholders will not have piggyback or other registration rights with respect to the following registered primary offerings by the Company: (i) a registration relating solely to employee benefit plans; (ii) a registration on Form S-4 or Form S-8 (or other similar successor forms then in effect under the Securities Act); (iii) a registration pursuant to which the Company is offering to exchange its own Securities for other Securities; (iv) a registration statement relating solely to dividend reinvestment or similar plans; (v) a shelf registration statement pursuant to which only the initial purchasers and subsequent transferees of debt securities of the Company or any Subsidiary that are convertible for common equity and that are initially issued pursuant to Rule 144A and/or Regulation S of the Securities Act may resell such notes and sell the common equity into which such notes may be converted; (vi) a registration where the Registrable Securities are not being sold for cash; (vii) an exchange registration; or (viii) a registration of Securities where the offering is a bona fide offering of debt securities, even if such Securities are convertible into or exchangeable or exercisable for Shares.
(b) The Company may postpone the filing of the Shelf Registration Statement or suspend the effectiveness of any Shelf Registration Statement for a reasonable “blackout period” not in excess of 90 days if the board of directors of the Company determines in good faith that such registration or offering could: (i) materially interfere with a bona fide business, reorganization, acquisition or divestiture or financing transaction of the Company or its Subsidiaries; (ii) require disclosure of material, non-public information that the Company has a bona fide business purpose for preserving as confidential; or (iii) or is reasonably likely to require premature disclosure of information, the premature disclosure of which could materially and adversely affect the Company; provided that the Company shall not delay the filing of any demanded registration statement more than once in any 12-month period (except that the Company shall be able to use this right more than once in any 12-month period if the Company is exercising such right during the 15-day period prior to the Company’s regularly scheduled quarterly earnings announcement and the total number of days of postponement in such 12-month period does not exceed 90 days). The blackout period will end upon the earlier to occur of, (i) in the case of a bona fide business, acquisition or divestiture or financing transaction, a date not later than 90 days from the date such deferral commenced, and (ii) in the case of disclosure of non-public information, the earlier to occur of (x) the filing by the Company of its next succeeding Annual Report on Form 10-K or Quarterly Report on Form 10-Q, or (y) the date upon which such information is otherwise disclosed or becomes public knowledge.
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ARTICLE IV
NOTICES, CUTBACKS AND OTHER MATTERS
4.1 Notifications Regarding Demanded Underwritten Takedowns.
(a) The Company will keep the Securityholders reasonably apprised of all pertinent aspects of any Underwritten Offering demanded by any Securityholder in order that other Securityholders may have a reasonable opportunity to exercise their related piggyback rights. Without limiting the Company’s obligation as described in the preceding sentence, having a reasonable opportunity requires that the Securityholders be notified by the Company of an anticipated Underwritten Offering (whether pursuant to a demand made by any Securityholder, the Existing RRA Holders or at the Company’s own initiative) no later than 5:00 p.m., New York City time, on (i) if applicable, the second Business Day prior to the date on which the preliminary prospectus or prospectus supplement intended to be used in connection with pre-pricing marketing efforts for such takedown is finalized, and (ii) in all other cases, the second Business Day prior to the date on which the pricing of the relevant takedown occurs.
(b) Any Securityholder wishing to exercise its piggyback rights with respect to an Underwritten Offering must notify the Company and the other Securityholders of the number of Registrable Securities it seeks to have included in such takedown. Such notice must be given as soon as practicable, but in no event later than 5:00 p.m., New York City time, on the Business Day after receipt of such notice. If no such notice is received from a Securityholder by the Company within the specified time, such Securityholder shall have no further right to participate in such takedown.
(c) Pending any required public disclosure and subject to applicable legal requirements, the parties will maintain appropriate confidentiality of their discussions regarding a prospective Underwritten Offering.
4.2 Plan of Distribution, Underwriters andAdvisors. The Securityholders holding a majority of the Securities proposed to be sold in an Underwritten Offering demanded by the Securityholders will be entitled to determine the plan of distribution and select the managing underwriters and any provider of advisory services for such offering from the lenders under the Company’s or its subsidiaries’ then current credit agreement (or other loan document), otherwise such selection shall be subject to the consent of the Company.
4.3 Cutbacks. If the managing underwriters advise the Company and the selling Securityholders that, in their opinion, the number of Registrable Securities requested to be included in an Underwritten Offering exceeds the amount that can be sold in such offering without adversely affecting the distribution of the Registrable Securities being offered, the price that will be paid in such offering or the marketability thereof, such offering will include only the number of Registrable Securities that the underwriters advise can be sold in such offering in the following order of priority:
(a) If such Underwritten Offering is initiated by the Securityholders pursuant to Article III, then, with respect to each class proposed to be registered:
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(i) first, the Registrable Securities beneficially owned by Securityholders requested to be included pursuant to this Agreement (pro rata based upon the number of Securities that each of the Securityholders shall have requested to be included in such offering);
(ii) second, any Securities to be sold by Existing RRA Holders who properly requested to include their securities in such offering pursuant to the Existing Registration Rights Agreement in accordance with such agreement;
(iii) third, any Securities to be sold by the Company for its own account; and
(iv) fourth, other Securities held by any other third parties requested to be included in such demand registration pursuant to registration rights granted to such third-party holder.
(b) If such Underwritten Offering is initiated by the Company, then, with respect to each class proposed to be registered:
(i) first, any Securities to be sold by the Company for its own account;
(ii) second, any Securities to be sold by Existing RRA Holders who properly requested to include their securities in such offering pursuant to the Existing Registration Rights Agreement in accordance with such agreement;
(iii) third, the Registrable Securities beneficially owned by Securityholders requested to be included pursuant to this Agreement (pro rata based upon the number of securities that each of the Securityholders shall have requested to be included in such offering); and
(iv) fourth, other Securities held by any other third parties requested to be included pursuant to registration rights granted to such third-party holder.
(c) If such Underwritten Offering is initiated by an Existing RRA Holder pursuant to the Existing Registration Rights Agreement then, with respect to each class proposed to be registered:
(i) first, the Securities beneficially owned by the Existing RRA Holders who properly requested to include their securities in such offering pursuant to the Existing Registration Rights Agreement in accordance with such agreement;
(ii) second, any Securities to be sold by the Company for its own account;
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(iii) third, the Registrable Securities beneficially owned by Securityholders requested to be included pursuant to this Agreement (pro rata based upon the number of securities that each of the Securityholders shall have requested to be included in such offering); and
(iv) fourth, other Securities held by any other third parties requested to be included pursuant to registration rights granted to such third-party holder.
(d) If such Underwritten Offering is initiated by any third-party holder other than an Existing RRA Holder, then, with respect to each class proposed to be registered:
(i) first, the Securities beneficially owned by such demanding third-party holder, the Registrable Securities beneficially owned by the Securityholders, and the Securities beneficially owned by the Existing RRA Holders who properly requested to include their securities in such offering pursuant to this Agreement and the Existing Registration Rights Agreement in accordance with such agreements (pro rata based upon the number of Securities that each of such demanding third-party holders, the Securityholders and Existing RRA Holders shall have requested to be included in such offering); and
(ii) second, any Securities to be sold by the Company for its own account.
4.4 Withdrawals. Even if Registrable Securities held by a Securityholder have been part of an Underwritten Offering, such Securityholder may, no later than the time at which the public offering price and underwriters’ discount are determined with the managing underwriter, decline to sell all or any portion of the Registrable Securities being offered for its account provided, that notwithstanding the foregoing, a withdrawn demand for an Underwritten Offering shall count as one of the permitted Underwritten Offerings pursuant to Section 3.1 if the Company has filed a prospectus supplement with the SEC for the launch of such Underwritten Offering.
4.5 Lockups. In connection with any Underwritten Offering, the Company and each Securityholder that holds Registrable Securities or that participates in such offering will agree (in the case of Securityholders, with respect to Registrable Securities respectively beneficially owned by them) to be bound by the underwriting agreement’s lockup restrictions (which must apply in like manner to all of them and must be consistent with the lockup restrictions applicable to the Existing RRA Holders) that are agreed to by the Company for so long as such Securityholders hold Registrable Securities. In addition, the Securityholders shall be bound by their obligations with respect to any lockup arrangements or other restrictions on transfer of Registrable Securities set forth in the Securities Purchase Agreement and Certificate of Designation.
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ARTICLE V
FACILITATING REGISTRATIONS AND OFFERINGS
5.1 General. If the Company becomes obligated under this Agreement to facilitate a registration and offering of Registrable Securities on behalf of Securityholders, the Company will do so with the same degree of care and dispatch as would reasonably be expected in the case of a registration and offering by the Company of Registrable Securities for its own account. Without limiting this general obligation, the Company will fulfill its specific obligations as described in this Article V.
5.2 Registration Statements. In connection with each Shelf Registration Statement that is required by this Agreement, the Company will:
(a) (i) prepare and file with the SEC a registration statement on the appropriate form covering the applicable Registrable Securities; (ii) file amendments thereto as warranted; (iii) seek the effectiveness thereof; and (iv) file with the SEC prospectuses and prospectus supplements as may be required, all in consultation with the Securityholders, as applicable, and as reasonably necessary in order to permit the offer and sale of such Registrable Securities in accordance with the applicable plan of distribution;
(b) within a reasonable time prior to the filing of any registration statement, any prospectus, any amendment to a registration statement, amendment or supplement to a prospectus or any free writing prospectus (in each case including all exhibits filed therewith), provide copies of such documents to the selling Securityholders and to the underwriter or underwriters of an Underwritten Offering, if applicable, and to their respective counsel; and fairly consider such reasonable changes in any such documents prior to or after the filing thereof as the counsel to the Securityholders or the underwriter or the underwriters may request; and make such of the representatives of the Company as shall be reasonably requested by the selling Securityholders or any underwriter available for discussion of such documents;
(c) use commercially reasonable efforts to cause each registration statement and the related prospectus and any amendment or supplement thereto, as of the effective date of such registration statement, amendment or supplement and during the distribution of the registered Registrable Securities (i) to comply in all material respects with the requirements of the Securities Act (including the rules and regulations promulgated thereunder) and (ii) not to contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading;
(d) notify each Securityholder promptly, and, if requested by such Securityholder, confirm such advice in writing, (i) when a registration statement has become effective and when any post-effective amendments and supplements thereto become effective if such registration statement or post-effective amendment is not automatically effective upon filing pursuant to Rule 462 under the Securities Act; (ii) of the issuance by the SEC or any state securities authority of any stop order, injunction or other order or requirement suspending the effectiveness of a registration statement or the initiation of any proceedings for that purpose; (iii) if, between the effective date of a registration statement and the closing of any sale of securities covered thereby pursuant to any agreement to which the Company is a party, the representations and warranties of the Company contained in such agreement cease to be true and correct in all material respects or if the Company receives any notification with respect to the suspension of the qualification of the Registrable Securities for sale in any jurisdiction or the initiation of any proceeding for such purpose; and (iv) of the happening of any event during the period a registration statement is effective as a result of which such registration statement or the related prospectus contains any untrue statement of a material fact or omits to state any material fact required to be stated therein or necessary to make the statements therein not misleading;
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(e) furnish counsel for each underwriter, if any, and for the Securityholders copies of any correspondence with the SEC or any state securities authority relating to the registration statement or prospectus;
(f) otherwise use commercially reasonable efforts to comply with all applicable rules and regulations of the SEC, including making available to its security holders an earnings statement covering at least twelve months which shall satisfy the provisions of Section 11(a) of the Securities Act and Rule 158 thereunder (or any similar provision then in force); and
(g) use commercially reasonable efforts to obtain the withdrawal of any order suspending the effectiveness of a registration statement at the earliest possible time.
5.3 Shelf Registered Offerings and Shelf Takedowns. In connection with any shelf registered offering or shelf takedown that is demanded by Securityholders or as to which piggyback rights otherwise apply, the Company will:
(a) cooperate with the selling Securityholders and the sole underwriter or managing underwriter of an Underwritten Offering, if any, to facilitate the timely preparation and delivery of the Registrable Securities to be sold and not bearing any restrictive legends; and enable such Registrable Securities to be in such denominations (consistent with the provisions of the governing documents thereof) and registered in such names as the selling Securityholders or the sole underwriter or managing underwriter of an Underwritten Offering of Registrable Securities, if any, may reasonably request at least five days prior to any sale of such Registrable Securities;
(b) furnish to each Securityholder and to each underwriter, if any, participating in the relevant offering, without charge, as many copies of the applicable prospectus, including each preliminary prospectus, and any amendment or supplement thereto and such other documents as such Securityholder or underwriter may reasonably request in order to facilitate the public sale or other disposition of the Registrable Securities; the Company hereby consents to the use of the prospectus, including each preliminary prospectus, by each such Securityholder and underwriter in connection with the offering and sale of the Registrable Securities covered by the prospectus or the preliminary prospectus;
(c) (i) use commercially reasonable efforts to register or qualify the Registrable Securities being offered and sold, no later than the time the applicable registration statement becomes effective, under all applicable state securities or blue sky laws of such jurisdictions as each underwriter, if any, or any Securityholder holding Registrable Securities covered by a registration statement, shall reasonably request; (ii) use commercially reasonable efforts to keep each such registration or qualification effective during the period such registration statement is required to be kept effective; and (iii) do any and all other acts and things which may be reasonably necessary or advisable to enable each such underwriter, if any, and Securityholder to consummate the disposition in each such jurisdiction of such Registrable Securities owned by such Securityholder; provided, however, that the Company shall not be obligated to qualify as a foreign corporation or as a dealer in securities in any jurisdiction in which it is not so qualified or to consent to be subject to general service of process (other than service of process in connection with such registration or qualification or any sale of Registrable Securities in connection therewith) in any such jurisdiction;
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(d) cause all Registrable Securities being sold to be qualified for inclusion in or listed on any Recognized Exchange on which Registrable Securities issued by the Company are then so qualified or listed if so requested by the Securityholders, or if so requested by the underwriter or underwriters of an Underwritten Offering of Registrable Securities, if any;
(e) cooperate and assist in any filings required to be made with FINRA and in the performance of any due diligence investigation by any underwriter in an Underwritten Offering;
(f) use commercially reasonable efforts to facilitate the distribution and sale of any Registrable Securities to be offered pursuant to this Agreement, including without limitation by making “road show” presentations, holding meetings with and making calls to potential investors and taking such other actions as shall be requested by the Securityholders or the lead managing underwriter of an Underwritten Offering;
(g) enter into customary agreements (including, in the case of an Underwritten Offering, underwriting agreements in customary form, and including provisions with respect to indemnification and contribution in customary form and consistent with the provisions relating to indemnification and contribution contained herein) and take all other customary and appropriate actions in order to expedite or facilitate the disposition of such Registrable Securities and in connection therewith:
(i) make such representations and warranties to the selling Securityholders and the underwriters, if any, in form, substance and scope as are customarily made by issuers to underwriters in similar Underwritten Offering;
(ii) obtain opinions of counsel to the Company covering the matters customarily covered in opinions requested in sales of securities or Underwritten Offering;
(iii) obtain “cold comfort” letters and updates thereof (including, without limitation, any such audits and comfort letters relating to financial statements pursuant to Rule 3-05 of Regulation S-X and Article 11 thereunder) from the Company’s independent certified public accountants, if permissible, and the underwriters, if any, which letters shall be customary in form and shall cover matters of the type customarily covered in “cold comfort” letters to underwriters in connection with primary Underwritten Offerings; and
(h) to the extent requested and customary for the relevant transaction, enter into a securities sales agreement with the Securityholders providing for, among other things, the appointment of such representative as agent for the selling Securityholders for the purpose of soliciting purchases of Registrable Securities, which agreement shall be customary in form, substance and scope and shall contain customary representations, warranties and covenants.
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The above shall be done at such times as customarily occur in similar Underwritten Offerings.
5.4 Due Diligence. In connection with each Underwritten Offering of Registrable Securities to be sold by Securityholders, the Company will, in accordance with customary practice, reasonably cooperate with such Securityholders to make available for inspection by underwriters and any counsel or accountant retained by such underwriters all relevant financial and other records, pertinent corporate documents and properties of the Company and cause appropriate officers, managers, employees, outside counsel and accountants of the Company to supply all information reasonably requested by any such underwriter, counsel or accountant in connection with their due diligence exercise, including through in-person meetings, but subject to customary privilege constraints.
5.5 Information from Securityholders. Each Securityholder that holds Registrable Securities will promptly furnish to the Company such information regarding itself as is required to be included in the Shelf Registration Statement or is otherwise required by FINRA or the SEC in connection with such Shelf Registration Statement or Underwritten Offering, the ownership of Registrable Securities by such Securityholder and the proposed distribution by such Securityholder of such Registrable Securities as the Company may from time to time reasonably request in writing. If a Securityholder does not provide the information reasonably requested by the Company pursuant to this Section 5.5, the Company shall have the right to exclude from the Shelf Registration Statement or Underwritten Offering the Registrable Securities of such Securityholder.
5.6 Expenses. All Registration Expenses incurred in connection with any registration statement or registered offering covering Registrable Securities held by the Securityholders will be borne by the Company. All Selling Expenses attributable to the sale of Registrable Securities sold for the account of the Securityholders shall be borne by the Securityholders of the securities included in such registered offering.
ARTICLE VI
INDEMNIFICATION
6.1 Indemnification by the Company. In the event of any registration under the Securities Act by any registration statement pursuant to rights granted in this Agreement of Registrable Securities held by Securityholders, the Company will indemnify and hold harmless Securityholders, their officers, directors and affiliates, and each underwriter of such securities and each other Person, if any, who Controls any Securityholder or such underwriter within the meaning of the Securities Act, against any losses, claims, damages or liabilities (including reasonable documented legal fees and costs of court), joint or several, to which Securityholders or such underwriter or controlling Person may become subject under the Securities Act or otherwise, including any amount paid in settlement of any litigation commenced or threatened, and shall promptly reimburse such Persons, as and when incurred, for any legal or other expenses reasonably incurred by them in connection with investigating any claims and defending any actions, insofar as such losses, claims, damages or liabilities (or any actions in respect thereof) arise out of or are
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based upon any violation or alleged violation by the Company of the Securities Act, any blue sky laws, securities laws or other applicable laws of any state or country in which such Shares are offered and relating to action taken or action or inaction required of the Company in connection with such offering, or arise out of or are based upon any untrue statement or alleged untrue statement of any material fact: (a) contained, on its effective date, in any registration statement under which such securities were registered under the Securities Act or any amendment or supplement to any of the foregoing, or which arise out of or are based upon the omission or alleged omission to state a material fact required to be stated therein or necessary to make the statements therein not misleading; or (b) included in any preliminary prospectus, if used prior to the effective date of such registration statement, or in the final prospectus (as amended or supplemented if the Company shall have filed with the SEC any amendment or supplement to the final prospectus), or which arise out of or are based upon the omission or alleged omission to state a material fact necessary in order to make the statements in such prospectus, in the light of the circumstances under which they were made, not misleading; and will reimburse Securityholders and each such underwriter and each such controlling Person for any legal or any other expenses reasonably incurred by them in connection with investigating or defending any such loss, claim, damage or liability; provided, however, that the Company shall not be liable to any Securityholder or its underwriters or controlling Persons in any such case to the extent that any such loss, claim, damage or liability arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission made in such registration statement or prospectus or such amendment or supplement, in reliance upon and in conformity with information furnished to the Company in writing by Securityholders or such underwriter specifically for use in the preparation thereof.
6.2 Indemnification by Securityholders. Each Securityholder as a condition to including Registrable Securities in such registration statement will indemnify and hold harmless (in the same manner and to the same extent as set forth in Section 6.1 hereof) the Company, each director of the Company, each officer of the Company who shall sign the registration statement, and any Person who Controls the Company within the meaning of the Securities Act, (a) with respect to any statement or omission from such registration statement, or any amendment or supplement to it, if such statement or omission was made in reliance upon and in conformity with information furnished to the Company in writing by such Securityholder specifically regarding such Securityholder for use in the preparation of such registration statement or amendment or supplement, and (b) with respect to compliance by such Securityholder with applicable laws in effecting the sale or other disposition of the securities covered by such registration statement.
6.3 Indemnification Procedures. Promptly after receipt by an indemnified party of notice of the commencement of any action involving a claim referred to in Section 6.1 and Section 6.2 hereof, the indemnified party will, if a claim in respect thereof is to be made or may be made against an indemnifying party, give written notice to such indemnifying party of the commencement of the action. The failure of any indemnified party to give notice shall not relieve the indemnifying party of its obligations in this Article VI, except to the extent that the indemnifying party is actually prejudiced by the failure to give notice. If any such action is brought against an indemnified party, the indemnifying party will be entitled to participate in and to assume the defense of the action with counsel reasonably satisfactory to the indemnified party, and after notice from the indemnifying party to such indemnified party of its election to assume defense of the action, the indemnifying party will not be liable to such indemnified party for any legal or other expenses incurred by the latter in connection with the action’s defense other than reasonable costs
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of investigation. An indemnified party shall have the right to employ separate counsel in any action or proceeding and participate in the defense thereof, but the fees and expenses of such counsel shall be at such indemnified party’s expense unless (a) the employment of such counsel has been specifically authorized in writing by the indemnifying party, which authorization shall not be unreasonably withheld; (b) the indemnifying party has not assumed the defense and employed counsel reasonably satisfactory to the indemnified party within thirty (30) days after notice of any such action or proceeding; or (c) the named parties to any such action or proceeding (including any impleaded parties) include the indemnified party and the indemnifying party and the indemnified party shall have been advised by such counsel that there may be one or more legal defenses available to the indemnified party that are different from or additional to those available to the indemnifying party (in which case the indemnifying party shall not have the right to assume the defense of such action or proceeding on behalf of the indemnified party), it being understood, however, that the indemnifying party shall not, in connection with any one such action or separate but substantially similar or related actions in the same jurisdiction arising out of the same general allegations or circumstances, be liable for the reasonable fees and expenses of more than one separate firm of attorneys (in addition to all local counsel which is necessary, in the good faith opinion of both counsel for the indemnifying party and counsel for the indemnified party in order to adequately represent the indemnified parties) for the indemnified party and that all such fees and expenses shall be reimbursed as they are incurred upon written request and presentation of invoices. Whether or not a defense is assumed by the indemnifying party, the indemnifying party will not be subject to any liability for any settlement made without its consent (not to be unreasonably withheld). No indemnifying party will consent to entry of any judgment or enter into any settlement which (a) does not include as an unconditional term the giving by the claimant or plaintiff, to the indemnified party, of a release from all liability in respect of such claim or litigation; or (b) involves the imposition of equitable remedies or the imposition of any non-financial obligations on the indemnified party.
6.4 Contribution. If the indemnification required by this Article VI from the indemnifying party is unavailable to or insufficient to hold harmless an indemnified party in respect of any indemnifiable losses, claims, damages, liabilities or expenses, then the indemnifying party shall contribute to the amount paid or payable by the indemnified party as a result of such losses, claims, damages, liabilities or expenses in such proportion as is appropriate to reflect (a) the relative benefit of the indemnifying and indemnified parties, and (b) if the allocation in clause (i) is not permitted by applicable law, in such proportion as is appropriate to reflect the relative benefit referred to in clause (i) and also the relative fault of the indemnified and indemnifying parties, in connection with the actions which resulted in such losses, claims, damages, liabilities or expenses, as well as any other relevant equitable considerations. The relative benefits received by a party shall be deemed to be in the same proportion as the total net proceeds from the offering (before deducting expenses) received by it bear to the total amounts (including, in the case of any underwriter, any underwriting commissions and discounts) received by each other party. The relative fault of the indemnifying party and the indemnified party shall be determined by reference to, among other things, whether any action in question, including any untrue or alleged untrue statement of a material fact, has been made by, or relates to information supplied by, such indemnifying party or parties, and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such action. The amount paid or payable by a party as a result of the losses, claims, damage, liabilities and expenses referred to above shall be deemed to include any legal or other fees or expenses reasonably incurred by such party in connection with any investigation or proceeding. The Company and Securityholders agree that it would not be just and equitable if contribution pursuant to this Section 6.4 were determined by pro rata allocation or by any other method of allocation which does not take account of the equitable considerations referred to in the prior provisions of this Section 6.4.
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Notwithstanding the provisions of this Section 6.4, no indemnifying party shall be required to contribute any amount in excess of the amount by which the total price at which the securities were offered to the public by such indemnifying party exceeds the amount of any damages which such indemnifying party has otherwise been required to pay by reason of an untrue statement or omission. No Person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any Person who was not guilty of such a fraudulent misrepresentation.
ARTICLE VII
OTHER AGREEMENTS
7.1 Assignment. No Securityholder shall assign all or any part of this Agreement without the prior written consent of the Company (which such consent shall not be unreasonably withheld); provided, however, that without the prior written consent of the Company, the Securityholders may assign their respective rights and obligations under this Agreement in whole or in part to any of their respective Affiliates if such Affiliate becomes a party hereto by executing and delivering an assignment and joinder agreement to the Company, substantially in the form of Exhibit A to this Agreement. Except as otherwise provided herein, this Agreement will inure to the benefit of and be binding on the parties hereto and their respective successors and permitted assigns.
7.2 Merger or Consolidation. In the event the Company engages in a merger or consolidation in which the Registrable Securities are converted into securities of another company, appropriate arrangements will be made so that the registration rights provided under this Agreement continue to be provided to Securityholders by the issuer of such securities.
7.3 Limited Liability. Notwithstanding any other provision of this Agreement, neither the members, general partners, limited partners or managing directors, or any directors or officers of any members, general or limited partner, advisory director, nor any future members, general partners, limited partners, advisory directors or managing directors, if any, of any Securityholder shall have any personal liability for performance of any obligation of such Securityholder under this Agreement in excess of the respective capital contributions of such members, general partners, limited partners, advisory directors or managing directors to such Securityholder.
7.4 Rule 144. If the Company is subject to the requirements of Section 13, 14 or 15(d) of the Exchange Act, the Company will file any reports required to be filed by it under the Securities Act and the Exchange Act (or, if the Company is subject to the requirements of Section 13, 14 or 15(d) of the Exchange Act but is not required to file such reports, it will, upon the request of any Securityholder, make publicly available such information), and it will take such further action as any Securityholder may reasonably request, so as to enable such Securityholder to sell Registrable Securities without registration under the Securities Act within the limitations of the exemptions provided by (a) Rule 144 under the Securities Act, as such Rule may be amended from
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time to time, or (b) any similar rule or regulation hereafter adopted by the SEC. Upon the request of any Securityholder, the Company will deliver to such Securityholder a written statement (with e-mail being sufficient) as to whether it has complied with such requirements, including using commercially reasonable efforts to cause counsel to the Company to deliver customary legal opinions in connection with the removal of any restrictive legends in connection with a sale of such Registrable Securities. For the avoidance of doubt, this Section 7.4 shall not in any way limit or otherwise modify any applicable restrictions on transfer set forth in the Securities Purchase Agreement of Certificate of Designation.
7.5 In-Kind Distributions. If any Securityholder seeks to effectuate an in-kind distribution of all or part of its Registrable Securities to its direct or indirect equityholders, the Company will, subject to applicable lockups, work with such Securityholder and the Company’s transfer agent to facilitate such in-kind distribution in the manner reasonably requested by such Securityholder.
ARTICLE VIII
MISCELLANEOUS
8.1 Notices. All notices, requests, demands and other communications required or permitted hereunder shall be made in writing by hand-delivery, registered first-class mail, telex, fax or air courier guaranteeing delivery to the Persons at the respective addresses set forth below or pursuant to such other instructions as may be designated in writing by the party to receive such notice.
(a) If to the Company, to:
Infinity Natural Resources, Inc.
2605 Cranberry Square
Morgantown, WV 26508
Attention: Raleigh Wolfe, General Counsel and Secretary
Email: legal@infinitynr.com
with a copy (which shall not constitute notice) to:
Kirkland & Ellis LLP
609 Main Street
Houston, Texas 77002
Attention: Matthew R. Pacey, P.C. and Michael W. Rigdon, P.C.
Email: matt.pacey@kirkland.com; michael.rigdon@kirkland.com
(b) If to the Quantum Purchaser (as defined in the Securities Purchase Agreement), to:
INR (II) Investments, LLC
c/o Quantum Capital Group
800 Capitol Street, Suite 3600
Houston, Texas 77002
Attention: General Counsel
Email: generalcounsel@quantumcap.com
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with a copy (which shall not constitute notice) to:
Vinson & Elkins L.L.P.
845 Texas Avenue, Suite 4700
Houston, Texas 77002
Attention: Robert P. Hughes and Benjamin N. Heriaud
Email: rhughes@velaw.com; bheriaud@velaw.com
(c) If to the Carnelian Purchaser (as defined in the Securities Purchase Agreement), to:
Carnelian Energy Capital Management, L.P.
2229 San Felipe St., Suite 1450
Houston, Texas 77019
Attention: Jeffrey Gilbert
Email: jeffrey@carnelianec.com
with a copy (which shall not constitute notice) to:
Vinson & Elkins L.L.P.
845 Texas Avenue, Suite 4700
Houston, Texas 77002
Attention: W. Matthew Strock and Crosby Scofield
Email: mstrock@velaw.com; cscofield@velaw.com
Any such notice, request, demand or other communication shall be deemed to have been duly given (a) on the date of delivery if delivered personally or by facsimile or electronic transmission; (b) on the first Business Day after being sent if delivered by nationally recognized overnight delivery service; and (c) upon the earlier of actual receipt thereof or five Business Days after the date of deposit in the United States mail if delivered by mail.
8.2 Section Headings. The article and section headings in this Agreement are for reference purposes only and shall not affect the meaning or interpretation of this Agreement. References in this Agreement to a designated “Article” or “Section” refer to an Article or Section of this Agreement unless otherwise specifically indicated.
8.3 Governing Law. This Agreement shall be governed by, and construed and enforced in accordance with, the laws of the State of Delaware.
8.4 Consent to Jurisdictionand Service of Process; Waiver of Jury Trial.
(a) The parties to this Agreement hereby agree to submit to the jurisdiction of the courts of the State of Delaware, the courts of the United States of America for the District of Delaware, and appellate courts from any thereof in any action or proceeding arising out of or relating to this Agreement.
(b) EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
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8.5 Amendments. This Agreement may not be modified or amended except by an instrument or instruments in writing signed by the Company and the Securityholders of a majority of the Registrable Securities outstanding at the time of such amendment; provided that any amendment that would adversely or disproportionately impact the rights hereunder of any Securityholder shall require the prior written consent of such Securityholder.
8.6 Entire Agreement. This Agreement contains the entire understanding of the parties with respect to the subject matter hereof. The registration rights granted under this Agreement supersede any registration, qualification or similar rights with respect to any of the Registrable Securities granted under any other agreement, and any of such preexisting registration rights are hereby terminated.
8.7 Severability. The invalidity or unenforceability of any specific provision of this Agreement shall not invalidate or render unenforceable any of its other provisions. Any provision of this Agreement held invalid or unenforceable shall be deemed reformed, if practicable, to the extent necessary to render it valid and enforceable and to the extent permitted by law and consistent with the intent of the parties to this Agreement.
8.8 Counterparts. This Agreement may be executed in multiple counterparts, including by electronic mail, in .pdf or any other form of electric delivery (including any electronic signature complying with U.S. federal ESIGN Act of 2000), each of which shall be deemed an original, but all of which together shall constitute the same instrument.
8.10 EquitableRemedies. The parties hereto agree that irreparable harm would occur in the event that any of the agreements and provisions of this Agreement were not performed fully by the parties hereto in accordance with their specific terms or conditions or were otherwise breached, and that money damages are an inadequate remedy for breach of this Agreement because of the difficulty of ascertaining and quantifying the amount of damage that will be suffered by the parties hereto in the event that this Agreement is not performed in accordance with its terms or conditions or is otherwise breached. It is accordingly hereby agreed that the parties hereto shall be entitled to an injunction or injunctions to restrain, enjoin and prevent breaches of this Agreement by the other parties and to enforce specifically the terms and provisions hereof in any court of the United States or any state having jurisdiction, such remedy being in addition to and not in lieu of, any other rights and remedies to which the other parties are entitled to at law or in equity.
[Remainder of page intentionally left blank]
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IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date first written above.
| COMPANY: | |
|---|---|
| INFINITY NATURAL RESOURCES, INC. | |
| By: | /s/ Zack Arnold |
| Name: | Zack Arnold |
| Title: | President and Chief Executive Officer |
[Signature Page to Infinity Natural Resources, Inc. Registration Rights Agreement]
| (II) INVESTMENTS, LLC: |
|---|
| By: |
| Name: |
| Title: |
All values are in Indian Rupees.
[Signature Page to Infinity Natural Resources, Inc. Registration Rights Agreement]
| ETINELES HOLDINGS V, LLC: | |
|---|---|
| By: CEC Selenite III Holdings, LLC, its sole member | |
| By: | /s/ Tomas Ackerman |
| Name: | Tomas Ackerman |
| Title: | Authorized Person |
[Signature Page to Infinity Natural Resources, Inc. Registration Rights Agreement]
Exhibit A
FORM OF ASSIGNMENT AND JOINDER
[ ], 20__
Reference is made to the Registration Rights Agreement, dated as of [ ] 20__, by and among Infinity Natural Resources, Inc., a Delaware corporation (the “Company”), and certain holders which hold Registrable Securities (as defined below) that become party thereto (the “Registration Rights Agreement”). Capitalized terms used but not otherwise defined herein shall have the meanings ascribed to such terms in the Registration Rights Agreement.
Pursuant to Section 7.1 of the Registration Rights Agreement, [ ] (the “Assignor”) hereby assigns [in part][or: in full] its rights and obligations under the Registration Rights Agreement to each of [ ], [ ] and [ ] (each, an “Assignee” and collectively, the “Assignees”). [For the avoidance of doubt, the Assignor will remain a party to the Registration Rights Agreement following the assignment in part of its rights and obligations thereunder to the undersigned Assignees.]
Each undersigned Assignee hereby agrees to and does become party to the Registration Rights Agreement. This assignment and joinder shall serve as a counterpart signature page to the Registration Rights Agreement and by executing below each undersigned Assignee is deemed to have executed the Registration Rights Agreement with the same force and effect as if originally named a party thereto and each Assignee’s shares of Class A Common Stock (including those underlying the shares of Series A Convertible Preferred Stock) held by such Assignee shall be included as Registrable Securities under the Registration Rights Agreement.
[Remainder of page intentionally left blank]
IN WITNESS WHEREOF, the undersigned have duly executed this assignment and joinder as of date first set forth above.
| ASSIGNOR: |
|---|
| [____________] |
| By: |
| Name: |
| Title: |
| ASSIGNEE(S): |
| [____________] |
| By: |
| Name: |
| Title: |
[Signature Page to Infinity Natural Resources, Inc. Form of Assignment and Joinder]
SCHEDULE I
| Purchaser | Purchase Price | ||
|---|---|---|---|
| (II) Investments, LLC | 275,000 | $ | 275,000,000 |
| Etineles Holdings V, LLC | 75,000 | $ | 75,000,000 |
| Total | 350,000 | $ | 350,000,000 |
All values are in Indian Rupees.
EX-10.1
Exhibit 10.1
Execution Version ****
SECURITIES PURCHASE AGREEMENT
BY AND AMONG
INFINITY NATURAL RESOURCES, INC.,
AND
THE PURCHASERS PARTY HERETO
Dated as of February 18, 2026
TABLE OF CONTENTS
| Page | |||
|---|---|---|---|
| ARTICLE I PURCHASE AND SALE OF PURCHASED SHARES | 1 | ||
| Section 1.1 | Purchase and Sale | 1 | |
| Section 1.2 | Closing | 1 | |
| ARTICLE II REPRESENTATIONS AND WARRANTIES OF THE COMPANY | 2 | ||
| Section 2.1 | Organization and Power | 2 | |
| Section 2.2 | Authorization; No Conflicts | 2 | |
| Section 2.3 | Government Approvals | 3 | |
| Section 2.4 | Authorized and Outstanding Stock | 3 | |
| Section 2.5 | Subsidiaries | 5 | |
| Section 2.6 | Private Placement | 5 | |
| Section 2.7 | SEC Documents; Financial Information | 6 | |
| Section 2.8 | Internal Control Over Financial Reporting | 6 | |
| Section 2.9 | Disclosure Controls and Procedures | 7 | |
| Section 2.10 | Litigation | 7 | |
| Section 2.11 | Compliance with Laws; Permits | 7 | |
| Section 2.12 | Taxes | 8 | |
| Section 2.13 | Employee Benefit Plans | 8 | |
| Section 2.14 | Labor Matters | 9 | |
| Section 2.15 | Environmental Matters | 10 | |
| Section 2.16 | Intellectual Property; Security | 10 | |
| Section 2.17 | Registration Rights | 11 | |
| Section 2.18 | Investment Company Act | 11 | |
| Section 2.19 | NYSE Listing and Maintenance Requirements | 11 | |
| Section 2.20 | No Brokers or Finders | 11 | |
| Section 2.21 | Illegal Payments; FCPA Violations | 11 | |
| Section 2.22 | Sanctions and Export Controls | 12 | |
| Section 2.23 | Absence of Certain Changes | 12 | |
| Section 2.24 | Anti-Takeover Provisions | 12 | |
| Section 2.25 | Indebtedness | 13 | |
| Section 2.26 | Antero Purchase Agreements | 13 | |
| Section 2.27 | No Additional Representations | 13 | |
| ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS | 14 | ||
| Section 3.1 | Organization and Power | 14 | |
| Section 3.2 | Authorization, Etc. | 14 | |
| Section 3.3 | Government Approvals | 15 | |
| Section 3.4 | Investment Representations | 15 | |
| Section 3.5 | No Prior Ownership | 16 | |
| Section 3.6 | No Brokers or Finders | 16 | |
| Section 3.7 | No Additional Representations | 16 |
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| ARTICLE IV COVENANTS OF THE PARTIES | 17 | |
|---|---|---|
| Section 4.1 | Restrictive Legends; Transfer Requirements and Restrictions | 17 |
| Section 4.2 | Standstill | 19 |
| Section 4.3 | Confidentiality | 20 |
| Section 4.4 | Information Rights | 21 |
| Section 4.5 | Filings; Other Actions | 23 |
| Section 4.6 | Antitakeover Provisions | 25 |
| Section 4.7 | Tax Matters | 25 |
| Section 4.8 | NYSE Listing of Shares | 27 |
| Section 4.9 | State Securities Laws | 27 |
| Section 4.10 | Section 16 Matters | 28 |
| Section 4.11 | Interim Negative Covenants | 28 |
| Section 4.12 | Excluded Sponsor Parties | 29 |
| Section 4.13 | Corporate Actions | 30 |
| Section 4.14 | Antero Acquisition | 30 |
| Section 4.15 | Corporate Opportunities | 31 |
| Section 4.16 | Stockholder Approval | 32 |
| ARTICLE V CONDITIONS TO THE PARTIES’ OBLIGATIONS | 32 | |
| Section 5.1 | Conditions of the Purchasers | 32 |
| Section 5.2 | Conditions of the Company | 34 |
| ARTICLE VI SURVIVAL AND INDEMNIFICATION | 35 | |
| Section 6.1 | Survival | 35 |
| Section 6.2 | Indemnification by the Company | 35 |
| Section 6.3 | Indemnification by the Purchasers | 35 |
| Section 6.4 | Indemnification Procedure | 36 |
| Section 6.5 | Tax Matters | 37 |
| ARTICLE VII MISCELLANEOUS | 37 | |
| Section 7.1 | Counterparts | 37 |
| Section 7.2 | Governing Law | 37 |
| Section 7.3 | Entire Agreement; No Third Party Beneficiary | 38 |
| Section 7.4 | Expenses | 38 |
| Section 7.5 | Notices | 39 |
| Section 7.6 | Successors and Assigns | 40 |
| Section 7.7 | Headings | 41 |
| Section 7.8 | Amendments and Waivers | 41 |
| Section 7.9 | Interpretation; Absence of Presumption | 41 |
| Section 7.10 | Severability | 42 |
| Section 7.11 | Preemptive Rights | 42 |
| Section 7.12 | Specific Performance | 42 |
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| Section 7.13 | Public Announcement | 42 |
|---|---|---|
| Section 7.14 | Non-Recourse | 43 |
| Section 7.15 | Further Assurances | 43 |
| Section 7.16 | Independent Nature of the Purchasers’ Obligations and Rights | 43 |
| Section 7.17 | Exculpation of the Placement Agent | 44 |
| ARTICLE VIII TERMINATION | 44 | |
| Section 8.1 | Termination | 44 |
| Section 8.2 | Certain Effects of Termination | 45 |
EXHIBITS
| Exhibit A | Definitions |
|---|---|
| Exhibit B | Form of Certificate of Designation |
| Exhibit C | Form of Registration Rights Agreement |
SCHEDULES
| Schedule I | Purchasers and Purchase Price |
|---|---|
| Schedule 3.5 | Current Ownership |
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SECURITIES PURCHASE AGREEMENT
This SECURITIES PURCHASE AGREEMENT dated as of February 18, 2026 (this “Agreement”), is by and among Infinity Natural Resources, Inc., a Delaware corporation (the “Company”), and each purchaser identified on Schedule I hereto (each, including its successors and assigns, a “Purchaser” and collectively, the “Purchasers”). Capitalized terms used but not defined herein have the meanings assigned to them in Exhibit A.
In connection with, and subject to, the consummation of the Antero Acquisition, each Purchaser desires to purchase from the Company, and the Company desires to issue and sell to each Purchaser, the number of shares of the Company’s Series A Convertible Preferred Stock, par value $0.01 per share (the “Series A Preferred Stock”), set forth opposite such Purchaser’s name on Schedule I hereto, on the terms and subject to the conditions hereinafter set forth.
In consideration of the premises and the mutual representations, warranties, covenants and agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties agree as follows:
ARTICLE I
PURCHASE ANDSALE OF PURCHASED SHARES
Section 1.1 Purchase and Sale. On the terms and subject to the satisfaction or waiver (to the extent permitted by applicable Law (as defined below)) of the conditions set forth in this Agreement, at the Closing (as defined below), each Purchaser shall purchase, and the Company shall issue and sell to each Purchaser, the number of shares of Series A Preferred Stock set forth opposite such Purchaser’s name on Schedule I hereto with an original purchase price of $1,000.00 per share (the “Purchased Shares”) for the purchase price set forth opposite such Purchaser’s name on Schedule I hereto (with respect to each Purchaser, its “Allocated Purchase Price”). The Purchased Shares shall be allocated among the Purchasers as set forth opposite such party’s name on Schedule I hereto. The shares of Series A Preferred Stock shall have the rights, powers, preferences and privileges set forth in the Certificate of Designation in the form attached as Exhibit B (as the same may be amended or amended and restated, the “Certificate of Designation”).
Section 1.2 Closing. On the terms and subject to the satisfaction or waiver (to the extent permitted by applicable Law) of the conditions set forth in this Agreement, the closing of the issuance, sale and purchase of the Purchased Shares (the “Closing”) shall take place remotely via the exchange of final documents and signature pages, on such date on which all of the conditions set forth in Article V have been satisfied or waived (other than those conditions that by their nature are to be satisfied at the Closing, but subject to the satisfaction or waiver (to the extent permitted by applicable Law) of those conditions at such time), or such other time and place as the Company and the Purchasers may agree. The date on which the Closing is to occur is herein referred to as the “Closing Date.” At the Closing, upon receipt by the Company of payment of the Allocated Purchase Price by or on behalf of a Purchaser to the Company by wire transfer of immediately available funds to an account designated in writing by the Company, the Company will deliver to such Purchaser evidence reasonably satisfactory to such Purchaser of the issuance of the Purchased Shares allocated to such Purchaser in the name of such Purchaser by book-entry on the books and records of the Company.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to the Purchasers as of the date hereof and as of the Closing Date (except to the extent made only as of a specified date in which case as of such date) that, except as set forth in the SEC Documents filed by the Company with the SEC since January 30, 2025 and prior to the date hereof (other than disclosures in the “Risk Factors” or “Forward-Looking Statements” sections or similarly captioned sections of any such filings):
Section 2.1 Organization and Power. The Company and each of its Subsidiaries is a corporation, limited liability company or other entity validly existing and in good standing under the laws of the jurisdiction of its incorporation or formation (as applicable) and has all requisite corporate, limited liability company or other entity power and authority to own or lease its properties and to carry on its business as presently conducted and as proposed to be conducted. The Company and each of its Subsidiaries are duly licensed or qualified to do business as a foreign corporation, limited liability company or other entity in each jurisdiction wherein the character of its property or the nature of the activities presently conducted by it, makes such qualification necessary, except where the failure to so qualify has not had, and would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect. True, correct and complete copies of the Company’s organizational documents are included in the SEC Documents filed with the SEC.
Section 2.2 Authorization; No Conflicts.
(a) The Company has all necessary corporate power and authority and has taken all necessary corporate action required for the due authorization, execution, delivery and performance by the Company of this Agreement and the Registration Rights Agreement, and the consummation by the Company of the transactions contemplated hereby and thereby, the filing of the Certificate of Designation with the Secretary of State of the State of Delaware and for the due authorization, issuance, sale and delivery of the Purchased Shares and the reservation, issuance and delivery of the Conversion Shares (as defined below). This Agreement has been, and the Registration Rights Agreement will be at the Closing, duly executed and delivered by the Company. Assuming due execution and delivery thereof by each of the other parties hereto or thereto, this Agreement and the Registration Rights Agreement will each be a valid and binding obligation of the Company enforceable against the Company in accordance with its terms, except as such enforceability may be limited by applicable laws relating to bankruptcy, insolvency, reorganization, moratorium or other similar legal requirement relating to or affecting creditors’ rights generally and except as such enforceability is subject to general principles of equity (regardless of whether enforceability is considered in a proceeding in equity or at law).
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(b) The authorization, execution, delivery and performance by the Company of this Agreement and the Registration Rights Agreement, and the consummation by the Company of the transactions contemplated hereby and thereby, including the filing of the Certificate of Designation and the issuance of the Purchased Shares and the Conversion Shares do not and will not: (i) violate or result in the breach of any provision of the Certificate of Incorporation or Bylaws of the Company; or (ii) with such exceptions that have not had, and would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect: (x) violate any provision of, constitute a breach of, or default under, any judgment, order, writ, or decree applicable to the Company or any of its Subsidiaries or any mortgage, loan or credit agreement, indenture, bond, note, deed of trust, lease, sublease, license, contract or other agreement (each, a “Contract”) to which the Company or any of its Subsidiaries is a party or accelerate the Company’s or, if applicable, any of its Subsidiaries’ obligations under any such Contract; (y) violate any provision of, constitute a breach of, or default under, any applicable state, federal or local Law; or (z) result in the creation of any Lien upon any assets of the Company or any of its Subsidiaries or the suspension, revocation or forfeiture of any franchise, permit or license granted by a Governmental Entity to the Company or any of its Subsidiaries, other than Liens under federal or state securities laws.
Section 2.3 Government Approvals. No consent, approval or authorization of, or filing with, any court or Governmental Entity is or will be required on the part of the Company in connection with the execution, delivery and performance by the Company of this Agreement and the Registration Rights Agreement, or in connection with the issuance of the Purchased Shares or the Conversion Shares, except for (a) the filing of the Certificate of Designation with the Secretary of State of the State of Delaware; (b) those which have already been made or granted; (c) the filing of a Form D and current report on Form 8-K with the SEC; (d) filings with applicable state securities commissions (if any); (e) the listing of the Conversion Shares with the NYSE; (f) receipt of the Requisite Stockholder Approval with respect to any issuance of Conversion Shares in excess of the Issuance Limitation (as each such term is defined in the Certificate of Designation); or (g) filings required under, and compliance with other applicable requirements of, the HSR Act.
Section 2.4 Authorized and Outstanding Stock.
(a) The authorized capital stock of the Company consists of 400,000,000 shares of Class A common stock of the Company, par value $0.01 per share (“Class A Common Stock”), 150,000,000 shares of Class B common stock, par value $0.01 per share (“Class B Common Stock”, and together with Class A Common Stock, “Common Stock”) and 50,000,000 shares of preferred stock, par value $0.01 per share (“Preferred Stock”). Upon the filing of the Certificate of Designation with the Secretary of State of the State of Delaware, 350,000 shares will be designated as the Series A Preferred Stock.
(b) As of February 17, 2026 (the “Capitalization Date”), (i) 18,165,700 shares of Class A Common Stock were issued and outstanding, (ii) 45,247,974 shares of Class B Common Stock were issued and outstanding, (iii) no shares of Preferred Stock were issued and outstanding and (iv) 5,888,889 shares of Class A Common Stock are reserved for issuance under our Stock Plan. Except as set forth in the foregoing sentence, there are no outstanding securities of the Company convertible into, measured by reference to, or exercisable or exchangeable for shares of capital stock of, or other equity or voting interests of any character in, the Company.
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(c) All of the issued and outstanding shares of Common Stock of the Company have been duly authorized and are validly issued, fully paid and non-assessable. The Purchased Shares have been duly authorized and, when issued in accordance with the terms hereof, the Purchased Shares will be, duly authorized and validly issued and fully paid and non-assessable and will not be subject to any preemptive right, right of first refusal or similar right or any restrictions on transfer under applicable Law or any Contract to which the Company is a party, other than, in the case of restrictions on transfer, those under applicable state and federal securities laws and Section 4.1 of this Agreement. The shares of Class A Common Stock issuable upon conversion of the Purchased Shares (including, for the avoidance of doubt, any shares of Class A Common Stock issuable upon the conversion of accrued dividends on the Purchased Shares), subject to the Issuance Limitation (the “Conversion Shares”), have been duly authorized and reserved for issuance and, when issued upon conversion of the Purchased Shares in accordance with the terms thereof, in each case as set forth in the Certificate of Designation, will be validly issued and fully paid and non-assessable. No share of Common Stock has been, and none of the Purchased Shares and Conversion Shares will be when issued, issued in violation of any preemptive right arising by operation of Law, under the Certificate of Incorporation, the Bylaws or any Contract, or otherwise. None of the Purchased Shares or Conversion Shares will be when issued subject to any restrictions on transfer under applicable Law or any Contract to which the Company is a party, other than, in the case of restrictions on transfer, those under applicable state and federal securities laws, and Section 4.1 of this Agreement and the Certificate of Designation. When issued in accordance with the terms hereof and the terms of the Certificate of Designation (as applicable), the Purchased Shares and Conversion Shares will be free and clear of all Liens (other than Liens incurred by the Purchasers or their respective Affiliates, restrictions arising under applicable securities laws, or restrictions imposed by this Agreement, the Certificate of Designation or the Registration Rights Agreement).
(d) Except as otherwise expressly described in this Section 2.4: (i) no subscription, warrant, option, convertible security or other right, commitment, agreement, arrangement issued by the Company or any other obligation of the Company to purchase or acquire any shares of capital stock of the Company is authorized or outstanding; (ii) there is no commitment, agreement, arrangement or obligation of the Company to issue any subscription, warrant, option, convertible security or other such right or to issue or distribute capital stock of, or other equity or voting interest (or voting debt) in, the Company; (iii) the Company has no obligation to purchase, redeem or otherwise acquire any shares of its capital stock or to pay any dividend or make any other distribution in respect thereof; (iv) there are no obligations of the Company to grant, extend or enter into any subscription, warrant, right, convertible or exchangeable security or other similar agreement or commitment relating to any capital stock of, or other equity or voting interests (or voting debt) in, the Company; (v) there are no outstanding shares of capital stock of, or other equity or voting interests of any character in, the Company as of the date hereof other than shares that have become outstanding after the Capitalization Date which were reserved for issuance as of the Capitalization Date as set forth in Section 2.4(a) or pursuant to the exercise or vesting, as applicable, after the Capitalization Date, of stock options, restricted stock units or performance-based restricted stock units issued and subsequently exercised or vested, as applicable, after the Capitalization Date; (vi) there are no agreements, arrangements or commitments between the Company and any Person relating to the acquisition, disposition or voting of the capital stock of, or other equity or voting interest (or voting debt) in, the Company and (vii) there are no equity appreciation, phantom equity, profit participation or similar rights with respect to the Company or any of its capital stock or equity interests. There exists no preemptive right, whether arising by operation of law, under the Certificate of Incorporation, the Bylaws or any contract, or otherwise, with respect to the issuance of any capital stock of the Company.
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Section 2.5 Subsidiaries. Other than any Subsidiaries of the Company acquired or formed following the filing of the Company’s Annual Report on Form 10-K for the year ended December 31, 2024, the Company’s material Subsidiaries consist of all the entities listed on Exhibit 21.1 to the Company’s Form 10-K for the year ended December 31, 2024. The Company, directly or indirectly, owns of record and beneficially, free and clear of all Liens (except for such restrictions as may exist under applicable Law and except for such Liens as may be imposed under the Credit Agreement, or the organizational documents of such Subsidiaries, as applicable), all of the issued and outstanding capital stock or equity interests of each of its Subsidiaries other than Infinity Natural Resources, LLC. As of the Capitalization Date, the Company owns a sole managing member interest in INR Holdings, and 18,165,700 units representing limited liability company interests in INR Holdings (“LLC Units”); such sole managing member interest and LLC Units are duly authorized and validly issued in accordance with the OpCo LLC Agreement (as defined below) and are fully paid (to the extent required under the OpCo LLC Agreement) and non-assessable (except in the case except as such nonassessability may be affected by matters described in Sections 18-303, 18-607 and 18-804 of the Delaware Limited Liability Company Act) and such sole managing member interest and LLC Units are owned by the Company free and clear of all Liens (except for such restrictions as may exist under applicable Law and except for such Liens as may be imposed under the Credit Agreement, or the organizational documents of INR Holdings, as applicable). All of the issued and outstanding capital stock or equity interests of the Company’s Subsidiaries has been duly authorized and validly issued, were not issued in violation of a preemptive right, right of first refusal or similar right, and in the case of corporations, is fully paid and non-assessable. There are no outstanding rights, options, warrants, preemptive rights, conversion rights, rights of first refusal or similar rights for the purchase or acquisition from any of the Company’s Subsidiaries of any securities of such Subsidiaries nor are there any commitments to issue or execute any such rights, options, warrants, preemptive rights, conversion rights or rights of first refusal.
Section 2.6 Private Placement. Assuming the accuracy of the representations and warranties of each Purchaser set forth in Section 3.4 (Investment Representations), the offer, sale and issuance of the Purchased Shares pursuant to this Agreement will be exempt from the registration requirements of the Securities Act and the rules and regulations promulgated thereunder, and neither the Company nor any person acting on its behalf, has taken nor will take any action hereafter that would cause the loss of such exemption. Without limiting the foregoing, neither the Company nor, to the Knowledge of the Company, any other Person authorized by the Company to act on its behalf, has engaged in a general solicitation or general advertising (within the meaning of Regulation D of the Securities Act) of investors with respect to offers or sales of Series A Preferred Stock, and neither the Company nor any Person acting on its behalf has made any offers or sales of any security or solicited any offers to buy any security, under circumstances that would cause the offering or issuance of Series A Preferred Stock under this Agreement to be integrated with prior offerings by the Company for purposes of the Securities Act that would result in none of Regulation D or any other applicable exemption from registration under the Securities Act to be available, nor will the Company take any action or steps that would cause the offering or issuance of Series A Preferred Stock under this Agreement to be integrated with other offerings by the Company.
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Section 2.7 SEC Documents; Financial Information. Since January 30, 2025, the Company has timely filed or furnished, as applicable, (a) all annual and quarterly reports and proxy statements (including all amendments, exhibits and schedules thereto) and (b) all other forms, reports and other documents (including all amendments, exhibits and schedules thereto), in each case required to be filed or furnished, as applicable, by the Company with the SEC pursuant to the Exchange Act, the Securities Act and all other federal securities laws. As of their respective dates, such SEC Documents complied in all material respects with the requirements of the Securities Act, the Exchange Act, the Sarbanes-Oxley Act of 2002 and the rules and regulations of the SEC promulgated thereunder applicable to such SEC Documents, and as of their respective dates none of the SEC Documents contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. The financial statements of the Company (including all related notes or schedules) included or incorporated by reference in the SEC Documents (the “Financial Statements”) comply as of their respective dates in all material respects with applicable accounting requirements and the rules and regulations of the SEC with respect thereto (except as may be indicated in the notes thereto or, in the case of the unaudited statements, as permitted by Form 10-Q promulgated by the SEC), have been prepared in accordance with GAAP (except, in the case of unaudited quarterly statements, as permitted by Form 10-Q of the SEC or other rules and regulations of the SEC) applied on a consistent basis during the periods involved (except (i) as may be indicated in the notes thereto or (ii) as permitted by Regulation S-X) and present fairly in all material respects as of their respective dates the consolidated financial position of the Company and its Subsidiaries as of the dates thereof and the consolidated results of their operations and their consolidated cash flows for each of the respective periods, all in conformity with GAAP. Neither the Company nor any of its Subsidiaries has any liabilities of any nature (whether accrued, absolute, contingent or otherwise) that would be required under GAAP to be reflected on a consolidated balance sheet of the Company (including the notes thereto) except liabilities (i) reflected or reserved against in the balance sheet (or the notes thereto) of the Company and its Subsidiaries as of September 30, 2025 (the “Balance Sheet Date”) included in the SEC Documents, (ii) incurred after the Balance Sheet Date in the ordinary course of business and that do not arise from any breach of a Contract, (iii) as expressly contemplated by this Agreement, the Antero Purchase Agreements, or otherwise incurred in connection with the transactions contemplated hereby or thereby, (iv) that have been discharged or paid prior to the date of this Agreement or (v) as would not, individually or in the aggregate, have had or reasonably be expected to have, a Material Adverse Effect. There is no transaction, arrangement or other relationship between the Company or any of its Subsidiaries and an unconsolidated or other off-balance sheet entity that is required by applicable Law to be disclosed by the Company in its SEC Documents and is not so disclosed.
Section 2.8 Internal Control Over Financial Reporting. The Company has disclosed, based on its most recent evaluation prior to the date hereof, to the Company’s outside auditors and the Audit Committee of the Board of Directors (a) any significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) that are reasonably likely to adversely affect the Company’s ability to record, process, summarize and report financial information and (b) any fraud, whether or not material, that involves management or other employees who have a significant role in the Company’s internal control over financial reporting.
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Section 2.9 Disclosure Controls and Procedures. The Company has established and maintains, and at all times since January 30, 2025, has maintained, disclosure controls and procedures and a system of internal controls over financial reporting (as such terms are defined in paragraphs (e) and (f), respectively, of Rule 13a-15 under the Exchange Act) that are (x) designed to provide reasonable assurance that material information relating to the Company, including its Subsidiaries, that is required to be disclosed by the Company in the reports that it furnishes or files under the Exchange Act is reported within the time periods specified in the rules and forms of the SEC and that such material information is communicated to the Company’s management to allow timely decisions regarding required disclosure and (y) sufficient to provide reasonable assurance that (a) transactions are executed in accordance with Company management’s general or specific authorization, (b) transactions are recorded as necessary to permit preparation of financial statements in conformity with GAAP, consistently applied, and to maintain accountability for assets, (c) access to assets is permitted only in accordance with Company management’s general or specific authorization and (d) the recorded accountability for assets is compared with existing assets at reasonable intervals and appropriate action is taken with respect to any differences. Except as set forth in the SEC Documents filed by the Company, there are no “material weaknesses” (as defined by the Public Company Accounting Oversight Board) in the design or operation of the Company’s internal controls over, and procedures relating to, financial reporting which would reasonably be expected to adversely affect in any material respect the Company’s ability to record, process, summarize and report financial data, in each case which has not been subsequently remediated.
Section 2.10 Litigation. There is not any litigation, governmental proceeding, suit, claim, action, dispute, arbitration, proceeding or complaint, or to the Knowledge of the Company, investigation (each, a “Proceeding”) pending or, to the Knowledge of the Company, threatened in writing, by or against the Company or any of its Subsidiaries or affecting any of the business, operations, properties, rights or assets of the Company or any of its Subsidiaries, in each case, which would reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect. Neither the Company nor any of its Subsidiaries is subject to or in default with respect to any order, judgment, writ, injunction, decree, ruling or decision of any Governmental Entity that is expressly applicable to the Company or any of its Subsidiaries or any of their respective assets which would reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.
Section 2.11 Compliance with Laws; Permits. The Company and its Subsidiaries are, and since January 1, 2025 have been, in compliance with all applicable laws, common law, statutes, acts, ordinances, codes, rules, and regulations^^enacted, adopted, promulgated, or applied by any Governmental Entity (collectively, “Laws”), and neither the Company nor any of its Subsidiaries has, since January 1, 2025, received any written notice from any Person regarding a violation of any of the foregoing, except, in each case, as has not had, and would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect. The Company and its Subsidiaries possess all permits, franchises, certificates, approvals, authorizations and licenses of Governmental Entities that are required to conduct their business, except as has not had, and would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.
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Section 2.12 Taxes.
(a) The Company and each of its Subsidiaries has duly and timely filed all Tax Returns required to be filed within the applicable periods for such filings (with due regard to any extension) and all such Tax Returns are true, correct and complete in all material respects, and the Company and each of its Subsidiaries has paid all Taxes required to be paid, except for any such failures to file or pay that have not had, and would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.
(b) Except as have not had and would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect, (i) no audit, investigation or similar Proceeding is currently being conducted or pending or, to the knowledge of the Company, is threatened with respect to the Company or any of its Subsidiaries in respect of any Tax, (ii) there is no outstanding claim, assessment or deficiency against the Company or any of its Subsidiaries for any Taxes that has been asserted in writing by any Governmental Entity other than those being contested in good faith through appropriate Proceedings and for which adequate reserves have been established on the Financial Statements of the Company in accordance with GAAP and (iii) neither the Company nor any of its Subsidiaries has any material liability for Taxes of any Person (other than the Company or any of its Subsidiaries) under Treasury Regulations Section 1.1502-6 (or any similar provision of U.S. state or local or non-U.S. Law) or as a transferee or successor.
(c) For U.S. federal (and applicable state and local) income tax purposes (but excluding for Texas franchise tax purposes), INR Holdings and each Subsidiary of INR Holdings is properly classified as a partnership (and not as a “publicly traded partnership” within the meaning of Section 7704(b) of the Code) or a disregarded entity (except for INR-E Blocker, LLC, which is classified as a corporation for U.S. federal (and applicable state and local) income tax purposes).
Section 2.13 Employee Benefit Plans.
(a) Except as would not have, or would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect, (i) the Company and its Subsidiaries have funded, administered and maintained each Benefit Plan in compliance with its terms and all applicable Laws (including the applicable requirements of ERISA and the Code); (ii) with respect to the Benefit Plans, no audits, Liens, Proceedings or complaints (other than routine claims for benefits, appeals of such claims and domestic relations order proceedings) or, to the Knowledge of the Company, investigations are pending or, to the Knowledge of the Company, threatened in writing, and, to the Knowledge of the Company, no facts or circumstances exist that would reasonably be expected to give rise to any such audits, Liens, Proceedings or complaints, and (iii) to the Knowledge of the Company, no event has occurred with respect to any Benefit Plan which would reasonably be expected to result in a liability of the Company or any of its Subsidiaries to any Governmental Entity.
(b) Except as would not be expected to have a Material Adverse Effect neither the Company, its Subsidiaries, nor any other entity which, together with the Company or its Subsidiaries, would be treated as a single employer under Section 4001 of ERISA or Section 414 of the Code, has at any time during the last six (6) years maintained, sponsored or contributed to or had any liability, including withdrawal liability, with respect to any defined benefit pension plan that is subject to Title IV of ERISA or any “multiemployer plan” (as defined in Section 4001(a)(3) of ERISA).
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(c) Except as would not reasonably be expected, individually or in the aggregate, to result in a Material Adverse Effect, neither the execution of, nor the completion of the transactions contemplated by, this Agreement (whether alone or in connection with any other event(s)), could result, directly or indirectly, in (i) severance pay, or an increase in severance pay upon termination of employment or service, after Closing to any current or former employee, officer, director or other individual service provider of the Company or its Subsidiaries, (ii) payment, compensation or benefit, or any increase in the amount of any payment, compensation or benefit, becoming due to any current or former employee, officer, director or other individual service provider of the Company or its Subsidiaries, (iii) acceleration of the time of payment or vesting, or result in funding, of compensation or benefits to any current or former employee, officer, director or other individual service provider of the Company or its Subsidiaries, (iv) new obligation under any Benefit Plan or (v) payment of any amount or the provision of any benefit that, separately or in the aggregate, could constitute an “excess parachute payment” within the meaning of Section 280G of the Code.
(d) No Benefit Plan provides any individual with the right to indemnification, reimbursement, or gross-up for any excise or penalty tax, including under Section 409A, or Section 4999 of the Code.
Section 2.14 Labor Matters.
(a) Except as would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect, (i) there is not, and since January 30, 2025 there has not been, any strike, lockout, concerted work stoppage or slowdown, or unfair labor practice charge pending or, to the Knowledge of the Company, threatened against the Company or any of its Subsidiaries, and (ii) there are not any, pending or, to the Knowledge of the Company, threatened union organizing activities with respect to any employees of the Company or its Subsidiaries or any representation or certification proceedings against the Company or any of its Subsidiaries. Neither the Company nor its Subsidiaries owe any notice, consent or consultation obligations to any labor union, labor organization or works council in connection with the execution of this Agreement on consummation of the transactions contemplated by this Agreement. Neither the Company nor any of its Subsidiaries are party to or bound by any Labor Agreement.
(b) Except as would not reasonably be expected to have a Material Adverse Effect, the Company and each of its Subsidiaries are, and since January 30, 2025 have been, in compliance with all applicable Laws respecting labor, employment, and employment practices, including all applicable Laws respecting terms and conditions of employment, wages and hours (including the classification of independent contractors and exempt and non-exempt U.S. employees), immigration (including the completion of Forms I-9 for all U.S. employees and the proper confirmation of employee visas), labor relations and collective bargaining, employment harassment, discrimination, and retaliation, equal opportunity, plant closures and layoffs (including the Worker Adjustment and Retraining Notification Act of 1988, as amended, or any similar Laws), worker health and safety, affirmative action and unemployment insurance.
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(c) Except as has not had, and would not reasonably be expected to have, a Material Adverse Effect, there are no, and since January 30, 2025, there have not been any, Proceedings by or against the Company or any of its Subsidiaries pending or, to the Knowledge of the Company, threatened by or before any Governmental Entity pertaining to the labor, workforce, personnel or employment practices.
(d) Neither the Company nor any of its Subsidiaries is, or since January 1, 2025 has been, party to a settlement agreement with any employee of the Company or any of its Subsidiaries that involves allegations of sexual harassment by any employee of Company or any of its Subsidiaries at the level of Senior Vice President or above. To the Knowledge of the Company, no allegations of sexual harassment are, or since January 1, 2025 have been, pending against any employee of Company or any of its Subsidiaries at the level of Senior Vice President or above. The Company or, if applicable, its Subsidiaries have reasonably investigated all allegations of sexual harassment against any employee of Company or any of its Subsidiaries at the level of Senior Vice President or above that have been reported to the Company or its Subsidiaries and have taken all reasonable corrective actions with respect to such allegations that is reasonably calculated to prevent further improper conduct with respect to such allegation of sexual harassment with potential merit.
Section 2.15 Environmental Matters.
(a) Except as not had, and would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect, (i) the Company and its Subsidiaries are, and since January 30, 2025 have been, in compliance with all applicable Requirements of Environmental Law and possess and maintain and are, and since January 30, 2025 have been, in compliance with all Environmental Permits; (ii) there are no pending or, to the Knowledge of the Company, threatened (in writing) actions, suits or proceedings relating to, and the Company and its Subsidiaries have not received any unresolved written notice of, any actual or alleged violation of, noncompliance with, or any liability under. any applicable Requirements of Environmental Law or Environmental Permit, including arising from any release or threatened release of any Hazardous Substance; (iii) neither the Company, nor any of its Subsidiaries has treated, stored, disposed of, arranged for or permitted the disposal of, transported, exposed any person to, released, or owned or operated any property or facility contaminated by, any Hazardous Substances, in each case so as to give rise to any liabilities for the Company or any of its Subsidiaries pursuant to any applicable Requirements of Environmental Laws; and (iv) neither the Company nor any of its Subsidiaries has by Contract assumed or provided an indemnity for any liabilities of any other Person under any Requirements of Environmental Law or concerning any Hazardous Substances.
Section 2.16 Intellectual Property; Security. Except as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect, (a) the Company and its Subsidiaries own the Intellectual Property they purport to own, or have a valid and enforceable license or right to use or otherwise exploit, all Intellectual Property that is used in or necessary for the operation of the business of the Company and its Subsidiaries, free and clear of all Liens other than Permitted Liens (“Company Intellectual Property”), (b) the conduct of the businesses of the Company and its Subsidiaries does not infringe, misappropriate or violate, and has not since January 1, 2025 infringed, misappropriated or violated, the Intellectual Property of any Person and, to the Knowledge of the Company, no Person is (or has been since January 1, 2025) infringing,
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misappropriating or violating the Company Intellectual Property and (c) the Company and its Subsidiaries take commercially reasonable efforts to protect the confidentiality of their trade secrets and the integrity, continuous operation and security of their Software and Systems (and the data stored or Processed therein or thereby). Except as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect, since January 1, 2025, there have not been any (x) security incidents, including any unauthorized intrusions, breaches (including phishing incidents, ransomware, or malware attacks) affecting the Software and Systems, (y) no incident in which personal information Processed by or for the Company was, or was reasonably likely to have been Processed in an unauthorized or unlawful manner, or (z) failures, breakdowns, continued substandard performance or other adverse events affecting the Software and Systems.
Section 2.17 Registration Rights. Except as provided in this Agreement, the Existing Registration Rights Agreement or the Registration Rights Agreement, the Company has not granted any rights to register under the Securities Act any of its presently outstanding securities or any of its securities that may be issued subsequently.
Section 2.18 Investment Company Act. The Company is not, and immediately after giving effect to the sale of the Purchased Shares in accordance with this Agreement and the application of the proceeds thereof will not be required to be registered as, an “investment company” or a company “controlled” by an “investment company,” within the meaning of the Investment Company Act.
Section 2.19 NYSE Listing and Maintenance Requirements. The Company’s Class A Common Stock is listed on the NYSE, and no event has occurred, and the Company is not aware of any event that is reasonably likely to occur, that would result in the Class A Common Stock being delisted from the NYSE, nor has the Company received as of the date of this Agreement any notification that the SEC or the NYSE is contemplating terminating such registration. The Company is in compliance in all material respects with the listing and listing maintenance requirements of the NYSE applicable to it for the continued trading of its Class A Common Stock on the NYSE. Without limiting the generality of the foregoing, the consummation of the transactions contemplated by this Agreement does not require approval of the Company’s stockholders pursuant to the listing maintenance requirements of the NYSE, except to the extent the Requisite Stockholder Approval is required with respect to any issuance of Conversion Shares in excess of the Issuance Limitation.
Section 2.20 No Brokers or Finders. No Person has or will have, as a result of the transactions contemplated by this Agreement, any right, interest or claim against or upon the Company, any of its Subsidiaries or the Purchasers for any commission, fee or other compensation as a finder or broker because of any act of the Company or any of its Subsidiaries.
Section 2.21 Illegal Payments; FCPA Violations. Except as has not had, and would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect, since January 1, 2021, neither the Company nor any Subsidiaries, or any officer, director, employee or, to the knowledge of the Company, agent, representative or consultant acting on behalf of the Company or any of its Subsidiaries has, in connection with the business of the Company: (a) unlawfully offered, paid, promised to pay, or authorized the payment of, directly or indirectly, anything of value, including money, loans, gifts, travel, or entertainment, to any Government
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Official with the purpose of (i) influencing any act or decision of such Government Official in his or her official capacity; (ii) inducing such Government Official to perform or omit to perform any activity in violation of his or her legal duties; (iii) securing any improper advantage; or (iv) inducing such Government Official to influence or affect any act or decision of such Governmental Entity in violation of the U.S. Foreign Corrupt Practices Act of 1977, as amended, the UK Bribery Act 2010, as amended, or any other applicable anti-corruption or anti-bribery law (collectively “Anti-Corruption Laws”); (b) made any illegal contribution to any political party or candidate; (c) made, offered, promised to pay, authorized or accepted any unlawful bribe, payoff, influence payment, kickback, unlawful rebate, or other similar unlawful payment of any nature, directly or indirectly, in connection with the business of the Company, to or from any person, including any supplier or customer; (d) knowingly established or maintained any unrecorded fund or asset or made any false entry on any book or record of the Company or any of its Subsidiaries for any purpose; or (e) otherwise violated any applicable Anti-Corruption Laws.
Section 2.22 Sanctions and Export Controls. Since January 1, 2021, neither the Company nor any of its Subsidiaries or, to the Knowledge of the Company any of its respective director officer, employee or agent of the Company or any of its Subsidiaries, (a) is or was a Sanctioned Person, (b) has conducted business, directly or indirectly, with any Sanctioned Person or in any Sanctioned Country on behalf of the Company or any of its Subsidiaries in violation of Sanctions Laws or (c) has otherwise violated or engaged in any conduct prohibited under any applicable Sanctions Laws or Export and Import Controls, or the anti-boycott Laws administered by the U.S. Department of Commerce and the U.S. Department of Treasury’s Internal Revenue Service.
Section 2.23 Absence of Certain Changes. (a) Since January 30, 2025, except for the execution and performance of this Agreement, the Antero Purchase Agreements or any amendment thereto that has been made in compliance with Section 4.14, the Fourth Amendment to the Credit Agreement, to be entered into on or about the date of the Closing and any other agreements contemplated hereby and thereby and the discussions, negotiations and transactions related hereto, the business of the Company and its Subsidiaries has been carried on and conducted in all material respects in the ordinary course of business, and (b) since January 30, 2025, there has not been any Material Adverse Effect.
Section 2.24 Anti-Takeover Provisions.
(a) Neither the Company nor any of its Subsidiaries is party to a stockholder rights plan or agreement, “poison pill” or substantially similar anti-takeover agreement or plan.
(b) The Board of Directors has taken all necessary actions, including the approval of this Agreement, the Registration Rights Agreement, the Certificate of Designation and the transactions contemplated by this Agreement, the Registration Rights Agreement and the Certificate of Designation, to ensure that the restrictions on business combinations contained in the Certificate of Incorporation of the Company do not apply to this Agreement, the Registration Rights Agreement, the Certificate of Designation or any of the transactions contemplated by this Agreement, the Registration Rights Agreement and the Certificate of Designation.
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(c) No other “business combination”, “control share acquisition”, “fair price”, “moratorium”, or similar anti-takeover provision of Law applies or purports to apply to this Agreement, the Registration Rights Agreement, the Certificate of Designation or any of the transactions contemplated by this Agreement, the Registration Rights Agreement and the Certificate of Designation.
Section 2.25 Indebtedness.
(a) As of the date of this Agreement, except for the Credit Agreement, the Company is not party to any agreement that by its terms restricts, limits, prohibits or prevents the Company from paying dividends or other distributions of or on equity interests.
(b) As of the date of this Agreement, other than the Credit Agreement, the Company is not party to any agreement (x) relating to the incurrence or assumption of any indebtedness or to mortgaging, pledging or otherwise placing a Lien on any material portion of the assets of the Company or its Subsidiaries or to mortgaging, pledging or otherwise placing a Lien (other than a Permitted Lien) securing any obligation in excess of $1,000,000 on any assets of the Company or its Subsidiaries or (y) guaranty of any indebtedness or other material guaranty.
(c) As of the date of this Agreement, the Credit Agreement has not been amended, modified or waived since December 5, 2025 by the Third Amendment to the Credit Agreement, dated as of December 5, 2025.^^
(d) The Company and its Subsidiaries and, to the Knowledge of the Company, each of the other parties thereto, are not in material breach of, default or material violation under, the Credit Agreement, (ii) no Default Event has occurred and is continuing (or otherwise exists) or would result immediately after giving pro forma effect to the consummation of the transactions contemplated hereby, and (iii) to the Knowledge of the Company, no event has occurred that with notice or lapse of time, or both, would constitute such a Default Event.
Section 2.26 Antero Purchase Agreements. To the Knowledge of the Company, the representations and warranties of the applicable sellers in the Antero Purchase Agreements are true and correct in all material respects. The Company has made available to the Purchaser a true, correct and complete copy of each Antero Purchase Agreement (including any amendments thereto), and all material agreements entered into pursuant to the terms of the Antero Purchase Agreements and all exhibits and schedules thereto.
Section 2.27 No Additional Representations. Except for the representations and warranties made by the Company in this Article II and in any certificate delivered to the Purchasers in connection with this Agreement, neither the Company nor any other Person makes any express or implied representation or warranty with respect to the Company or any Subsidiaries or their respective businesses, operations, assets, liabilities, employees, employee benefit plans, conditions or prospects, and the Company hereby disclaims any such other representations or warranties. In particular, without limiting the foregoing disclaimer, except for the representations and warranties made by the Company in this Article II and in any certificate delivered to the Purchasers in connection with this Agreement, neither the Company nor any other Person makes or has made any representation or warranty to the Purchasers, or any of their respective Affiliates or
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representatives, with respect to (a) any financial projection, forecast, estimate, budget or prospect information relating to the Company or any of its Subsidiaries or their respective business, or (b) any oral or written information presented to the Purchasers or any of their respective Affiliates or representatives in the course of their due diligence investigation of the Company, the negotiation of this Agreement or in the course of the transactions contemplated hereby. Notwithstanding anything to the contrary herein, nothing in this Agreement shall limit the right of the Purchasers and their respective Affiliates to rely on the representations, warranties, covenants and agreements expressly set forth in this Agreement and in any certificate delivered to the Purchasers in connection with this Agreement, nor will anything in this Agreement operate to limit any claim by any Purchaser or any of its respective Affiliates for fraud.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS
Each Purchaser, severally and not jointly, hereby, for itself and for no other Purchaser, represents and warrants to the Company as of the date hereof and as of the Closing Date (except to the extent made only as of a specified date in which case as of such date) that:
Section 3.1 Organization and Power. Such Purchaser is a limited liability company duly formed, validly existing and in good standing under the laws of the jurisdiction of its formation and has all necessary power and authority to own its properties and to carry on its business as presently conducted.
Section 3.2 Authorization, Etc. Such Purchaser has all necessary power and authority and has taken all necessary entity action required for the due authorization, execution, delivery and performance by such Purchaser of this Agreement and the Registration Rights Agreement and the consummation by such Purchaser of the transactions contemplated hereby and thereby. The authorization, execution, delivery and performance by such Purchaser of this Agreement and the Registration Rights Agreement, and the consummation by such Purchaser of the transactions contemplated hereby and thereby do not and will not: (a) violate or result in the breach of any provision of the organizational documents of such Purchaser; or (b) with the exceptions that are not reasonably likely to have, individually or in the aggregate, a material adverse effect on its ability to perform its obligations under this Agreement and the Registration Rights Agreement: (i) violate any provision of, constitute a breach of, or default under, any judgment, order, writ, or decree applicable to such Purchaser or any material contract to which such Purchaser is a party; or (ii) violate any provision of, constitute a breach of, or default under, any applicable state, federal or local Law. This Agreement has been, and the Registration Rights Agreement will be at the Closing, duly executed and delivered by such Purchaser. Assuming due execution and delivery thereof by the other parties hereto or thereto, this Agreement and the Registration Rights Agreement will each be a valid and binding obligation of such Purchaser enforceable against such Purchaser in accordance with its terms, except as the enforceability may be limited by applicable laws relating to bankruptcy, insolvency, reorganization, moratorium or other similar legal requirement relating to or affecting creditors’ rights generally and except as the enforceability is subject to general principles of equity (regardless of whether enforceability is considered in a proceeding in equity or at law).
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Section 3.3 Government Approvals. No consent, approval, license or authorization of, or filing with, any court or Governmental Entity is or will be required on the part of such Purchaser in connection with the execution, delivery and performance by such Purchaser of this Agreement and the Registration Rights Agreement, except for: (a) those which have already been made or granted; (b) the filing with the SEC of a Schedule 13D or Schedule 13G and a Form 3 to report such Purchaser’s ownership of the Purchased Shares; (c) those where the failure to obtain such consent, approval or license would not have a material adverse effect on the ability of such Purchaser to perform its obligations hereunder; or (d) filings required under, and compliance with other applicable requirements of, the HSR Act or any other Antitrust Law.
Section 3.4 Investment Representations.
(a) Such Purchaser is an “accredited investor” as that term is defined in Rule 501(a) of Regulation D promulgated under the Securities Act.
(b) Such Purchaser has been advised by the Company that the Purchased Shares have not been registered under the Securities Act, that the Purchased Shares will be issued on the basis of the statutory exemption provided by Section 4(a)(2) under the Securities Act or Regulation D promulgated thereunder, or both, relating to transactions by an issuer not involving any public offering and under similar exemptions under certain state securities laws, that this transaction has not been reviewed by, passed on or submitted to any federal or state agency or self-regulatory organization where an exemption is being relied upon, and that the Company’s reliance thereon is based in part upon the representations made by such Purchaser in this Agreement. Such Purchaser acknowledges that it has been informed by the Company of, or is otherwise familiar with, the nature of the limitations imposed by the Securities Act and the rules and regulations thereunder on the transfer of securities.
(c) Such Purchaser is purchasing its allocation of the Purchased Shares for its own account and not with a view to, or for sale in connection with, any distribution thereof in violation of federal or state securities laws.
(d) Such Purchaser (i) by reason of its business and financial experience, has such knowledge, sophistication and experience in making similar investments and in business and financial matters generally so as to be capable of evaluating the merits and risks of the prospective investment in the Purchased Shares and the Conversion Shares, (ii) has been furnished with or has had access to all the information that it considers necessary or appropriate to make an informed investment decision with respect to the Purchased Shares and the Conversion Shares, (iii) has had an opportunity to discuss with the Company and its Representatives the intended business and financial affairs of the Company and to obtain information necessary to verify any information furnished to it or to which it had access and (iv) can bear the economic risk of an investment in the Purchased Shares and the Conversion Shares indefinitely.
(e) Such Purchaser is aware that the Company has access to certain non-public information which may be material regarding the Company, its businesses, projections, future plans, financial information and results of operations that the Company has not disclosed to such Purchaser. Such Purchaser is experienced, sophisticated and knowledgeable in the purchase and sale of securities and understands the disadvantage to which such Purchaser is subject on
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account of the disparity of information as between the Company and such Purchaser. Such Purchaser believes, by reason of its business or financial experience or its own independent investigation that it is capable of evaluating the merits and risks of the purchasing the Purchased Shares and of protecting its own interest in connection with purchasing the Purchased Shares. Assuming the accuracy of the representations and warranties of the Company set forth in Article II and in any certificate delivered hereunder, such Purchaser has independently and without reliance upon the Company (except for the representations and warranties made by the Company in Article II), and based on such information as it deems appropriate, including information publicly available about the Company, made its own analysis and decision to purchase the Purchased Shares.
Section 3.5 No Prior Ownership. Except as set forth on Schedule 3.5, as of the date hereof and as of immediately prior to the Closing, such Purchaser does not have record or beneficial ownership (within the meaning of Rule 13d-3 under the Exchange Act) of any shares of the Company’s Common Stock.
Section 3.6 No Brokers or Finders. No Person has or will have, as a result of the transactions contemplated by this Agreement, any right, interest or claim against or upon the Company, any of its Subsidiaries or any Purchaser for any commission, fee or other compensation as a finder or broker because of any act by such Purchaser and for which the Company will be liable.
Section 3.7 No Additional Representations. Such Purchaser acknowledges and agrees, on behalf of itself and its Affiliates, that, except for the representations and warranties contained in Article II and in any certificate delivered by the Company in connection with this Agreement, neither the Company nor any other Person, makes any express or implied representation or warranty with respect to the Company, its Subsidiaries or their respective businesses, operations, assets, liabilities, employees, employee benefit plans, conditions or prospects, and such Purchaser, on behalf of itself and its Affiliates, hereby disclaims reliance upon any such other representations or warranties. In particular, without limiting the foregoing disclaimer, such Purchaser acknowledges and agrees, on behalf of itself and its Affiliates, that neither the Company nor any other Person, makes or has made any representation or warranty with respect to, and such Purchaser, on behalf of itself and its Affiliates, hereby disclaims reliance upon (a) any financial projection, forecast, estimate, budget or prospect information relating to the Company, its Subsidiaries or their respective business, or (b) without limiting the representations and warranties made by the Company in Article II and in any certificate delivered by the Company in connection with this Agreement, any information presented to such Purchaser or any of its respective Affiliates or representatives in the course of their due diligence investigation of the Company, the negotiation of this Agreement or in the course of the transactions contemplated hereby. To the fullest extent permitted by applicable Law, without limiting the representations and warranties contained in Article II and in any certificate delivered by the Company in connection with this Agreement, other than in the case of fraud, neither the Company nor any of its Subsidiaries shall have any liability to any Purchaser or its respective Affiliates or representatives on any basis (including in contract or tort, under federal or state securities laws or otherwise) based upon any other representation or warranty, either express or implied, included in any information or statements (or any omissions therefrom) provided or made available by the Company or its Subsidiaries to such Purchaser or its respective Affiliates or representatives in the course of their due diligence investigation of the Company, the negotiation of this Agreement or in the course of the transactions contemplated by this Agreement.
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ARTICLE IV
COVENANTS OF THE PARTIES
Section 4.1 Restrictive Legends; Transfer Requirements and Restrictions.
(a) For a period of two (2) years after the Closing, no Purchaser shall Transfer (as defined below) any of the Purchased Shares to any Person without the consent of the Company; provided, however, that, without the consent of the Company, a Purchaser may Transfer Purchased Shares (i) to a Permitted Transferee of the Purchaser that agrees to be bound by the terms of this Agreement pursuant to a written agreement (and upon such Transfer the Permitted Transferee shall become a “Purchaser” for purposes of this Agreement (including this Section 4.1)); (ii) pursuant to a tender or exchange offer, merger, consolidation, division, acquisition, reorganization or recapitalization involving the Company; or (iii) following the date the Company commences a voluntary case under Title 11 of the United States Bankruptcy Code or any other similar insolvency laws. From and after the two (2) year anniversary of the Closing, each Purchaser shall be permitted to Transfer any or all of the Purchased Shares to any Person without the consent of the Company, subject to Section 4.1(b); provided that for any Transfer permitted by the terms of this Agreement, the transferee must execute and deliver to the Company a joinder in a form reasonably acceptable to the Company agreeing to be bound by the terms of this Agreement; provided, further, that the Company’s acceptance of such joinder shall not be unreasonably withheld, conditioned or delayed.
(b) At no time shall a Purchaser knowingly Transfer any Purchased Shares or Conversion Shares to (i) any Company Competitor, or (ii) any Person who is known to have engaged in activist campaigns in the three years prior to the date of any such proposed Transfer by publicly stating an intention to or actually attempting to (pursuant to proxy solicitation, tender or exchange offer or other means) obtain a seat on the board of directors of a company or effecting a significant change within such company, in each case, that was publicly opposed by the board of directors of such company; provided that the restrictions set forth in this Section 4.1(b) shall not apply to Transfers in connection with and pursuant to the terms of a merger or other business combination, acquisition of assets or similar transaction or any change of control transaction involving the Company or any Subsidiary thereof.
(c) Each certificate or other instrument representing the Purchased Shares or the Conversion Shares (unless otherwise permitted by the provisions of Section 4.1(f) or (g)) shall be stamped or otherwise imprinted with a legend in substantially the following form (in addition to any legend required under applicable state securities laws):
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS. THESE SECURITIES MAY NOT BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, REGISTRATION.
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(d) In addition, for so long as the Purchased Shares are subject to the restrictions set forth in Section 4.1(a) and Section 4.1(b), each certificate representing the Purchased Shares shall be stamped or otherwise imprinted with a legend in substantially the following form:
THE SECURITIES REPRESENTED HEREBY ARE SUBJECT TO RESTRICTIONS ON TRANSFER AS PURSUANT TO SECTION 4.2(A) AND 4.2(B) OF THAT CERTAIN SECURITIES PURCHASE AGREEMENT, DATED AS OF FEBRUARY 18, 2026, BY AND AMONG THE COMPANY AND THE PURCHASERS THERETO GOVERNING THE INITIAL ISSUANCE OF THE SERIES A CONVERTIBLE PREFERRED STOCK OF THE COMPANY.
(e) Each Purchaser consents to the Company making a notation on its records and giving instructions to any transfer agent of the Purchased Shares or the Conversion Shares in order to implement the restrictions on transfer set forth in this Section 4.1.
(f) The Company shall remove the legends described in Section 4.1(c) and Section 4.1(d) (or instruct its transfer agent to so remove such legend) from the book-entry account evidencing the Conversion Shares (for purposes of this Section 4.1, the “Shares”) if (i) such Shares are sold pursuant to an effective registration statement under the Securities Act, (ii) such Shares are sold or transferred pursuant to Rule 144 promulgated under the Securities Act (or any similar rule or regulation hereafter adopted by the SEC having substantially the same effect as such rule, “Rule 144”), or (iii) such Shares are eligible for sale under Rule 144, without the requirement for the Company to be in compliance with the current public information required under Rule 144(c)(1) (or Rule 144(i)(2), if applicable) as to such securities and without volume or manner of sale restrictions. If a Purchaser holds a certificate bearing the restrictive legend set forth in Section 4.1(d), the Company shall promptly remove such restrictive legend from such certificate when the provisions of Section 4.1(a) and Section 4.1(b) are no longer applicable to the applicable Purchased Shares or Conversion Shares.
(g) In connection with a sale of Conversion Shares by a Purchaser in reliance on Rule 144, such Purchaser or its broker shall deliver to the transfer agent and the Company a customary representation letter providing to the transfer agent and the Company any information necessary to determine that the sale of the Shares is made in compliance with Rule 144, including, as may be appropriate, a certification that such Purchaser is not an Affiliate of the Company and regarding the length of time the Shares have been held. Upon receipt of such representation letter, the Company shall promptly direct its transfer agent to remove the legend referred to in Section 4.1(c) and Section 4.1(d) from the appropriate book-entry accounts maintained by the transfer agent, and the Company shall bear all direct costs and expenses associated therewith. After a Purchaser or its permitted assigns have held the Shares for such time as non-Affiliates are permitted to sell without volume limitations under Rule 144, if the book-entry account for such Shares still bears the restrictive legend referred to in Section 4.1(c) or Section 4.1(d), the Company agrees, upon request of such Purchaser or its permitted assignees, to take all steps necessary to promptly effect the removal of the legend described in Section 4.1(c) and
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Section 4.1(d) from the Shares, and the Company shall bear all direct costs and expenses associated therewith, regardless of whether the request is made in connection with a sale or otherwise, so long as such Purchaser or its permitted assigns provide to the Company any information the Company deems reasonably necessary to determine that the legend is no longer required under the Securities Act or applicable state laws, including a certification that the holder is not an Affiliate of the Company (and a covenant to inform the Company if it should thereafter become an Affiliate and to consent to the notation of an appropriate restrictive legend) and regarding the length of time the Shares have been held.
(h) The Company shall cooperate with each Purchaser to effect the removal of the legend referred to in Section 4.1(c) or Section 4.1(d), as applicable, at any time such legend is no longer appropriate.
Section 4.2 Standstill.
(a) Except as otherwise provided in this Agreement or the Certificate of Designation, (x) for the Quantum Purchaser and its transferees, so long as the Quantum Purchase and its Affiliates owns, of record or beneficially, at least ten percent (10%) of the outstanding shares of the Company’s Common Stock (which shall be determined assuming the conversion of all of the shares of Series A Preferred Stock) or (y) for any other Purchaser and its transferees, so long as such Purchaser and its Affiliates owns, of record or beneficially, at least three percent (3%) of the outstanding shares of the Company’s Common Stock (which shall be determined assuming the conversion of all of the shares of Series A Preferred Stock), in each case, until the date that is two (2) years following the Closing, without the prior written consent of the Company, no Purchaser will, nor will it cause or permit any of its Affiliates to: (i) effect or seek, offer or propose (whether publicly or otherwise) to effect, or announce any intention to effect or cause or participate in or in any way assist, facilitate or knowingly encourage any other person to effect or seek, offer or propose (whether publicly or otherwise) to effect or participate in, any acquisition of any equity securities (or beneficial ownership thereof) or rights or options to acquire any equity securities (or beneficial ownership thereof), or any securities convertible into or exchangeable for any such equity securities (or beneficial ownership thereof), of the Company; (ii) (A) make, participate in or knowingly encourage any “solicitation” (as such term is used in the proxy rules of SEC) of proxies or consents with respect to the election or removal of directors or any other matter or proposal; (B) become a “participant” (as such term is used in the proxy rules of the SEC) in any such solicitation of proxies or consents; (C) seek to advise, or knowingly encourage or influence any Person with respect to the voting or disposition of any of the securities of the Company; or (D) initiate, knowingly encourage or participate, directly or indirectly, in any “vote no,” “withhold” or similar campaign; (iii) otherwise act to seek representation on or to control or influence the management or policies of the Company or to obtain representation on the Board of Directors (beyond the right of the holders of shares of Series A Preferred Stock to elect the Series A Director); (iv) submit (whether publicly or otherwise) any shareholder proposal to the Company; (v) propose (whether publicly or otherwise) any change of control or other material transaction involving the Company or (vi) support or knowingly encourage any third party in doing any of the foregoing; it being understood that nothing in this Section 4.2 shall (1) restrict or prohibit the Series A Director from taking any action, or refraining from (x) taking any action, which he or she determines, in his or her reasonable discretion, is necessary or appropriate in light of his or her fiduciary duties as a member of the Board of Directors or (y)
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(b) In the event that a Purchaser Party or any of its Representatives is required or requested by applicable law (including oral questions, interrogatories, requests for information or documents, subpoena, civil investigative demand or other process) to disclose any of the Confidential Information, such Purchaser Party will provide the Company with prompt notice (unless such notification is prohibited by applicable law and other than in connection with a routine audit or examination by, or a blanket document request from, a regulatory or Governmental Entity that does not reference the Company or this Agreement) so that the Company may seek a protective order or other appropriate remedy or waive compliance with the provisions of this Section 4.3, at the Company’s sole cost. In the event that such a protective order or other remedy is not obtained, that no such notice is required to be provided to the Company or that the Company waives compliance with the provisions of this Section 4.3, each Purchaser Party may disclose such Confidential Information without liability hereunder. Notwithstanding the foregoing, no notice or action pursuant to this Section 4.3(b) shall be required in respect of disclosure of Confidential Information (or provision of access thereto) to regulatory authorities or self-regulatory organizations having authority over any Purchaser Party or its Representatives in connection with an audit or examination or pursuant to statutory requirements that are not targeted at the Company or this Agreement.
(c) In no event will the Company be required to cleanse any Confidential Information provided to any Purchaser.
(d) The confidentiality letter agreement, dated December 22, 2025, by and between Quantum Capital Solutions II GP, LLC and INR Holdings (the “Quantum Confidentiality Agreement”), and the confidentiality letter agreement, dated December 8, 2025, by and between Carnelian Energy Capital Management, L.P. and INR Holdings (the “Carnelian Confidentiality Agreement”, and together with the Quantum Confidentiality Agreement, the “Confidentiality Agreements”) shall terminate simultaneously with the Closing.
Section 4.4 Information Rights.
(a) For so long as any Purchaser Party collectively holds record and beneficial ownership (within the meaning of Rule 13d-3 under the Exchange Act) of more than three percent (3%) of the outstanding shares of the Company’s Common Stock (which shall be determined assuming the conversion of all of the shares of Series A Preferred Stock) (the “Information Rights Threshold”), at the written request of such Purchaser Party, the Company shall provide to such Purchaser Party:^^
(i) within 120 days following the end of each fiscal year, a consolidated budget for the following fiscal year as customarily prepared by management of the Company in the form consistent with the budget delivered to, at the Company’s option, the senior lenders of the Company and its subsidiaries or the Board of Directors, as applicable;
(ii) (x) an updated, annual reserve report that has been prepared or audited by a nationally recognized, independent third-party reserve engineer delivered within sixty (60) days following the end of each fiscal year and (y) an internal, unaudited reserve report delivered within forty-five (45) days following March 31, June 30 and September 30 of each year; each such reserve report shall evaluate the proven reserves, proven and probable reserves, and proven, probable and possible reserves of the Company and its Subsidiaries and other applicable oil and gas properties of the Company and its Subsidiaries as of the end of such immediately preceding fiscal quarter;
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(iii) to the extent not included in any reserve report described in Section 4.4(a), concurrently with the delivery of such reserve report, a schedule of the forecasted midstream and land capital expenditures associated with the oil and gas properties evaluated in each reserve report;
(iv) within seventy-five (75) days after the end of each fiscal quarter, a report setting forth the gross daily wellhead production volumes by wellbore for such quarter from all producing wellbores included in any reserve report delivered pursuant to Section 4.4(a)(ii); and
(v) within seventy-five (75) days after the end of each fiscal quarter, gross and net monthly lease operating statements (at the well level to the extent applicable) with respect to the oil and gas properties of the Company and its Subsidiaries (for the avoidance of doubt, such lease operating statements shall include midstream assets owned by the Company and its Subsidiaries).
(b) For so long as any Purchaser Party meets the Information Rights Threshold, the Company shall provide to such Purchaser Party reasonable access, to the extent reasonably requested by such Purchaser Party, to the Company and its Subsidiaries’ office properties, books and records, and to discuss their affairs, finances and matters related to capital structure and financing with its and their officers, all upon reasonable notice and at reasonable times at the Company’s principal place of business; provided that the officers of the Company and its Subsidiaries shall make themselves available for such discussions no less frequently than once per fiscal quarter; provided, further, any access pursuant to this Section 4.4(b) shall be conducted in a manner as not to interfere unreasonably with the conduct of the business of the Company and its Subsidiaries; provided, further, that the Company shall not (i) be obligated pursuant to this Section 4.4(b) to provide access to any information that it reasonably and in good faith considers to be a trade secret or Confidential Information (unless covered by an enforceable confidentiality agreement, in form acceptable to the Company, it being acknowledged that an agreement in the form of the Confidentiality Agreement is acceptable to the Company and if such Purchaser Party desires to enter into such an agreement, the Company agrees to promptly do so in such form) or the disclosure of which would adversely affect the attorney-client privilege between the Company and its counsel; or (ii) be required to violate any obligation of confidentiality, order or applicable Law to which it or its Subsidiaries is subject or to waive any privilege which any of them may possess in discharging its obligations pursuant to this Section 4.4(b); provided, further, that (i) the Company may not enter into any obligation of confidentiality or otherwise for the purpose of avoiding disclosure under this Section 4.4(b) and (ii) the Company shall give notice to such Purchaser Party of the fact that it is withholding such information or documents and inform such Purchaser Party of the general nature of the information being withheld and thereafter the Company shall reasonably cooperate with such Purchaser Party to provide such information (or as much of it as possible) in a manner that would render clauses (i) and (ii) inapplicable.
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(c) During the period from the date hereof through the Closing, subject to each Purchaser’s obligations under the applicable Confidentiality Agreement, the Company shall, and shall cause its Subsidiaries to, afford to each Purchaser and its authorized Representatives reasonable access during normal business hours, upon reasonable advance notice, to the offices, properties, assets and business, regulatory and financial records of the Company and its Subsidiaries and shall furnish to each Purchaser or such authorized Representatives such additional information concerning the Company and its Subsidiaries (including any businesses to be acquired by the Company or its Subsidiaries) as shall be reasonably requested; provided, however, that the Company shall not be required to violate any obligation of confidentiality, order or applicable Law to which it or its Subsidiaries is subject or to waive any privilege which any of them may possess in discharging its obligations pursuant to this Section 4.4(c) (but in such event the Company shall use commercially reasonable efforts to cooperate with each Purchaser to seek an appropriate remedy to provide the required information). Each Purchaser hereby acknowledges and agrees that any investigation pursuant to this Section 4.4(c) shall be conducted in such a manner as not to interfere unreasonably with the operations of the Company.
(d) Notwithstanding the foregoing, where a conflict of interest is reasonably determined to exist between the Company’s interest in such information and the interests of any Purchaser or its Affiliates (including its investments and portfolio companies), the Company may withhold the delivery of the necessary portion of such information to such Purchaser to protect its competitive interests.
Section 4.5 Filings; Other Actions.
(a) Each Purchaser and the Company shall use reasonable best efforts to obtain or submit, as the case may be, as promptly as practicable following the date hereof, the approvals and authorizations of, filings and registrations with, and notifications to, or expiration or termination of any applicable waiting period, under the HSR Act and other applicable Antitrust Laws in connection with the acquisition of voting securities of the Company by a Purchaser pursuant to this Agreement or the Certificate of Designation (including the issuance of the Conversion Shares) (the “Antitrust Approval”), including litigating to avoid the entry of any decree, judgment, injunction (permanent or preliminary), or any other order that would make the transactions contemplated by this Agreement or by the Certificate of Designation unlawful or would otherwise materially delay or prevent the consummation of the transactions contemplated hereby or by the Certificate of Designation. Notwithstanding anything in this Agreement to the contrary, this Section 4.5 shall not require or obligate the Company or any Purchaser to propose, negotiate, commit to, or effect, by consent decree or otherwise, the sale, divestiture, transfer, license, disposition, or hold separate (through the establishment of a trust or otherwise) of such assets, properties, or businesses of any Purchaser or any of its Affiliates, Subsidiaries, investment funds or vehicles, or portfolio companies, in order to avoid the entry of any decree, judgment, injunction (permanent or preliminary), or any other order that would make the transactions contemplated by this Agreement unlawful or would otherwise materially delay or prevent the consummation of the transactions contemplated hereby. Without limiting the foregoing, the Quantum Purchaser and the Company shall each prepare and file within twenty-five (25) Business Days after the date hereof a required Notification and Report Form pursuant to the HSR Act in connection with the transactions contemplated by this Agreement. In connection with such undertakings, the Quantum Purchaser or the Carnelian Purchaser, on the one hand, as applicable,
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and the Company, on the other hand, will cooperate and consult with the other and use reasonable best efforts to prepare and file all necessary documentation, to effect all necessary applications, notices, petitions, filings and other documents, and to obtain all necessary permits, consents, orders, approvals and authorizations of, or any exemption by, all third parties and Governmental Entities, necessary or advisable to consummate the transactions contemplated by this Agreement, including obtaining the Antitrust Approval. Each Purchaser and the Company shall execute and deliver such further certificates, agreements and other documents and take such other actions as the other party may reasonably request to consummate or implement such transactions or to evidence such events or matters.
(b) Each Purchaser and the Company will have the right to review in advance, and to the extent practicable, each will consult with the other, in each case, subject to applicable laws relating to the exchange of information, all the material information required for or which appears in any application or other filing made with, or written materials submitted to, any third party or any Governmental Entity in connection with the transactions contemplated by this Agreement, including obtaining the Antitrust Approval; provided that, with respect to obtaining the Antitrust Approval, only the Purchaser that is making (or is required to make) the applicable filing or that is the subject of the applicable communication with a Governmental Entity (together with the Company) shall have the right to review any such application, filing or written materials. In exercising the foregoing right, each of the applicable parties hereto agrees to act reasonably and as promptly as practicable. Each applicable party hereto agrees to keep the other parties apprised of the status of matters referred to in this Section 4.5, and shall promptly notify the other parties of any communication received by such party from, or given by such party to, any U.S., state-level, multinational or foreign Governmental Entity and of any communication received or given in connection with any proceeding by a private party, in each case in respect of the transactions contemplated by this Agreement, including, with respect to each Purchaser and the Company, obtaining the Antitrust Approval. Each Purchaser shall promptly furnish the Company, and the Company shall promptly furnish each Purchaser, to the extent permitted by law, with copies of written communications received by it or its Subsidiaries or, in the case of each Purchaser, its investment funds or vehicles, or portfolio companies, from any Governmental Entity in respect of the transactions contemplated by this Agreement, including with respect to Quantum Purchaser and the Company obtaining the Antitrust Approval; provided, further, that materials may be redacted (x) to remove references concerning the valuation of the Company, (y) as necessary to comply with contractual arrangements, and (z) as necessary to address reasonable attorney-client or other privilege or confidentiality concerns, to the extent that that such attorney-client or other privilege or confidentiality concerns are not governed by a common interest privilege or doctrine. Neither the Purchasers nor the Company shall participate in any substantive meeting with any Governmental Entity in respect of the transactions contemplated by this Agreement, including obtaining the Antitrust Approval unless it consults with the other parties in advance and, to the extent not prohibited by such Governmental Entity, gives the other parties the opportunity to attend and participate therein or thereat; provided that each Purchaser shall have such rights with respect to the Antitrust Approval to the extent relating to such Purchaser’s own filings, submissions, or acquisition of voting securities pursuant to this Agreement or the Certificate of Designation, and, for the avoidance of doubt, when the Carnelian Purchaser is not making (and is not required to make) any such filing and is not the subject of the applicable communication, only the Quantum Purchaser and the Company shall have such rights.
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(c) For the avoidance of doubt, each Purchaser shall pay, or cause to be paid, and be responsible for all filing fees payable in connection with obtaining its own Antitrust Approval relating to the transactions contemplated hereby or by the Certificate of Designation.
Section 4.6 Antitakeover Provisions. If, after the execution and delivery of this Agreement, any Antitakeover Provision shall apply or purport to apply to this Agreement, the Registration Rights Agreement, the Certificate of Designation or any of the transactions contemplated by this Agreement, the Registration Rights Agreement or the Certificate of Designation, the Board of Directors shall, to the fullest extent permitted by applicable Law, take all actions necessary so that such transactions may be consummated as promptly as practicable on the terms required by, or provided for, in this Agreement, the Registration Rights Agreement and the Certificate of Designation, and otherwise to take all such other actions as are reasonably necessary to eliminate or minimize to the greatest extent possible the effects of any such Antitakeover Provision thereupon or upon the transactions contemplated thereby.
Section 4.7 Tax Matters.
(a) Tax Treatment. The Company and the Purchasers agree (i) to treat the Series A Preferred Stock as not being “preferred stock” within the meaning of Section 305 of the Code and Treasury Regulation Section 1.305-5 for U.S. federal income tax and withholding tax purposes, and (ii) to treat any conversion of the Series A Preferred Stock to Class A Common Stock in accordance with the terms of the Certificate of Designation as a tax-deferred recapitalization under Section 368(a)(1)(E) of the Code or as an exchange under Section 1036(a) of the Code, or both (the “Intended Tax Treatment”). Neither the Company nor any Purchaser Party shall take any tax reporting position that is inconsistent with the Intended Tax Treatment, including on any applicable U.S. federal (or applicable state or local) income tax return or in connection with any audit or other Proceeding unless otherwise required by a “determination” pursuant to Section 1313(a) of the Code.
(b) Dividends. The Company and the Purchasers intend that none of the Purchaser Parties nor any of their Affiliates shall be required to include in income any dividend income for U.S. federal (or applicable state and local) income tax purposes by reason of the application of Section 305 of the Code to the Series A Preferred Stock except (i) to the extent of the amount of any dividends on the Series A Preferred Stock that are declared and paid in cash, (ii) to the extent of the amount of any dividends on the Series A Preferred Stock that are declared but unpaid at the time of any redemption of such Series A Preferred Stock, and (iii) to the extent required by applicable law at a “more likely than not” level of comfort (as determined in good faith by the Company and its tax advisors and after reasonable notice and reasonable consultation with the Purchasers). The Company and the Purchasers agree to take no tax positions or actions inconsistent with the foregoing (including on any IRS Form 1099), unless otherwise required by a change in applicable law after the date hereof or pursuant to a “determination” within the meaning of Section 1313(a) of the Code.
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(c) Liquidations, Reorganizations, Etc. For so long as any Purchaser Party owns equity or securities convertible into equity in the Company, the Company shall not be liquidated, merged, or otherwise converted into a limited liability company or partnership, or otherwise enter into a transaction, in each case if the Company (or the company in which the Purchaser Party directly owns its equity interest as a result of such liquidation, merger or other transaction) ceases to exist as an entity treated as a corporation for U.S. federal (and applicable state and local) income tax purposes as a result of such transaction, without such Purchaser Party’s prior written consent; provided that, for the avoidance of doubt, the foregoing restriction shall not prevent the Company from undergoing a “reorganization” described in Section 368(a)(1)(F) of the Code or otherwise inserting a new holding entity above the Company so long as (i) the resulting parent entity is treated as a corporation for U.S. federal (and applicable state and local) income tax purposes and (ii) any exchange of the Series A Preferred Stock, Class A Common Stock or other equity securities of the Company held by any Purchaser Party necessary to effect such transaction is structured as a tax-deferred transaction with respect to any such Purchaser Party for U.S. federal (and applicable state and local) income tax purposes.^^To the extent any merger, sale, consolidation, reorganization or other similar transaction may result in any Purchaser Party disposing of its Series A Preferred Stock or Conversion Shares and such transaction is structured, in whole or in part, as a tax-deferred transaction with respect to the other holders of equity securities in the Company, the Company shall use commercially reasonable efforts to also provide such tax-deferred treatment with respect to the Purchaser Parties.
(d) Transfer Taxes. Except as provided in Section 13 of the Certificate of Designation, the Company shall pay any and all transfer, documentary, sales, use, registration, stamp, issue and other similar Taxes incurred in connection with this Agreement and the issuance and purchase of Purchased Shares and the issuance of shares of Class A Common Stock upon the conversion or redemption of the Purchased Shares.
(e) Redemptions. The Company shall use commercially reasonable efforts to cooperate with each Purchaser Party and any of their Affiliates to structure any redemption or repurchase of Series A Preferred Stock permitted under the Certificate of Designation to be treated as a payment received in part or full payment in exchange for stock pursuant to Section 302 of the Code. The Company further agrees that, for any taxable year in which the Series A Preferred Stock remains outstanding, it shall make a good faith determination as to whether its then-current and accumulated earnings and profits for U.S. federal income tax purposes are sufficient to result in any distributions on the Series A Preferred Stock being treated as “dividends” for U.S. federal income tax purposes and shall provide each Purchaser Party with any workpapers or other documentation that the Company used to make such determination upon the reasonable request by any such Purchaser Party; provided, however, that nothing in this Agreement shall be interpreted as requiring the Company to conduct and/or update its “earnings and profits study” (or similar analysis) to determine the actual amount of its then-current and accumulated earnings and profits for U.S. federal income tax purposes; provided, further, that the right to receive such workpapers and other documentation shall be unique to Quantum Purchaser and Carnelian Purchaser and their respective Affiliates and shall in no event transfer to any other holder of Series A Preferred Stock.
(f) IRS Form W-9. At the Closing, each Purchaser shall deliver to the Company a duly executed, valid, accurate and properly completed Internal Revenue Service (“IRS”) Form W-9 certifying that such Purchaser is a U.S. person and with the effect that the Company can make dividend payments to such Purchaser (or its nominee) without deduction or withholding for any U.S. federal withholding taxes. Each Purchaser agrees that if the information provided on any IRS Form W-9 previously delivered by such Purchaser changes, or if a lapse in time or change in circumstances renders the information on such IRS Form W-9 obsolete, expired or inaccurate in any material respect, such Purchaser shall promptly inform the Company and deliver promptly an updated IRS Form W-9.
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(g) Withholding. The Company and its applicable Affiliates shall be entitled to withhold such amounts as it is required to withhold pursuant to applicable law with respect to distributions or payments to such Purchaser Party relating to the Series A Preferred Stock, and amounts so withheld in accordance with this Section 4.7(g) shall be treated as having been paid to the party with respect to which such withholding is made. The Company shall remit and pay the amounts so withheld to the applicable governmental authorities in accordance with applicable law. If the Company determines that any amounts are so required to be deducted and withheld from any such payment made to a Purchaser Party, the Company shall use commercially reasonable efforts to provide such Purchaser Party with (i) written notice of such intent to deduct and withhold reasonably in advance of the date the applicable payment is scheduled to be made, which notice shall include the basis for the withholding and an estimate of the amount proposed to be deducted and withheld, and (ii) a reasonable opportunity to provide forms or other evidence that would exempt such amounts from withholding, and the Company shall reasonably cooperate with such Purchaser Party to reduce or eliminate amounts required to be withheld in accordance with applicable law.
Section 4.8 NYSE Listing of Shares. To the extent the Company has not done so prior to the date of this Agreement, the Company shall as promptly as practicable following the date of this Agreement apply to cause the Conversion Shares to be approved for listing on the NYSE, subject to official notice of issuance. In accordance with the Certificate of Designation, the Company shall cause a number of shares of Class A Common Stock equal to the total number of Conversion Shares to be authorized, reserved, and kept available at all times, free and clear of preemptive rights and all Liens, to allow for full conversion of the Series A Preferred Stock in accordance with the terms thereof. From time to time following the Closing Date, the Company shall cause the number of shares of Class A Common Stock issuable upon conversion or redemption of the then outstanding shares of Series A Preferred Stock (including, for the avoidance of doubt, any shares of Class A Common Stock issuable upon conversion of dividends that are paid in kind on the Purchased Shares) to be approved for listing on the NYSE, subject to the receipt of the Requisite Stockholder Approval as required under the Certificate of Designation with respect to the issuance of any Conversion Shares in excess of the Issuance Limitation. The Company shall pay all fees and expenses in connection with satisfying the obligations under this Section 4.8.
Section 4.9 State Securities Laws. The Company shall use its commercially reasonable efforts to (a) obtain all necessary permits and qualifications, if any, or secure an exemption therefrom, required by any state or country prior to the offer, sale and issuance of Class A Common Stock or Series A Preferred Stock and (b) cause such authorization, approval, permit or qualification to be effective as of the Closing and as of any conversion of Series A Preferred Stock.
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Section 4.10 Section 16 Matters. If the Company becomes a party to a consolidation, merger or other similar transaction or otherwise or if there is any event or circumstance that may result in a Purchaser Party, its Affiliates or the Series A Director being deemed to have made a disposition or acquisition of the Series A Preferred Stock or Conversion Shares for purposes of Section 16 of the Exchange Act, and if the Series A Director is serving on the Board of Directors at such time or has served on the Board of Directors during the preceding six (6) months (a) the Board of Directors or a committee thereof composed solely of two or more “non-employee directors” as defined in Rule 16b-3 of the Exchange Act will pre-approve such acquisition or disposition of the Series A Preferred Stock or Conversion Shares for the express purpose of exempting such Purchaser Party’s, its Affiliates’ and the Series A Director’s interests (for the Carnelian Purchaser or its Affiliates, to the extent such persons may be deemed to be “directors by deputization”) in such transaction from Section 16(b) of the Exchange Act pursuant to Rule 16b-3 thereunder and (b) if the transaction involves (i) a merger or consolidation to which the Company is a party and the Class A Common Stock is, in whole or in part, converted into or exchanged for equity securities of a different issuer, (ii) a potential acquisition or deemed acquisition, or disposition or deemed disposition, by such Purchaser Party, its respective Affiliates, or the Series A Director of equity securities of such other issuer or derivatives thereof and (iii) an Affiliate or other designee of such Purchaser Party or its Affiliates will serve on the board of directors (or its equivalent) of such other issuer pursuant to the terms of an agreement to which the Company is a party (or if such Purchaser Party notifies the Company of such service a reasonable time in advance of the closing of such transactions), then the Company shall require that such other issuer pre-approve any such acquisitions of equity securities or derivatives thereof for the express purpose of exempting the interests of such Purchaser Party, its Affiliates and the Series A Director (for the Carnelian Purchaser or its Affiliates, to the extent such persons may be deemed to be “directors by deputization” of such other issuer) in such transactions from Section 16(b) of the Exchange Act pursuant to Rule 16b-3 thereunder.
Section 4.11 Interim Negative Covenants From the date of this Agreement through the Closing, the Company and its Subsidiaries shall use their commercially reasonable efforts to operate their businesses in the ordinary course, and, without the prior written consent of the Purchasers (which consent shall not be unreasonably withheld, conditioned or delayed), the Company shall not and shall cause its Subsidiaries not to:
(a) take any action that would require the consent of the Holders (as defined in the Certificate of Designation) pursuant to Section 10(c) of the Certificate of Designation;
(b) redeem, purchase, repurchase or otherwise acquire any of its outstanding shares of capital stock or other equity or voting interests, or any rights, warrants or options to acquire any shares of its capital stock or other equity or voting interests, except in the ordinary course of business, consistent with past practice pursuant to the terms of the Stock Plan;
(c) establish a record date for, declare, set aside for payment or pay any dividend on, or make any other distribution in respect of, any shares of its capital stock or other equity or voting interests;
(d) split, combine, subdivide, recapitalize, reclassify or make like change to any shares of its capital stock or other equity or voting interests;
(e) amend, supplement or otherwise change, or waive any provision of, the Certificate of Incorporation or Bylaws (except as and to the extent contemplated by Section 2.24(b)) or make any amendments to the OpCo LLC Agreement (other than the OpCo LLC Agreement Amendment (as defined below)) or take or authorize any action to wind up the affairs of or dissolve the Company;
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(f) issue capital stock of the Company that would require the Company to obtain approval of its stockholders under the continued listing requirements of the NYSE;
(g) make any material change in the Company’s or its Subsidiaries’ financial accounting principles, except as required by changes in GAAP (or any interpretation thereof) or in applicable Law;
(h) take any action that would result in the Company being treated as other than a corporation for U.S. federal income tax purposes; or
(i) agree, authorize or commit to do any of the foregoing.
Section 4.12 Excluded Sponsor Parties.
(a) Notwithstanding anything to the contrary in this Agreement, the Company and the Members acknowledge that the Quantum Purchaser and its affiliates manage a variety of private equity funds and other investment vehicles (the “Quantum Funds”) and that the Quantum Funds currently own, and may in the future acquire, interests in energy-related companies and investments (the “Quantum Portfolio Companies”) and that none of the terms of this Agreement shall apply to any Quantum Funds, to any Quantum Portfolio Companies or to any members, owners, officers, managers, directors, partners, employees, agents, representatives or Affiliates of the Quantum Funds or the Quantum Portfolio Companies (other than the Quantum Purchaser, the “Excluded Quantum Sponsor Parties”), unless (i) Confidential Information has been actually disclosed to any such Quantum Funds or Quantum Portfolio Companies or (ii) such Excluded Quantum Sponsor Parties or any of their Representatives is acting on behalf of or at the direction of any Purchaser Party with respect to any matter that otherwise would violate any term or provision of this Agreement. For purposes hereof, the fact that a representative of Quantum Purchaser serves as a member of the board of directors, investment committee or equivalent governing body of any Quantum Fund or Quantum Portfolio Company shall not, in and of itself, constitute actual disclosure of Confidential Information to such Quantum Fund or Quantum Portfolio Company.
(b) Notwithstanding anything to the contrary in this Agreement, the Company and the Members acknowledge that the Carnelian Purchaser and its affiliates manage a variety of private equity funds and other investment vehicles (the “Carnelian Funds”) and that the Carnelian Funds currently own, and may in the future acquire, interests in energy-related companies and investments (the “Carnelian Portfolio Companies”) and that none of the terms of this Agreement shall apply to any Carnelian Funds, to any Carnelian Portfolio Companies or to any members, owners, officers, managers, directors, partners, employees, agents, representatives or Affiliates of the Carnelian Funds or the Carnelian Portfolio Companies (other than the Carnelian Purchaser, the “Excluded Carnelian Sponsor Parties”, and together with the Excluded Quantum Sponsor Parties, collectively, the “Excluded Sponsor Parties”), unless (i) Confidential Information has been actually disclosed to any such Carnelian Funds or Carnelian Portfolio Companies or (ii) such Excluded Carnelian Sponsor Parties or any of their Representatives is acting on behalf of or
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at the direction of any Purchaser Party with respect to any matter that otherwise would violate any term or provision of this Agreement. For purposes hereof, the fact that a representative of Carnelian Purchaser serves as a member of the board of directors, investment committee or equivalent governing body of any Carnelian Fund or Carnelian Portfolio Company shall not, in and of itself, constitute actual disclosure of Confidential Information to such Carnelian Fund or Carnelian Portfolio Company.
(c) The Purchaser Parties and the Company hereby agree, notwithstanding anything to the contrary in any other agreement or at law or in equity, that, to the maximum extent permitted by law, when any Purchaser Party takes any action under this Agreement to give or withhold its consent, such Purchaser Party shall have no duty (fiduciary or other) to consider the interests of the Company or the other stockholders of the Company and may act exclusively in their own interest; provided, however, that the foregoing shall in no way affect the obligations of the parties hereto to comply with the provisions of this Agreement. For the avoidance of doubt, the foregoing sentence shall not limit or otherwise affect the fiduciary duties of the Series A Director.
Section 4.13 Corporate Actions.
(a) If any occurrence since the date of this Agreement until the Closing would have resulted in an adjustment to the Conversion Price (as defined in the Certificate of Designation) pursuant to the Certificate of Designation if the Series A Preferred Stock had been issued and outstanding since the date of this Agreement, the Company shall adjust the Conversion Price, effective as of the Closing, in the same manner as would have been required by the Certificate of Designation if the Series A Preferred Stock had been issued and outstanding since the date of this Agreement.
(b) The Company shall not adopt, approve or agree to adopt a stockholder rights agreement, “poison pill” or similar anti-takeover agreement or plan that is applicable to the Purchaser Parties unless the Company has excluded the Purchaser Parties from the definition of “acquiring person” (or such similar term) as such term is defined in such anti-takeover agreement, solely with respect to acquisitions of Class A Common Stock pursuant to the Purchaser Parties’ conversion rights under the Certificate of Designation.
Section 4.14 Antero Acquisition. At and prior to Closing, the Company shall not, and shall not permit any of its Subsidiaries to, without the prior written consent of Quantum Purchaser (which consent shall not be unreasonably withheld, conditioned or delayed), make any amendment, supplement, waiver or other modification to any Antero Purchase Agreement in a manner that would be materially adverse to a Purchaser; provided that, for the avoidance of doubt, such consent shall not be required in connection with (i) the resolution or waiver of any Title Defect or Environmental Defect (each as defined in the Antero Purchase Agreements), or (ii) de minimis amendments or modifications to the Antero Purchase Agreements or the closing documents delivered pursuant to the terms of the Antero Purchase Agreements. Any request for consent delivered pursuant to the terms of this Section 4.14 shall be deemed granted if a response is not provided by Quantum Purchaser within twenty-four (24) hours of receipt of such notice. For the avoidance of doubt, Quantum Purchaser’s consent shall not be required for any amendment to the Antero Purchase Agreements, a substantially final draft of which has been shared with the Quantum Purchaser, executed prior to or contemporaneously with the execution of this Agreement.
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Section 4.15 Corporate Opportunities.
(a) In recognition and anticipation, as applicable, that (i) certain directors, principals, officers, employees and/or other representatives of each Purchaser Party and their respective Affiliates may serve as directors, officers or agents of the Company, (ii) each Purchaser Party and their respective Affiliates may now engage and may continue to engage in the same or similar activities or related lines of business as those in which the Company, directly or indirectly, may engage and/or other business activities that overlap with or compete with those in which the Company, directly or indirectly, may engage, and (iii) the Series A Director and its Affiliates may now engage and may continue to engage in the same or similar activities or related lines of business as those in which the Company, directly or indirectly, may engage and/or other business activities that overlap with or compete with those in which the Company, directly or indirectly, may engage, the provisions of this Section 4.15 are set forth to address certain classes or categories of business opportunities as they may involve each Purchaser Party, the Series A Director, or their respective Affiliates (together with the Excluded Sponsor Parties, collectively, the “Identified Persons” and, individually, an “Identified Person”).
(b) None of the Identified Persons shall, to the fullest extent permitted by law, have any duty to refrain from, directly or indirectly, (A) engaging in the same or similar business activities or lines of business in which the Company or any of its Affiliates now engages or proposes to engage or (B) otherwise competing with the Company or any of its Affiliates, and, to the fullest extent permitted by law, no Identified Person shall be liable to the Company or its stockholders or to any Affiliate of the Company for breach of any fiduciary duty solely by reason of the fact that such Identified Person engages in any such activities, except as provided elsewhere in this Agreement.
(c) To the fullest extent permitted by law, the Company hereby renounces any interest or expectancy in, or right to be offered an opportunity to participate in, any business opportunity that may be a corporate opportunity for an Identified Person and the Company or any of its Affiliates, except as provided in Section 4.15(d). Subject to Section 4.15(d), in the event that any Identified Person acquires knowledge of a potential transaction or other business opportunity that may be a corporate opportunity for itself, herself or himself and the Company or any of its Affiliates, such Identified Person shall, to the fullest extent permitted by law, have no duty to communicate or offer such transaction or other business opportunity to the Company or any of its Affiliates and, to the fullest extent permitted by law, shall not be liable to the Company or its stockholders or to any Affiliate of the Company for breach of any fiduciary duty as a stockholder, director or officer of the Company solely by reason of the fact that such Identified Person pursues or acquires such corporate opportunity for itself, herself or himself, or offers or directs such corporate opportunity to another Person or does not communicate information regarding such corporate opportunity to the Company.
(d) The Company does not renounce its interest in any corporate opportunity offered to the Series A Director if such opportunity is expressly offered to such person solely in his or her capacity as a director or officer of the Company, and the provisions of Section 4.15(b) and Section 4.15(c) shall not apply to any such corporate opportunity.
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(e) In addition to and notwithstanding the foregoing provisions of this Section 4.15, a corporate opportunity shall not be deemed to be a potential corporate opportunity for the Company if it is a business opportunity that (i) the Company is neither financially or legally able, nor contractually permitted to undertake, (ii) from its nature, is not in the line of the Company’s business or is of no practical advantage to the Company or (iii) is one in which the Company has no interest or reasonable expectancy.
(f) To the fullest extent permitted by law, any Person purchasing or otherwise acquiring or holding any interest in any shares of capital stock of the Company shall be deemed to have notice of and to have consented to the provisions of this Section 4.15.
Section 4.16 Stockholder Approval. On or before April 30, 2026, the Company shall file a preliminary proxy statement (the “Preliminary Proxy Statement”) relating to the Company’s next annual meeting of stockholders (the “Meeting”), which will include a proposal to approve the issuance of all Conversion Shares upon conversion of the Purchased Shares (the “Proposal”). Prior to filing the Preliminary Proxy Statement, the Company will provide a copy of the Proposal to the Purchasers. The Company shall use reasonable best efforts to promptly clear any comments received by the SEC on the Preliminary Proxy Statement. The Company shall, as soon as practicable following notification from the SEC that it has completed its review of the preliminary proxy statement or that it will not review the preliminary proxy statement, file and mail a definitive proxy statement for the vote of its stockholders to approve the Proposal (the “Definitive Proxy Statement”). The Company covenants and agrees that its Board of Directors shall recommend that the Proposal be approved by the Company’s stockholders at the Meeting and all meetings in which such Proposal is considered. The Company shall solicit proxies from its stockholders in the same manner as all other management proposals in such Definitive Proxy Statement and all management-appointed proxyholders shall vote their proxies in favor of such Proposal. If the Company’s stockholders do not approve such Proposal at the first Meeting in which they are voted on by stockholders, the Company covenants and agrees that it will submit the Proposal for approval of the Company’s stockholders at least bi-annually until such approval is obtained.
ARTICLE V
CONDITIONSTO THE PARTIES’ OBLIGATIONS
Section 5.1 Conditions of the Purchasers. The obligations of each Purchaser to consummate the purchase of the applicable Purchased Shares are subject to the satisfaction or written waiver (to the extent any such waiver is permitted by applicable law) by such Purchaser, on or prior to the Closing Date, of each of the following conditions precedent:
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(a) Representations and Warranties. (i) Each of the representations and warranties of the Company contained in Article II of this Agreement (other than Sections 2.1 (Organization and Power), 2.2(a) (Authorization; No Conflicts), 2.4(a) and (b) (Authorized andOutstanding Stock), 2.6 (Private Placement), 2.12(c) (Taxes) 2.19 (NYSE Listing and Maintenance Requirements), 2.20 (No Brokers or Finders), 2.23(b) (Absence of CertainChanges) and 2.24 (Anti-Takeover Provisions) of this Agreement) shall be true and correct on and as of the date hereof and on and as of the Closing Date with the same effect as though such representations and warranties had been made on and as of the Closing Date, except for representations and warranties that speak as of a specific date or time other than the Closing Date (which need only be true and correct as of such date or time), except where the failure of such representations and warranties to be so true and correct, without giving effect to any qualification or limitation as to “materiality,” “Material Adverse Effect” or similar qualifier set forth therein, has not had, and would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect, (ii) each of the representations and warranties of the Company contained in Sections 2.1 (Organization and Power), 2.2(a) (Authorization; No Conflicts), 2.6 (Private Placement), 2.19 (NYSE Listing and Maintenance Requirements), 2.20 (No Brokers or Finders) and 2.24 (Anti-Takeover Provisions) of this Agreement shall be true and correct in all material respects on and as of the date hereof and on and as of the Closing Date with the same effect as though such representations and warranties had been made on and as of the Closing Date, except for representations and warranties that speak as of a specific date or time other than the Closing Date (which need only be true and correct in all material respects as of such date or time), (iii) the representations and warranties of the Company contained in Section 2.4(a) and (b) (Authorized and Outstanding Stock) of this Agreement shall be true and correct on and as of the date hereof and as of the Closing Date with the same effect as though such representations and warranties had been made on and as of the Closing Date, subject only to de minimis inaccuracies, and (iv) the representations and warranties of the Company contained in Section 2.23(b) (Absence ofCertain Changes) and Section 2.12(c) (Taxes) of this Agreement shall be true and correct on and as of the date hereof and on and as of the Closing Date with the same effect as though such representations and warranties had been made on and as of the Closing Date.
(b) Covenants. The Company shall have performed and complied in all material respects with all covenants and agreements required by this Agreement to be performed or complied with by it at or prior to the Closing.
(c) Certificate of Designation. The Certificate of Designation shall have been duly filed with the Secretary of State of the State of Delaware and a certified copy shall have been delivered to such Purchaser.
(d) Antero Acquisition. The Antero Acquisition shall have been consummated or shall be consummated substantially simultaneously with the Closing.
(e) Officer’s Certificate. Such Purchaser shall have received from the Company a certificate signed on behalf of the Company by a duly authorized officer certifying to the effect that the conditions set forth in Section 5.1(a), (b) and (d) have been satisfied.
(f) No Order. There shall be no injunction, order or decree of any nature of any Governmental Entity in effect that restrains, prohibits or makes illegal the consummation of the transactions contemplated hereby.
(g) Registration Rights Agreement. Such Purchaser shall have received from the Company a Registration Rights Agreement duly executed by the Company, in the form of Exhibit C hereto.
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(h) OpCo LLC Agreement Amendment. Such Purchaser shall have received an amendment to (the “OpCo LLC Agreement Amendment”) the Second Amended and Restated Limited Liability Company Agreement of Infinity Natural Resources, LLC (the “OpCo LLC Agreement”) reflecting amendments to such agreement as are necessary to implement or give effect to the issuance of the Series A Preferred Stock (and the Class A Common Stock issuable upon conversion thereof) on the terms set forth in the Transaction Documents, in each case, as mutually agreed to by the parties to this Agreement, each acting reasonably and in good faith, duly executed by Infinity Natural Resources, LLC and the Company.
Section 5.2 Conditions of the Company. The obligations of the Company to consummate the transactions contemplated hereby with respect to a Purchaser are subject to the satisfaction or written waiver (to the extent any such waiver is permitted by applicable law) by the Company, on or prior to the Closing Date, of each of the following conditions precedent with respect to the sale to such Purchaser:
(a) Representations and Warranties; Performance. (i) Each of the representations and warranties of such Purchaser contained in Article III of this Agreement (other than Sections 3.1 (Organization and Power) and 3.2 (Authorization, Etc.)) shall be true and correct on and as of the Closing Date with the same effect as though such representations and warranties had been made on and as of the Closing Date, except for representations and warranties that speak as of a specific date or time other than the Closing Date (which need only be true and correct as of such date or time), except where the failure of such representations and warranties to be so true and correct, without giving effect to any qualification or limitation as to “materiality,” “material adverse effect” or similar qualifier set forth therein, has not had, and would not reasonably be expected to have, individually or in the aggregate, a material adverse effect on such Purchaser’s ability to consummate the transactions under this Agreement and the Registration Rights Agreement and (ii) each of the representations and warranties of such Purchaser contained in Sections 3.1 (Organization and Power) and 3.2 (Authorization, Etc.) of this Agreement shall be true and correct in all material respects on and as of the date hereof and on and as of the Closing Date with the same effect as though such representations and warranties had been made on and as of the Closing Date, except for representations and warranties that speak as of a specific date or time other than the Closing Date (which need only be true and correct as of such date or time).
(b) Covenants. Such Purchaser shall have performed and complied in all material respects with all covenants and agreements required by this Agreement to be performed or complied with by such Purchaser at or prior to the Closing.
(c) Consideration for the Securities. All Purchasers shall have paid their Allocated Purchase Price in full at the Closing by wire transfer of immediately available funds to an account designated in writing by the Company.
(d) Certificate of Designation. The Certificate of Designation shall have been duly filed with the Secretary of State of the State of Delaware.
(e) Antero Acquisition. The Antero Acquisition shall have been consummated or shall be consummated substantially simultaneously with the Closing.
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(f) Officer’s Certificate. The Company shall have received a certificate signed on behalf of such Purchaser by a duly authorized officer certifying to the effect that the conditions set forth in Sections 5.2(a) and (b) have been satisfied.
(g) No Order. There shall be no injunction, order or decree of any nature of any Governmental Entity in effect that restrains, prohibits or makes illegal the consummation of the transactions contemplated hereby.
ARTICLE VI
SURVIVAL AND INDEMNIFICATION
Section 6.1 Survival. Except for the representations and warranties of the Company contained in Sections 2.1 (Organization and Power), 2.2(a) (Authorization; No Conflicts), 2.4(a) and (b) (Authorized and Outstanding Stock), 2.6 (Private Placement), and 2.12(c) (Taxes), which shall survive for the period of the applicable statute of limitations plus sixty (60) days, the representations and warranties contained in Article II and Article III hereof shall survive for twelve (12) months following the Closing Date and then expire; provided that nothing herein shall relieve any party of liability for any inaccuracy or breach of such representations and warranties in the case of fraud. All other covenants and agreements of the parties contained herein shall survive the Closing and remain operative and in full force and effect until fully performed.
Section 6.2 Indemnification by the Company. The Company agrees to indemnify the Purchaser, its Affiliates and its Representatives (collectively, the “Purchaser Indemnitees”) from all costs, losses, liabilities, damages or expenses (including the reasonable fees and disbursements of counsel) of any kind or nature whatsoever, and hold each of them harmless against, any and all actions, suits, proceedings (including any investigations, litigation or inquiries), claims, demands and causes of action, whether or not involving a Third-Party Claim (as defined below) (but excluding any punitive damages or exemplary damages of any nature whatsoever, unless actually awarded by a Governmental Entity with respect to a Third-Party Claim) (collectively, “Losses”) as a result of, arising out of, or in any way related to the breach of any of the representations, warranties, or covenants of the Company contained herein; provided that any claim for indemnification relating to the breach of representations or warranties is made prior to the expiration of the survival period of such representation or warranty as set forth in Section 6.1; provided, further, that for purposes of determining when an indemnification claim has been made, the date upon which a Purchaser Indemnitee shall have given notice (stating in reasonable detail the basis of the claim for indemnification) to the Company shall constitute the date upon which such claim has been made; provided*,* further*,* that except in the event of fraud, the aggregate liability of the Company shall not be greater in amount than the sum of the aggregate Allocated Purchase Prices of all Purchasers.
Section 6.3 Indemnification by the Purchasers. Each Purchaser agrees, severally and not jointly, to indemnify the Company, its Affiliates and its Representatives (collectively, the “Company Indemnitees”) from all Losses as a result of, arising out of, or in any way related to the breach of any of the representations, warranties or covenants of such Purchaser contained herein; provided that such claim for indemnification relating to a breach of any representation or warranty is made prior to the expiration of the survival period of such representation, warranty or
35
covenant as set forth in Section 6.1; provided*,* further, that for purposes of determining when an indemnification claim has been made, the date upon which a Company Indemnitee shall have given notice (stating in reasonable detail the basis of the claim for indemnification) to such Purchaser shall constitute the date upon which such claim has been made; provided*,further,* that except in the event of fraud, the aggregate liability of such Purchaser shall not be greater in amount than such Purchaser Party’s Allocated Purchase Price.
Section 6.4 Indemnification Procedure.
(a) A claim for indemnification for any matter not involving a Third-Party Claim may be asserted by notice to the party from whom indemnification is sought; provided, however, that failure to so notify the indemnifying party shall not preclude the indemnified party from any indemnification which it may claim in accordance with this Article VI, except as otherwise provided in Section 6.2 and Section 6.3. Such notice shall state the nature and the basis of such indemnification claim to the extent then known in reasonable detail and the amount of the asserted Losses and method of computation thereof.
(b) Promptly after any Company Indemnitee or Purchaser Indemnitee (hereinafter, the “Indemnified Party”) has received notice of any indemnifiable claim hereunder, or the commencement of any action, suit or proceeding by a third person, which the Indemnified Party believes in good faith is an indemnifiable claim under this Agreement (each, a “Third-Party Claim”), the Indemnified Party shall give the indemnitor hereunder (the “Indemnifying Party”) written notice of such Third-Party Claim, but failure to so notify the Indemnifying Party will not relieve the Indemnifying Party from any liability it may have to such Indemnified Party hereunder except to the extent that the Indemnifying Party is materially prejudiced by such failure or otherwise provided in Section 6.2 and Section 6.3. Such notice shall state the nature and the basis of such Third-Party Claim to the extent then known in reasonable detail, the amount of the asserted Losses and method of computation thereof, and such other relevant information that the Indemnified Party may have in its possession regarding such claim, including a copy of all papers served on or received by the Indemnified Party with respect to such Third Party Claim, if any. The Indemnifying Party shall have the right to defend and settle, at its own expense and by its own counsel who shall be reasonably acceptable to the Indemnified Party, any such matter as long as the Indemnifying Party pursues the same diligently and in good faith. If the Indemnifying Party undertakes to defend or settle, it shall promptly, and in no event later than ten (10) business days, notify the Indemnified Party of its intention to do so, and the Indemnified Party shall cooperate with the Indemnifying Party and its counsel in all commercially reasonable respects in the defense thereof and the settlement thereof. Such cooperation shall include, but shall not be limited to, furnishing the Indemnifying Party with any books, records and other information reasonably requested by the Indemnifying Party and in the Indemnified Party’s possession or control. Such cooperation of the Indemnified Party shall be at the cost of the Indemnifying Party. After the Indemnifying Party has notified the Indemnified Party of its intention to undertake to defend or settle any such asserted liability, and for so long as the Indemnifying Party diligently pursues such defense, the Indemnifying Party shall not be liable for any additional legal expenses incurred by the Indemnified Party in connection with any defense or settlement of such asserted liability; provided, however, that the Indemnified Party shall be entitled (i) at its expense, to participate in the defense of such asserted liability and the negotiations of the settlement thereof and (ii) if (A) the Indemnifying Party has, within ten (10) business days of when the Indemnified
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any proceeding seeking to enforce any provision of, or based on any matter arising out of or in connection with, this Agreement or the transactions contemplated hereby or by any matters related to the foregoing (the “Applicable Matters”) shall be brought exclusively in a Chosen Court, and that any proceeding arising out of this Agreement or any other Applicable Matter shall be deemed to have arisen from a transaction of business in the State of Delaware and each of the foregoing Persons hereby irrevocably consents to the jurisdiction of such Chosen Courts in any such proceeding and irrevocably and unconditionally waives, to the fullest extent permitted by law, any objection that such Person may now or hereafter have to the laying of the venue of any such suit, action or proceeding in any such Chosen Court or that any such proceeding brought in any such Chosen Court has been brought in an inconvenient forum.
(c) Such Persons further covenant not to bring a proceeding with respect to the Applicable Matters (or that could affect any Applicable Matter) other than in such Chosen Court and not to challenge or enforce in another jurisdiction a judgment of such Chosen Court.
(d) Process in any such proceeding may be served on any Person with respect to such Applicable Matters anywhere in the world, whether within or without the jurisdiction of any such Chosen Court. Without limiting the foregoing, each such Person agrees that service of process on such party as provided in Section 7.5 shall be deemed effective service of process on such Person.
(e) Waiver of Jury Trial. EACH PARTY HERETO, FOR ITSELF AND ITS AFFILIATES, HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, SUIT OR OTHER PROCEEDING (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THE ACTIONS OF THE PARTIES HERETO OR THEIR RESPECTIVE AFFILIATES PURSUANT TO THIS AGREEMENT OR IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE OR ENFORCEMENT HEREOF.
Section 7.3 Entire Agreement; No Third Party Beneficiary. This Agreement, the Registration Rights Agreement and any letter agreement entered into by one or more parties hereto contemporaneously with the entry into this Agreement contain the entire agreement by and among the parties with respect to the subject matter hereof and all prior negotiations, writings and understandings relating to the subject matter of this Agreement. This Agreement is not intended to confer upon any Person not a party hereto (or their successors and permitted assigns) any rights or remedies hereunder, other than as specifically set forth in Section 7.17, with respect to the Placement Agent and other than with respect to the representations and warranties of the Company set forth in Section 2.6 and the representations and warranties of each Purchaser set forth in Article III, as to which the Placement Agent shall be an express third party beneficiary.
Section 7.4 Expenses. All fees, costs and expenses incurred in connection with this Agreement and the transactions contemplated hereby, including fees and expenses of independent accountants, financial advisors, third party consultants and outside legal counsel, shall be paid by the party incurring such expenses, except that the Company hereby agrees to reimburse each of (a) the Quantum Purchaser for its reasonable and documented out-of-pocket fees and expenses in connection with this Agreement and the transactions contemplated hereby, including reasonable
38
out-of-pocket fees and expenses of independent accountants, financial advisors, third party consultants and outside legal counsel (but limited in the case of legal fees and expenses to the reasonable and documented fees, charges and disbursements of one primary legal counsel and, if necessary, of one local counsel in each relevant jurisdiction), up to a maximum reimbursement amount of $1.5 million incurred by the Quantum Purchaser in connection the transactions contemplated by this Agreement, and (b) the Carnelian Purchaser for its reasonable and documented out-of-pocket fees and expenses in connection with this Agreement and the transactions contemplated hereby, including reasonable out-of-pocket fees and expenses of independent accountants, financial advisors, third party consultants and outside legal counsel (but limited in the case of legal fees and expenses to the reasonable and documented fees, charges and disbursements of one primary legal counsel and, if necessary, one local counsel in each relevant jurisdiction), up to a maximum reimbursement amount of $300,000 incurred by the Carnelian Purchaser in connection with the transactions contemplated by this Agreement.
Section 7.5 Notices. All notices, requests, demands and other communications under this Agreement shall be in writing and shall be deemed to have been duly given or made as follows: (a) if sent by registered or certified mail in the United States return receipt requested, upon receipt; (b) if sent by nationally recognized overnight air courier, one (1) Business Day after mailing; (c) if sent by e-mail transmission, when transmitted and receipt is confirmed via return e-mail from the primary recipient; and (d) if otherwise actually personally delivered, when delivered; provided that such notices, requests, demands and other communications are delivered to the address set forth below, or to such other address as any party shall provide by like notice to the other parties to this Agreement:
If to the Company, to:
Infinity Natural Resources, Inc.
2605 Cranberry Square
Morgantown, WV 26508
Attention: Zack Arnold
Email: zarnold@infinitynr.com
with a copy (which shall not constitute notice) to:
Attn: General Counsel
Email: legal@infinitynr.com
and
Kirkland & Ellis LLP
609 Main Street
Houston, Texas
Attention: Matthew R. Pacey, P.C.
Michael W. Rigdon P.C.
Email: matt.pacey@kirkland.com
michael.rigdon@kirkland.com
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If to the Quantum Purchaser, to:
INR (II) Investments, LLC
c/o Quantum Capital Group
800 Capitol Street, Suite 3600
Houston, Texas 77002
Attention: General Counsel
Email: generalcounsel@quantumcap.com
with a copy (which shall not constitute notice) to:
Vinson & Elkins L.L.P.
845 Texas Avenue, Suite 4700
Houston, Texas 77002
Attention: Robert P. Hughes
Benjamin N. Heriaud
Email: rhughes@velaw.com
bheriaud@velaw.com
If to the Carnelian Purchaser, to:
Carnelian Energy Capital Management, L.P.
2229 San Felipe St., Suite 1450
Houston, TX 77019
Attention: Jeffrey Gilbert
Email: jeffrey@carnelianec.com
with a copy (which shall not constitute notice) to:
Vinson & Elkins L.L.P.
845 Texas Avenue, Suite 4700
Houston, Texas 77002
Attention: W. Matthew Strock
Crosby Scofield
Email: mstrock@velaw.com
cscofield@velaw.com
Section 7.6 Successors and Assigns. This Agreement will be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns. This Agreement may be assigned (a) in connection with a permitted Transfer made in accordance with this Agreement and in which a joinder was executed by both the transferee and the Company as contemplated by Section 4.1(a) and (b) by each Purchaser, in whole or in part to any Permitted Transferee; provided that such Purchaser shall not be relieved of its obligations hereunder in connection with such an assignment. No other assignment of this Agreement or of any rights or obligations hereunder may be made by any party hereto without the prior written consent of the other parties hereto. Any purported assignment or delegation in violation of this Agreement shall be null and void ab initio.
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Section 7.7 Headings. The Section, Article and other headings contained in this Agreement are inserted for convenience of reference only and will not affect the meaning or interpretation of this Agreement.
Section 7.8 Amendments and Waivers. This Agreement may not be modified or amended except by an instrument or instruments in writing signed by each party hereto. Any party hereto may, only by an instrument in writing, waive compliance by any other party or parties hereto with any term or provision hereof on the part of such other party or parties hereto to be performed or complied with. No failure or delay of any party in exercising any right or remedy hereunder shall operate as a waiver thereof, nor will any single or partial exercise of any right or power, or any abandonment or discontinuance of steps to enforce such right or power, preclude any other or further exercise thereof or the exercise of any other right or power. The waiver by any party hereto of a breach of any term or provision hereof shall not be construed as a waiver of any subsequent breach. The rights and remedies of the parties hereunder are cumulative and are not exclusive of any rights or remedies that they would otherwise have hereunder.
Section 7.9 Interpretation; Absence of Presumption.
(a) For the purposes hereof: (i) words in the singular shall be held to include the plural and vice versa and words of one gender shall be held to include the other gender as the context requires; (ii) the terms “hereof,” “herein,” and “herewith” and words of similar import shall, unless otherwise stated, be construed to refer to this Agreement as a whole (including all of the Schedules and Exhibits) and not to any particular provision of this Agreement, and Article, Section, paragraph, Exhibit and Schedule references are to the Articles, Sections, paragraphs, Exhibits, and Schedules to this Agreement unless otherwise specified; (iii) the word “including” and words of similar import when used in this Agreement shall mean “including, without limitation,” unless the context otherwise requires or unless otherwise specified; (iv) the word “or”, “any” or “either” shall not be exclusive; and (v) the word “extent” in the phrase “to the extent” means the degree to which a subject or other thing extends, and does not simply mean “if.” References to a Person are also to its permitted assigns and successors. When calculating the period of time between which, within which or following which any act is to be done or step taken pursuant to this Agreement, the date that is the reference date in calculating such period shall be excluded (and unless, otherwise required by applicable law, if the last day of such period is not a Business Day, the period in question shall end on the next succeeding Business Day). When used in this Agreement, references to “$” or “Dollars” are references to U.S. dollars. The meaning assigned to each capitalized term defined and used in this Agreement is equally applicable to both the singular and the plural forms of such term, and words denoting any gender include all genders. Where a word or phrase is defined in this Agreement, each of its other grammatical forms has a corresponding meaning. When reference is made to any party to this Agreement or any other agreement or document, such reference includes such party’s successors and permitted assigns. References to any Person include the successors and permitted assigns of that Person. Unless the context otherwise requires, all references in this Agreement to the Subsidiaries of a Person will be deemed to include all direct and indirect Subsidiaries of such entity. The measure of a period of one month or year for purposes of this Agreement will be the date of the following month or year corresponding to the starting date. If no corresponding date exists, then the end date of such period being measured will be the next actual date of the following month or year (for example, one month following May 18 is June 18 and one month following May 31 is July 1). The phrase “made
41
available” with respect to documents shall be deemed to include any documents (x) filed with or furnished to the SEC or (y) provided in a virtual “data room” established by the Company in connection with the transactions contemplated hereby, in the case of each of clauses (x) and (y), at least two (2) Business Days prior to the date hereof. The phrase “ordinary course of business” shall be deemed to be followed by the words “consistent with past practice in all material respects” and shall refer to an action taken by a person that is consistent in all material respects in nature, scope and magnitude with the past practices of such person and is taken in the ordinary course of the normal operations of such person. All accounting terms used and not defined herein shall have the respective meanings given to them under GAAP.
(b) With regard to each and every term and condition of this Agreement and any and all agreements and instruments subject to the terms hereof, the parties hereto understand and agree that the same have or has been mutually negotiated, prepared and drafted, and if at any time the parties hereto desire or are required to interpret or construe any such term or condition or any agreement or instrument subject hereto, no consideration will be given to the issue of which party hereto actually prepared, drafted or requested any term or condition of this Agreement or any agreement or instrument subject hereto.
Section 7.10 Severability. Any provision hereof that is held to be invalid, illegal or unenforceable in any respect by a court of competent jurisdiction, shall be ineffective only to the extent of such invalidity, illegality or unenforceability, without affecting in any way the remaining provisions hereof; provided, however, that the parties will attempt in good faith to reform this Agreement in a manner consistent with the intent of any such ineffective provision for the purpose of carrying out such intent.
Section 7.11 Preemptive Rights. The Purchasers shall not have any preemptive rights.
Section 7.12 Specific Performance. The parties hereto agree that irreparable damage could occur to a party and that a party may not have any adequate remedy at law in the event that any of the provisions of this Agreement are not performed in accordance with their terms or were otherwise breached. Accordingly, a party shall, without the necessity of proving the inadequacy of money damages or posting a bond, be entitled to seek an injunction or injunctions to prevent breaches of this Agreement and to enforce specifically the terms, provisions and covenants contained therein (including, for the avoidance of doubt, the right of a party to specifically enforce the obligation of a Purchaser to cause the purchase of the Purchased Shares allocated to such Purchaser to be consummated on the terms and subject to the conditions set forth in this Agreement), this being in addition to any other remedy to which they are entitled at law or in equity. Under no circumstances will the Company be permitted or entitled to receive both (i) a grant of specific performance resulting in the consummation of the issuance of the Purchased Shares allocated to a Purchaser in exchange for receipt in full by the Company of the Allocated Purchase Price therefor, and (ii) the payment of monetary damages at any time.
Section 7.13 Public Announcement. Subject to each party’s disclosure obligations imposed by applicable law or the rules of any stock exchange upon which its securities are listed, each of the parties hereto will cooperate with each other in the development and distribution of all news releases and other public information disclosures with respect to this Agreement and any of the transactions contemplated by this Agreement, and neither the Company nor any Purchaser will
42
make any such news release or public disclosure without first consulting with the other, and, in each case, also receiving the other’s consent (which shall not be unreasonably withheld or delayed) and each party shall coordinate with the party whose consent is required with respect to any such news release or public disclosure. Notwithstanding the foregoing, this Section 7.13 shall not apply to any press release or other public statement made by the Company or a Purchaser Party (a) that is consistent with prior disclosure and does not contain any information relating to the transactions that has not been previously announced or made public in accordance with the terms of this Agreement or (b) is made to its auditors, attorneys, accountants, financial advisors, limited partners or other transferees. Notwithstanding anything to the contrary in this Agreement or the Confidentiality Agreement, in no event shall either this Section 7.13 or any provision of the Confidentiality Agreement limit disclosure by any Purchaser Party and its Affiliates of ordinary course communications regarding this Agreement and the transactions contemplated by this Agreement to its existing or prospective direct or indirect general and limited partners, equityholders, financing sources, members, managers and investors of any Affiliates of such Person, including disclosing information about the transactions contemplated by this Agreement on their websites in the ordinary course of business consistent with past practice.
Section 7.14 Non-Recourse. Any claim or cause of action based upon, arising out of, or related to this Agreement may only be brought against the entities that are expressly named as parties hereto (the “Contract Parties”) and then only with respect to the specific obligations of such party and subject to the terms, conditions and limitations set forth herein or therein. No Person other than the Contract Parties, including no direct or indirect member, partner, stockholder, unitholder, Affiliate or Representative thereof, nor any member, partner, stockholder, unitholder, Affiliate or Representative of any of the foregoing, shall have any liability (whether in contract or in tort, in law or in equity, or granted by statute) for any claims, causes of action, obligations, or liabilities arising under, out of, in connection with, or related in any manner to this Agreement or based on, in respect of, or by reason of this Agreement or their respective negotiation, execution, performance, or breach; and, to the maximum extent permitted by law, each of the Contract Parties hereby waives and releases all such liabilities, claims, causes of action, and obligations against any such third Person.
Section 7.15 Further Assurances. From the date hereof until the Closing, without further consideration, the Company and each Purchaser shall use their respective commercially reasonable efforts to take, or cause to be taken, all actions necessary, appropriate or advisable to consummate the transactions contemplated by this Agreement, the Registration Rights Agreement, the Certificate of Designation and any and all other agreements or instruments executed and delivered to each Purchaser by the Company hereunder or thereunder, as applicable.
Section 7.16 Independent Nature of the Purchasers’ Obligations and Rights. The obligations of each Purchaser Party under the Transaction Documents are several and not joint with the obligations of any other Purchaser Party, and no Purchaser Party shall be responsible in any way for the performance of the obligations of any other Purchaser Party under any Transaction Document. The failure or waiver of performance under any Transaction Document of any Purchaser Party by the Company does not excuse performance by any other Purchaser Party and the waiver of performance of the Company by any Purchaser Party does not excuse performance by the Company with respect to each other Purchaser Party. Nothing contained herein or in any
43
other Transaction Document, and no action taken by any Purchaser Party pursuant thereto, shall be deemed to constitute the Purchaser Parties as a partnership, an association, a joint venture or any other kind of entity, or create a presumption that the Purchaser Parties are in any way acting in concert or as a group with respect to such obligations or the transactions contemplated by the Transaction Documents. Each Purchaser Party shall be entitled to independently protect and enforce its rights, including without limitation, the rights arising out of this Agreement or out of the other Transaction Documents, and it shall not be necessary for any other Purchaser Party to be joined as an additional party in any proceeding for such purpose.
Section 7.17 Exculpation of the Placement Agent. Each party hereto agrees, for the express benefit of the Placement Agent, its respective affiliates and representatives, that, in connection with the Transaction Documents and the transactions contemplated thereby:
(a) Neither the Placement Agent nor any of its affiliates or any of its representatives (i) shall be liable for any improper payment made in accordance with information provided by the Company; (ii) make any representation or warranty, or has any responsibilities as to the validity, accuracy, value or genuineness of any information, certificates or documentation delivered by or on behalf of the company pursuant to this Agreement or any other Transaction Documents or in connection with any of the transactions contemplated by this Agreement or any Other Transaction Documents, including offering or marketing materials; or (iii) shall be liable (x) for any action taken, suffered or omitted by any of them in good faith and reasonably believed to be authorized or within the discretion or rights or powers conferred upon them by this Agreement or any other Transaction Document or (y) for anything which any of them may do or refrain from doing in connection with this Agreement or any other Transaction Document, except for such party’s own gross negligence, willful misconduct or bad faith.
(b) The Placement Agent, its respective affiliates and representatives shall be entitled to rely on, and shall be protected in acting upon, (i) any opinion delivered to any of them by or on behalf of the Company and (ii) the representations and warranties (a) of the Company contained in Section 2.6 of this Agreement and (b) contained in Article III of this Agreement.
Each Purchaser acknowledges that the Placement Agent and its respective directors, officers, employees, representatives and controlling persons have made no independent investigation with respect to the Company of the Purchased Shares or the accuracy, completeness or adequacy of information supplied to the Purchasers by the Company. In connection with the issue and purchase of the Purchase Shares, each Purchaser, acknowledges and agrees that the Placement Agent has not acted as its financial advisor or fiduciary.
ARTICLE VIII
TERMINATION
Section 8.1 Termination. This Agreement may be terminated at any time prior to Closing:
(a) by mutual written consent of the Company and each of the Purchasers;
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(b) by either the Company or either of the Purchasers, if (i) any Governmental Entity with lawful jurisdiction shall have issued a final order, decree or ruling or taken any other final action restraining, enjoining or otherwise prohibiting the transactions contemplated by this Agreement and such order, decree, ruling or other action is or shall have become final and nonappealable or (ii) any Antero Purchase Agreement is terminated for any reason;
(c) by notice given by the Company to a Purchaser if there have been one or more inaccuracies in or breaches of one or more representations, warranties, covenants or agreements made by such Purchaser in this Agreement such that the conditions in Section 5.2(a), Section 5.2(b) or Section 5.2(c) would not be satisfied and, if capable of being cured, which have not been cured by such Purchaser one (1) Business Day after receipt by such Purchaser of written notice from the Company requesting such inaccuracies or breaches to be cured; provided, however, that the Company is not then in breach of any of its obligations hereunder; or
(d) by notice given by either of the Purchasers to the Company, if there have been one or more inaccuracies in or breaches of one or more representations, warranties, covenants or agreements made by the Company in this Agreement such that the conditions in Section 5.1(a) or Section 5.1(b) would not be satisfied and, if capable of being cured, which have not been cured by the Company within one (1) Business Day after receipt by the Company of written notice from such Purchaser requesting such inaccuracies or breaches to be cured; provided, however, that such Purchaser is not then in breach of any of its obligations hereunder.
Section 8.2 Certain Effects of Termination. In the event that this Agreement is terminated in accordance with Section 8.1, neither party (nor any of its Affiliates) shall have any liability or obligation to the other (or any of its Affiliates) under or in respect of this Agreement, except to the extent of (a) any liability arising from any breach by such party of its obligations pursuant to this Agreement arising prior to such termination, and (b) any actual and intentional fraud or intentional or willful breach of this Agreement; provided that, notwithstanding any other provision set forth in this Agreement, except in the event of any actual and intentional fraud or intentional or willful breach by the applicable party, no Purchaser shall have any such liability in excess of its Allocated Purchase Price and the Company shall not have any such liability in excess of the sum of the aggregate Allocated Purchase Prices of all Purchasers. In the event of any such termination, this Agreement shall become void and have no effect, and the transactions contemplated hereby shall be abandoned without further action by the parties, in each case, except (x) as set forth in the preceding sentence and (y) that the provisions of Section 4.3 (Confidentiality), Sections 7.1 to 7.10 (Counterparts, Governing Law, Entire Agreement; No Third Party Beneficiary, Expenses, Notices, Successors and Assigns,Headings, Amendments and Waivers, Interpretation; Absence of Presumption and Severability), and Sections 7.13 through 7.16 (Public Announcement, Non-Recourse, FurtherAssurances and Independent Nature of the Purchasers ’ Obligations and Rights) shall survive the termination of this Agreement.
(Signature page follows)
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The parties have caused this Securities Purchase Agreement to be executed as of the date first written above.
| INFINITY NATURAL RESOURCES, INC. | |
|---|---|
| By: | /s/ Zack Arnold |
| Name: Zack Arnold | |
| Title: President and Chief Executive Officer |
[Signature Page to Securities Purchase Agreement]
| (II) INVESTMENTS, LLC |
|---|
| By: |
All values are in Indian Rupees.
[Signature Page to Securities Purchase Agreement]
| ETINELES HOLDINGS V, LLC | |
|---|---|
| By: CEC Selenite III Holdings, LLC, its sole member | |
| By: | /s/ Tomas Ackerman |
| Name: Tomas Ackerman | |
| Title: Authorized Person |
[Signature Page to Securities Purchase Agreement]
EXHIBIT A
DEFINED TERMS
- The following capitalized terms have the meanings indicated:
“Affiliate” of any Person means any Person, directly or indirectly, Controlling, Controlled by or under common Control with such Person; provided, however, that (a) the Company and its Subsidiaries, on the one hand, and any Purchaser Party or any of its Affiliates, on the other hand, shall not be deemed to be Affiliates, (b) “portfolio companies” (as such term is customarily used among institutional investors) in which any Purchaser Party or any of its Affiliates has an investment (whether as debt or equity) shall not be deemed an Affiliate of such Purchaser and (c) except for purposes of Section 4.3, Section 7.13, Section 7.14, Section 8.2 and the definition of “Permitted Transferee”, the Excluded Sponsor Parties shall not be deemed to be Affiliates of any Purchaser Party, the Company or any of the Company’s Subsidiaries.
“Antero Acquisition” means the transactions contemplated by the Antero Purchase Agreements.
“Antero Purchase Agreements” means (a) that certain Purchase and Sale Agreement, dated as of December 5, 2025, by and among Antero Resources Corporation, Antero Minerals LLC and Monroe Pipeline LLC, as sellers, and Infinity Natural Resources, LLC and Northern Oil and Gas, Inc., as buyers, as may be amended and modified in accordance with Section 4.14, and (b) that certain Purchase and Sale Agreement, dated as of December 5, 2025, by and among Antero Midstream LLC, Antero Water LLC and Antero Treatment LLC, as sellers, and Infinity Natural Resources, LLC and Northern Oil and Gas, Inc., as buyers, as may be amended and modified in accordance with Section 4.14.
“Antitakeover Provisions” means the provisions of any stockholder rights plan or agreement, “poison pill” or substantially similar anti-takeover agreement or any “business combination”, “control share acquisition”, “fair price”, “moratorium” or similar anti-takeover provision under the Certificate of Incorporation, the Bylaws, or applicable law.
“Antitrust Laws” means the HSR Act and any applicable international, multilateral, multinational, national, federal or state law designed or intended to prohibit, restrict or regulate actions having the purpose or effect of monopolization or restraint of trade or lessening of competition, through merger, acquisition or otherwise.
“Benefit Plan” means each “employee benefit plan” as defined in Section 3(3) of ERISA, whether or not subject to ERISA, the Stock Plan and any retirement, pension, profit sharing, deferred compensation, equity or equity-based, bonus, incentive, severance, employment, individual consulting, termination, retention, change in control, health, welfare, vacation, paid time off, fringe benefit and each other benefit or compensation plan, policy, program, agreement, contract or arrangement, whether written or oral, qualified or nonqualified, funded or underfunded, that are maintained, sponsored, contributed to or required to be contributed to by the Company or its Subsidiaries or with respect to which the Company or its Subsidiaries have any current or contingent liability or obligation, excluding any “multiemployer plans” within the meaning of Section 3(37) of ERISA.
“Board of Directors” means the Company’s board of directors.
“Business Day” means any day other than a Saturday, a Sunday or any day on which the Federal Reserve Bank of New York is authorized or required by law or executive order to close or be closed.
“Bylaws” means the Amended and Restated Bylaws of the Company, adopted as of January 30, 2025, as the same may be further amended or restated.
“Carnelian Purchaser” means Etineles Holdings V, LLC, a Delaware limited liability company, and each transferee of Etineles Holdings V, LLC to whom Purchased Shares or Conversion Shares are transferred as permitted by this Agreement.
“Certificate of Incorporation” means the Company’s Amended and Restated Certificate of Incorporation, as the same has been and may be further amended or restated.
“Code” means the Internal Revenue Code of 1986, as amended.
“Company Competitor” means, as of any date of determination, a Person or any of such Person’s Affiliates directly or indirectly engaged in the business of exploration and development and operation of properties for the production of oil, natural gas, and/or natural gas liquids from underground reservoirs in the Appalachian Basin or the ownership, operation and/or development of midstream energy infrastructure in the Appalachian Basin, together with such Person’s Affiliates; provided, however, that a private equity fund, financial institution, asset management firm or similar firm shall not be considered a “Company Competitor” unless it has a controlling equity investment in a portfolio company that is directly engaged in the business of exploration and development and operation of properties for the production of oil, natural gas, and/or natural gas liquids from underground reservoirs in the Appalachian Basin having a fair market value of at least $100 million as determined in good faith by such Person.
“Confidential Information” means information regarding the Company or its Subsidiaries furnished by or on behalf of the Company, directly or indirectly, to a Purchaser Party or its Representatives, including any information provided by the Company to such Purchaser Party or its Representatives since the date of the Confidentiality Agreements, together with all analyses, compilations, forecasts, studies or other documents prepared by the Purchaser Parties or their Representatives to the extent containing or otherwise reflecting such information, including, for the avoidance of doubt, any information provided to any Purchaser pursuant to Section 4.4 of this Agreement. Notwithstanding the foregoing, “Confidential Information” shall not include information (including such portions of the Confidential Information) that (a) is or becomes generally available to the public other than as a result of a Purchaser Party’s or its Affiliates’ disclosure in violation of this Agreement, (b) becomes available to a Purchaser Party or its Affiliates on a non-confidential basis from a source other than the Company or its Subsidiaries, (c) was already in a Purchaser Party’s or its Affiliate’s possession prior to the date of the applicable Confidentiality Agreement or (d) is independently developed by a Purchaser Party or its Representatives without reference to the Confidential Information.
Exhibit A
“Control” (including its correlative meanings “under common Control with” and “Controlled by”) means, with respect to any Person, the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of such Person, whether through ownership of securities or partnership or other interests, by contract or otherwise.
“Credit Agreement” refers to that certain Credit Agreement, dated September 25, 2024, by and among Infinity Natural Resources, LLC, the lenders from time to time party thereto and Citibank, N.A., as the administrative agent and an issuing bank, as amended, restated, supplemented or otherwise modified from time to time.
“Default Event” means any “Default” or “Event of Default” (in each case, as defined in and under the Credit Agreement (as in effect on the date hereof)).
“Environmental Permit” means any permit, license, order, certificate, registration, approval or other authorization issued or required under any applicable Requirements of Environmental Law for the operation of the business and the occupation of the facilities or properties of the Company and its Subsidiaries.
“ERISA” means the Employee Retirement Income Security Act of 1974, as amended.
“Exchange Act” means the Securities Exchange Act of 1934, as amended.
“Existing Registration Rights Agreement” means that certain Registration Rights Agreement, dated February 3, 2025, by and among the Company and the signatories thereto.
“Export and Import Controls” means all applicable laws, regulations, and restrictive measures relating to the import, export, re-export, or transfer of information, data, goods, and technology (including the Export Administration Regulations administered by the U.S. Department of Commerce, the International Traffic in Arms Regulations administered by the U.S. Department of State, and customs and import laws administered by U.S. Customs and Border Protection).
“GAAP” means generally accepted accounting principles as in effect in the United States.
“Government Official” means any officer or employee of a foreign governmental authority or any department, agency, or instrumentality thereof, or of a public international organization, or any person acting in an official capacity for or on behalf of any such foreign governmental authority or department, agency, or instrumentality, or for or on behalf of any such public international organization, or any political party, party official, or candidate thereof, excluding officials of the governments of the United States, the several states thereof, any local subdivision of any of them or any agency, department or unit of any of the foregoing.
“Governmental Entity” means any supranational, national, state, municipal, local or foreign government, any court, tribunal, arbitrator or arbitral body (public or private), administrative agency, commission or other governmental official, authority or instrumentality (including any legislature, commission, regulatory administrative authority, governmental agency, bureau, branch or department).
Exhibit A
“Hazardous Substance” means any waste, substance, product or material defined or regulated as “hazardous” or “toxic” or as a “pollutant” or “contaminant” or words of similar meaning by, or for which liability or standards of conduct may be imposed under, any Requirements of Environmental Law, including petroleum and any fraction thereof, asbestos or asbestos containing material, per- and polyfluoroalkyl substances, polychlorinated biphenyls, lead, toxic mold, noise, odor and any biomedical or radioactive materials and waste.
“HSR Act” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended.
“INR Holdings” means Infinity Natural Resources, LLC, a Delaware limited liability company.
“Intellectual Property” means all intellectual property and proprietary rights in any jurisdiction throughout the world, including (i) patents, trade secrets, know-how, inventions, algorithms, methods and processes; (ii) copyrights and works of authorship; (iii) trademarks, service marks, trade names, trade dress, logos, domain names, social and mobile media identifiers and other source indicators and all associated goodwill; and (iv) all registrations, applications, renewals, continuations, continuations-in-part, divisions, re-issues, re-examinations, foreign counterparts and equivalents of the foregoing.
“Investment Company Act” means the Investment Company Act of 1940, as amended.
“Knowledge” means, with respect to the Company, the actual knowledge of the following individuals, in each case after reasonable due inquiry of direct reports: Zack Arnold and David Sproule.
“Labor Agreement” means any collective bargaining agreement or other Contract with any labor union, labor organization, works council, or other similar employee bargaining unit representative.
“Lien” means any lien, mortgage, pledge, conditional or installment sale agreement, title defect, encumbrance, covenant, condition, restriction, charge, right of first refusal, right of first offer, purchase option, easement, security interest, lease, deed of trust, right-of-way, encroachment, defect of title, occupancy right, community property interest or other similar restriction or encumbrance of any kind, including any restriction on the use, voting, transfer or other exercise of any attributes of ownership.
“Material Adverse Effect” means any event, change, development, circumstance, condition, state of facts or occurrence that individually or in the aggregate is, or would reasonably be expected to be, materially adverse to (x) the financial condition, assets, properties, or liabilities of the Company and its Subsidiaries (taken as a whole) or results of operations of the Company and its Subsidiaries (taken as a whole), or (y) the ability of the Company to perform its obligations or consummate the transactions contemplated hereby, but, shall exclude any prospects and shall also exclude any event, change, development, circumstance, condition, state of facts or occurrence to the extent resulting or arising from: (a) any change or prospective change in any applicable law or GAAP or interpretation thereof; (b) any change in general economic conditions in the industries
Exhibit A
or markets in which the Company and its Subsidiaries operate or affecting the United States of America or any foreign economies in general; (c) any change made by any Governmental Entity that is generally applicable to the industries or markets in which the Company and its Subsidiaries operate; (d) the announcement of this Agreement or the consummation of the transactions contemplated hereby; (e) any action that is consented to or requested by a Purchaser in writing; (f) any action expressly required by, or the failure to take any action expressly prohibited by this Agreement; (g) any national or international political or social conditions, including the conflict between Russia and Ukraine and the conflict in the Middle East (including involving Israel) (or the worsening thereof), the engagement by the United States of America or any foreign government in hostilities, whether or not pursuant to the declaration of a national emergency or war, or the occurrence of any military or terrorist attack upon the United States of America or any foreign government or any of their respective territories, possessions, or diplomatic or consular offices or upon any military installation, equipment or personnel of the United States of America or any foreign government; (h) any acts of God, including any earthquakes, hurricanes, tornados, floods, tsunamis or other natural disasters, or any other damage to or destruction of assets caused by casualty; (i) any epidemic, pandemic, disease outbreak or other health crisis or public health event, or the worsening thereof; and (j) any failure of the Company and its Subsidiaries to meet internal or published projections, estimates or forecasts of revenues, earnings or other measures of financial or operating performance for any period; provided that the underlying causes of such failure (subject to the other provisions of this definition of “Material Adverse Effect”) shall not be excluded; provided, however, that in the case of each of clauses (a), (b), (c), (g), (h) and (i) of the foregoing, any such event, change, circumstance or occurrence shall not be excluded to the extent that it has or would reasonably be expected to have a disproportionate adverse effect on the condition (financial or otherwise), assets, properties, or liabilities of the Company and its Subsidiaries (taken as a whole), or results of operations of the Company and its Subsidiaries (taken as a whole) relative to other companies operating in the same industry in which the Company and its Subsidiaries operates.
“NYSE” means the New York Stock Exchange.
“Permitted Liens” means (i) Liens for Taxes or other governmental charges that are not yet delinquent or, if delinquent, the amount or validity of which is being contested in good faith by appropriate proceedings by the Company or its Subsidiaries and for which appropriate reserves have been established in accordance with GAAP; (ii) mechanics’, materialmens’, carriers’, workers’, warehousemens’, repairers’ and similar statutory Liens arising or incurred in the ordinary course of business for amounts which are not delinquent and which are not, individually or in the aggregate, significant; (iii) zoning, entitlement, building and other land use regulations imposed by Governmental Entities having jurisdiction over the leased real property and which are not violated by the current use or occupancy of such leased real property; (iv) covenants, conditions, restrictions, easements and other similar matters of record affecting title to the leased real property and which are not violated by the current use or occupancy of such leased real property; (v) public roads and highways; (vi) Liens arising under worker’s compensation, unemployment insurance, social security, retirement and similar legislation; (vii) Liens arising in connection with sales of foreign receivables; (viii) Liens on goods in transit incurred pursuant to documentary letters of credit; (ix) purchase money Liens and Liens securing rental payments under capital lease arrangements; and (x) Liens arising under the Credit Agreement as in effect on the date hereof.
Exhibit A
“Permitted Transferee” means, with respect to any Person, (i) any Affiliate of such Person, (ii) any successor entity of such Person, and (iii) if such Person is an investment fund, vehicle or similar entity, any other investment fund, vehicle or similar entity of which such Person or an Affiliate, advisor or manager of such Person serves as the general partner, managing member, manager or advisor (excluding any Company Competitor).
“Person” means an individual, corporation, partnership, limited liability company, joint venture, trust or unincorporated organization or a government or other agency or political subdivision thereof.
“Placement Agent” means BofA Securities, Inc.
“Process” means, with respect to any data or information, any operation or set of operations performed on such Software and Systems, data, or information, whether or not by automated means, including collection, use, storage, securing, alteration, modification, disclosure, transmission, or destruction.
“Purchaser Parties” means each Purchaser and each transferee of such Purchaser to whom shares of Series A Preferred Stock or Conversion Shares are transferred in accordance with the terms of this Agreement.
“Quantum Purchaser” means INR (II) Investments, LLC, a Delaware limited liability company, and each transferee of INR (II) Investments, LLC to whom Purchased Shares or Conversion Shares are transferred as permitted by this Agreement.
“Registration Rights Agreement” means the Registration Rights Agreement between the Company and each Purchaser in the form attached to the Agreement as Exhibit C, as it may be amended or modified in accordance with the terms thereof.
“Representatives” means a Persons’ Affiliates, and its and their respective employees, agents, consultants, accountants, attorneys or financial advisors.
“Requirements of Environmental Law” means all Laws (including the Resource Conservation and Recovery Act, the Comprehensive Environmental Response, Compensation, and Liability Act, the Clean Water Act, the Clean Air Act, the Endangered Species Act, the Occupational Safety and Health Act (regarding exposure to Hazardous Substances) and any state analogues of any of the foregoing), orders, judgements, decrees or similar requirements of any Governmental Entity which relate to (a) pollution, protection or clean-up of the environment, including air, surface water, ground water, land, natural resources or any other environmental media; (b) solid, gaseous or liquid waste or the generation, recycling, reclamation, release, threatened release, treatment, storage, disposal or transportation of Hazardous Substances; (c) exposure of Persons to Hazardous Substances; or (d) the manufacture, presence, processing, distribution in commerce, use, discharge, release, threatened release, emission or storage of Hazardous Substances into the environment.
“Sanctioned Country” means any of the Crimea region of Ukraine, the so-called Donetsk People’s Republic, the so-called Luhansk People’s Republic, Cuba, Iran, North Korea and Venezuela.
Exhibit A
“Sanctioned Person” means any Person with whom dealings are restricted or prohibited under the Sanctions Laws of the United States, the United Kingdom, the European Union, or the United Nations, including (a) any Person identified in any list of sanctioned person maintained by (i) the United States Department of Treasury, Office of Foreign Assets Control, the United States Department of Commerce, Bureau of Industry and Security, or the United States Department of State; (ii) Her Majesty’s Treasury of the United Kingdom; (iii) any committee of the United Nations Security Council; or (iv) the European Union; (b) any Person located, organized, or resident in, organized in, or a Governmental Entity or government instrumentality of, any Sanctioned Country; and (c) any Person directly or indirectly fifty percent (50%) or more owned or controlled by, or acting for the benefit or on behalf of, a Person described in clause (a) or (b).
“Sanctions Laws” means those trade, economic and financial sanctions laws, regulations, embargoes, and restrictive measures (in each case having the force of law) administered, enacted or enforced from time to time by (a) the United States (including without limitation the Department of Treasury, Office of Foreign Assets Control), (b) the European Union and enforced by its member states, (c) the United Nations, (d) Her Majesty’s Treasury, or (e) other similar governmental bodies from time to time.
“SEC” means the Securities and Exchange Commission.
“SEC Documents” means all reports, schedules, registration statements, proxy statements and other documents (including all amendments, exhibits and schedules thereto) filed or furnished, as applicable, by the Company with the SEC.
“Securities Act” means the Securities Act of 1933, as amended.
“Series A Director” has the meaning set forth in the Certificate of Designation.
“Software and Systems” means all of the following used by or for, or otherwise relied on by the Company and its Subsidiaries: computers, hardware, software, systems, networks, websites, databases, applications and other information technology assets and equipment.
“Stock Plan” means the Infinity Natural Resources, Inc. Omnibus Incentive Plan, and all other equity-based compensation plans and agreements maintained or sponsored by the Company or its Subsidiaries for the benefit of their respective current or former employees, directors, officers or other service providers.
“Subsidiary” means, when used with reference to a party, any corporation or other organization, whether incorporated or unincorporated, of which such party or any other Subsidiary of such party is a general partner, managing member or serves in a similar capacity, or, with respect to such corporation or other organization, at least a majority of the securities or other interests having by their terms ordinary voting power to elect a majority of the board of directors or others performing similar functions is directly or indirectly owned or controlled by such party or by any one or more of its Subsidiaries, or by such party and one or more of its Subsidiaries.
Exhibit A
“Tax” and “Taxes” means all U.S. federal, state, and local and non-U.S. taxes (including income, franchise, property, sales, use, withholding, payroll and employment taxes) and similar assessments, fees, levies or other charges, in each case, in the nature of a Tax imposed by any Governmental Entity, including any interest, additions to tax or penalties applicable thereto.
“Tax Return” means any return, report or similar filing (including the attached schedules) filed or required to be filed with respect to Taxes (and any amendments thereto), including any information return, claim for refund or declaration of estimated Taxes.
“Transaction Documents” means this Agreement, the Certificate of Designation and the Registration Rights Agreement.
“Transfer” means any direct or indirect (a) sale, transfer, hypothecation, assignment, gift, bequest or disposition by any other means, whether for value or no value and whether voluntary or involuntary (including by realization upon any Lien or by operation of law or by judgment, levy, attachment, garnishment, bankruptcy or other legal or equitable proceedings) or (b) grant of any option, warrant or other right to purchase or the entry into any hedge, swap or any other agreement or any transaction that transfers, in whole or in part, directly or indirectly, the economic consequence of ownership of Class A Common Stock; provided, however, that, notwithstanding anything to the contrary in this Agreement, a Transfer shall not include (i) the conversion of one or more shares of Series A Preferred Stock into shares of Class A Common Stock pursuant to the Certificate of Designation, (ii) the redemption, repurchase or other acquisition of Class A Common Stock or Series A Preferred Stock by the Company, or (iii) the direct or indirect transfer of any limited partnership interests or other equity interests in a Purchaser Party (or any direct or indirect parent entity of such Purchaser Party); provided that if any transferor or transferee referred to in this clause (iii) ceases to be controlled, directly or indirectly, by the Person, directly or indirectly, controlling such Person immediately prior to such transfer, such event shall be deemed to constitute a “Transfer”. The term “Transferred” shall have a correlative meaning.
“Treasury Regulations” means the U.S. Treasury Regulations promulgated under the Code.
Exhibit A
- The following terms are defined in the Sections of the Agreement indicated:
INDEX OF TERMS
| Term | Section |
|---|---|
| Agreement | Preamble |
| Allocated Purchase Price | 1.1 |
| Anti-Corruption Laws | 2.21 |
| Antitrust Approval | 4.5(a) |
| Applicable Matters | 7.2(b) |
| Balance Sheet Date | 2.7 |
| Capitalization Date | 2.4(b) |
| Carnelian Confidentiality Agreement | 4.3(b) |
| Carnelian Funds | 4.12(b) |
| Carnelian Portfolio Companies | 4.12(b) |
| Certificate of Designation | 1.1 |
| Chosen Courts | 7.2(b) |
| Class A Common Stock | 2.4(a) |
| Class B Common Stock | 2.4(a) |
| Closing | 1.2 |
| Closing Date | 1.2 |
| Common Stock | 2.4(a) |
| Company | Preamble |
| Company Indemnities | 6.3 |
| Company Intellectual Property | 2.16 |
| Confidentiality Agreements | 4.3(b) |
| Contract | 2.2(b) |
| Contract Parties | 7.14 |
| Conversion Shares | 2.4(c) |
| Definitive Proxy Statement | 4.16 |
| Excluded Carnelian Sponsor Parties | 4.12(b) |
| Excluded Quantum Sponsor Parties | 4.12(a) |
| Excluded Sponsor Parties | 4.12(b) |
| Financial Statements | 2.7 |
| Information Rights Threshold | 4.4(a) |
| Intended Tax Treatment | 4.7(a) |
| Indemnified Party | 6.4(b) |
| Indemnifying Party | 6.4(b) |
| Identified Persons | 4.15 |
| IRS | 4.7(f) |
| Laws | 2.11 |
| LLC Units | 2.5 |
| Losses | 6.2 |
| Meeting | 4.16 |
| OpCo LLC Agreement | 5.1(h) |
| OpCo LLC Agreement Amendment | 5.1(h) |
Exhibit A
| Term | Section |
|---|---|
| Preferred Stock | 2.4(a) |
| Preliminary Proxy Statement | 4.16 |
| Proceeding | 2.10 |
| Proposal | 4.16 |
| Purchased Shares | 1.1 |
| Purchaser Indemnitees | 6.2 |
| Purchasers | Preamble |
| Rule 144 | 4.1(f) |
| Quantum Confidentiality Agreement | 4.3(b) |
| Quantum Funds | 4.12 |
| Quantum Portfolio Companies | 4.12 |
| Series A Preferred Stock | Preamble |
| Shares | 4.1(f) |
| Third Party Claim | 6.4(b) |
Exhibit A
EXHIBIT B
FORM OF CERTIFICATE OF DESIGNATION
(see attached)
Exhibit B
Final Version
CERTIFICATE OF DESIGNATION
OF
SERIES A CONVERTIBLEPREFERRED STOCK
OF
INFINITY NATURAL RESOURCES, INC.
(Pursuant to Section 151 of the General Corporation Law of the State of Delaware)
Infinity Natural Resources, Inc., a corporation organized and existing under the General Corporation Law of the State of Delaware (hereinafter, the “Corporation”), hereby certifies that the following resolution was duly adopted by the Board of Directors of the Corporation (or a duly authorized committee thereof) as required by Section 151 of the General Corporation Law of the State of Delaware:
NOW, THEREFORE, BE IT RESOLVED, that pursuant to the authority expressly granted to and vested in the Board of Directors of the Corporation in accordance with the provisions of the certificate of incorporation of the Corporation, there is hereby created and provided out of the authorized but unissued preferred stock, par value $0.01 per share, of the Corporation (“Preferred Stock”), a new series of Preferred Stock, and there is hereby stated and fixed the number of shares constituting such series and the designation of such series and the powers (including voting powers), if any, of such series and the preferences and relative, participating, optional, special or other rights, if any, and the qualifications, limitations or restrictions, if any, of such series as follows:
TABLE OF CONTENTS
| Page | |||
|---|---|---|---|
| Section 1. | Designation; Par Value; Number of Authorized Shares | 1 | |
| (a) | Designation; Par Value | 1 | |
| (b) | Number of Authorized Shares | 1 | |
| Section 2. | Definitions | 1 | |
| Section 3. | Rules of Construction | 16 | |
| Section 4. | Records; Registration | 16 | |
| (a) | Form, Dating and Denominations | 16 | |
| (b) | Execution, Countersignature and Delivery | 18 | |
| (c) | Method of Payment; Delay When Payment Date is Not a Business Day | 18 | |
| (d) | Transfer Agent, Registrar, Paying Agent and Conversion Agent | 19 | |
| (e) | Legends | 20 | |
| (f) | Transfers and Exchanges; Transfer Taxes; Certain Transfer Restrictions | 21 | |
| (g) | Exchange and Cancellation of Convertible Preferred Stock to Be Converted or to Be Repurchased Pursuant to a<br>Repurchase Upon Change of Control or a Redemption | 23 | |
| (h) | Status of Converted, Redeemed or Repurchased Shares of Convertible Preferred Stock | 24 | |
| (i) | Replacement Certificates | 24 | |
| (j) | Registered Holders | 25 | |
| (k) | Cancellation | 25 | |
| (l) | Shares Held by the Corporation or its Subsidiaries | 25 | |
| (m) | Outstanding Shares | 25 | |
| (n) | Notations and Exchanges | 26 | |
| Section 5. | Ranking | 26 | |
| Section 6. | Dividends | 27 | |
| (a) | Regular Dividends | 27 | |
| (b) | Calculation of Dividends | 28 | |
| (c) | Participating Dividends | 28 | |
| (d) | Treatment of Dividends Upon Redemption, Repurchase Upon Change of Control or Conversion | 29 | |
| Section 7. | Rights Upon Liquidation, Dissolution or Winding Up | 29 | |
| (a) | Generally | 29 | |
| (b) | Certain Business Combination Transactions Deemed Not to Be a Liquidation | 30 | |
| (c) | Treatment of Convertible Preferred Stock | 30 | |
| Section 8. | Right of the Corporation to Redeem the Convertible Preferred Stock | 30 | |
| (a) | Right to Redeem On or After the Five-Year Anniversary | 30 | |
| (b) | Redemption Prohibited in Certain Circumstances | 31 |
i
TABLE OF CONTENTS
(cont’d)
| Page | |||
|---|---|---|---|
| (c) | Redemption Date | 31 | |
| (d) | Redemption Price | 31 | |
| (e) | Redemption Notice | 31 | |
| (f) | Payment of the Redemption Price | 32 | |
| Section 9. | Right of Holders to Require the Corporation to Repurchase Convertible Preferred Stock Upon a Change of<br>Control | 32 | |
| (a) | Change of Control Repurchase Right | 32 | |
| (b) | Funds Legally Available for Payment of Change of Control Repurchase Price; Covenant Not to Take Certain<br>Actions | 32 | |
| (c) | Change of Control Repurchase Date | 33 | |
| (d) | Change of Control Repurchase Price | 33 | |
| (e) | Initial Change of Control Notice | 34 | |
| (f) | Change of Control Notice | 34 | |
| (g) | Procedures to Exercise the Change of Control Repurchase Right | 35 | |
| (h) | Payment of the Change of Control Repurchase Price | 36 | |
| (i) | Third Party May Conduct Repurchase Offer In Lieu of the Corporation | 36 | |
| (j) | Change of Control Agreements | 36 | |
| Section 10. | Voting Rights | 37 | |
| (a) | Generally | 37 | |
| (b) | Series A Director. | 37 | |
| (c) | Voting and Consent Rights with Respect to Specified Matters | 39 | |
| (d) | Procedures for Voting and Consents | 42 | |
| Section 11. | Conversion | 43 | |
| (a) | Generally | 43 | |
| (b) | Conversion at the Option of the Holders | 43 | |
| (c) | Mandatory Conversion at the Corporation’s Election | 44 | |
| (d) | Conversion Procedures | 46 | |
| (e) | Settlement upon Conversion | 47 | |
| (f) | Conversion Price Adjustments | 47 | |
| (g) | Voluntary Conversion Price Decreases | 55 | |
| (h) | Restriction on Conversions | 55 | |
| (i) | Effect of Class A Common Stock Change Event | 56 | |
| Section 12. | Certain Provisions Relating to the Issuance of Class A Common Stock | 58 | |
| (a) | Equitable Adjustments to Prices | 58 | |
| (b) | Status of Shares of Class A Common Stock | 58 | |
| Section 13. | Taxes | 58 | |
| Section 14. | Term | 59 | |
| Section 15. | Calculations | 59 |
ii
TABLE OF CONTENTS
(cont’d)
| Page | |||
|---|---|---|---|
| (a) | Responsibility; Schedule of Calculations | 59 | |
| (b) | Calculations Aggregated for Each Holder | 59 | |
| Section 16. | Notices | 59 | |
| Section 17. | Facts Ascertainable | 59 | |
| Section 18. | Waiver | 59 | |
| Section 19. | Severability | 60 | |
| Section 20. | No Other Rights | 60 |
Exhibits
| Exhibit A: Form of Preferred Stock Certificate | A-1 |
|---|---|
| Exhibit B: Form of Legends | B-1 |
| Exhibit C: Minimum Hedging | C-1 |
iii
Section 1. Designation; Par Value; Number of AuthorizedShares.
(a) Designation; Par Value. The shares of such series shall be designated as the “Series A Convertible Preferred Stock” par value $0.01 per share, of the Corporation (the “Convertible Preferred Stock”).
(b) Number of Authorized Shares. The total authorized number of shares of Convertible Preferred Stock is three hundred and fifty thousand (350,000); provided, however, that, subject to Section 10(c)(i)(2), by resolution of the Board of Directors, or any duly authorized committee thereof, the total number of authorized shares of Convertible Preferred Stock may be increased (but not above the total number of authorized shares of Preferred Stock) or decreased (but not below the number of shares thereof then outstanding) in accordance with the General Corporation Law of the State of Delaware. The Corporation shall not have the authority to issue fractional shares of Convertible Preferred Stock.
Section 2. Definitions.
“Affiliate” of any Person means any Person, directly or indirectly, Controlling, Controlled by or under common Control with such Person; provided, however, that (i) the Corporation and its Subsidiaries, on the one hand, and any Purchaser Party or any of its Affiliates, on the other hand, shall not be deemed to be Affiliates, (ii) “portfolio companies” (as such term is customarily used among institutional investors) in which any Purchaser Party or any of its Affiliates has an investment (whether as debt or equity) shall not be deemed an Affiliate of such Purchaser Party and (iii) the Excluded Sponsor Parties (as such term is defined in the Purchase Agreement) shall not be deemed to be Affiliates of any Purchaser Party, the Corporation or any of the Corporation’s Subsidiaries.
“Average Price” means, in respect of shares of Class A Common Stock or any other securities, as of any date or relevant period (as applicable): (i) the volume weighted average price for such security on the NYSE for such date or relevant period as reported by Bloomberg through its “Volume at Price” functions; (ii) if the Board of Directors determines in its discretion that the NYSE is not the principal securities exchange or trading market for that security, the volume weighted average price of that security for such date or relevant period on the principal securities exchange or trading market on which that security is listed or traded as reported by Bloomberg through its “Volume at Price” functions; (iii) if the foregoing do not apply, the last closing trade price (or average of the last closing trade price for each Trading Day in the relevant period) of that security in the over-the-counter market on the electronic bulletin board for that security as reported by Bloomberg; or (iv) if no last closing trade price is reported for that security by Bloomberg, the last closing ask price (or average of the last closing ask price for each Trading Day in the relevant period) of that security as reported by Bloomberg. If the Average Price cannot be calculated for that security on that date or relevant period on any of the foregoing bases, the Average Price of that security on such date or relevant period shall be the fair market value as mutually determined by the Corporation and the holders of at least a majority in voting power of the then outstanding shares of Convertible Preferred Stock (acting reasonably), voting or consenting separately as a single series.
“Bloomberg” means Bloomberg Financial Markets, together with the primary successor to the business of Bloomberg Financial Markets.
“Board of Directors” means the Corporation’s board of directors or a committee of such board duly authorized to act with the authority of such board.
“Business Day” means any day other than a Saturday, a Sunday or any day on which the Federal Reserve Bank of New York is authorized or required by law or executive order to close or be closed.
“Bylaws” means the Amended and Restated Bylaws of the Corporation, as the same may be amended or amended and restated from time to time.
“Capital Stock” of any Person means any and all shares of, interests in, rights to purchase, warrants or options for, participations in, or other equivalents of, in each case however designated, the equity of such Person, but excluding any debt securities convertible into such equity.
“Carnelian” means Etineles Holdings V, LLC, a Delaware limited liability company, and its Affiliates.
“Cash Dividend Date” means the two (2) year anniversary of the Initial Issue Date.
“Certificate” means a Physical Certificate or an Electronic Certificate.
“Certificate of Designation” means this Certificate of Designation, as amended or amended and restated from time to time.
“Certificate of Incorporation” means the Amended and Restated Certificate of Incorporation of the Corporation, as the same has been and may be amended or amended and restated from time to time.
“Change of Control” means the occurrence of any of the following events after the Initial Issue Date, whether in a single transaction or a series of related transactions:
(a) a “person” or “group” (within the meaning of Section 13(d) and 14(d) of the Exchange Act), other than one or more Permitted Holders, is or becomes the direct or indirect “beneficial owner” (as defined below) of more than fifty percent (50.0%) of the Corporation’s Voting Stock (as defined below); provided, however, that in connection with a transaction pursuant to which the Persons that directly or indirectly “beneficially owned” (as defined below) one hundred percent (100.0%) of the Corporation’s Voting Stock immediately before such transaction directly or indirectly “beneficially own,” immediately after such transaction, more than fifty percent (50.0%) of the Voting Stock of a Person that is, or becomes, a direct or indirect parent of the Corporation (a “Parent Company”) in substantially the same proportions vis-à-vis each other as immediately before such transaction, no person shall be deemed to be or become a beneficial owner of more than fifty percent (50.0%) of the total voting power of the Voting Stock of the Corporation unless such person shall be or become a beneficial owner of more than fifty percent (50.0%) of the Voting Stock of such Parent Company (other than a Parent Company that is a Subsidiary of another Parent Company); provided, further, that (x) if a majority of the members of
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the board of directors of each Parent Company (other than a Parent Company that is a Subsidiary of another Parent Company) were members of the Board of Directors immediately prior to the consummation of such transaction and (y) the Corporation’s President and Chief Executive Officer and Executive Vice President and Chief Financial Officer are members of the executive management team in substantially similar roles of the Parent Company immediately after the consummation of the transaction pursuant to which the Corporation becomes a Subsidiary of a Parent Company, then such transaction will be deemed not to be a Change of Control pursuant to any transaction or event described in clause (a);
(b) the consummation of (i) any sale, lease or other transfer, in one transaction or a series of transactions, of all or substantially all of the assets of the Corporation and its Subsidiaries, taken as a whole, to any Person or group (within the meaning of Section 13(d) and 14(d) of the Exchange Act), other than any of the Corporation’s Wholly Owned Subsidiaries or OpCo’s Wholly Owned Subsidiaries; or (ii) any transaction or series of related transactions in connection with which (whether by means of merger, consolidation, share exchange, combination, reclassification, recapitalization, acquisition, liquidation or otherwise) all of the Class A Common Stock is exchanged for, converted into, acquired for, or constitutes solely the right to receive, other securities, cash or other property; provided, however, that any transaction pursuant to which the Persons that directly or indirectly “beneficially owned” (as defined below) one hundred percent (100.0%) of the Corporation’s Voting Stock immediately before such transaction directly or indirectly “beneficially own,” immediately after such transaction, more than fifty percent (50.0%) of the Voting Stock of the surviving, continuing or acquiring company or other transferee, as applicable, or the parent thereof, in substantially the same proportions vis-à-vis each other as immediately before such transaction, will be deemed not to be a Change of Control pursuant to this clause (b)(i) and clause (b)(ii); provided, further, that (x) if a majority of the members of the board of directors of the surviving, continuing or acquiring company or other transferee, as applicable, or the Parent Company thereof, were members of the Board of Directors immediately prior to the consummation of such transaction and (y) the Corporation’s President and Chief Executive Officer and Executive Vice President and Chief Financial Officer are members of the executive management team in substantially similar roles of the surviving, continuing or acquiring company or other transferee, as applicable, or the Parent Company thereof, immediately after the consummation of such transaction, then such transaction will be deemed not to be a Change of Control pursuant to any transaction or event described in clause (b)(i) and clause (b)(ii); or
(c) neither shares of Class A Common Stock nor shares of any other Capital Stock into which the Convertible Preferred Stock is convertible are listed for trading on any National Securities Exchange.
For the purposes of this definition, whether a Person is a “beneficial owner”, whether shares are “beneficially owned”, and percentage beneficial ownership, will be determined in accordance with Rules 13d-3 and 13d-5 under the Exchange Act.
Notwithstanding the preceding or any provision of Section 13(d)-3 of the Exchange Act, a Person or group shall not be deemed to beneficially own Voting Stock subject to a stock or asset purchase agreement, merger agreement, option agreement, warrant agreement or similar agreement (or voting or option or similar agreement related thereto) until the consummation of the acquisition of the Voting Stock in connection with the transactions contemplated by such agreement.
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“Change of Control Notice” has the meaning set forth in Section 9(f).
“Change of Control Repurchase Date” means the date specified in****Section 9(c) for the repurchase of any Convertible Preferred Stock by the Corporation pursuant to a Repurchase Upon Change of Control.
“Change of Control Repurchase Notice” means a notice (including a notice substantially in the form of the “Change of Control Repurchase Notice” set forth in Exhibit A) containing the information, or otherwise complying with the requirements, set forth in Section 9(g)(i) and Section 9(g)(ii).
“Change of Control Repurchase Price” means the cash price payable by the Corporation to repurchase any share of Convertible Preferred Stock upon its Repurchase Upon Change of Control, calculated pursuant to Section 9(d).
“Change of Control Repurchase Right” has the meaning set forth in Section 9(a).
“Class A Common Stock” means the Class A common stock, par value $0.01 per share, of the Corporation.
“Class A Common Stock Change Event” has the meaning set forth in Section 11(i)(i).
“Class A Common Stock Liquidity Conditions” will be satisfied with respect to a Mandatory Conversion if:
(a) the offer and sale of such share of Class A Common Stock by such Holder are registered pursuant to an effective registration statement under the Securities Act and such registration statement is reasonably expected by the Corporation to remain effective and usable, by the Holder to sell such share of Class A Common Stock, continuously during the period from, and including, the date the related Mandatory Conversion Notice is sent to, and including, the one (1) year anniversary after the date such share of Class A Common Stock is issued;
(b) each share of Class A Common Stock referred to in clause (a) above (i) will, when issued and when sold or otherwise transferred pursuant to the registration statement referred to in such clause (a), unless sold to the Corporation or an Affiliate of the Corporation, not be evidenced by any Certificate that bears a legend referring to transfer restrictions under the Securities Act or other securities laws; and (ii) will, when issued, be listed and admitted for trading, without suspension or material limitation on trading, on any of the NYSE, The NYSE American, The NASDAQ Capital Market, The NASDAQ Global Market or The NASDAQ Global Select Market (or any of their respective successors);
(c) (i) the Corporation has not received any written threat or notice of delisting or suspension by the applicable exchange referred to in clause (b)(ii) **** above with a reasonable prospect of delisting, after giving effect to all applicable notice and appeal periods; and (ii) no such delisting or suspension is reasonably likely to occur or is pending based on the Corporation falling below the minimum listing maintenance requirements of such exchange;
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(d) the conversion of all shares of Convertible Preferred Stock pursuant to such Mandatory Conversion or that are subject to such Redemption, as applicable, would not be limited or otherwise restricted by Section 11(h);
(e) the average daily trading volume of the Class A Common Stock on the principal National Securities Exchange on which the Class A Common Stock is then listed for, or admitted to, trading must exceed 138,000 shares (as such amount may be adjusted to reflect any split, combination or similar event with respect to the Class A Common Stock) for the thirty (30) Trading Days immediately preceding the Mandatory Conversion Notice Date; and
(f) the Corporation shall not have repurchased on any day in the 30-Trading Day period immediately preceding the Mandatory Conversion Notice Date more than ten percent (10.0%) of the 30-day trailing average trading volume of the Class A Common Stock on the principal National Securities Exchange on which the Class A Common Stock is then listed for, or admitted to, trading (calculated as of the Mandatory Conversion Notice Date).
“Class B Common Stock” means the Class B common stock, par value $0.01 per share, of the Corporation.
“Close of Business” means 5:00 p.m., New York City time.
“Common Stock” means the Class A Common Stock together with the Class B Common Stock.
“Common Stock Dividend” has the meaning set forth in Section 6(c)(i).
“Common Stock Participating Dividend” has the meaning set forth in Section 6(c)(i).
“Common Unit” has the meaning ascribed to such term in the OpCo LLCA.
“Continuing Share Reserve Requirement” means, as of any time, a number of shares of Class A Common Stock equal to the product of (a) one and one-half (1.5); and (b) the number of shares of Class A Common Stock that would be issuable (without regard to Section 11(h)) upon conversion of all Convertible Preferred Stock outstanding as of such time (assuming such conversion occurred as of such time); provided that, absent a written request from a Holder, the Board of Directors shall have no obligation to call a special meeting or to act by written consent outside of a regularly scheduled meeting of the Board of Directors to reserve additional shares of Class A Common Stock in connection with the Continuing Share Reserve Requirement.
“Control” (including its correlative meanings “under common Control with” and “Controlled by”) means, with respect to any Person, the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of such Person, whether through ownership of securities or partnership or other interests, by contract or otherwise.
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“Controlled Investment Affiliate” means, as to any Person, any other Person, other than any Investor (as defined below), which directly or indirectly is in control of, is controlled by, or is under common control with such Person and is organized by such Person (or any Person controlling such Person) primarily for making direct or indirect equity or debt investments in the Corporation and/or other companies.
“Conversion Agent” has the meaning set forth in Section 4(d)(i).
“Conversion Consideration” means, with respect to the conversion of any Convertible Preferred Stock, the type and amount of consideration payable to settle such conversion, determined in accordance with Section 11.
“Conversion Date” means an Optional Conversion Date or a Mandatory Conversion Date, as applicable.
“Conversion Price” initially means $21.39 per share of Class A Common Stock; provided, however, that aforesaid initial Conversion Price is subject to adjustment pursuant to Sections 11(f) and 11(g). Each reference in this Certificate of Designation to the Conversion Price as of a particular date without setting forth a particular time on such date will be deemed to be a reference to the Conversion Price immediately before the Close of Business on such date.
“Conversion Share” means any share of Class A Common Stock issued or issuable upon conversion of any Convertible Preferred Stock.
“Convertible Preferred Stock” has the meaning set forth in Section 1(a).
“Corporation” means Infinity Natural Resources, Inc., a Delaware corporation, as such name may be changed from time to time in accordance with the General Corporation Law of the State of Delaware.
“Credit Agreement” means that certain credit agreement, dated as of September 25, 2024, by and among, Infinity Natural Resources, LLC, the lenders from time to time party thereto and Citibank, N.A., as the administrative agent and an issuing bank, as the same may be amended, restated, supplemented, refinanced, replaced or otherwise modified from time to time, unless otherwise expressly specified herein.
“Credit Agreement Prohibited Dividend” has the meaning set forth in Section 6(a)(ii).
“Credit Agreement Prohibited Dividend Redemption” has the meaning set forth in Section 6(a)(ii).
“Daily VWAP” means, for any VWAP Trading Day, the per share volume-weighted average price of the Class A Common Stock as displayed under the heading “Bloomberg VWAP” on Bloomberg page “INR <EQUITY> AQR” (or, if such page is not available, its equivalent successor page) in respect of the period from the scheduled open of trading until the scheduled close of trading of the primary trading session on such VWAP Trading Day (or, if such volume-weighted average price is unavailable, the market value of one (1) share of Class A Common Stock on such VWAP Trading Day, determined, using a volume-weighted average price method, by a nationally recognized independent investment banking firm the Corporation selects). The Daily VWAP will be determined without regard to after-hours trading or any other trading outside of the regular trading session.
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“Dividend” means any Regular Dividend or Participating Dividend.
“Dividend Junior Stock” means any class or series of the Corporation’s Capital Stock, including preferred stock, the terms of which would result in such class or series ranking junior to the Convertible Preferred Stock with respect to the payment of dividends (without regard to whether or not dividends accumulate cumulatively). Dividend Junior Stock includes the Class A Common Stock.
“Dividend Parity Stock” means any class or series of the Corporation’s Capital Stock, including preferred stock (other than the Convertible Preferred Stock), the terms of which would result in such class or series ranking equally with the Convertible Preferred Stock with respect to the payment of dividends (without regard to whether or not dividends accumulate cumulatively).
“Dividend Payment Date” means each Regular Dividend Payment Date with respect to a Regular Dividend and each date on which any declared Participating Dividend is scheduled to be paid on the Convertible Preferred Stock with respect to a Participating Dividend.
“Dividend Senior Stock” means any class or series of the Corporation’s Capital Stock, including preferred stock, the terms of which would result in such class or series ranking senior to the Convertible Preferred Stock with respect to the payment of dividends (without regard to whether or not dividends accumulate cumulatively).
“Electronic Certificate” means, if the Board of Directors has provided by resolution that the Convertible Preferred Stock shall be uncertificated, any electronic book entry maintained by the Transfer Agent that evidences any share(s) of Convertible Preferred Stock.
“Exchange Act” means the U.S. Securities Exchange Act of 1934, as amended.
“Expiration Date” has the meaning set forth in Section 11(f)(i)(2).
“Expiration Time” has the meaning set forth in Section 11(f)(i)(2).
“Holder” means a person in whose name any Convertible Preferred Stock is registered on the Registrar’s books.
“HSR Act” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules and regulations promulgated thereunder.
“Immediate Family Members” means with respect to any individual, such individual’s child, stepchild, grandchild or more remote descendant, parent, stepparent, grandparent, spouse, former spouse, qualified domestic partner, sibling, mother-in-law, father-in-law, son-in-law and daughter-in-law (including, in each case, adoptive relationships) and any trust, partnership or other bona fide estate-planning vehicle the only beneficiaries of which are any of the foregoing individuals or any private foundation or fund that is controlled by any of the foregoing individuals or any donor-advised fund of which any such individual is the donor.
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“Initial Change of Control Notice” has the meaning set forth in Section 9(e).
“Initial Issue Date” means the Closing Date as defined in the Purchase Agreement.
“Initial Liquidation Preference” means one thousand dollars ($1,000.00) per share of Convertible Preferred Stock.
“Initial Share Reserve Requirement” means a number of shares of Class A Common Stock equal to the product of: (a) two (2); and (b) the number of shares of Class A Common Stock that would be issuable (without regard to Section 11(h)) upon conversion of all shares of Convertible Preferred Stock outstanding as of the Initial Issue Date (assuming such conversion occurred on the Initial Issue Date).
“Issuance Limitation” has the meaning set forth in Section 11(h)(i).
“Last Reported Sale Price” of the Class A Common Stock for any Trading Day means the closing sale price per share (or, if no closing sale price is reported, the average of the last bid price and the last ask price per share or, if more than one in either case, the average of the average last bid prices and the average last ask prices per share) of the Class A Common Stock on such Trading Day as reported in composite transactions for the principal U.S. national or regional securities exchange on which the Class A Common Stock is then listed. If the Class A Common Stock is not listed on a U.S. national or regional securities exchange on such Trading Day, then the Last Reported Sale Price will be the last quoted bid price per share of Class A Common Stock on such Trading Day in the over-the-counter market as reported by OTC Markets Group Inc. or a similar organization. If the Class A Common Stock is not so quoted on such Trading Day, then the Last Reported Sale Price will be the average of the mid-point of the last bid price and the last ask price per share of Class A Common Stock on such Trading Day from a nationally recognized independent investment banking firm the Corporation selects.
“Liquidation Junior Stock” means any class or series of the Corporation’s Capital Stock, including preferred stock, the terms of which would result in such class or series ranking junior to the Convertible Preferred Stock with respect to the distribution of assets upon the Corporation’s liquidation, dissolution or winding up. Liquidation Junior Stock includes the Class A Common Stock.
“Liquidation Parity Stock” means any class or series of the Corporation’s Capital Stock, including preferred stock (other than the Convertible Preferred Stock), the terms of which would result in such class or series ranking equally with the Convertible Preferred Stock with respect to the distribution of assets upon the Corporation’s liquidation, dissolution or winding up.
“Liquidation Preference” means, with respect to any share of Convertible Preferred Stock, an amount equal to (i) the Initial Liquidation Preference per share of Convertible Preferred Stock, plus (ii) any accumulated and unpaid dividends (including Regular Dividends and Participating Dividends) on such share of Convertible Preferred Stock to, but excluding, the date of payment of such amount (including any Liquidation Preference Dividends).
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“Liquidation Preference Dividend” has the meaning set forth in Section 6(a)(i).
“Liquidation Senior Stock” means any class or series of the Corporation’s Capital Stock, including preferred stock, the terms of which would result in such class or series ranking senior to the Convertible Preferred Stock with respect to the distribution of assets upon the Corporation’s liquidation, dissolution or winding up.
“Majority Holders” means the Holders holding at least a majority of the outstanding voting power of the Convertible Preferred Stock; provided that for purposes of Section 10(c) only the shares of Convertible Common Stock held by Holders that are entitled to vote on such action shall be counted for purposes of calculating a majority for this definition.
“Management Stockholders” means (a) the directors, managers, executive officers and other members of management (and their Controlled Investment Affiliates and Immediate Family Members and any permitted transferees thereof) of the Corporation who are holders of equity interests of the Corporation on the Initial Issue Date together with (b) (i) any new directors or managers whose election by such boards of directors or managers or whose nomination for election by the equity holders of the Corporation was approved by a vote of a majority of the directors or managers of the Corporation then still in office who were either directors or managers on the Initial Issue Date or whose election or nomination was previously so approved and (ii) executive officers and other management personnel of the Corporation hired at a time when the directors or managers on the Initial Issue Date together with the directors or managers so approved constituted a majority of the directors or managers of the Corporation.
“Mandatory Conversion” has the meaning set forth in Section 11(c)(i).
“Mandatory Conversion Date” means a Conversion Date designated with respect to any Convertible Preferred Stock pursuant to Section 11(c)(i) and Section 11(c)(iii).
“Mandatory Conversion Notice” has the meaning set forth in Section 11(c)(iv).
“Mandatory Conversion Notice Date” means, with respect to a Mandatory Conversion, the date on which the Corporation sends the Mandatory Conversion Notice for such Mandatory Conversion pursuant to Section 11(c)(iv).
“Mandatory Conversion Right” has the meaning set forth in Section 11(c)(i).
“Market Disruption Event” means, with respect to any date, the occurrence or existence, during the one-half hour period ending at the scheduled close of trading on such date on the principal U.S. national or regional securities exchange or other market on which the Class A Common Stock is listed for trading or trades, of any material suspension or limitation imposed on trading (by reason of movements in price exceeding limits permitted by the relevant exchange or otherwise) in the Class A Common Stock or in any options contracts or futures contracts relating to the Class A Common Stock.
“Midstream Assets” means (i) assets used primarily for gathering, transmission, compression, storage, processing, marketing, fractionation, dehydration, stabilization, sourcing, disposal, transportation or treatment of hydrocarbons, carbon dioxide or water and (ii) equity interests of any person whose assets consist, in all material respects, of assets referred to in clause (i).
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“National Securities Exchange” means the NYSE, The NYSE American, The NASDAQ Capital Market, The NASDAQ Global Market or The NASDAQ Global Select Market (or any of their respective successors).
“Non-Wholly Owned Permitted Subsidiary” means a Subsidiary of the Corporation (a) substantially all of whose assets consist of (i) Midstream Assets, (ii) mineral or royalty assets or (iii) cash to fund operations and (b) whose equity interests consist entirely of common equity interests.
“Number of Reserved Shares” means, as of any time, the number of shares of Class A Common Stock that, at such time, the Corporation has reserved (out of its authorized but unissued shares of Class A Common Stock that are not reserved for any other purpose) for delivery upon conversion of the Convertible Preferred Stock.
“NYSE” means The New York Stock Exchange.
“Officer” means the President and Chief Executive Officer, the Executive Vice President and Chief Financial Officer, the General Counsel and Secretary, the Chief Accounting Officer or any Senior Vice President of the Corporation.
“OpCo” means Infinity Natural Resources, LLC, a Delaware limited liability company.
“OpCo LLCA” means the Second Amended and Restated Limited Liability Company Agreement of OpCo, dated as of January 30, 2025, as in effect on the Initial Issue Date, as amended.
“Open of Business” means 9:00 a.m., New York City time.
“Optional Conversion” means the conversion of any outstanding shares of Convertible Preferred Stock pursuant to Section 11, other than a Mandatory Conversion.
“Optional Conversion Date” means, with respect to the Optional Conversion of any Convertible Preferred Stock, the first Business Day on which the requirements set forth in Section 11(d)(ii) for such conversion are satisfied.
“Optional Conversion Notice” means a notice substantially in the form of the “Optional Conversion Notice” set forth in Exhibit A.
“Parity Issuance Redemption” has the meaning set forth in Section 10(c)(i)(3).
“Parity Leverage Threshold” has the meaning set forth in Section 10(c)(i)(3).
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“Parity Redemption Price” means the greater of: (x) an amount in cash that, when taken together with any cash Dividends or other cash payments received by the Holder in respect of such share of Convertible Preferred Stock, as of the applicable time of determination, results in the Holder having received an aggregate amount of cash with respect to such share of Convertible Preferred Stock yielding an internal rate of return (calculated using the XIRR function of Microsoft Excel or any successor function) of fifteen percent (15.0%) per annum on the Initial Liquidation Preference from the Initial Issue Date of such share of Convertible Preferred Stock to the date immediately prior to the date of determination; and (y) a return on investment with respect to such share of Convertible Preferred Stock of 1.50x, calculated as the quotient of (1) the aggregate amount of cash, including cash Dividends, received by the Holder in respect of such share of Convertible Preferred Stock as of the applicable time of determination divided by (2) the Initial Liquidation Preference.
“Participating Dividend” has the meaning set forth in Section 6(c)(i).
“Paying Agent” has the meaning set forth in Section 4(d)(i).
“Permitted Dividend” means (i) any dividends or distributions in which the Holders participate pursuant to Section 6(c), (ii) any tax distributions required to be paid by OpCo pursuant to Section 4.01(b) of the OpCo LLCA; provided, that, the Corporation shall determine in good faith the portion of any such tax distributions that are to be paid with respect to the Common Units of OpCo and the portion of any such tax distributions that are to be paid with respect to the Series A Convertible Preferred Units of OpCo, or (iii) any dividends or distributions payable on the Class A Common Stock in shares of Class A Common Stock; provided that dividends or distributions pursuant to clause (i) shall be permitted only to the extent (A) such dividend or distribution, when aggregated with other dividends or distributions made pursuant to this clause (A), does not exceed the aggregate amount of net cash provided by operating activities of the Corporation and its consolidated subsidiaries (as determined in accordance with GAAP) generated subsequent to January 1, 2026 or (B) both (y) the Consolidated Total Net Leverage Ratio (as defined in the Credit Agreement in effect as of the Initial Issue Date), calculated on a pro forma basis at the time of such payment does not exceed 1.5 to 1.00 and (z) the Parity Leverage Threshold (inclusive of the Convertible Preferred Stock), calculated on a pro forma basis at the time of such payment, does not exceed 2.75 to 1.00.
“Permitted Holder” means any of (A) Pearl Energy Investments, L.P., PEI INR Holdings, L.P., Pearl Energy Investments III, L.P., PEI Infinity-S, LP, PEI INR Co-Invest-B Corp., NGP XI US Holdings, L.P. and/or their respective Affiliates (including the funds, partnerships or other co-investment vehicles managed, advised or controlled by them or their respective Affiliates) (individually or collectively, “Investor”) and (B) Management Stockholders.
“Permitted Payment” means a redemption, repurchase or other acquisition of: (i) shares of Class B Common Stock and Common Units of OpCo in accordance with Article XI of the OpCo LLCA, but solely to the extent made in connection with the exchange of the underlying Class A Common Stock by the holders thereof, or indirectly by the Corporation on their behalf; (ii) shares of Class A Common Stock pursuant to the Corporation’s share repurchase program announced on November 10, 2025, of up to seventy-five million dollars ($75,000,000); (iii) in any 12-month period after the exhaustion or termination of the share repurchase program in clause (ii), shares of Class A Common Stock equal to the greater of (a) twenty-five million dollars ($25,000,000) and (b) ten percent (10.0%) of Consolidated EBITDAX (as defined in the Credit Agreement as of the Initial Issue Date) on a pro forma basis, to the extent the Consolidated Total Net Leverage Ratio
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(as defined in the Credit Agreement in effect as of the Initial Issue Date), calculated on a pro forma basis at the time of such repurchase, does not exceed 1.5 to 1.00; and (iv) shares of Class A Common Stock in connection with the administration of any employee benefit plan in the ordinary course of business, including, without limitation, the forfeiture of unvested shares of restricted stock or share withholdings upon exercise, delivery or vesting of equity awards granted to officers, directors and employees.
“Permitted Redemption” has the meaning set forth in Section 8(a).
“Person” or “person” means any individual, corporation, partnership, limited liability company, joint venture, association, joint-stock company, trust, unincorporated organization or government or other agency or political subdivision thereof. Any division or series of a limited liability company, limited partnership or trust will constitute a separate “person” under this Certificate of Designation.
“Physical Certificate” means, if the Board of Directors has not provided by resolution that the Convertible Preferred Stock shall be uncertificated, any certificate (other than an Electronic Certificate) evidencing any share(s) of Convertible Preferred Stock, which certificate is substantially in the form set forth in Exhibit A, registered in the name of the Holder of such share(s) and duly executed by the Corporation and countersigned by the Transfer Agent.
“Purchase Agreement” means that certain Securities Purchase Agreement, dated as of February 18, 2026, by and between the Corporation and the Purchasers (as defined therein), as the same may be amended or amended and restated from time to time.
“Purchaser Parties” has the meaning set forth in the Purchase Agreement.
“Quantum” means INR (II) Investments, LLC, a Delaware limited liability company, and its Affiliates.
“Record Date” means, with respect to any dividend or distribution on, or issuance to holders of, Convertible Preferred Stock or Class A Common Stock, the date fixed (whether by applicable law, applicable provision of the Certificate of Incorporation or Bylaws, resolution of the Board of Directors or otherwise) to determine the Holders or the holders of Class A Common Stock, as applicable, that are entitled to such dividend, distribution or issuance.
“Redemption” has the meaning set forth in Section 8(a).
“Redemption Date” means the date fixed, pursuant to Section 8(c), for the settlement of the redemption of the Convertible Preferred Stock by the Corporation pursuant to a Redemption.
“Redemption Notice” has the meaning set forth in Section 8(e).
“Redemption Notice Date” means, with respect to a Redemption, the date on which the Corporation sends the Redemption Notice for such Redemption pursuant to Section 8(e).
“Redemption Price” means the consideration payable by the Corporation to repurchase any Convertible Preferred Stock upon its Redemption, calculated pursuant to Section 8(d).
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“Reference Property” has the meaning set forth in Section 11(i)(i).
“Reference Property Unit” has the meaning set forth in Section 11(i)(i).
“Register” has the meaning set forth in Section 4(d)(ii).
“Registrar” has the meaning set forth in Section 4(d)(i).
“Regular Dividend Payment Date” means, with respect to any share of Convertible Preferred Stock, each March 31, June 30, September 30 and December 31 of each year, beginning on the first of the foregoing dates occurring after the Initial Issue Date.
“Regular Dividend Period” means each period from, and including, a Regular Dividend Payment Date (or, in the case of the first Regular Dividend Period, from, and including, the Initial Issue Date) to, but excluding, the next Regular Dividend Payment Date, or, if such day is not a Business Day, the first Business Day following such day.
“Regular Dividend Rate” means (i) until, but excluding, the five (5) year anniversary of the Initial Issue Date, eight percent (8.0%) per annum and (ii) on and after the five (5) year anniversary of the Initial Issue Date, twelve percent (12.0%) per annum; provided that, if any Regular Dividends are accrued as a Liquidation Preference Dividend at any time on or after the Cash Dividend Date, the otherwise applicable Regular Dividend Rate shall be subject to an automatic increase of two percent (2.0%) per annum for such Regular Dividend and continuing for all subsequent Regular Dividends until all Credit Agreement Prohibited Dividends have been paid in cash pursuant to Section 6(a)(ii), which, for the avoidance of doubt, such automatic increase will represent a maximum aggregate increase of two percent (2.0%) on the otherwise applicable Regular Dividend Rate.
“Regular Dividend Record Date” means the Close of Business on either: (a) March 15^th^, in the case of a Regular Dividend Payment Date occurring on March 31^st^; (b) June 15^th^, in the case of a Regular Dividend Payment Date occurring on June 30^th^; (c) September 15^th^, in the case of a Regular Dividend Payment Date occurring on September 30th; and (d) December 15^th^, in the case of a Regular Dividend Payment Date occurring on December 31^st^, or, if such day is not a Business Day, the first Business Day following such day.
“Regular Dividends” has the meaning set forth in Section 6(a)(i).
“Repayment Condition” has the meaning set forth in Section 9(b).
“Repurchase Upon Change of Control” means the repurchase of any Convertible Preferred Stock by the Corporation pursuant to Section 9.
“Requisite Stockholder Approval” means the stockholder approvals contemplated by Section 312.03 of the NYSE Listed Company Manual, as applicable, with respect to the issuance of shares of Class A Common Stock upon conversion of the Convertible Preferred Stock in excess of the limitations imposed by such rule.
“Restricted Stock Legend” means a legend substantially in the form set forth in Exhibit B.
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“Rule 144” means Rule 144 under the Securities Act (or any successor rule thereto), as the same may be amended from time to time.
“Securities Act” means the U.S. Securities Act of 1933, as amended.
“Security” means any Convertible Preferred Stock or Conversion Share.
“Series A Convertible Preferred Unit” has the meaning ascribed to such term in the OpCo LLCA.
“Series A Director” has the meaning set forth in Section 10(b)(i).
“Share Agent” means the Transfer Agent or any Registrar, Paying Agent or Conversion Agent.
“Spin-Off” has the meaning set forth in Section 11(f)(i)(4)(B).
“Spin-Off Valuation Period” has the meaning set forth in Section 11(f)(i)(4)(B).
“Subsidiary” means, with respect to any Person: (a) any corporation, association or other business entity (other than a partnership or limited liability company) of which more than fifty percent (50.0%) of the Voting Stock is owned or controlled, directly or indirectly, by such Person or one or more of the other Subsidiaries of such Person; and (b) any partnership or limited liability company where (x) more than fifty percent (50.0%) of the capital accounts, distribution rights, equity and voting interests, or of the general and limited partnership interests, as applicable, of such partnership or limited liability company are owned or controlled, directly or indirectly, by such Person or one or more of the other Subsidiaries of such Person, whether in the form of membership, general, special or limited partnership or limited liability company interests or otherwise, or (y) such Person or any one or more of the other Subsidiaries of such Person is a controlling general partner or managing member of, or otherwise controls, such partnership or limited liability company.
“Successor Person” has the meaning set forth in Section 11(i)(iii).
“Tender/Exchange Offer Valuation Period” has the meaning set forth in Section 11(f)(i)(2).
“Trading Day” means any day on which: (a) trading in the Class A Common Stock generally occurs on the principal U.S. national or regional securities exchange on which the Class A Common Stock is then listed or, if the Class A Common Stock is not then listed on a U.S. national or regional securities exchange, on the principal other market on which the Class A Common Stock is then traded; and (b) there is no Market Disruption Event. If the Class A Common Stock is not so listed or traded, then “Trading Day” means a Business Day.
“Transfer Agent” means Equiniti Trust Company, LLC or its successor.
“Transfer Restrictions Legend” means a legend substantially in the form set forth in Exhibit B.
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“Transfer-Restricted Security” means any Security that constitutes a “restricted security” (as defined in Rule 144); provided, however, that such Security will cease to be a Transfer-Restricted Security upon the earliest to occur of the following events:
(a) such Security is sold or otherwise transferred to a Person (other than the Corporation or an Affiliate of the Corporation) pursuant to a registration statement that was effective under the Securities Act at the time of such sale or transfer;
(b) such Security is sold or otherwise transferred to a Person (other than the Corporation or an Affiliate of the Corporation) pursuant to an available exemption (including Rule 144) from the registration and prospectus-delivery requirements of, or in a transaction not subject to, the Securities Act and, immediately after such sale or transfer, such Security ceases to constitute a “restricted security” (as defined in Rule 144); or
(c) (i) such Security is eligible for resale, by a Person that is not an Affiliate of the Corporation and that has not been an Affiliate of the Corporation during the immediately preceding three (3) months, pursuant to Rule 144 without any limitations thereunder as to volume, manner of sale, availability of current public information or notice; and (ii) the Corporation has received such certificates or other documentation or evidence as the Corporation may reasonably require to determine that the Holder, holder or beneficial owner of such Security is not, and that has not been during the immediately preceding three (3) months, an Affiliate of the Corporation.
“Voting Rights” has the meaning set forth in Section 10(a).
“Voting Stock” of any Person as of any date means the Capital Stock of such Person that is at the time entitled to vote in the election of the board of directors or other governing body of such Person; provided that with respect to a limited partnership or other entity that does not have a board of directors, Voting Stock means the Capital Stock of the general partner of such limited partnership or other business entity with the ultimate authority to manage the business and operations of such Person.
“VWAP Market Disruption Event” means, with respect to any date: (a) the failure by the principal U.S. national or regional securities exchange on which the Class A Common Stock is then listed, or, if the Class A Common Stock is not then listed on a U.S. national or regional securities exchange, the principal other market on which the Class A Common Stock is then traded, to open for trading during its regular trading session on such date; or (b) the occurrence or existence, for more than one half hour period in the aggregate, of any suspension or limitation imposed on trading (by reason of movements in price exceeding limits permitted by the relevant exchange or otherwise) in the Class A Common Stock or in any options contracts or futures contracts relating to the Class A Common Stock, and such suspension or limitation occurs or exists at any time before 1:00 p.m., New York City time, on such date.
“VWAP Trading Day” means a day on which: (a) there is no VWAP Market Disruption Event; and (b) trading in the Class A Common Stock generally occurs on the principal U.S. national or regional securities exchange on which the Class A Common Stock is then listed or, if the Class A Common Stock is not then listed on a U.S. national or regional securities exchange, on the principal other market on which the Class A Common Stock is then traded. If the Class A Common Stock is not so listed or traded, then “VWAP Trading Day” means a Business Day.
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“Wholly Owned Subsidiary” means any Subsidiary of such Person all of the outstanding Capital Stock or other ownership interests of which (other than directors’ qualifying shares) are owned by such Person or one or more Wholly Owned Subsidiaries of such Person; provided that units of OpCo held by holders other than the Corporation as of the date of the Purchase Agreement shall be disregarded for purposes of this definition.
Section 3. Rules of Construction. For purposes of this Certificate of Designation:
(a) “or” is not exclusive;
(b) “including” means “including without limitation”;
(c) “will” expresses a command;
(d) the “average” of a set of numerical values refers to the arithmetic average of such numerical values;
(e) a merger involving, or a transfer of assets by, a limited liability company, limited partnership or trust will be deemed to include any division of or by, or an allocation of assets to a series of, such limited liability company, limited partnership or trust, or any unwinding of any such division or allocation;
(f) words in the singular include the plural and words in the plural include the singular, unless the context requires otherwise;
(g) “herein,” “hereof” and other words of similar import refer to this Certificate of Designation as a whole and not to any particular Section or other subdivision of this Certificate of Designation, unless the context requires otherwise;
(h) references to currency mean the lawful currency of the United States of America, unless the context requires otherwise; and
(i) the exhibits, schedules and other attachments to this Certificate of Designation are deemed to form part of this Certificate of Designation.
Section 4. Records; Registration.
(a) Form, Dating and Denominations.
(i) Form and Date of Certificates Evidencing Convertible Preferred Stock. Each Certificate evidencing any Convertible Preferred Stock will: (1) be substantially in the form set forth in Exhibit A; (2) bear the legends required by Section 4(e) or by any provision of the Bylaws or agreement to which the Holder of such Certificate is a party or is otherwise bound and may bear notations, legends or endorsements required by the General Corporation Law of the State of Delaware, any other applicable law, stock exchange rule or usage, as applicable; and (3) be dated as of the date it is countersigned by the Transfer Agent.
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(ii) Electronic Certificates; Physical Certificates. Provided that the Board of Directors has provided by resolution that the Convertible Preferred Stock shall be uncertificated, the Convertible Preferred Stock will be originally issued initially in the form of one or more Electronic Certificates. Subject to receiving the Corporation’s written consent, Electronic Certificates may be exchanged for Physical Certificates, and Physical Certificates may be exchanged for Electronic Certificates, upon request by the Holder thereof pursuant to customary procedures, subject to Section 4(f).
(iii) Electronic Certificates; Interpretation. For purposes of this Certificate of Designation: (1) each Electronic Certificate will be deemed to include the text of the stock certificate set forth in Exhibit A; (2) any legend or other notation that is required to be included on a Certificate will be deemed to be affixed to any Electronic Certificate notwithstanding that such Electronic Certificate may be in a form that does not permit affixing legends thereto; (3) any reference in this Certificate of Designation to the “delivery” of any Electronic Certificate will be deemed to be satisfied upon the registration of the electronic book entry representing such Electronic Certificate in the name of the applicable Holder; (4) upon satisfaction of any applicable requirements of the General Corporation Law of the State of Delaware, the Certificate of Incorporation and the Bylaws of the Corporation, and any related requirements of the Transfer Agent, in each case for the issuance of Convertible Preferred Stock in the form of one or more Electronic Certificates, such Electronic Certificates will be deemed to be executed by the Corporation and countersigned by the Transfer Agent.
(iv) Appointment of Depositary. If any Convertible Preferred Stock is admitted to the book-entry clearance and settlement facilities of any electronic depositary, then, notwithstanding anything to the contrary in this Certificate of Designation, each reference in this Certificate of Designation to the delivery of, or payment on, any such Convertible Preferred Stock, or the delivery of any related notice or demand, will be deemed to be satisfied to the extent the applicable procedures of such depositary governing such delivery or payment, as applicable, are satisfied.
(v) No Bearer Certificates; Denominations. The Convertible Preferred Stock will be issued only in registered form and only in whole numbers of shares.
(vi) Registration Numbers. Each Certificate evidencing any share of Convertible Preferred Stock will bear a unique registration number that is not affixed to any other Certificate evidencing any other then-outstanding shares of Convertible Preferred Stock.
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(b) Execution, Countersignature and Delivery.
(i) Due Execution by the Corporation. At least two (2) duly authorized Officers will sign each Certificate evidencing any Convertible Preferred Stock on behalf of the Corporation by manual, facsimile or electronic signature. The validity of any Convertible Preferred Stock will not be affected by the failure of any Officer whose signature is on any Certificate evidencing such Convertible Preferred Stock to hold, at the time such Certificate is countersigned by the Transfer Agent, the same or any other office at the Corporation.
(ii) Countersignature by Transfer Agent. No Certificate evidencing any share of Convertible Preferred Stock is valid until such Certificate is countersigned by the Transfer Agent. Each Certificate will be deemed to be duly countersigned only when an authorized signatory of the Transfer Agent (or a duly appointed agent thereof) signs (by manual, facsimile or electronic signature) the countersignature block set forth in such Certificate.
(c) Method of Payment; Delay When Payment Date is Not a Business Day.
(i) Method of Payment.
(1) Electronic Certificates. The Corporation will pay (or cause the Paying Agent to pay) all cash amounts due with respect to any outstanding shares of Convertible Preferred Stock evidenced by an Electronic Certificate, out of funds legally available therefor, by wire transfer of immediately available funds.
(2) Physical Certificates. The Corporation will pay (or cause the Paying Agent to pay) all cash amounts due with respect to any outstanding shares of Convertible Preferred Stock evidenced by a Physical Certificate, out of funds legally available therefor, as follows:
(A) if the aggregate Liquidation Preference of the outstanding shares of Convertible Preferred Stock evidenced by such Physical Certificate is at least five million dollars ($5,000,000) (or such lower amount as the Corporation may choose in its sole and absolute discretion) and the Holder of such Convertible Preferred Stock entitled to such cash amount has delivered to the Paying Agent, no later than the time set forth in the next sentence, a written request to receive payment by wire transfer to an account of such Holder within the United States, by wire transfer of immediately available funds to such account; and
(B) in all other cases, by check mailed to the address of such Holder set forth in the Register.
To be timely, such written request must be delivered no later than the Close of Business on the following date: (x) with respect to the payment of any declared cash Dividend due on a Dividend Payment Date for the Convertible Preferred Stock, the related Record Date; and (y) with respect to any other payment, the date that is fifteen (15) calendar days immediately before the date such payment is due.
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(ii) Delay of Payment when Payment Date is Not a Business Day. If the due date for a payment on any outstanding share of Convertible Preferred Stock as provided in this Certificate of Designation is not a Business Day, then, notwithstanding anything to the contrary in this Certificate of Designation, such payment may be made on the immediately following Business Day and no interest, dividend or other amount will accrue or accumulate on such payment as a result of the related delay. Solely for purposes of the immediately preceding sentence, a day on which the applicable place of payment is authorized or required by applicable law or executive order to close or be closed will be deemed not to be a “Business Day.”
(d) Transfer Agent, Registrar, Paying Agent and Conversion Agent.
(i) Generally. The Corporation designates its principal U.S. executive offices, and any office of the Transfer Agent in the continental United States, as an office or agency where Convertible Preferred Stock may be presented for: (1) registration of transfer or for exchange (the “Registrar”); (2) payment (the “Paying Agent”); and (3) conversion (the “Conversion Agent”). At all times when any shares of Convertible Preferred Stock are outstanding, the Corporation will maintain an office in the continental United States constituting the Registrar, Paying Agent and Conversion Agent.
(ii) Maintenance of the Register. The Corporation will keep, or cause there to be kept, a record (the “Register”) of the names and addresses of the Holders, the number of shares of Convertible Preferred Stock held by each Holder and the transfer, exchange, repurchase, Redemption and conversion of the Convertible Preferred Stock. Absent manifest error, the entries in the Register will be conclusive and the Corporation and the Transfer Agent may treat each Person whose name is recorded as a Holder in the Register as a Holder for all purposes to the fullest extent permitted by applicable law. The Register will be in written form or kept on, or by means of, or in the form of, any information storage device, method or one or more electronic networks or databases; provided that the records so kept can be converted into clearly legible paper form within a reasonable time. The Corporation will promptly provide a copy of the Register to any Holder upon its written demand.
(iii) Subsequent Appointments. By notice to each Holder, the Corporation may, at any time, appoint any Person (including any Subsidiary of the Corporation) to act as Registrar, Paying Agent or Conversion Agent.
(iv) If the Corporation or any of its Subsidiaries acts as Paying Agent or Conversion Agent, then: (1) it will segregate for the benefit of the Holders all money and other property held by it as Paying Agent or Conversion Agent; and (2) references in this Certificate of Designation to the Paying Agent or Conversion Agent holding cash or other property, or to the delivery of cash or other property to the Paying Agent or Conversion Agent, in each case for payment or delivery to any Holders or with respect to the Convertible Preferred Stock, will be deemed to refer to cash or other property so segregated, or to the segregation of such cash or other property, respectively.
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(e) Legends.
(i) Restricted Stock Legend.
(1) Each Certificate evidencing any share of Convertible Preferred Stock that is a Transfer-Restricted Security will bear the Restricted Stock Legend.
(2) If any share of Convertible Preferred Stock is issued in exchange for, in substitution of, or to effect a partial conversion of, any other share(s) of Convertible Preferred Stock (such other share(s) being referred to as the “old share(s)” for purposes of this Section 4(e)(i)(2)), including pursuant to Sections 4(g) or 4(i), then the Certificate evidencing such share will bear the Restricted Stock Legend if the Certificate evidencing such old share(s) bore the Restricted Stock Legend at the time of such exchange or substitution, or on the related Conversion Date with respect to such conversion, as applicable; provided, however, that the Certificate evidencing such share need not bear the Restricted Stock Legend if such share does not constitute a Transfer-Restricted Security immediately after such exchange or substitution, or as of such Conversion Date, as applicable.
(ii) Transfer Restrictions Legend. Each Certificate evidencing a share of Convertible Preferred Stock will bear the Transfer Restrictions Legend and be subject to the restrictions on transfer contained in Sections 4.2(a) and 4.2(b) of the Purchase Agreement.
(iii) Other Legends. The Certificate evidencing any outstanding shares of Convertible Preferred Stock may bear any other legend or text, not inconsistent with this Certificate of Designation, as may be required by applicable law, by the rules of any applicable depositary for the Convertible Preferred Stock or by any securities exchange or automated quotation system on which such Convertible Preferred Stock is traded or quoted or as may be otherwise reasonably determined by the Corporation to be appropriate.
(iv) Acknowledgement and Agreement by the Holders. A Holder’s acceptance of any Convertible Preferred Stock evidenced by a Certificate bearing any legend required by this Section 4(e) will constitute such Holder’s acknowledgement of, and agreement to comply with, the restrictions set forth in such legend.
(v) Legends on Conversion Shares.
(1) Each Conversion Share will bear a legend substantially to the same effect as the Restricted Stock Legend if the Convertible Preferred Stock upon the conversion of which such Conversion Share was issued was (or would have been had it not been converted) a Transfer-Restricted Security at the time such Conversion Share was issued; provided, however, that such Conversion Share need not bear such a legend if the Corporation determines, in its reasonable discretion, that such Conversion Share need not bear such a legend.
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(2) Notwithstanding anything to the contrary in Section 4(e)(v)(1), a Conversion Share need not bear a legend pursuant to Section 4(e)(v)(1) if such Conversion Share is issued in an uncertificated form that does not permit affixing legends thereto; provided, however, that the Corporation may take measures (including the assignment thereto of a “restricted” CUSIP number) that it reasonably deems appropriate to enforce the transfer restrictions referred to in such legend.
(f) Transfers and Exchanges; Transfer Taxes; Certain Transfer Restrictions.
(i) Provisions Applicable to All Transfers and Exchanges.
(1) Generally. Subject to this Section 4(f) and Sections 4.1(a) and 4.1(b) of the Purchase Agreement, any outstanding share of Convertible Preferred Stock evidenced by any Certificate may be transferred or exchanged from time to time and, upon receiving an executed Assignment Form (in substantially the form set forth on Exhibit A hereto), the Corporation will cause the Registrar to record each such transfer or exchange in the Register.
(2) No Services Charge; Transfer Taxes. The Corporation and the Share Agents will not impose any service charge on any Holder for any transfer, exchange or conversion of any Convertible Preferred Stock, but the Corporation, the Transfer Agent, the Registrar and the Conversion Agent may require payment of a sum sufficient to cover any transfer tax or similar governmental charge that may be imposed in connection with any transfer, exchange or conversion of Convertible Preferred Stock, other than exchanges pursuant to Section 4(g) or Section 4(n) not involving any transfer (and; provided that (A) any such taxes or charges incurred in connection with the original issuance of the Convertible Preferred Stock shall be paid and borne by the Corporation; and (B) any such taxes or charges incurred in connection with a conversion of the Convertible Preferred Stock pursuant to Section 11 shall be paid and borne as provided in Section 13).
(3) No Transfers or Exchanges of Fractional Shares. Notwithstanding anything to the contrary in this Certificate of Designation, all transfers or exchanges of Convertible Preferred Stock must be in an amount representing a whole number of shares of Convertible Preferred Stock, and no fractional share of Convertible Preferred Stock may be transferred or exchanged.
(4) Legends. Each Certificate evidencing any share of Convertible Preferred Stock that is issued upon transfer of, or in exchange for, another share of Convertible Preferred Stock will bear each legend, if any, required by Section 4(e).
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(5) Settlement of Transfers and Exchanges. Upon satisfaction of the requirements of this Certificate of Designation to effect a transfer or exchange of any Convertible Preferred Stock, the Corporation will cause such transfer or exchange to be effected as soon as reasonably practicable but in no event later than the second (2nd) Business Day after the date of such satisfaction.
(6) Exchanges to Remove Transfer Restrictions. For the avoidance of doubt, and subject to the terms of this Certificate of Designation, as used in this Section 4(f), an “exchange” of a Certificate includes an exchange effected for the sole purpose of removing any Restricted Stock Legend affixed to such Certificate.
(ii) Transfers and Exchanges of Convertible Preferred Stock.
(1) Subject to this Section 4(f), a Holder of any Convertible Preferred Stock evidenced by a Certificate may (x) transfer any whole number of shares of such Convertible Preferred Stock to one or more other Person(s); and (y) exchange any whole number of shares of such Convertible Preferred Stock for an equal number of shares of Convertible Preferred Stock evidenced by one or more other Certificates; provided, however, that, to effect any such transfer or exchange, such Holder must, if such Certificate is a Physical Certificate, surrender such Physical Certificate to the office of the Transfer Agent or the Registrar, together with any endorsements or transfer instruments reasonably required by the Corporation, the Transfer Agent or the Registrar.
(2) Upon the satisfaction of the requirements of this Certificate of Designation to effect a transfer or exchange of any whole number of shares of a Holder’s Convertible Preferred Stock evidenced by a Certificate (such Certificate being referred to as the “old Certificate” for purposes of this Section 4(f)(ii)(2)):
(A) such old Certificate will be promptly cancelled pursuant to Section 4(k);
(B) if fewer than all of the shares of Convertible Preferred Stock evidenced by such old Certificate are to be so transferred or exchanged, then the Corporation will issue, execute and deliver, and cause the Transfer Agent to countersign, in each case in accordance with Section 4(b), one or more Certificates that (x) each evidence a whole number of shares of Convertible Preferred Stock and, in the aggregate, evidence a total number of shares of Convertible Preferred Stock equal to the number of shares of Convertible Preferred Stock evidenced by such old Certificate not to be so transferred or exchanged; (y) are registered in the name of such Holder; and (z) bear each legend, if any, required by Section 4(e);
(C) in the case of a transfer to a transferee, the Corporation will issue, execute and deliver, and cause the Transfer Agent to countersign, in each case in accordance with Section 4(b), one or more Certificates that (x) each evidence a whole number of shares of Convertible Preferred Stock and, in the aggregate, evidence a total number of shares of Convertible Preferred Stock equal to the number of shares of Convertible Preferred Stock to be so transferred; (y) are registered in the name of such transferee; and (z) bear each legend, if any, required by Section 4(e); and
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(D) in the case of an exchange, the Corporation will issue, execute and deliver, and cause the Transfer Agent to countersign, in each case in accordance with Section 4(b), one or more Certificates that (x) each evidence a whole number of shares of Convertible Preferred Stock and, in the aggregate, evidence a total number of shares of Convertible Preferred Stock equal to the number of shares of Convertible Preferred Stock to be so exchanged; (y) are registered in the name of the Person to whom such old Certificate was registered; and (z) bear each legend, if any, required by Section 4(e).
(iii) Transfers of Shares Subject to Redemption, Repurchase or Conversion. Notwithstanding anything to the contrary in this Certificate of Designation, the Corporation, the Transfer Agent and the Registrar will not be required to register the transfer of or exchange any share of Convertible Preferred Stock that has been surrendered for conversion.
(g) Exchange and Cancellation of Convertible Preferred Stock to Be Converted or to Be Repurchased Pursuant to a Repurchase Upon Change of Control or a Redemption.
(i) Partial Conversions of Physical Certificates and Partial Repurchases of Physical Certificates Pursuant to a Repurchase Upon Change of Control or a Redemption. If fewer than all of the shares of Convertible Preferred Stock evidenced by a Physical Certificate (such Physical Certificate being referred to as the “old Physical Certificate” for purposes of this Section 4(g)(i)) are to be converted pursuant to Section 11 or repurchased pursuant to a Repurchase Upon Change of Control or a Redemption, then, as soon as reasonably practicable after such Physical Certificate is surrendered for such conversion or repurchase, as applicable, the Corporation will cause such Physical Certificate to be exchanged, pursuant and subject to Section 4(f), for (1) one or more Physical Certificates that each evidence a whole number of shares of Convertible Preferred Stock and, in the aggregate, evidence a total number of shares of Convertible Preferred Stock equal to the number of shares of Convertible Preferred Stock evidenced by such old Physical Certificate that are not to be so converted or repurchased, as applicable, and deliver such Physical Certificate(s) to such Holder; and (2) a Physical Certificate evidencing a whole number of shares of Convertible Preferred Stock equal to the number of shares of Convertible Preferred Stock evidenced by such old Physical Certificate that are to be so converted or repurchased, as applicable, which Physical Certificate will be converted or repurchased, as applicable, pursuant to the terms of this Certificate of Designation; provided, however, that the Physical Certificate referred to in this clause (2) need not be issued at any time after which such shares subject to such conversion or repurchase, as applicable, are deemed to cease to be outstanding pursuant to Section 4(m).
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(ii) Cancellation of Convertible Preferred Stock that Is Converted and Convertible Preferred Stock that Is Repurchased Pursuant to a Repurchase Upon Change of Control or a Redemption. If shares of Convertible Preferred Stock evidenced by a Certificate (or any portion thereof that has not theretofore been exchanged pursuant to Section 4(g)(i)) (such Certificate being referred to as the “old Certificate” for purposes of this Section 4(g)(ii)) are to be converted pursuant to Section 11 or repurchased pursuant to a Repurchase Upon Change of Control or a Redemption, then, promptly after the later of the time such Convertible Preferred Stock is deemed to cease to be outstanding pursuant to Section 4(m) and the time such old Certificate is surrendered for such conversion or repurchase, as applicable, (1) such old Certificate will be cancelled pursuant to Section 4(k); and (2) in the case of a partial conversion or repurchase, the Corporation will issue, execute and deliver to such Holder, and cause the Transfer Agent to countersign, in each case in accordance with Section 4(b), one or more Certificates that (x) each evidence a whole number of shares of Convertible Preferred Stock and, in the aggregate, evidence a total number of shares of Convertible Preferred Stock equal to the number of shares of Convertible Preferred Stock evidenced by such old Certificate that are not to be so converted or repurchased, as applicable; (y) are registered in the name of such Holder; and (z) bear each legend, if any, required by Section 4(e).
(h) Status of Converted, Redeemed or Repurchased Shares of Convertible Preferred Stock. If any share of Convertible Preferred Stock is converted, redeemed, repurchased or otherwise acquired by the Corporation, in any manner whatsoever, the share of Convertible Preferred Stock so acquired shall, to the fullest extent permitted by applicable law, be retired and cancelled upon such acquisition, and shall not be reissued as a share of Convertible Preferred Stock. Any share of Convertible Preferred Stock so acquired shall, upon its retirement and cancellation, and upon the taking of any action required by applicable law, become an authorized but unissued share of Preferred Stock undesignated as to series and may be reissued a part of a new series of Preferred Stock, subject to the conditions and restrictions set forth in the Certificate of Incorporation or imposed by the General Corporation Law of the State of Delaware.
(i) Replacement Certificates. If a Holder of any Convertible Preferred Stock claims that the Certificate(s) evidencing such Convertible Preferred Stock have been mutilated, lost, stolen, destroyed or wrongfully taken, then the Corporation will issue, execute and deliver, and cause the Transfer Agent to countersign, in each case in accordance with Section 4(a), a replacement Certificate evidencing such Convertible Preferred Stock upon surrender to the Corporation or the Transfer Agent of such mutilated Certificate, or upon delivery to the Corporation or the Transfer Agent of evidence of such loss, taking, destruction or wrongful taking reasonably satisfactory to the Transfer Agent and the Corporation. In the case of a lost, stolen, destroyed or wrongfully taken Certificate evidencing Convertible Preferred Stock, the Corporation and the Transfer Agent may require the Holder or such Holder’s representative to provide the Corporation such security or indemnity that is reasonably satisfactory to the Corporation and the Transfer Agent to protect the Corporation and the Transfer Agent from any loss that any of them may suffer if such Certificate is replaced. Every replacement Certificate evidencing Convertible Preferred Stock issued pursuant to this Section 4(i) will, upon such replacement, be deemed to be evidence of outstanding share(s) of Convertible Preferred Stock, entitled to all of the benefits of this Certificate of Designation equally and ratably with all other shares of Convertible Preferred Stock then outstanding.
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(j) Registered Holders. Only the Holder of any share of Convertible Preferred Stock will have such powers (including voting powers), if any, and the preferences and relative, participating, optional, special or other rights, if any, and the qualifications, limitations or restrictions, if any, as set forth in this Certificate of Designation as the owner of such share of Convertible Preferred Stock.
(k) Cancellation. The Corporation may at any time deliver Certificates evidencing Convertible Preferred Stock, if any, to the Transfer Agent for cancellation. The Registrar, the Paying Agent and the Conversion Agent will forward to the Transfer Agent each share of Convertible Preferred Stock duly surrendered to them for transfer, exchange, payment or conversion. The Corporation will cause the Transfer Agent to promptly cancel all Certificates evidencing shares of Convertible Preferred Stock so surrendered to it in accordance with its customary procedures.
(l) Shares Held by the Corporation or its Subsidiaries. Without limiting the generality of Section 4(g) and Section 4(m), in determining whether the Holders of the required number of outstanding shares of Convertible Preferred Stock have concurred in any direction, waiver or consent, shares of Convertible Preferred Stock owned by the Corporation or any of its Subsidiaries will be deemed not to be outstanding.
(m) Outstanding Shares.
(i) Generally. The shares of Convertible Preferred Stock that are outstanding at any time will be deemed to be those shares indicated as outstanding in the Register, excluding those shares of Convertible Preferred Stock that have theretofore been: (1) cancelled by the Transfer Agent or delivered to the Transfer Agent for cancellation in accordance with Section 4(k); (2) paid in full upon their conversion or upon their repurchase pursuant to a Repurchase Upon Change of Control or upon their redemption pursuant to a Redemption in accordance with this Certificate of Designation; or (3) deemed to cease to be outstanding to the extent provided in, and subject to, clause (ii), (iii), (iv) or (v) of this Section 4(m).
(ii) Replaced Shares. If any Certificate evidencing any share of Convertible Preferred Stock is replaced pursuant to Section 4(i), then such share will cease to be outstanding at the time of such replacement, unless the Transfer Agent and the Corporation receive proof reasonably satisfactory to them that such share is held by a “bona fide purchaser” under applicable law.
(iii) Shares to Be Repurchased Pursuant to a Redemption. If, on a Redemption Date, the Paying Agent holds consideration in kind and amount that is sufficient to pay the aggregate Redemption Price due on such date, then (unless there occurs a default in the payment of the Redemption Price): (1) the shares of Convertible Preferred Stock to be redeemed on such date will be deemed, as of such date, to cease to be outstanding (without limiting the Corporation’s obligations pursuant to Section 6(d)); and (2) the rights of the Holders of such shares of Convertible Preferred Stock, as such, will terminate with respect to such Convertible Preferred Stock, other than the right to receive the Redemption Price as provided in Section 8 (and, if applicable, declared Dividends as provided in Section 6(d)).
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(iv) Shares to Be Repurchased Pursuant to a Repurchase Upon Change of Control. If, on a Change of Control Repurchase Date, the Paying Agent holds consideration in kind and amount that is sufficient to pay the aggregate Change of Control Repurchase Price due on such date, then (unless there occurs a default in the payment of the Change of Control Repurchase Price): (1) the shares of Convertible Preferred Stock to be repurchased on such date will be deemed, as of such date, to cease to be outstanding (without limiting the Corporation’s obligations pursuant to Section 6(d)); and (2) the rights of the Holders of such shares of Convertible Preferred Stock, as such, will terminate with respect to such Convertible Preferred Stock, other than the right to receive the Change of Control Repurchase Price as provided in Section 9 (and, if applicable, declared Dividends as provided in Section 6(d)).
(v) Shares to Be Converted. If any Convertible Preferred Stock is to be converted, then, at the Close of Business on the Conversion Date for such conversion (unless there occurs a default in the delivery of the Conversion Consideration due pursuant to Section 11 upon such conversion): (1) such shares of Convertible Preferred Stock will be deemed to cease to be outstanding (without limiting the Corporation’s obligations pursuant to Section 6(d)); and (2) the rights of the Holders of such shares of Convertible Preferred Stock, as such, will terminate with respect to such Convertible Preferred Stock, other than the right to receive such Conversion Consideration as provided in Section 11 (and, if applicable, declared Dividends as provided in Section 6(d)).
(n) Notations and Exchanges. Without limiting any rights of Holders pursuant to Section 10, if any valid amendment, supplement or waiver to the Certificate of Incorporation or this Certificate of Designation changes the powers (including voting powers), if any, and the preferences and relative, participating, optional, special or other rights, if any, and the qualifications, limitations or restrictions, if any, of the Convertible Preferred Stock, then the Corporation may, in its discretion, require the Holder of the Certificate evidencing such Convertible Preferred Stock to deliver such Certificate to the Transfer Agent so that the Transfer Agent may place an appropriate notation prepared by the Corporation on such Certificate and return such Certificate to such Holder. Alternatively, at its discretion, the Corporation may, in exchange for such Convertible Preferred Stock, issue, execute and deliver, and cause the Transfer Agent to countersign, in each case in accordance with Section 4(a), a new Certificate evidencing such Convertible Preferred Stock that reflects the changed powers (including voting powers), if any, and the preferences and relative, participating, optional, special or other rights, if any, and the qualifications, limitations or restrictions, if any. The failure to make any appropriate notation or issue a new Certificate evidencing any Convertible Preferred Stock pursuant to this Section 4(n) will not impair or affect the validity of such amendment, supplement or waiver.
Section 5. Ranking. The Convertible Preferred Stock will rank (a) senior to (i) Dividend Junior Stock with respect to the payment of dividends; and (ii) Liquidation Junior Stock with respect to the distribution of assets upon the Corporation’s liquidation, dissolution or winding up; (b) equally with (i) Dividend Parity Stock with respect to the payment of dividends; and (ii) Liquidation Parity Stock with respect to the distribution of assets upon the Corporation’s liquidation, dissolution or winding up; and (c) junior to (i) Dividend Senior Stock with respect to the payment of dividends; and (ii) Liquidation Senior Stock with respect to the distribution of assets upon the Corporation’s liquidation, dissolution or winding up.
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Section 6. Dividends.
(a) Regular Dividends.
(i) Generally. The Convertible Preferred Stock shall accumulate cumulative dividends at a rate per annum equal to the applicable Regular Dividend Rate on the Liquidation Preference thereof (calculated in accordance with Section 6(a)(iii)), regardless of whether or not declared or assets are legally available for their payment (such dividends that accumulate on the Convertible Preferred Stock pursuant to this sentence, “Regular Dividends”). Regular Dividends shall accrue quarterly in arrears on each Regular Dividend Payment Date with respect to the Convertible Preferred Stock to the Holders as of the immediately preceding Regular Dividend Record Date and such Regular Dividends shall accrue regardless of whether they have been declared. In the Corporation’s sole discretion, any Regular Dividends may be paid (A) in cash, when, as and if declared by the Board of Directors or (B) if a cash dividend is not declared and paid in cash on a Regular Dividend Payment Date, by adding the dollar amount (expressed as an amount per share of Convertible Preferred Stock) of such Regular Dividend (or, if applicable, portion thereof) not paid in cash (without duplication), effective immediately before the Close of Business on the related Regular Dividend Payment Date, to the Liquidation Preference of each share of Convertible Preferred Stock outstanding as of such time, which addition shall occur automatically, without the need of any action on the part of the Corporation or any other Person (such an increase in the Liquidation Preference, a “Liquidation Preference Dividend”). Dividends on the Convertible Preferred Stock shall accumulate daily in arrears from, and including, the last date on which Dividends have been accrued or paid (or, if no Dividends have been paid, from, and including, the Initial Issue Date) to, but excluding, the next Regular Dividend Payment Date. If a Regular Dividend is declared by the Board of Directors, then such Regular Dividend shall be paid in cash. The Corporation shall not be required to declare any Regular Dividend, and any declaration of a Regular Dividend shall be solely at the discretion of the Board of Directors.
(ii) Cash Dividend Date. Notwithstanding anything else in this Certificate of Designation, on and after the Cash Dividend Date, Regular Dividends must be paid in cash; provided that the Corporation shall not be required to pay any such Regular Dividends in cash (1) unless the Credit Agreement would not prohibit the payment of such Regular Dividends in cash and (2) for so long as the Convertible Preferred Stock would constitute Disqualified Stock (as defined in the Credit Agreement) under the Credit Agreement if Regular Dividends are required to be paid in cash, if the Restricted Payment Conditions (as defined in the Credit Agreement) could not be satisfied with respect to such Regular Dividend payment in cash. For the avoidance of doubt, if the Corporation does not pay such Regular Dividends in cash for any period on or after the Cash Dividend Date as a result of such Credit Agreement prohibition, then a Liquidation Preference Dividend (a “Credit Agreement Prohibited Dividend”) shall automatically accrue with respect to such period. In the event of accrual of a Credit Agreement Prohibited Dividend, the Corporation shall promptly use commercially reasonable efforts to seek an amendment, restatement or other modification of the Credit Agreement that would not prohibit the payment of Regular Dividends in cash. Upon removal of such prohibition on the payment of Regular Dividends in cash, the Corporation shall be permitted, but not required, to redeem for cash an aggregate portion of the Liquidation Preference of the Convertible Preferred Stock equal to the dollar amount of the Credit Agreement Prohibited Dividends accrued (a “Credit Agreement Prohibited Dividend Redemption”) pursuant to and in accordance with Section 8.
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(iii) Computation of Regular Dividends. Regular Dividends shall be computed on the basis of a 360-day year comprised of twelve 30-day months. Regular Dividends on each share of Convertible Preferred Stock shall accrue on the Liquidation Preference of such share as of immediately before the preceding Regular Dividend Payment Date (or, if there is no preceding Regular Dividend Payment Date, on the Initial Issue Date of such share).
(b) Calculation of Dividends. Notwithstanding anything to the contrary in the foregoing, if upon any Regular Dividend Payment Date subsequent to July 31, 2026, the Liquidation Preference Dividend or any portion thereof would result in the number of shares of Common Stock into which the outstanding Convertible Preferred Stock could be converted to contravene the Issuance Limitation prior to the date the Requisite Stockholder Approval is obtained, then the Corporation must either (i) make each dividend payment or any portion thereof on the Convertible Preferred Stock on each such Regular Dividend Payment Date in cash or (ii) make a Liquidation Preference Dividend at a rate per annum equal to the otherwise applicable Regular Dividend Rate plus a one-time automatic increase of two percent (2.0%) per annum for such Regular Dividend and all subsequent Regular Dividends until the Requisite Stockholder Approval is obtained, which, for the avoidance of doubt, such automatic increase will represent a maximum aggregate increase of two percent (2.0%) on the otherwise applicable Regular Dividend Rate.
(c) Participating Dividends.
(i) Generally. Subject to the rights of the holders of any Dividend Senior Stock, on parity with the holders of any Dividend Parity Stock and subject to Section 6(c)(ii), no dividends or other distribution on the Class A Common Stock will be declared or paid in cash on the Common Stock (a “Common Stock Dividend”) unless, at the time of such declaration and payment, an equivalent dividend or distribution is declared and paid, respectively, on the Convertible Preferred Stock (such a dividend or distribution on the Convertible Preferred Stock, a “Participating Dividend,” and such corresponding dividend or distribution on the Common Stock, the “Common Stock Participating Dividend”), such that: (1) the Record Date and the payment date for such Participating Dividend occur on the same dates as the Record Date and payment date, respectively, for such Common Stock Participating Dividend; and (2) the kind and amount of consideration payable per share of Convertible Preferred Stock in such Participating Dividend is the same kind and amount of consideration that would be payable in the Common Stock Participating Dividend in respect of a number of shares of Common Stock equal to the number of shares of Common Stock that would be issuable (determined in accordance with Section 11 but without regard to Section 11(h)) in respect of one (1) share of Convertible Preferred Stock if such share of Convertible Preferred Stock was converted as of an Optional Conversion Date occurring immediately prior to such Record Date.
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(ii) Class A Common Stock Change Events. Section 6(c)(i) will not apply to, and no Participating Dividend will be required to be declared or paid on the Convertible Preferred Stock in respect of a Class A Common Stock Change Event, as to which Section 11(i) will apply.
(d) Treatment of Dividends Upon Redemption, Repurchase Upon Change of Control or Conversion. If the Redemption Date, Change of Control Repurchase Date or Conversion Date with respect to any share of Convertible Preferred Stock is after a Record Date for a declared Dividend on the Convertible Preferred Stock and on or before the next Dividend Payment Date, then the Holder of such share at the Close of Business on such Record Date will be entitled, notwithstanding the related Redemption, Repurchase Upon Change of Control or conversion, as applicable, to receive, on or, at the Corporation’s election, before such Dividend Payment Date, such declared Dividend on such share.
Section 7. Rights Upon Liquidation, Dissolution or Winding Up.
(a) Generally. If the Corporation liquidates, dissolves or winds up, whether voluntarily or involuntarily, then, subject to the rights of any of the Corporation’s creditors or holders of any outstanding Liquidation Senior Stock and on parity with the holders of any outstanding Liquidation Parity Stock, each share of Convertible Preferred Stock shall entitle the Holder thereof to receive payment for the greater of the amounts set forth in clause (i) and (ii) below out of the Corporation’s assets or funds legally available for distribution to the Corporation’s stockholders, before any such assets or funds are distributed to, or set aside for the benefit of, any Liquidation Junior Stock:
(i) a liquidation preference equal to the greater of: (x) an amount in cash that, when taken together with any cash Dividends or other cash payments received by the Holder in respect of such share of Convertible Preferred Stock, as of the applicable time of determination, results in the Holder having received an aggregate amount of cash with respect to such share of Convertible Preferred Stock yielding an internal rate of return (calculated using the XIRR function of Microsoft Excel or any successor function) of thirteen percent (13.0%) per annum on the Initial Liquidation Preference from the Initial Issue Date of such share of Convertible Preferred Stock to the date immediately prior to the date of determination; and (y) a return on investment with respect to such share of Convertible Preferred Stock of 1.30x, calculated as the quotient of (1) the aggregate amount of cash, including cash Dividends, received by the Holder in respect of such share of Convertible Preferred Stock as of the applicable time of determination divided by (2) the Initial Liquidation Preference; and
(ii) the amount such Holder would have received in respect of the number of shares of Class A Common Stock that would be issuable upon conversion of such share of Convertible Preferred Stock in connection with an Optional Conversion pursuant to Section 11 assuming the Conversion Date of such conversion occurs on the date of such payment, without regard to any of the limitations on convertibility contained in Section 11(h).
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Upon payment of such amount in full on the outstanding Convertible Preferred Stock pursuant to the foregoing provisions of this Section 7(a), Holders will have no rights to the Corporation’s remaining assets or funds, if any. If such assets or funds are insufficient to fully pay such amount on all outstanding shares of Convertible Preferred Stock and the corresponding amounts payable in respect of all outstanding shares of Liquidation Parity Stock, if any, then, subject to the rights of any of the Corporation’s creditors or holders of any outstanding Liquidation Senior Stock, such assets or funds will be distributed ratably on the outstanding shares of Convertible Preferred Stock and Liquidation Parity Stock in proportion to the full respective distributions to which such shares would otherwise be entitled. For the avoidance of doubt, a reorganization or liquidation pursuant to applicable federal, state or local bankruptcy or insolvency law shall be deemed to constitute a liquidation, dissolution, or winding up of the affairs of the Corporation.
(b) Certain Business Combination Transactions Deemed Not to Be a Liquidation. For purposes of Section 7(a), the Corporation’s consolidation or combination with, or merger with or into, or the sale, lease or other transfer of all or substantially all of the Corporation’s assets (other than a sale, lease or other transfer in connection with the Corporation’s liquidation, dissolution or winding up) to, another Person will not, in itself, constitute the Corporation’s liquidation, dissolution or winding up, even if, in connection therewith, the Convertible Preferred Stock is converted into, or is exchanged for, or represents solely the right to receive, other securities, cash or other property, or any combination of the foregoing.
(c) Treatment of Convertible Preferred Stock. Notwithstanding anything to the contrary herein, any redemption, repurchase, distribution in respect of a liquidation, dissolution or winding up, conversion-related payment or delivery of consideration, or any other payment or delivery of consideration with respect to, or in exchange for, the Convertible Preferred Stock pursuant to the terms of this Certificate of Designation shall be made on the same terms and for the same per share amount and form of consideration to each outstanding share of Convertible Preferred Stock, and any such action pursuant to the terms of this Certificate of Designation involving fewer than all outstanding shares shall be effected on a pro rata basis among all Holders based on the number of shares then held by each such Holder (or, if required by applicable law, by lot). If any election or choice is offered as to the form of consideration, such election shall be made available to all Holders on a uniform, per share basis. No consideration or other benefit (including any agreement, waiver, amendment or side letter) shall be offered, paid or delivered to any Holder in connection with any of the foregoing unless the same consideration or benefit, in form and value, on a per share basis, is concurrently offered, paid or delivered to all Holders.
Section 8. Right of the Corporation to Redeem the Convertible Preferred Stock.
(a) Right to Redeem On or After the Five-Year Anniversary. Subject to the terms of this Section 8, the Corporation has the right, at its election, to redeem, subject to the right of the Holders to convert the Convertible Preferred Stock pursuant to Section 11 prior to such redemption, any or all of the Convertible Preferred Stock, at any time, on a Redemption Date beginning on or after the five (5) year anniversary of the Initial Issue Date, for a cash purchase price equal to the Redemption Price (each such redemption, a “Permitted Redemption” and, together with any Credit Agreement Prohibited Dividend Redemption and any Parity Issuance Redemption, a “Redemption”); provided that, with respect to any Holder so redeemed, and unless otherwise consented to by such Holder in writing, such Permitted Redemption results in such Holder holding less than eighty percent (80.0%) of the Corporation’s voting stock held by such Holder prior to
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such Permitted Redemption as determined for purposes of Section 302(b)(2) of the Internal Revenue Code of 1986, as amended; provided, further, that the Corporation shall not effect a partial Permitted Redemption in an amount that would cause the aggregate number of shares of Convertible Preferred Stock outstanding, after giving effect to such Permitted Redemption, to be less than 100,000.
(b) Redemption Prohibited in Certain Circumstances. The Corporation will not elect a Redemption of, or otherwise send a Redemption Notice in respect of a Redemption of, any Convertible Preferred Stock pursuant to this Section 8 unless the Corporation has sufficient funds legally available, and is permitted under the terms of its indebtedness for borrowed money, to fully pay the Redemption Price in respect of all shares of Convertible Preferred Stock called for Redemption.
(c) Redemption Date. The Redemption Date for a Redemption will be a Business Day chosen by the Board of Directors that is no more than twenty (20), nor less than ten (10), calendar days after the Redemption Notice Date for such Redemption.
(d) Redemption Price. The Redemption Price for any share of Convertible Preferred Stock to be repurchased pursuant to a Permitted Redemption shall be an amount in cash that, when taken together with any cash Dividends or other cash payments received by the Holder in respect of such share of Convertible Preferred Stock, as of the applicable time of determination, results in the Holder having received an aggregate amount of cash with respect to such share of Convertible Preferred Stock yielding an internal rate of return (calculated using the XIRR function of Microsoft Excel or any successor function) of fifteen percent (15.0%) per annum on the Initial Liquidation Preference from the Initial Issue Date of such share of Convertible Preferred Stock to the date immediately prior to the applicable Redemption Date.
(e) Redemption Notice. To elect the Redemption of any share of Convertible Preferred Stock, the Corporation must send to the Holder of such share a notice of such Redemption (a “Redemption Notice”), which Redemption Notice must state:
(i) that such share has been called for Redemption under this Certificate of Designation;
(ii) the Redemption Date for such Redemption;
(iii) the Redemption Price per share of Convertible Preferred Stock;
(iv) if the Redemption Date is after a Record Date for a declared Dividend on the Convertible Preferred Stock and on or before the next Dividend Payment Date, that such Dividend will be paid in accordance with Section 6(d);
(v) the name and address of the Transfer Agent and the Conversion Agent, as well as instructions whereby the Holder may surrender the Physical Certificate evidencing such share (if a Physical Certificate has been issued in respect of such share) to the Transfer Agent or Conversion Agent;
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(vi) that the share of Convertible Preferred Stock called for Redemption may be converted pursuant to Section 11, at any time before the Close of Business on the Business Day immediately before the Redemption Date (or, if the Corporation fails to pay the Redemption Price due on such Redemption Date in full, at any time until such time as the Corporation pays such Redemption Price in full); and
(vii) the Conversion Price in effect on the Redemption Notice Date for such Redemption;
provided that any such Redemption Notice delivered by the Corporation may, at the Corporation’s discretion, be subject to one or more conditions precedent, including, but not limited to, refinancing or replacing the Credit Agreement or certain related transactions or events, as the case may be; provided, further, that if the Redemption Date is delayed, the Corporation shall deliver an updated Redemption Notice at least three (3) Business Days prior to the new Redemption Date.
(f) Payment of the Redemption Price. The Corporation will cause the Redemption Price for each share of Convertible Preferred Stock subject to Redemption to be paid to the Holder thereof on the applicable Redemption Date.
Section 9. Right of Holders to Require the Corporation to Repurchase Convertible Preferred Stock Upon a Change of Control.
(a) Change of Control Repurchase Right. Subject to the other terms of this Section 9, if a Change of Control occurs, then each Holder may, at its election, effective as of immediately prior to the Change of Control, either (i) convert (which conversion shall be mandatory and binding on the Corporation) all, or any whole number of shares that is less than all, of such Holder’s shares of Convertible Preferred Stock pursuant to Section 11 at the then-current Conversion Price or (ii) require the Corporation to repurchase (which repurchase shall be mandatory and binding on the Corporation and shall occur prior to the consummation of such Change of Control) (the “Change of Control Repurchase Right”) all, or any whole number of shares that is less than all, of such Holder’s shares of Convertible Preferred Stock that have not been converted pursuant to the foregoing clause (i) on the Change of Control Repurchase Date for such Change of Control, out of funds legally available therefor, for a cash purchase price equal to the Change of Control Repurchase Price.
(b) Funds Legally Available for Payment of Change of Control Repurchase Price; Covenant Not to Take Certain Actions. If the Corporation does not have sufficient funds legally available to pay the Change of Control Repurchase Price of all shares of Convertible Preferred Stock that are to be repurchased pursuant to a Repurchase Upon Change of Control, then the Corporation shall: (1) pay the maximum amount of such Change of Control Repurchase Price that can be paid out of funds legally available for payment, which payment will be made pro rata to each Holder based on the total number of shares of Convertible Preferred Stock of such Holder that were otherwise to be repurchased pursuant to such Repurchase Upon Change of Control; and (2) purchase any shares of Convertible Preferred Stock not purchased because of the foregoing limitations at the applicable Change of Control Repurchase Price as soon as practicable after the Corporation is able to make such purchase out of funds legally available for the purchase of such
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shares of Convertible Preferred Stock. The inability of the Corporation (or its successor) to make a purchase payment for any reason shall not relieve the Corporation (or its successor) from its obligation to effect any required purchase when, as and if permitted by applicable law. If the Corporation fails to pay the Change of Control Repurchase Price in full when due in accordance with this Section 9 in respect of some or all of the shares or Convertible Preferred Stock to be repurchased pursuant to the Change of Control Repurchase Right, the Corporation will pay Dividends on such shares not repurchased at the applicable Regular Dividend Rate until such shares are repurchased, payable quarterly in arrears, out of funds legally available, on each Dividend Payment Date, for the period from and including the first Dividend Payment Date (or the Initial Issue Date, as applicable) upon which the Corporation fails to pay the Change of Control Repurchase Price in full when due in accordance with this Section 9 through but not including the latest of the day upon which the Corporation pays the Change of Control Repurchase Price in full in accordance with this Section 9. For the avoidance of doubt, the Change of Control Repurchase Price shall not be required to be paid in cash unless Payment in Full (as defined in the Credit Agreement) under the Credit Agreement has occurred (the “Repayment Condition”); provided that if the proceeds of any transaction or series of related transactions constituting the Change of Control would be sufficient to both (x) satisfy the Repayment Condition and (y) pay all or any portion of the Change of Control Repurchase Price, the Corporation shall be obligated to satisfy the Repayment Condition such that the Corporation shall not be restricted from repaying the Change of Control Repurchase Price in whole or in part on the Change of Control Repurchase Date. Notwithstanding the foregoing, in the event a Holder exercises a Change of Control Repurchase Right pursuant to this Section 9 at a time when the Corporation is restricted or prohibited (contractually or otherwise, including under the Credit Agreement) from repurchasing some or all of the Convertible Preferred Stock subject to the Change of Control Repurchase Right, the Corporation will use its commercially reasonable efforts to obtain the requisite consents to remove or obtain an exception or waiver to such restrictions or prohibition. Nothing herein shall limit a Holder’s right to pursue any other remedies available to such Holder under this Certificate of Designation, at law or in equity, including, without limitation, a decree of specific performance and/or injunctive relief with respect to the Corporation’s failure to comply with its obligations under this Section 9. The Corporation will not voluntarily take any action, or voluntarily engage in any transaction, that would result in a Change of Control unless the Corporation will have sufficient funds legally available to fully pay the maximum aggregate Change of Control Repurchase Price that would be payable in respect of such Change of Control on all shares of Convertible Preferred Stock then outstanding.
(c) Change of Control Repurchase Date. The “Change of Control Repurchase Date” for any Change of Control will be on or prior to the date of the effectiveness of the Change of Control.
(d) Change of Control Repurchase Price. The Change of Control Repurchase Price for any share of Convertible Preferred Stock to be repurchased upon a Repurchase Upon Change of Control following a Change of Control is an amount in cash equal to the greater of: (i) an amount in cash that, when taken together with any cash Dividends or other cash payments received by the Holder in respect of such share of Convertible Preferred Stock, as of the applicable time of determination, results in the Holder having received an aggregate amount of cash with respect to such share of Convertible Preferred Stock yielding an internal rate of return (calculated using the XIRR function of Microsoft Excel or any successor function) of thirteen percent (13.0%) per annum on the Initial Liquidation Preference from the Initial Issue Date of such share of
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Convertible Preferred Stock to the date immediately prior to the applicable Change of Control Repurchase Date; and (ii) a return on investment with respect to such share of Convertible Preferred Stock of 1.30x, calculated as the quotient of (A) the aggregate amount of cash, including cash Dividends, received by the Holder in respect of such share of Convertible Preferred Stock as of the applicable time of determination divided by (B) the Initial Liquidation Preference.
(e) Initial Change of Control Notice. No less than twenty (20) Business Days prior to the date on which the Corporation reasonably anticipates consummating a Change of Control (or, if the Corporation discovers that a Change of Control may occur within less than twenty (20) Business Days, promptly after such discovery by the Corporation but in any case no less than ten (10) Business Days prior to the consummation of a Change of Control), an initial written notice (the “Initial Change of Control Notice”) shall be sent by or on behalf of the Corporation to the Holders as they appear in the records of the Corporation, which notice shall contain the date on which the Change of Control is anticipated to be effected (the “Anticipated Change of Control Date”). If the Corporation determines after delivery of an Initial Change of Control Notice that it will not consummate the Change of Control on the Anticipated Change of Control Date, the Corporation will promptly (but in any case no less than ten (10) Business Days prior to the consummation of a Change of Control) deliver an updated Initial Change of Control Notice.
(f) Change of Control Notice. No less than ten (10) Business Days prior to the effective date of a Change of Control, the Corporation will send to each Holder a final written notice of such Change of Control (a “Change of Control Notice”). Such Change of Control Notice must state:
(i) briefly, the events causing such Change of Control;
(ii) the effective date of such Change of Control;
(iii) the procedures that a Holder must follow to require the Corporation to repurchase its Convertible Preferred Stock pursuant to this Section 9;
(iv) the Change of Control Repurchase Date for such Change of Control;
(v) the Change of Control Repurchase Price per share of Convertible Preferred Stock, including reasonable detail of the calculation thereof;
(vi) if the Change of Control Repurchase Date is after a Record Date for a declared Dividend on the Convertible Preferred Stock and on or before the next Dividend Payment Date, that such Dividend will be paid in accordance with Section 6(a);
(vii) the name and address of the Transfer Agent and the Conversion Agent;
(viii) the Conversion Price in effect on the date of such Change of Control Notice and a description and quantification of any adjustments to the Conversion Price that may result from such Change of Control;
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(ix) that Convertible Preferred Stock may be converted pursuant to Section 11 at any time before the Close of Business on the Business Day immediately before the related Change of Control Repurchase Date (or, if the Corporation fails to pay the Change of Control Repurchase Price due on such Change of Control Repurchase Date in full, at any time until such time as the Corporation pays such Change of Control Repurchase Price in full);
(x) that shares of Convertible Preferred Stock for which a Change of Control Repurchase Notice has been duly tendered and not duly withdrawn must be delivered to the Paying Agent for the Holder thereof to be entitled to receive the Change of Control Repurchase Price; and
(xi) that shares of Convertible Preferred Stock that are subject to a Change of Control Repurchase Notice that has been duly tendered may be converted only if such Change of Control Repurchase Notice is withdrawn in accordance with this Certificate of Designation.
Within five (5) Business Days of receipt of a Change of Control Notice, any Holder that desires to exercise its rights pursuant to Section 9(a) shall notify the Corporation in writing thereof and shall specify (x) whether such Holder is electing to exercise its rights pursuant to clause (i) or (ii) of Section 9(a) and (y) the number of shares of Convertible Preferred Stock subject thereto.
For the avoidance of doubt, the Corporation shall not consummate a Change of Control on a date that is less than five (5) Business Days after delivery of a Change of Control Notice to the Holders.
(g) Procedures to Exercise the Change of Control Repurchase Right.
(i) Delivery of Change of Control Repurchase Notice and Shares of Convertible Preferred Stock to Be Repurchased. To exercise its Change of Control Repurchase Right for any share(s) of Convertible Preferred Stock, the Holder thereof must deliver to the Paying Agent:
(1) before the Close of Business on the Business Day immediately before the related Change of Control Repurchase Date (or such later time as may be required by applicable law), a duly completed, written Change of Control Repurchase Notice with respect to such share(s); and
(2) such share(s), duly endorsed for transfer (to the extent such share(s) are evidenced by one or more Physical Certificates).
(ii) Contents of Change of Control Repurchase Notices. Each Change of Control Repurchase Notice with respect to any share(s) of Convertible Preferred Stock must state:
(1) if such share(s) are evidenced by one or more Physical Certificates, the certificate number(s) of such Physical Certificate(s);
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(2) the number of shares of Convertible Preferred Stock to be repurchased, which must be a whole number; and
(3) that such Holder is exercising its Change of Control Repurchase Right with respect to such share(s).
(iii) Withdrawal of Change of Control Repurchase Notice. A Holder that has delivered a Change of Control Repurchase Notice with respect to any share(s) of Convertible Preferred Stock may withdraw such Change of Control Repurchase Notice by delivering a written notice of withdrawal to the Paying Agent at any time before the Close of Business on the Business Day immediately before the related Change of Control Repurchase Date. Such withdrawal notice must state:
(1) if such share(s) are evidenced by one or more Physical Certificates, the certificate number(s) of such Physical Certificate(s);
(2) the number of shares of Convertible Preferred Stock to be withdrawn, which must be a whole number; and
(3) the number of shares of Convertible Preferred Stock, if any, that remain subject to such Change of Control Repurchase Notice, which must be a whole number.
If any Holder delivers to the Paying Agent any such withdrawal notice withdrawing any share(s) of Convertible Preferred Stock from any Change of Control Repurchase Notice previously delivered to the Paying Agent, and such share(s) have been surrendered to the Paying Agent, then such share(s) will be returned to the Holder thereof.
(h) Payment of the Change of Control Repurchase Price. Subject to Section 9(b), the Corporation will cause the Change of Control Repurchase Price for each share of Convertible Preferred Stock to be repurchased pursuant to a Repurchase Upon Change of Control to be paid to the Holder thereof on the applicable Change of Control Repurchase Date and, for the avoidance of doubt, not after consummation of the Change of Control.
(i) Third Party May Conduct Repurchase Offer In Lieu of the Corporation. Notwithstanding anything to the contrary in this Section 9, the Corporation will be deemed to satisfy its obligations under this Section 9 if one or more third parties conduct any Repurchase Upon Change of Control and related offer to repurchase Convertible Preferred Stock otherwise required by this Section 9 in a manner that would have satisfied the requirements of this Section 9 if conducted directly by the Corporation.
(j) Change of Control Agreements. To the fullest extent permitted by applicable law, the Corporation shall not enter into any agreement for a transaction constituting a Change of Control unless (i) such agreement provides for, or does not interfere with or prevent (as applicable), the exercise by the Holders of their Change of Control Repurchase Right in a manner that is consistent with, and gives effect to, this Section 9 and (ii) the acquiring or surviving Person in such Change of Control represents and covenants, in form and substance reasonably satisfactory to the Board
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of Directors acting in good faith, that at the closing of such Change of Control that such Person shall have sufficient funds (which may include, without limitation, cash and cash equivalents on the Corporation’s balance sheet, the proceeds of any debt or equity financing, available lines of credit or uncalled capital commitments) to consummate such Change of Control and the payment of the Change of Control Repurchase Price in respect of all outstanding shares of Convertible Preferred Stock prior to the Change of Control Repurchase Date pursuant to this Section 9.
Section 10. Voting Rights.
(a) Generally. Except as provided by this Certificate of Designation or applicable law, the Holders will have the right to vote (in their capacity as Holders) together as a single class with the holders of the Common Stock on each matter submitted for a vote or consent by the holders of the Common Stock (“Voting Rights”), and, for these purposes, (i) the Convertible Preferred Stock of each Holder will entitle such Holder to be treated as if such Holder were the holder of record, as of the Record Date or other relevant date for such matter, of a number of shares of Class A Common Stock equal to the number of shares of Class A Common Stock that would be issuable (determined in accordance with Section 11(e)) upon conversion of such Convertible Preferred Stock assuming such Convertible Preferred Stock were converted with a Conversion Date occurring on such Record Date or other relevant date, and (ii) the Holders will be entitled to notice of all stockholder meetings or proposed actions by written consent in accordance with the Certificate of Incorporation, the Bylaws and the General Corporation Law of the State of Delaware as if the Holders were holders of Class A Common Stock. Notwithstanding the foregoing: (i) no Holder of Convertible Preferred Stock will have Voting Rights with respect to the election of members to the Board of Directors prior to the expiration or early termination of the applicable waiting period, if any, under the HSR Act; and (ii) the aggregate voting power of the Convertible Preferred Stock when voting with the holders of the Common Stock shall be limited to the extent necessary to comply with the rules set forth in the NYSE Listed Company Manual, as applicable, and any resulting limitation on the voting rights of the Convertible Preferred Stock shall apply pro rata among the Holders thereof.
(b) Series A Director.
(i) Generally. For so long as Carnelian holds record and beneficial ownership (within the meaning of Rule 13d-3 under the Exchange Act) of (x) all of the shares of Convertible Preferred Stock (which, for the avoidance of doubt, shall cease to be the case upon the conversion of any share of Convertible Preferred Stock) issued to Carnelian on the Initial Issue Date and (y) more than three percent (3.0%) of the outstanding shares of the Corporation’s Common Stock (which shall be determined assuming the conversion of all of the shares of Convertible Preferred Stock, without regard to any of the limitations on convertibility contained in Section 11(b)), the Holders of outstanding shares of Convertible Preferred Stock entitled to vote thereon, voting separately as a single class, shall have the exclusive right to appoint and elect one (1) individual to the Board of Directors (such individual, the “Series A Director”), subject to the approval of the Board of Directors (such approval not to be unreasonably withheld, conditioned, delayed); provided, that (A) the shares of Convertible Preferred Stock held by Carnelian shall be the only shares of Convertible Preferred Stock entitled to vote, and (B) the initial Series A Director shall be Matthew Kelly, who is hereby deemed approved by
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the Board of Directors and shall be appointed to the Board of Directors as of the Initial Issue Date. Notwithstanding anything to the contrary set forth herein or otherwise, for so long as Holders of outstanding shares of Convertible Preferred Stock have the right to appoint the Series A Director, the shares of Convertible Preferred Stock held by Carnelian shall be the only shares of Convertible Preferred Stock entitled to vote on or consent to the removal without cause of such Series A Director, and the shares of Convertible Preferred Stock owned by any other Holders as of the record date for determining stockholders entitled to vote thereon shall have no voting rights with respect to such matter. In the event that a vacancy is created on the Board of Directors at any time due to the death, disability, retirement, resignation, or removal of a Series A Director, then Carnelian, voting on behalf of the Holders of outstanding shares of Convertible Preferred Stock entitled to vote thereon, voting separately as a single class, shall have the exclusive right to appoint an individual to fill such vacancy, and the shares of Convertible Preferred Stock owned by any other Holders as of the record date for determining stockholders entitled to vote thereon shall have no voting rights with respect to such matter; provided that such replacement appointee shall be an employee of Carnelian and shall be subject to the approval of the Board of Directors (such approval not to be unreasonably withheld, conditioned, delayed). In the event that Carnelian shall fail to appoint in writing a representative to fill the vacant Series A Director seat on the Board of Directors, and such Board of Directors seat shall remain vacant until such time as Carnelian elects an individual to fill such seat in accordance with this Section 10(b), and during any period where such seat remains vacant, the Board of Directors nonetheless shall be deemed duly constituted. For the avoidance of doubt and notwithstanding anything to the contrary in this Certificate of Designation, Carnelian’s rights under this Section 10(b) shall be non-transferable.
(ii) Indemnification. The Series A Director shall be entitled to advancement of expenses and indemnification in the same manner and to the same extent as the other non-executive members of the Board of Directors under the Corporation’s organizational documents, the General Corporation Law of the State of Delaware and any indemnification agreements. Any director minimum ownership requirements of the board policies shall be deemed satisfied in respect of the Series A Director, by the shares of Convertible Preferred Stock purchased pursuant to the Purchase Agreement, or any Conversion Shares, as applicable, held by Carnelian. The Corporation acknowledges and agrees that it is the indemnitor of first resort (i.e., its obligations to the Series A Director are primary and any obligation of Carnelian to advance expenses or to provide indemnification for the same expenses or liabilities incurred by the Series A Director are secondary).
(iii) Policies; Expenses. The Series A Director shall comply with the corporate governance principles and practices of the Corporation as in effect from time to time and applicable to directors generally, including the Corporation’s Corporate Governance Guidelines, the Corporation’s Code of Ethics and the Corporation’s Insider Trading Policy. The Series A Director shall be entitled to reimbursement of out-of-pocket expenses in the same manner and to the same extent as the other non-executive members of the Board of Directors, subject to the Corporation’s expense reimbursement policies as in effect from time to time.
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(iv) Board Size. The size of the Board of Directors shall be increased as of the date hereof to give effect to the appointment of the Series A Director to the Board of Directors; provided that, as a condition to the appointment of the Series A Director, the Series A Director appointee shall submit to the Board of Directors an irrevocable resignation letter in a form reasonably acceptable to the Board of Directors which shall state that the Series A Director resigns upon the lapsing of the right to appoint a Series A Director contained in this Section 10(b) (the “Resignation Letter”), which the Board of Directors shall have the right to accept or reject upon such future date. Notwithstanding the foregoing, at the time when Carnelian ceases to be entitled to appoint and elect a Series A Director pursuant to Section 10(b) as a result of Carnelian either ceasing to hold (x) all of the shares of Convertible Preferred Stock issued to Carnelian on the Initial Issue Date or (y) at least three percent (3.0%) of the Corporation’s issued and outstanding shares of Common Stock (which shall be determined assuming the conversion of all of the shares of Convertible Preferred Stock, without regard to any of the limitations on convertibility contained in Section 11(b)), the right of Carnelian to appoint and elect a Series A Director shall permanently terminate and from and after such time and, subject to acceptance of the Resignation Letter by the Board of Directors, the Series A Director shall cease to be qualified to serve as a director, such directorship shall terminate and the size of the Board of Directors shall automatically be reduced (unless the Board of Directors, in its sole discretion, elects to fill such vacancy with another director).
(c) Voting and Consent Rights with Respect to Specified Matters.
(i) Generally. Subject to the other provisions of this Section 10(c), so long as any shares of Convertible Preferred Stock remain outstanding, the Corporation shall not, and shall not permit any of its Subsidiaries to, without, the affirmative vote or written consent of the Majority Holders, voting separately as a single series, take any of the following actions:
(1) any amendment, modification, repeal or waiver of any provision of the Certificate of Incorporation, this Certificate of Designation, the Bylaws, or the OpCo LLCA in a manner that adversely affects the rights, preferences and privileges or powers, or otherwise amends the terms, of the Convertible Preferred Stock (other than an amendment, modification or repeal permitted by Section 10(c)(ii)); provided that any change to the size of the Board of Directors will not be deemed to adversely affect the rights, preferences and privileges or powers, of the Convertible Preferred Stock so long as such change does not adversely affect the rights of the Holders to designate, elect, remove or replace the Series A Director;
(2) any increase or decrease to the authorized number of shares of Convertible Preferred Stock;
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(3) any issuances by the Corporation of shares of Dividend Parity Stock, Liquidation Parity Stock, Dividend Senior Stock or Liquidation Senior Stock or other securities or equity interests that would have or that do have preferences or relative, participating, option, special or other rights senior to or on parity with the Convertible Preferred Stock; provided that the Corporation will be permitted to issue shares of Dividend Parity Stock and Liquidation Parity Stock for so long as the Consolidated Total Net Leverage Ratio (as defined in the Credit Agreement in effect as of the Initial Issue Date, but including the Convertible Preferred Stock and the proposed issuances of any such Dividend Parity Stock or Liquidation Parity Stock, as applicable, in the numerator of such ratio), calculated on a pro forma basis at the time of such issuance, does not exceed 2.75 to 1.00 (the “Parity Leverage Threshold”); provided, further, that if the Majority Holders do not vote or consent in favor of such issuance pursuant to this Section 10(c)(i)(3), then the Corporation shall have the right to redeem (a “Parity Issuance Redemption”), pursuant to and in accordance with Section 8 (subject to the right of the Holders to convert the Convertible Preferred Stock pursuant to Section 11 prior to such redemption), all of Convertible Preferred Stock and the issuance of such Dividend Parity Stock or Liquidation Parity Stock must be conditioned on the substantially simultaneous redemption of all of the shares of Convertible Preferred Stock then outstanding at the Parity Redemption Price and the Corporation may not waive such condition; provided, further, that (i) to the extent any Dividend Parity Stock or Liquidation Parity Stock is issued with a regular dividend rate higher than the equivalent rate provided in this Certificate of Designation, appropriate adjustment shall be made to this Certificate of Designation to increase the Regular Dividend Rate to such higher rate and (ii) to the extent any Dividend Parity Stock or Liquidation Parity Stock is issued with a liquidation preference with better economic terms than that provided in this Certificate of Designation in Section 7(a), appropriate adjustment shall be made to this Certificate of Designation to adjust the economic terms of the liquidation preference herein to such better economic terms; provided, further that in no event may the stated use of proceeds of issuances made pursuant to this Section 10(c)(i)(3) be to fund a distribution.
(4) create (by reclassification or otherwise) any new class or series of stock of the Corporation or units of OpCo (other than the Series A Convertible Preferred Units issued by OpCo to the Corporation in connection with issuance of the Convertible Preferred Stock and the accrual of any Liquidation Preference Dividends) having preferences or relative participating, option, special or other rights senior to the Convertible Preferred Stock (or, in the case of OpCo, senior to the Series A Convertible Preferred Units);
(5) (A) declare, pay or set apart for payment any dividends or distributions on Dividend Junior Stock, Liquidation Junior Stock or Common Units of OpCo (other than a Permitted Dividend) or (B) repurchase, redeem or otherwise acquire any Dividend Junior Stock, Liquidation Junior Stock or Common Unit of OpCo (other than a Permitted Payment);
(6) any action to deregister the Class A Common Stock under Section 12 of the Exchange Act or voluntarily delist such Class A Common Stock from a National Securities Exchange, other than as a result of a Change of Control in which the Corporation has complied with the terms of Section 9 of this Certificate of Designation;
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(7) incur or otherwise become liable for any Indebtedness (as defined in the Credit Agreement in effect as of the Initial Issue Date) in an amount that would cause either (i) the Consolidated Total Net Leverage Ratio (as defined in the Credit Agreement in effect as of the Initial Issue Date), calculated on a pro forma basis at the time of such incurrence, to exceed 2.25 to 1.00 or (ii) the Parity Leverage Threshold (excluding for purposes of such calculation, the Convertible Preferred Stock), calculated on a pro forma basis at the time of such incurrence, to exceed 2.75 to 1.00;
(8) cease to comply with the minimum hedging requirements specified on Exhibit C;
(9) form, create or suffer to exist any Subsidiaries of the Corporation other than (i) Wholly Owned Subsidiaries of the Corporation and OpCo or (ii) Non-Wholly Owned Permitted Subsidiaries for a bona fide business purpose, the terms of which are on an arm’s length basis determined by the independent members of the Board of Directors; or
(10) agree, authorize or commit to do any of the foregoing;
provided that only Holders who, as of the time upon which such Holder is called to vote or give their consent, hold, together with such Holder’s Affiliates, record and beneficial ownership (within the meaning of Rule 13d-3 under the Exchange Act) of at least 60,000 shares of Convertible Preferred Stock will have the right to vote with respect to the consent rights enumerated in Section 10(c)(i)(3), Section 10(c)(i)(7), Section 10(c)(i)(8), Section 10(c)(i)(9) and, solely to the extent related to such enumerated consent rights, Section 10(c)(i)(10); provided, further, that the voting and consent rights enumerated in Section 10(c)(i)(3), Section 10(c)(i)(7), Section 10(c)(i)(8), Section 10(c)(i)(9) and, solely to the extent related to such enumerated consent rights, Section 10(c)(i)(10), shall terminate automatically without any action required on behalf of the Corporation or the Holders on the date when, in the aggregate, less than 100,000 shares of Convertible Preferred Stock remain outstanding; provided, further, that, to the extent not already terminated pursuant to the immediately preceding proviso, if, at any time when at least 100,000 shares of Convertible Preferred Stock remain outstanding, Carnelian and Quantum collectively beneficially own (within the meaning of Rule 13d-3 under the Exchange Act) less than a majority of the then outstanding shares of Convertible Preferred Stock, then (1) for so long as Carnelian beneficially owns at least 60,000 shares of Convertible Preferred Stock, any action pursuant to Section 10(c)(i)(3) or Section 10(c)(i)(7) shall also require Carnelian’s prior written consent, which consent right shall be non-transferable and shall automatically terminate upon Carnelian beneficially owning fewer than 60,000 shares of Convertible Preferred Stock and (2) for so long as Quantum beneficially owns at least 60,000 shares of Convertible Preferred Stock, any action pursuant to Section 10(c)(i)(3) or Section 10(c)(i)(7) shall also require Quantum’s prior written consent, which consent right shall be non-transferable and shall automatically terminate upon Quantum beneficially owning fewer than 60,000 shares of Convertible Preferred Stock.
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In addition, any action that would adversely affect (i) the Conversion Price, Liquidation Preference, the Mandatory Conversion Right, or Change of Control Repurchase Price, or (ii) any right, preference, privilege or power of any Holder of Convertible Preferred Stock, in each case, in a manner that is disproportionate to one Holder (or group of Holders) relative to the other Holders of Convertible Preferred Stock shall require the prior written consent of such affected Holder. No consideration (including any modification of this Certificate of Designation or related transaction document) shall be offered or paid to any person or entity to amend or consent to a waiver or modification of any provision of this Certificate of Designation or related transaction document unless the same consideration is also offered to all of holders of the outstanding shares of Convertible Preferred Stock. For clarification purposes, this provision is intended for the Corporation to treat all Holders as a single class and shall not in any way be construed as such Holders acting in concert or as a group with respect to the purchase, disposition or voting of the Convertible Preferred Stock or otherwise. In connection with seeking the affirmative vote or written consent of the Majority Holders pursuant to this Section 10(c) that relates to a transaction where the parties include the Corporation or any Subsidiary, on the one hand, and a Holder or its Affiliate (other than solely in such Person’s capacity as a holder of Convertible Preferred Stock or Common Stock), on the other hand, such conflicted Holder shall be deemed non-voting.
(ii) Certain Amendments Permitted Without Consent. Notwithstanding anything to the contrary in Section 10(c)(i)(1), the Corporation may amend, modify or repeal any of provision of the Certificate of Incorporation, this Certificate of Designation or the Bylaws without the vote or consent of any Holder to amend or correct the Certificate of Incorporation, this Certificate of Designation or the Bylaws to cure any ambiguity or correct any omission, defect or inconsistency.
(d) Procedures for Voting and Consents.
(i) Rules and Procedures Governing Votes and Consents. If any vote or consent of the Holders will be held or solicited, including at an annual meeting or a special meeting of stockholders, then: (1) the Board of Directors will adopt customary rules and procedures at its discretion to govern such vote or consent, subject to the other provisions of this Section 10; and (2) such rules and procedures may include fixing a record date to determine the Holders that are entitled to vote or provide consent, as applicable, rules governing the solicitation and use of proxies or written consents and customary procedures for the nomination by Holders, of directors for election.
(ii) Voting Power of the Convertible Preferred Stock. Each share of Convertible Preferred Stock will entitle the holder thereof to one (1) vote on each matter on which the Holders of the Convertible Preferred Stock are entitled to vote separately as a series and not together with the holders of any other class or series of stock.
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(iii) Written Consent in Lieu of Stockholder Meeting. Notwithstanding anything to the contrary set forth in the Certificate of Incorporation, any action required or permitted to be taken at a meeting of the holders of the Convertible Preferred Stock may be taken without a meeting, without prior notice and without a vote, if a consent or consents in writing, setting forth the action so taken, shall be signed by the Holders having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares of Convertible Preferred Stock then outstanding were present and voted and shall be delivered to the Corporation (a) by delivery to its registered agent in the State of Delaware, its principal place of business, or an officer or agent of the Corporation having custody of the book in which minutes of proceedings of stockholders are recorded or (b) by electronic mail to the Corporation at the e-mail address specified for notices pursuant to Section 16 (or such other e-mail address as the Corporation may designate by notice in accordance with Section 16). The Holders initiating or approving any action by less than unanimous consent shall use reasonable efforts to promptly notify the other Holders prior to such approval. Delivery and effectiveness of any consent delivered by electronic mail shall be governed by Section 16. Delivery made to the Corporation’s registered office shall be by hand or by certified or registered mail, return receipt requested. Prompt notice of the taking of corporate action without a meeting by less than unanimous consent of the Holders shall be given to those Holders who have not consented and who, if the action had been taken at a meeting, would have been entitled to notice of the meeting if the record date for notice of such meeting had been the date that consents signed by a sufficient number of Holders to take the action were delivered to the Corporation. Notwithstanding anything to the contrary herein, the consent of the Majority Holders shall be deemed given in respect of any request for a written consent of the Majority Holders made by the Corporation for the matters enumerated in Section 10(c) if a response is not received by the Corporation from the Majority Holders within ten (10) Business Days of the delivery of such consent request.
Section 11. Conversion.
(a) Generally. Subject to the provisions of this Section 11, the Convertible Preferred Stock may be converted only pursuant to a Mandatory Conversion or an Optional Conversion.
(b) Conversion at the Option of the Holders.
(i) Conversion Right; When Shares May Be Submitted for Optional Conversion. Holders will have the right to convert (each, an “Optional Conversion”) all, or any whole number of shares that is less than all, of their shares of Convertible Preferred Stock pursuant to an Optional Conversion at any time; provided, however, that, notwithstanding anything to the contrary in this Certificate of Designation:
(1) if a Change of Control Repurchase Notice is validly delivered pursuant to Section 9(g)(i) **** with respect to any share of Convertible Preferred Stock, then, beginning on the Business Day prior to the consummation of the Change of Control, such share may not be submitted for Optional Conversion, except to the extent (A) such share is not subject to such notice, (B) such notice is withdrawn in accordance with Section 9(g)(iii), or (C) the Corporation fails to pay the Change of Control Repurchase Price for such share in accordance with this Certificate of Designation;
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(2) no Convertible Preferred Stock may be submitted for Optional Conversion to the extent limited by Section 11(h);
(3) shares of Convertible Preferred Stock that are called for Redemption in accordance with Section 8 may not be submitted for Optional Conversion after the Close of Business on the Business Day immediately before the related Redemption Date;
(4) shares of Convertible Preferred Stock that are subject to Mandatory Conversion may not be submitted for Optional Conversion after the Close of Business on the Business Day immediately before the related Mandatory Conversion Date; and
(5) no conversion by any Holder will be permitted until the expiration or early termination of the waiting period applicable to such Holder, if any, under the HSR Act with respect to any conversion of the Convertible Preferred Stock by such Holder.
(ii) Conversions of Fractional Shares Not Permitted. Notwithstanding anything to the contrary in this Certificate of Designation, in no event will any Holder be entitled to convert a number of shares of Convertible Preferred Stock that is not a whole number.
(c) Mandatory Conversion at the Corporation’s Election.
(i) Mandatory Conversion Right. Subject to the provisions of this Section 11, on or after the first Trading Day after the three (3) year anniversary of the Initial Issue Date, the Corporation will have the right (the “Mandatory Conversion Right”), exercisable at its election, to designate any Business Day as a Conversion Date for the conversion (such a conversion, a “Mandatory Conversion”) of any or all of the outstanding shares of Convertible Preferred Stock, but only if the Last Reported Sale Price of the Class A Common Stock for any 20 Trading Days in a 30 Trading Day window before the Mandatory Conversion Notice Date for such Mandatory Conversion, exceeds one hundred and forty percent (140.0%) of the Conversion Price (without giving effect to any decrease in the Conversion Price effected pursuant to Section 11(g)(i)). If the Corporation elects to cause less than all the outstanding shares of the Convertible Preferred Stock to be converted, the Corporation shall select the Convertible Preferred Stock to be converted from each holder of Convertible Preferred Stock on a pro rata basis.
(ii) Mandatory Conversion Prohibited in Certain Circumstances. The Corporation will not exercise its Mandatory Conversion Right, or otherwise send a Mandatory Conversion Notice, with respect to any Convertible Preferred Stock pursuant to this Section 11(c) **** unless the Class A Common Stock Liquidity Conditions are satisfied on the applicable Mandatory Conversion Notice Date. Notwithstanding anything to the contrary in this Section 11(c), the Corporation’s exercise of its Mandatory Conversion Right, and any related Mandatory Conversion Notice, will not apply to any share of Convertible Preferred Stock as to which a Change of Control Repurchase Notice has been duly delivered, and not withdrawn, pursuant to Section 9(g). Notwithstanding anything to the contrary in this Section 11(c), the Corporation cannot exercise its Mandatory Conversion Right with respect to any shares of Convertible Preferred Stock to the extent limited by Section 11(h).
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(iii) Mandatory Conversion Date. The Mandatory Conversion Date for any Mandatory Conversion will be a Business Day of the Corporation’s choosing that is no more than twenty (20), nor less than ten (10), Business Days after the Mandatory Conversion Notice Date for such Mandatory Conversion.
(iv) Mandatory Conversion Notice. To exercise its Mandatory Conversion Right with respect to shares of Convertible Preferred Stock, the Corporation must send to the Holders a written notice of such exercise (a “Mandatory Conversion Notice”).
(v) Such Mandatory Conversion Notice must state:
(1) that the Class A Common Stock Liquidity Conditions are satisfied as of the Mandatory Conversion Notice Date;
(2) that the Corporation has exercised its Mandatory Conversion Right to cause the Mandatory Conversion of the shares of Convertible Preferred Stock under this Certificate of Designation;
(3) the Mandatory Conversion Date for such Mandatory Conversion and the date scheduled for the settlement of such Mandatory Conversion;
(4) the name and address of the Paying Agent and the Conversion Agent, as well as instructions whereby the Holder may surrender such share to the Transfer Agent or Conversion Agent;
(5) that shares of Convertible Preferred Stock subject to Mandatory Conversion may be converted earlier at the option of the Holders thereof pursuant to an Optional Conversion at any time before the Close of Business on the Business Day immediately before the Mandatory Conversion Date; and
(6) the Conversion Price in effect on the Mandatory Conversion Notice Date for such Mandatory Conversion, the number of shares of Class A Common Stock to be issued to such Holder upon conversion of each share of Convertible Preferred Stock held by such Holder and, if applicable, the amount of accumulated and unpaid Regular Dividends, whether or not declared, in respect of such share of Convertible Preferred Stock as of the Mandatory Conversion Date.
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(d) Conversion Procedures.
(i) Mandatory Conversion. If the Corporation duly exercises, in accordance with Section 11(c), its Mandatory Conversion Right with respect to shares of Convertible Preferred Stock, then: (1) the Mandatory Conversion of such share(s) will occur automatically as of the Close of Business on the related Mandatory Conversion Date and without the need for any action on the part of the Holder(s) thereof; and (2) the shares of Class A Common Stock into which shares of Convertible Preferred Stock shall have been converted in such Mandatory Conversion and any cash payable in lieu of fractions of a share of Class A Common Stock pursuant to Section 11(e)(ii) will be registered in the name of, or paid to, the Holder(s) of such share of Convertible Preferred Stock as of the Close of Business on the related Mandatory Conversion Date.
(ii) Requirements for Holders to Exercise Optional Conversion Right.
(1) Generally. To convert any share of Convertible Preferred Stock evidenced by a Certificate pursuant to an Optional Conversion, the Holder of such share must: (w) complete, sign (by manual, facsimile or electronic signature) and deliver to the Conversion Agent an Optional Conversion Notice (at which time, in the case such Certificate is an Electronic Certificate, such Optional Conversion will become irrevocable); (x) if such Certificate is a Physical Certificate, deliver such Physical Certificate to the Conversion Agent (at which time such Optional Conversion will become irrevocable); (y) furnish any endorsements and transfer documents that the Corporation or the Conversion Agent may require; and (z) if applicable, pay any documentary or other taxes that are required to be paid by the Corporation as a result of a Holder requesting that shares be registered in a name other than such Holders’ name as described in Section 13.
(2) Optional Conversion Permitted Only During Business Hours. Convertible Preferred Stock will be deemed to be surrendered for Optional Conversion only after the Open of Business and before the Close of Business on a day that is a Business Day.
(iii) Treatment of Accumulated Dividends upon Conversion.
(1) No Adjustments for Accumulated Regular Dividends. Without limiting the operation of Section 11(c)(i), the Conversion Price will not be adjusted to account for any accrued and unpaid Regular Dividends on any shares of Convertible Preferred Stock being converted.
(2) Conversions Between a Record Date and a Dividend Payment Date. If the Conversion Date of any share of Convertible Preferred Stock to be converted is after a Record Date for a declared Dividend on the Convertible Preferred Stock and on or before the next Dividend Payment Date, then such Dividend will be paid pursuant to Section 6(d) notwithstanding such conversion.
(iv) When Holders Become Stockholders of Record of the Shares of Class A Common Stock Issuable Upon Conversion. The Person in whose name any share of Class A Common Stock is issuable upon conversion of any Convertible Preferred Stock will be deemed to become the holder of record of such share as of the Close of Business on the Conversion Date for such conversion.
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(e) Settlement upon Conversion.
(i) Generally. Subject to Section 11(e)(ii), Section 11(h) and Section 15(b), the consideration due upon settlement of the conversion of each share of Convertible Preferred Stock will consist of a number of shares of Class A Common Stock equal to the quotient obtained by dividing (I) the Liquidation Preference for such shares of Convertible Preferred Stock subject to conversion (plus all accrued and unpaid dividends to, but excluding, the Conversion Date) by (II) the Conversion Price, in each case, as of immediately after the Close of Business on such Conversion Date.
(ii) Payment of Cash in Lieu of any Fractional Share of Class A Common Stock. Subject to Section 15(b), in lieu of delivering any fractional share of Class A Common Stock otherwise due upon conversion of any Convertible Preferred Stock, the Corporation will, to the extent it is legally able to do so and permitted under the terms of its indebtedness, pay cash based on the Last Reported Sale Price per share of Class A Common Stock on the Conversion Date for such conversion (or, if such Conversion Date is not a Trading Day, the immediately preceding Trading Day).
(iii) Delivery of Conversion Consideration. Except as provided in Section 11(f)(i)(4)(B) and 11(i), the Corporation will pay or deliver, as applicable, the Conversion Consideration due upon conversion of any Convertible Preferred Stock on or before the second (2nd) Business Day immediately after the Conversion Date for such conversion.
(f) Conversion Price Adjustments.
(i) Events Requiring an Adjustment to the Conversion Price. The Conversion Price will be adjusted from time to time as follows:
(1) Stock Dividends, Stock Splits and Combinations. If the Corporation issues shares of Class A Common Stock as a dividend or distribution on all or substantially all shares of Class A Common Stock or if the Corporation effects a stock split or a stock combination of the Class A Common Stock (in each case excluding a Class A Common Stock Change Event, as to which Section 11(i) will apply), then the Conversion Price will be adjusted based on the following formula:
where:
| CP0 = | the Conversion Price in effect immediately before the Close of Business on the Record Date for such dividend or<br>distribution, or immediately before the Close of Business on the effective date of such stock split or stock combination, as applicable; |
|---|
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| CP1 = | the Conversion Price in effect immediately after the Close of Business on such Record Date or effective date,<br>as applicable; |
|---|---|
| OS0 = | the number of shares of Class A Common Stock outstanding immediately before the Close of Business on such<br>Record Date or effective date, as applicable, without giving effect to such dividend, distribution, stock split or stock combination; and |
| --- | --- |
| OS1 = | the number of shares of Class A Common Stock outstanding immediately after giving effect to such dividend,<br>distribution, stock split or stock combination. |
| --- | --- |
If any dividend, distribution, stock split or stock combination of the type described in this Section 11(f)(i)(1) is declared or announced, but not so paid or made, then the Conversion Price will be readjusted, effective as of the date the Board of Directors, or any Officer acting pursuant to authority conferred by the Board of Directors, determines not to pay such dividend or distribution or to effect such stock split or stock combination, to the Conversion Price that would then be in effect had such dividend, distribution, stock split or stock combination not been declared or announced.
(2) Tender Offers or Exchange Offers. If the Corporation or any of its Subsidiaries makes a payment in respect of a tender offer or exchange offer for shares of Class A Common Stock (other than solely pursuant to an odd-lot tender offer pursuant to Rule 13e-4(h)(5) under the Exchange Act), and the value (determined as of the Expiration Time by the Board of Directors in good faith) of the cash and other consideration paid per share of Class A Common Stock in such tender or exchange offer exceeds the Last Reported Sale Price per share of Class A Common Stock on the Trading Day immediately after the last date (the “Expiration Date”) on which tenders or exchanges may be made pursuant to such tender or exchange offer (as it may be amended), then the Conversion Price will be decreased based on the following formula:
where:
| CP 0 = | the Conversion Price in effect immediately before the time (the “Expiration Time”) such<br>tender or exchange offer expires; |
|---|---|
| CP 1 = | the Conversion Price in effect immediately after the Expiration Time; |
| --- | --- |
| SP = | the average of the Last Reported Sale Prices per share of Class A Common Stock over the ten<br>(10) consecutive Trading Day period (the “Tender/Exchange Offer Valuation Period”) beginning on, and including, the Trading Day immediately after the Expiration Date; |
| --- | --- |
| OS 0 = | the number of shares of Class A Common Stock outstanding immediately before the Expiration Time (including<br>all shares of Class A Common Stock accepted for purchase or exchange in such tender or exchange offer); |
| --- | --- |
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| AC = | the aggregate value (determined as of the Expiration Time by the Board of Directors in good faith) of all cash<br>and other consideration paid for shares of Class A Common Stock purchased or exchanged in such tender or exchange offer; and |
|---|---|
| OS 1 = | the number of shares of Class A Common Stock outstanding immediately after the Expiration Time (excluding<br>all shares of Class A Common Stock accepted for purchase or exchange in such tender or exchange offer); |
| --- | --- |
provided, however, that the Conversion Price will in no event be adjusted up pursuant to this Section 11(f)(i)(2), except to the extent provided in the immediately following paragraph. The adjustment to the Conversion Price pursuant to this Section 11(f)(i)(2) will be calculated as of the Close of Business on the last Trading Day of the Tender/Exchange Offer Valuation Period but will be given effect immediately after the Expiration Time, with retroactive effect. If the Conversion Date for any share of Convertible Preferred Stock to be converted occurs on the Expiration Date or during the Tender/Exchange Offer Valuation Period, then, notwithstanding anything to the contrary in this Certificate of Designation, the Corporation will, if necessary, delay the settlement of such conversion until the second (2nd) Business Day after the last Trading Day of the Tender/Exchange Offer Valuation Period.
To the extent such tender or exchange offer is announced but not consummated (including as a result of being precluded from consummating such tender or exchange offer under applicable law), or any purchases or exchanges of shares of Class A Common Stock in such tender or exchange offer are rescinded, the Conversion Price will be readjusted to the Conversion Price that would then be in effect had the adjustment been made on the basis of only the purchases or exchanges of shares of Class A Common Stock, if any, actually made, and not rescinded, in such tender or exchange offer.
(3) Rights, Options and Warrants. If the Corporation distributes, to all or substantially all holders of Class A Common Stock, rights, options or warrants (other than rights issued or otherwise distributed pursuant to a stockholder rights plan, as to which Section 11(f)(i)(4)(A) and Section 11(f)(iii) will apply) entitling such holders, for a period of not more than sixty (60) calendar days after the Record Date of such distribution, to subscribe for or purchase shares of Class A Common Stock at a price per share that is less than the average of the Last Reported Sale Prices per share of Class A Common Stock for the ten (10) consecutive Trading Days ending on, and including, the Trading Day immediately before the date such distribution is announced, then the Conversion Price will be decreased based on the following formula:
where:
| CP0 | = | the Conversion Price in effect immediately before the Close of Business on such Record Date; |
|---|
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| CP1 | = | the Conversion Price in effect immediately after the Close of Business on such Record Date; |
|---|---|---|
| OS | = | the number of shares of Class A Common Stock outstanding immediately before the Close of Business on such Record Date; |
| Y | = | a number of shares of Class A Common Stock obtained by dividing (x) the aggregate price payable to exercise such rights, options or warrants by (y) the average of the Last Reported Sale Prices per share of<br>Class A Common Stock for the ten (10) consecutive Trading Days ending on, and including, the Trading Day immediately before the date such distribution is announced; and |
| X | = | the total number of shares of Class A Common Stock issuable pursuant to such rights, options or warrants. |
To the extent such rights, options or warrants are not so distributed, the Conversion Price will be readjusted to the Conversion Price that would then be in effect had the decrease to the Conversion Price for such distribution been made on the basis of only the rights, options or warrants, if any, actually distributed. In addition, to the extent that shares of Class A Common Stock are not delivered after the expiration of such rights, options or warrants (including as a result of such rights, options or warrants not being exercised), the Conversion Price will be readjusted to the Conversion Price that would then be in effect had the decrease to the Conversion Price for such distribution been made on the basis of delivery of only the number of shares of Class A Common Stock actually delivered upon exercise of such rights, option or warrants.
For purposes of this Section 11(f)(i)(3), in determining whether any rights, options or warrants entitle holders of Class A Common Stock to subscribe for or purchase shares of Class A Common Stock at a price per share that is less than the average of the Last Reported Sale Prices per share of Class A Common Stock for the ten (10) consecutive Trading Days ending on, and including, the Trading Day immediately before the date the distribution of such rights, options or warrants is announced, and in determining the aggregate price payable to exercise such rights, options or warrants, there will be taken into account any consideration the Corporation receives for such rights, options or warrants and any amount payable on exercise thereof, with the value of such consideration, if not cash, to be determined by the Board of Directors in good faith.
(4) Spin-Offs and Other Distributed Property.
(A) Distributions Other than Spin-Offs. If the Corporation distributes shares of Capital Stock, evidences of the Corporation’s indebtedness or other assets or property of the Corporation, or rights, options or warrants to acquire the Corporation’s Capital Stock or other securities, to all or substantially all holders of the Class A Common Stock, excluding:
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(I) dividends, distributions, rights, options or warrants for which an adjustment to the Conversion Price is required pursuant to Section 11(f)(i)(1) or Section 11(f)(i)(3);
(II) rights issued or otherwise distributed pursuant to a stockholder rights plan, except to the extent provided in Section 11(f)(iii);
(III) Spin-Offs for which an adjustment to the Conversion Price is required pursuant to Section 11(f)(i)(4)(B);
(IV) a distribution solely pursuant to a tender offer or exchange offer for shares of Class A Common Stock, as to which Section 11(f)(i)(2) will apply; and
(V) a distribution solely pursuant to a Class A Common Stock Change Event, as to which Section 11(i) will apply,
then the Conversion Price will be decreased based on the following formula:
where:
| CP0 | = | the Conversion Price in effect immediately before the Close of Business on the Record Date for such distribution; |
|---|---|---|
| CP1 | = | the Conversion Price in effect immediately after the Close of Business on such Record Date; |
| SP | = | the average of the Last Reported Sale Prices per share of Class A Common Stock for the ten (10) consecutive Trading Days ending on, and including, the Trading Day immediately before the<br>ex-dividend date for such distribution; and |
| FMV | = | the fair market value (as determined by the independent members of the Board of Directors in good faith), as of such Record Date, of the shares of Capital Stock, evidences of indebtedness, assets, property, rights, options or<br>warrants distributed per share of Class A Common Stock pursuant to such distribution; |
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provided, however, that, if FMV is equal to or greater than SP, then, in lieu of the foregoing adjustment to the Conversion Price, each Holder will receive, for each share of Convertible Preferred Stock held by such Holder on such Record Date, at the same time and on the same terms as holders of Class A Common Stock the amount and kind of shares of Capital Stock, evidences of indebtedness, assets, property, rights, options or warrants that such Holder would have received in such distribution if such Holder had owned, on such Record Date, a number of shares of Class A Common Stock equal to the number of shares of Class A Common Stock that would be issuable (determined in accordance with Section 11(e)) in respect of one (1) share of Convertible Preferred Stock that is converted with a Conversion Date occurring on such Record Date (subject to the same arrangements, if any, in such distribution not to issue or deliver a fractional portion of any Capital Stock, evidences of indebtedness, assets, property, rights, options or warrants, but with such arrangement applying separately to each Holder and computed based on the total number of shares of Convertible Preferred Stock held by such Holder on such Record Date).
To the extent such distribution is not so paid or made, the Conversion Price will be readjusted to the Conversion Price that would then be in effect had the adjustment been made on the basis of only the distribution, if any, actually made or paid.
(B) Spin-Offs. If the Corporation distributes or dividends shares of Capital Stock of any class or series, or similar equity interests, of or relating to an Affiliate or Subsidiary or other business unit of the Corporation to all or substantially all holders of the Class A Common Stock (other than solely pursuant to (x) a Class A Common Stock Change Event, as to which Section 11(i) will apply, (y) a tender offer or exchange offer for shares of Class A Common Stock, as to which Section 11(f)(i)(2) will apply; or (z) rights, options or warrants, as to which Section 11(f)(i)(3) will apply), and such Capital Stock or equity interests are listed or quoted (or will be listed or quoted upon the consummation of the transaction) on a U.S. National Securities Exchange (a “Spin-Off”), then the Conversion Price will be decreased based on the following formula:
where:
| CP0 | = | the Conversion Price in effect immediately before the Close of Business on the Record Date for such Spin-Off; |
|---|---|---|
| CP1 | = | the Conversion Price in effect immediately after the Close of Business on such Record Date; |
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| SP | = | the average of the Last Reported Sale Prices per share of Class A Common Stock for each Trading Day in the Spin-Off Valuation Period (as defined below); and |
|---|---|---|
| FMV | = | the product of (x) the average of the Last Reported Sale Prices per share or unit of the Capital Stock or equity interests distributed in such Spin-Off over the ten (10) consecutive<br>Trading Day period (the “Spin-Off Valuation Period”) beginning on, and including, the ex-dividend date for such<br>Spin-Off (such average to be determined as if references to Class A Common Stock in the definitions of “Last Reported Sale Price,” “Trading Day” and “Market Disruption<br>Event” were instead references to such Capital Stock or equity interests); and (y) the number of shares or units of such Capital Stock or equity interests distributed per share of Class A Common Stock in such Spin-Off. |
The adjustment to the Conversion Price pursuant to this Section 11(f)(i)(4)(B) will be calculated as of the Close of Business on the last Trading Day of the Spin-Off Valuation Period but will be given effect immediately after the Close of Business on the Record Date for the Spin-Off, with retroactive effect. If the Conversion Date for any share of Convertible Preferred Stock to be converted occurs during the Spin-Off Valuation Period, then, notwithstanding anything to the contrary in this Certificate of Designation, the Corporation will, if necessary, delay the settlement of such conversion until the second (2nd) Business Day after the last Trading Day of the Spin-Off Valuation Period.
To the extent any dividend or distribution of the type described in Section 11(f)(i)(4)(B) is declared but not made or paid, the Conversion Price will be readjusted to the Conversion Price that would then be in effect had the adjustment been made on the basis of only the dividend or distribution, if any, actually made or paid.
(ii) No Adjustments in Certain Cases.
(1) Certain Events. Without limiting the operation of Section 11(e)(i), the Corporation will not be required to adjust the Conversion Price except pursuant to Section 11(f)(i). Notwithstanding anything to the contrary in this Certificate of Designation, and without limiting the foregoing, the Corporation will not be required to adjust the Conversion Price on account of:
(A) any declaration and/or payment of Dividends on the Convertible Preferred Stock pursuant to Section 6;
(B) upon the issuance of any shares of Class A Common Stock or options or rights to purchase such shares pursuant to any equity-based compensation plans and agreements maintained or sponsored by the Corporation or its Subsidiaries for the benefit of their respective current or former employees, directors, officers or other service providers, including, without limitation, the Infinity Natural Resources, Inc. Omnibus Incentive Plan;
53
(C) upon the issuance of any shares of Class A Common Stock pursuant to any option, warrant, right, or exercisable, exchangeable or convertible security, including the Convertible Preferred Stock; or
(D) any declaration and/or payment of (1) any Common Stock Participating Dividend in cash on any shares of Class A Common Stock or (2) distributions in cash made by Infinity Natural Resources, LLC to the holders of its interests, including the Corporation.
(iii) Stockholder Rights Plans. If any shares of Class A Common Stock are to be issued upon conversion of any Convertible Preferred Stock and, at the time of such conversion, the Corporation has in effect any stockholder rights plan, then the Holder of such Convertible Preferred Stock will be entitled to receive, in addition to, and concurrently with the delivery of, the consideration otherwise due upon such conversion, the rights set forth in such stockholder rights plan, unless such rights have separated from the Class A Common Stock at such time, in which case, and only in such case, the Conversion Price will be adjusted pursuant to Section 11(f)(i)(4)(A) on account of such separation as if, at the time of such separation, the Corporation had made a distribution of the type referred to in such Section 11(f)(i)(4)(A) to all holders of Class A Common Stock, subject to readjustment pursuant to Section 11(f)(i)(4)(A) if such rights expire, terminate or are redeemed.
(iv) Determination of the Number of Outstanding Shares of Class A Common Stock. For purposes of Section 11(f)(i), the number of shares of Class A Common Stock outstanding at any time will: (1) include shares issuable in respect of scrip certificates issued in lieu of fractions of shares of Class A Common Stock; and (2) exclude shares of Class A Common Stock held in the Corporation’s treasury (unless the Corporation pays any dividend or makes any distributions on shares of Class A Common Stock held in its treasury).
(v) Calculations. All calculations with respect to the Conversion Price and adjustments thereto will be made to the nearest 1/100th of a cent (with 5/1,000ths rounded upward).
(vi) Notice of Conversion Price Adjustments. Upon the effectiveness of any adjustment to the Conversion Price pursuant to Section 11(f)(i), the Corporation will promptly send notice to the Holders containing: (1) a brief description of the transaction or other event on account of which such adjustment was made; (2) the Conversion Price in effect immediately after such adjustment; and (3) the effective time of such adjustment.
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(g) Voluntary Conversion Price Decreases.
(i) Generally. To the fullest extent permitted by applicable law and applicable stock exchange rules, the Corporation, from time to time, may (but is not required to) decrease the Conversion Price by any amount if: (1) the Board of Directors determines that such decrease is in the Corporation’s best interest or that such decrease is advisable to avoid or diminish the recognition of income or gain for U.S. federal (or applicable state or local) income tax purposes by the holders of Class A Common Stock or holders of rights to purchase Class A Common Stock as a result of any dividend or distribution of shares (or rights to acquire shares) of Class A Common Stock or any similar event; (2) such decrease is in effect for a period of at least twenty (20) Business Days; and (3) such decrease is irrevocable during such period; provided, however, that any such decrease that would be reasonably expected to result in the recognition of income or gain to any Holder (or its direct or indirect owners) for U.S. federal (or applicable state or local) income tax purposes shall require the affirmative vote or consent of the Majority Holders.
(ii) Notice of Voluntary Decrease. If the Board of Directors determines to decrease the Conversion Price pursuant to Section 11(g)(i), then, no later than the first Business Day of the related twenty (20) Business Day period referred to in Section 11(g)(i), the Corporation will send notice to each Holder, the Transfer Agent and the Conversion Agent of such decrease to the Conversion Price, the amount thereof and the period during which such decrease will be in effect.
(h) Restriction on Conversions.
(i) Limitation on Conversion Right. Notwithstanding anything to the contrary in this Certificate of Designation, unless and until the Requisite Stockholder Approval is obtained, the aggregate number of shares of Class A Common Stock issuable or deliverable upon conversion of any Convertible Preferred Stock (subject to proportionate adjustment for stock dividends, stock splits or stock combinations with respect to the Common Stock) shall be capped at nineteen point nine percent (19.9%) of the shares of Common Stock issued and outstanding as of the date hereof (subject to proportionate adjustment for stock dividends, stock splits or stock combinations with respect to the Class A Common Stock; the restriction set forth in this sentence, the “Issuance Limitation”). If any Conversion Consideration otherwise due upon the conversion of any Convertible Preferred Stock is not delivered as a result of the Issuance Limitation, then the Corporation’s obligation to deliver such Conversion Consideration will not be extinguished, and the Corporation will deliver such Conversion Consideration as soon as reasonably practicable after the Holder of such Convertible Preferred Stock provides written confirmation to the Corporation that such delivery will not contravene the Issuance Limitation. Any purported delivery of shares of Class A Common Stock upon conversion of any Convertible Preferred Stock will be void and have no effect to the extent, and only to the extent, that such delivery would contravene the Issuance Limitation.
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(ii) Share Reserve Provisions. On the Initial Issue Date, the Number of Reserved Shares is not less than the Initial Share Reserve Requirement. The Corporation shall at all times reserve and keep available a Number of Reserved Shares to be no less than the Continuing Share Reserve Requirement at any time when any Convertible Preferred Stock is outstanding (including, if applicable, and to the fullest extent permitted by applicable law, by seeking the approval of its stockholders to amend the Certificate of Incorporation to increase the number of authorized shares of Class A Common Stock).
(iii) Limitation on Certain Transactions. Notwithstanding anything in this Section 11(h) to the contrary, unless and until the Requisite Stockholder Approval is obtained, the Corporation may not decrease the Conversion Price pursuant to Section 11(g)(i) to the extent such decrease would cause the Issuance Limitation to be contravened.
(i) Effect of Class A Common Stock Change Event.
(i) Generally. If there occurs any:
(1) recapitalization, reclassification or change of the Class A Common Stock, other than (x) changes solely resulting from a stock split or a stock combination of the Class A Common Stock, (y) a change only in par value or from par value to no par value or no par value to par value or (z) recapitalization, reclassifications or change of the Class A Common Stock that do not involve the issuance of any other series or class of securities;
(2) consolidation, merger, business combination or binding or statutory share exchange involving the Corporation, including a transaction by which the Corporation becomes a Subsidiary of a Parent Company;
(3) sale, lease or other transfer of all or substantially all of the assets of the Corporation and its Subsidiaries, taken as a whole, to any Person; or
(4) other substantially similar event,
and, as a result of which, the Class A Common Stock is converted into, or is exchanged for, or represents solely the right to receive, other securities, cash or other property, or any combination of the foregoing (such an event, a “Class A Common Stock Change Event,” and such other securities, cash or property, the “Reference Property,” and the amount and kind of Reference Property that a holder of one (1) share of Class A Common Stock would be entitled to receive on account of such Class A Common Stock Change Event (without giving effect to any arrangement not to issue or deliver a fractional portion of any security or other property), a “Reference Property Unit”), then, notwithstanding anything to the contrary in this Certificate of Designation,
(A) from and after the effective time of such Class A Common Stock Change Event: (I) the consideration due upon conversion of any Convertible Preferred Stock will be determined in the same manner as if each reference to any number of shares of Class A Common Stock in this Section 11 or in Section 12, or in any related definitions, were instead a reference to the same number of Reference Property Units; (II) for purposes of Section 8, each reference to any number of shares of Class A Common Stock in such Sections (or in any related definitions) will instead be deemed to be a reference to the same number of Reference Property Units; and (III) for purposes of the definitions of “Change of Control,” the terms “Class A Common Stock”, “Common Stock” and “common equity” will be deemed to mean the common equity (including depositary receipts representing common equity), if any, forming part of such Reference Property; and
56
(B) if such Reference Property Unit consists entirely of cash, then the Corporation will pay the cash due in respect of all conversions whose Conversion Date occurs on or after the effective date of such Class A Common Stock Change Event no later than the tenth (10th) Business Day after the relevant Conversion Date; and
(C) for these purposes: (I) the Daily VWAP of any Reference Property Unit or portion thereof that consists of a class of common equity securities will be determined by reference to the definition of “Daily VWAP,” substituting, if applicable, the Bloomberg page for such class of securities in such definition; and (II) the Daily VWAP of any Reference Property Unit or portion thereof that does not consist of a class of common equity securities, and the Last Reported Sale Price of any Reference Property Unit or portion thereof that does not consist of a class of securities, will be the fair market value of such Reference Property Unit or portion thereof, as applicable, determined in good faith by the independent members of the Board of Directors; provided, that the fair market value of cash denominated in U.S. dollars shall be the face amount thereof.
If the Reference Property consists of more than a single type of consideration to be determined based in part upon any form of stockholder election, then the composition of the Reference Property Unit will be deemed to be the weighted average of the types and amounts of consideration actually received, per share of Class A Common Stock, by the holders of Class A Common Stock. The Corporation will notify the Holders of such weighted average as soon as practicable after such determination is made. For the avoidance of doubt, the Corporation shall be required to comply with Section 9 with respect to any Class A Common Stock Change Event that constitutes a Change of Control.
(ii) Compliance Covenant. The Corporation will not become a party to any Class A Common Stock Change Event unless its terms are consistent with this Section 11(i).
(iii) Execution of Supplemental Instruments. On or before the date the Class A Common Stock Change Event becomes effective, the Corporation and, if applicable, the resulting, surviving or transferee Person (if not the Corporation) of such Class A Common Stock Change Event (the “Successor Person”) will execute and deliver such supplemental instruments, if any, as the Corporation reasonably determines are necessary or desirable to: (1) provide for subsequent adjustments to the Conversion Price pursuant to Section 11(f)(i) in a manner consistent with this Section 11(i); and (2) give effect to such other provisions, if any, as the Corporation reasonably determines are
57
appropriate to preserve the economic interests of the Holders and to give effect to Section 11(i)(i). If the Reference Property includes shares of stock or other securities or assets of a Person other than the Successor Person, then such other Person will also execute such supplemental instrument(s), if any, and such supplemental instrument(s) will contain such additional provisions, if any, that the Corporation reasonably determines are appropriate to preserve the economic interests of Holders.
(iv) Notice of Class A Common Stock Change Event. The Corporation will provide notice of each Class A Common Stock Change Event to Holders by no less than five (5) Business Days prior to the effective date of the Class A Common Stock Change Event.
Section 12. Certain Provisions Relating to the Issuance ofClass A Common Stock.
(a) Equitable Adjustments to Prices. Whenever this Certificate of Designation requires the Corporation to calculate the average of the Last Reported Sale Prices or Daily VWAPs, or any function thereof, over a period of multiple days (including to calculate an adjustment to the Conversion Price), the Corporation will make appropriate adjustments, if any, to those calculations to account for any adjustment to the Conversion Price pursuant to Section 11(h)(i) that becomes effective, or any event requiring such an adjustment to the Conversion Price where effective date or Expiration Date, as applicable, of such event occurs, at any time during such period.
(b) Status of Shares of Class A Common Stock. Each share of Class A Common Stock delivered upon conversion of the Convertible Preferred Stock of any Holder will be a newly issued share and will be duly authorized and validly issued, fully paid, non-assessable, free from preemptive rights and free of any lien or adverse claim (except to the extent of any lien or adverse claim created by the action or inaction of such Holder or the Person to whom such share of Class A Common Stock will be delivered). If the Class A Common Stock is then listed on any securities exchange, or quoted on any inter-dealer quotation system, then the Corporation will cause each such share of Class A Common Stock, when so delivered, to be admitted for listing on such exchange or quotation on such system.
Section 13. Taxes. The Corporation shall pay any and all stock transfer, documentary, issue, stamp and similar taxes that may be payable in respect of any issuance or delivery of shares of Convertible Preferred Stock, shares of Class A Common Stock or other securities issued on account of Convertible Preferred Stock pursuant to this Certificate of Designation; provided, however, that in the case of conversion of Convertible Preferred Stock, the Corporation shall not be required to pay any such tax that may be payable in respect of any transfer involved in the issuance or delivery of shares of Convertible Preferred Stock, shares of Class A Common Stock or other securities to a beneficial owner other than the beneficial owner of the Convertible Preferred Stock immediately prior to such conversion, and shall not be required to make any such issuance, delivery or payment unless and until the Person otherwise entitled to such issuance, delivery or payment has paid to the Corporation the amount of any such tax or has established, to the reasonable satisfaction of the Corporation, that such tax has been paid or is not payable.
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Section 14. Term. Except as expressly provided in this Certificate of Designation, the shares of Convertible Preferred Stock shall not be redeemable or otherwise mature and the term of the Convertible Preferred Stock shall be perpetual.
Section 15. Calculations.
(a) Responsibility; Schedule of Calculations. Except as otherwise provided in this Certificate of Designation, the Corporation will be responsible for making all calculations called for under this Certificate of Designation, including determinations of the Conversion Price, the Daily VWAPs, the Last Reported Sale Prices and accumulated Regular Dividends on the Convertible Preferred Stock. The Corporation and the Board of Directors, as applicable, will make all calculations in good faith, and, absent manifest error, its calculations will be final and binding on all Holders to the fullest extent permitted by applicable law. The Corporation will provide a schedule of such calculations to any Holder upon written demand.
(b) Calculations Aggregated for Each Holder. The composition of the Conversion Consideration due upon conversion of the Convertible Preferred Stock of any Holder will be computed based on the total number of shares of Convertible Preferred Stock of such Holder being converted with the same Conversion Date. For these purposes, unless otherwise provided in this Certificate of Designation, any cash amounts due to such Holder in respect thereof will be rounded to the nearest cent.
Section 16. Notices. All notices and other communications pursuant to this Certificate of Designation shall be in writing and delivered personally, by facsimile or e-mail (with confirmation of receipt requested from the recipient, in the case of e-mail), or sent by a nationally recognized overnight courier service guaranteeing next day delivery, and (i) if to any Holder, to such Holder’s address shown on the Register, and (ii) if to the Corporation, to its principal executive offices and to the e-mail address designated by the Corporation by notice to the Holders as of the date hereof (as may be amended from time to time by notice to the Holders in accordance with this Section 16). Unless otherwise specified herein, all notices and communications hereunder shall be deemed to have been given upon the earlier of receipt thereof or three (3) Business Days after the mailing thereof if sent by registered or certified mail with postage prepaid, or by private courier service.
Section 17. Facts Ascertainable. When the terms of this Certificate of Designation refer to a specific agreement or other document to determine the meaning or operation of a provision hereof, the Corporation shall maintain a copy of such agreement or document at the principal executive offices of the Corporation and a copy thereof shall be provided free of charge to any Holder who makes a written demand therefore. The Corporation shall also maintain a written record of the Initial Issue Date, the number of shares of Convertible Preferred Stock issued to a Holder and the date of each such issuance, and shall furnish such written record free of charge to any Holder who makes a written demand therefor.
Section 18. Waiver. The powers (including voting powers), if any, of the Convertible Preferred Stock and the preferences and relative, participating, optional, special or other rights, if any, and the qualifications, limitations or restrictions, if any, of the Convertible Preferred Stock may be waived as to all shares of Convertible Preferred Stock in any instance (without the necessity of calling, noticing or holding a meeting of stockholders) by the written consent or agreement of the Majority Holders, consenting or agreeing separately as a single class.
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Section 19. Severability. If any term of the Convertible Preferred Stock set forth herein is invalid, unlawful or incapable of being enforced by reason of any rule of law or public policy, all other terms set forth herein which can be given effect without the invalid, unlawful or unenforceable term will, nevertheless and to the fullest extent permitted by applicable law, remain in full force and effect, and no term herein set forth will be deemed dependent upon any other such term unless so expressed herein.
Section 20. No Other Rights. The Convertible Preferred Stock will have no powers (including voting powers), if any, or preferences and relative, participating, optional, special or other rights, if any, or qualifications, limitations or restrictions, if any, except as provided in this Certificate of Designation or the Certificate of Incorporation or as required by applicable law.
[The Remainder of This Page Intentionally Left Blank; Signature Page Follows]
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IN WITNESS WHEREOF, the Corporation has caused this Certificate of Designation to be duly executed on this _____ day of ________, 2026.
| INFINITY NATURAL RESOURCES, INC. |
|---|
| By: |
| Name: |
| Title: |
[Signature Page to Certificate of Designation]
EXHIBIT A
FORM OF PREFERRED STOCK CERTIFICATE
[Insert Restricted Stock Legend, if applicable]
Infinity Natural Resources, Inc.
Series A Convertible Preferred Stock
Certificate No. [ ]
Infinity Natural Resources, Inc., a Delaware corporation (the “Corporation”), certifies that [ ] is the registered owner of [ ] shares of the Corporation’s Series A Convertible Preferred Stock, par value $0.01 per share (the “Convertible Preferred Stock”) evidenced by this certificate (this “Certificate”). The powers (including voting powers), if any, or preferences and relative, participating, optional, special or other rights, if any, or qualifications, limitations or restrictions, if any, are set forth in the Certificate of Designation of the Corporation establishing the Convertible Preferred Stock (as the same may be amended or amended and restated, the “Certificate of Designation”). Capitalized terms used in this Certificate without definition have the respective meanings ascribed to them in the Certificate of Designation.
Additional terms of this Certificate are set forth on the other side of this Certificate.
[The Remainder of This Page Intentionally Left Blank; Signature Page Follows]
A-1
IN WITNESS WHEREOF, Infinity Natural Resources, Inc. has caused this instrument to be duly executed as of the date set forth below.
| INFINITY NATURAL RESOURCES, INC. | |
|---|---|
| Date: | By: |
| Name: | |
| Title: | |
| Date: | By: |
| Name: | |
| Title: |
A-2
TRANSFER AGENT’S COUNTERSIGNATURE
Equiniti Trust Company, LLC, as Transfer Agent, certifies that this Certificate evidences shares of Convertible Preferred Stock referred to in the within-mentioned Certificate of Designation.
| Date: | By: | |
|---|---|---|
| Authorized Signatory |
A-3
INFINITY NATURAL RESOURCES, INC.
Series A Convertible Preferred Stock
This Certificate evidences duly authorized, issued and outstanding shares of Convertible Preferred Stock. Notwithstanding anything to the contrary in this Certificate, to the extent that any provision of this Certificate conflicts with the provisions of the Certificate of Designation or the Certificate of Incorporation, the provisions of the Certificate of Designation or the Certificate of Incorporation, as applicable, will control.
- Countersignature. This Certificate will not be valid until countersigned by the Transfer Agent.
2. Abbreviations. Customary abbreviations may be used in the name of a Holder or its assignee, such as TEN COM (tenants in common), TENENT (tenants by the entireties), JT TEN (joint tenants with right of survivorship and not as tenants in common), CUST (custodian), and U/G/M/A (Uniform Gift to Minors Act).
* * *
To request a copy of the Certificate of Designation, which the Corporation will provide to any Holder at no charge, please send a written demand to the following address:
Infinity Natural Resources, Inc.
2605 Cranberry Square
Morgantown, WV 26508
Attention: Secretary
A-4
OPTIONAL CONVERSION NOTICE
Infinity Natural Resources, Inc.
Series A Convertible Preferred Stock
Subject to the terms of the Certificate of Designation, by executing and delivering this Optional Conversion Notice, the undersigned Holder of the Convertible Preferred Stock identified below directs the Corporation to convert (check one):
| ☐ | all of the shares of Convertible Preferred Stock |
|---|---|
| ☐ | __________________* shares of Convertible Preferred Stock |
| --- | --- |
evidenced by Certificate No. _______________.
| Date: | |
|---|---|
| (Legal Name of Holder) | |
| By: | |
| Name: | |
| Title: |
___________________________
| * | Must be a whole number. |
|---|
A-5
CHANGE OF CONTROL REPURCHASE NOTICE
Infinity Natural Resources, Inc.
Series A Convertible Preferred Stock
Subject to the terms of the Certificate of Designation, by executing and delivering this Change of Control Repurchase Notice, the undersigned Holder of the Convertible Preferred Stock identified below is exercising its Change of Control Repurchase Right with respect to (check one):
| ☐ | all of the shares of Convertible Preferred Stock |
|---|---|
| ☐ | __________________* shares of Convertible Preferred Stock |
| --- | --- |
evidenced by Certificate No. _______________.
The undersigned acknowledges that Certificate identified above, duly endorsed for transfer, must be delivered to the Paying Agent before the Change of Control Repurchase Price will be paid.
| Date: | |
|---|---|
| (Legal Name of Holder) | |
| By: | |
| Name: | |
| Title: |
___________________________
| * | Must be a whole number. |
|---|
A-6
ASSIGNMENT FORM
Infinity Natural Resources, Inc.
Series A Convertible Preferred Stock
Subject to the terms of the Certificate of Designation, the undersigned Holder of the within Convertible Preferred Stock assigns to:
| Name: |
|---|
| Address: |
| Social security or tax identification number: |
the within Convertible Preferred Stock and all rights thereunder irrevocably appoints:
as agent to transfer the within Convertible Preferred Stock on the books of the Corporation. The agent may substitute another to act for him/her.
| Date: | |
|---|---|
| (Legal Name of Holder) | |
| By: | |
| Name: | |
| Title: |
A-7
EXHIBIT B
FORM OF RESTRICTED STOCK LEGEND
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR ANY STATE SECURITIES LAWS. THESE SECURITIES MAY NOT BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, REGISTRATION.
FORM OF TRANSFER RESTRICTIONS LEGEND
THE SECURITIES REPRESENTED HEREBY ARE SUBJECT TO RESTRICTIONS ON TRANSFER AS PURSUANT TO SECTIONS 4.2(A) AND 4.2(B) OF THAT CERTAIN SECURITIES PURCHASE AGREEMENT, DATED AS OF [•], 2026, BY AND AMONG THE COMPANY AND THE PURCHASERS THERETO GOVERNING THE INITIAL ISSUANCE OF THE SERIES A CONVERTIBLE PREFERRED STOCK OF THE COMPANY.
B-1
EXHIBIT C
MINIMUM HEDGING
As of the last day of any fiscal quarter (each such last day of any fiscal quarter, a “Minimum Hedging Requirement Date”), the Company shall, or shall cause its applicable Subsidiary to, maintain commodity hedging agreements hedging aggregate notional volumes of crude oil, natural gas, and natural gas liquids covering at least fifty percent (50.0%) of the reasonably projected total production on a net boe (barrel of oil equivalent) basis of crude oil, natural gas (measured on a 1:6 basis with crude oil), and natural gas liquids from proved developed producing oil and gas properties evaluated in the Reserve Report most recently delivered to the Purchasers pursuant to Section 4.4 of the Purchase Agreement for each full calendar month during the period of twenty-four (24) full calendar months following such Minimum Hedging Requirement Date.
To the extent that, as of any Minimum Hedging Requirement Date, additional commodity hedging agreements are required to satisfy the foregoing requirements, then the Company shall, or shall cause its applicable Subsidiary to, enter into such additional commodity hedging agreements within sixty (60) days following such Minimum Hedging Requirement Date.
Upon request of Quantum, the Company shall deliver to Quantum a report or other evidence reasonably satisfactory to Quantum that the Company has complied with the commodity hedging requirements set forth on this Exhibit C.
C-1
EXHIBIT C
FORM OF REGISTRATION RIGHTS AGREEMENT
(see attached)
Exhibit C
Final Form
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (as may be amended, restated, supplemented or otherwise modified from time to time, this “Agreement”) is dated as of [•], 2026, by and among Infinity Natural Resources, Inc., a Delaware corporation (the “Company”), and the undersigned holders of Registrable Securities (as defined below), and such other holders of Registrable Securities that join this Agreement pursuant to the provisions herein. Such holders of Registrable Securities party hereto are collectively referred to herein as the “Securityholders.”
WHEREAS, this Agreement is entered into in connection with the closing (the “Closing”) of the issuance of an aggregate 350,000 shares of the Series A Convertible Preferred Stock (as defined below) pursuant to the Securities Purchase Agreement, dated as of February 18, 2026, by and among the Company and the Securityholders (the “Securities Purchase Agreement”), which are convertible into shares of Class A Common Stock (as defined below);
WHEREAS, as a condition to each of the parties’ obligations under the Securities Purchase Agreement, the Company and the Securityholders are entering into this Agreement for the purpose of granting certain registration rights to the Securityholders; and
WHEREAS, in consideration of the premises and the mutual representations, warranties, covenants and agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties agree as follows:
ARTICLE I
DEFINITIONS
In this Agreement:
“Affiliate” has the meaning ascribed thereto in Rule 12b-2 promulgated under the Exchange Act, as in effect on the date hereof.
“Agreement” has the meaning set forth in the Preamble.
“Business Day” means a day other than a Saturday, Sunday or other day on which commercial banks are authorized or required by applicable law to be closed in New York, New York.
“Carnelian” means Etineles Holdings V, LLC, a Delaware limited liability company, and its Affiliates.
“Certificate of Designation” means the Certificate of Designation relating to the Series A Convertible Preferred Stock, as it may be amended or amended and restated from time to time.
“Class A Common Stock” means the shares of Class A common stock, par value $0.01 per share, of the Company, and any other capital stock of the Company into which such common stock is reclassified or reconstituted.
“Closing” has the meaning set forth in the Preamble.
“Company” has the meaning set forth in the Preamble.
“Control” (including its correlative meanings, “Controlled by” and “under common Control with”) means possession, directly or indirectly, of the power to direct or cause the direction of management or policies (whether through ownership of securities or partnership or other ownership interests, by contract or otherwise) of a Person.
“Demand Notice” has the meaning set forth in Section 3.1 hereof.
“Effectiveness Period” has the meaning set forth in Section 2.2.
“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder, as the same may be amended from time to time.
“Existing Registration Rights Agreement” means that certain Registration Rights Agreement, dated February 3, 2025, by and among the Company and each of the other signatories from time to time party thereto.
“Existing RRA Holders” means the “Securityholders” as defined in the Existing Registration Rights Agreement.
“FINRA” means the Financial Industry Regulatory Authority, Inc.
“Person” means an individual, a partnership, a corporation, a limited liability company, an association, a joint stock company, a trust, a joint venture, a cooperative, an unincorporated organization or other form of business organization, whether or not regarded as a legal entity under applicable law, or any governmental authority or any department, agency or political subdivision thereof.
“Quantum” means INR (II) Investments, LLC, a Delaware limited liability company, and its Affiliates.
“Recognized Exchange” means The New York Stock Exchange, the Nasdaq Stock Market or any securities exchange on which similar securities of the Company are then listed.
“Registrable Securities” means (a) any shares of Class A Common Stock issuable upon the conversion of the Series A Convertible Preferred Stock in accordance with the Certificate of Designation and (b) any other securities issued or issuable with respect to any such shares of Class A Common Stock by way of share split, share dividend (including dividends paid in kind), distribution, recapitalization, merger, exchange––, replacement or similar event or otherwise. For purposes of this Agreement, Registrable Securities shall cease to be Registrable Securities when (a) a registration statement covering the resale of such Registrable Securities has been declared effective under the Securities Act by the SEC and such Registrable Securities have been sold, transferred, disposed of or exchanged pursuant to such effective registration statement; (b) such Registrable Securities have been sold pursuant to Rule 144 or Rule 145 (or any successor rules or regulations then in force); (c) such Registrable Securities cease to be outstanding (or issuable upon exchange); or (d) such Registrable Securities become eligible for resale without volume or manner-of-sale restrictions and without current public information pursuant to Rule 144 and the Securityholder beneficially owns less than 3% of the outstanding shares of Class A Common Stock (determined assuming the conversion of all shares of Series A Convertible Preferred Stock).
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“Registration Expenses” means any and all expenses incurred in connection with the performance of or compliance with this Agreement, including:
(a) all SEC, stock exchange or FINRA registration and filing fees (including, if applicable, the fees and expenses of any “qualified independent underwriter,” as such term is defined in Rule 5121 of FINRA, and of its counsel);
(b) all fees and expenses of complying with securities or blue sky laws (including fees and disbursements of counsel for the underwriters in connection with blue sky qualifications of the Registrable Securities);
(c) all printing, messenger and delivery expenses;
(d) all fees and expenses incurred in connection with the listing of the Registrable Securities on any Recognized Exchange or FINRA and all rating agency fees;
(e) the reasonable fees and disbursements of counsel for the Company and of its independent public accountants, including the expenses of any special audits and/or comfort letters required by or incident to such performance and compliance (including, without limitation, any such audits and comfort letters relating to financial statements pursuant to Rule 3-05 of Regulation S-X and Article 11 thereunder);
(f) any fees and disbursements of underwriters customarily paid by the issuers or sellers of Securities, including liability or similar insurance if the Company so desires or if the underwriters so require, and the reasonable fees and expenses of any special experts retained in connection with the requested registration, but, for the avoidance of doubt, excluding underwriting discounts, selling commissions and transfer taxes, if any;
(g) the costs and expenses of the Company relating to analyst and investor presentations or any “road show” undertaken in connection with the registration and/or marketing of the Registrable Securities (including the reasonable out-of-pocket expenses of the Securityholders); and
(h) any other fees and disbursements customarily paid by the issuers of Securities;
provided, however, that Registration Expenses shall not include any Selling Expenses.
“SEC” means the U.S. Securities and Exchange Commission or any successor agency.
“Securities” means capital stock, limited partnership interests, limited liability company interests, beneficial interests, warrants, options, notes, bonds, debentures and other securities, equity interests, ownership interests and similar obligations of every kind and nature of any Person.
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“Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder, as the same may be amended from time to time.
“Securities Purchase Agreement” has the meaning set forth in the Preamble.
“Securityholders” has the meaning set forth in the Preamble.
“Selling Expenses” means all underwriting discounts, fees, selling commissions and stock transfer taxes applicable to the securities registered by the Securityholders, in addition to legal fees incurred by Securityholders in connection with the Company’s performance of its obligations under this Agreement.
“Series A Convertible Preferred Stock” means the Company’s Series A Convertible Preferred Stock, par value $0.01 per share.
“Shares” means shares of Class A Common Stock of the Company. Shares held by or on behalf of a Securityholder, the certificate for which does not bear a Securities Act restrictive legend, which Shares may be resold freely without registration under the Securities Act, will not be considered Shares for purposes of the demand and piggyback provisions of this Agreement.
“Shelf Registration” has the meaning set forth in Section 2.1.
“Shelf Registration Statement” has the meaning set forth in Section 2.1.
“Subsidiary” means, with respect to any Person, any corporation, limited liability company, partnership, association or other business entity of which: (a) if a corporation, a majority of the total voting power of shares of stock entitled (without regard to the occurrence of any contingency) to vote in the election of directors, representatives or trustees thereof is at the time owned or Controlled, directly or indirectly, by that Person or one or more of the other Subsidiaries of that Person or a combination thereof; or (b) if a limited liability company, partnership, association or other business entity, a majority of the total voting power of stock (or equivalent ownership interest) of the limited liability company, partnership, association or other business entity is at the time owned or Controlled, directly or indirectly, by any Person or one or more Subsidiaries of that Person or a combination thereof. For purposes hereof, a Person or Persons shall be deemed to have a majority ownership interest in a limited liability company, partnership, association or other business entity if such Person or Persons shall be allocated a majority of limited liability company, partnership, association or other business entity gains or losses or shall be or Control the managing director or general partner of such limited liability company, partnership, association or other business entity.
“Underwritten Offering” means an offering (including an offering pursuant to a Shelf Registration Statement) in which Shares are issued and allotted to investors and/or to an underwriter on a firm commitment basis for reoffering to the public.
“WKSI” means a well-known seasoned issuer, as defined in Rule 405 under the Securities Act.
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ARTICLE II
SHELF REGISTRATION
2.1 Shelf Registration Statement. Subject to the other applicable provisions of this Agreement, the Company shall file within 60 days of the date hereof, and use its commercially reasonable efforts to cause to go effective as promptly as practicable thereafter, a registration statement covering (or amend an existing registration statement to cover) the sale or distribution from time to time by the Securityholders, on a delayed or continuous basis pursuant to Rule 415 of the Securities Act (or any similar provision adopted by the SEC then in effect), of all of the Registrable Securities on Form S-3 (except if the Company is not then eligible to register for resale the Registrable Securities on Form S-3, then such registration shall be on another appropriate form (including Form S-1) and shall provide for the registration of such Registrable Securities for resale by such Securityholders in accordance with any reasonable method of distribution elected by the Securityholders and provided for in such registration statement) (the “Shelf Registration Statement” and such registration, the “Shelf Registration”), and, at the Company’s option, if the Company is a WKSI as of the filing date, the Shelf Registration Statement may be an Automatic Shelf Registration Statement, or a prospectus supplement to an effective Automatic Shelf Registration Statement that shall become effective upon filing with the SEC pursuant to Rule 462(e).
2.2 Effectiveness Period. Once effective, the Company shall, subject to the other applicable provisions of this Agreement, use its commercially reasonable efforts to cause the Shelf Registration Statement to be continuously effective (including by filing a new Shelf Registration Statement, if necessary) and usable until the earlier of (a) the date on which all Registrable Securities included in such registration have been sold or distributed pursuant to the Shelf Registration Statement, (b) the date as of which there are no longer in existence any Registrable Securities covered by the Shelf Registration Statement, and (c) an earlier date agreed to in writing by the Securityholders of a majority of the Registrable Securities (the “Effectiveness Period”).
ARTICLE III
DEMAND ANDPIGGYBACK RIGHTS
3.1 Demand and Piggyback Rights for Shelf Takedowns. Upon the receipt of a written demand of any Securityholder made at least six months after Closing (assuming the Shelf Registration Statement is effective) (a “Demand Notice”), the Company will facilitate in the manner described in this Agreement an Underwritten Offering of Registrable Securities off of the Shelf Registration Statement; provided that (a) the market value, based on the closing price of the Class A Common Stock on the Business Day immediately preceding the date of the Demand Notice, of the aggregate amount of Registrable Securities requested to be included by the demanding Securityholder in such Underwritten Offering is at least $75 million, and (b) the Company shall not be obligated to effect more than four such Underwritten Offering demands in any twelve-month period; provided, that any Underwritten Offering demanded by the Existing RRA Holders for which the Securityholders can piggyback shall count towards the limitation set forth in clause (b) as long as such Underwritten Offering is consummated. In connection with any Underwritten Offering (whether pursuant to the exercise of such demand rights by any Securityholder, the Existing RRA Holders or at the initiative of the Company), the Securityholders may exercise piggyback rights to have included in such takedown Registrable Securities held by them that are registered on such shelf.
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3.2 Limitations on Demand and Piggyback Rights.
(a) Any demand for an Underwritten Offering, and the exercise of any piggyback registration rights, will be subject to the constraints of any applicable lockup arrangements, and any such demand must be deferred until such lockup arrangements no longer apply. If a demand has been made for an Underwritten Offering, no further demands may be made so long as the related offering is still being pursued. Notwithstanding anything in this Agreement to the contrary, the Securityholders will not have piggyback or other registration rights with respect to the following registered primary offerings by the Company: (i) a registration relating solely to employee benefit plans; (ii) a registration on Form S-4 or Form S-8 (or other similar successor forms then in effect under the Securities Act); (iii) a registration pursuant to which the Company is offering to exchange its own Securities for other Securities; (iv) a registration statement relating solely to dividend reinvestment or similar plans; (v) a shelf registration statement pursuant to which only the initial purchasers and subsequent transferees of debt securities of the Company or any Subsidiary that are convertible for common equity and that are initially issued pursuant to Rule 144A and/or Regulation S of the Securities Act may resell such notes and sell the common equity into which such notes may be converted; (vi) a registration where the Registrable Securities are not being sold for cash; (vii) an exchange registration; or (viii) a registration of Securities where the offering is a bona fide offering of debt securities, even if such Securities are convertible into or exchangeable or exercisable for Shares.
(b) The Company may postpone the filing of the Shelf Registration Statement or suspend the effectiveness of any Shelf Registration Statement for a reasonable “blackout period” not in excess of 90 days if the board of directors of the Company determines in good faith that such registration or offering could: (i) materially interfere with a bona fide business, reorganization, acquisition or divestiture or financing transaction of the Company or its Subsidiaries; (ii) require disclosure of material, non-public information that the Company has a bona fide business purpose for preserving as confidential; or (iii) or is reasonably likely to require premature disclosure of information, the premature disclosure of which could materially and adversely affect the Company; provided that the Company shall not delay the filing of any demanded registration statement more than once in any 12-month period (except that the Company shall be able to use this right more than once in any 12-month period if the Company is exercising such right during the 15-day period prior to the Company’s regularly scheduled quarterly earnings announcement and the total number of days of postponement in such 12-month period does not exceed 90 days). The blackout period will end upon the earlier to occur of, (i) in the case of a bona fide business, acquisition or divestiture or financing transaction, a date not later than 90 days from the date such deferral commenced, and (ii) in the case of disclosure of non-public information, the earlier to occur of (x) the filing by the Company of its next succeeding Annual Report on Form 10-K or Quarterly Report on Form 10-Q, or (y) the date upon which such information is otherwise disclosed or becomes public knowledge.
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ARTICLE IV
NOTICES, CUTBACKS AND OTHER MATTERS
4.1 Notifications Regarding Demanded Underwritten Takedowns.
(a) The Company will keep the Securityholders reasonably apprised of all pertinent aspects of any Underwritten Offering demanded by any Securityholder in order that other Securityholders may have a reasonable opportunity to exercise their related piggyback rights. Without limiting the Company’s obligation as described in the preceding sentence, having a reasonable opportunity requires that the Securityholders be notified by the Company of an anticipated Underwritten Offering (whether pursuant to a demand made by any Securityholder, the Existing RRA Holders or at the Company’s own initiative) no later than 5:00 p.m., New York City time, on (i) if applicable, the second Business Day prior to the date on which the preliminary prospectus or prospectus supplement intended to be used in connection with pre-pricing marketing efforts for such takedown is finalized, and (ii) in all other cases, the second Business Day prior to the date on which the pricing of the relevant takedown occurs.
(b) Any Securityholder wishing to exercise its piggyback rights with respect to an Underwritten Offering must notify the Company and the other Securityholders of the number of Registrable Securities it seeks to have included in such takedown. Such notice must be given as soon as practicable, but in no event later than 5:00 p.m., New York City time, on the Business Day after receipt of such notice. If no such notice is received from a Securityholder by the Company within the specified time, such Securityholder shall have no further right to participate in such takedown.
(c) Pending any required public disclosure and subject to applicable legal requirements, the parties will maintain appropriate confidentiality of their discussions regarding a prospective Underwritten Offering.
4.2 Plan of Distribution, Underwriters andAdvisors. The Securityholders holding a majority of the Securities proposed to be sold in an Underwritten Offering demanded by the Securityholders will be entitled to determine the plan of distribution and select the managing underwriters and any provider of advisory services for such offering from the lenders under the Company’s or its subsidiaries’ then current credit agreement (or other loan document), otherwise such selection shall be subject to the consent of the Company.
4.3 Cutbacks. If the managing underwriters advise the Company and the selling Securityholders that, in their opinion, the number of Registrable Securities requested to be included in an Underwritten Offering exceeds the amount that can be sold in such offering without adversely affecting the distribution of the Registrable Securities being offered, the price that will be paid in such offering or the marketability thereof, such offering will include only the number of Registrable Securities that the underwriters advise can be sold in such offering in the following order of priority:
(a) If such Underwritten Offering is initiated by the Securityholders pursuant to Article III, then, with respect to each class proposed to be registered:
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(i) first, the Registrable Securities beneficially owned by Securityholders requested to be included pursuant to this Agreement (pro rata based upon the number of Securities that each of the Securityholders shall have requested to be included in such offering);
(ii) second, any Securities to be sold by Existing RRA Holders who properly requested to include their securities in such offering pursuant to the Existing Registration Rights Agreement in accordance with such agreement;
(iii) third, any Securities to be sold by the Company for its own account; and
(iv) fourth, other Securities held by any other third parties requested to be included in such demand registration pursuant to registration rights granted to such third-party holder.
(b) If such Underwritten Offering is initiated by the Company, then, with respect to each class proposed to be registered:
(i) first, any Securities to be sold by the Company for its own account;
(ii) second, any Securities to be sold by Existing RRA Holders who properly requested to include their securities in such offering pursuant to the Existing Registration Rights Agreement in accordance with such agreement;
(iii) third, the Registrable Securities beneficially owned by Securityholders requested to be included pursuant to this Agreement (pro rata based upon the number of securities that each of the Securityholders shall have requested to be included in such offering); and
(iv) fourth, other Securities held by any other third parties requested to be included pursuant to registration rights granted to such third-party holder.
(c) If such Underwritten Offering is initiated by an Existing RRA Holder pursuant to the Existing Registration Rights Agreement then, with respect to each class proposed to be registered:
(i) first, the Securities beneficially owned by the Existing RRA Holders who properly requested to include their securities in such offering pursuant to the Existing Registration Rights Agreement in accordance with such agreement;
(ii) second, any Securities to be sold by the Company for its own account;
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(iii) third, the Registrable Securities beneficially owned by Securityholders requested to be included pursuant to this Agreement (pro rata based upon the number of securities that each of the Securityholders shall have requested to be included in such offering); and
(iv) fourth, other Securities held by any other third parties requested to be included pursuant to registration rights granted to such third-party holder.
(d) If such Underwritten Offering is initiated by any third-party holder other than an Existing RRA Holder, then, with respect to each class proposed to be registered:
(i) first, the Securities beneficially owned by such demanding third-party holder, the Registrable Securities beneficially owned by the Securityholders, and the Securities beneficially owned by the Existing RRA Holders who properly requested to include their securities in such offering pursuant to this Agreement and the Existing Registration Rights Agreement in accordance with such agreements (pro rata based upon the number of Securities that each of such demanding third-party holders, the Securityholders and Existing RRA Holders shall have requested to be included in such offering); and
(ii) second, any Securities to be sold by the Company for its own account.
4.4 Withdrawals. Even if Registrable Securities held by a Securityholder have been part of an Underwritten Offering, such Securityholder may, no later than the time at which the public offering price and underwriters’ discount are determined with the managing underwriter, decline to sell all or any portion of the Registrable Securities being offered for its account provided, that notwithstanding the foregoing, a withdrawn demand for an Underwritten Offering shall count as one of the permitted Underwritten Offerings pursuant to Section 3.1 if the Company has filed a prospectus supplement with the SEC for the launch of such Underwritten Offering.
4.5 Lockups. In connection with any Underwritten Offering, the Company and each Securityholder that holds Registrable Securities or that participates in such offering will agree (in the case of Securityholders, with respect to Registrable Securities respectively beneficially owned by them) to be bound by the underwriting agreement’s lockup restrictions (which must apply in like manner to all of them and must be consistent with the lockup restrictions applicable to the Existing RRA Holders) that are agreed to by the Company for so long as such Securityholders hold Registrable Securities. In addition, the Securityholders shall be bound by their obligations with respect to any lockup arrangements or other restrictions on transfer of Registrable Securities set forth in the Securities Purchase Agreement and Certificate of Designation.
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ARTICLE V
FACILITATING REGISTRATIONS AND OFFERINGS
5.1 General. If the Company becomes obligated under this Agreement to facilitate a registration and offering of Registrable Securities on behalf of Securityholders, the Company will do so with the same degree of care and dispatch as would reasonably be expected in the case of a registration and offering by the Company of Registrable Securities for its own account. Without limiting this general obligation, the Company will fulfill its specific obligations as described in this Article V.
5.2 Registration Statements. In connection with each Shelf Registration Statement that is required by this Agreement, the Company will:
(a) (i) prepare and file with the SEC a registration statement on the appropriate form covering the applicable Registrable Securities; (ii) file amendments thereto as warranted; (iii) seek the effectiveness thereof; and (iv) file with the SEC prospectuses and prospectus supplements as may be required, all in consultation with the Securityholders, as applicable, and as reasonably necessary in order to permit the offer and sale of such Registrable Securities in accordance with the applicable plan of distribution;
(b) within a reasonable time prior to the filing of any registration statement, any prospectus, any amendment to a registration statement, amendment or supplement to a prospectus or any free writing prospectus (in each case including all exhibits filed therewith), provide copies of such documents to the selling Securityholders and to the underwriter or underwriters of an Underwritten Offering, if applicable, and to their respective counsel; and fairly consider such reasonable changes in any such documents prior to or after the filing thereof as the counsel to the Securityholders or the underwriter or the underwriters may request; and make such of the representatives of the Company as shall be reasonably requested by the selling Securityholders or any underwriter available for discussion of such documents;
(c) use commercially reasonable efforts to cause each registration statement and the related prospectus and any amendment or supplement thereto, as of the effective date of such registration statement, amendment or supplement and during the distribution of the registered Registrable Securities (i) to comply in all material respects with the requirements of the Securities Act (including the rules and regulations promulgated thereunder) and (ii) not to contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading;
(d) notify each Securityholder promptly, and, if requested by such Securityholder, confirm such advice in writing, (i) when a registration statement has become effective and when any post-effective amendments and supplements thereto become effective if such registration statement or post-effective amendment is not automatically effective upon filing pursuant to Rule 462 under the Securities Act; (ii) of the issuance by the SEC or any state securities authority of any stop order, injunction or other order or requirement suspending the effectiveness of a registration statement or the initiation of any proceedings for that purpose; (iii) if, between the effective date of a registration statement and the closing of any sale of securities covered thereby pursuant to any agreement to which the Company is a party, the representations and warranties of the Company contained in such agreement cease to be true and correct in all material respects or if the Company receives any notification with respect to the suspension of the qualification of the Registrable Securities for sale in any jurisdiction or the initiation of any proceeding for such purpose; and (iv) of the happening of any event during the period a registration statement is effective as a result of which such registration statement or the related prospectus contains any untrue statement of a material fact or omits to state any material fact required to be stated therein or necessary to make the statements therein not misleading;
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(e) furnish counsel for each underwriter, if any, and for the Securityholders copies of any correspondence with the SEC or any state securities authority relating to the registration statement or prospectus;
(f) otherwise use commercially reasonable efforts to comply with all applicable rules and regulations of the SEC, including making available to its security holders an earnings statement covering at least twelve months which shall satisfy the provisions of Section 11(a) of the Securities Act and Rule 158 thereunder (or any similar provision then in force); and
(g) use commercially reasonable efforts to obtain the withdrawal of any order suspending the effectiveness of a registration statement at the earliest possible time.
5.3 Shelf Registered Offerings and Shelf Takedowns. In connection with any shelf registered offering or shelf takedown that is demanded by Securityholders or as to which piggyback rights otherwise apply, the Company will:
(a) cooperate with the selling Securityholders and the sole underwriter or managing underwriter of an Underwritten Offering, if any, to facilitate the timely preparation and delivery of the Registrable Securities to be sold and not bearing any restrictive legends; and enable such Registrable Securities to be in such denominations (consistent with the provisions of the governing documents thereof) and registered in such names as the selling Securityholders or the sole underwriter or managing underwriter of an Underwritten Offering of Registrable Securities, if any, may reasonably request at least five days prior to any sale of such Registrable Securities;
(b) furnish to each Securityholder and to each underwriter, if any, participating in the relevant offering, without charge, as many copies of the applicable prospectus, including each preliminary prospectus, and any amendment or supplement thereto and such other documents as such Securityholder or underwriter may reasonably request in order to facilitate the public sale or other disposition of the Registrable Securities; the Company hereby consents to the use of the prospectus, including each preliminary prospectus, by each such Securityholder and underwriter in connection with the offering and sale of the Registrable Securities covered by the prospectus or the preliminary prospectus;
(c) (i) use commercially reasonable efforts to register or qualify the Registrable Securities being offered and sold, no later than the time the applicable registration statement becomes effective, under all applicable state securities or blue sky laws of such jurisdictions as each underwriter, if any, or any Securityholder holding Registrable Securities covered by a registration statement, shall reasonably request; (ii) use commercially reasonable efforts to keep each such registration or qualification effective during the period such registration statement is required to be kept effective; and (iii) do any and all other acts and things which may be reasonably necessary or advisable to enable each such underwriter, if any, and Securityholder to consummate the disposition in each such jurisdiction of such Registrable Securities owned by such Securityholder; provided, however, that the Company shall not be obligated to qualify as a foreign corporation or as a dealer in securities in any jurisdiction in which it is not so qualified or to consent to be subject to general service of process (other than service of process in connection with such registration or qualification or any sale of Registrable Securities in connection therewith) in any such jurisdiction;
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(d) cause all Registrable Securities being sold to be qualified for inclusion in or listed on any Recognized Exchange on which Registrable Securities issued by the Company are then so qualified or listed if so requested by the Securityholders, or if so requested by the underwriter or underwriters of an Underwritten Offering of Registrable Securities, if any;
(e) cooperate and assist in any filings required to be made with FINRA and in the performance of any due diligence investigation by any underwriter in an Underwritten Offering;
(f) use commercially reasonable efforts to facilitate the distribution and sale of any Registrable Securities to be offered pursuant to this Agreement, including without limitation by making “road show” presentations, holding meetings with and making calls to potential investors and taking such other actions as shall be requested by the Securityholders or the lead managing underwriter of an Underwritten Offering;
(g) enter into customary agreements (including, in the case of an Underwritten Offering, underwriting agreements in customary form, and including provisions with respect to indemnification and contribution in customary form and consistent with the provisions relating to indemnification and contribution contained herein) and take all other customary and appropriate actions in order to expedite or facilitate the disposition of such Registrable Securities and in connection therewith:
(i) make such representations and warranties to the selling Securityholders and the underwriters, if any, in form, substance and scope as are customarily made by issuers to underwriters in similar Underwritten Offering;
(ii) obtain opinions of counsel to the Company covering the matters customarily covered in opinions requested in sales of securities or Underwritten Offering;
(iii) obtain “cold comfort” letters and updates thereof (including, without limitation, any such audits and comfort letters relating to financial statements pursuant to Rule 3-05 of Regulation S-X and Article 11 thereunder) from the Company’s independent certified public accountants, if permissible, and the underwriters, if any, which letters shall be customary in form and shall cover matters of the type customarily covered in “cold comfort” letters to underwriters in connection with primary Underwritten Offerings; and
(h) to the extent requested and customary for the relevant transaction, enter into a securities sales agreement with the Securityholders providing for, among other things, the appointment of such representative as agent for the selling Securityholders for the purpose of soliciting purchases of Registrable Securities, which agreement shall be customary in form, substance and scope and shall contain customary representations, warranties and covenants.
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The above shall be done at such times as customarily occur in similar Underwritten Offerings.
5.4 Due Diligence. In connection with each Underwritten Offering of Registrable Securities to be sold by Securityholders, the Company will, in accordance with customary practice, reasonably cooperate with such Securityholders to make available for inspection by underwriters and any counsel or accountant retained by such underwriters all relevant financial and other records, pertinent corporate documents and properties of the Company and cause appropriate officers, managers, employees, outside counsel and accountants of the Company to supply all information reasonably requested by any such underwriter, counsel or accountant in connection with their due diligence exercise, including through in-person meetings, but subject to customary privilege constraints.
5.5 Information from Securityholders. Each Securityholder that holds Registrable Securities will promptly furnish to the Company such information regarding itself as is required to be included in the Shelf Registration Statement or is otherwise required by FINRA or the SEC in connection with such Shelf Registration Statement or Underwritten Offering, the ownership of Registrable Securities by such Securityholder and the proposed distribution by such Securityholder of such Registrable Securities as the Company may from time to time reasonably request in writing. If a Securityholder does not provide the information reasonably requested by the Company pursuant to this Section 5.5, the Company shall have the right to exclude from the Shelf Registration Statement or Underwritten Offering the Registrable Securities of such Securityholder.
5.6 Expenses. All Registration Expenses incurred in connection with any registration statement or registered offering covering Registrable Securities held by the Securityholders will be borne by the Company. All Selling Expenses attributable to the sale of Registrable Securities sold for the account of the Securityholders shall be borne by the Securityholders of the securities included in such registered offering.
ARTICLE VI
INDEMNIFICATION
6.1 Indemnification by the Company. In the event of any registration under the Securities Act by any registration statement pursuant to rights granted in this Agreement of Registrable Securities held by Securityholders, the Company will indemnify and hold harmless Securityholders, their officers, directors and affiliates, and each underwriter of such securities and each other Person, if any, who Controls any Securityholder or such underwriter within the meaning of the Securities Act, against any losses, claims, damages or liabilities (including reasonable documented legal fees and costs of court), joint or several, to which Securityholders or such underwriter or controlling Person may become subject under the Securities Act or otherwise, including any amount paid in settlement of any litigation commenced or threatened, and shall promptly reimburse such Persons, as and when incurred, for any legal or other expenses reasonably incurred by them in connection with investigating any claims and defending any actions, insofar as such losses, claims, damages or liabilities (or any actions in respect thereof) arise out of or are
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based upon any violation or alleged violation by the Company of the Securities Act, any blue sky laws, securities laws or other applicable laws of any state or country in which such Shares are offered and relating to action taken or action or inaction required of the Company in connection with such offering, or arise out of or are based upon any untrue statement or alleged untrue statement of any material fact: (a) contained, on its effective date, in any registration statement under which such securities were registered under the Securities Act or any amendment or supplement to any of the foregoing, or which arise out of or are based upon the omission or alleged omission to state a material fact required to be stated therein or necessary to make the statements therein not misleading; or (b) included in any preliminary prospectus, if used prior to the effective date of such registration statement, or in the final prospectus (as amended or supplemented if the Company shall have filed with the SEC any amendment or supplement to the final prospectus), or which arise out of or are based upon the omission or alleged omission to state a material fact necessary in order to make the statements in such prospectus, in the light of the circumstances under which they were made, not misleading; and will reimburse Securityholders and each such underwriter and each such controlling Person for any legal or any other expenses reasonably incurred by them in connection with investigating or defending any such loss, claim, damage or liability; provided, however, that the Company shall not be liable to any Securityholder or its underwriters or controlling Persons in any such case to the extent that any such loss, claim, damage or liability arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission made in such registration statement or prospectus or such amendment or supplement, in reliance upon and in conformity with information furnished to the Company in writing by Securityholders or such underwriter specifically for use in the preparation thereof.
6.2 Indemnification by Securityholders. Each Securityholder as a condition to including Registrable Securities in such registration statement will indemnify and hold harmless (in the same manner and to the same extent as set forth in Section 6.1 hereof) the Company, each director of the Company, each officer of the Company who shall sign the registration statement, and any Person who Controls the Company within the meaning of the Securities Act, (a) with respect to any statement or omission from such registration statement, or any amendment or supplement to it, if such statement or omission was made in reliance upon and in conformity with information furnished to the Company in writing by such Securityholder specifically regarding such Securityholder for use in the preparation of such registration statement or amendment or supplement, and (b) with respect to compliance by such Securityholder with applicable laws in effecting the sale or other disposition of the securities covered by such registration statement.
6.3 Indemnification Procedures. Promptly after receipt by an indemnified party of notice of the commencement of any action involving a claim referred to in Section 6.1 and Section 6.2 hereof, the indemnified party will, if a claim in respect thereof is to be made or may be made against an indemnifying party, give written notice to such indemnifying party of the commencement of the action. The failure of any indemnified party to give notice shall not relieve the indemnifying party of its obligations in this Article VI, except to the extent that the indemnifying party is actually prejudiced by the failure to give notice. If any such action is brought against an indemnified party, the indemnifying party will be entitled to participate in and to assume the defense of the action with counsel reasonably satisfactory to the indemnified party, and after notice from the indemnifying party to such indemnified party of its election to assume defense of the action, the indemnifying party will not be liable to such indemnified party for any legal or other expenses incurred by the latter in connection with the action’s defense other than reasonable costs
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of investigation. An indemnified party shall have the right to employ separate counsel in any action or proceeding and participate in the defense thereof, but the fees and expenses of such counsel shall be at such indemnified party’s expense unless (a) the employment of such counsel has been specifically authorized in writing by the indemnifying party, which authorization shall not be unreasonably withheld; (b) the indemnifying party has not assumed the defense and employed counsel reasonably satisfactory to the indemnified party within thirty (30) days after notice of any such action or proceeding; or (c) the named parties to any such action or proceeding (including any impleaded parties) include the indemnified party and the indemnifying party and the indemnified party shall have been advised by such counsel that there may be one or more legal defenses available to the indemnified party that are different from or additional to those available to the indemnifying party (in which case the indemnifying party shall not have the right to assume the defense of such action or proceeding on behalf of the indemnified party), it being understood, however, that the indemnifying party shall not, in connection with any one such action or separate but substantially similar or related actions in the same jurisdiction arising out of the same general allegations or circumstances, be liable for the reasonable fees and expenses of more than one separate firm of attorneys (in addition to all local counsel which is necessary, in the good faith opinion of both counsel for the indemnifying party and counsel for the indemnified party in order to adequately represent the indemnified parties) for the indemnified party and that all such fees and expenses shall be reimbursed as they are incurred upon written request and presentation of invoices. Whether or not a defense is assumed by the indemnifying party, the indemnifying party will not be subject to any liability for any settlement made without its consent (not to be unreasonably withheld). No indemnifying party will consent to entry of any judgment or enter into any settlement which (a) does not include as an unconditional term the giving by the claimant or plaintiff, to the indemnified party, of a release from all liability in respect of such claim or litigation; or (b) involves the imposition of equitable remedies or the imposition of any non-financial obligations on the indemnified party.
6.4 Contribution. If the indemnification required by this Article VI from the indemnifying party is unavailable to or insufficient to hold harmless an indemnified party in respect of any indemnifiable losses, claims, damages, liabilities or expenses, then the indemnifying party shall contribute to the amount paid or payable by the indemnified party as a result of such losses, claims, damages, liabilities or expenses in such proportion as is appropriate to reflect (a) the relative benefit of the indemnifying and indemnified parties, and (b) if the allocation in clause (i) is not permitted by applicable law, in such proportion as is appropriate to reflect the relative benefit referred to in clause (i) and also the relative fault of the indemnified and indemnifying parties, in connection with the actions which resulted in such losses, claims, damages, liabilities or expenses, as well as any other relevant equitable considerations. The relative benefits received by a party shall be deemed to be in the same proportion as the total net proceeds from the offering (before deducting expenses) received by it bear to the total amounts (including, in the case of any underwriter, any underwriting commissions and discounts) received by each other party. The relative fault of the indemnifying party and the indemnified party shall be determined by reference to, among other things, whether any action in question, including any untrue or alleged untrue statement of a material fact, has been made by, or relates to information supplied by, such indemnifying party or parties, and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such action. The amount paid or payable by a party as a result of the losses, claims, damage, liabilities and expenses referred to above shall be deemed to include any legal or other fees or expenses reasonably incurred by such party in connection with any investigation or proceeding. The Company and Securityholders agree that it would not be just and equitable if contribution pursuant to this Section 6.4 were determined by pro rata allocation or by any other method of allocation which does not take account of the equitable considerations referred to in the prior provisions of this Section 6.4.
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Notwithstanding the provisions of this Section 6.4, no indemnifying party shall be required to contribute any amount in excess of the amount by which the total price at which the securities were offered to the public by such indemnifying party exceeds the amount of any damages which such indemnifying party has otherwise been required to pay by reason of an untrue statement or omission. No Person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any Person who was not guilty of such a fraudulent misrepresentation.
ARTICLE VII
OTHER AGREEMENTS
7.1 Assignment. No Securityholder shall assign all or any part of this Agreement without the prior written consent of the Company (which such consent shall not be unreasonably withheld); provided, however, that without the prior written consent of the Company, the Securityholders may assign their respective rights and obligations under this Agreement in whole or in part to any of their respective Affiliates if such Affiliate becomes a party hereto by executing and delivering an assignment and joinder agreement to the Company, substantially in the form of Exhibit A to this Agreement. Except as otherwise provided herein, this Agreement will inure to the benefit of and be binding on the parties hereto and their respective successors and permitted assigns.
7.2 Merger or Consolidation. In the event the Company engages in a merger or consolidation in which the Registrable Securities are converted into securities of another company, appropriate arrangements will be made so that the registration rights provided under this Agreement continue to be provided to Securityholders by the issuer of such securities.
7.3 Limited Liability. Notwithstanding any other provision of this Agreement, neither the members, general partners, limited partners or managing directors, or any directors or officers of any members, general or limited partner, advisory director, nor any future members, general partners, limited partners, advisory directors or managing directors, if any, of any Securityholder shall have any personal liability for performance of any obligation of such Securityholder under this Agreement in excess of the respective capital contributions of such members, general partners, limited partners, advisory directors or managing directors to such Securityholder.
7.4 Rule 144. If the Company is subject to the requirements of Section 13, 14 or 15(d) of the Exchange Act, the Company will file any reports required to be filed by it under the Securities Act and the Exchange Act (or, if the Company is subject to the requirements of Section 13, 14 or 15(d) of the Exchange Act but is not required to file such reports, it will, upon the request of any Securityholder, make publicly available such information), and it will take such further action as any Securityholder may reasonably request, so as to enable such Securityholder to sell Registrable Securities without registration under the Securities Act within the limitations of the exemptions provided by (a) Rule 144 under the Securities Act, as such Rule may be amended from
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time to time, or (b) any similar rule or regulation hereafter adopted by the SEC. Upon the request of any Securityholder, the Company will deliver to such Securityholder a written statement (with e-mail being sufficient) as to whether it has complied with such requirements, including using commercially reasonable efforts to cause counsel to the Company to deliver customary legal opinions in connection with the removal of any restrictive legends in connection with a sale of such Registrable Securities. For the avoidance of doubt, this Section 7.4 shall not in any way limit or otherwise modify any applicable restrictions on transfer set forth in the Securities Purchase Agreement of Certificate of Designation.
7.5 In-Kind Distributions. If any Securityholder seeks to effectuate an in-kind distribution of all or part of its Registrable Securities to its direct or indirect equityholders, the Company will, subject to applicable lockups, work with such Securityholder and the Company’s transfer agent to facilitate such in-kind distribution in the manner reasonably requested by such Securityholder.
ARTICLE VIII
MISCELLANEOUS
8.1 Notices. All notices, requests, demands and other communications required or permitted hereunder shall be made in writing by hand-delivery, registered first-class mail, telex, fax or air courier guaranteeing delivery to the Persons at the respective addresses set forth below or pursuant to such other instructions as may be designated in writing by the party to receive such notice.
(a) If to the Company, to:
Infinity Natural Resources, Inc.
2605 Cranberry Square
Morgantown, WV 26508
Attention: Raleigh Wolfe, General Counsel and Secretary
Email: legal@infinitynr.com
with a copy (which shall not constitute notice) to:
Kirkland & Ellis LLP
609 Main Street
Houston, Texas 77002
Attention: Matthew R. Pacey, P.C. and Michael W. Rigdon, P.C.
Email: matt.pacey@kirkland.com; michael.rigdon@kirkland.com
(b) If to the Quantum Purchaser (as defined in the Securities Purchase Agreement), to:
INR (II) Investments, LLC
c/o Quantum Capital Group
800 Capitol Street, Suite 3600
Houston, Texas 77002
Attention: General Counsel
Email: generalcounsel@quantumcap.com
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with a copy (which shall not constitute notice) to:
Vinson & Elkins L.L.P.
845 Texas Avenue, Suite 4700
Houston, Texas 77002
Attention: Robert P. Hughes and Benjamin N. Heriaud
Email: rhughes@velaw.com; bheriaud@velaw.com
(c) If to the Carnelian Purchaser (as defined in the Securities Purchase Agreement), to:
Carnelian Energy Capital Management, L.P.
2229 San Felipe St., Suite 1450
Houston, Texas 77019
Attention: Jeffrey Gilbert
Email: jeffrey@carnelianec.com
with a copy (which shall not constitute notice) to:
Vinson & Elkins L.L.P.
845 Texas Avenue, Suite 4700
Houston, Texas 77002
Attention: W. Matthew Strock and Crosby Scofield
Email: mstrock@velaw.com; cscofield@velaw.com
Any such notice, request, demand or other communication shall be deemed to have been duly given (a) on the date of delivery if delivered personally or by facsimile or electronic transmission; (b) on the first Business Day after being sent if delivered by nationally recognized overnight delivery service; and (c) upon the earlier of actual receipt thereof or five Business Days after the date of deposit in the United States mail if delivered by mail.
8.2 Section Headings. The article and section headings in this Agreement are for reference purposes only and shall not affect the meaning or interpretation of this Agreement. References in this Agreement to a designated “Article” or “Section” refer to an Article or Section of this Agreement unless otherwise specifically indicated.
8.3 Governing Law. This Agreement shall be governed by, and construed and enforced in accordance with, the laws of the State of Delaware.
8.4 Consent to Jurisdictionand Service of Process; Waiver of Jury Trial.
(a) The parties to this Agreement hereby agree to submit to the jurisdiction of the courts of the State of Delaware, the courts of the United States of America for the District of Delaware, and appellate courts from any thereof in any action or proceeding arising out of or relating to this Agreement.
(b) EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
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8.5 Amendments. This Agreement may not be modified or amended except by an instrument or instruments in writing signed by the Company and the Securityholders of a majority of the Registrable Securities outstanding at the time of such amendment; provided that any amendment that would adversely or disproportionately impact the rights hereunder of any Securityholder shall require the prior written consent of such Securityholder.
8.6 Entire Agreement. This Agreement contains the entire understanding of the parties with respect to the subject matter hereof. The registration rights granted under this Agreement supersede any registration, qualification or similar rights with respect to any of the Registrable Securities granted under any other agreement, and any of such preexisting registration rights are hereby terminated.
8.7 Severability. The invalidity or unenforceability of any specific provision of this Agreement shall not invalidate or render unenforceable any of its other provisions. Any provision of this Agreement held invalid or unenforceable shall be deemed reformed, if practicable, to the extent necessary to render it valid and enforceable and to the extent permitted by law and consistent with the intent of the parties to this Agreement.
8.8 Counterparts. This Agreement may be executed in multiple counterparts, including by electronic mail, in .pdf or any other form of electric delivery (including any electronic signature complying with U.S. federal ESIGN Act of 2000), each of which shall be deemed an original, but all of which together shall constitute the same instrument.
8.10 EquitableRemedies. The parties hereto agree that irreparable harm would occur in the event that any of the agreements and provisions of this Agreement were not performed fully by the parties hereto in accordance with their specific terms or conditions or were otherwise breached, and that money damages are an inadequate remedy for breach of this Agreement because of the difficulty of ascertaining and quantifying the amount of damage that will be suffered by the parties hereto in the event that this Agreement is not performed in accordance with its terms or conditions or is otherwise breached. It is accordingly hereby agreed that the parties hereto shall be entitled to an injunction or injunctions to restrain, enjoin and prevent breaches of this Agreement by the other parties and to enforce specifically the terms and provisions hereof in any court of the United States or any state having jurisdiction, such remedy being in addition to and not in lieu of, any other rights and remedies to which the other parties are entitled to at law or in equity.
[Remainder of page intentionally left blank]
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IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date first written above.
| COMPANY: |
|---|
| INFINITY NATURAL RESOURCES, INC. |
| By: |
| Name: |
| Title: |
[Signature Page to Infinity Natural Resources, Inc. Registration Rights Agreement]
| INR (II) INVESTMENTS, LLC: |
|---|
| By: |
| Name: |
| Title: |
[Signature Page to Infinity Natural Resources, Inc. Registration Rights Agreement]
| ETINELES HOLDINGS V, LLC: |
|---|
| By: |
| Name: |
| Title: |
[Signature Page to Infinity Natural Resources, Inc. Registration Rights Agreement]
Exhibit A
FORM OF ASSIGNMENT AND JOINDER
[ ], 20__
Reference is made to the Registration Rights Agreement, dated as of [ ] 20__, by and among Infinity Natural Resources, Inc., a Delaware corporation (the “Company”), and certain holders which hold Registrable Securities (as defined below) that become party thereto (the “Registration Rights Agreement”). Capitalized terms used but not otherwise defined herein shall have the meanings ascribed to such terms in the Registration Rights Agreement.
Pursuant to Section 7.1 of the Registration Rights Agreement, [ ] (the “Assignor”) hereby assigns [in part][or: in full] its rights and obligations under the Registration Rights Agreement to each of [ ], [ ] and [ ] (each, an “Assignee” and collectively, the “Assignees”). [For the avoidance of doubt, the Assignor will remain a party to the Registration Rights Agreement following the assignment in part of its rights and obligations thereunder to the undersigned Assignees.]
Each undersigned Assignee hereby agrees to and does become party to the Registration Rights Agreement. This assignment and joinder shall serve as a counterpart signature page to the Registration Rights Agreement and by executing below each undersigned Assignee is deemed to have executed the Registration Rights Agreement with the same force and effect as if originally named a party thereto and each Assignee’s shares of Class A Common Stock (including those underlying the shares of Series A Convertible Preferred Stock) held by such Assignee shall be included as Registrable Securities under the Registration Rights Agreement.
[Remainder of page intentionally left blank]
IN WITNESS WHEREOF, the undersigned have duly executed this assignment and joinder as of date first set forth above.
| ASSIGNOR: |
|---|
| [____________] |
| By: |
| Name: |
| Title: |
| ASSIGNEE(S): |
| [____________] |
| By: |
| Name: |
| Title: |
[Signature Page to Infinity Natural Resources, Inc. Form of Assignment and Joinder]
SCHEDULE I
| Purchaser | Purchase Price | ||
|---|---|---|---|
| (II) Investments, LLC | 275,000 | $ | 275,000,000 |
| Etineles Holdings V, LLC | 75,000 | $ | 75,000,000 |
| Total | 350,000 | $ | 350,000,000 |
All values are in Indian Rupees.
EX-10.2
Exhibit 10.2
Execution Version ****
Amendment No. 1
tothe
Second Amended and Restated Limited Liability Company Agreement
of
Infinity NaturalResources, LLC
This Amendment No. 1 (this “Amendment No. 1”) to the Second Amended and Restated Limited Liability Company Agreement, dated January 30, 2025 (the “LLC Agreement”) of Infinity Natural Resources, LLC, a Delaware limited liability company (the “Company”), is made effective as of February 23, 2026 (the “Amendment Date”). Capitalized terms used but not otherwise defined herein shall have the meanings set forth in the LLC Agreement.
WHEREAS, in connection with the Corporation’s issuance of Series A Convertible Preferred Stock as of the Amendment Date (the “Preferred Stock Issuance”), the Manager desires to amend the LLC Agreement as set forth herein and in accordance with Sections 3.04(a) and 16.03 of the LLC Agreement; and
WHEREAS, the Manager has determined that it is advisable and in the best interests of the Company to amend the LLC Agreement as set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants and agreements set forth in this Amendment, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Company and the Manager hereto agree as follows:
| 1. | Amendment. The LLC Agreement is hereby amended as follows: |
|---|
(a) The following definitions are added to Article I in the appropriate alphabetical order:
“Amendment Date” means February 23, 2026.
“Certificate of Designation” means the Certificate of Designation of Series A Convertible Preferred Stock, par value $0.01 per share, of Infinity Natural Resources, Inc., filed with the Delaware Secretary of State on February 23, 2026, as the same may be amended, amended and restated, changed or replaced from time to time in accordance with its terms.
“Series A Convertible Preferred Stock” means the Series A Convertible Preferred Stock of the Corporation, the rights and preferences of which are set forth in the Certificate of Designation.
“Series A Convertible Preferred Unit” means a Unit designated as a “Series A Convertible Preferred Unit”, issued to the Corporation on the Amendment Date, and having the rights and obligations specified with respect to a Series A Convertible Preferred Unit in this Agreement.
“Series A Preferred Stock Cash Dividend” means any dividend declared and actually paid in cash by the Corporation in respect of the Series A Convertible Preferred Stock.
“Series A Preferred Stock Cash Dividend Amount” means, with respect to any Series A Preferred Stock Cash Dividend, the aggregate amount paid in cash by the Corporation in connection with such Series A Preferred Stock Cash Dividend.
“Series A Preferred Stock Change of Control Repurchase” means, if elected by a holder of Series A Convertible Preferred Stock, a repurchase of Series A Convertible Preferred Stock by the Corporation required pursuant to Section 9 of the Certificate of Designation because of the occurrence of a Change of Control (as such term is defined in the Certificate of Designation).
“Series A Preferred Stock Liquidation Payment” means any distribution of the Series A Preferred Stock Liquidation Payment Amount by the Corporation pursuant to Section 7 of the Certificate of Designation in respect of the Series A Convertible Preferred Stock.
“Series A Preferred Stock Liquidation Payment Amount” means the amount to be paid by the Corporation pursuant to the Certificate of Designation in respect of the Series A Convertible Preferred Stock with respect to any liquidation, dissolution or winding up of the affairs of the Corporation, which, for the avoidance of doubt, includes any applicable adjustment for the Liquidation Preference Dividend (as such term is defined in the Certificate of Designation).
“Series A Preferred Stock Redemption” means any redemption of the Series A Convertible Preferred Stock by the Corporation pursuant to Section 8 of the Certificate of Designation.
(b) Article III is amended to add the following Section 3.12:
“Section 3.12. Rights of the Series A Convertible PreferredUnits. The Company intends that the rights, preferences and privileges of the Series A Convertible Preferred Units issued to the Corporation, subject to Section 4.01(b)(i), mirror the rights, preferences and privileges of the Series A Convertible Preferred Stock issued by the Corporation, and that at all times the ratio between the number of outstanding Series A Convertible Preferred Units and the number of outstanding shares of Series A Convertible Preferred Stock be maintained at 1:1. Accordingly, the terms and provisions of this Section 3.12 shall be construed in accordance with such intent, and to the extent there is a conflict between the rights, preferences and privileges of the Series A Convertible Preferred Units under this Agreement and the rights, preferences and privileges of the Series A Convertible Preferred Stock under the Certificate of Designation, the terms of the Certificate of Designation shall control. Subject to the foregoing, the Series A Convertible Preferred Units shall have the following rights, preferences and privileges and shall be subject to the following duties and obligations:
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(a) Dividends or Other Distributions.
(i) In the event the Corporation declares a Series A Preferred Stock Cash Dividend, on or before the related Dividend Payment Date (as defined in the Certificate of Designation), the Manager shall cause the Company to make a distribution of cash to the Corporation in respect of the Series A Convertible Preferred Units in an amount equal to the related Series A Preferred Stock Cash Dividend Amount, which distribution shall be, for the avoidance of doubt, in addition to any amounts distributable to the Corporation pursuant to Section 4.01(b)(i).
(ii) To the extent the holders of the Series A Convertible Preferred Stock are entitled to participate in any dividends or distributions (whether in cash or other property, but not including dividends or distributions of Class A Common Stock or other Equity Securities of the Corporation to holders of Class A Common Stock, the Manager shall cause the Company to make a distribution of cash or other property, as applicable, to the Corporation in respect of the Series A Convertible Preferred Units in an amount and type equal to the amount to be paid by the Corporation to the holders of the Series A Convertible Preferred Stock, which distribution shall be in addition to any amounts distributable to the Corporation with respect to Series A Convertible Preferred Units pursuant to Section 4.01(b)(i).
(b) Series A Preferred Stock Change of Control Repurchase. In the event the Corporation is required to make a Series A Preferred Stock Change of Control Repurchase, on or before the date of the Repurchase Upon Change of Control (as defined in the Certificate of Designation), the Manager shall cause the Company to redeem an equal number of Series A Convertible Preferred Units from the Corporation in exchange for the same consideration that is to be paid by the Corporation in redemption of the Series A Convertible Preferred Stock, which shall be in addition to any amounts distributable to the Corporation with respect to Series A Convertible Preferred Units pursuant to Section 4.01(b)(i).
(c) Series A Convertible Preferred Unit Redemption. Consistent with Section 3.04(a), in the event the Corporation makes a Series A Preferred Stock Redemption, on or before the Redemption Date (as defined in the Certificate of Designation), the Company shall redeem an equal number of Series A Convertible Preferred Units from the Corporation in exchange for the same consideration that is to be paid by the Corporation in the redemption of the Series A Convertible Preferred Stock, which shall be in addition to any amounts distributable to the Corporation with respect to Series A Convertible Preferred Units pursuant to Section 4.01(b)(i).
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(d) Series A Convertible Preferred Unit Liquidation Payment. In the event the Corporation makes a Series A Preferred Stock Liquidation Payment, on or before the related date fixed for liquidation, winding-up or dissolution of the Corporation, the Manager shall cause the Company to make a distribution of cash or other property, as applicable, to the Corporation in respect of the Series A Convertible Preferred Units in an amount equal to the amount to be paid by the Corporation in respect of such Series A Preferred Stock Liquidation Payment, which distribution shall be in addition to any amounts distributable to the Corporation with respect to Series A Convertible Preferred Units pursuant to Section 4.01(b)(i) and/or Section 14.02.
(e) Conversion. Consistent with Section 3.04(a), each time that shares of Series A Convertible Preferred Stock are converted into shares of Class A Common Stock, an equal number of Series A Convertible Preferred Units shall automatically be converted into (without any further action of the Company or the Corporation) a number of Common Units at the same conversion ratio as applied to the conversion of the Series A Convertible Preferred Stock into Class A Common Stock.”
(c) Section 4.01(a) is amended by adding the following proviso to the end of the first sentence of Section 4.01(a):
“; and provided further, that no distribution shall be made to the holders of Common Units pursuant to this Section 4.01(a) in respect thereof unless and until all distributions to the holders of Series A Convertible Preferred Units have been made in accordance with Section 3.12.”
(d) Section 4.01(b) is deleted in its entirety and replaced with the following:
“(b) Tax Distributions. Notwithstanding the foregoing, the Manager shall cause Distributable Cash to be distributed:
(i) first, to the Corporation in such amounts as the Manager determines in its reasonable discretion is necessary to cause the Corporation to be able to timely satisfy any and all Corporation Tax Liabilities attributable to the Series A Convertible Preferred Units during the Fiscal Period or other taxable period to which the tax-related distribution under this Section 4.01(b) relates (without regard to any other distributions to the Corporation in the relevant period or periods); and
(ii) second, pro rata to all Members in accordance with each Member’s Percentage Interest pursuant to Section 4.01(a) at such times and in such amounts as the Manager determines in its reasonable discretion is necessary to cause the Corporation to be able to timely satisfy any and all other Corporation Tax Liabilities attributable to the Fiscal Period or other taxable period to which the tax-related distribution under this Section 4.01(b) relates (and, for avoidance of doubt, taking into account all distributions to the Corporation in the relevant period or periods other than any distributions attributable to the Series A Convertible Preferred Units); provided that, notwithstanding any other provision herein to the contrary, no Distribution would violate Section 18-607 or Section 18-804 of the Delaware Act.”
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(e) Section 5.03 is amended to add the following Section 5.03(i):
“(i) The Manager may, in its reasonable discretion, cause the Company to make allocations of items of gross income and gain to the holders of Series A Convertible Preferred Units to the extent necessary to cause, after taking into account distributions with respect to Series A Convertible Preferred Units, and allocations to be made pursuant to Section 5.02, Capital Account balances attributable to Series A Convertible Preferred Units, to be, as nearly as possible, equal to amounts distributable with respect to Series A Convertible Preferred Units pursuant to Section 14.02.”
(f) Article V is amended to add the following Section 5.06:
“Section 5.06. Other Allocation Rules.
(a) The Members acknowledge and agree that (i) the amount determined under Section 7(a)(i)(x) of the Certificate of Designation is anticipated to exceed the amount determined under Section 7(a)(i)(y) of the Certificate of Designation as of a termination or other disposition of Series A Convertible Preferred Stock (and therefore as of a termination or disposition of a Series A Convertible Preferred Unit), (ii) Section 7(a)(i)(y) of the Certificate of Designation is intended to provide the holders of Series A Convertible Preferred Stock with a minimum return in the contingent event of an earlier than expected termination or other disposition of Series A Convertible Preferred Stock, and (iii) given the foregoing, Section 5.02 and Section 5.03 shall be applied as though Section 7(a)(i)(y) of the Certificate of Designation did not exist, except with respect to any taxable period in which (1) a redemption of Series A Convertible Preferred Units occurs, or (2) the Company liquidates or dissolves.
(b) Notwithstanding anything to the contrary herein (including Section 5.02), without the prior consent of the Corporation, no amount allocated or distributed under this Agreement with respect to the Series A Convertible Preferred Units will be reported as (i) a guaranteed payment for the use of capital pursuant to Section 707(c) of the Code, (ii) a taxable capital shift, or (iii) except as required by Section 5.02, Section 5.03 or Section 5.06, requiring a gross income allocation, in each case, for U.S. federal income tax purposes.”
(g) Section 14.02(c) is deleted in its entirety and replaced with the following:
“(c) all remaining assets of the Company shall be distributed to the Members by the end of the Taxable Year during which the liquidation of the Company occurs (or, if later, by ninety (90) days after the date of the liquidation or such other date as reasonably determined by the Manager) as follows, (A) first, to
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the Corporation in respect of its Series A Convertible Preferred Units, until the Corporation has received an amount equal to the total amount that would then be required to be distributed by the Company to the Corporation pursuant to Section 3.12(d) if the Corporation were required to make on the date of the distribution pursuant to this Section 14.02(c) a Series A Preferred Stock Liquidation Payment on the date of the distribution pursuant to this Section 14.02(c) (without duplication of any amounts actually distributed to the Corporation pursuant to Section 3.12(d)), and (B) the balance to the Members, on a pro rata basis in accordance with each Member’s Percentage Interest. The distribution of cash and/or property to the Members in accordance with the provisions of this Section 14.02 and Section 14.03 below constitutes a complete return to the Members of their Capital Contributions, a complete distribution to the Members of their interest in the Company and all the Company’s property and, to the fullest extent permitted by law, constitutes a compromise to which all Members have consented within the meaning of the Delaware Act. To the extent that a Member returns funds to the Company, it has no claim against any other Member for those funds.”
(h) The first sentence of Section 16.14 is deleted in its entirety and replaced with the following:
“Whenever the Company is to pay any sum (other than pursuant to Section 3.12, Article IV or Section 14.02(c)) to any Member, any amounts that such Member owes to the Company which are not the subject of a good faith dispute may be deducted from that sum before payment.”
Issuance of Series A Convertible Preferred Units. Pursuant to this Amendment, the Manager hereby authorizes the Company to issue 350,000 Series A Convertible Preferred Units to the Corporation, effective as of the Amendment Date, in consideration for the capital contribution made or deemed to have been made by the Corporation of the net proceeds of the Preferred Stock Issuance.
Applicable Law. This Amendment shall be governed by, and construed in accordance with, the laws of the State of Delaware, without giving effect to any choice of law or conflict of law rules or provisions (whether of the State of Delaware or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of Delaware.
Entire Agreement. This Amendment, the LLC Agreement as amended hereby and those other documents expressly referred to herein or therein embody the complete agreement and understanding among the parties and supersede and preempt any prior understandings, agreements or representations by or among the parties, written or oral, which may have related to the subject matter hereof in any way.
Miscellaneous. The provisions of the LLC Agreement shall remain in full force and effect except as expressly amended and modified as set forth in this Amendment. Each reference to “Agreement”, “hereof”, “hereunder”, “herein” and “hereby” and each similar reference contained in the LLC Agreement shall refer to the LLC Agreement as amended hereby.
* * * *
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IN WITNESS HEREOF, the undersigned have executed this Amendment No. 1 to Second Amended and Restated Limited Liability Company Agreement of Infinity Natural Resources, LLC, effective as of the date first written above.
| INFINITY NATURAL RESOURCES, INC., as Manager | |
|---|---|
| By: | /s/ Zack Arnold |
| Name: | Zack Arnold |
| Title: | President and Chief Executive Officer |
| INFINITY NATURAL RESOURCES, LLC | |
| By: | /s/ Zack Arnold |
| Name: | Zack Arnold |
| Title: | President and Chief Executive Officer |
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EX-10.3
Exhibit 10.3
Execution Version ****
FOURTH AMENDMENT TO CREDIT AGREEMENT
This FOURTH AMENDMENT TO CREDIT AGREEMENT (this “Fourth Amendment”), dated as of February 23, 2026, is among Infinity Natural Resources, LLC, a Delaware limited liability company (the “Borrower”), each of the other Credit Parties (as defined in the Existing Credit Agreement referred to below), each of the Lenders (as defined below) party hereto and Citibank, N.A., as Administrative Agent, Collateral Agent and Issuing Bank (as each such term is defined in the Existing Credit Agreement).
RECITALS:
WHEREAS, the Borrower, Administrative Agent, Collateral Agent, Issuing Bank, the banks, financial institutions and other lending institutions parties as lenders thereto (the “Lenders”) and the other parties thereto are parties to that certain Credit Agreement, dated as of September 25, 2024 (as amended, restated, amended and restated, supplemented or otherwise modified prior to the date hereof, the “Existing Credit Agreement”; the Existing Credit Agreement as amended by this Fourth Amendment, the “Credit Agreement”), pursuant to which the Lenders have, subject to the terms and conditions set forth therein, made certain credit available to and on behalf of the Borrower;
WHEREAS, the Borrower has advised the Administrative Agent that it intends to acquire (the “Pinehurst Acquisition”) all of the assets and properties identified as (a) the “Infinity Assets” (as defined in the Pinehurst Upstream Assets Acquisition Agreement referred to below, as executed, without giving effect to any subsequent amendment, consent, waiver or other modification thereto except to the extent permitted under Section 4.5 of this Fourth Amendment, the “Pinehurst Upstream Acquired Assets”) and (b) the “Infinity Assets” (as defined in the Pinehurst Midstream Assets Acquisition Agreement referred to below, as executed, without giving effect to any subsequent amendment, consent, waiver or other modification thereto except to the extent permitted under Section 4.5 of this Fourth Amendment, the “Pinehurst Midstream Acquired Assets” and, together with the Pinehurst Upstream Acquired Assets, the “Pinehurst Acquired Assets”) from, as applicable, Antero Resources Corporation, a Delaware corporation (“Antero Resources”), Antero Minerals LLC, a Delaware limited liability company (“Antero Minerals”), Monroe Pipeline LLC, a Delaware limited liability company (“Monroe Pipeline”), Antero Midstream LLC, a Delaware limited liability company (“Antero Midstream”), Antero Water LLC, a Delaware limited liability company (“Antero Water”), and Antero Treatment LLC, a Delaware limited liability company (“Antero Treatment”, and together with Antero Resources, Antero Minerals, Monroe Pipeline, Antero Midstream and Antero Water, collectively, “Seller”), pursuant to (i) that certain Purchase and Sale Agreement (together with all exhibits, schedules, annexes and disclosure schedules and side letters thereto, collectively, the “Pinehurst Upstream Assets Acquisition Agreement”) dated as of December 5, 2025 by and among the Borrower and Northern Oil and Gas, Inc., a Delaware corporation (“NOG”), collectively, as buyer, and Antero Resources, Antero Minerals and Monroe Pipeline, collectively, as seller, and (ii) that certain Purchase and Sale Agreement (together with all exhibits, schedules, annexes and disclosure schedules and side letters thereto, collectively, the “Pinehurst Midstream Assets Acquisition Agreement” and, together with the Pinehurst Upstream Assets Acquisition Agreement, collectively, the “Pinehurst Acquisition Agreements”) dated as of December 5, 2025 by and among the Borrower and NOG, collectively, as buyer, and Antero Midstream, Antero Water and Antero Treatment, collectively, as seller; and
WHEREAS, effective as of the Fourth Amendment Effective Date (as defined below), the parties hereto are entering into this Fourth Amendment to, among other things, on the terms and subject to the conditions set forth herein:
(a) provide for a redetermination and increase of the Borrowing Base by the Lenders from $375,000,000 to $875,000,000;
(b) increase the Aggregate Elected Commitment Amount by $500,000,000 from $375,000,000 to $875,000,000; and
(c) amend certain terms of the Existing Credit Agreement as provided for in Section 2 hereof.
NOW THEREFORE, in consideration of the mutual covenants and agreements herein contained, and other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto hereby agree as follows:
SECTION 1. Defined Terms. Each capitalized term used herein and not otherwise defined herein has the meaning assigned to such term in the Credit Agreement. Unless otherwise indicated, all section references in this Fourth Amendment refer to sections of the Credit Agreement.
SECTION 2. Amendments.
2.1 Amendments to the Existing Credit Agreement. In reliance on the representations, warranties, covenants and agreements contained in this Fourth Amendment, and subject to the satisfaction (or waiver) of the conditions precedent set forth in Section 4 hereof, the Existing Credit Agreement (other than the signature pages, Exhibits and Schedules (other than Schedule 1.1(a)) thereto) is hereby amended in its entirety to read as set forth in Exhibit A attached hereto. After giving effect to this Fourth Amendment, each Issuing Bank hereby agrees that its Letter of Credit Commitment under the Credit Agreement effective as of the Fourth Amendment Effective Date shall be in the amount set forth opposite such Issuing Bank’s name in the definition of “Letter of Credit Commitment” in Section 1.1 of the Credit Agreement.
2.2 Replacement of Schedule 1.1(a) to Existing Credit Agreement. Schedule 1.1(a) to the Existing Credit Agreement is hereby replaced in its entirety with Schedule 1.1(a) attached hereto and Schedule 1.1(a) attached hereto is hereby deemed to be attached as Schedule 1.1(a) to the Credit Agreement. After giving effect to this Fourth Amendment, each Lender hereby agrees that its Maximum Credit Amount, Elected Commitment and Applicable Percentage under the Credit Agreement effective as of the Fourth Amendment Effective Date shall be in the amount set forth opposite such Lender’s name on Schedule 1.1(a) to the Credit Agreement. After giving effect to this Fourth Amendment and any Borrowings made on the Fourth Amendment Effective Date, (a) each Lender who holds Loans in an aggregate amount less than its Applicable Percentage of all Loans shall advance new Loans which shall be disbursed to the Administrative Agent and used to repay Loans outstanding to each Lender who holds Loans in an aggregate amount greater than its Applicable Percentage of all Loans, including with respect to portions of any outstanding SOFR Loans which SOFR Loans shall otherwise remain outstanding through the last day of the Interest Period applicable thereto unless repaid prior thereto by the Borrower after giving effect to the adjustments described in this Section 2.2; provided, that in no event shall any such advance, disbursement or other adjustment be considered an extinguishment, novation or retirement of the Obligations under the Existing Credit Agreement or any other Credit Document, (b) each Lender’s participation in each Letter of Credit, if any, shall be automatically adjusted to equal its Applicable Percentage, (c) such other adjustments shall be made as the Administrative Agent shall specify so that the Total Exposure applicable to each Lender equals its Applicable Percentage of the aggregate Total Exposures of all Lenders and (d) each Lender waives any break funding payments owing to such Lender that are required under Section 5.02 of the Credit Agreement as a result of the reallocation of Loans and adjustments described in this Section 2.2.
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SECTION 3. Borrowing Base Redetermination; Aggregate Elected Commitment Amount Increase. In reliance on the representations, warranties, covenants and agreements contained in this Fourth Amendment, and subject to the satisfaction (or waiver) of the conditions precedent set forth in Section 4 hereof, (a) Administrative Agent and the Lenders hereby agree that the existing Borrowing Base of $375,000,000 under the Credit Agreement shall be increased to $875,000,000 effective as of the Fourth Amendment Effective Date, (b) the Borrower hereby waives its right under Section 2.14(h) of the Existing Credit Agreement to reduce such increased Borrowing Base, (c) Administrative Agent, the Lenders and the Borrower hereby agree and acknowledge that such increased Borrowing Base shall remain in effect until the date such Borrowing Base is otherwise adjusted pursuant to the terms of the Credit Agreement and (d) the Borrower, the Administrative Agent and the Lenders hereby agree that the Aggregate Elected Commitment Amount shall be increased from $375,000,000 to $875,000,000 effective as of the Fourth Amendment Effective Date. The parties hereto hereby agree that the redetermination of the Borrowing Base on the Fourth Amendment Effective Date as set forth in this Section 3 shall not constitute either a Scheduled Redetermination nor an Interim Redetermination, in each case, for the purposes of Section 2.14(b) of the Credit Agreement. This Fourth Amendment constitutes the New Borrowing Base Notice delivered pursuant to Section 2.14(d) of the Existing Credit Agreement with respect to the Borrowing Base increase provided for in this Section 3.
SECTION 4. Conditions Precedent. The effectiveness of this Fourth Amendment is subject to the satisfaction (or waiver by each Lender) of each of the following conditions precedent (the date on which such conditions precedent are satisfied, the “Fourth Amendment Effective Date”):
4.1 Executed Fourth Amendment. Administrative Agent (or its counsel) shall have received counterparts of this Fourth Amendment duly executed by the Borrower, each other Credit Party, each Lender and Administrative Agent.
4.2 Absence of Certain Events of Defaults. No Event of Default under Section 11.1 of the Existing Credit Agreement or Section 11.5 of the Existing Credit Agreement shall have occurred and be continuing as of the Fourth Amendment Effective Date.
4.3 Certain Representations and Warranties. (i) The Pinehurst Specified Acquisition Agreement Representations (as defined below) shall be true and correct in all material respects and (ii) the Pinehurst Specified Representations (as defined below) shall be true and correct in all material respects, except to the extent that any such representation or warranty is already qualified by materiality, material adverse effect or other similar qualification, in which case such representation or warranty shall be true and correct in all respects. For purposes hereof, (1) “Pinehurst Specified Acquisition Agreement Representations” means such of the representations made by the Seller or its subsidiaries or affiliates in the Pinehurst Acquisition Agreements as are material to the interests of the Lenders, but only to the extent that the Borrower or its affiliates have the right to terminate its or its affiliates’ respective obligations under either Pinehurst Acquisition Agreement or otherwise decline to close the Pinehurst Acquisition as a result of a breach of any such Pinehurst Specified Acquisition Agreement Representations or any such Pinehurst Specified Acquisition Agreement Representations not being accurate (in each case, determined without regard to any notice requirement) and (2) “Pinehurst Specified Representations” means those representations and warranties of the Borrower in Section 8.1, Section 8.2, Section 8.3, Section 8.5, Section 8.7, Section 8.15, Section 8.16 and Section 8.20 of the Credit Agreement.
4.4 Fees and Expenses. Administrative Agent, Arrangers and the Lenders shall have received all fees and other amounts due and payable on or prior to the Fourth Amendment Effective Date including, without limitation, the reimbursement or payment of all reasonable and documented out-of-pocket fees and expenses required to be reimbursed or paid by the Borrower under the Credit Agreement to the extent that an invoice has been received by the Borrower at least three (3) Business Days prior to the Fourth Amendment Effective Date (including the fees and expenses of Paul Hastings LLP, counsel to Administrative Agent).
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4.5 Pinehurst Acquisition. Substantially simultaneously with the Fourth Amendment Effective Date, the Pinehurst Acquisition (including the direct or indirect acquisition of the Pinehurst Assets described on (i) Exhibits A-1 through F to the Pinehurst Upstream Assets Acquisition Agreement and (ii) Exhibits A through F to the Pinehurst Midstream Assets Acquisition Agreement, in each case, as executed, without giving effect to any subsequent amendment, consent, waiver or other modification thereto except to the extent permitted pursuant to subclauses (x) or (y) below) shall be consummated in all material respects in accordance with the terms of the Pinehurst Acquisition Agreements, as executed, without giving effect to any subsequent amendment, consent, waiver or other modification to any provision of any Pinehurst Acquisition Agreement or any side letters and other material agreements and instruments executed and delivered in connection with the Pinehurst Acquisitions, in each case as in effect on December 5, 2025, except (x) with the consent of each Lender party hereto or (y) to the extent such amendment, consent, waiver or modification is not materially adverse to the Lenders party hereto (it being understood that (a) any substantive modification, amendment, consent or waiver to the definition of (i) Assets (as defined in each Pinehurst Acquisition Agreement as in effect on December 5, 2025) that is adverse to the Lenders party hereto (provided that so long as the Borrower complies with Section 4.19 below, any such changes shall be deemed to not be adverse) and (ii) Material Adverse Effect (as defined in each Acquisition Agreement as in effect on December 5, 2025) shall be deemed to be material and adverse to the interest of the Lenders party hereto, (b) any increase in the purchase price of the Pinehurst Acquisition to be paid by the Borrower shall not be deemed to be material and adverse to the interests of the Lenders party hereto so long as such increase is funded by (i) the proceeds of an issuance of the Borrower’s common equity (or other equity interests reasonably satisfactory to the Lenders party hereto) on or prior to the Fourth Amendment Effective Date or (ii) other sources of funds permitted under the Existing Credit Agreement not constituting the proceeds of any Loans, (c) any reduction in the purchase price of the Assets (as defined in each Acquisition Agreement as in effect on December 5, 2025) to be paid by the Borrower shall not be deemed to be material and adverse to the interests of the Lenders party hereto so long as any such reduction is applied first to reduce the amount of borrowings under the Credit Agreement used to pay a portion of the purchase price for the Acquired Assets (as defined in each Acquisition Agreement as in effect on December 5, 2025) required under the Pinehurst Acquisition Agreements on the Fourth Amendment Effective Date and fees and expenses incurred in connection therewith, (d) no modification to the purchase price as a result of any purchase price adjustment or working capital adjustment expressly contemplated by the Pinehurst Acquisition Agreements, as applicable, as of December 5, 2025 shall constitute a reduction or increase in the purchase price and (e) any Lenders party hereto shall be deemed to have consented to any modification, amendment, consent or waiver of the Pinehurst Acquisition Agreements, as applicable, if it shall have not affirmatively objected to any such modification, amendment, consent or waiver within five (5) business days of receipt of written notice of such modification, amendment, consent or waiver). The Administrative Agent shall have received a certificate from an Authorized Officer dated as of the date hereof certifying that: (a) attached to such certificate are true and correct, fully-executed copies of each Pinehurst Acquisition Agreement (including, for the avoidance of doubt, all exhibits, schedules, annexes and disclosure schedules thereto, all amendments, waivers, supplements or modifications thereto and all side letters and other supplemental or material agreements and instruments executed and delivered in connection with the Pinehurst Acquisition), (b) substantially simultaneously with the Fourth Amendment Effective Date, the Pinehurst Acquisition (including the direct or indirect acquisition
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of the Pinehurst Assets described on (i) Exhibits A-1 through F to the Pinehurst Upstream Assets Acquisition Agreement and (ii) Exhibits A through F to the Pinehurst Midstream Assets Acquisition Agreement, in each case, as executed, without giving effect to any subsequent amendment, consent, waiver or other modification thereto except to the extent permitted by the preceding sentence) shall be consummated in all material respects in accordance with the terms of each Pinehurst Acquisition Agreement, as executed, without giving effect to any subsequent amendment, consent, waiver or other modification thereto except as permitted in the preceding sentence and (c) the conditions set forth in Section 4.2, Section 4.3, Section 4.6(a) and Section 4.6(b) of this Fourth Amendment have been satisfied.
4.6 Minimum Hedging.
(a) The Administrative Agent shall have received evidence that the Credit Parties (i) entered into as of December 5, 2025 and (ii) continue to maintain as of the Fourth Amendment Effective Date, Acceptable Commodity Hedge Agreements in compliance with Sections 9.17(a) and (b), as applicable, of the Existing Credit Agreement; provided that, for purposes hereof, the term “Minimum Hedging Requirement Date” (as defined in the Existing Credit Agreement) shall be deemed to include the signing date of each Acquisition Agreement.
(b) The Administrative Agent shall have received evidence that the Credit Parties (i) entered into, during the period commencing on December 5, 2025 and ending on December 12, 2025, and (ii) continue to maintain as of the Fourth Amendment Effective Date, Acceptable Commodity Hedge Agreements at prices acceptable to the Administrative Agent hedging aggregate notional volumes of natural gas covering at least 75% of the reasonably projected total production on a boe (barrel of oil equivalent) basis of natural gas (measured on a 1:6 basis with crude oil) from the Credit Parties’ Proved Developed Producing Reserves (after giving pro forma effect to the Pinehurst Acquisition) for each full calendar month during the period of sixty (60) full calendar months following the date of the Pinehurst Acquisition Agreements.
4.7 Promissory Notes. The Administrative Agent shall have received duly executed promissory notes (or any amendment or restatement thereof, as the case may be) payable to each requesting Lender in a principal amount equal to such requesting Lender’s Maximum Credit Amount as set forth on Schedule 1.1(a) to the Credit Agreement (as amended hereby).
4.8 Solvency Certificate. The Administrative Agent shall have received a certificate of the Borrower’s chief financial officer certifying that, after giving effect to this Fourth Amendment and the Pinehurst Acquisition on the Fourth Amendment Effective Date, the Borrower and its subsidiaries on a consolidated basis are solvent in substantially the form attached as Annex I hereto.
4.9 Officer’s Certificate. The Administrative Agent shall have received, in the case of each Credit Party, a certificate of an officer of each Credit Party dated the Fourth Amendment Effective Date and certifying:
(1) that attached thereto is a true and complete copy of the bylaws (or limited liability company agreement or other equivalent governing documents) of such Credit Party as in effect on the Fourth Amendment Effective Date,
(2) that attached thereto is a true and complete copy of resolutions duly adopted by the board of directors (or managing member or equivalent) of such Credit Party authorizing the execution, delivery and performance of the Credit Documents to which such person is a party and, in the case of the Borrower, the borrowings hereunder, and that such resolutions have not been modified, rescinded or amended and are in full force and effect on the Fourth Amendment Effective Date,
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(3) that attached thereto is (A) a true and complete copy of the certificate or articles of incorporation or certificate of formation, including all amendments thereto, of such Credit Party, certified as of a recent date by the Secretary of State (or other similar official) of the jurisdiction of its organization, (B) a certificate as to the good standing (to the extent such concept or a similar concept exists under the laws of such jurisdiction) of each such Credit Party in the jurisdiction in which it is formed or organized as of a recent date from such Secretary of State (or other similar official), which has not been amended and, (C) if available after the use of commercially reasonable efforts by the Borrower, a certificate as to the good standing (to the extent such concept or a similar concept exists under the laws of such jurisdiction) of each Credit Party in each jurisdiction where such Credit Party owns material Borrowing Base Properties (other than in the jurisdiction where such Credit Party is formed or organized), as of a recent date from the Secretary of State (or other similar official) of such jurisdiction, which has not been amended,
(4) as to the incumbency and specimen signature of each officer executing any Credit Document or any other document delivered in connection herewith on behalf of such Credit Party, and
(5) a certificate of a director or an officer as to the incumbency and specimen signature of the Secretary or Assistant Secretary or similar officer executing the certificate pursuant to subclause (2) above.
4.10 Notice of Borrowing. the Administrative Agent shall have received a Notice of Borrowing (whether in writing or by telephone) meeting the requirements of Section 2.3(a) of the Credit Agreement.
4.11 Title. The Credit Parties shall have delivered title information to the Administrative Agent (or its counsel) as the Administrative Agent may reasonably require satisfactory to the Administrative Agent setting forth the status of title to at least eighty-five percent (85%) of the PV-9 (as defined below) value of the Oil and Gas Properties of the Credit Parties included in the Reserve Report evaluating the Oil and Gas Properties of the Credit Parties as of September 1, 2025 (the “Non-Target Reserve Report”) (prior to giving effect to the Pinehurst Acquisition). “PV-9” means, with respect to any Proved Reserves expected to be produced from any Borrowing Base Properties or Pinehurst Acquired Assets constituting Proved Reserves, the net present value, discounted at nine percent (9%) per annum, of the future net revenues expected to accrue to the Credit Parties’ collective interests in such reserves during the remaining expected economic lives of such reserves, calculated in accordance with the Bank Price Deck.
4.12 Mortgages. The Administrative Agent shall have received (i) Mortgages and other applicable Security Documents, duly executed by each Credit Party party thereto and otherwise in form and substance reasonably satisfactory to the Administrative Agent, such that after giving effect thereto, the Mortgages create first-priority, perfected Liens (subject only to Liens permitted by Section 10.2 of the Credit Agreement) on at least 85% of the PV-9 value of the Borrowing Base Properties included in the Non-Target Reserve Report (prior to giving effect to the Pinehurst Acquisition) and (ii) legal opinions (including from local counsel in each applicable jurisdiction) covering such mortgage related matters in connection with the foregoing as may be reasonably requested by the Administrative Agent.
4.13 Pinehurst Acquired Assets. The Credit Parties shall use commercially reasonable efforts to deliver to the Administrative Agent (i) Mortgages, duly executed by the applicable Credit Parties and otherwise in form and substance reasonably satisfactory to the Administrative Agent, such that after giving effect thereto, the Mortgages create first-priority, perfected Liens (subject only to Liens permitted by
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Section 10.2 of the Credit Agreement) on at least 85% of the PV-9 value of the Pinehurst Acquired Assets, evaluated in the Third Party Reserve Report (as defined below), (ii) legal opinions (including from local counsel in each applicable jurisdiction) covering such mortgage related matters in connection with the foregoing as may be reasonably requested by the Administrative Agent, (iii) title information reasonably satisfactory to the Administrative Agent setting forth the status of title to at least 85% of the PV-9 value of the Pinehurst Acquired Assets evaluated in the Third Party Reserve Report and (iv) a third party reserve report prepared by an Approved Petroleum Engineer and other reserve engineering information evaluating all or substantially all of the Pinehurst Acquired Assets (the “Third Party Reserve Report”).
4.14 Insurance. The Administrative Agent shall have received evidence that the Borrower has (i) obtained and effected all insurance required to be maintained pursuant to the Credit Documents and (ii) caused the Administrative Agent to be named as lender loss payee and/or additional insured under each insurance policy with respect to such insurance, as applicable.
4.15 Available Commitment. After giving effect to the Borrowing on the Fourth Amendment Effective Date, the Available Commitment shall not be less than twenty percent (20.0%) of the Total Commitment.
4.16 Lien Searches and Absence of Liens. The Administrative Agent shall have received (a) customary payoff letters and lien releases evidencing that all existing liens or security interests on the Pinehurst Acquired Assets (subject only to liens permitted by Section 10.2 of the Credit Agreement) have been, or contemporaneously with the Fourth Amendment Effective Date shall be, terminated or released and (b) customary UCC lien search results with respect to the Borrower and the other Credit Parties, in each case, in their respective jurisdictions of formation.
4.17 KYC. The requesting Lenders shall have received at least three (3) Business Days prior to the Fourth Amendment Effective Date, to the extent requested in writing to the Borrower at least ten (10) Business Days prior to the Fourth Amendment Effective Date, and be reasonably satisfied in form and substance with, all documentation and other information required by regulatory authorities under applicable “know your customer” and anti-money laundering rules and regulations, including without limitation the PATRIOT Act and Beneficial Ownership Regulation.
4.18 No Material Adverse Effect. Since December 5, 2025, no Material Adverse Effect (as defined in each Pinehurst Acquisition Agreement, as executed, without giving effect to any subsequent amendment, consent, waiver or other modification thereto except to the extent approved by the Administrative Agent) has occurred.
4.19 Oil and Gas Property Dispositions. As of the Fourth Amendment Effective Date, after giving effect to the Pinehurst Acquisition, the aggregate PV-9 value of (i) all Borrowing Base Properties Disposed of since the October 1, 2025 Scheduled Redetermination and (ii) the Pinehurst Acquired Assets evaluated in the Initial Target Reserve Report that are not acquired directly by the Credit Parties does not exceed 7.5% of the aggregate PV-9 value of (1) the Borrowing Base Properties included in the Reserve Report delivered to the Administrative Agent for the October 1, 2025 Scheduled Redetermination and (2) the Pinehurst Acquired Assets evaluated in the Initial Target Reserve Report, as certified to by an Authorized Officer of the Borrower. “Initial Target Reserve Report” means the engineering reports and other engineering information prepared by the Seller and delivered to the Administrative Agent prior to December 5, 2025 evaluating all or substantially all of the Pinehurst Acquired Assets constituting Proved Reserves.
Notwithstanding anything to the contrary contained in this Fourth Amendment or any other Credit Document, in the case of any Borrowing requested to occur on the Fourth Amendment Effective Date, the only conditions precedent to such Borrowing shall be the satisfaction (or waiver by each Lender) of each of the foregoing conditions precedent.
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Without limiting the generality of the provisions of Section 11.2 of the Credit Agreement, for purposes of determining compliance with the conditions specified in this Section 4, each Lender that has signed this Fourth Amendment shall be deemed to have consented to, approved or accepted or to be satisfied with, each document or other matter required under this Section 4 to be consented to or approved by or reasonably acceptable or reasonably satisfactory to a Lender unless Administrative Agent shall have received written notice from such Lender prior to the Fourth Amendment Effective Date specifying its objection thereto. All documents executed or submitted pursuant to this Section 4 by and on behalf of any of the Credit Parties shall be in form and substance reasonably satisfactory to the Administrative Agent and its counsel. The Administrative Agent shall notify the Borrower and the Lenders of the Fourth Amendment Effective Date, and such notice shall be conclusive and binding.
SECTION 5. Representations and Warranties. In order to induce Administrative Agent and the Lenders to enter into this Fourth Amendment, each of the Borrower and the other Credit Parties hereby represents and warrants to Administrative Agent and the Lenders that:
5.1 Due Authorization, No Conflicts. The execution, delivery and performance by Borrower and each other Credit Party of this Fourth Amendment are within such Credit Party’s organizational powers, have been duly authorized by necessary organizational action, require no action by or in respect of, or filing with, any Governmental Authority and do not contravene any Requirement of Law, or result in any breach of or default under any Contractual Requirement to which such Credit Party or any of the Restricted Subsidiaries is a party or by which it or any of its property or assets is bound, or result in the creation or imposition of any Lien (or the obligation to create or impose) any Lien upon any of the property or assets of such Credit Party or any of the Restricted Subsidiaries, except, in each case, to the extent such contravention, breach, default or Lien would not reasonably be expected to result in a Material Adverse Effect.
5.2 Validity and Binding Effect. This Fourth Amendment constitutes the valid and binding obligations of each Credit Party enforceable in accordance with its terms, subject to the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization and other similar laws relating to or affecting creditors’ rights generally and general principles of equity (whether considered in a proceeding in equity or law).
SECTION 6. Certain Agreements.
6.1 Post-Closing Covenants. To the extent not delivered on or before the date hereof pursuant to Section 4 above, no later than thirty (30) days after the Fourth Amendment Effective Date (or such later date as the Administrative Agent may agree to in its sole discretion), the Administrative Agent shall have received from the Borrower:
(a) (i) Mortgages, duly executed by the applicable Credit Parties and otherwise in form and substance reasonably satisfactory to the Administrative Agent, such that after giving effect thereto, the Mortgages create first-priority, perfected Liens (subject only to Liens permitted by Section 10.2 of the Credit Agreement) on at least 85% of the PV-9 value of the Pinehurst Acquired Assets, evaluated in the Third Party Reserve Report and (ii) legal opinions (including from local counsel in each applicable jurisdiction) covering such mortgage related matters in connection with the foregoing as may be reasonably requested by the Administrative Agent;
8
(b) title information reasonably satisfactory to the Administrative Agent setting forth the status of title to at least 85% of the PV-9 value of the Pinehurst Acquired Assets evaluated in the Third Party Reserve Report; and
(c) the Third Party Reserve Report.
SECTION 7. Miscellaneous.
7.1 Reaffirmation of Credit Documents; Extension of Liens. Each of the Credit Parties hereby (a) acknowledges the existence, validity and enforceability of this Fourth Amendment, (b) confirms and ratifies all of its obligations under the Credit Agreement, each Security Document and the other Credit Documents (in each case, immediately after giving effect to this Fourth Amendment) to which it is party, including its respective guarantees, pledges, grants of security interests and other obligations, as applicable, under and subject to the terms of the Credit Agreement, each Security Document and each of the other Credit Documents (in each case, immediately after giving effect to this Fourth Amendment) to which it is party, and (c) agrees that such guarantees, pledges, grants of security interests and other obligations, and the terms of the Credit Agreement, each Security Document and each of the other Credit Documents (in each case, immediately after giving effect to this Fourth Amendment) to which it is a party, are not impaired or adversely affected in any manner whatsoever and shall continue to be in full force and effect in accordance with their terms and, as applicable, shall guarantee and secure all Obligations, as modified pursuant to this Fourth Amendment. The parties hereto acknowledge and agree that each reference in the Existing Credit Agreement to “this Agreement”, “hereunder”, “hereof”, “herein” or any other word or words of similar import shall mean and be a reference to the Existing Credit Agreement as amended and supplemented hereby, and each reference in any other Credit Document to the “Credit Agreement” or any word or words of similar import shall be and mean a reference to the Existing Credit Agreement as amended and supplemented hereby.
7.2 Parties in Interest. All of the terms and provisions of this Fourth Amendment shall bind and inure to the benefit of the parties hereto and their respective permitted successors and assigns.
7.3 No Waiver. Neither the execution by the Agents or the Lenders party hereto of this Fourth Amendment, nor any other act or omission by any Agent or the Lenders or their officers in connection herewith, shall be deemed a waiver by the Agents or the Lenders of any Defaults or Events of Default which may exist, which may have occurred prior to the date of the effectiveness of this Fourth Amendment or which may occur in the future under the Credit Agreement and/or the other Credit Documents. Similarly, nothing contained in this Fourth Amendment shall directly or indirectly in any way whatsoever: (a) impair, prejudice or otherwise adversely affect the Agents’ or the Lenders’ right at any time to exercise any right, privilege or remedy in connection with the Credit Documents with respect to any Default or Event of Default, (b) except as expressly provided herein, amend or alter any provision of the Existing Credit Agreement, the other Credit Documents, or any other contract or instrument, or (c) constitute any course of dealing or, except as expressly provided herein, other basis for altering any obligation of the Borrower or any right, privilege or remedy of the Agents or the Lenders under the Credit Agreement, the other Credit Documents, or any other contract or instrument.
7.4 Counterparts. This Fourth Amendment 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. Delivery of an executed counterpart of this Fourth Amendment 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 Fourth Amendment. The words “execution”, “execute”, “signed”, “signature”, “delivery” and words of like import in or related to any document to be signed in connection with this Fourth Amendment and the transactions
9
contemplated hereby shall be deemed to include electronic signatures or the keeping of records in electronic form, each of which shall be of the same legal effect, validity or enforceability as a manually executed signature or the use of a paper-based recordkeeping system, as the case may be, to the extent and as provided for in any applicable law, including the Federal Electronic Signatures in Global and National Commerce Act, the New York State Electronic Signatures and Records Act, or any other similar state laws based on the Uniform Electronic Transactions Act.
7.5 COMPLETE AGREEMENT. THIS FOURTH AMENDMENT, THE CREDIT AGREEMENT AND THE OTHER CREDIT DOCUMENTS REPRESENT THE FINAL AGREEMENT AMONG THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
7.6 Arms-Length/Good Faith; Review and Construction of Documents. This Fourth Amendment has been negotiated at arms-length and in good faith by the parties hereto. The Borrower (a) has had the opportunity to consult with legal counsel of its own choice and has been afforded an opportunity to review this Amendment with its legal counsel, (b) has reviewed this Fourth Amendment and fully understands the effects thereof and all terms and provisions contained in this Fourth Amendment, and (c) has executed this Fourth Amendment of its own free will and volition. Furthermore, the Borrower acknowledges that (i) this Fourth Amendment shall be construed as if jointly drafted by the Borrower and the Lenders, and (ii) the recitals contained in this Fourth Amendment shall be construed to be part of the operative terms and provisions of this Fourth Amendment.
7.7 Interpretation. Wherever the context hereof shall so require, the singular shall include the plural, the masculine gender shall include the feminine gender and the neuter and vice versa.
7.8 Titles of Sections. All titles or headings to the sections or other divisions of this Fourth Amendment are only for the convenience of the parties and shall not be construed to have any effect or meaning with respect to the other content of such sections, subsections or other divisions, such other content being controlling as to the agreement between the parties hereto.
7.9 Severability. Any provision of this Fourth Amendment held to be invalid, illegal or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such invalidity, illegality or unenforceability without affecting the validity, legality and enforceability of the remaining provisions hereof; and the invalidity of a particular provision in a particular jurisdiction shall not invalidate such provision in any other jurisdiction.
7.10 Payment of Expenses. The Borrower agrees to pay or reimburse Administrative Agent for all of its reasonable and documented out-of-pocket costs and expenses incurred in connection with this Fourth Amendment, any other documents prepared in connection herewith and the transactions contemplated hereby, including, without limitation, the reasonable and documented fees and disbursements of counsel to Administrative Agent, to the extent required by Section 13.5 of the Credit Agreement.
7.11 Credit Documents. The Borrower acknowledges and agrees that this Fourth Amendment is a Credit Document.
7.12 Governing Law. THIS FOURTH AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK. Section 13.13 of the Credit Agreement and Section 13.15 of the Credit Agreement are incorporated herein by reference.
[Signature Pages Follow]
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IN WITNESS WHEREOF, the parties hereto have caused this Fourth Amendment to be duly executed and delivered as of the date first above written.
| BORROWER: |
|---|
| INFINITY NATURAL RESOURCES, LLC |
| By: |
| Name: |
| Title: |
| SUBSIDIARY GUARANTORS: |
| OPERATING, LLC |
| By: |
| Name: |
| Title: |
| -E, LLC |
| By: |
| Name: |
| Title: |
| -E BLOCKER, LLC |
| By: |
| Name: |
| Title: |
| OHIO, LLC |
| By: |
| Name: |
| Title: |
| MIDSTREAM, LLC |
| By: |
| Name: |
| Title: |
All values are in Indian Rupees.
Signature Page to Fourth Amendment to Credit Agreement
(Infinity Natural Resources, LLC)
| CHEAT MOUNTAIN RESOURCES, LLC | |
|---|---|
| By: | /s/ David Sproule |
| Name: | David Sproule |
| Title: | Chief Financial Officer |
| BLOCK ISLAND MINERALS LLC | |
| By: | /s/ David Sproule |
| Name: | David Sproule |
| Title: | Chief Financial Officer |
Signature Page to Fourth Amendment to Credit Agreement
(Infinity Natural Resources, LLC)
| CITIBANK, N.A., as Administrative Agent, Collateral Agent, Issuing Bank and a Lender | |
|---|---|
| By: | /s/ Thomas Skipper |
| Name: | Thomas Skipper |
| Title: | Director |
Signature Page to Fourth Amendment to Credit Agreement
(Infinity Natural Resources, LLC)
| BANK OF AMERICA, N.A., as a Lender and an Issuing Bank | |
|---|---|
| By: | /s/ Megan Baqui |
| Name: | Megan Baqui |
| Title: | Director |
Signature Page to Fourth Amendment to Credit Agreement
(Infinity Natural Resources, LLC)
| BOKF, NA, as a Lender and an Issuing Bank | |
|---|---|
| By: | /s/ Matt Chase |
| Name: | Matt Chase |
| Title: | Senior Vice President |
Signature Page to Fourth Amendment to Credit Agreement
(Infinity Natural Resources, LLC)
| CAPITAL ONE, NATIONAL ASSOCIATION, as a Lender and an Issuing Bank | |
|---|---|
| By: | /s/ Jason Groll |
| Name: | Jason Groll |
| Title: | Director |
Signature Page to Fourth Amendment to Credit Agreement
(Infinity Natural Resources, LLC)
| FIFTH THIRD BANK, NATIONAL ASSOCIATION,<br><br><br>as a Lender and an Issuing Bank | |
|---|---|
| By: | /s/ Dan Condley |
| Name: | Dan Condley |
| Title: | Managing Director |
Signature Page to Fourth Amendment to Credit Agreement
(Infinity Natural Resources, LLC)
| ROYAL BANK OF CANADA, as a Lender and an Issuing Bank | |
|---|---|
| By: | /s/ Emilee Scott |
| Name: | Emilee Scott |
| Title: | Authorized Signatory |
Signature Page to Fourth Amendment to Credit Agreement
(Infinity Natural Resources, LLC)
| TRUIST BANK, as a Lender and an Issuing Bank | |
|---|---|
| By: | /s/ John Kovarik |
| Name: | John Kovarik |
| Title: | Managing Director |
Signature Page to Fourth Amendment to Credit Agreement
(Infinity Natural Resources, LLC)
| U.S. BANK NATIONAL ASSOCIATION, as a Lender and an Issuing Bank | |
|---|---|
| By: | /s/ Alex Pedrinan |
| Name: | Alex Pedrinan |
| Title: | Vice President |
Signature Page to Fourth Amendment to Credit Agreement
(Infinity Natural Resources, LLC)
| FIFTH THIRD BANK, N.A., SUCCESSOR BY MERGER TO COMERICA BANK, as a Lender | |
|---|---|
| By: | /s/ Cassandra Lucas |
| Name: | Cassandra Lucas |
| Title: | Vice President |
Signature Page to Fourth Amendment to Credit Agreement
(Infinity Natural Resources, LLC)
| FIRST-CITIZENS BANK & TRUST COMPANY, as a Lender | |
|---|---|
| By: | /s/ John Feeley |
| Name: | John Feeley |
| Title: | Managing Director |
Signature Page to Fourth Amendment to Credit Agreement
(Infinity Natural Resources, LLC)
| KEYBANK NATIONAL ASSOCIATION, as a Lender | |
|---|---|
| By: | /s/ David Bornstein |
| Name: | David Bornstein |
| Title: | Senior Vice President |
Signature Page to Fourth Amendment to Credit Agreement
(Infinity Natural Resources, LLC)
| SOUTHSTATE BANK, N.A., as a Lender | |
|---|---|
| By: | /s/ Blake Kirshman |
| Name: | Blake Kirshman |
| Title: | Senior Vice President |
Signature Page to Fourth Amendment to Credit Agreement
(Infinity Natural Resources, LLC)
| ZIONS BANCORPORATION, N.A. DBA AMEGY BANK, as a Lender | |
|---|---|
| By: | /s/ Kathlin Ardell |
| Name: | Kathlin Ardell |
| Title: | Senior Vice President |
Signature Page to Fourth Amendment to Credit Agreement
(Infinity Natural Resources, LLC)
Exhibit A
[See attached]
Exhibit A to Fourth Amendment to Credit Agreement
(Infinity Natural Resources, LLC)
Exhibit A to the Fourth Amendment
to Credit Agreement dated as of February 23, 2026 ****
CREDIT AGREEMENT
Dated as of September 25, 2024
among
INFINITY NATURAL RESOURCES, LLC
as the Borrower,
The Several Lenders
from Time to Time Parties Hereto,
and
CITIBANK, N.A.,
as Administrative Agent, Collateral Agent and an Issuing Bank
CITIBANK, N.A., BANK OF AMERICA, N.A., BOKF, NA, CAPITAL ONE, NATIONAL
ASSOCIATION, FIFTH THIRD BANK, NATIONAL ASSOCIATION, ROYAL BANK OF CANADA,
TRUIST BANK AND U.S. BANK NATIONAL ASSOCIATION,
as Co-Syndication Agents
FIFTH THIRD BANK, N.A., SUCCESSOR BY MERGER TO COMERICA BANK
and
FIRST-CITIZENS BANK & TRUST COMPANY,
as Co-Documentation Agents
CITIBANK, N.A., BOFA SECURITIES, INC., BOKF, NA, CAPITAL ONE, NATIONAL ASSOCIATION, FIFTH THIRD BANK, NATIONAL ASSOCIATION, RBC CAPITAL MARKETS, TRUIST SECURITIES, INC., U.S. BANK NATIONAL ASSOCIATION and KEYBANC CAPITAL MARKETS INC.,
as Joint Lead Arrangers and Joint Bookrunners
TABLE OF CONTENTS
| Page | |||
|---|---|---|---|
| SECTION 1. | DEFINITIONS | 1 | |
| 1.1 | Defined Terms | 1 | |
| 1.2 | Other Interpretive Provisions | 54 | |
| 1.3 | Accounting Terms | 55 | |
| 1.4 | Rounding | 55 | |
| 1.5 | References to Agreements, Laws, Etc. | 55 | |
| 1.6 | Times of Day | 55 | |
| 1.7 | Timing of Payment or Performance | 55 | |
| 1.8 | Classification of Loans and Borrowings | 55 | |
| 1.9 | Hedging Requirements Generally | 55 | |
| 1.10 | Certain Determinations | 56 | |
| 1.11 | Pro Forma and Other Calculations | 56 | |
| 1.12 | Rates | 56 | |
| 1.13 | Divisions | 57 | |
| 1.14 | Letter of Credit Amounts | 57 | |
| SECTION 2. | AMOUNT AND TERMS OF CREDIT | 57 | |
| 2.1 | Commitments | 57 | |
| 2.2 | Minimum Amount of Each Borrowing; Maximum Number of Borrowings | 57 | |
| 2.3 | Notice of Borrowing | 58 | |
| 2.4 | Disbursement of Funds | 58 | |
| 2.5 | Repayment of Loans; Evidence of Debt | 59 | |
| 2.6 | Conversions and Continuations | 60 | |
| 2.7 | Pro Rata Borrowings | 61 | |
| 2.8 | Interest | 61 | |
| 2.9 | Interest Periods | 62 | |
| 2.10 | Increased Costs, Illegality, Changed Circumstances, Etc. | 63 | |
| 2.11 | Compensation | 65 | |
| 2.12 | Change of Lending Office | 66 | |
| 2.13 | Notice of Certain Costs | 66 | |
| 2.14 | Borrowing Base | 66 | |
| 2.15 | Defaulting Lenders | 70 | |
| 2.16 | Termination, Revision and Reduction of Commitments and Aggregate Maximum Credit Amounts; Increase, Reduction and Termination of Aggregate Elected Commitment Amount | 72 | |
| SECTION 3. | LETTERS OF CREDIT | 75 | |
| 3.1 | Letters of Credit | 75 | |
| 3.2 | Letter of Credit Applications | 76 | |
| 3.3 | Letter of Credit Participations | 77 | |
| 3.4 | Agreement to Repay Letter of Credit Drawings | 79 | |
| 3.5 | New or Successor Issuing Bank | 80 | |
| 3.6 | Role of Issuing Bank | 81 |
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| 3.7 | Cash Collateral | 82 |
|---|---|---|
| 3.8 | Applicability of ISP and UCP | 82 |
| 3.9 | Conflict with Issuer Documents | 83 |
| 3.10 | Letters of Credit Issued for Subsidiaries | 83 |
| 3.11 | Increased Costs | 83 |
| 3.12 | Independence | 83 |
| SECTION 4. | FEES | 83 |
| 4.1 | Fees | 83 |
| SECTION 5. | PAYMENTS | 84 |
| 5.1 | Voluntary Prepayments | 84 |
| 5.2 | Mandatory Prepayments | 85 |
| 5.3 | Method and Place of Payment | 87 |
| 5.4 | Net Payments | 87 |
| 5.5 | Computations of Interest and Fees | 91 |
| 5.6 | Limit on Rate of Interest | 91 |
| SECTION 6. | CONDITIONS PRECEDENT TO INITIAL BORROWING | 92 |
| SECTION 7. | CONDITIONS PRECEDENT TO ALL SUBSEQUENT CREDIT EVENTS | 95 |
| SECTION 8. | REPRESENTATIONS, WARRANTIES AND AGREEMENTS | 96 |
| 8.1 | Existence, Qualification and Power | 96 |
| 8.2 | Corporate Power and Authority; Enforceability; Binding Effect | 96 |
| 8.3 | No Violation | 96 |
| 8.4 | Litigation | 96 |
| 8.5 | Margin Regulations | 96 |
| 8.6 | Governmental Authorization | 96 |
| 8.7 | Investment Company Act | 97 |
| 8.8 | True and Complete Disclosure | 97 |
| 8.9 | Tax Matters | 97 |
| 8.10 | Compliance with ERISA | 97 |
| 8.11 | Subsidiaries | 98 |
| 8.12 | Intellectual Property | 98 |
| 8.13 | Environmental Laws | 98 |
| 8.14 | Properties | 99 |
| 8.15 | Solvency | 99 |
| 8.16 | Security Documents; Restrictions on Liens | 100 |
| 8.17 | Gas Imbalances, Prepayments | 100 |
| 8.18 | Marketing of Production | 100 |
| 8.19 | Financial Statements | 100 |
| 8.20 | OFAC; Patriot Act; FCPA; Use of Proceeds | 101 |
| 8.21 | Hedge Agreements | 101 |
| 8.22 | Affected Financial Institutions | 101 |
-ii-
| 8.23 | Compliance with Laws and Agreements; No Default | 101 |
|---|---|---|
| 8.24 | Insurance | 101 |
| 8.25 | Foreign Operations | 101 |
| 8.26 | Qualified ECP Guarantor | 102 |
| SECTION 9. | AFFIRMATIVE COVENANTS | 102 |
| 9.1 | Information Covenants | 102 |
| 9.2 | Books, Records and Inspections | 107 |
| 9.3 | Maintenance of Insurance | 108 |
| 9.4 | Payment of Obligations; Performance of Obligations under Credit Documents | 108 |
| 9.5 | Preservation of Existence, Compliance, Etc. | 108 |
| 9.6 | Compliance with Requirements of Law | 109 |
| 9.7 | ERISA | 109 |
| 9.8 | Maintenance of Properties | 109 |
| 9.9 | Compliance with Environmental Laws | 110 |
| 9.10 | Additional Guarantors and Collateral | 110 |
| 9.11 | Use of Proceeds | 111 |
| 9.12 | Further Assurances | 112 |
| 9.13 | Reserve Reports | 112 |
| 9.14 | Reserved | 113 |
| 9.15 | Title Information | 114 |
| 9.16 | Deposit Account, Securities Account and Commodity Account Control Agreements | 114 |
| 9.17 | Minimum Hedged Volumes | 115 |
| 9.18 | Unrestricted Subsidiaries | 116 |
| 9.19 | Marketing Activities | 116 |
| 9.20 | Keepwell | 117 |
| 9.21 | Post-Closing Matters | 117 |
| SECTION 10. | NEGATIVE COVENANTS | 117 |
| 10.1 | Limitation on Indebtedness | 117 |
| 10.2 | Limitation on Liens | 121 |
| 10.3 | Limitation on Fundamental Changes | 123 |
| 10.4 | Limitation on Sale of Assets | 125 |
| 10.5 | Limitation on Investments | 128 |
| 10.6 | Limitation on Restricted Payments | 132 |
| 10.7 | Limitations on Debt Payments and Amendments | 134 |
| 10.8 | Negative Pledge Agreements | 135 |
| 10.9 | Limitation on Subsidiary Distributions | 137 |
| 10.10 | Hedge Agreements | 138 |
| 10.11 | Financial Covenants | 140 |
| 10.12 | Accounting Changes; Amendments to Organization Documents | 140 |
| 10.13 | Change in Business | 140 |
| 10.14 | Transactions with Affiliates | 140 |
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| 10.15 | Sale or Discount of Receivables | 141 |
|---|---|---|
| 10.16 | Gas Imbalances | 141 |
| 10.17 | ERISA Compliance | 142 |
| SECTION 11. | EVENTS OF DEFAULT | 142 |
| 11.1 | Payments | 142 |
| 11.2 | Representations, Etc. | 142 |
| 11.3 | Covenants | 142 |
| 11.4 | Default Under Other Agreements | 142 |
| 11.5 | Bankruptcy, Etc. | 143 |
| 11.6 | ERISA | 143 |
| 11.7 | Credit Documents | 144 |
| 11.8 | Security Documents | 144 |
| 11.9 | Judgments | 144 |
| 11.10 | Change of Control | 144 |
| 11.11 | Intercreditor Agreements | 144 |
| 11.12 | Application of Proceeds | 145 |
| 11.13 | Equity Cure | 146 |
| SECTION 12. | THE AGENTS | 147 |
| 12.1 | Appointment | 147 |
| 12.2 | Delegation of Duties | 148 |
| 12.3 | Exculpatory Provisions | 148 |
| 12.4 | Reliance by Agents | 148 |
| 12.5 | Notice of Default | 149 |
| 12.6 | Non-Reliance on Administrative Agent, Collateral Agent and Other Lenders | 149 |
| 12.7 | Indemnification | 149 |
| 12.8 | Agents in Its Individual Capacities | 150 |
| 12.9 | Successor Agents | 150 |
| 12.10 | Security Documents and Collateral Agent under Security Documents and Guarantee | 151 |
| 12.11 | Right to Realize on Collateral and Enforce Guarantee | 152 |
| 12.12 | Administrative Agent May File Proofs of Claim | 152 |
| 12.13 | Certain ERISA Matters | 152 |
| 12.14 | Credit Bidding | 153 |
| 12.15 | Erroneous Payments | 154 |
| SECTION 13. | MISCELLANEOUS | 157 |
| 13.1 | Amendments, Waivers and Releases | 157 |
| 13.2 | Notices | 160 |
| 13.3 | No Waiver; Cumulative Remedies | 161 |
| 13.4 | Survival of Representations and Warranties | 161 |
| 13.5 | Payment of Expenses; Indemnification | 161 |
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| 13.6 | Successors and Assigns; Participations and Assignments | 163 |
|---|---|---|
| 13.7 | Replacements of Lenders under Certain Circumstances | 167 |
| 13.8 | Adjustments; Set-off | 168 |
| 13.9 | Counterparts | 169 |
| 13.10 | Severability | 170 |
| 13.11 | Integration | 170 |
| 13.12 | GOVERNING LAW | 170 |
| 13.13 | Submission to Jurisdiction; Waivers | 170 |
| 13.14 | Acknowledgments | 170 |
| 13.15 | WAIVERS OF JURY TRIAL | 171 |
| 13.16 | Confidentiality | 171 |
| 13.17 | Release of Collateral and Guarantee Obligations | 173 |
| 13.18 | Patriot Act | 174 |
| 13.19 | Payments Set Aside | 174 |
| 13.20 | Reinstatement | 174 |
| 13.21 | Disposition of Proceeds | 174 |
| 13.22 | Collateral Matters; Hedge Agreements | 174 |
| 13.23 | Agency of the Borrower for the Other Credit Parties | 175 |
| 13.24 | Acknowledgement and Consent to Bail-In of EEA Financial Institutions | 175 |
| 13.25 | Acknowledgement Regarding Any Supported QFCs | 175 |
| EXHIBITS | ||
| --- | --- | |
| Exhibit A | Form of Reserve Report Certificate | |
| Exhibit B | Form of Notice of Borrowing | |
| Exhibit C | Form of Guarantee | |
| Exhibit D | Form of Mortgage/Deed of Trust | |
| Exhibit E | Form of Collateral Agreement | |
| Exhibit F | Form of Assignment and Assumption | |
| Exhibit G | Form of Promissory Note (Loan) | |
| Exhibit H | Form of Solvency Certificate | |
| Exhibit I | Form of Non-Bank Tax Certificate | |
| Exhibit J | Form of Intercompany Note | |
| Exhibit K | Form of Elected Commitment Increase Certificate | |
| Exhibit L | Form of Additional Lender Certificate | |
| SCHEDULES | ||
| --- | --- | |
| Schedule 1.1(a) | Commitments | |
| Schedule 1.1(b) | Closing Date Specified Hedge Agreements | |
| Schedule 1.1(c) | Closing Date Subsidiaries | |
| Schedule 8.4 | Litigation | |
| Schedule 8.10(a) | Closing Date ERISA Matters | |
| Schedule 8.14 | Properties | |
| Schedule 8.17 | Closing Date Gas Imbalance | |
| Schedule 8.18 | Closing Date Marketing Agreements | |
| Schedule 8.21 | Closing Date Hedge Agreements | |
| Schedule 9.21 | Post-Closing Matters | |
| Schedule 10.1 | Closing Date Indebtedness |
-v-
| Schedule 10.2(d) | Closing Date Liens |
|---|---|
| Schedule 10.5(d) | Closing Date Investments |
| Schedule 10.8 | Closing Date Negative Pledge Agreements |
| Schedule 10.14 | Closing Date Affiliate Transactions |
| Schedule 10.17(c) | Continuing ERISA Plans |
| Schedule 13.2 | Notice Addresses |
-vi-
This CREDIT AGREEMENT, dated as of September 25, 2024, is among Infinity Natural Resources, LLC, a Delaware limited liability company (the “Borrower”), the banks, financial institutions and other lending institutions from time to time parties as lenders hereto (each a “Lender” and, collectively, the “Lenders”), Citibank, N.A. (“Citi”), as administrative agent and collateral agent for the Lenders and an Issuing Bank, and each other Issuing Bank from time to time party hereto.
WHEREAS, the Borrower has requested that (i) at any time and from time to time from and after the Closing Date and prior to the Maturity Date, the Lenders provide Loans to the Borrower subject to the Available Commitment and (ii) at any time and from time to time after the Closing Date and prior to the L/C Maturity Date, each Issuing Bank issue Letters of Credit (subject to the Available Commitment); and
WHEREAS, the Lenders and the Issuing Banks are willing to make available to the Borrower such revolving credit and letter of credit facilities, in each case, upon the terms and subject to the conditions set forth herein.
NOW, THEREFORE, in consideration of the premises and the covenants and agreements contained herein, the parties hereto hereby agree as follows:
SECTION 1. DEFINITIONS.
1.1 Defined Terms.
As used herein, the following terms shall have the meanings specified below:
“ABR” shall mean for any day a fluctuating rate per annum equal to the highest of (a) the Federal Funds Rate plus ^1^⁄2 of one percent (1.0%), (b) the Prime Rate in effect on such day and (c) Adjusted Term SOFR for a one-month tenor in effect on such day plus one percent (1.00%). Any change in the ABR due to a change in the Prime Rate, the Federal Funds Rate or Adjusted Term SOFR shall take effect at the opening of business on the day specified in the public announcement of such change in the Prime Rate, the Federal Funds Rate or Adjusted Term SOFR, respectively. If the ABR is being used as an alternate rate of interest pursuant to Section 2.10 (for the avoidance of doubt, only until any amendment has become effective pursuant to Section 2.10(d)), then the ABR shall be the greater of clauses (a) and (b) above and shall be determined without reference to clause (c) above; provided further, that if ABR shall be less than one percent (1.00%), such rate shall be deemed to be one percent (1.00%) for purposes of this Agreement.
“ABR Loan” shall mean each Loan bearing interest based on the ABR.
“ABR Term SOFR Determination Day” shall have the meaning specified in the definition of “Term SOFR”.
“Acceptable Commodity Hedge Agreements” shall mean Hedge Agreements entered into with Approved Counterparties in respect of Hydrocarbons for the purpose of reducing the Credit Parties’ commodity price risk in respect of crude oil, natural gas, natural gas liquids or other Hydrocarbons.
“Acceptable Security Interest” shall mean with respect to Mortgaged Properties, a first priority, perfected Mortgage; provided that Permitted Liens may exist and have whatever priority such Liens have at such time under applicable law.
“Additional Lender” shall have the meaning provided in Section 2.16(c)(i).
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“Adjusted Term SOFR” shall mean, for purposes of any calculation, the rate per annum equal to Term SOFR for such calculation; provided that if Adjusted Term SOFR as so determined shall ever be less than the Floor, then Adjusted Term SOFR shall be deemed to be the Floor.
“Adjusted Total Commitment” shall mean, at any time, the Total Commitment less the aggregate amount of Commitments of all Defaulting Lenders.
“Administrative Agent” shall mean Citi, as the administrative agent for the Lenders under this Agreement and the other Credit Documents, or any successor administrative agent appointed in accordance with the provisions of Section 12.9.
“Administrative Agent’s Office” shall mean the Administrative Agent’s address and, as appropriate, account as set forth on Schedule 13.2, or such other address or account as the Administrative Agent may from time to time notify in writing to the Borrower and the Lenders.
“Administrative Questionnaire” shall mean, for each Lender, an administrative questionnaire in a form approved by the Administrative Agent.
“Affected Financial Institution” shall mean (a) any EEA Financial Institution or (b) any UK Financial Institution.
“Affiliate” shall mean, with respect to any Person, any other Person directly or indirectly controlling, controlled by, or under direct or indirect common control with such Person. A Person shall be deemed to control another Person if such Person possesses, directly or indirectly, the power to direct or cause the direction of the management and policies of such other Person, whether through the ownership of Voting Equity, by contract or otherwise. “Controlling” and “controlled” shall have meanings correlative thereto. Notwithstanding anything to the contrary herein, no Person (or any of its Subsidiaries) whose Equity Interests are publicly traded shall be considered an Affiliate of another Person (or any of its Subsidiaries) whose Equity Interests are publicly traded.
“Agent-Related Party” shall mean, with respect to any Agent, its Affiliates and the officers, directors, employees, agents, attorney-in-fact, partners, trustees and advisors of such Agent and of such Agent’s Affiliates.
“Agents” shall mean the Administrative Agent and the Collateral Agent.
“Aggregate Elected Commitment Amount” shall mean, at any time, an amount equal to the sum of the Elected Commitments, as the same may be increased, reduced or terminated pursuant to Section 2.16. The Aggregate Elected Commitment Amount as of the Fourth Amendment Effective Date is $875,000,000.
“Aggregate Maximum Credit Amounts” shall mean, at any time, an amount equal to the sum of the Maximum Credit Amounts, as the same may be reduced or terminated pursuant to Section 2.16. The Aggregate Maximum Credit Amounts of the Lenders as of the Closing Date is $1,500,000,000.
“Agreement” shall mean this Credit Agreement, as amended by the First Amendment, the Second Amendment, the Third Amendment and the Fourth Amendment and as the same may be further amended, restated, amended and restated, extended, replaced, exchanged, refinanced, supplemented or otherwise modified from time to time.
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“Anticipated Acquisition Debt” shall mean any Permitted Additional Debt permitted to be incurred hereunder solely to fund the purchase price of a Permitted Acquisition and related expenses (a) that is incurred prior to the consummation of such acquisition and (b) the net cash proceeds thereof are held in a segregated account (which may be an escrow or trust account) pending the consummation of such acquisition or a special mandatory redemption related thereto.
“Applicable Margin” shall mean, for any day, with respect to any ABR Loan or SOFR Loan, as the case may be, or the Commitment Fee Rate, the rate per annum set forth in the grid below based upon the Utilization Percentage in effect on such day:
| UtilizationGrid | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| Utilization Percentage | X < 25% | 25% < X <50% | 50% < X <75% | 75% < X <90% | X > 90% | ||||
| SOFR Loans | 2.750 | % | 3.000 | % | 3.250 | % | 3.500 | % | 3.750% |
| ABR Loans | 1.750 | % | 2.000 | % | 2.250 | % | 2.500 | % | 2.750% |
| Commitment Fee Rate | 0.375 | % | 0.375 | % | 0.500 | % | 0.500 | % | 0.500% |
Each change in the Commitment Fee Rate or 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.
“Approved Bank” shall have the meaning assigned to such term in the definition of “Permitted Investments”.
“Approved Counterparty” shall mean (a) any Hedge Bank and (b) any Person (other than a Hedge Bank) whose long term senior unsecured debt rating is BBB/Baa2 by S&P or Moody’s (or their equivalent) or higher at the time of entering into any Hedge Agreement (or whose obligations under such Hedge Agreement are guaranteed by an Affiliate of such Person meeting such rating standards) and whose Hedge Agreements remain unsecured and do not contain margin call rights.
“Approved Petroleum Engineers” shall mean (a) Wright & Company, Inc. and (b) any other nationally recognized independent petroleum engineering company that is designated by the Borrower with the consent of the Administrative Agent (such consent not to be unreasonably withheld, conditioned, or delayed).
“Arrangers” shall mean Citi, BofA Securities, Inc., BOKF, NA, Capital One, National Association, Fifth Third Bank, National Association, RBC Capital Markets, Truist Securities, Inc., U.S. Bank National Association and KeyBanc Capital Markets Inc., each in its capacity as a joint lead arranger and joint bookrunner in respect of the Facility.
“Assignment and Assumption” shall mean an assignment and assumption substantially in the form of Exhibit F or such other form as may be approved by the Administrative Agent.
“Attorney Costs” shall mean all reasonable and documented fees, expenses and disbursements of any law firm or other external legal counsel.
“Authorized Officer” shall mean as to any Person, the President, the Chief Executive Officer, the Chief Financial Officer, the Chief Operating Officer, the Treasurer, the Assistant or Vice Treasurer, the Vice President-Finance, the General Counsel, any Senior Vice President, any Executive Vice President and any manager, managing member or general partner, in each case, of such Person, and any other senior
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officer designated as such in writing to the Administrative Agent by such Person. Any document delivered hereunder that is signed by an Authorized Officer shall be conclusively presumed to have been authorized by all necessary corporate, limited liability company, partnership and/or other action on the part of the Borrower or any other Credit Party and such Authorized Officer shall be conclusively presumed to have acted on behalf of such Person.
“Auto-Extension Letter of Credit” shall have the meaning provided in Section 3.2(b).
“Available Commitment” shall mean, at any time, (a) the Total Commitment at such time minus (b) the aggregate Total Exposures of all Lenders at such time.
“Available Tenor” shall mean, as of any date of determination and with respect to the then-current Benchmark, as applicable, (x) if such Benchmark is a term rate, any tenor for such Benchmark (or component thereof) that is or may be used for determining the length of an interest period pursuant to this Agreement or (y) otherwise, any payment period for interest calculated with reference to such Benchmark (or component thereof) that is or may be used for determining any frequency of making payments of interest calculated with reference to such Benchmark pursuant to this Agreement, in each case, as of such date and not including, for the avoidance of doubt, any tenor for such Benchmark that is then-removed from the definition of “Interest Period” pursuant to Section 2.10(d)(iv).
“Bail-In Action” shall mean 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” shall mean (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” shall mean 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” shall have the meaning provided in Section 11.5.
“Benchmark” shall mean, initially, the Term SOFR Reference Rate; provided that if a Benchmark Transition Event has occurred with respect to the Term SOFR Reference Rate or the then-current Benchmark, then “Benchmark” shall mean the applicable Benchmark Replacement to the extent that such Benchmark Replacement has replaced such prior benchmark rate pursuant to Section 2.10(d)(i).
“Benchmark Replacement” shall mean, with respect to any Benchmark Transition Event, the sum of: (a) the alternate benchmark rate that has been selected by the Administrative Agent and the Borrower giving due consideration to (i) any selection or recommendation of a replacement benchmark rate or the mechanism for determining such a rate by the Relevant Governmental Body or (ii) any evolving or then-prevailing market convention for determining a benchmark rate as a replacement to the then-current Benchmark for Dollar-denominated syndicated credit facilities at such time and (b) the related Benchmark Replacement Adjustment; provided that, if such Benchmark Replacement as so determined would be less than the Floor, such Benchmark Replacement will be deemed to be the Floor for the purposes of this Agreement and the other Credit Documents.
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“Benchmark Replacement Adjustment” shall mean, with respect to any replacement of the then-current Benchmark with an Unadjusted Benchmark Replacement, the spread adjustment, or method for calculating or determining such spread adjustment, (which may be a positive or negative value or zero) that has been selected by the Administrative Agent and the Borrower 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 such Benchmark with the applicable Unadjusted Benchmark Replacement by the Relevant Governmental Body 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 such Benchmark with the applicable Unadjusted Benchmark Replacement for Dollar-denominated syndicated credit facilities at such time.
“Benchmark Replacement Date” shall mean the earliest to occur of the following events with respect to the then-current Benchmark:
(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 such Benchmark (or the published component used in the calculation thereof) permanently or indefinitely ceases to provide all Available Tenors of such Benchmark (or such component thereof); or
(b) in the case of clause (c) of the definition of “Benchmark Transition Event,” the first date on which such Benchmark (or the published component used in the calculation thereof) has been determined and announced by the regulatory supervisor for the administrator of such Benchmark (or such component thereof) to be non-representative; provided that such non-representativeness will be determined by reference to the most recent statement or publication referenced in such clause (c) and even if any Available Tenor of such Benchmark (or such component thereof) continues to be provided on such date.
For the avoidance of doubt, the “Benchmark Replacement Date” will be deemed to have occurred in the case of clause (a) or (b) with respect to any Benchmark upon the occurrence of the applicable event or events set forth therein with respect to all then-current Available Tenors of such Benchmark (or the published component used in the calculation thereof).
“Benchmark Transition Event” shall mean the occurrence of one or more of the following events with respect to the then-current Benchmark:
(a) a public statement or publication of information by or on behalf of the administrator of such Benchmark (or the published component used in the calculation thereof) announcing that such administrator has ceased or will cease to provide all Available Tenors of such Benchmark (or such component thereof), permanently or indefinitely; provided that, at the time of such statement or publication, there is no successor administrator that will continue to provide any Available Tenor of such Benchmark (or such component thereof);
(b) a public statement or publication of information by the regulatory supervisor for the administrator of such Benchmark (or the published component used in the calculation thereof), the Federal Reserve Board, the Federal Reserve Bank of New York, an insolvency official with jurisdiction over the administrator for such Benchmark (or such component), a resolution authority with jurisdiction over the administrator for such Benchmark (or such component) or a court or an entity with similar insolvency or resolution authority over the administrator for such Benchmark (or such component), which states that the administrator of such Benchmark (or such component) has ceased or will cease to provide all Available Tenors of such Benchmark (or such component thereof) permanently or indefinitely; provided that, at the time of such statement or publication, there is no successor administrator that will continue to provide any Available Tenor of such Benchmark (or such component thereof); or
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(c) a public statement or publication of information by the regulatory supervisor for the administrator of such Benchmark (or the published component used in the calculation thereof) announcing that all Available Tenors of such Benchmark (or such component thereof) are not, or as of a specified future date will not be, representative.
For the avoidance of doubt, a “Benchmark Transition Event” will be deemed to have occurred with respect to any Benchmark if a public statement or publication of information set forth above has occurred with respect to each then-current Available Tenor of such Benchmark (or the published component used in the calculation thereof).
“Benchmark Transition Start Date” shall mean, in the case of a Benchmark Transition Event, the earlier of (a) the applicable Benchmark Replacement Date and (b) if such Benchmark Transition Event is a public statement or publication of information of a prospective event, the ninetieth (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 ninety (90) days after such statement or publication, the date of such statement or publication).
“Benchmark Unavailability Period” shall mean, the period (if any) (a) beginning at the time that a Benchmark Replacement Date has occurred if, at such time, no Benchmark Replacement has replaced the then-current Benchmark for all purposes hereunder and under any Credit Document in accordance with Section 2.10(d) and (b) ending at the time that a Benchmark Replacement has replaced the then-current Benchmark for all purposes hereunder and under any Credit Document in accordance with Section 2.10(d).
“Beneficial Ownership Certification” shall mean a certification regarding beneficial ownership as required by the Beneficial Ownership Regulation.
“Beneficial Ownership Regulation” shall mean 31 C.F.R. § 1010.230.
“Benefit Plan” shall mean 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”.
“Benefited Lender” shall have the meaning provided in Section 13.8(a).
“BHC Act Affiliate” of a party shall mean an “affiliate” (as such term is defined under, and interpreted in accordance with, 12 U.S.C. 1841(k)) of such party.
“Board” shall mean the Board of Governors of the Federal Reserve System of the United States of America (or any successor).
“Board of Directors” shall mean, as to any Person, the board of directors or other governing body of such Person, or if such Person is owned or managed by a single entity, the board of directors or other governing body of such entity.
“Borrower” shall have the meaning provided in the introductory paragraph hereto.
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“Borrowing” shall mean the incurrence of one Type of Loan on a given date (or resulting from conversions on a given date) having, in the case of SOFR Loans, the same Interest Period (provided that ABR Loans incurred pursuant to Section 2.10(b) shall be considered part of any related Borrowing of SOFR Loans).
“Borrowing Base” shall mean, at any time, an amount determined in accordance with Section 2.14, as may be adjusted from time to time pursuant to Section 2.14. As of the Fourth Amendment Effective Date, the Borrowing Base will be $875,000,000.
“Borrowing Base Properties” shall mean the Oil and Gas Properties of the Credit Parties constituting Proved Reserves as set forth in the most recently delivered Reserve Report.
“Borrowing Base Reduction Debt” shall mean Permitted Additional Debt issued or incurred in accordance with Sections 10.1(j) or (n), as applicable.
“Borrowing Base Value” shall mean, (a) with respect to any Oil and Gas Property of the Credit Parties, the value attributed to such Oil and Gas Property in the Borrowing Base then in effect, as determined by the Administrative Agent and (b) with respect to any Hedge Agreement of the Credit Parties in respect of commodities, the value attributable to such Hedge Agreement in the Borrowing Base then in effect, as determined by the Administrative Agent; provided that (x) any Borrowing Base Value calculation by the Administrative Agent that would result in a reduction of the Borrowing Base pursuant to Section 2.14(f) shall be submitted to the Lenders for approval and (y) the failure of the Required Lenders to object to such Borrowing Base Value within five (5) Business Days shall be deemed to be an approval of such Borrowing Base Value by the Lenders.
“Bridge Facility” shall mean a customary unsecured “bridge” loan facility incurred by Borrower solely to finance a Permitted Acquisition and related expenses and which has a scheduled maturity date not later than 365 days from the date of incurrence.
“Budget” shall have the meaning provided in Section 9.1(p).
“Building” shall have the meaning assigned to such term in the applicable Flood Insurance Regulation.
“Business Day” shall mean any day excluding Saturday, Sunday and any other day on which banking institutions in New York City, New York or Morgantown, West Virginia are authorized by law or other governmental actions to close.
“Capitalized Lease” shall mean, as applied to any Person, any lease of any property (whether real, personal or mixed) by that Person as lessee that, in conformity with GAAP, is, or is required to be, accounted for as a capital lease on the balance sheet of that Person; provided that for all purposes hereunder the amount of obligations under any Capitalized Lease shall be the amount thereof accounted for as a liability on the balance sheet of such Person in accordance with GAAP; provided, further, that for purposes of calculations made pursuant to the terms of this Agreement, GAAP will be deemed to treat leases in a manner consistent with its treatment under generally accepted accounting principles as of January 1, 2018, notwithstanding any modifications or interpretative changes thereto that may occur. For the avoidance of doubt, any lease that would have been characterized as an operating lease in accordance with GAAP as of January 1, 2018 (whether or not such operating lease was in effect on such date) shall continue to be accounted for as an operating lease (and not as a Capitalized Lease) for purposes of this Agreement regardless of any change in GAAP following January 1, 2018 that would otherwise require such lease to be re-characterized (on a prospective or retroactive basis or otherwise) as a Capitalized Lease.
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“Cash Collateralize” shall have the meaning provided in Section 3.7(c).
“Cash Management Agreement” shall mean any agreement entered into from time to time by the Borrower or any of the Borrower’s Restricted Subsidiaries in connection with cash management services for collections, other Cash Management Services and for operating, payroll and trust accounts of such Person, including automatic clearing house services, controlled disbursement services, electronic funds transfer services, lockbox services, stop payment services and wire transfer services.
“Cash Management Bank” shall mean any Person that either (a) at the time it provides Cash Management Services or (b) at any time after it has provided any Cash Management Services, is a Lender or an Agent or an Affiliate of a Lender or an Agent.
“Cash Management Obligations” shall mean obligations owed by the Borrower or any Restricted Subsidiary to any Cash Management Bank in connection with, or in respect of, any Cash Management Services.
“Cash Management Services” shall mean (a) commercial credit cards, merchant card services, purchase or debit cards, including non-card e-payables services, (b) treasury management services (including controlled disbursement, overdraft, automated clearing house fund transfer services, return items and interstate depository network services) and (c) any other demand deposit or operating account relationships or other cash management services, including any Cash Management Agreement.
“Casualty Event” shall mean, with respect to any Collateral, (a) any damage to, destruction of, or other casualty or loss involving, any property or asset or (b) any seizure, condemnation, confiscation or taking under the power of eminent domain of, or any requisition of title or use of, or relating to, or any similar event in respect of, any property or asset.
“CFC” shall mean a “controlled foreign corporation” within the meaning of Section 957 of the Code.
“Change in Law” shall mean (a) the adoption of any law, treaty, order, policy, rule or regulation after the Closing Date, (b) any change in any law, treaty, order, policy, rule or regulation or in the interpretation, implementation or application thereof by any Governmental Authority after the Closing Date or (c) compliance by any Lender with any guideline, request, directive or order enacted or promulgated after the Closing Date by any central bank or other governmental or quasi-governmental authority (whether or not having the force of law); provided that notwithstanding anything herein to the contrary, the Dodd-Frank Wall Street Reform and Consumer Protection Act, the Basel Committee on Banking Regulations and Supervisory Practices (or any successor or similar authority) and all guidelines, requests, directives, orders, rules and regulations adopted, enacted or promulgated in connection therewith shall be deemed to have gone into effect after the Closing Date regardless of the date adopted, enacted or promulgated and shall be included as a Change in Law but solely for such costs that would have been included if they would have otherwise been imposed under clauses (a)(ii) and (c) of Section 2.10 or Section 3.11 and only to the extent a Lender is imposing applicable increased costs or costs in connection with capital adequacy requirements similar to those described in clauses (a)(ii) and (c) of Section 2.10 or Section 3.11 generally on other borrowers of comparable loans under United States reserve based credit facilities under credit agreements having similar reimbursement provisions.
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“Change of Control” shall mean and be deemed to have occurred if:
(a) prior to the occurrence of a Qualifying IPO, the Permitted Holders shall in the aggregate be the “beneficial owner” (as defined in Rules 13d-3 and 13d-5 under the Exchange Act as in effect on the Closing Date) of (i) if the Borrower is a Subsidiary of any Parent Entity, Voting Equity having less than 50.01% of the total voting power of all outstanding shares of such Parent Entity (other than a Parent Entity that is a Subsidiary of another Parent Entity) and (ii) if the Borrower is not a Subsidiary of any Parent Entity, Voting Equity having less than 50.01% of the total voting power of all outstanding shares of the Borrower;
(b) from and after the occurrence of a Qualifying IPO, any “person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act as in effect on the Closing Date), other than one or more Permitted Holders, shall be the “beneficial owner” of (i) if the Borrower is a Subsidiary of any Parent Entity, shares or units of Voting Equity having more than 50.0% of the total voting power of all outstanding shares of such Parent Entity (other than a Parent Entity that is a Subsidiary of another Parent Entity) and (ii) if the Borrower is not a Subsidiary of any Parent Entity, shares or units of Voting Equity having more than 50.0% of the total voting power of all outstanding shares of the Borrower; or
(c) a “change of control” (or any other defined term describing a similar event or having a similar purpose or meaning) shall occur under any Material Indebtedness.
Notwithstanding the preceding or any provision of Section 13d-3 of the Exchange Act, a Person or group shall not be deemed to beneficially own Equity Interests subject to a stock or asset purchase agreement, merger agreement, option agreement, warrant agreement or similar agreement (or voting or option or similar agreement related thereto) until the consummation of the acquisition of the Equity Interests in connection with the transactions contemplated by such agreement.
“Citi” shall have the meaning provided in the introductory paragraph hereto.
“Closing Date” shall mean the date on which the conditions precedent of Section 6 have been satisfied except as otherwise agreed or waived pursuant to Section 13.1.
“Code” shall mean the Internal Revenue Code of 1986, as amended from time to time.
“Collateral” shall have the meaning provided for such term in each of the Security Documents and shall include any and all assets securing or intended to secure any or all of the Obligations; provided that with respect to any Mortgages, Collateral (as defined herein), shall include “Property” (as defined therein).
“Collateral Agent” shall mean Citi, as collateral agent under the Security Documents, or any successor collateral agent appointed in accordance with the provisions of Section 12.9.
“Collateral Agreement” shall mean that certain Collateral Agreement dated as of the date hereof, by and among the Borrower, the other grantors party thereto and the Collateral Agent, for the benefit of the Secured Parties, substantially in the form of Exhibit E hereto.
“Collateral Coverage Minimum” shall mean that the Mortgaged Properties shall represent at least eighty-five percent (85%) of the PV-9 of the Borrowing Base Properties, in each case, included in the most recent Reserve Report delivered to the Administrative Agent.
“Commitment” shall mean, with respect to each Lender, the commitment of such Lender to make Loans and to acquire participations in Letters of Credit hereunder, as such commitment may be (a) modified from time to time pursuant to Section 2.16, (b) modified from time to time pursuant to assignments by or to such Lender pursuant to Section 13.6(b) or (c) modified by any other amendment or modification of such commitment permitted under this Agreement. The amount representing each Lender’s Commitment shall at any time be the least of (i) such Lender’s Maximum Credit Amount, (ii) such Lender’s Commitment Percentage of the then-effective Borrowing Base and (iii) such Lender’s Elected Commitment.
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“Commitment Fee” shall have the meaning provided in Section 4.1(a).
“Commitment Fee Rate” shall mean, for any day, with respect to the Available Commitment on such day, the applicable rate per annum set forth next to the row heading “Commitment Fee Rate” in the definition of “Applicable Margin” and based upon the Utilization Percentage in effect on such day.
“Commitment Percentage” shall mean, at any time, for each Lender, the percentage obtained by dividing (a) such Lender’s Maximum Credit Amount at such time by (b) the amount of the Aggregate Maximum Credit Amounts at such time; provided that at any time when the Total Commitment shall have been terminated, each Lender’s Commitment Percentage shall be the percentage obtained by dividing (i) such Lender’s Total Exposure at such time by (ii) the aggregate Total Exposures of all Lenders at such time (with such Total Exposure, and the components thereof, calculated using (x) any applicable Lender’s outstanding principal amount of Loans plus (y) such Lender’s Letter of Credit Exposure based on the Commitment Percentage of such Lender immediately prior to the termination of the Total Commitment).
“Commodity Account” shall mean any commodity account maintained by the Credit Parties, including any “commodity accounts” under Article 9 of the UCC. All funds in such Commodity Accounts (other than Excluded Accounts) shall be conclusively presumed to be Collateral and proceeds of Collateral and the Agents and the Lenders shall have no duty to inquire as to the source of the amounts on deposit in the Commodity Accounts.
“Commodity Account Control Agreement” has the meaning specified in Section 9.16(a).
“Commodity Exchange Act” shall mean the Commodity Exchange Act (7 U.S.C. § 1 et seq.), as amended from time to time, and any successor statute, and any regulations promulgated thereunder.
“Communications” shall have the meaning provided in Section 13.2(c).
“Confidential Information” shall have the meaning provided in Section 13.16.
“Conforming Changes” shall mean, with respect to either the use or administration of Term SOFR or the use, administration, adoption or implementation of any Benchmark Replacement, any technical, administrative or operational changes (including changes to the definition of “ABR,” the definition of “Business Day,” the definition of “U.S. Government Securities Business Day,” the definition of “Interest Period” or any similar or analogous definition (or the addition of a concept of “interest period”), timing and frequency of determining rates and making payments of interest, timing of borrowing requests or prepayment, conversion or continuation notices, the applicability and length of lookback periods, the applicability of Section 2.11 and other technical, administrative or operational matters) that the Administrative Agent decides may be appropriate to reflect the adoption and implementation of any such rate or to permit the use and 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 any such rate exists, in such other manner of administration as the Administrative Agent decides is reasonably necessary in connection with the administration of this Agreement and the other Credit Documents).
“Connection Income Taxes” shall mean Other Connection Taxes that are imposed on or measured by net income (however denominated) or that are franchise Taxes or branch profits Taxes.
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“Consolidated Current Assets” shall mean, as at any date of determination, without duplication, the sum of all amounts that would, in conformity with GAAP, be set forth opposite the caption “total current assets” (or any like caption) on a consolidated balance sheet of the Borrower and its Restricted Subsidiaries on such date, plus the Available Commitment then available to be borrowed under this Agreement, including under Section 7, but excluding the amount of any non-cash asset under Accounting Standards Codification Topic No. 410 and Accounting Standards Codification Topic No. 815.
“Consolidated Current Liabilities” shall mean, as at any date of determination, without duplication, the sum of all amounts that would, in conformity with GAAP, be set forth opposite the caption “total current liabilities” (or any like caption) on a consolidated balance sheet of the Borrower and its Restricted Subsidiaries on such date, but excluding, without duplication, (a) the amount of any non-cash liabilities under Accounting Standards Codification Topic No. 410 and Accounting Standards Codification Topic No. 815, (b) the current portion of current and deferred income taxes (c) the current portion of any Loans and other long-term liabilities and (d) any non-cash liabilities recorded in connection with stock-based or similar incentive-based compensation awards or arrangements.
“Consolidated EBITDAX” shall mean, for any period, for the Borrower and its Restricted Subsidiaries on a consolidated basis, an amount equal to Consolidated Net Income for such period plus (a) the following to the extent deducted (and not added back) in calculating such Consolidated Net Income: (i) Consolidated Interest Expenses for such period, (ii) an amount equal to the provision for federal, state, and local income and franchise taxes, (iii) depletion, depreciation, amortization and exploration expense for such period (including all drilling, completion, geological and geophysical costs), (iv) losses from asset Dispositions (excluding Hydrocarbons Disposed of in the ordinary course of business), (v) all other non-cash items reducing such Consolidated Net Income for such period, (vi) all transaction costs, expenses, and charges with respect to acquisitions, Investments, Dispositions, equity issuances and incurrences of Indebtedness, in each case, permitted by this Agreement (but excluding all transactions costs, expenses, and charges incurred with regard to the negotiation, execution and delivery of the Credit Documents) in an aggregate amount not to exceed $2,000,000.00 for such period, (vii) extraordinary, unusual and non-recurring losses, and (viii) fees, costs, expenses incurred with regard to negotiation, execution and delivery of this Agreement and the other Credit Documents; all determined on a consolidated basis with respect to the Borrower and its Restricted Subsidiaries in accordance with GAAP, using the results of the twelve-month period ending with that reporting period, and minus (b) the following to the extent included in (and not deducted from) calculating such Consolidated Net Income: (i) federal, state and local income tax credits of the Borrower and its Restricted Subsidiaries for such period, (ii) gains from asset Dispositions (excluding Hydrocarbons Disposed of in the ordinary course of business), (iii) all other non-cash items increasing Consolidated Net Income for such period and (iv) extraordinary, unusual and non-recurring gains; provided that, with respect to the determination of the Borrower’s compliance with the Financial Performance Covenants set forth in Section 10.11 for any period, Consolidated EBITDAX shall be adjusted to give effect, on a pro forma basis, to any Qualified Acquisition or Qualified Disposition made during such period, as if such acquisition or Disposition had occurred on the first (1st) day of such period.
Consolidated EBITDAX shall be calculated for each four-fiscal quarter period using the Consolidated EBITDAX for the four most recently ended fiscal quarters.
For the avoidance of doubt, Consolidated EBITDAX shall be calculated in accordance with Section 1.11.
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“Consolidated Interest Expense” shall mean, with respect to any Person for any period, without duplication, the sum of:
(i) consolidated interest expense of such Person and its Restricted Subsidiaries for such period, to the extent such expense was deducted (and not added back) in computing Consolidated Net Income (including (A) amortization of original issue discount resulting from the issuance of Indebtedness at less than par, (B) all commissions, discounts and other fees and charges owed with respect to letters of credit or bankers acceptances, (C) non-cash interest payments (but excluding any non-cash interest expense attributable to the movement in the mark to market valuation of Hedging Obligations or other derivative instruments pursuant to GAAP), (D) the interest component of obligations under any Capitalized Lease, and (E) net payments, if any, made (less net payments, if any, received), pursuant to interest rate Hedge Agreements with respect to Indebtedness, and excluding (F) costs associated with obtaining Hedge Agreements and breakage costs in respect of Hedge Agreements related to interest rates, (G) any expense resulting from the discounting of any Indebtedness in connection with the application of recapitalization accounting or, if applicable, recapitalization or purchase accounting in connection with the Transactions or any acquisition, (H) penalties and interest relating to income taxes, (I) any “additional interest” or “liquidated damages” with respect to other securities for failure to timely comply with registration rights obligations, (J) amortization or expensing of deferred financing fees, amendment and consent fees, debt issuance costs, commissions, fees and expenses and discounted liabilities, (K) any expensing of bridge, commitment and other financing fees and any other fees related to the Transactions or any acquisitions after the Closing Date, (L) any accretion of accrued interest on discounted liabilities and any prepayment premium or penalty (other than Indebtedness except to the extent arising from the application of purchase or recapitalization accounting) and (M) annual agency fees paid to the administrative agents and collateral agents under any credit facilities or other debt instruments or document); plus
(ii) consolidated capitalized interest of such Person and its Restricted Subsidiaries for such period, whether paid or accrued; less
(iii) interest income of such Person and its Restricted Subsidiaries for such period.
For purposes of this definition, interest on obligations in respect of Capitalized Leases shall be deemed to accrue at an interest rate reasonably determined by such Person to be the rate of interest implicit in such obligations in accordance with GAAP.
“Consolidated Net Income”^^shall mean, for any period, for the Borrower and its Restricted Subsidiaries on a consolidated basis, the net income (loss) of the Borrower and its Restricted Subsidiaries (excluding extraordinary gains and extraordinary losses and the net income (loss) of any Person (other than the Borrower or a Restricted Subsidiary) in which the Borrower and its Restricted Subsidiaries own any Equity Interests for that period, except to the extent of the amount of dividends and distributions actually received by the Borrower or a Restricted Subsidiary), provided that the calculation of Consolidated Net Income shall exclude any non-cash charges or losses and any non-cash income or gains, in each case, required to be included in net income of the Borrower and its Subsidiaries as a result of the application of FASB Accounting Standards Codifications 718, 815, 410 and 360, but shall expressly include any cash charges or payments that have been incurred as a result of the termination of any Hedge Agreement.
“Consolidated Total Assets” shall mean the total assets of the Borrower and its Restricted Subsidiaries, determined on a consolidated basis in accordance with GAAP, as shown on the most recent consolidated balance sheet of the Borrower delivered pursuant to Section 9.1(a) or (b) (and, in the case of any determination relating to any incurrence of Indebtedness or any Investment or other acquisition, on a pro forma basis including any property or assets being acquired in connection therewith).
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“Consolidated Total Debt” shall mean, as of any date of determination, (a) the sum of (without duplication) all Indebtedness of the types described in clause (a) and clause (b) (other than (i) intercompany Indebtedness owing to the Borrower or any Restricted Subsidiary and (ii) Anticipated Acquisition Debt but only to the extent that the acquisition for which such Anticipated Acquisition Debt was incurred has not been consummated as of such date of determination,), clause (d) (but, in the case of clause (d), only to the extent of any unreimbursed drawings under any letter of credit that has not been cash collateralized), clause (e), clauses (h) through (i) and clause (k) (but, in the case of clause (k) only to the extent of Guarantee Obligations with respect to Indebtedness otherwise included in this definition of “Consolidated Total Debt”) of the definition thereof, in each case actually owing by the Borrower and the Subsidiaries on such date and to the extent appearing on the balance sheet of the Borrower determined on a consolidated basis in accordance with GAAP, minus (b) the aggregate amount of all Unrestricted Cash and cash equivalents included on the consolidated balance sheet of the Borrower and its Restricted Subsidiaries as of such date; provided that (i) clause (a) above shall not include Indebtedness (A) in respect of letters of credit, bank guarantees and performance or similar bonds except to the extent of unreimbursed amounts thereunder and (B) of Unrestricted Subsidiaries (other than Indebtedness of Unrestricted Subsidiaries in respect of which the Borrower or any Restricted Subsidiary has Guarantee Obligations); and (ii) if as of any date of determination, the Total Exposure (other than Letter of Credit Exposure) is greater than $0, the amount of Unrestricted Cash and cash equivalents deducted pursuant to clause (b) above shall not exceed the greater of (x) $35,000,000 and (y) ten percent (10%) of the then effective Borrowing Base.
“Consolidated Total Net Leverage Ratio” shall mean, as of any date of determination, the ratio of (a) Consolidated Total Debt as of the last day of the most recent Test Period to (b) Consolidated EBITDAX of the Borrower for such Test Period.
“Contractual Requirement” shall have the meaning provided in Section 8.3.
“Controlled Account” shall mean a Deposit Account, a Securities Account or a Commodity Account that is subject to a Deposit Account Control Agreement, a Securities Account Control Agreement or a Commodity Account Control Agreement, as the case may be.
“Covered Entity” shall mean 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” shall have the meaning provided in Section 13.25.
“Credit Documents” shall mean this Agreement, the First Amendment, the Second Amendment, the Third Amendment, the Fourth Amendment, the Guarantee, the Security Documents, each Letter of Credit Application, any Notes issued by the Borrower to a Lender under this Agreement and any other document, instrument or agreement (other than Secured Hedge Agreements or Secured Cash Management Agreements) now or hereafter delivered by or on behalf of a Credit Party in connection with this Agreement.
“Credit Event” shall mean and include the making (but not the conversion or continuation) of a Loan and the issuance of a Letter of Credit.
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“Credit Party” shall mean each of the Borrower and the Guarantors.
“Cure Amount” shall have the meaning provided in Section 11.13(a).
“Cure Deadline” shall have the meaning provided in Section 11.13(a)
“Cure Right” shall have the meaning provided in Section 11.13(a).
“Current Ratio” shall mean, as of any date of determination, the ratio of (a) Consolidated Current Assets to (b) Consolidated Current Liabilities.
“Current Ratio Covenant” shall mean the covenant of the Borrower set forth in Section 10.11(b).
“December 31 Reserve Report” shall have the meaning provided in Section 9.13(a).
“Debtor Relief Laws” shall mean the Bankruptcy Code of the United States, and all other liquidation, conservatorship, bankruptcy, assignment for the benefit of creditors, moratorium, rearrangement, receivership, insolvency, reorganization, or similar debtor relief laws of the United States or other applicable jurisdictions from time to time in effect and affecting the rights of creditors generally.
“Default” shall mean any event, act or condition that constitutes an Event of Default or with notice or lapse of time, or both, would constitute an Event of Default.
“Default Rate” shall have the meaning provided in Section 2.8(c).
“Defaulting Lender” shall mean any Lender whose acts or failure to act, whether directly or indirectly, cause it to meet any part of the definition of “Lender Default”.
“Deposit Account” shall mean any checking or other demand deposit account maintained by the Credit Parties, including any “deposit accounts” under Article 9 of the UCC. All funds in such Deposit Accounts (other than Excluded Accounts) shall be conclusively presumed to be Collateral and proceeds of Collateral and the Agents and the Lenders shall have no duty to inquire as to the source of the amounts on deposit in the Deposit Accounts.
“Deposit Account Control Agreement” shall have the meaning provided in Section 9.16(a).
“Dispose” or “Disposed of” shall have a correlative meaning to the defined term of “Disposition”.
“Disposition” shall have the meaning provided in Section 10.4.
“Disqualified Stock” shall mean any Equity Interest that, by its terms (or by the terms of any security or other Equity Interests into which it is convertible or for which it is exchangeable), or upon the happening of any event or condition (a) matures or is mandatorily redeemable (other than solely for Qualified Equity Interests), pursuant to a sinking fund obligation, scheduled redemption or otherwise (except as a result of a change of control or asset sale so long as any rights of the holders thereof upon the occurrence of a change of control or asset sale event shall be subject to the prior Payment in Full), (b) is redeemable at the option of the holder thereof (other than solely for Qualified Equity Interests and other than as a result of a change of control or asset sale so long as any rights of the holders thereof upon the occurrence of a change of control or asset sale event shall be subject to the prior Payment in Full), (c) provides for the scheduled payments of dividends in cash that are not subject to Restricted Payment Conditions being satisfied, or (d) is or becomes convertible into or exchangeable for Indebtedness or any
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other Equity Interests that would constitute Disqualified Stock, in the case of each of clauses (a), (b), (c) and (d), prior to the date that is one hundred eighty-one (181) days after the Maturity Date; provided, that if such Equity Interests are issued pursuant to any plan for the benefit of future, current or former employees, directors, officers, members of management or consultants of the Borrower or its Restricted Subsidiaries or by any such plan to such employees, directors, officers, members of management or consultants, such Equity Interests shall not constitute Disqualified Stock solely because they may be required to be repurchased by the Borrower or its Restricted Subsidiaries in order to satisfy applicable statutory or regulatory obligations or as a result of such employee’s, director’s, officer’s, management member’s or consultant’s termination, death or disability; provided, further, that any Equity Interests held by any future, current or former employee, director, officer, member of management or consultant of the Borrower, any of its Restricted Subsidiaries or any other entity in which the Borrower or a Restricted Subsidiary has an Investment and is designated in good faith as an “affiliate” by the Board of Directors of the Borrower (or the compensation committee thereof), in each case pursuant to any stock subscription or shareholders’ agreement, management equity plan or stock option plan or any other management or employee benefit plan or agreement shall not constitute Disqualified Stock solely because it may be required to be repurchased by the Borrower or its Restricted Subsidiaries in order to satisfy applicable statutory or regulatory obligations or as a result of such employee’s, director’s, officer’s, management member’s or consultant’s termination, death or disability.
“Distressed Person” shall have the meaning provided in the definition of “Lender-Related Distress Event”.
“Distributable Free Cash Flow” shall mean, as of any time of determination, an amount equal to (a) Free Cash Flow as of the last day of the most recently ended Test Period for which financial statements have been delivered pursuant to clause (a) or (b) of Section 9.1 minus (b) the positive difference, if any, between (i) aggregate amount of the Free Cash Flow Utilizations that occur during such Test Period and through such time of determination minus (ii) aggregate amount of Free Cash Flow Utilizations that occurred during such Test Period and which are attributable to Free Cash Flow generated during the four fiscal quarter period ending immediately prior to such Test Period. 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” and “$” shall mean dollars in lawful currency of the United States of America.
“Domestic Subsidiary” shall mean each Subsidiary of the Borrower that is organized under the laws of the United States or any state thereof, or the District of Columbia.
“Drawing” shall have the meaning provided in Section 3.4(b).
“ECP” shall mean any Person who qualifies as an “eligible contract participant” under Section 2(e) of the Commodity Exchange Act.
“EEA Financial Institution” shall mean (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.
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“EEA Member Country” shall mean any of the member states of the European Union, Iceland, Liechtenstein, and Norway.
“EEA Resolution Authority” shall mean 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.
“Elected Commitment” shall mean, as to each Lender, the amount set forth opposite such Lender’s name on Schedule 1.1(a) under the caption “Elected Commitment”, as the same may be increased, reduced or terminated from time to time in connection with an optional increase, reduction or termination of the Aggregate Elected Commitment Amount pursuant to Section 2.16(b) or (c).
“Elected Commitment Increase Certificate” shall have the meaning given to such term in Section 2.16(c)(ii)(F).
“Energy Business” shall mean:
(a) the business of acquiring, exploring, exploiting, developing, producing, operating and disposing of interests in oil, natural gas, natural gas liquids, liquefied natural gas and other Hydrocarbons and mineral properties or products produced in association with any of the foregoing;
(b) the business of gathering, marketing, distributing, treating, processing, storing, refining, selling and transporting of any production from interests in oil, natural gas, natural gas liquids, liquefied natural gas and other Hydrocarbons and mineral properties or products produced in association therewith; and the marketing of oil, natural gas, natural gas liquids, liquefied natural gas and other Hydrocarbons and minerals obtained from unrelated Persons;
(c) the business of developing, constructing, owning, operating and maintaining (i) low carbon, carbon management, carbon sequestration and/or carbon offsetting technologies, assets, infrastructure and businesses, including carbon dioxide and associated gases capture (including direct air capture and pre- and post-combustion capture processes), transportation, utilization and/or sequestration technologies, facilities or assets, (ii) solar, wind, geothermal or other renewable power generation or deployment technologies, facilities or assets, (iii) the production, storage, or transportation of hydrogen, ammonia or other substances, and (iv) energy storage or other clean energy technologies, facilities or assets; and
(d) any business or activity relating to, arising from, or necessary, appropriate, incidental or ancillary to the activities described in the foregoing clauses (a), (b) or (c) of this definition.
“Engineering Reports” shall have the meaning provided in Section 2.14(c)(i).
“Environmental Claims” shall mean any and all written actions, suits, orders, decrees, demands, demand letters, claims, liens, notices of liability, noncompliance, violation or proceedings arising under or based upon any Environmental Law or any Environmental Permit (hereinafter, “Claims”), including, without limitation, (i) any and all Claims by any Governmental Authority for enforcement, investigation, cleanup, removal, response, remedial, reclamation, closure, plugging and abandonment, or other actions, damages, or civil or criminal sanctions pursuant to any applicable Environmental Law and (ii) any and all Claims by any third party seeking damages, contribution, indemnification, cost recovery, compensation or injunctive relief regarding the presence or Release of Hazardous Materials or arising from alleged injury or threat of injury to health or safety (to the extent relating to human exposure to Hazardous Materials), or the environment including, without limitation, air, surface water, groundwater, land surface and subsurface strata and natural resources such as wetlands or pertaining to alleged public or private nuisance.
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“Environmental Law” shall mean any applicable federal, state, foreign or local statute, law, rule, regulation, ordinance, code, guidance, and common law now or hereafter in effect and in each case as amended, and any binding judicial or administrative interpretation thereof, including any binding judicial or administrative order, consent decree or judgment, as well as any permit or approval, relating to the pollution or protection of the environment, including, without limitation, ambient or indoor air, surface water, groundwater, greenhouse gases or climate change, endangered species, land surface and subsurface strata and natural resources such as wetlands, or human health or safety (to the extent relating to human exposure to, or the Release of, Hazardous Materials).
“Environmental Permit” shall mean any permit, approval, identification number, registration, license or other authorization required under any applicable Environmental Law.
“Equity Interests” of any person shall mean any and all shares, interests, rights to purchase or otherwise acquire, warrants, options, participations or other equivalents of or interests in (however designated) equity or ownership of such person, including any preferred stock, any limited or general partnership interest and any limited liability company membership interest, and any securities or other rights or interests convertible into or exchangeable for any of the foregoing, excluding any debt security that is convertible or exchangeable into any Equity Interests; provided that (i) any instrument evidencing Indebtedness convertible or exchangeable into Equity Interests (including, for the avoidance of doubt, any Permitted Convertible Debt), whether or not such debt securities include any right of participation with Equity Interests, shall not be deemed to be Equity Interests unless and until such instrument is so converted or exchanged and (ii) “Equity Interests” shall not include any Permitted Bond Hedge Transaction or Permitted Warrant Transaction until any Equity Interests have been issued pursuant to the terms thereof.
“ERISA” shall mean the Employee Retirement Income Security Act of 1974, as amended from time to time, and the rules and regulations promulgated thereunder.
“ERISA Affiliate” shall mean each person (as defined in Section 3(9) of ERISA) that together with any Credit Party would be deemed to be a “single employer” within the meaning of Section 4001(b)(1) of ERISA or Section 414(b) or (c) of the Code or, solely for purposes of Section 302 of ERISA and Section 412 of the Code, is treated as a single employer under Section 414 of the Code.
“ERISA Event” shall mean (a) a Reportable Event with respect to a Pension Plan; (b) a withdrawal by the Borrower or any ERISA Affiliate from a Pension Plan subject to Section 4063 of ERISA during a plan year in which it was a substantial employer (as defined in Section 4001(a)(2) of ERISA) or a cessation of operations that is treated as such a withdrawal under Section 4062(e) of ERISA; (c) the failure of a Credit Party or any ERISA Affiliate to make by its due date a required installment under Section 430(j) of the Code with respect to any Pension Plan; (d) a failure to satisfy the minimum funding standard under Section 412 of the Code or Section 302 of ERISA, or the filing pursuant to Section 412(c) of the Code or Section 302(c) of ERISA of an application for a waiver of the minimum funding standard, in each case with respect to a Pension Plan, whether or not waived, or a failure to make any required contribution to a Multiemployer Plan; (e) a complete or partial withdrawal by a Credit Party or any ERISA Affiliate from a Multiemployer Plan or notification that a Multiemployer Plan is insolvent within the meaning of Title IV of ERISA or is in endangered or critical status, within the meaning of Section 305 of ERISA; (f) the filing of a notice of intent to terminate, the treatment of a Pension Plan amendment as a termination under Section 4041 or 4041A of ERISA, respectively, or the commencement of proceedings by the PBGC to terminate a Pension Plan; (g) the appointment of a trustee to administer, any Pension Plan; (h) the imposition of any liability under Title IV of ERISA, including the imposition of a lien under Section 412 or 430(k) of the Code or
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Section 303 or 4068 of ERISA on any property (or rights to property, whether real or personal) of a Credit Party or any ERISA Affiliate, but excluding PBGC premiums due but not delinquent under Section 4007 of ERISA, upon such Credit Party or any ERISA Affiliate; (i) a determination that any Pension Plan is, or is expected to be, in “at-risk” status (within the meaning of Section 303(i)(4)(A) of ERISA or Section 430(i)(4)(A) of the Code) or (j) the occurrence of a non-exempt prohibited transaction with respect to any Pension Plan maintained or contributed to by any Credit Party (within the meaning of Section 4975 of the Code or Section 406 of ERISA) which could reasonably be excepted to result in material liability to such Credit Party.
“Erroneous Payment” shall have the meaning provided in Section 12.15(a).
“Erroneous Payment Deficiency Assignment” shall have the meaning provided in Section 12.15(d)(i).
“Erroneous Payment Impacted Class” shall have the meaning provided in Section 12.15(d)(i).
“Erroneous Payment Return Deficiency” shall have the meaning provided in Section 12.15(d)(i).
“Erroneous Payment Subrogation Rights” shall have the meaning provided in Section 12.15(e).
“EU Bail-In Legislation Schedule” shall mean the EU Bail-In Legislation Schedule published by the Loan Market Association (or any successor person), as in effect from time to time.
“Event of Default” shall have the meaning provided in Section 11.
“Excess Cash” shall mean, as of any date of determination, cash and cash equivalents of the Borrower and its Restricted Subsidiaries other than (a) any cash allocated for, reserved or otherwise set aside to pay royalty obligations, working interest obligations, vendor payments, suspense payments, similar payments as are customary in the oil and gas industry, severance and ad valorem taxes, payroll, payroll taxes, other taxes and employee wage and benefit payment obligations of the Borrower or any Restricted Subsidiary then due and owing (or to be due and owing within fifteen (15) days of such date), in each case other than such payments that would be due and owing in connection with or in contemplation of the commencement of proceedings under Debtor Relief Laws, and for which the Borrower or such Restricted Subsidiary either (x) has issued checks or has initiated wires or ACH transfers or (y) reasonably anticipates in good faith that it will issue checks or initiate wires or ACH transfers within five (5) days of such date, (b) any cash allocated for, reserved or otherwise set aside to pay other amounts permitted to be paid by the Borrower or its Restricted Subsidiaries in accordance with this Agreement and other Credit Documents due and owing as of such date (or to be due and owing within five (5) days of such date), in each case other than such payments that would be due and owing in connection with or in contemplation of the commencement of proceedings under Debtor Relief Laws, to Persons who are not Affiliates of the Credit Parties and for which obligations the Borrower or any of its Restricted Subsidiaries have (x) issued checks or have initiated wires or ACH transfers or (y) reasonably anticipates in good faith that it will issue checks or initiate wires or ACH transfers within five (5) days of such date, as certified by the Borrower in any Notice of Borrowing with sufficient detail as is reasonably acceptable to the Agent, (c) any cash of the Borrower and its Restricted Subsidiaries constituting pledges and/or deposits securing any binding and enforceable purchase and sale agreement for the benefit of unaffiliated third parties, in each case to the extent permitted by this Agreement, (d) cash deposited with the Issuing Bank to cash collateralize Letters of Credit and (e) any cash allocated for, reserved or otherwise set aside and used solely to pay Permitted Tax Distributions, solely to the extent the Borrower has provided to the Administrative Agent the amount of such cash as of the last day of the previous fiscal quarter.
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“Exchange Act” shall mean the Securities Exchange Act of 1934, as amended, and the rules and regulations of the SEC promulgated thereunder.
“Excluded Accounts” shall mean (a) each Deposit Account all of the deposits in which consist solely of amounts set aside to fund payroll, employee benefit or payroll tax obligations of the Borrower and its Restricted Subsidiaries, (b) each Deposit Account solely holding cash of the Credit Parties used solely as an escrow account or as a fiduciary or trust account that is contractually obligated to be segregated from the other assets of the Credit Parties, in each case, for the benefit of unaffiliated third parties, (c) each Deposit Account of a Credit Party all of the deposits in which consist solely of royalty obligations, suspense funds, royalty payments, net profits interest payments and other similar payments, in each case, constituting property of an unaffiliated third party, (d) each Deposit Account solely holding cash of the Credit Parties constituting pledges and/or deposits securing any binding and enforceable purchase and sale agreement for the benefit of unaffiliated third parties, in each case to the extent permitted by this Agreement, (e) each Deposit Account of a Credit Party that is a zero balance account or is a Deposit Account for which the balance of such Deposit Account is transferred at the end of each date to a Deposit Account of a Credit Party that is not an Excluded Account and (f) other accounts selected by the Borrower and its Restricted Subsidiaries so long as the balance in each such account, individually, does not exceed $250,000 at any time; provided that the aggregate daily maximum balance for all such bank accounts excluded pursuant to this clause (f) on any day shall not exceed $1,500,000.
“Excluded Assets” shall have the meaning assigned to such term in the Collateral Agreement.
“Excluded Equity Interests” shall mean (a) any Equity Interests with respect to which, in the reasonable judgment of the Administrative Agent (confirmed in writing by notice to the Borrower), the cost or other consequences of pledging such Equity Interests in favor of the Secured Parties under the Security Documents shall be excessive in view of the benefits to be obtained by the Secured Parties therefrom, (b) any Equity Interests to the extent the pledge thereof would be prohibited by any Requirement of Law, (c) in the case of any Equity Interests of any Subsidiary to the extent the pledge of such Equity Interests is prohibited by Contractual Requirements at the time such Subsidiary is acquired (provided that such Contractual Requirements have not been entered into in contemplation of this Agreement or such Subsidiary being acquired), any Equity Interests of each such Subsidiary to the extent (A) that a pledge thereof to secure the Obligations is prohibited by such Contractual Requirement (other than (x) with respect to any Wholly owned Subsidiary, the applicable Organization Documents and (y) customary non-assignment provisions which are ineffective under the UCC or other applicable Requirements of Law), (B) such Contractual Requirement prohibits such a pledge without the consent of any other party other than if (1) such other party is a Credit Party or a Subsidiary, (2) such consent is solely contingent or conditioned upon a commercially reasonable undertaking by the Borrower or any Subsidiary which is in its reasonable control or (3) such consent has been obtained (it being understood that this clause (3) shall not be deemed to obligate the Borrower or any Subsidiary to obtain any such consent) and only for so long as such Contractual Requirement is in effect, or (C) a pledge thereof to secure the Obligations would give any other party (other than a Credit Party or a Subsidiary) to such Contractual Requirement the right to terminate its obligations thereunder (in each case under clauses (A), (B) and (C), other than customary non-assignment provisions that are ineffective under the UCC or other applicable Requirement of Law), (d) the Equity Interests of any Unrestricted Subsidiary, (e) Margin Stock and (f) solely in the case of any pledge of Equity Interests of any CFC or FSHCO to secure the Obligations, any Equity Interests in excess of sixty-five percent (65%) of the outstanding Voting Equity of such CFC or FSHCO (such percentages to be adjusted upon any change of law as may be required to avoid adverse U.S. federal income tax consequences to the Borrower, any Subsidiary or any direct or indirect owner of the Borrower). Notwithstanding anything to the contrary set forth herein, none of the Equity Interests of a Subsidiary Guarantor shall be Excluded Equity Interests.
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“Excluded Subsidiary” shall mean (a) each Immaterial Subsidiary, for so long as any such Subsidiary constitutes an Immaterial Subsidiary pursuant to the terms hereof, (b) each Domestic Subsidiary that is not a Wholly owned Subsidiary (for so long as such Subsidiary remains a non-Wholly owned Subsidiary), (c) each Domestic Subsidiary that is prohibited by any applicable Contractual Requirement (other than (x) with respect to any Wholly owned Subsidiary, the applicable Organization Documents and (y) customary non-assignment provisions that are ineffective under the UCC or other applicable Requirement of Law or any term, covenant, condition or provision that would be waived by the Borrower or its Affiliates) not entered into in contemplation of this Agreement or of such Subsidiary becoming a Subsidiary or a Restricted Subsidiary or Requirement of Law from guaranteeing or granting Liens to secure the Obligations at the time such Person becomes a Subsidiary or Restricted Subsidiary, and for so long as such restriction is in effect and was not entered into in contemplation of this Agreement or such Person becoming a Subsidiary or a Restricted Subsidiary or that would require a consent, approval, license or authorization of a Governmental Authority to guarantee or grant Liens to secure the Obligations at the time such Person becomes a Subsidiary or a Restricted Subsidiary (unless such consent, approval, license or authorization has been received), (d) (i) any direct or indirect Subsidiary of the Borrower that is a FSHCO or CFC and (ii) any direct or indirect Subsidiary of a Subsidiary of the Borrower that is a CFC and (e) each Unrestricted Subsidiary. Notwithstanding anything to the contrary set forth herein, no Excluded Subsidiary shall own Borrowing Base Properties or incur or guarantee any obligations under any Material Indebtedness.
“Excluded Swap Obligation” shall mean with respect to any Guarantor, any Hedging Obligation if, and to the extent that, and only for so long as, all or a portion of the guarantee of such Guarantor of, or the grant by such Guarantor of a security interest to secure, as applicable, such Hedging Obligation (or any guarantee thereof) is or becomes illegal or unlawful under the Commodity Exchange Act or any rule, regulation or order of the Commodity Futures Trading Commission (or the application or official interpretation of any thereof) or any other applicable Requirement of Law. If a Hedging Obligation arises under a master agreement governing more than one Hedge Agreement, such exclusion shall apply only to the portion of such Hedging Obligation that is attributable to Hedge Agreements for which such guarantee or security interest is or becomes illegal.
“Excluded Taxes” shall mean any (a) Taxes imposed on or measured by net income (however denominated), franchise Taxes, and branch profits Taxes, in each case, (i) imposed as a result of such recipient being organized under the laws of, or having its principal office or, in the case of any Lender, its applicable lending office located in, the jurisdiction imposing such Tax (or any political subdivision thereof) or (ii) that are Other Connection Taxes, (b) in the case of a Lender, U.S. federal withholding Taxes imposed on amounts payable to or for the account of such Lender with respect to an applicable interest in a Loan or Commitment pursuant to a law in effect on the date on which (i) such Lender acquires such interest in the Loan or Commitment (other than pursuant to an assignment request by the Borrower under Section 13.7) or (ii) such Lender changes its lending office, except in each case to the extent that, pursuant to Section 5.4 amounts with respect to such Taxes were payable either to such Lender’s assignor immediately before such Lender became a party hereto or to such Lender immediately before it changed its lending office, (c) Taxes attributable to such recipient’s failure to comply with Section 5.4(f) and (d) any withholding Taxes imposed under FATCA, in each case of the foregoing clauses (a)-(d), which Taxes are imposed on or with respect to a Recipient or required to be withheld or deducted from a payment to a Recipient.
“Existing Credit Agreement” means that certain Amended and Restated Credit Agreement dated as of October 4, 2023, among the Borrower, BOKF, NA, as Administrative Agent and LC Issuer (as each such term is defined therein) and the lenders party thereto, as amended, restated, amended and restated, supplemented or otherwise modified from time to time prior to the date hereof.
“Expected Cure Amount” shall have the meaning provided in Section 11.13(a)(iii).
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“Facility” shall mean this Agreement and the Commitments and the extensions of credit made hereunder.
“Fair Market Value” shall mean, with respect to any asset or group of assets on any date of determination, the value of the consideration obtainable in a Disposition of such asset at such date of determination assuming a Disposition by a willing seller to a willing purchaser dealing at arm’s length and arranged in an orderly manner over a reasonable period of time having regard to the nature and characteristics of such asset, as reasonably determined by the Borrower in good faith.
“Farm-In Agreement” shall mean an agreement, joint venture or contractual relationship whereby a Person agrees, among other things, to pay all or a share of the drilling, completion or other expenses of one or more wells or perform the drilling, completion or other operation on such well or wells as all or a part of the consideration provided in exchange for an ownership interest in an Oil and Gas Property or which has been formed for the purpose of exploring for and/or developing Oil and Gas Properties, where each of the parties thereto has either contributed or agreed to contribute cash, services, Oil and Gas Properties, other assets, or any combination of the foregoing.
“Farm-Out Agreement” shall mean a Farm-In Agreement, viewed from the standpoint of the party that grants to another party the right to earn an ownership interest in an Oil and Gas Property.
“FATCA” shall mean Sections 1471 through 1474 of the Code, as of the date of this Agreement (or any amended or successor version to the extent it is substantively comparable and not materially more onerous to comply with), any current or future regulations or official interpretations thereof, any agreements entered into pursuant to Section 1471(b)(1) of the Code, and any applicable intergovernmental agreement, treaty or convention with respect to the foregoing (including any legislation, rules or practices adopted pursuant to such agreement, treaty or convention).
“Federal Funds Rate” shall mean, for any day, the weighted average of the per annum rates on overnight federal funds transactions with members of the Federal Reserve System arranged by federal funds brokers on such day, as published on the next succeeding Business Day on the Federal Reserve Bank of New York’s Website or, (a) if such rate is not so published for any date that is a Business Day, the Federal Funds Rate for such day shall be such rate on such transactions on the immediately preceding Business Day as so published on the next succeeding Business Day and if no such rate is so published on such next succeeding Business Day, the Federal Funds Rate for such day shall be the average rate charged to the Administrative Agent on such day on such transactions as determined by the Administrative Agent; provided that if the Federal Funds 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” shall mean the website of the NYFRB at http://www.newyorkfed.org, or any successor source.
“Financial Officer” of any Person shall mean the Chief Financial Officer, Chief Accounting Officer, principal accounting officer, Controller, Treasurer or Assistant Treasurer of such Person.
“Financial Performance Covenants” shall mean the covenants of the Borrower set forth in Section 10.11.
“First Amendment” shall mean that certain First Amendment to Credit Agreement, dated as of the First Amendment Effective Date, by and among the Borrower, Administrative Agent, Collateral Agent, the Issuing Banks party thereto and the Lenders party thereto.
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“First Amendment Effective Date” shall mean March 31, 2025.
“Flood Insurance Regulations” shall mean (a) the National Flood Insurance Act of 1968 as now or hereafter in effect or any successor statute thereto, (b) the Flood Disaster Protection Act of 1973 as now or hereafter in effect or any successor statute thereto, (c) the National Flood Insurance Reform Act of 1994 (amending 42 USC § 4001, et seq.), as the same may be amended or recodified from time to time or any successor statute thereto, (d) the Flood Insurance Reform Act of 2004 as now or hereafter in effect or any successor statute thereto, and (e) the Biggert-Waters Flood Insurance Reform Act of 2012, as now or hereafter in effect or any successor statute thereto, together with all statutory and regulatory provisions consolidating, amending, replacing, supplementing, implementing or interpreting any of the foregoing, as amended or modified from time to time.
“Floor” shall mean a rate of interest equal to zero percent (0.00%) per annum.
“Foreign Lender” shall mean a Lender that is not a U.S. Person.
“Foreign Plan” shall mean any employee benefit plan, program, policy, arrangement or agreement maintained or contributed to by the Borrower or any of its Subsidiaries with respect to employees employed outside the United States.
“Foreign Subsidiary” shall mean each Subsidiary of the Borrower that is not a Domestic Subsidiary.
“Fourth Amendment” shall mean that certain Fourth Amendment to Credit Agreement, dated as of the Fourth Amendment Effective Date, by and among the Borrower, the other Credit Parties party thereto, Administrative Agent, Collateral Agent, the Issuing Banks party thereto and the Lenders party thereto.
“Fourth Amendment Effective Date” shall mean February 23, 2026.
“Free Cash Flow” shall mean, for any Test Period, Consolidated EBITDAX of the Borrower and its Restricted Subsidiaries minus the increase (or plus the decrease) in non-cash Working Capital (without duplication of any working capital changes already considered elsewhere and excluding the Available Commitment from the calculation of Consolidated Current Assets) from the previous Test Period minus the sum, in each case without duplication, of the following amounts in respect of the Borrower and its Restricted Subsidiaries for such period: (a) 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 repayments of Other Debt and other transactions contemplated by Section 10.7(a)(iii)), (b) cash paid for capital expenditures, (c)(i) cash payments for amounts described in clauses (i) and (ii) of the definition of Consolidated Interest Expense minus (ii) amounts described in clause (iii) of the definition of Consolidated Interest Expense, (d) income and franchise taxes paid in cash by the Borrower and its Restricted Subsidiaries, (e) exploration expenses paid in cash, (f)(i) Investments made in cash during such period (other than those made in reliance on Section 10.5(i)) and (ii) Restricted Payments made in cash during such period (other than those made in reliance on Section 10.6(i)) and (g) to the extent not included in the foregoing and added back in the calculation of Consolidated EBITDAX, any other cash charge that reduces the earnings of the Borrower and its Restricted Subsidiaries, except (i) in the case of each of the forgoing clauses in this definition, to the extent financed with proceeds of any Qualified Equity Interests (excluding any Cure Amount) and (ii) in the case of the foregoing clauses (a), (b), (e), and (f)(i) (except to the extent made in reliance on Section 10.5(k)), to the extent financed with long term Indebtedness permitted in the Credit Documents (other than the Loans), plus aggregate Net Cash Proceeds from Dispositions not required to be applied to repay the Loans under Section 5.2 so long as no Loans are outstanding at the time of determination of “Free Cash Flow”.
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“Free Cash Flow Utilizations” shall mean each of the following transactions that occur in reliance on clause (a)(iv) of the definition of “Restricted Payment Conditions”: (a) Investments made in reliance on Section 10.5(i) and clause (a) of the definition of “Restricted Payment Conditions”, (b) Investments made in reliance on Section 10.5(aa) and clause (a) of the definition of “Restricted Payment Conditions”, (c) Restricted Payments made in reliance on Section 10.6(i) and clause (a) of the definition of “Restricted Payment Conditions” and (d) repayments of Other Debt and other transactions contemplated by Section 10.7(a)(iii).
“Fronting Fee” shall have the meaning provided in Section 4.1(c).
“FSHCO” shall mean any Domestic Subsidiary substantially all of the assets of which (either held directly or through one or more subsidiaries) consists of (i) Equity Interests (including instruments treated as equity for U.S. federal income Tax purposes) and/or Indebtedness of one or more (x) CFCs and/or (y) Persons described in clause (i) of this definition and (ii) cash or cash equivalents.
“Fund” shall mean any Person (other than a natural person) that is (or will be) engaged in making, purchasing, holding or otherwise investing in commercial loans and similar extensions of credit in the ordinary course.
“GAAP” shall mean generally accepted accounting principles in the United States of America, as in effect from time to time; provided, however, that (i) if the Borrower notifies the Administrative Agent that the Borrower requests that any provision hereof be applied in a way to eliminate the effect of any change occurring after the Closing Date in GAAP or in the application thereof on the operation of such provision (or if the Administrative Agent notifies the Borrower that the Required 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, (ii) GAAP shall be construed, and all computations of amounts and ratios referred to herein shall be made, without giving effect to any election under Accounting Standards Codification Topic No. 825 (or any other Financial Accounting Standard having a similar result or effect) to value any Indebtedness or other liabilities of the Borrower or any of its Subsidiaries at “fair value,” as defined therein, and Indebtedness shall be measured at the aggregate principal amount thereof, and (iii) the accounting for operating leases and capital leases shall be determined in compliance with the definition of “Capitalized Lease”.
“Governmental Authority” shall mean any nation, sovereign or government, any state, province, city, territory or other political subdivision thereof, and any entity or authority exercising executive, legislative, judicial, taxing, regulatory or administrative functions of or pertaining to government, including a central bank or stock exchange (including any supra-national bodies such as the European Union or the European Central Bank) and any port authority.
“Granting Lender” shall have the meaning provided in Section 13.6(g).
“Guarantee” shall mean that certain Guarantee dated as of the date hereof, by the Borrower and the Guarantors from time to time party thereto in favor of the Collateral Agent for the benefit of the Secured Parties, substantially in the form of Exhibit C.
“Guarantee Obligations” shall mean, as to any Person, any obligation of such Person guaranteeing or intended to guarantee any Indebtedness of any other Person (the “primary obligor”) in any manner, whether directly or indirectly, including any obligation of such Person, whether or not contingent, (a) to purchase any such Indebtedness or any property constituting direct or indirect security therefor, (b) to
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advance or supply funds (i) for the purchase or payment of any such Indebtedness or (ii) to maintain working capital or equity capital of the primary obligor or otherwise to maintain financial condition or liquidity of the primary obligor so as to enable the primary obligor to pay such Indebtedness, (c) to purchase property, securities or services primarily for the purpose of assuring the owner of any such Indebtedness of the ability of the primary obligor to make payment of such Indebtedness or (d) otherwise to assure or hold harmless the owner of such Indebtedness against loss in respect thereof; provided, however, that the term “Guarantee Obligations” shall not include endorsements of instruments for deposit or collection in the ordinary course of business or customary and reasonable indemnity obligations in effect on the Closing Date or entered into in connection with any acquisition or Disposition of assets permitted under this Agreement (other than such obligations with respect to Indebtedness). The amount of any Guarantee Obligation shall be deemed to be an amount equal to the stated or determinable amount of the Indebtedness in respect of which such Guarantee Obligation is made or, if not stated or determinable, the maximum reasonably anticipated liability in respect thereof as determined by such Person in good faith.
“Guarantors” shall mean (a) each Restricted Subsidiary listed on Schedule 1.1(c) that becomes a party to the Guarantee on the Closing Date (except to the extent such subsidiary is released from the Guarantee in accordance with the terms hereof); provided that, for the avoidance of doubt, each Restricted Subsidiary listed on Schedule 1.1(c) shall be required to become a party to the Guarantee on the Closing Date (other than an Excluded Subsidiary (except to the extent provided below)), and (b) each other Restricted Subsidiary (other than an Excluded Subsidiary (except to the extent provided below)) that becomes a party to the Guarantee after the Closing Date pursuant to Section 9.10 or otherwise; provided that, for the avoidance of doubt, the Borrower in its sole discretion may cause any Restricted Subsidiary or any other Person that is not required to be a Guarantor hereunder or pursuant to the Security Documents to provide a Guarantee by causing such Restricted Subsidiary or other Person to execute a Guarantee and such Restricted Subsidiary or other Person, as applicable, shall be a Guarantor and Credit Party for all purposes hereunder except to the extent released from the Guarantee in accordance with the terms hereof. Notwithstanding the foregoing, the terms “Guarantor” and “Credit Party” shall not include any Parent Entity that guarantees the Obligations.
“Hazardous Materials” shall mean (a) any petroleum or petroleum products, natural gas or natural gas liquids, radioactive materials, friable asbestos, urea formaldehyde foam insulation, polychlorinated biphenyls, and radon gas and (b) any chemicals, materials, substances, or wastes defined as or included in the definition of or otherwise classified or regulated as “hazardous substances”, “hazardous waste”, “hazardous materials”, “extremely hazardous waste”, “restricted hazardous waste”, “toxic substances”, “toxic pollutants”, “contaminants”, or “pollutants”, or words of similar import, under any applicable Environmental Law or that would otherwise reasonably be expected to result in liability under any Environmental Law.
“Hedge Agreements” shall mean (a) any and all rate swap transactions, basis swaps, credit derivative transactions, forward rate transactions, commodity swaps, commodity options, forward commodity contracts, future contracts, equity or equity index swaps or options, bond or bond price or bond index swaps or options or forward bond or forward bond price or forward bond index transactions, interest rate options, forward foreign exchange transactions, cap transactions, floor transactions, collar transactions, currency swap transactions, cross-currency rate swap transactions, currency options, total return swap, credit spread transaction, repurchase transaction, reserve repurchase transaction, securities lending transaction, weather index transaction, spot contracts, fixed-price physical delivery contracts of crude oil with a tenor ending over ninety (90) days from the date of execution (it being understood that such contracts with a tenor of ninety (90) days or shorter shall not be “Hedge Agreements” for purposes of this clause (a)), fixed-price physical delivery contracts of natural gas or natural gas liquids with a tenor ending over thirty (30) months from the date of execution (it being understood that such contracts with a tenor of thirty (30) months or shorter shall not be “Hedge Agreements” for purposes of this clause (a)), in each case whether
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or not exchange traded, or any combination of any of the foregoing (including any options to enter into any of the foregoing), whether or not any such transaction is governed by or subject to any master agreement, and (b) any and all transactions of any kind, and the related confirmations, which are subject to the terms and conditions of, or governed by, any form of master agreement published by the International Swaps and Derivatives Association, Inc., or any International Foreign Exchange Master Agreement (any such master agreement, together with any related schedules, a “Master Agreement”), including any such obligations or liabilities under any Master Agreement. Notwithstanding the foregoing, agreements or obligations to physically sell any commodity at any index-based price shall not be considered Hedge Agreements. For the avoidance of doubt, any agreement entered into in connection with any Permitted Bond Hedge Transaction or Permitted Warrant Transaction will not constitute a Hedge Agreement.
“Hedge Bank” shall mean **** (a) any Person that (i) at the time it enters into a Hedge Agreement with the Borrower or any of its Restricted Subsidiaries is an Agent, Lender or an Affiliate of an Agent or Lender or (ii) at any time after it has entered into a Hedge Agreement with the Borrower or any of its Restricted Subsidiaries becomes an Agent, Lender or an Affiliate of an Agent or Lender and (b) solely with respect to the Specified Hedge Agreements, East West Bank.
“Hedging Compliance Certificate” shall have the meaning provided in Section 9.1(g).
“Hedging Obligations” shall mean, with respect to any Person, the obligations of such Person under Hedge Agreements.
“Highest Lawful Rate” shall mean, 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 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” shall mean 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” shall mean oil, gas, casinghead gas, drip gasoline, natural gasoline, condensate, distillate, liquid hydrocarbons, gaseous hydrocarbons and all products refined or separated therefrom.
“ICC” shall have the meaning provided in Section 3.8.
“ICC Rule” shall have the meaning provided in Section 3.8.
“Immaterial Subsidiary” shall mean any Subsidiary that is not a Material Subsidiary. As of the Closing Date, INR Inc., is the only Immaterial Subsidiary.
“Indebtedness” of any Person shall mean (a) all indebtedness of such Person for borrowed money, (b) all obligations of such Person evidenced by bonds, debentures, notes, loan agreements or other similar instruments, (c) the deferred purchase price of assets or services that in accordance with GAAP would be included as a liability on the balance sheet of such Person (other than (i) any earn-out obligation until such obligation becomes a liability on the balance sheet of such Person in accordance with GAAP, and (ii) obligations resulting under firm transportation contracts, supply agreements, take or pay contracts or other similar agreements entered into in the ordinary course of business), (d) the maximum amount (after giving effect to any prior drawings or reductions which may have been reimbursed) of all outstanding letters
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of credit (including standby and commercial), bankers’ acceptances, bank guaranties, surety bonds, performance bonds and similar instruments issued or created by or for the account of such Person, (e) the principal component of all obligations in respect of Capitalized Leases of such Person, (f) net Hedging Obligations of such Person, (g) obligations to deliver commodities, goods or services, including Hydrocarbons, in consideration of one or more advance payments received by such Person, made more than one (1) month in advance of the month in which the commodities, good or services are to be delivered, other than obligations relating to net oil, natural gas liquids or natural gas balancing arrangements arising in the ordinary course of business, (h) all indebtedness (excluding prepaid interest thereon) of any other Person secured by any Lien on any property owned by such Person, whether or not such indebtedness has been assumed by such Person or is limited in recourse, (i) the amount of all obligations of such Person with respect to the redemption, repayment or other repurchase in respect of Disqualified Stock (excluding accrued dividends that have not increased the liquidation preference of such Disqualified Stock), (j) the undischarged balance of any Production Payments and Reserve Sales created by such Person or for the creation of which such Person directly or indirectly received payment and (k) without duplication, all Guarantee Obligations of such Person in respect of the items described in clauses (a) through (j) above; provided that Indebtedness shall not include (i) trade and other ordinary-course payables (including payroll) and accrued expenses (which are not more than one hundred twenty (120) days past the due date of payment unless the subject of a good faith dispute, (ii) deferred or prepaid revenues, (iii) purchase price holdbacks in respect of a portion of the purchase price of an asset to satisfy warranty or other unperformed obligations of the respective seller, (iv) in the case of the Borrower and its Restricted Subsidiaries, all intercompany Indebtedness made in the ordinary course of business, (v) guaranties, bonds and surety obligations incurred in the ordinary course of business and required by governmental requirements in connection with the exploration, development or operation of Oil and Gas Properties, (vi) in-kind obligations relating to net oil, natural gas liquids or natural gas balancing positions arising in the ordinary course of business, (vii) any obligation in respect of a Farm-In Agreement or similar arrangement whereby such Person agrees to pay all or a share of the drilling, completion or other expenses of an exploratory or development well (which agreement may be subject to a maximum payment obligation, after which expenses are shared in accordance with the working or participation interest therein or in accordance with the agreement of the parties) or perform the drilling, completion or other operation on such well in exchange for an ownership interest in an oil or gas property, (viii) operating leases or sale and leaseback transactions (except any resulting obligations under any Capitalized Lease), (ix) any Guarantee Obligations incurred in the ordinary course of business to the extent not guaranteeing Indebtedness, (x) [reserved] and (xi) obligations to deliver commodities or pay royalties or other payments in connection with and obligations arising from net profits interests, working interests, overriding, non-participating or other royalty interests or similar real property interests. The amount of any net Hedging Obligations on any date shall be deemed to be the Swap Termination Value thereof as of such date. The amount of Indebtedness of any Person for purposes of clause (h) above shall be deemed to be equal to the lesser of (i) the aggregate unpaid amount of such Indebtedness and (ii) the fair market value of the property encumbered thereby as determined by such Person in good faith. Notwithstanding anything in this definition to the contrary, Indebtedness shall be calculated without giving effect to the effects of Financial Accounting Standards Board Accounting Standards Codification 815 and related interpretations to the extent such effects would otherwise increase or decrease an amount of Indebtedness for any purpose hereunder as a result of accounting for any embedded derivatives created by the terms of such Indebtedness.
“Indemnified Liabilities” shall have the meaning provided in Section 13.5(b).
“Indemnified Taxes” shall mean (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 Credit Document and (b) to the extent not otherwise described in clause (a), Other Taxes.
“Indemnitees” shall have the meaning provided in Section 13.5(b).
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“Industry Investments” shall mean Investments and/or expenditures made in the ordinary course of, and of a nature that is or shall have become customary in, the Energy Business as a means of actively engaging therein through agreements, transactions, interests or arrangements that permit one to share risks or costs, comply with regulatory requirements regarding local ownership or satisfy other objectives customarily achieved through the conduct of Energy Business jointly with third parties, including: (1) direct ownership interests in Oil and Gas Properties or gathering, transportation, processing, or related systems or assets or other interests related to Energy Business; and (2) Investments and/or expenditures in the form of or pursuant to operating agreements, processing agreements, Farm-In Agreements, Farm-Out Agreements, development agreements, area of mutual interest agreements, unitization agreements, pooling arrangements, joint bidding agreements, service contracts, joint venture agreements, carbon management agreements and other similar agreements (including for limited liability companies) with third parties (other than a joint venture in the form of a partnership, corporation or limited liability company).
“Information” shall have the meaning provided in Section 8.8(a).
“Initial Reserve Report” shall mean the reserve engineers’ report evaluating the Proved Developed Producing Reserves of the Credit Parties prepared by an Approved Petroleum Engineer as of December 31, 2023, delivered to the Administrative Agent prior to the date hereof.
“INR Inc.” shall mean Infinity Natural Resources, Inc., a Delaware corporation.
“Intercompany Note” shall mean a promissory note substantially in the form of Exhibit J hereto.
“Interest Period” shall mean, with respect to any Loan, the interest period applicable thereto, as determined pursuant to Section 2.9.
“Interim Redetermination” shall have the meaning provided in Section 2.14(b).
“Investment” shall have the meaning provided in Section 10.5.
“Investment Grade Rating” shall mean a rating equal to or higher than Baa3 (or the equivalent) by Moody’s and BBB- (or the equivalent) by S&P, or an equivalent rating by any other rating agency selected by the Borrower.
“IPO Vehicle” shall mean (a) an entity formed or designated for the purpose of facilitating an issuance or sale of common equity interests (which represent an indirect economic and/or voting interest in the Borrower or a Parent Entity and through which investors shall indirectly hold their equity interests in the Borrower or a Parent Entity) in an underwritten public offering (other than a public offering pursuant to a registration statement on Form S-8) pursuant to an effective registration statement filed with the SEC in accordance with the Securities Act (whether alone or in connection with a secondary public offering) and such equity interests are listed on a nationally-recognized stock exchange in the U.S. and (b) any Wholly owned Subsidiary of the entity referred to in clause (a) above other than a Parent Entity or any Subsidiary of a Parent Entity (unless the entity in clause (a) is a Parent Entity, in which case other than the Borrower or any Subsidiary thereof).
“IRS” shall mean the United States Internal Revenue Service.
“ISP” shall mean, with respect to any Letter of Credit, the “International Standby Practices 1998” published by the Institute of International Banking Law & Practice (or such later version thereof as may be in effect at the time of issuance).
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“ISP 98” shall have the meaning provided in Section 3.8.
“Issuer Documents” shall mean, with respect to any Letter of Credit, the Letter of Credit Application, and any other document, agreement and instrument entered into by the applicable Issuing Bank and the Borrower (or any Restricted Subsidiary) or in favor of the applicable Issuing Bank and relating to such Letter of Credit.
“Issuing Bank” shall mean (a) each of Citi, Bank of America, N.A., BOKF, NA, Capital One, National Association, Fifth Third Bank, National Association, Royal Bank of Canada, Truist Bank, U.S. Bank National Association, KeyBank National Association and any of their respective Affiliates and (b) if requested by the Borrower and reasonably acceptable to the Administrative Agent, any other Person who is a Lender at the time of such request and who accepts such appointment (it being understood that, if any such Person ceases to be a Lender hereunder, such Person will remain an Issuing Bank with respect to any Letter of Credit issued by such Person that remained outstanding as of the date such Person ceased to be a Lender). References herein and in the other Credit Documents to an 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. Any Lender may, from time to time, become an Issuing Bank under this Agreement with the protections and rights afforded to Issuing Banks hereunder by executing a joinder, in a form reasonably satisfactory to (and acknowledged and accepted by) the Administrative Agent and the Borrower, indicating such Lender’s “Letter of Credit Commitment” and upon the execution and delivery of any such joinder, such Lender shall be an Issuing Bank for all purposes hereof.
“L/C Borrowing” shall mean an extension of credit resulting from a drawing under any Letter of Credit which has not been reimbursed on the date when made or refinanced as a Borrowing. All L/C Borrowings shall be denominated in Dollars.
“L/C Maturity Date” shall mean the date that is five (5) Business Days prior to the Maturity Date.
“L/C Obligations” shall mean, as at any date of determination, the aggregate amount available to be drawn under all outstanding Letters of Credit plus the aggregate of all Unpaid Drawings, including all L/C Borrowings. For all purposes of this Agreement, if on any date of determination a Letter of Credit has expired by its terms but any amount may still be drawn thereunder by reason of the operation of Rule 3.14 of the ISP, such Letter of Credit shall be deemed to be “outstanding” in the amount so remaining available to be drawn.
“L/C Participant” shall have the meaning provided in Section 3.3(a).
“L/C Participation” shall have the meaning provided in Section 3.3(a).
“Lender” shall have the meaning provided in the introductory paragraph hereto. Unless the context otherwise requires, the term “Lenders” includes the Issuing Banks. For avoidance of doubt, each Additional Lender shall be deemed a “Lender” for purposes of this Agreement and each other Credit Document.
“Lender Default” shall mean (i) the refusal (which may be given verbally or in writing and has not been retracted) or failure of any Lender to make available its portion of any incurrence of Loans or participations in Letters of Credit or reimbursement obligations required to be made by it, which refusal or failure is not cured within one (1) Business Day after the date of such refusal or failure, unless such Lender notifies the Administrative Agent and the Borrower in writing that such failure is the result of such Lender’s determination that one or more conditions precedent to funding (each of which conditions precedent, together with any applicable default, shall be specifically identified in such writing) has not been satisfied; (ii) the failure of any Lender to pay over to the Administrative Agent, any Issuing Bank or any other Lender
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any other amount required to be paid by it hereunder within two (2) Business Days of the date when due; (iii) a Lender has notified the Borrower, the Administrative Agent or any Issuing Bank in writing that it does not intend or expect to comply with any of its funding obligations, or has made a public statement to that effect with respect to its funding obligations under the Facility (unless such writing or public statement relates to such Lender’s obligation to fund a Loan hereunder and states that such position is based on such Lender’s determination that a condition precedent to funding (which condition precedent, together with any applicable default, shall be specifically identified in such writing or public statement) cannot be satisfied); (iv) a Lender has failed, within three (3) Business Days after a written request by the Administrative Agent, to confirm in writing that it will comply with its funding obligations under the Facility (provided that such Lender shall cease to be a Defaulting Lender pursuant to this clause (iv) upon receipt of such written confirmation by the Administrative Agent and the Borrower) or (v) a Distressed Person has admitted in writing that it is insolvent or such Distressed Person becomes subject to a Lender-Related Distress Event or a Bail-In Action. Any determination by the Administrative Agent that a Lender Default has occurred under any one or more of clauses (i) through (v) above shall be conclusive and binding absent manifest error, and the applicable Lender shall be deemed to be a Defaulting Lender upon delivery of written notice of such determination to the Borrower, each Issuing Bank and each Lender.
“Lender-Related Distress Event” shall mean, with respect to any Lender, that such Lender or any Person that directly or indirectly controls such Lender (each, a “Distressed Person”), as the case may be, is or becomes subject to a voluntary or involuntary case with respect to such Distressed Person under any Debtor Relief Law, or a custodian, conservator, receiver or similar official is appointed for such Distressed Person or any substantial part of such Distressed Person’s assets, or such Distressed Person or any Person that directly or indirectly controls such Distressed Person is subject to a forced liquidation, or such Distressed Person makes a general assignment for the benefit of creditors or is otherwise adjudicated as, or determined by any Governmental Authority having regulatory authority over such Distressed Person or its assets to be, insolvent or bankrupt; provided that a Lender-Related Distress Event shall not be deemed to have occurred solely by virtue of the ownership or acquisition of any equity interests in any Lender or any Person that directly or indirectly controls such Lender by a Governmental Authority or an instrumentality thereof, so long as such ownership interest does not result in or provide such Lender with immunity from the jurisdiction of courts within the United States or from the enforcement of judgments or writs of attachment on its assets or permit such Lender (or such Governmental Authority) to reject, repudiate, disavow or disaffirm any contracts or agreements made with such Lender.
“Letter of Credit” shall mean (a) any standby letter of credit issued pursuant to this Agreement and (b) at the election of Borrower by written notice to the Administrative Agent on or prior to the closing date of an acquisition of Equity Interests of a Person that becomes a Restricted Subsidiary that is permitted under this Agreement (which written notice shall, with respect to each letter of credit covered thereby, specify (i) the date on which such letter of credit is to expire (which shall comply with Section 3.1(b)), (ii) the amount of such letter of credit, (iii) the name and address of the beneficiary thereof and (iv) the amount of the then-effective Borrowing Base, the amount of the then-effective Aggregate Elected Commitment Amount, the current aggregate Total Exposures of all Lenders (without regard to such letters of credit) and the pro forma aggregate Total Exposures of all Lenders (giving effect to the deemed issuance or inclusion of such letters of credit as Letters of Credit hereunder), any outstanding letters of credit issued for the account of such Person under any credit facilities of such Person that are terminated on or prior to the applicable acquisition closing date may be deemed to be Letters of Credit hereunder from and after such acquisition closing date; provided that (1) each such letter of credit was issued by an Issuing Bank, including any entity that becomes an Issuing Bank on such date, and the aggregate stated amount of such letters of credit, when added to the stated amount of all other Letters of Credit issued (or deemed issued) by such Issuing Bank, would not result in such Issuing Bank’s Letter of Credit Commitment being exceeded (unless such Issuing Bank so consents), (2) the aggregate stated amount of such letters of credit, when added to the aggregate stated amount of all other Letters of Credit outstanding, does not exceed the Letter of Credit Commitment, (3) the
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Total Exposures do not exceed the Total Commitment (after giving effect to the deemed issuance or inclusion of such letters of credit as Letters of Credit hereunder), (4) such letters of credit would be permitted to be issued under Section 2.08 on the date such letters of credit are to be deemed issued or included as Letters of Credit hereunder and otherwise satisfy all of the other terms and conditions contained in Section 3.1(a) and applicable to Letters of Credit issued under this Agreement and (5) the Administrative Agent and the Issuing Bank of such letter of credit has approved in writing the deemed issuance or inclusion of such letter of credit as a Letter of Credit under this Agreement.
“Letter of Credit Application” shall have the meaning provided in Section 3.2(a).
“Letter of Credit Commitment” shall mean the lesser of (x) ten percent (10%) of the then effective Borrowing Base, as the same may be reduced from time to time pursuant to Section 3.1 and (y) the Total Commitment; provided, that to the extent any Letters of Credit are outstanding as of any date on which the Borrowing Base is decreased, the Letter of Credit Commitment shall not decrease below the lesser of (a) the amount of the Letters of Credit Outstanding as of such date and (b) the aggregate Commitments (after giving effect to such Borrowing Base decrease); provided further that the Letter of Credit Commitment with respect to Letters of Credit shall be allocated to the Issuing Banks in accordance with the following table:
| Issuing Bank | Letter of CreditCommitment | |
|---|---|---|
| Citi | $ | 11,982,484.10 |
| Bank of America, N.A. | $ | 9,753,184.71 |
| Capital One, National Association | $ | 9,753,184.71 |
| KeyBank National Association | $ | 9,753,184.71 |
| Royal Bank of Canada | $ | 9,753,184.71 |
| Truist Bank | $ | 9,753,184.71 |
| U.S. Bank National Association | $ | 9,753,184.71 |
| Fifth Third Bank, National Association | $ | 9,753,184.71 |
| BOKF, NA | $ | 7,245,222.93 |
“Letter of Credit Exposure” shall mean, with respect to any Lender, at any time, the sum of (a) the principal amount of any Unpaid Drawings in respect of which such Lender has made (or is required to have made) payments to the applicable Issuing Bank pursuant to Section 3.4(a) at such time and (b) such Lender’s Commitment Percentage of the Letters of Credit Outstanding at such time (excluding the portion thereof consisting of Unpaid Drawings in respect of which the Lenders have made (or are required to have made) payments to the applicable Issuing Bank pursuant to Section 3.4(a)) minus the amount of cash or deposit account balances held by the Administrative Agent to Cash Collateralize outstanding Letters of Credit and Unpaid Drawings under Section 3.7.
“Letter of Credit Fee” shall have the meaning provided in Section 4.1(b).
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“Letters of Credit Outstanding” shall mean, at any time, the sum of, without duplication, (a) the aggregate Stated Amount of all outstanding Letters of Credit and (b) the aggregate principal amount of all Unpaid Drawings in respect of all Letters of Credit.
“Leverage Ratio Covenant” shall mean the covenant of the Borrower set forth in Section 10.11(a).
“Lien” shall mean, with respect to any asset, (a) any mortgage, preferred mortgage, deed of trust, lien, notice of claim of lien, hypothecation, pledge, charge, security interest or similar encumbrance in or on such asset, (b) production payments and the like payable out of Oil and Gas Properties or (c) the interest of a vendor or a lessor under any conditional sale agreement, capital lease or title retention agreement (or any financing lease having substantially the same economic effect as any of the foregoing) relating to such asset; provided that in no event shall an operating lease be deemed to be a Lien under GAAP.
“Loan Limit Deficiency” occurs if, at any time, the aggregate Total Exposure of all Lenders exceeds the Total Commitment then in effect. The amount of the Loan Limit Deficiency is the amount by which the aggregate Total Exposure of all Lenders exceeds the Total Commitment then in effect.
“Loans” shall have the meaning provided in Section 2.1(a).
“Majority Lenders” shall mean, at any date, (a) Non-Defaulting Lenders having or holding more than fifty percent (50.0%) of the Adjusted Total Commitment at such date, or (b) if the Total Commitment has been terminated or for the purposes of acceleration pursuant to Section 11, Non-Defaulting Lenders having or holding more than fifty percent (50.0%) of the outstanding principal amount of the Loans and Letter of Credit Exposure (excluding the Loans and Letter of Credit Exposure of Defaulting Lenders) in the aggregate at such date.
“Manufactured (Mobile) Home” shall have the meaning assigned to such term in the applicable Flood Insurance Regulation.
“Margin Stock” shall have the meaning assigned to such terms in Regulation U.
“Master Agreement” shall have the meaning assigned to such term in the definition of “Hedge Agreements.”
“Material Adverse Effect” shall mean a circumstance or condition affecting the business, assets, operations, properties or financial condition of the Borrower and the Restricted Subsidiaries, taken as a whole, that, individually or in the aggregate, would materially adversely affect (a) the business, assets, operations, properties or financial condition of the Borrower and the other Credit Parties, taken as a whole, (b) the ability of the Borrower and the other Credit Parties, taken as a whole, to perform their material obligations under the Credit Documents, or (c) the rights and remedies of the Agents and the Lenders under the Credit Documents.
“Material Indebtedness” shall mean any Indebtedness (other than Loans and Letters of Credit) of any one or more of the Borrower or any Restricted Subsidiary in an aggregate principal amount exceeding the Threshold Amount.
“Material Subsidiary” shall mean, at any date of determination (a) each Wholly owned Subsidiary (directly or indirectly) that is a Restricted Subsidiary of the Borrower such that the Consolidated Total Assets of the Immaterial Subsidiaries (when combined with the assets of each such Subsidiary’s Subsidiaries, after eliminating intercompany obligations) at the last day of the Test Period for which financial statements have been delivered, or required to be delivered, pursuant to Section 9.1(a) or Section 9.1(b) are equal to or less than five percent (5.0%) of the Consolidated Total Assets of the Borrower and the Restricted Subsidiaries at such date, determined in accordance with GAAP and (b) any Subsidiary that (x) owns any Borrowing Base Properties or (y) incurs or guarantees any obligations under any Material Indebtedness.
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“Maturity Date” shall mean September 25, 2028.
“Maximum Credit Amount” shall mean, as to each Lender, the amount set forth opposite such Lender’s name on Schedule 1.1(a) under the caption “Maximum Credit Amounts”, as the same may be (a) reduced or terminated from time to time in connection with a reduction or termination of the Aggregate Maximum Credit Amounts pursuant to Section 2.16(b), (b) modified from time to time pursuant to Section 2.16(c) or (c) increased, created or modified from time to time pursuant to any assignment permitted by Section 13.6(b) or amendment or other modification to this Agreement.
“Minimum Borrowing Amount” shall mean, with respect to any Borrowing of Loans, $500,000 (or, if less, the entire remaining Commitments at the time of such Borrowing).
“Minimum Hedging Requirement Date” shall have the meaning provided in Section 9.17(a).
“Minority Investment” shall mean any Person (other than a Subsidiary) in which the Borrower or any Restricted Subsidiary owns Equity Interests.
“Moody’s” shall mean Moody’s Investors Service, Inc. or any successor by merger or consolidation to its business.
“Mortgage” shall mean a mortgage or a deed of trust, deed to secure debt, trust deed, assignment of as-extracted collateral, fixture filing or other security document entered into by the owner of a Mortgaged Property and the Collateral Agent for the benefit of the Secured Parties in respect of that Mortgaged Property, substantially in the form of Exhibit D (with such changes thereto as may be necessary to account for local law matters) or otherwise in such form as agreed between the Borrower and the Collateral Agent; provided, that any Mortgage encumbering Oil and Gas Properties shall exclude any Building or Manufactured (Mobile) Home (including, for the avoidance of doubt, the contents thereof) that is located on any such Oil and Gas Property covered by (or intended to be covered by) such Mortgage.
“Mortgaged Property” shall mean, at any time, all Borrowing Base Properties with respect to which a Mortgage has been granted and/or which are subject to an Acceptable Security Interest, in each case, pursuant to the Credit Documents. Notwithstanding any provision in this Agreement or any other Credit Document to the contrary, in no event is any Building or Manufactured (Mobile) Home included in this definition and no Building or Manufactured (Mobile) Home is hereby encumbered by this Agreement or any other Credit Document.
“Multiemployer Plan” shall mean a multiemployer plan as defined in Section 4001(a)(3) of ERISA.
“Necessary Cure Amount” shall have the meaning provided in Section 11.13(a)(iii).
“Net Cash Proceeds” shall mean (a) with respect to any Disposition, the cash proceeds thereof (including cash proceeds subsequently received (as and when received) in respect of noncash consideration initially received), net of, in respect of the Borrower and its Restricted Subsidiaries’ (i) selling expenses (including reasonable broker’s fees or commissions, legal, accounting and investment banking fees and expenses, title insurance premiums, survey costs, transfer and similar taxes and the Borrower’s good faith estimate of income or similar taxes and (without duplication) Permitted Tax Distributions that are or will
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be paid or payable in connection with such sale), (ii) amounts provided as a reserve, in accordance with GAAP, against any liabilities under any indemnification obligations or purchase price adjustment associated with such Disposition (provided that, to the extent and at the time any such amounts are released from such reserve, such amounts shall constitute Net Cash Proceeds), and (iii) the principal amount, premium or penalty, if any, interest and other amounts on any Indebtedness permitted hereunder that is secured by a Lien permitted hereunder (other than any Lien pursuant to a Security Document) on the asset disposed of in such Disposition and required to be repaid with such proceeds (other than any such Indebtedness assumed by the purchaser of such asset), (b) with respect to any Casualty Event, the cash proceeds received pursuant to any casualty insurance policy in respect of a covered loss thereunder of any assets of the Borrower or any of its Restricted Subsidiaries, net of any actual out-of-pocket costs and expenses incurred by the Borrower or any of its Restricted Subsidiaries in connection with the adjustment, settlement or collection of any claims of the Borrower or the applicable Restricted Subsidiary in respect thereof and the Borrower’s good faith estimate of income or similar taxes and (without duplication) Permitted Tax Distributions that are or will be paid or payable in connection with such Casualty Event and (c) with respect to any issuance or incurrence of Indebtedness, the cash proceeds thereof, net of all taxes and attorneys’ fees, accountants’ fees, underwriters’ or placement agents’ fees, listing fees, commissions and brokerage, consultant and other customary fees and charges actually incurred by the Borrower and its Restricted Subsidiaries in connection with such issuance.
“New Borrowing Base Notice” shall have the meaning provided in Section 2.14(d).
“Non-Consenting Lender” shall have the meaning provided in Section 13.7(b).
“Non-Defaulting Lender” shall mean and include each Lender other than a Defaulting Lender.
“Non-Extension Notice Date” shall have the meaning provided in Section 3.2(b).
“Notes” shall mean the promissory notes of the Borrower described in Section 2.5(e) and being substantially in the form of Exhibit G, together with all amendments, modifications, replacements, extensions and rearrangements thereof.
“Notice of Borrowing” shall mean a request of the Borrower in accordance with the terms of Section 2.3(a) and substantially in the form of Exhibit B or such other form as shall be approved by the Administrative Agent (acting reasonably).
“Notice of Conversion or Continuation” shall have the meaning provided in Section 2.6(a).
“NYFRB” shall mean the Federal Reserve Bank of New York.
“Obligations” shall mean all advances to, and debts, liabilities, obligations, covenants and duties of, any Credit Party arising under any Credit Document or otherwise with respect to any Loan or Letter of Credit or under any Secured Cash Management Agreement or Secured Hedge Agreement, in each case, entered into with the Borrower or any of its Restricted Subsidiaries, whether direct or indirect (including those acquired by assumption), absolute or contingent, due or to become due, now existing or hereafter arising and including interest and fees that accrue after the commencement by or against any Credit Party or any Affiliate thereof in any proceeding under any bankruptcy or insolvency law naming such Person as the debtor in such proceeding, regardless of whether such interest and fees are allowed claims in such proceeding. Without limiting the generality of the foregoing, the Obligations of the Credit Parties under the Credit Documents (and any of their Restricted Subsidiaries to the extent they have obligations under the Credit Documents) include the obligation (including Guarantee Obligations) to pay principal, interest, charges, expenses, fees, attorney costs, indemnities and other amounts payable by any Credit Party under
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any Credit Document. Notwithstanding the foregoing, (a) Excluded Swap Obligations shall not constitute Obligations, (b) the obligations of the Borrower or any Restricted Subsidiary under any Secured Hedge Agreement and under any Secured Cash Management Agreement shall be secured and guaranteed pursuant to the Security Documents and the Guarantee only to the extent that, and for so long as, the other Obligations are so secured and guaranteed and (c) any release of Collateral or Guarantors effected in the manner permitted by this Agreement and the other Credit Documents, except as otherwise provided herein, shall not require the consent of the holders of Hedging Obligations under Secured Hedge Agreements or of the holders of Cash Management Obligations under Secured Cash Management Agreements.
“OFAC” shall mean the Office of Foreign Assets Control of the U.S. Department of the Treasury.
“Oil and Gas Properties” shall mean (a) Hydrocarbon Interests, (b) the properties now or hereafter pooled or unitized with Hydrocarbon Interests, (c) all presently existing or future unitization agreements, pooling agreements and declarations of pooled or unitized units and the units created thereby (including all units created under orders, regulations and rules of any Governmental Authority) which may affect all or any portion of any Hydrocarbon Interests, (d) all operating agreements, contracts and other agreements, including production sharing contracts and agreements, which relate to any Hydrocarbon Interests or the production, sale, purchase, exchange or processing of Hydrocarbons from or attributable to such Hydrocarbon Interests, (e) all Hydrocarbons in and under and which may be produced and saved or attributable to Hydrocarbon Interests, including all oil in tanks, and all rents, issues, profits, proceeds, products, revenues and other incomes from or attributable to Hydrocarbon Interests, (f) all tenements, hereditaments, appurtenances and properties in any manner appertaining, belonging, affixed or incidental to Hydrocarbon Interests and (g) all properties, rights, titles, interests and estates described or referred to above, including any and all property, real or personal, now owned or hereafter acquired and situated upon, used, held for use or useful in connection with the operating, working or development of any Hydrocarbon Interests or property (excluding drilling rigs, automotive equipment, rental equipment or other personal property which may be on such premises for the purpose of drilling a well or for other similar temporary uses) and including any and all oil wells, gas wells, injection wells or other wells, structures, fuel separators, liquid extraction plants, plant compressors, pumps, pumping units, field gathering systems, gas processing plants and pipeline systems, power and cogeneration facilities, steam flood facilities and any related infrastructure to any thereof, tanks and tank batteries, fixtures, valves, fittings, machinery and parts, engines, boilers, meters, apparatus, equipment, appliances, tools, implements, cables, wires, towers, casing, tubing and rods, surface leases, rights-of-way, easements and servitudes together with all additions, substitutions, replacements, accessions and attachments to any and all of the foregoing.
“Ongoing Hedges” shall have the meaning provided in Section 10.10(a).
“Organization Documents” shall mean (a) with respect to any corporation, the certificate or articles of incorporation and the bylaws (or equivalent or comparable constitutive documents with respect to any non-U.S. jurisdiction); (b) with respect to any limited liability company, the certificate or articles of formation or organization and operating agreement; and (c) with respect to any partnership, joint venture, trust or other form of business entity, the partnership, joint venture or other applicable agreement of formation or organization and any agreement, instrument, filing or notice with respect thereto filed in connection with its formation or organization with the applicable Governmental Authority in the jurisdiction of its formation or organization and, if applicable, any certificate or articles of formation or organization of such entity.
“Other Connection Taxes” shall mean, 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 solely 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 under any Credit Document, or sold or assigned an interest in any Loan, Commitment or any other interest under any Credit Document).
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“Other Debt” shall have the meaning provided in Section 10.7(a).
“Other Parent” shall mean a Person (which may be an IPO Vehicle) of which the Borrower is or becomes a Subsidiary after the Closing Date that is designated by the Borrower as an “Other Parent”; provided that either (x) immediately after the Borrower first becomes a Subsidiary of such Person, more than 50.0% of the Voting Equity of such Person shall be held by one or more Persons that held more than 50.0% of the Voting Equity of the Borrower or a Parent Entity of the Borrower immediately prior to the Borrower first becoming such Subsidiary, (y) such Person shall be deemed not to be an Other Parent for the purpose of determining whether a Change of Control shall have occurred by reason of the Borrower first becoming a Subsidiary of such Person or (z) in the case of an IPO Vehicle, no Change of Control shall have occurred in treating such IPO Vehicle as if it were a Parent Entity both before and after giving effect to the Borrower becoming a Subsidiary of such IPO Vehicle. The Borrower shall not in any event be deemed to be a “Parent Entity.”
“Other Taxes” shall mean 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 Credit Document, except any such Taxes that are Other Connection Taxes imposed with respect to an assignment (other than an assignment made pursuant to Section 13.7(a)).
“Overnight Rate” shall mean, for any day, the greater of (a) the Federal Funds Rate and (b) an overnight rate determined by the Administrative Agent or the applicable Issuing Bank, as the case may be, in accordance with banking industry rules on interbank compensation.
“Parent Entity” shall mean any Other Parent and any other Person that is a Subsidiary of any Other Parent and of which the Borrower is a Subsidiary, in each case, solely for so long as the Borrower remains a Subsidiary of such Person.
“Participant” shall have the meaning provided in Section 13.6(c)(i).
“Participant Register” shall have the meaning provided in Section 13.6(c)(ii).
“Patriot Act” shall have the meaning provided in Section 13.18.
“Payment in Full” shall mean the day the Total Commitment and each Letter of Credit have terminated (unless such Letters of Credit have been collateralized on terms and conditions reasonably satisfactory to each applicable Issuing Bank following the termination of the Total Commitment) and the Loans and Unpaid Drawings, together with interest, fees and all other Obligations incurred hereunder (other than contingent indemnification obligations not then due and payable and Cash Management Obligations under Secured Cash Management Agreements) and Hedging Obligations under Secured Hedge Agreements (except as to which arrangements satisfactory to the applicable Hedge Bank shall have been made), are paid in full in cash and all transactions thereunder terminated.
“Payment Recipient” shall have the meaning provided in Section 12.15(a).
“PBGC” shall mean the Pension Benefit Guaranty Corporation established pursuant to Section 4002 of ERISA, or any successor thereto.
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“Pension Plan” shall mean any “employee pension benefit plan” (as such term is defined in Section 3(2) of ERISA), other than a Multiemployer Plan, that is subject to Title IV of ERISA and is sponsored or maintained by any Credit Party or any ERISA Affiliate or to which any Credit Party or any ERISA Affiliate contributes or has an obligation to contribute, or in the case of a multiple employer or other plan described in Section 4064(a) of ERISA, has made contributions at any time during the immediately preceding six (6) years.
“Periodic Term SOFR Determination Day” shall have the meaning specified in the definition of “Term SOFR”.
“Permitted Acquisition” shall mean the acquisition, by merger or otherwise, by the Borrower or any of the Restricted Subsidiaries of assets (including any assets constituting a business unit, line of business or division) or Equity Interests, so long as (a) if such acquisition involves the acquisition of Equity Interests of a Person that upon such acquisition would become a Subsidiary, such acquisition shall result in the issuer of such Equity Interests becoming a Restricted Subsidiary and, to the extent required by Section 9.10, a Guarantor; (b) such acquisition shall result in the Collateral Agent, for the benefit of the Secured Parties, being granted a security interest in any Equity Interests or any assets so acquired to the extent required by Section 9.10; (c) unless such acquisition results in (i) each Subsidiary acquired in such acquisition becoming a Guarantor and (ii) the Collateral Agent, for the benefit of the Secured Parties, being granted a security interest in all Equity Interests and substantially all other assets being acquired, immediately after giving effect to such acquisition, the Restricted Payment Conditions shall have been satisfied and (d) immediately after giving effect to such acquisition, the Borrower and its Restricted Subsidiaries shall be in compliance with Section 10.13.
“Permitted Additional Debt” shall mean any Permitted Convertible Debt, any Disqualified Stock, any Bridge Facility and any unsecured senior, unsecured senior subordinated or unsecured subordinated loans or notes issued by the Borrower or a Guarantor after the Closing Date (a) the terms of which do not provide for (i) other than for any Bridge Facility, a scheduled maturity date prior to the 181st day after the Maturity Date and (ii) notwithstanding the foregoing clause (i), any scheduled repayment, mandatory redemption or sinking fund obligation prior to the 181st day after the Maturity Date (other than customary offers to purchase upon a change of control (including customary offers to repurchase any Permitted Convertible Debt in connection with “fundamental change”), AHYDO payments, customary asset sale or casualty or condemnation event prepayments and customary acceleration rights after an event of default prior to the 181st day after the Maturity Date, customary special mandatory redemptions of any Anticipated Acquisition Debt, with respect to any Bridge Facility, customary prepayments in connection with (x) the incurrence of Indebtedness to refinance such Bridge Facility and (y) the sale or issuance of Equity Interests of Borrower, any right of any holder of any Permitted Convertible Debt to convert, exchange or exercise such Permitted Convertible Debt, or any actual conversion, exchange or exercise of any Permitted Convertible Debt, in each case into or for common stock or other common equity interests of the Borrower and/or cash (in an amount determined by reference to the price of such common stock or other common equity interest), any optional right of the issuer of Permitted Convertible Debt to call such Permitted Convertible Debt for redemption or in the case of any loans or notes or other Indebtedness that are convertible into Qualified Equity Interests (including any Permitted Convertible Debt), payments in respect of any fractional shares that would otherwise be issued upon such conversion) and has a Weighted Average Life to Maturity equal to or greater than the Weighted Average Life to Maturity of the Facility, if applicable, (b) if such Indebtedness is subordinated in right of payment to the Obligations, the terms of such Indebtedness provide for customary subordination of such Indebtedness to the Obligations and is subject to a Subordination Agreement, (c) no Subsidiary of the Borrower (other than a Guarantor) is a borrower or guarantor with respect to such Indebtedness, (d) that does not restrict, by its terms, the prepayment or repayment of the Obligations, (e) the covenants, events of default, guarantees and other terms of which (other than interest rate, fees, funding discounts and redemption or prepayment premiums reasonably
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determined by the Borrower to be “market” rates, fees, discounts and premiums at the time of issuance or incurrence of any such Indebtedness), taken as a whole, shall be customary for high yield debt securities (or (i) in the case of any Permitted Convertible Debt, taken as a whole, shall be customary for convertible debt securities of such nature or (ii) in the case of any Bridge Facility, taken as a whole, shall be customary for “bridge” loan facilities of such nature) and are determined by the Borrower to be no more restrictive on or less favorable to the Borrower and its Restricted Subsidiaries than the terms of this Agreement (as in effect at the time of such issuance or incurrence), taken as a whole, except to the extent this Agreement is amended to incorporate any terms more restrictive than this Agreement and (f) shall not include any financial maintenance covenants nor prohibit prior repayment or prepayment of the Loans; provided that a certificate of an Authorized Officer of the Borrower delivered to the Administrative Agent at least three (3) Business Days prior to the incurrence or issuance of such Indebtedness (or such later date as may be reasonably acceptable to the Administrative Agent), together with a reasonably detailed description of the material terms and conditions of such Indebtedness or drafts of the documentation relating thereto, stating that the Borrower has determined in good faith that such terms and conditions satisfy the foregoing requirements shall be conclusive evidence that such terms and conditions satisfy the foregoing requirements.
“Permitted Bond Hedge Transaction(s)” means any call or capped call option (or substantively equivalent derivative transaction) entered into by the Borrower in connection with the issuance of any Permitted Convertible Debt and requiring the counterparty thereto to deliver to the Borrower (i) shares of common stock of the Borrower (or other securities or property following a merger event or other change of the common stock of the Borrower), (ii) the cash value thereof or (iii) a combination thereof, in each case, from time to time upon exercise of such option; provided that (a) the purchase price for such Permitted Bond Hedge Transaction, less the proceeds received by the Borrower from the sale of any related Permitted Warrant Transaction, does not exceed the net proceeds received by the Borrower from the sale of such Permitted Convertible Debt issued in connection with the Permitted Bond Hedge Transaction and (b) the terms, conditions and covenants of each such transaction shall be such as are reasonable and customary for transactions of such type (as determined by Borrower in good faith and in its reasonable discretion).
“Permitted Convertible Debt” means Indebtedness that is either (i) convertible into a fixed number (subject to customary anti-dilution adjustments, “make-whole” increases and other customary changes thereto) of shares of common stock of Borrower (and cash in lieu of fractional shares) (or other securities or property following a merger event or other change of the common stock of the Borrower), cash or any combination thereof (with the amount of such cash or such combination determined by reference to the market price of such common stock or such other securities) or (ii) sold as units with call options, warrants or rights to purchase (or substantially equivalent derivative transactions) that are exercisable for shares of common stock of the Borrower (and cash in lieu of fractional shares) (or other securities or property following a merger event or other change of the common stock of Borrower), cash or any combination thereof (with the amount of such cash or such combination determined by reference to the market price of such common stock or such other securities).
“Permitted Holders” means, collectively, (a) Pearl Energy Investments, L.P., a Delaware limited partnership, (b) NGP XI US Holdings, L.P., a Delaware limited partnership, (c) any of the equity-holding members of the management of the Borrower, whether by trust or otherwise, and (d) any Affiliates and investment funds, co-investment vehicles and/or similar vehicles or accounts of any of the foregoing that are advised or managed by any of the foregoing; provided that in no event shall any portfolio company of any Permitted Holder be included in the definition of “Permitted Holders”.
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“Permitted Intercompany Activities” shall mean any transactions between or among the Borrower and its Subsidiaries or Affiliates (for the avoidance of doubt, including Unrestricted Subsidiaries) that (x) in respect of clause (i) through (iii) **** below, are entered into in the ordinary course of business of the Borrower and its Subsidiaries and (y) in the good faith judgment of the Borrower, are necessary or advisable in connection with the ownership or operation of the business of the Borrower and its Subsidiaries or Affiliates, including (i) payroll, cash management, purchasing, insurance, indemnity and liability sharing and hedging arrangements (other than the hedging arrangements of any Unrestricted Subsidiaries), (ii) management, technology and licensing arrangements and (iii) purchase and sale of Hydrocarbons in connection with marketing activities.
“Permitted Investments” shall mean:
(a) Dollars;
(b) securities issued or directly and fully and unconditionally guaranteed or insured by the United States government or any agency or instrumentality thereof the securities of which are unconditionally guaranteed as a full faith and credit obligation of such government with maturities of twenty-four (24) months or less from the date of acquisition;
(c) certificates of deposit, time deposits and eurodollar time deposits with maturities of twenty-four (24) months or less from the date of acquisition, demand deposits, bankers’ acceptances with maturities not exceeding three (3) years and overnight bank deposits, in each case with any domestic or foreign commercial bank having capital and surplus of not less than $250,000,000 in the case of U.S. banks and $100,000,000 (or the Dollar equivalent as of the date of determination) in the case of non-U.S. banks (any such bank in the forgoing an “Approved Bank”);
(d) repurchase obligations for underlying securities of the types described in clauses (b) and (c) above or clauses (f) and (g) below entered into with any financial institution or recognized securities dealer meeting the qualifications specified in clause (c) above;
(e) commercial paper and variable or fixed rate notes issued by an Approved Bank (or by the parent company thereof) or any variable or fixed rate note issued by, or guaranteed by, a corporation by, a corporation (other than structured investment vehicles and other than corporations used in structured financing transactions) rated at least A-2 (or the equivalent thereof) by S&P or at least P-2 (or the equivalent thereof) or better by Moody’s (or, if at any time neither Moody’s nor S&P shall be rating such obligations, an equivalent rating from another nationally recognized statistical rating agency selected by the Borrower) and in each case maturing within twelve (12) months after the date of acquisition thereof;
(f) marketable short-term money market and similar liquid funds having a rating of at least P-2 (or the equivalent thereof) or A-2 (or the equivalent thereof) from either Moody’s or S&P, respectively (or, if at any time neither Moody’s nor S&P shall be rating such obligations, an equivalent rating from another nationally recognized statistical rating agency selected by the Borrower);
(g) readily marketable direct obligations issued or fully guaranteed by any state, commonwealth or territory of the United States or any political subdivision or taxing authority thereof; provided, that each such readily marketable direct obligation shall have an Investment Grade Rating from either Moody’s or S&P or Moody’s (or the equivalent thereof) (or, if at any time neither Moody’s nor S&P or Moody’s (or the equivalent thereof) shall be rating such obligations, an equivalent rating from another nationally recognized statistical rating agency selected by the Borrower) with maturities of thirty-six (36) months or less from the date of acquisition;
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(h) Investments with average maturities of twelve (12) months or less from the date of acquisition in money market funds rated AAA- (or the equivalent thereof) or better by S&P or Aaa3 (or the equivalent thereof) or better by Moody’s (or, if at any time neither Moody’s nor S&P shall be rating such obligations, an equivalent rating from another nationally recognized statistical rating agency selected by the Borrower); and
(i) investment funds investing substantially all of their assets in securities of the types described in clauses (a) through (h) above.
“Permitted Liens” shall mean:
(a) Liens for taxes, assessments or governmental charges or claims not yet overdue for a period of more than thirty (30) days or that are being contested in good faith and by appropriate proceedings diligently conducted, for which appropriate reserves have been established in accordance with GAAP (or in the case of any Foreign Subsidiary, the comparable accounting principles in the relevant jurisdiction), or for property taxes on property that the Borrower or one of its Subsidiaries has determined to abandon if the sole recourse for such tax, assessment, charge or claim is to such property;
(b) Liens in respect of property or assets of the Borrower or any of the Restricted Subsidiaries imposed by law, such as landlords’, sublandlords’, vendors’, operators’, suppliers’, carriers’, warehousemen’s, repairmen’s, construction contractors’, workers’, materialmen’s and mechanics’ Liens and other similar Liens arising in the ordinary course of business or incident to the exploration, development, operation or maintenance of Oil and Gas Properties, in each case so long as such Liens arise in the ordinary course of business and do not individually or in the aggregate have a Material Adverse Effect and (i) are not overdue for a period of more than sixty (60) days or (ii) are being contested in good faith by appropriate action and for which adequate reserves have been maintained in accordance with GAAP;
(c) Liens arising from judgments or decrees in circumstances not constituting an Event of Default under Section 11.9;
(d) Liens incurred or pledges or deposits made in connection with workers’ compensation, unemployment insurance and other types of social security, old age pension, public liability obligations or similar legislation, and deposits securing liabilities to insurance carriers under insurance or self-insurance arrangements in respect of such obligations, or to secure (or secure the Liens securing) liability for reimbursement or indemnification obligations of (including obligations in respect of letters of credit or bank guarantees for the benefit of) insurance carriers providing property, casualty or liability insurance to the Borrower or any Subsidiary;
(e) deposits and other Liens securing (or securing the bonds or similar instruments securing) the performance of tenders, statutory obligations, plugging and abandonment or decommissioning obligations, surety, stay, customs and appeal bonds, bids, leases, government contracts, trade contracts, performance and return-of-money bonds and other similar obligations (including letters of credit issued in lieu of such bonds or to support the issuance thereof) incurred in the ordinary course of business or in a manner consistent with past practice or industry practice including those incurred to secure health, safety and environmental obligations in the ordinary course of business, or otherwise constituting Investments permitted by Section 10.5;
(f) ground leases, subleases, licenses or sublicenses in respect of real property (other than any Oil and Gas Properties) on which facilities owned or leased by the Borrower or any of its Restricted Subsidiaries are located;
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(g) easements, rights-of-way, restrictive covenants, licenses, restrictions (including zoning restrictions), title defects, exceptions, reservations, deficiencies or irregularities in title, encroachments, protrusions, servitudes, rights, eminent domain or condemnation rights, permits, conditions and covenants and other similar charges or encumbrances (including in any rights-of-way or other property of the Borrower or its Restricted Subsidiaries for the purpose of roads, pipelines, transmission lines, transportation lines, distribution lines for the removal of gas, oil or other minerals or timber, and other like purposes, or for joint or common use of real estate, rights of way, facilities and equipment) not (i) interfering in any material respect with the business of the Borrower and its Restricted Subsidiaries, taken as a whole, (ii) securing monetary obligations or (iii) materially impairing the value of the affected Borrowing Base Properties, taken as a whole and, to the extent reasonably agreed by the Administrative Agent, any exception on the title reports issued in connection with any Borrowing Base Property;
(h) (i) any interest or title of a lessor, sublessor, licensor or sublicensor under any lease, liens reserved in oil, gas or other Hydrocarbons, minerals, leases for bonus, royalty or rental payments and for compliance with the terms of such lease and (ii) any interest or title of a lessor, sublessor, licensor or sublicensor or secured by a lessor’s, sublessor’s, licensor’s or sublicensor’s interest under any lease, sublease, license or sublicense entered into by the Borrower or any Restricted Subsidiary in the ordinary course of business or otherwise permitted by this Agreement and not securing Indebtedness;
(i) Liens in favor of customs and revenue authorities arising as a matter of law to secure payment of customs duties in connection with the importation of goods;
(j) Liens on goods or inventory the purchase, shipment or storage price of which is financed by a documentary letter of credit or bankers’ acceptance issued for the account of the Borrower or any of its Restricted Subsidiaries; provided that such Lien secures only the obligations of the Borrower or such Restricted Subsidiaries in respect of such letter of credit or bankers’ acceptance to the extent permitted under Section 10.1;
(k) leases, licenses, subleases or sublicenses granted to others not (i) interfering in any material respect with the business of the Borrower and its Restricted Subsidiaries, taken as a whole or (ii) securing any Indebtedness for borrowed money;
(l) Liens arising from precautionary UCC financing statement or similar filings made in respect of operating leases entered into by the Borrower or any of its Restricted Subsidiaries;
(m) Liens created in the ordinary course of business in favor of banks and other financial institutions over credit balances of any bank accounts, commodity trading accounts or other brokerage accounts of the Borrower and the Restricted Subsidiaries held at such banks or financial institutions, as the case may be, in the ordinary course of business;
(n) Liens which arise in the ordinary course of business under operating agreements (including preferential purchase rights, consents to assignment and other restraints on alienation), joint operating agreements, joint venture agreements, oil and gas partnership agreements, oil and gas leases, Farm-Out Agreements, Farm-In Agreements, division orders, contracts for the sale, gathering, transportation or exchange of oil and natural gas, unitization and pooling declarations and agreements, area of mutual interest agreements, royalty and overriding royalty agreements, reversionary interests, 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 that are usual or customary in the Energy Business and are for claims which are not delinquent or that are being contested in good faith and by appropriate proceedings for which appropriate reserves have been established to the extent required by and in accordance with GAAP; provided that any such Lien referred to in this clause does not materially impair the use of the property covered by such Lien for the purposes for which such property is held by the Borrower or any Restricted Subsidiary or materially impair the value of the affected Borrowing Base Properties, taken as a whole;
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(o) Liens on pipelines, pipeline facilities and other midstream assets or facilities that arise by operation of law or other like Liens arising by operation of law in the ordinary course of business and incidental to the exploration, development, operation and maintenance of Oil and Gas Properties;
(p) (i) zoning, building, entitlement and other land use regulations by Governmental Authorities with which the normal operation of the business complies and (ii) any zoning or similar law or right reserved to or vested in any Governmental Authority to control or regulate the use of any real property that does not materially interfere with the ordinary conduct of the business of the Borrower and its Restricted Subsidiaries, taken as a whole;
(q) Liens on equipment of the Borrower or any Restricted Subsidiary granted in the ordinary course of business to the Borrower’s or such Restricted Subsidiary’s client at which such equipment is located;
(r) security given to a public utility or any municipality or governmental authority when required by such utility or authority in connection with the operations of that Person in the ordinary course of business;
(s) Liens arising under statutory provisions of applicable law with respect to production purchased from others; and
(t) deposits of cash with the owner or lessor of premises leased and operated by the Borrower or any of its Subsidiaries to secure the performance of the Borrower’s or such Subsidiary’s obligations under the terms of the lease for such premises;
provided that the term “Permitted Liens” shall not include any Lien securing Indebtedness for borrowed money other than the Obligations.
“Permitted Refinancing Indebtedness” shall mean, with respect to any Indebtedness (the “Refinanced Indebtedness”), any Indebtedness issued or incurred in exchange for, or the net proceeds of which are used to modify, extend, refinance, renew, replace or refund (collectively to “Refinance” or a “Refinancing” or “Refinanced”), such Refinanced Indebtedness (or previous refinancing thereof constituting Permitted Refinancing Indebtedness); provided that (A) the principal amount (or accreted value, if applicable) of any such Permitted Refinancing Indebtedness does not exceed the principal amount (or accreted value, if applicable) of the Refinanced Indebtedness outstanding immediately prior to such Refinancing except by an amount equal to the unpaid accrued interest and premium thereon and other amounts paid in connection with the defeasance or discharge of such Indebtedness plus other amounts paid consisting of original issue discount or fees and expenses incurred in connection with such Refinancing, (B) the direct and contingent obligors with respect to such Permitted Refinancing Indebtedness immediately prior to such Refinancing are not changed as a result of such Refinancing (except that a Guarantor may be added as an additional obligor and except as may change pursuant to subclause (G) below), (C) other than with respect to a Refinancing in respect of Indebtedness incurred pursuant to Section 10.1(g), such Permitted Refinancing Indebtedness shall have a final maturity date equal to or later than the final maturity date of, and has a Weighted Average Life to Maturity equal to or greater than the Weighted Average Life to Maturity of, the Refinanced Indebtedness, (D) subject to clause (G) below, the terms and conditions of any such Permitted Refinancing Indebtedness, taken as a whole, are not materially less favorable to the
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Lenders than the terms and conditions of the Refinanced Indebtedness being Refinanced (including, if applicable, as to collateral priority and subordination, but excluding as to interest rates, fees, floors, funding discounts and redemption or prepayment premiums) or are customary for similar Indebtedness in light of current market conditions, (E) if the Refinanced Indebtedness is subordinated in right of payment to the Obligations, such Permitted Refinancing Indebtedness shall be subordinated to the Obligations, subject to a Subordination Agreement on terms no less favorable to the Secured Parties than such Refinanced Indebtedness, (F) [reserved] and (G) if the Refinanced Indebtedness is secured as permitted by Section 10.2(f), such Permitted Refinancing Indebtedness shall be unsecured. Notwithstanding the foregoing, Permitted Refinancing Indebtedness in respect of Permitted Additional Debt must constitute Permitted Additional Debt. A certificate of an Authorized Officer of the Borrower delivered to the Administrative Agent at least five (5) Business Days prior to the incurrence or issuance of such Indebtedness (or such later date as may be reasonably acceptable to the Administrative Agent), together with a reasonably detailed description of the material terms and conditions of such Indebtedness or drafts of the documentation relating thereto, stating that the Borrower has determined in good faith that such terms and conditions satisfy the requirements set forth in the definition of “Permitted Refinancing Indebtedness” shall be conclusive evidence that such terms and conditions satisfy the foregoing requirements.
“Permitted Tax Distributions” shall mean (x) tax distributions to the members of the Borrower in an aggregate amount equal to (a) the sum of the highest marginal United States federal, state and local income tax rates applicable to individuals or corporations (whichever is higher) resident in New York City, New York, multiplied by (b) the Borrower’s net taxable income for federal income tax purposes; provided that such distributions will be determined (i) by taking into account (A) any loss carryforwards of such member attributable to its direct or indirect ownership of the Borrower and its Subsidiaries for prior taxable periods to the extent such loss is of a character that would allow such loss to be available to reduce taxes in the current taxable period and (B) any adjustments available to such member under Section 743(b) of the Code and (ii) without regard to (A) any available deduction under Section 199A of the Code and (B) absent a change in U.S. federal income tax law, the deductibility of state and local income taxes for U.S. federal income tax purposes and (y) for any taxable year ending after a Qualifying IPO, if any Parent Entity shall be subject to a Tax Receivable Agreement with respect to such taxable year, distributions or other Restricted Payments by the Borrower to its owners in an amount not to exceed the amount necessary to pay a pro rata distribution to holders of its Equity Interests such that such Parent Entity’s direct or indirect share of such distribution is equal to such Parent Entity’s payment obligations under such Tax Receivable Agreement with respect to such taxable year. Permitted Tax Distributions may be made quarterly, based on the Borrower’s estimated income for each such quarterly period, and annually, based on the Borrower’s annual federal income tax filing; provided that if the aggregate quarterly estimates for any tax year exceed the actual annual amount for such tax year, such excess shall be deducted from the next quarterly distribution(s) to occur after such annual federal income tax filing, and if the aggregate quarterly estimates for any tax year is less than the actual annual amount for such tax year, such deficit may be distributed to the members of the Borrower as a Permitted Tax Distribution.
“Permitted Warrant Transaction(s)” means any call option, warrant or right to purchase (or substantively equivalent derivative transaction) relating to the Borrower’s common stock (or other securities or property following a merger event or other change of the common stock of the Borrower) and/or cash (in an amount determined by reference to the price of such common stock or such other securities) sold by the Borrower substantially concurrently with any purchase by the Borrower of a related Permitted Bond Hedge Transaction; provided that the terms, conditions and covenants of each such transaction shall be such as are reasonable and customary for transactions of such type (as determined by Borrower in good faith and in its reasonable discretion).
“Person” shall mean any individual, partnership, joint venture, firm, corporation, limited liability company, association, trust or other enterprise or any Governmental Authority.
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“Petroleum Industry Standards” shall mean 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” shall mean any employee benefit plan within the meaning of Section 3(3) of ERISA, that is or was within any of the preceding six plan years sponsored, maintained for or contributed to by (or to which there is or was an obligation to contribute or to make payments to) any Credit Party, or with respect to which any Credit Party has any actual or contingent liability.
“Platform” shall have the meaning provided in Section 13.2(c).
“Prime Rate” shall mean the rate of interest per annum determined and publicly announced by Citi from time to time as its prime commercial lending rate for Dollar loans in the United States for such day. The Prime Rate is not necessarily the lowest rate that Citi is charging any corporate customer.
“Proceeding” shall have the meaning provided in Section 13.5(b).
“Production Payments and Reserve Sales” shall mean the grant or transfer by the Borrower or any of its Restricted Subsidiaries to any Person of the right to receive all or a portion of the production or the proceeds from the sale of production attributable to such properties where the holder of such interest has recourse solely to such production or proceeds of production, subject to the obligation of the grantor or transferor to operate and maintain, or cause the subject interests to be operated and maintained, in a reasonably prudent manner or other customary standard or subject to the obligation of the grantor or transferor to indemnify for environmental, title or other matters customary in the oil and gas exploration and development business, including any such grants or transfers.
“Projections” shall mean financial estimates, forecasts and other forward-looking information prepared by or on behalf of the Borrower or any of its representatives and that have been made available to any Lenders or the Administrative Agent in connection with the Transactions or the other transactions contemplated hereby.
“Proposed Acquisition” shall have the meaning provided in Section 10.10(a).
“Proposed Borrowing Base” shall have the meaning provided in Section 2.14(c)(i).
“Proposed Borrowing Base Notice” shall have the meaning provided in Section 2.14(c)(ii).
“Proved Developed Producing Reserves” shall mean oil and gas mineral interests that, in accordance with Petroleum Industry Standards, are classified as both “Proved Reserves” and “Developed Producing Reserves.”
“Proved Developed Reserves” shall mean oil and gas mineral interests that, in accordance with Petroleum Industry Standards, are classified as both “Proved Reserves” and one of the following: (a) “Developed Producing Reserves” or (b) “Developed Non-Producing Reserves.”
“Proved Reserves” shall mean oil and gas mineral interests 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” shall mean a prohibited transaction class exemption issued by the U.S. Department of Labor, as any such exemption may be amended from time to time.
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“PV-9” shall mean, with respect to any Proved Reserves expected to be produced from any Borrowing Base Properties, the net present value, discounted at nine percent (9%) per annum, of the future net revenues expected to accrue to the Credit Parties’ collective interests in such reserves during the remaining expected economic lives of such reserves, calculated in accordance with the Bank Price Deck.
“QFC” shall have 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” shall have the meaning provided in Section 13.25.
“Qualified Acquisition” shall mean an acquisition or a series of related acquisitions in which the consideration paid by the Credit Parties is equal to or greater than $10,000,000.
“Qualified Disposition” shall mean a Disposition or a series of related Dispositions in which the consideration received by the Credit Parties is equal to or greater than $10,000,000.
“Qualified ECP Guarantor” shall mean, in respect of any Swap Obligation, each of the Borrower, any Restricted Subsidiary and any Guarantor that has total assets exceeding $10,000,000 at the time such Swap Obligation is incurred or such other person as constitutes an ECP under the Commodity Exchange Act or any regulations promulgated thereunder.
“Qualified Equity Interests” shall mean any Equity Interests of the Borrower other than Disqualified Stock.
“Qualifying IPO” means the sale of common Equity Interests of any Parent Entity in an underwritten primary public offering (other than a public offering pursuant to a registration statement on Form S-8) pursuant to an effective registration statement filed with the SEC in accordance with the Exchange Act (whether alone or in connection with a secondary public offering).
“Recipient” shall mean (a) any Agent or (b) any Lender, as applicable.
“Redetermination Date” shall mean, with respect to any Scheduled Redetermination or any Interim Redetermination, the date that the redetermined Borrowing Base related thereto becomes effective pursuant to Section 2.14(d).
“Refinance” shall have the meaning provided in the definition of “Permitted Refinancing Indebtedness.”
“Refinanced Indebtedness” shall have the meaning assigned to such term in the definition of “Permitted Refinancing Indebtedness.”
“Register” shall have the meaning provided in Section 13.6(b)(iv).
“Regulation T” shall mean Regulation T of the Board as from time to time in effect and any successor to all or a portion thereof establishing margin requirements.
“Regulation U” shall mean Regulation U of the Board as from time to time in effect and any successor to all or a portion thereof establishing margin requirements.
“Regulation X” shall mean Regulation X of the Board as from time to time in effect and any successor to all or a portion thereof establishing margin requirements.
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“Reimbursement Date” shall have the meaning provided in Section 3.4(a).
“Related Indemnified Person” shall mean, with respect to an Indemnitee, (1) any controlling Person or controlled Affiliate of such Indemnitee, (2) the respective directors, officers, or employees of such Indemnitee or any of its controlling Persons or controlled Affiliates and (3) the respective agents and representatives of such Indemnitee or any of its controlling Persons or controlled Affiliates, in the case of this clause (3), acting at the instructions of such Indemnitee, controlling Person or such controlled Affiliate.
“Related Party” shall mean, with respect to any Agent or any Lender, its Affiliates and the officers, directors, employees, agents, attorney-in-fact, attorneys, representatives, partners, members, trustees and advisors of such Agent or Lender and of such Agent’s or Lender’s Affiliates.
“Release” shall mean any release, spill, emission, discharge, disposal, leaking, pumping, pouring, dumping, emitting, migrating, emptying, injecting or leaching into, through, or from the air, surface water, groundwater, sediment, land surface or subsurface strata.
“Relevant Governmental Body” shall mean the Board or the NYFRB, or a committee officially endorsed or convened by Board or the NYFRB, or any successor thereto.
“Reportable Event” shall mean an event described in Section 4043(c) of ERISA and the regulations thereunder, other than any event as to which the thirty (30) day notice period has been waived.
“Required Cash Collateral Amount” shall have the meaning provided in Section 3.7(c).
“Required Lenders” shall mean, at any date, (a) Non-Defaulting Lenders having or holding at least sixty-six and two-thirds percent (66.67%) of the Adjusted Total Commitment at such date or (b) if the Total Commitment has been terminated, Non-Defaulting Lenders having or holding at least sixty-six and two-thirds percent (66.67%) of the outstanding principal amount of the Loans and Letter of Credit Exposure (excluding the Loans and Letter of Credit Exposure of Defaulting Lenders) in the aggregate at such date.
“Requirement of Law” shall mean, as to any Person, any law, treaty, rule, regulation, statute, order, ordinance, decree, judgment, consent decree, writ, injunction, settlement agreement or governmental requirement enacted, promulgated or imposed or entered into or agreed by any Governmental Authority, in each case applicable to or binding upon such Person or any of its property or assets or to which such Person or any of its property or assets is subject.
“Reserve Report” shall mean (a) the Initial Reserve Report, (b) any other subsequent report, in form and substance reasonably satisfactory to the Administrative Agent, or (c) any other engineering data reasonably acceptable to the Administrative Agent, setting forth, as of each December 31 or June 30 (or such other date as contemplated by this Agreement with respect to Interim Redeterminations or otherwise reasonably acceptable to the Administrative Agent) the Proved Reserves and the Proved Developed Reserves of the Borrower and the Credit Parties (or of Oil and Gas Properties to be acquired, provided that any Oil and Gas Properties not yet acquired shall be expressly designated as such), together with a projection of the rate of production and future net revenues, operating expenses (including production taxes and ad valorem expenses) and capital expenditures with respect thereto as of such date, based upon the PV-9 of the Proved Reserves and Proved Developed Reserves set forth therein; provided that in connection with any Interim Redeterminations of the Borrowing Base pursuant to the last sentence of Section 2.14(b), the Borrower shall only be required, for purposes of updating the Reserve Report, to (i) set forth such additional Proved Reserves and related information as are the subject of such acquisition and (ii) include updates, if any, for any additional completions and additions.
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“Reserve Report Certificate” shall mean a certificate of an Authorized Officer in substantially the form of Exhibit A certifying as to the matters set forth in Section 9.13(c).
“Resolution Authority” shall mean an EEA Resolution Authority or, with respect to any UK Financial Institution, a UK Resolution Authority.
“Restricted Payment Conditions” shall mean as of any date of determination, on a pro formabasis after giving effect to the transaction with respect to which the Restricted Payment Conditions are being evaluated, either:
(a) (i) no Default, Event of Default or Loan Limit Deficiency shall have occurred and be continuing, (ii) the Available Commitment is not less than twenty percent (20.0%) of the Total Commitment, (iii) the Consolidated Total Net Leverage Ratio is less than or equal to 2.00 to 1.00 and (iv) Distributable Free Cash Flow is greater than or equal to zero on such date of determination; or
(b) (i) no Default, Event of Default or Loan Limit Deficiency shall have occurred and be continuing, (ii) the Available Commitment is not less than twenty percent (20.0%) of the Total Commitment and (iii) the Consolidated Total Net Leverage Ratio is less than or equal to 1.25 to 1.00.
“Restricted Payments” shall have the meaning provided in Section 10.6.
“Restricted Subsidiary” shall mean any Subsidiary of the Borrower other than an Unrestricted Subsidiary.
“S&P” shall mean S&P Global Ratings, an S&P Global Inc. business, and any successor thereto that is a nationally recognized rating agency.
“Sanctions” shall mean 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, the European Union, His Majesty’s Treasury of the United Kingdom or other applicable sanctions authority.
“Sanctions Laws” shall mean the following, in each case, to the extent enacted and in effect: (a) laws, regulations, and rules promulgated or administered by OFAC to implement U.S. sanctions programs, including any enabling legislation or Executive Order related thereto, as amended from time to time; (b) the US Comprehensive Iran Sanctions, Accountability, and Divestment Act and the regulations and rules promulgated thereunder, as amended from time to time; (c) the U.S. Iran Threat Reduction and Syria Human Rights Act and the regulations and rules promulgated thereunder, as amended from time to time; (d) the US Iran Freedom and Counter-Proliferation Act and the regulations and rules promulgated thereunder (e) the sanctions and other restrictive measures applied by the European Union in pursuit of the Common Foreign and Security Policy objectives set out in the Treaty on European Union; and (f) any similar sanctions laws as may be enacted from time to time in the future by the U.S., the European Union (and its member states), or the U.N. Security Council or any other legislative body of the United Nations; and any corresponding laws of jurisdictions in which the Borrower operates or in which the proceeds of the Loans will be used or from which repayments of the Obligations will be derived.
“Scheduled Redetermination” shall have the meaning provided in Section 2.14(b).
“Scheduled Redetermination Date” shall mean the date on which a Borrowing Base that has been redetermined pursuant to a Scheduled Redetermination becomes effective as provided in Section 2.14.
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“SEC” shall mean the Securities and Exchange Commission or any successor thereto.
“Second Amendment” shall mean that certain Second Amendment to Credit Agreement, dated as of the Second Amendment Effective Date, by and among the Borrower, the other Credit Parties party thereto, Administrative Agent, Collateral Agent, the Issuing Banks party thereto and the Lenders party thereto.
“Second Amendment Effective Date” shall mean May 29, 2025.
“Secured Cash Management Agreement” shall mean any agreement related to Cash Management Services by and between the Borrower or any of its Restricted Subsidiaries and any Cash Management Bank.
“Secured Hedge Agreement” shall mean (i) any Hedge Agreement by and between the Borrower or any of its Restricted Subsidiaries and any Hedge Bank of the type described in cause (a) of the definition of Hedge Bank, excluding any Hedge Agreement, transactions under any Hedge Agreement and extensions or other modifications of any Hedge Agreement or transactions under any Hedge Agreement entered into after the time that such Hedge Bank ceases to be a Lender or an Affiliate of a Lender and (ii) Specified Hedge Agreements.
“Secured Parties” shall mean, collectively, the Administrative Agent, the Collateral Agent, each Issuing Bank, each Lender, each Hedge Bank that is party to any Secured Hedge Agreement, each Cash Management Bank that is a party to any Secured Cash Management Agreement and each sub-agent appointed pursuant to Section 12.2 by the Administrative Agent with respect to matters relating to the Credit Documents or by the Collateral Agent with respect to matters relating to any Security Document.
“Securities Account” shall mean any securities account maintained by the Credit Parties, including any “security accounts” under Article 9 of the UCC. All funds in such Securities Accounts (other than Excluded Accounts) shall be conclusively presumed to be Collateral and proceeds of Collateral and the Agents and the Lenders shall have no duty to inquire as to the source of the amounts on deposit in the Securities Accounts.
“Securities Account Control Agreement” has the meaning specified in Section 9.16(a).
“Security Documents” shall mean, collectively, (a) the Collateral Agreement, (b) the Mortgages, (c) each Deposit Account Control Agreement, (d) each Securities Account Control Agreement, (e) each Commodity Account Control Agreement and (f) each other security agreement or other instrument or document executed and delivered pursuant to Section 9.10 or 9.12 or pursuant to any other such Security Documents or otherwise in order to secure or perfect the security interest in any or all of the Obligations.
“Service Agreement Undertakings” shall mean agreements to pay fees and other consideration in respect of agreed quantities of marketing, transportation and/or other similar services in connection with reasonably anticipated (i) production from Oil and Gas Properties of the Borrower and the Restricted Subsidiaries and (ii) associated production of non-operators and royalty and similar interest owners, in each case which fees and other consideration are payable whether or not such services are utilized; provided that (A) each such contract or arrangement is at rates and on terms at least comparable to those generally available in the market at the time such rates and terms are negotiated and (B) the aggregate amount of such prepayments to be made by the Borrower and the Restricted Subsidiaries pursuant to all such contracts and arrangements during any calendar year would not exceed the Threshold Amount.
“SFAS 87” has the meaning set forth in the definition of the term “Unfunded Current Liability”.
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“SOFR” shall mean a rate equal to the secured overnight financing rate as administered by the SOFR Administrator.
“SOFR Administrator” shall mean the Federal Reserve Bank of New York (or a successor administrator of the secured overnight financing rate).
“SOFR Loan” shall mean a Loan that bears interest at a rate based on Adjusted Term SOFR, other than pursuant to clause (c) of the definition of “ABR”.
“Solvent” shall mean, with respect to any Person on any date of determination, that on such date (i)(a) the fair value of the assets of such Person and its Restricted Subsidiaries, on a consolidated basis, exceeds, on a consolidated basis, their debts and liabilities, subordinated, contingent or otherwise, (b) the present fair saleable value of the property of such Person and its Restricted Subsidiaries, on a consolidated basis, is greater than the amount that will be required to pay the probable liability, on a consolidated basis, of their debts and other liabilities, subordinated, contingent or otherwise, as such debts and other liabilities become absolute and matured or (c) such Person and its Restricted Subsidiaries, on a consolidated basis, are able to pay their debts and liabilities, subordinated, contingent or otherwise, as such liabilities become absolute and matured and (ii) such Person and its Restricted Subsidiaries, on a consolidated basis, are not engaged in, and are not about to engage in, business for which they have unreasonably small capital. The amount of any contingent liability at any time shall be computed as the amount that would reasonably be expected to become an actual and matured liability.
“Specified Hedge Agreements” shall mean any Hedge Agreement as of the Closing Date governed by that certain ISDA 2002 Master Agreement, dated as of November 27, 2023, including the schedules and trade confirmations thereto as of the Closing Date, between East West Bank and one or more Credit Parties, and, in each case, specified on Schedule 1.1(b) to this Agreement as of the Closing Date; provided, that only such Hedge Agreements, trade confirmations and other transactions governed by such ISDA that are in existence as of the Closing Date and specified on Schedule 1.1(b) to this Agreement as of the Closing Date shall constitute a Specified Hedge Agreement hereunder (but not any extensions or modifications of any of the foregoing that are entered into after the Closing Date nor any Hedge Agreements, trade confirmations or other transactions governed by such ISDA that are entered into on or after the Closing Date).
“Specified Transaction” shall mean any acquisition, Investment, Disposition, incurrence or repayment of Indebtedness, Restricted Payment or Subsidiary designation that by the terms of this Agreement requires a financial ratio or test to be calculated on a pro forma basis.
“SPV” shall have the meaning provided in Section 13.6(g).
“SPV Loan” shall have the meaning provided in Section 13.6(c)(ii).
“Stated Amount” of any Letter of Credit shall mean the maximum amount from time to time available to be drawn thereunder, determined without regard to whether any conditions to drawing could then be met.
“Subagent” shall have the meaning provided in Section 12.2.
“Subordination Agreement” shall mean a subordination agreement in form and substance reasonably acceptable to the Administrative Agent and/or the Collateral Agent, the Borrower and the Majority Lenders, among the Administrative Agent, the representative on behalf of any holders of senior subordinated or subordinated Permitted Additional Debt, the Borrower, the Guarantors and the other parties party thereto from time to time.
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“Subsidiary” shall mean, with respect to any Person: (1) any corporation, association, or other business entity (other than a partnership, joint venture, limited liability company or similar entity) of which more than fifty percent (50.0%) of the total Voting Equity is at the time of determination owned or controlled, directly or indirectly, by such Person or one or more of the other Subsidiaries of that Person or a combination thereof; and (2) any partnership, joint venture, limited liability company or similar entity of which: (a) more than fifty percent (50.0%) of the Voting Equity or general partnership interests, as applicable, are owned or controlled, directly or indirectly, by such Person or one or more of the other Subsidiaries of that Person or a combination thereof whether in the form of membership, general, special or limited partnership or otherwise, and (b) such Person or any Restricted Subsidiary of such Person is a controlling general partner or otherwise controls such entity. Unless otherwise qualified, all references to a “Subsidiary” or to “Subsidiaries” in this Agreement shall refer to a Subsidiary or Subsidiaries of the Borrower.
“Subsidiary Guarantor” shall mean each Subsidiary that is a Guarantor.
“Subsidiary Redesignation” shall have the meaning provided in the definition of “Unrestricted Subsidiary” contained in this Section 1.1.
“Successor Borrower” shall have the meaning provided in Section 10.3(a)(i).
“Supported QFC” has the meaning assigned to such term in Section 13.25.
“Swap Obligation” shall mean, with respect to any Guarantor, any obligation to pay or perform under any agreement, contract or transaction that constitutes a “swap” within the meaning of section 1a(47) of the Commodity Exchange Act.
“Swap PV” shall mean, with respect to any commodity Hedge Agreement, the present value, discounted at nine percent (9%) per annum, of the future receipts expected to be paid to the Borrower or its Restricted Subsidiaries under such Hedge Agreement netted against the Administrative Agent’s then current Bank Price Deck; provided, that the “Swap PV” shall never be less than $0.00.
“Swap Termination Value” shall mean, in respect of any one or more Hedge Agreements, after taking into account the effect of any legally enforceable netting agreement relating to such Hedge Agreements, (a) for any date on or after the date such Hedge Agreements have been closed out and termination value(s) determined in accordance therewith, the sum of any unpaid amount in respect of such Hedge Agreement and 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 Hedge Agreements, as determined based upon one or more mid-market or other readily available quotations provided by any recognized dealer in such Hedge Agreements (which may include a Lender or any Affiliate of a Lender).
“Taxes” shall mean all present or future taxes, levies, imposts, duties, deductions, withholdings (including backup withholding), assessments, fees or other charges, in each case in the nature of a tax, imposed by any Governmental Authority, including any interest, additions to tax or penalties applicable thereto.
“Tax Receivable Agreement” means the tax receivable agreement in substantially the form provided to the Administrative Agent on or prior to the Closing Date and modified in a manner consistent with customary tax receivable agreements entered into in connection with an “Up-C” Qualifying IPO and any transactions related thereto and otherwise reasonably satisfactory to the Administrative Agent.
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“Term SOFR” shall mean,
(a) for any calculation with respect to a SOFR Loan, the Term SOFR Reference Rate for a tenor comparable to the applicable Interest Period on the day (such day, the “Periodic Term SOFR Determination Day”) that is two (2) U.S. Government Securities Business Days prior to the first (1st) day of such Interest Period, as such rate is published by the Term SOFR Administrator; provided, however, that if as of 5:00 p.m. (New York City time) on any Periodic Term SOFR Determination Day the Term SOFR Reference Rate for the applicable tenor has not been published by the Term SOFR Administrator and a Benchmark Replacement Date with respect to the Term SOFR Reference Rate has not occurred, then Term SOFR will be the Term SOFR Reference Rate for such tenor as published by the Term SOFR Administrator on the first preceding U.S. Government Securities Business Day for which such Term SOFR Reference Rate for such tenor was published by the Term SOFR Administrator so long as such first preceding U.S. Government Securities Business Day is not more than three (3) U.S. Government Securities Business Days prior to such Periodic Term SOFR Determination Day, and
(b) for any calculation with respect to an ABR Loan on any day, the Term SOFR Reference Rate for a tenor of one (1) month on the day (such day, the “ABR Term SOFR Determination Day”) that is two (2) U.S. Government Securities Business Days prior to such day as such rate is published by the Term SOFR Administrator; provided, however, that if as of 5:00 p.m. (New York City time) on any ABR Term SOFR Determination Day the Term SOFR Reference Rate for the applicable tenor has not been published by the Term SOFR Administrator and a Benchmark Replacement Date with respect to the Term SOFR Reference Rate has not occurred, then Term SOFR will be the Term SOFR Reference Rate for such tenor as published by the Term SOFR Administrator on the first preceding U.S. Government Securities Business Day for which such Term SOFR Reference Rate for such tenor was published by the Term SOFR Administrator so long as such first preceding U.S. Government Securities Business Day is not more than three (3) U.S. Government Securities Business Days prior to such ABR Term SOFR Determination day.
“Term SOFR Administrator” shall mean CME Group Benchmark Administration Limited (CBA) (or a successor administrator of the Term SOFR Reference Rate selected by the Administrative Agent in its reasonable discretion).
“Term SOFR Reference Rate” shall mean the forward-looking term rate based on SOFR.
“Termination Date” shall mean the earlier to occur of (a) the Maturity Date and (b) the date on which the Total Commitment shall have terminated.
“Test Period” shall mean, for any date of determination under this Agreement, any period of four (4) consecutive fiscal quarters ending on the last day of such applicable fiscal quarter.
“Third Amendment” shall mean that certain Third Amendment to Credit Agreement, dated as of the Third Amendment Effective Date, by and among the Borrower, the other Credit Parties party thereto, Administrative Agent, Collateral Agent, the Issuing Banks party thereto and the Lenders party thereto.
“Third Amendment Effective Date” shall mean December 5, 2025.
“Threshold Amount” shall mean the greater of (a) $16,250,000 and (b) five percent (5.0%) of the Borrowing Base then in effect.
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“Total Commitment” shall mean the sum of the Commitments of the Lenders.
“Total Exposure” shall mean, with respect to any Lender at any time, the sum of (a) the aggregate principal amount of the Loans of such Lender then outstanding and (b) such Lender’s Letter of Credit Exposure at such time.
“Transaction Expenses” shall mean any fees or expenses incurred or paid by the Borrower or any of its Subsidiaries in connection with the Transactions (including expenses in connection with hedging transactions (including termination or amendment thereof), if any, payments to officers, employees and directors as change of control payments, severance payments or special or retention bonuses and payments or charges for payments on account of phantom stock units, restricted stock, stock appreciation rights, restricted stock units and options (including the repurchase or rollover of, or modifications to, the foregoing awards)), this Agreement and the other Credit Documents and the transactions contemplated hereby and thereby.
“Transactions” shall mean, collectively, the execution, delivery and performance of this Agreement and the other Credit Documents, the borrowing of the Loans, the use of the proceeds thereof, the issuance of Letters of Credit hereunder, the payment of Transaction Expenses and any other transactions contemplated by this Agreement and the Credit Documents.
“Transferee” shall have the meaning provided in Section 13.6(e).
“Type” shall mean, as to any Loan, its nature as an ABR Loan or a SOFR Loan.
“UCC” shall mean the Uniform Commercial Code of the State of New York or of any other state the laws of which are required to be applied in connection with the perfection of security interests in any Collateral.
“UCP 600” shall have the meaning provided in Section 3.8.
“UK Financial Institution” shall mean 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” shall mean the Bank of England or any other public administrative authority having responsibility for the resolution of any UK Financial Institution.
“Unadjusted Benchmark Replacement” shall mean the applicable Benchmark Replacement excluding the related Benchmark Replacement Adjustment.
“Unfunded Current Liability” of any Plan shall mean the amount, if any, by which the Accumulated Benefit Obligation (as defined under Statement of Financial Accounting Standards No. 87 (“SFAS 87”)) under the Plan as of the close of its most recent plan year, determined in accordance with SFAS 87 as in effect on the date hereof, exceeds the Fair Market Value of the assets allocable thereto.
“Uniform Customs” shall mean, with respect to any Letter of Credit, the Uniform Customs and Practice for Documentary Credits as approved by the International Chamber of Commerce, commencing on July 1, 2007 (or such later version thereof as may be in effect at the time of issuance).
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“Unpaid Drawing” shall have the meaning provided in Section 3.4(a).
“Unrestricted Cash” shall mean cash or cash equivalents (including Permitted Investments) of the Borrower or any of its Restricted Subsidiaries that would not appear as “restricted” on a consolidated balance sheet of the Borrower or any of its Restricted Subsidiaries; provided that (a) cash or cash equivalents (including Permitted Investments) that would appear as “restricted” on a consolidated balance sheet of Borrower or any of its Restricted Subsidiaries solely because such cash or cash equivalents (including Permitted Investments) are subject to a Deposit Account Control Agreement, a Securities Account Control Agreement or a Commodity Account Control Agreement in favor of the Collateral Agent shall constitute Unrestricted Cash hereunder, (b) cash and cash equivalents shall be included in the determination of Unrestricted Cash only to the extent that such cash and cash equivalents are maintained in accounts subject to a Deposit Account Control Agreement, a Securities Account Control Agreement or a Commodity Account Control Agreement in favor of the Collateral Agent and (c) cash and cash equivalents that are maintained in accounts to the extent required under this Agreement to cash collateralize Letter of Credit Exposure shall not be included in Unrestricted Cash.
“Unrestricted Subsidiary” shall mean (a) any Subsidiary of the Borrower that is formed or acquired after the Closing Date if, at such time or promptly thereafter, the Borrower designates such Subsidiary as an “Unrestricted Subsidiary” in a written notice to the Administrative Agent, (b) any Restricted Subsidiary designated as an Unrestricted Subsidiary by the Borrower in a written notice to the Administrative Agent; provided that in the case of each of clauses (a) and (b), (i) such designation shall be deemed to be an Investment (or reduction in an outstanding Investment, in the case of a designation of an Unrestricted Subsidiary as a Restricted Subsidiary) on the date of such designation in an amount equal to the Fair Market Value of the Borrower’s investment therein on such date and such designation shall be permitted only to the extent such Investment is permitted under Section 10.5 on the date of such designation, (ii) in the case of clauses (a) and (b), such designation shall be deemed to be a Disposition pursuant to which the provisions of Section 2.14(f) will apply to the extent contemplated thereby, (iii) no Default, Event of Default or Loan Limit Deficiency exists or would result from such designation immediately after giving effect thereto, (iv) immediately after giving pro forma effect to such designation, the Borrower shall be in compliance with the Financial Performance Covenants on a pro forma basis, (v) all representations and warranties made by any Credit Party contained herein or in the other Credit Documents shall be true and correct in all material respects with the same effect as though such representations and warranties had been made on and as of the date of such designation (except where such representations and warranties expressly relate to an earlier date, in which case such representations and warranties shall have been true and correct in all material respects as of such earlier date and except that any representation and warranty that is qualified as to “materiality,” “Material Adverse Effect” or similar language shall be true and correct (after giving effect to any qualification therein) in all respects on such respective dates) and (vi) at the time of such designation, if such Subsidiary owns any Borrowing Base Properties, such designation shall be deemed a Disposition of such Borrowing Base Properties and shall otherwise be in compliance with this Agreement and (c) each Subsidiary of an Unrestricted Subsidiary. No Subsidiary may be designated as an Unrestricted Subsidiary if, after such designation, it would be a “Restricted Subsidiary” for the purpose of any Permitted Additional Debt or any Permitted Refinancing Indebtedness in respect thereof or if, immediately prior to such designation, such Subsidiary is a party to a Secured Hedge Agreement (except if arrangements satisfactory to the applicable Hedge Bank have been made). The Borrower may, by written notice to the Administrative Agent, re-designate any Unrestricted Subsidiary as a Restricted Subsidiary (each, a “Subsidiary Redesignation”), and thereafter, such Subsidiary shall no longer constitute an Unrestricted Subsidiary, but only if no Event of Default would result from such Subsidiary Redesignation. Any such Subsidiary Redesignation shall be deemed to constitute the incurrence by the Borrower at the time of redesignation of any Investment, Indebtedness, or Liens of such Subsidiary existing at such time, and the Borrower shall be in compliance with Sections 10.1, 10.2 and 10.5 after giving effect to such redesignation. As of the Closing Date, there are no Unrestricted Subsidiaries.
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“U.S. Government Securities Business Day” shall mean any day except for (a) a Saturday, (b) a Sunday or (c) a day on which the Securities Industry and Financial Markets Association recommends that the fixed income departments of its members be closed for the entire day for purposes of trading in United States government securities.
“U.S. Person” shall mean any Person that is a “United States Person” as defined in Section 7701(a)(30) of the Code.
“U.S. Special Resolution Regimes” shall have the meaning provided in Section 13.25.
“U.S. Tax Compliance Certificate” has the meaning specified in Section 5.4(f).
“Utilization Percentage” shall mean, as of any day, the fraction expressed as a percentage, the numerator of which is the aggregate Total Exposures of all Lenders on such day, and the denominator of which is the Aggregate Elected Commitment Amount in effect on such day.
“Voting Equity” shall mean, with respect to any Person, such Person’s Equity Interests having the voting power entitled (without regard to the occurrence of any contingency) to vote in the election of directors (or equivalent thereof), members of management or trustees thereof under ordinary circumstances, or all interests in such Person with the power to direct or cause the direction of the management or actions of such Person.
“Weighted Average Life to Maturity” shall mean, when applied to any Indebtedness at any date, the number of years obtained by dividing: (i) the sum of the products obtained by multiplying (a) the amount of each then remaining scheduled installment, sinking fund, serial maturity or other required scheduled payments of principal, including payment at final scheduled maturity, in respect thereof, by (b) the number of years (calculated to the nearest one-twelfth) that will elapse between such date and the making of such payment; by (ii) the then outstanding principal amount of such Indebtedness; provided that the effects of any prepayments made on such Indebtedness shall be disregarded in making such calculation.
“Wholly owned Subsidiary” of any person shall mean a subsidiary of such person, all of the Equity Interests of which (other than directors’ qualifying shares or nominee or other similar shares required pursuant to applicable law) are owned by such person or another Wholly owned Subsidiary of such person.
“Withdrawal Liability” shall mean the liability to a Multiemployer Plan as a result of a complete or partial withdrawal from such Multiemployer Plan, as such terms are defined in Part I of Subtitle E of Title IV of ERISA.
“Withholding Agent” shall mean the Borrower and the Administrative Agent.
“Working Capital” shall mean, as at any date of determination, the difference of Consolidated Current Assets minus Consolidated Current Liabilities.
“Write-Down and Conversion Powers” shall mean, (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.
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1.2 Other Interpretive Provisions. With reference to this Agreement and each other Credit Document, unless otherwise specified herein or in such other Credit Document:
(a) The meanings of defined terms are equally applicable to the singular and plural forms of the defined terms.
(b) The words “herein”, “hereto”, “hereof” and “hereunder” and words of similar import when used in any Credit Document shall refer to such Credit Document as a whole and not to any particular provision thereof.
(c) Article, Section, Exhibit and Schedule references are to the Credit Document in which such reference appears.
(d) The terms “include,” “includes” and “including” are by way of example and not limitation.
(e) The term “documents” includes any and all instruments, documents, agreements, certificates, notices, reports, financial statements and other writings, however evidenced, whether in physical or electronic form.
(f) In the computation of periods of time from a specified date to a later specified date, the word “from” shall mean “from and including”; the words “to” and “until” each mean “to but excluding”; and the word “through” shall mean “to and including”.
(g) Section headings herein and in the other Credit Documents are included for convenience of reference only and shall not affect the interpretation of this Agreement or any other Credit Document.
(h) Any reference to any Person shall be constructed to include such Person’s successors or assigns (subject to any restrictions on assignment set forth herein) and, in the case of any Governmental Authority, any other Governmental Authority that shall have succeeded to any or all of the functions thereof.
(i) Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms.
(j) The word “will” shall be construed to have the same meaning as the word “shall”.
(k) The words “asset” and “property” shall be construed to have the same meaning and effect and to refer to any and all tangible and intangible assets and properties, including cash, securities, accounts and contract rights.
(l) The principal amount of any non-interest bearing Indebtedness or other discount security constituting Indebtedness at any date shall be the principal amount thereof that would be shown on a balance sheet of the Borrower dated such date prepared in accordance with GAAP.
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1.3 Accounting Terms.
(a) Generally. All accounting terms not specifically or completely defined herein shall be construed in conformity with, and all financial data (including financial ratios and other financial calculations) required to be submitted pursuant to this Agreement shall be prepared in conformity with, GAAP applied on a consistent basis, as in effect from time to time, applied in a manner consistent with that used in preparing the first audited financial statements delivered under Section 9.1(a), except as otherwise specifically prescribed herein. 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 (i) without giving effect to any election under Accounting Standards Codification 825-10-25 (or any other Accounting Standards Codification or Financial Accounting Standard having a similar result or effect) to value any Indebtedness or other liabilities of the Borrower or any Subsidiary at “fair value”, as defined therein and (ii) without giving effect to any treatment of Indebtedness in respect of convertible debt instruments under Accounting Standards Codification 470-20 (or any other Accounting Standards Codification or Financial Accounting Standard having a similar result or effect) to value any such Indebtedness in a reduced or bifurcated manner as described therein, and such Indebtedness shall at all times be valued at the full stated principal amount thereof.
(b) Computation of Certain Financial Covenants. Unless otherwise specified herein, all defined financial terms (and all other definitions used to determine such terms) shall be determined and computed in respect of the Borrower and its Restricted Subsidiaries on a consolidated basis.
1.4 Rounding. Any financial ratios required to be maintained or complied with by the Borrower pursuant to this Agreement (or required to be satisfied in order for a specific action to be permitted under this Agreement) shall be calculated by dividing the appropriate component by the other component, carrying the result to one place more than the number of places by which such ratio is expressed herein and rounding the result up or down to the nearest number (with a rounding-up if there is no nearest number).
1.5 References to Agreements, Laws, Etc. Unless otherwise expressly provided herein, (a) references to organizational documents, agreements (including the Credit Documents) and other Contractual Requirements shall be deemed to include all subsequent amendments, restatements, amendment and restatements, extensions, supplements and other modifications thereto, but only to the extent that such amendments, restatements, amendment and restatements, extensions, supplements and other modifications are permitted by any Credit Document and (b) references to any Requirement of Law shall include all statutory and regulatory provisions consolidating, amending, replacing, supplementing or interpreting such Requirement of Law.
1.6 Times of Day. Unless otherwise specified, all references herein to times of day shall be references to New York City (daylight saving or standard, as applicable).
1.7 Timing of Payment or Performance. When the payment of any obligation or the performance of any covenant, duty or obligation is stated to be due or performance required on a day which is not a Business Day, the date of such payment (other than as described in Section 2.9) or performance shall extend to the immediately succeeding Business Day.
1.8 Classification of Loans and Borrowings. For purposes of this Agreement, Loans may be classified and referred to by Type (e.g., a “SOFR Loan”).
1.9 Hedging Requirements Generally. For purposes of any determination with respect to compliance with Section 10.10, Section 9.17 or any other calculation under or requirement of this Agreement in respect of hedging, such determination or calculation shall be calculated on a net boe (barrel of oil equivalent) basis of crude oil, natural gas (measured on a 1:6 basis with crude oil) and natural gas liquids; provided that, such individual notional volume hedged of each of (i) crude oil, (ii) natural gas and (iii) natural gas liquids shall not exceed, based on daily volumes on an annual basis, 100% of the projected production of (i) crude oil, (ii) natural gas, and (iii) natural gas liquids, respectively, in each case, calculated separately.
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1.10 Certain Determinations. For purposes of determining compliance with any of the covenants set forth in Section 9 or Section 10 below, but subject to any limitation expressly set forth therein, as applicable, at any time (whether at the time of incurrence or thereafter) that any Lien, Investment, Indebtedness, Disposition, Restricted Payment, Affiliate transaction, prepayment, redemption or the consummation of any other transaction meets the criteria of one, or more than one, of the categories permitted pursuant to Section 9 or Section 10 below, as applicable, the Borrower shall, in its sole discretion, determine under which category such Lien, Investment, Indebtedness, Disposition, Restricted Payment, Affiliate transaction, prepayment, redemption or the consummation of any other transaction (or, in each case, any portion thereof) is permitted.
1.11 Pro Forma and Other Calculations.
(a) Notwithstanding anything to the contrary herein, for purposes of determining compliance with any test or covenant contained in this Agreement with respect to any period during which any Specified Transaction occurs, the Consolidated Total Net Leverage Ratio and the Current Ratio shall be calculated with respect to such period and such Specified Transaction on a pro formabasis and in the manner prescribed by this Section 1.11.
(b) If since the beginning of any applicable Test Period any Person that subsequently became a Restricted Subsidiary or was merged, amalgamated or consolidated with or into the Borrower or any of its Restricted Subsidiaries since the beginning of such Test Period shall have made any Specified Transaction that would have required adjustment pursuant to this Section 1.11, then such financial ratio or test (or Consolidated Total Assets) shall be calculated to give pro forma effect thereto in accordance with this Section 1.11.
(c) Whenever pro forma effect is to be given to a Specified Transaction, the pro forma calculations shall be made in good faith by a Financial Officer of the Borrower.
(d) In the event that the Borrower or any Restricted Subsidiary issues, repurchases or redeems Disqualified Stock (i) during the applicable Test Period or (ii) subsequent to the end of the applicable Test Period and prior to or simultaneously with the event for which the calculation of any such ratio is made, then such financial ratio or test shall be calculated giving pro forma effect to such issuance, refinancing or redemption of Disqualified Stock to the extent required, as if the same had occurred on the last day of the applicable Test Period.
1.12 Rates. The Administrative Agent does not warrant or accept responsibility for, and shall not have any liability with respect to (a) the continuation of, administration of, submission of, calculation of or any other matter related to ABR, the Term SOFR Reference Rate, Adjusted Term SOFR or Term SOFR, or any component definition thereof or rates referred to in the definition thereof, or any alternative, successor or replacement rate thereto (including any Benchmark Replacement), including whether the composition or characteristics of any such alternative, successor or replacement rate (including any Benchmark Replacement) will be similar to, or produce the same value or economic equivalence of, or have the same volume or liquidity as, ABR, the Term SOFR Reference Rate, Adjusted Term SOFR, Term SOFR or any other Benchmark prior to its discontinuance or unavailability, or (b) the effect, implementation or composition of any Conforming Changes. The Administrative Agent and its affiliates or other related entities may engage in transactions that affect the calculation of ABR, the Term SOFR Reference Rate, Term SOFR, Adjusted Term SOFR, any alternative, successor or replacement rate (including any Benchmark Replacement) or any relevant adjustments thereto, in each case, in a manner adverse to the Borrower. The Administrative Agent may select information sources or services in its reasonable discretion to ascertain ABR, the Term SOFR Reference Rate, Term SOFR, Adjusted Term SOFR or any other Benchmark, in each case pursuant to the terms of this Agreement, and shall have no liability to the Borrower, any Lender or any other person or entity for damages of any kind, including direct or indirect, special, punitive, incidental or consequential damages, costs, losses or expenses (whether in tort, contract or otherwise and whether at law or in equity), for any error or calculation of any such rate (or component thereof) provided by any such information source or service.
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1.13 Divisions. For all purposes under the Credit 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 on the first date of its existence by the holders of its Equity Interests at such time.
1.14 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, 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 2. AMOUNT AND TERMS OF CREDIT
2.1 Commitments.
(a) Subject to and upon the terms and conditions herein set forth, each Lender severally, but not jointly, agrees to make a loan or loans denominated in Dollars (each a “Loan” and, collectively, the “Loans”) to the Borrower, which Loans (i) shall be made at any time and from time to time on and after the Closing Date and prior to the Termination Date, (ii) may, at the option of the Borrower, be incurred and maintained as, and/or converted into, ABR Loans or SOFR Loans; provided that all Loans made by each of the Lenders pursuant to the same Borrowing shall, unless otherwise specifically provided herein, consist entirely of Loans of the same Type, (iii) may be repaid and reborrowed in accordance with the provisions hereof, (iv) shall not, for any Lender at any time, after giving effect thereto and to the application of the proceeds thereof, result in such Lender’s Total Exposure at such time exceeding such Lender’s Commitment Percentage at such time of the Total Commitment and (v) shall not, after giving effect thereto and to the application of the proceeds thereof, result in the aggregate amount of all Lenders’ Total Exposures at such time exceeding the Total Commitment (i.e., the least of (A) the Aggregate Maximum Credit Amounts, (B) the then-effective Borrowing Base and (C) the then-effective Aggregate Elected Commitment Amount).
(b) Each Lender may at its option make any SOFR Loan by causing any domestic or foreign branch or Affiliate of such Lender to make such Loan, provided that (i) any exercise of such option shall not affect the obligation of the Borrower to repay such Loan and (ii) in exercising such option, such Lender shall use its reasonable efforts to minimize any increased costs to the Borrower resulting therefrom (which obligation of the Lender shall not require it to take, or refrain from taking, actions that it determines would result in increased costs for which it will not be compensated hereunder or that it determines would be otherwise disadvantageous to it and in the event of such request for costs for which compensation is provided under this Agreement, the provisions of Section 2.10 shall apply).
2.2 Minimum Amount of Each Borrowing; Maximum Number of Borrowings. The aggregate principal amount of each Borrowing shall be in a minimum amount of at least the Minimum Borrowing Amount for such Type of Loans and in a multiple of $100,000 in excess thereof (except that Loans to reimburse the applicable Issuing Bank with respect to any Unpaid Drawing shall be made in the amounts required by Section 3.3 or Section 3.4, as applicable). More than one Borrowing may be incurred on any date; provided, that at no time shall there be outstanding more than ten Borrowings of SOFR Loans under this Agreement.
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2.3 Notice of Borrowing.
(a) Whenever the Borrower desires to incur Loans (other than borrowings to repay Unpaid Drawings), the Borrower shall give the Administrative Agent at the Administrative Agent’s Office, (i) prior to 1:00 p.m. (New York City time) at least three (3) U.S. Government Securities Business Days’ prior written notice (or telephonic notice promptly confirmed in writing) of each Borrowing of Loans if such Loans are to be initially SOFR Loans and (ii) (A) in the case of any ABR Loans incurred on the Closing Date, prior to 1:00 p.m. (New York City time) at least one (1) Business Day prior written notice (or telephonic notice promptly confirmed in writing) of each Borrowing of Loans and (B) in the case of any ABR Loans incurred after the Closing Date, written notice (or telephonic notice promptly confirmed in writing) prior to 12:00 p.m. (New York City time) on the date of each Borrowing of Loans that are to be ABR Loans. Such notice (a “Notice of Borrowing”) shall specify (A) the aggregate principal amount of the Loans to be made pursuant to such Borrowing, (B) the date of the Borrowing (which shall be a Business Day), (C) whether the respective Borrowing shall consist of ABR Loans and/or SOFR Loans and, if SOFR Loans, the Interest Period to be initially applicable thereto (if no Interest Period is selected, the Borrower shall be deemed to have selected an Interest Period of one (1) month’s duration) and (D) the amount of the then-effective Borrowing Base, the amount of the then-effective Aggregate Elected Commitment Amount, the current aggregate Total Exposures of all Lenders (without regard to the requested Borrowing) and the pro forma aggregate Total Exposures of all Lenders (giving effect to the requested Borrowing). The Administrative Agent shall promptly give each Lender written notice (or telephonic notice promptly confirmed in writing) of each proposed Borrowing of Loans, of such Lender’s Commitment Percentage thereof and of the other matters covered by the related Notice of Borrowing.
(b) Borrowings to reimburse Unpaid Drawings shall be made upon the notice specified in Section 3.4(a).
(c) Without in any way limiting the obligation of the Borrower to confirm in writing any notice it may give hereunder by telephone, the Administrative Agent may act prior to receipt of written confirmation without liability upon the basis of such telephonic notice believed by the Administrative Agent in good faith to be from an Authorized Officer of the Borrower.
2.4 Disbursement of Funds.
(a) No later than 2:00 p.m. (New York City time) on the date specified in each Notice of Borrowing, each Lender will make available its pro rata portion of each Borrowing requested to be made on such date in the manner provided below; provided that on the Closing Date, such funds shall be made available by 10:00 a.m. (New York City time) or such earlier time as may be agreed among the Lenders, the Borrower and the Administrative Agent for the purpose of consummating the Transactions.
(b) Each Lender shall make available all amounts it is to fund to the Borrower under any Borrowing in immediately available funds to the Administrative Agent at the Administrative Agent’s Office in Dollars, and the Administrative Agent will (except in the case of Borrowings to repay Unpaid Drawings) make available to the Borrower, by depositing or wiring to an account (such account to be a Controlled Account on and after the date referred to in Section 9.16) as designated by the Borrower in the Notice of Borrowing to the Administrative Agent the aggregate of the amounts so made available in Dollars. Unless the Administrative Agent shall have been notified by any Lender prior to the date of any such Borrowing (or, with respect to an ABR Loan, the date of such Borrowing prior to 1:00 p.m. (New York City time)) that such Lender does not intend to make available to the Administrative Agent its portion of the Borrowing
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or Borrowings to be made on such date, the Administrative Agent may assume that such Lender has made such amount available to the Administrative Agent on such date of Borrowing, and the Administrative Agent, in reliance upon such assumption, may (in its sole discretion and without any obligation to do so) make available to the Borrower a corresponding amount. If such corresponding amount is not in fact made available to the Administrative Agent by such Lender and the Administrative Agent has made available such amount to the Borrower, the Administrative Agent shall be entitled to recover such corresponding amount from such Lender. If such Lender does not pay such corresponding amount forthwith upon the Administrative Agent’s demand therefor the Administrative Agent shall promptly notify the Borrower and the Borrower shall immediately pay such corresponding amount to the Administrative Agent in Dollars. The Administrative Agent shall also be entitled to recover from such Lender or the Borrower, as the case may be, interest on such corresponding amount in respect of each day from the date such corresponding amount was made available by the Administrative Agent to the Borrower to the date such corresponding amount is recovered by the Administrative Agent, at a rate per annum equal to (i) if paid by such Lender, the Overnight Rate or (ii) if paid by the Borrower, the then-applicable rate of interest or fees, calculated in accordance with Section 2.8, for the respective Loans.
(c) Nothing in this Section 2.4 shall be deemed to relieve any Lender from its obligation to fulfill its commitments hereunder or to prejudice any rights that the Borrower may have against any Lender as a result of any default by such Lender hereunder (it being understood, however, that no Lender shall be responsible for the failure of any other Lender to fulfill its commitments hereunder).
2.5 Repayment of Loans; Evidence of Debt.
(a) The Borrower agrees to repay to the Administrative Agent, for the benefit of the applicable Lenders, the principal amount outstanding as of such date, together with all accrued and unpaid interest as of such date, and all fees and all other Obligations incurred and unpaid hereunder and under each other Credit Document (other than contingent or indemnification obligations not then due and payable) as of such date in respect of all Loans on the earlier of (X) the Termination Date and (Y) the Maturity Date.
(b) Each Lender shall maintain in accordance with its usual practice an account or accounts evidencing the indebtedness of the Borrower to the appropriate lending office of such Lender resulting from each Loan made by such lending office from time to time, including the amounts of principal and interest payable and paid to such lending office from time to time under this Agreement.
(c) The Administrative Agent, acting solely for this purpose as a non-fiduciary agent of the Borrower, shall maintain the Register pursuant to Section 13.6(b)(iv), and a subaccount for each Lender, in which Register and subaccounts (taken together) shall be recorded (i) the amount of each Loan made hereunder, the Type of each Loan made and the Interest Period applicable thereto, (ii) the amount of any principal or interest due and payable or to become due and payable from the Borrower to each Lender hereunder and (iii) the amount of any sum received by the Administrative Agent hereunder from the Borrower and each Lender’s share thereof.
(d) The entries made in the Register and accounts and subaccounts maintained pursuant to clauses (b) and (c) of this Section 2.5 shall, to the extent permitted by applicable Requirements of Law, be prima facie evidence of the existence and amounts of the obligations of the Borrower therein recorded; provided, however, that the failure of any Lender or the Administrative Agent to maintain such account, such Register or such subaccount, as applicable, or any error therein, shall not in any manner affect the obligation of the Borrower to repay (with applicable interest) the Loans made to the Borrower by such Lender in accordance with the terms of this Agreement.
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(e) If requested by a Lender, the Loans made by each Lender shall be evidenced by a single promissory note of the Borrower in substantially the form of Exhibit G, dated, in the case of (i) any Lender party hereto as of the Closing Date, as of the Closing Date, (ii) any Lender that becomes a party hereto pursuant to an Assignment and Assumption or amendment or other modification to this Agreement, as of the effective date of the Assignment and Assumption, amendment or other modification, as applicable, or (iii) in the case of any Lender that becomes a party hereto in connection with an increase in the Aggregate Elected Commitment Amount pursuant to Section 2.16(c), as of the effective date of such increase, in each case, payable to such Lender in a principal amount equal to its Maximum Credit Amount as in effect on such date, and otherwise duly completed. In the event that any Lender’s Maximum Credit Amount increases or decreases for any reason (whether pursuant to Section 2.16, Section 13.6(b) or otherwise), the Borrower shall deliver or cause to be delivered, to the extent such Lender is then holding a Note, on the effective date of such increase or decrease, a new Note payable to such Lender in a principal amount equal to its Maximum Credit Amount after giving effect to such increase or decrease, and otherwise duly completed and such Lender shall promptly return to the Borrower the previously issued Note held by such Lender. 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 and/or its Note, if applicable. Failure to make any such recordation shall not affect any Lender’s or the Borrower’s rights or obligations in respect of Loans by a Lender or affect the validity of any transfer by a Lender of its Note.
(f) As soon as available after the end of each month, commencing with the month ending March 31, 2025, the Administrative Agent will furnish to the Borrower a statement showing each of the outstanding Borrowings, the applicable interest rate for such Borrowings and the applicable Interest Period for such Borrowings.
2.6 Conversions and Continuations.
(a) Subject to the penultimate sentence of this clause (a), (i) the Borrower shall have the option on any Business Day to convert all or a portion equal to at least the Minimum Borrowing Amount (and in multiples of $100,000 in excess thereof) of the outstanding principal amount of Loans of one Type into a Borrowing or Borrowings of another Type and (ii) the Borrower shall have the option on any Business Day to continue the outstanding principal amount of any SOFR Loans as SOFR Loans for an additional Interest Period; provided that (A) no partial conversion of SOFR Loans shall reduce the outstanding principal amount of SOFR Loans made pursuant to a single Borrowing to less than the Minimum Borrowing Amount, (B) ABR Loans may not be converted into SOFR Loans if an Event of Default is in existence on the date of the conversion and the Administrative Agent has or the Majority Lenders have determined in its or their sole discretion not to permit such conversion, (C) SOFR Loans may not be continued as SOFR Loans for an additional Interest Period if an Event of Default is in existence on the date of the proposed continuation and the Administrative Agent has or the Majority Lenders have determined in its or their sole discretion not to permit such continuation, and (D) Borrowings resulting from conversions pursuant to this Section 2.6 shall be limited in number as provided in Section 2.2. Each such conversion or continuation shall be effected by the Borrower by giving the Administrative Agent at the Administrative Agent’s Office prior to 2:00 p.m. (New York City time) at least (1) three (3) U.S. Government Securities Business Days’, in the case of a continuation of or conversion to SOFR Loans or (2) the date of conversion, in the case of a conversion into ABR Loans, prior written notice (or telephonic notice promptly confirmed in writing) (each, a “Notice of Conversion or Continuation”) specifying the Loans to be so converted or continued, the Type of Loans to be converted into or continued and, if such Loans are to be converted into or continued as SOFR Loans, the Interest Period to be initially applicable thereto (if no Interest Period is selected, the Borrower shall be deemed to have selected an Interest Period of one (1) month’s duration). The Administrative Agent shall give each applicable Lender notice as promptly as practicable of any such proposed conversion or continuation affecting any of its Loans.
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(b) If any Event of Default is in existence at the time of any proposed continuation of any SOFR Loans and the Administrative Agent has or the Majority Lenders have determined in its or their sole discretion not to permit such continuation, such SOFR Loans shall be automatically converted on the last day of the current Interest Period into ABR Loans. If upon the expiration of any Interest Period in respect of SOFR Loans, the Borrower has failed to elect a new Interest Period to be applicable thereto as provided in clause (a) above, the Borrower shall be deemed to have elected to continue such Borrowing of SOFR Loans into a Borrowing of SOFR Loans having an interest period of one (1) month, effective as of the expiration date of such current Interest Period.
2.7 Pro Rata Borrowings. Each Borrowing of Loans under this Agreement shall be made by the Lenders pro rata on the basis of their then applicable Commitment Percentages. It is understood that (a) no Lender shall be responsible for any default by any other Lender in its obligation to make Loans hereunder and that each Lender severally but not jointly shall be obligated to make the Loans provided to be made by it hereunder, regardless of the failure of any other Lender to fulfill its commitments hereunder and (b) failure by a Lender to perform any of its obligations under any of the Credit Documents shall not release any Person from performance of its obligation under any Credit Document.
2.8 Interest.
(a) The unpaid principal amount of each ABR Loan shall bear interest from the date of the Borrowing thereof until maturity (whether by acceleration or otherwise) at a rate per annum that shall at all times be the Applicable Margin plus the ABR, in each case, in effect from time to time.
(b) The unpaid principal amount of each SOFR Loan shall bear interest from the date of the Borrowing thereof until maturity thereof (whether by acceleration or otherwise) at a rate per annum that shall at all times be the Applicable Margin plus Adjusted Term SOFR, in each case, in effect from time to time.
(c) Upon the occurrence and during the continuance of an Event of Default, the Loans and all other amounts outstanding under the Credit Documents shall bear interest at a rate per annum, after as well as before judgment, that is (the “Default Rate”) (A) in the case of outstanding principal, fees and other obligations, the rate that would otherwise be applicable thereto plus two percent (2%) or (B) in the case of any overdue interest, to the extent permitted by applicable Requirements of Law, the rate described in Section 2.8(a) plus two percent (2%) from the date of such non-payment to the date on which such amount is paid in full.
(d) Interest on each Loan shall accrue from and including the date of any Borrowing to but excluding the date of any repayment thereof and shall be payable in Dollars; provided that any Loan that is repaid on the same date on which it is made shall bear interest for one (1) day. Except as provided below, interest shall be payable (i) in respect of each ABR Loan, quarterly in arrears on the last Business Day of each March, June, September and December, (ii) in respect of each SOFR Loan, on the last day of each Interest Period applicable thereto and, in the case of an Interest Period in excess of three (3) months, on each date occurring at three-month intervals after the first (1st) day of such Interest Period, (iii) in respect of each Loan, (A) on any prepayment (on the amount prepaid), (B) at maturity (whether by acceleration or otherwise) and (C) after such maturity, on demand.
(e) All computations of interest hereunder shall be made in accordance with Section 5.5.
(f) The Administrative Agent, upon determining the interest rate for any Borrowing of SOFR Loans, shall promptly notify the Borrower and the relevant Lenders thereof. Each such determination shall, absent clearly demonstrable error, be final and conclusive and binding on all parties hereto.
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(g) In connection with the use or administration of Term SOFR, the Administrative Agent will have the right to make Conforming Changes from time to time and, notwithstanding anything to the contrary herein or in any other Credit Document, any amendments implementing such Conforming Changes will become effective without any further action or consent of any other party to this Agreement or any other Credit Document. The Administrative Agent will promptly notify the Borrower and the Lenders of the effectiveness of any Conforming Changes in connection with the use or administration of Term SOFR.
2.9 Interest Periods. At the time the Borrower gives a Notice of Borrowing or Notice of Conversion or Continuation in respect of the making of, or conversion into or continuation as, a Borrowing of SOFR Loans in accordance with Section 2.6(a), the Borrower shall give the Administrative Agent written notice (or telephonic notice promptly confirmed in writing) of the Interest Period applicable to such Borrowing, which Interest Period shall, at the option of the Borrower be a one-, three- or six-month period as requested by the Borrower.
Notwithstanding anything to the contrary contained above:
(a) the initial Interest Period for any Borrowing of SOFR Loans shall commence on the date of such Borrowing (including the date of any conversion from a Borrowing of ABR Loans) and each Interest Period occurring thereafter in respect of such Borrowing shall commence on the day on which the next preceding Interest Period expires;
(b) if any Interest Period relating to a Borrowing of SOFR Loans begins on the last Business Day of a calendar month or begins on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period, such Interest Period shall end on the last Business Day of the calendar month at the end of such Interest Period;
(c) if any Interest Period would otherwise expire on a day that is not a Business Day, such Interest Period shall expire on the next succeeding Business Day; provided that, if any Interest Period in respect of a SOFR Loan would otherwise expire on a day that is not a Business Day, but is a day of the month after which no further Business Day occurs in such month, such Interest Period shall expire on the next preceding Business Day;
(d) the Borrower shall not be entitled to elect any Interest Period in respect of any SOFR Loan if such Interest Period would extend beyond the Maturity Date; and
(e) no tenor that has been removed from the definition of “Interest Period” pursuant to Section 2.10(d)(iv) shall be available for specification by the Borrower in any Notice of Borrowing or Notice of Conversion or Continuation.
Promptly upon request from the Borrower, the Administrative Agent shall give the Borrower written notice of the Term SOFR interest rate with respect to all available Interest Periods as of the date of such request or up to two (2) Business Days prior to the date of such request.
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2.10 Increased Costs, Illegality, Changed Circumstances, Etc.
(a) Subject to Section 2.10(d), in the event that (x) in the case of clause (i) below, the Majority Lenders (or the Administrative Agent, as applicable) or (y) in the case of clauses (ii) and (iii) below, any Lender (or the Administrative Agent, as applicable), shall have reasonably determined (which determination shall, absent clearly demonstrable error, be final and conclusive and binding upon all parties hereto):
(i) on any date for determining SOFR, the Term SOFR Reference Rate, Adjusted Term SOFR or Term SOFR for any Interest Period that (A) deposits in the principal amounts of the Loans comprising such Borrowing of SOFR Loans are not generally available in the relevant market or (B) adequate and fair means do not exist for ascertaining the applicable interest rate on the basis provided for in the definition of Term SOFR; or
(ii) that a Change in Law occurring at any time after the Closing Date shall (A) 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, (B) subject any Lender (including any Issuing Bank) and the Administrative Agent to any Tax (other than (i) Indemnified Taxes, (ii) Taxes described in clauses (b) through (d) of the definition of Excluded Taxes and (iii) Connection Income Taxes) on its loans, loan principal, letters of credit, commitments, or other obligations, or its deposits, reserves, other liabilities or capital attributable thereto, or (C) impose on any Lender any other condition, cost or expense (in each case, other than Taxes) affecting this Agreement or SOFR Loans made by such Lender, which results in the cost to such Lender of making, converting into, continuing or maintaining SOFR Loans or participating in Letters of Credit (in each case hereunder) increasing by an amount which such Lender reasonably deems material or the amounts received or receivable by such Lender hereunder with respect to the foregoing shall be reduced; or
(iii) at any time, that the making or continuance of any SOFR Loan has become unlawful as a result of compliance by such Lender in good faith with any Requirement of Law (or would conflict with any such Requirement of Law not having the force of law even though the failure to comply therewith would not be unlawful);
then, and in any such event, such Lenders (or the Administrative Agent, in the case of clause (i) and (ii)(B) above) shall within a reasonable time thereafter give notice (if by telephone, confirmed in writing) to the Borrower and to the Administrative Agent of such determination (which notice the Administrative Agent shall promptly transmit to each of the other Lenders). Thereafter (x) in the case of clause (i) above, SOFR Loans shall no longer be available until such time as the Administrative Agent notifies the Borrower and the Lenders that the circumstances giving rise to such notice by the Administrative Agent no longer exist (which notice the Administrative Agent agrees to give at such time when such circumstances no longer exist), and any Notice of Borrowing or Notice of Conversion or Continuation given by the Borrower with respect to SOFR Loans that have not yet been incurred shall be deemed rescinded by the Borrower, (y) in the case of clause (ii) above, the Borrower shall pay to such Lender (or the Administrative Agent, as applicable), promptly (but no later than fifteen (15) days) after receipt of written demand therefor such additional amounts as shall be required to compensate such Lender (or the Administrative Agent, as applicable) for such increased costs or reductions in amounts receivable hereunder (it being agreed that a written notice as to the additional amounts owed to such Lender (or the Administrative Agent, as applicable), showing in reasonable detail the basis for the calculation thereof, submitted to the Borrower by such Lender (or the Administrative Agent, as applicable) shall, absent clearly demonstrable error, be final and conclusive and binding upon all parties hereto) and (z) in the case of clause (iii) above, the Borrower shall take one of the actions specified in Section 2.10(b) as promptly as possible and, in any event, within the time period required by applicable Requirements of Law.
(b) At any time that any SOFR Loan is affected by the circumstances described in Section 2.10(a)(ii) or (iii), the Borrower may (and in the case of a SOFR Loan affected pursuant to Section 2.10(a)(iii) shall) either if the affected SOFR Loan is then being made pursuant to a Borrowing, cancel such Borrowing by giving the Administrative Agent telephonic notice (confirmed promptly in writing) thereof on the same date that the Borrower was notified by a Lender pursuant to Section 2.10(a)(ii) or (iii) or if the affected SOFR Loan is then outstanding, upon at least three (3) Business Days’ notice to the Administrative Agent, require the affected Lender to convert each such SOFR Loan into an ABR Loan; provided that if more than one Lender are affected at any time, then all affected Lenders must be treated in the same manner pursuant to this Section 2.10(b).
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(c) If, after the Closing Date, any Change in Law relating to capital adequacy or liquidity requirements of any Lender or compliance by any Lender or its parent with any Change in Law relating to capital adequacy or liquidity requirements occurring after the Closing Date, has or would have the effect of reducing the rate of return on such Lender’s or its parent’s capital or assets as a consequence of such Lender’s commitments or obligations hereunder to a level below that which such Lender or its parent could have achieved but for such Change in Law (taking into consideration such Lender’s or its parent’s policies with respect to capital adequacy or liquidity requirements), then from time to time, promptly (but in any event no later than fifteen (15) days) after written demand by such Lender (with a copy to the Administrative Agent), the Borrower shall pay to such Lender such additional amount or amounts as will compensate such Lender or its parent for such reduction, it being understood and agreed, however, that a Lender shall not be entitled to such compensation as a result of such Lender’s compliance with, or pursuant to any request or directive to comply with, any applicable Requirement of Law as in effect on the Closing Date. Each Lender, upon determining in good faith that any additional amounts will be payable pursuant to this Section 2.10(c), will give prompt written notice thereof to the Borrower, which notice shall set forth in reasonable detail the basis of the calculation of such additional amounts, although the failure to give any such notice shall not, subject to Section 2.13, release or diminish the Borrower’s obligations to pay additional amounts pursuant to this Section 2.10(c) upon receipt of such notice.
(d)
(i) Notwithstanding anything to the contrary herein or in any other Credit Document, upon the occurrence of a Benchmark Transition Event, the Administrative Agent and the Borrower may amend this Agreement to replace the then-current Benchmark with a Benchmark Replacement. Any such amendment with respect to a Benchmark Transition Event will become effective at 5:00 p.m. (New York City time) on the fifth (5th) Business Day after the Administrative Agent has posted such proposed amendment to all affected Lenders and the Borrower so long as the Administrative Agent has not received, by such time, written notice of objection to such amendment from Lenders comprising the Required Lenders. No replacement of a Benchmark with a Benchmark Replacement pursuant to this Section 2.10(d)(i) will occur prior to the applicable Benchmark Transition Start Date.
(ii) In connection with the use, administration, adoption or implementation of a Benchmark Replacement, the Administrative Agent will have the right (in consultation with the Borrower) to make Conforming Changes from time to time and, notwithstanding anything to the contrary herein or in any other Credit Document, any amendments implementing such Conforming Changes will become effective without any further action or consent of any other party to this Agreement or any other Credit Document; provided, the Administrative Agent shall use commercially reasonable efforts to satisfy Proposed Treasury Regulations Section 1.1001-6 and/or any similar or related IRS guidance to the effect that the use, administration, adoption or implementation of a Benchmark Replacement (together with any necessary or related changes) will not result in a deemed exchange for U.S. federal income Tax purposes of any obligation of any Credit Party under any Credit Document.
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(iii) The Administrative Agent will promptly notify the Borrower and the Lenders of (i) the implementation of any Benchmark Replacement and (ii) the effectiveness of any Conforming Changes in connection with the use, administration, adoption or implementation of a Benchmark Replacement. The Administrative Agent will promptly notify the Borrower of the removal or reinstatement of any tenor of a Benchmark pursuant to Section 2.10(d)(iv) below. Any determination, decision or election that may be made by the Administrative Agent or, if applicable, any Lender (or group of Lenders) pursuant to this Section 2.10(d), including any determination with respect to a tenor, rate or adjustment or of the occurrence or non-occurrence of an event, circumstance or date and any decision to take or refrain from taking any action or any selection, will be conclusive and binding absent manifest error and may be made in its or their sole discretion and without consent from any other party to this Agreement or any other Credit Document, except, in each case, as expressly required pursuant to this Section 2.10(d).
(iv) Notwithstanding anything to the contrary herein or in any other Credit Document, at any time (including in connection with the implementation of a Benchmark Replacement), (i) if the then-current Benchmark is a term rate (including the Term SOFR Reference Rate) and either (A) any tenor for such Benchmark is not displayed on a screen or other information service that publishes such rate from time to time as selected by the Administrative Agent in its reasonable discretion or (B) the regulatory supervisor for the administrator of such Benchmark has provided a public statement or publication of information announcing that any tenor for such Benchmark is not or will not be representative, then the Administrative Agent may modify the definition of “Interest Period” (or any similar or analogous definition) for any Benchmark settings at or after such time to remove such unavailable or non-representative tenor and (ii) if a tenor that was removed pursuant to clause (i) above either (A) is subsequently displayed on a screen or information service for a Benchmark (including a Benchmark Replacement) or (B) is not, or is no longer, subject to an announcement that it is not or will not be representative for a Benchmark (including a Benchmark Replacement), then the Administrative Agent may modify the definition of “Interest Period” (or any similar or analogous definition) for all Benchmark settings at or after such time to reinstate such previously removed tenor.
(v) Upon the Borrower’s receipt of notice of the commencement of a Benchmark Unavailability Period, the Borrower may revoke any pending request for a SOFR Loan of, conversion to or continuation of SOFR Loans to be made, converted or continued during any Benchmark Unavailability Period and, failing that, the Borrower will be deemed to have converted any such request into a request for a Borrowing of or conversion to ABR Loans. During any Benchmark Unavailability Period or at any time that a tenor for the then-current Benchmark is not an Available Tenor, the component of ABR based upon the then-current Benchmark or such tenor for such Benchmark, as applicable, will not be used in any determination of ABR.
2.11 Compensation. If (a) any payment of principal of any SOFR Loan is made by the Borrower to or for the account of a Lender other than on the last day of the Interest Period for such SOFR Loan as a result of a payment or conversion pursuant to Section 2.5, 2.6, 2.10, 5.1, 5.2 or 13.7, as a result of acceleration of the maturity of the Loans pursuant to Section 11 or for any other reason, (b) any Borrowing of SOFR Loans is not made on the date specified in a Notice of Borrowing, (c) any ABR Loan is not converted into a SOFR Loan on the date specified in a Notice of Conversion or Continuation, (d) any SOFR Loan is not continued as a SOFR Loan on the date specified in a Notice of Conversion or Continuation or (e) any prepayment of principal of any SOFR Loan is not made as a result of a withdrawn notice of prepayment pursuant to Section 5.1 or 5.2, the Borrower shall after the Borrower’s receipt of a written request by such Lender (which request shall set forth in reasonable detail the basis for requesting such amount and shall be conclusive and binding in the absence of manifest error), pay to the Administrative Agent (within fifteen (15) days after such request) for the account of such Lender any amounts required to compensate such Lender for any additional losses, costs or expenses that such Lender may reasonably incur as a result of such payment, failure to convert, failure to continue or failure to prepay, including any loss, cost or expense (excluding loss of anticipated profits) actually incurred by reason of the liquidation or reemployment of deposits or other funds acquired by any Lender to fund or maintain such SOFR Loan.
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2.12 Change of Lending Office. Each Lender agrees that, upon the occurrence of any event giving rise to the operation of Section 2.10(a)(ii), 2.10(a)(iii), 2.10(c), 3.11 or 5.4 with respect to such Lender, it will, if requested by the Borrower use reasonable efforts (subject to overall policy considerations of such Lender) to designate another lending office for any Loans affected by such event; provided that such designation does not cause such Lender or its lending office to suffer any economic, legal or regulatory disadvantage, with the object of avoiding the consequence of the event giving rise to the operation of any such Section. Nothing in this Section 2.12 shall affect or postpone any of the obligations of the Borrower or the right of any Lender provided in Section 2.10, 3.11 or 5.4.
2.13 Notice of Certain Costs. Notwithstanding anything in this Agreement to the contrary, to the extent any notice required by Section 2.10, 2.11 or 5.4 is given by any Lender more than one hundred eighty (180) days after such Lender has knowledge (or should have had knowledge) of the occurrence of the event giving rise to the additional cost, reduction in amounts, loss or other additional amounts described in such Sections, such Lender shall not be entitled to compensation under Section 2.10, 2.11 or 5.4, as the case may be, for any such amounts incurred or accruing prior to the 181^st^ day prior to the giving of such notice to the Borrower; provided that if the circumstance giving rise to such claim is retroactive, then such one hundred eighty (180)-day period referred to above shall be extended to include the period of retroactive effect thereof.
2.14 Borrowing Base.
(a) Initial Borrowing Base. For the period from and including the Closing Date to but excluding the first Redetermination Date, the Borrowing Base shall be equal to $325,000,000. Notwithstanding the foregoing, the Borrowing Base may be subject to further adjustments from time to time pursuant to this Section 2.14.
(b) Scheduled and Interim Redeterminations. The Borrowing Base shall be redetermined semi-annually in accordance with this Section 2.14 (a “Scheduled Redetermination”), and, subject to Section 2.14(d), such redetermined Borrowing Base shall become effective and applicable to the Borrower, the Administrative Agent, the Issuing Banks and the Lenders on or about (i) April 1, 2026 (or such date promptly thereafter as reasonably practicable) and (ii) thereafter, commencing September 1, 2026, on September 1st and March 1st of each year (or, in each case, such date promptly thereafter as reasonably practicable). In addition, (i) the Borrower may at any time, by notifying the Administrative Agent thereof not more than once during any period between Scheduled Redeterminations; and (ii) the Administrative Agent, may at any time, at the written direction of the Required Lenders, by written notice to the Borrower thereof, not more than once during any period between Scheduled Redeterminations, in each case, elect to cause the Borrowing Base to be redetermined between Scheduled Redeterminations (an “Interim Redetermination”) in accordance with this Section 2.14. In addition to, and not including and/or limited by the Interim Redeterminations allowed above, the Borrower may request, by notifying the Administrative Agent of any acquisition or acquisitions of Oil and Gas Properties by the Credit Parties between any two successive Scheduled Redeterminations pursuant to which the Credit Parties paid cash consideration for such Oil and Gas Properties in an aggregate amount equal to at least five percent (5.0%) of the Borrowing Base then in effect, to cause the Borrowing Base to be redetermined between such Scheduled Redeterminations.
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(c) Scheduled and Interim Redetermination Procedure.
(i) Each Scheduled Redetermination **** and each Interim Redetermination shall be effectuated as follows: Upon receipt by the Administrative Agent of the Reserve Report, the Reserve Report Certificate, the information provided pursuant to Section 9.13(c) and such other related reports, data and supplemental information as the Administrative Agent or the Required Lenders may reasonably request (the Reserve Report, such Reserve Report Certificate and such other related reports, data and information collectively being referred to as the “Engineering Reports”), the Administrative Agent shall evaluate the information contained in the Engineering Reports and shall in good faith and based upon its sole credit discretion propose a new Borrowing Base (the “Proposed Borrowing Base”) based upon such information and such other related information (including the status of title information with respect to the Borrowing Base Properties as described in the Engineering Reports and the existence of any Hedge Agreements) in good faith in accordance with its usual and customary oil and gas lending criteria as they exist at the particular time. For the avoidance of doubt, in the case of an Interim Redetermination, the Administrative Agent may utilize the Engineering Reports delivered in connection with the last Scheduled Redetermination, provided, however, the Administrative Agent may in its sole discretion request Borrower-generated supplemental Engineering Reports in connection with such Interim Redetermination.
(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 Sections 9.13(a) and (c) in a timely manner, within ten (10) Business Days following its receipt of such Engineering Reports or (2) if the Administrative Agent shall not have received the Engineering Reports required to be delivered by the Borrower pursuant to Sections 9.13(a) and (c) in a timely 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 2.14(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 (or such later date to which the Borrower and the Administrative Agent may agree in their respective sole discretion).
(iii) Any Proposed Borrowing Base that would increase the Borrowing Base then in effect must be approved by each Lender in each such Lender’s sole discretion and consistent with each such Lender’s normal and customary oil and gas lending criteria as they exist at the particular time as provided in this Section 2.14(c) and any Proposed Borrowing Base that would decrease or maintain the Borrowing Base then in effect must be approved by Lenders constituting at least the Required Lenders in each such Lender’s sole discretion and consistent with each such Lender’s normal and customary oil and gas lending criteria as they exist at the particular time as provided in this Section 2.14(c). Upon receipt of the Proposed Borrowing Base Notice, each Lender shall have fifteen (15) Business Days to agree with the Proposed Borrowing Base or disagree with the Proposed Borrowing Base by proposing an alternate Borrowing Base. If, in the case of any Proposed Borrowing Base that would decrease or maintain the Borrowing Base then in effect, at the end of such fifteen (15) Business Days, any Lender has not communicated its approval or disapproval in writing to the Administrative Agent, such Lender shall be deemed to have approved the Proposed Borrowing Base. If, in the case of any Proposed Borrowing Base that would increase the Borrowing Base then in effect, at the end of such fifteen (15) Business Days, any Lender has not communicated its approval or disapproval in writing to the Administrative Agent, such Lender shall be deemed to have disapproved the Proposed Borrowing Base. If at the end of such 15-Business 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
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Borrowing Base that would decrease or maintain the Borrowing Base then in effect, have approved or, in the case of a decrease or reaffirmation, deemed to have approved, then the Proposed Borrowing Base shall become the new Borrowing Base, effective on the date specified in Section 2.14(d). If, however, at the end of such 15-Business Day period, all Lenders or the Required Lenders, as applicable, have not approved or, in the case of a decrease or reaffirmation, deemed to have approved, as aforesaid, then the Administrative Agent shall promptly thereafter poll the Lenders to ascertain the highest Borrowing Base then acceptable to (a) in the case of a decrease or reaffirmation, a number of Lenders sufficient to constitute the Required Lenders or (b) in the case of an increase, all of the Lenders, and such amount shall become the new Borrowing Base, effective on the date specified in Section 2.14(d).
(d) Effectiveness of a Redetermined Borrowing Base. Subject to Section 2.14(h), after a redetermined Borrowing Base is approved by each Lender or the Required Lenders, as applicable, pursuant to Section 2.14(c), the Administrative Agent shall promptly thereafter 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 Banks and the Lenders:
(i) in the case of a Scheduled Redetermination, on the earlier to occur of (A) April 1, 2026, September 1 or March 1, as applicable, following such notice, or (B) if such notice is not delivered on or before April 1, 2026, September 1 or March 1, as applicable, then on the day of delivery of such New Borrowing Base Notice; and
(ii) in the case of an Interim Redetermination, on the day of delivery of such New Borrowing Base Notice.
Such amount shall then become the Borrowing Base until the next Scheduled Redetermination Date, the next redetermination or modification thereof hereunder. Notwithstanding the foregoing, no Scheduled Redetermination or Interim Redetermination shall become effective until the New Borrowing Base Notice related thereto delivered to the Borrower in accordance with Section 13.2.
(e) Reduction of Borrowing Base Upon Incurrence of Borrowing Base Reduction Debt. The Borrowing Base shall be reduced upon the issuance or incurrence of any Borrowing Base Reduction Debt after the Closing Date (other than Borrowing Base Reduction Debt constituting Permitted Refinancing Indebtedness incurred to Refinance such Indebtedness, but only to the extent that the aggregate principal amount of Permitted Refinancing Indebtedness incurred to Refinance such Indebtedness does not exceed the principal amount of the Refinanced Indebtedness) by an amount equal to the product of 0.25 multiplied by the stated principal amount of such Borrowing Base Reduction Debt (without regard to any original issue discount), and the Borrowing Base as so reduced shall become the new Borrowing Base immediately upon the date of such issuance or incurrence, effective and applicable to the Borrower, the Administrative Agent, the Issuing Banks and the Lenders on such date until the next redetermination or modification thereof hereunder.
(f) Reduction of Borrowing Base Upon Termination of Hedge Positions and Asset Dispositions.
(i) If the Borrower or any Restricted Subsidiary shall terminate, unwind or create any off-setting positions in respect of any commodity hedge positions (whether evidenced by a floor, put or Hedge Agreement) (for the avoidance of doubt, excluding any novation of any Hedge Agreements with respect to which the Borrower or applicable Restricted Subsidiary remains a party), and/or
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(ii) If the Borrower or one of the other Credit Parties Disposes of Borrowing Base Properties (including pursuant to an Investment or designation of Unrestricted Subsidiary) or Disposes of any Equity Interests in any Restricted Subsidiary owning Borrowing Base Properties, and
(iii) the sum of (x) the aggregate Borrowing Base Value of all such terminated, unwound and/or offsetting positions (after taking into account any other similar Hedge Agreement executed contemporaneously with the taking of such actions acceptable to the Required Lenders) plus (y) the aggregate Borrowing Base Value of all such Borrowing Base Properties Disposed of (after giving effect to any acquisitions of and other investments in Oil and Gas Properties by the Credit Parties with respect to which the Borrower has delivered a Reserve Report in accordance with Section 9.13(b) since the last Borrowing Base redetermination or adjustment pursuant to this Section 2.14(f)), in each case, since the later of (A) the most recent Scheduled Redetermination Date and (B) the last adjustment of the Borrowing Base made pursuant to this Section 2.14(f), exceeds five percent (5.0%) of the then-effective Borrowing Base, then upon the approval or deemed approval of the Borrowing Base Value pursuant to the definition thereof, the Borrowing Base shall automatically reduce by the aggregate Borrowing Base Value attributable to such (1) terminated, unwound or off-setting hedge positions in the calculation of the then-effective Borrowing Base (after taking into account any other similar Hedge Agreement executed contemporaneously with the taking of such actions acceptable to the Required Lenders) and (2) such Disposed Borrowing Base Properties in the calculation of the then-effective Borrowing Base (after giving effect to any acquisitions of and other investments in Oil and Gas Properties by the Borrower and the Credit Parties with respect to which the Borrower has delivered a Reserve Report in accordance with Section 9.13(b) since the last Borrowing Base redetermination or adjustment pursuant to this Section 2.14(f)) in excess of such five percent (5.0%) threshold for such period. The Administrative Agent shall promptly notify the Borrower in writing of the Borrowing Base Value, if any, attributable to such terminated, unwound or offsetting hedge positions and Disposed of Borrowing Base Properties in the calculation of the then-effective Borrowing Base and, upon receipt of such notice, the Borrowing Base shall be simultaneously reduced by such amount.
(iv) For the purposes of this Section 2.14(f), a “Disposition” of Oil and Gas Properties shall include the designation of a Restricted Subsidiary owning Oil and Gas Properties as an Unrestricted Subsidiary, any Investment or capital contribution of Oil and Gas Properties, and the Disposition or other transfer of Oil and Gas Properties or the Equity Interests in any Restricted Subsidiary owning Oil and Gas Properties to an Unrestricted Subsidiary or any other Person that is not the Borrower or a Guarantor.
(g) Reduction of Borrowing Base Related to Title. If (i) the Borrower fails to provide the information required by Section 9.15(a) within the time periods specified therein or (ii) any title defect or exception requested by the Administrative Agent to be cured pursuant to Section 9.15(b) is not cured within the time period specified therein, the Required Lenders shall have the right to adjust the Borrowing Base upon written notice (which such notice shall include the effective date of reduction) such that, after giving effect to such reduction, the Borrower shall have provided reasonably satisfactory title information in respect of the required percentage of the value of the Borrowing Base Properties, and upon the effective date of the reduction specified in the notice described above, the new Borrowing Base will become effective.
(h) Borrower’s Right to Elect Reduced Borrowing Base. Within three (3) Business Days of its receipt of a New Borrowing Base Notice, the Borrower may provide written notice to the Administrative Agent and the Lenders that specifies for the period from the effective date of the New Borrowing Base Notice until the next succeeding Scheduled Redetermination Date, the Borrowing Base will be a lesser amount than the amount set forth in such New Borrowing Base Notice, whereupon such specified lesser amount will become the new Borrowing Base. The Borrower’s notice under this Section 2.14(h) shall be irrevocable, but without prejudice to its rights to initiate Interim Redeterminations.
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(i) Administrative Agent Data. The Administrative Agent hereby agrees to provide an updated Bank Price Deck to the Borrower promptly, and in any event within three (3) Business Days, following (i) its receipt of a request by the Borrower or (ii) its request for an Interim Redetermination. In addition, the Administrative Agent agrees, upon request, to meet with the Borrower to discuss its evaluation of the reservoir engineering of the Oil and Gas Properties included in the Reserve Report and their respective methodologies for valuing such properties and the other factors considered in calculating the Borrowing Base.
2.15 Defaulting Lenders. 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:
(a) Commitment Fees shall cease to accrue on the unfunded portion of the Commitment of such Defaulting Lender pursuant to Section 4.1(a);
(b) The Commitment and Total Exposure of such Defaulting Lender shall not be included in determining whether all Lenders, the Majority Lenders or the Required Lenders or each affected Lender have taken or may take any action hereunder (including any consent to any amendment or waiver pursuant to Section 13.1); provided that (i) any waiver, amendment or modification requiring the consent of all Lenders pursuant to Section 13.1 (other than Section 13.1(a)(x)) or requiring the consent of each affected Lender pursuant to Section 13.1(a)(i) or (ix) shall require the consent of such Defaulting Lender (which for the avoidance of doubt would include any change to the Maturity Date applicable to such Defaulting Lender, decreasing or forgiving any principal or interest due to such Defaulting Lender, any decrease of any interest rate applicable to Loans made by such Defaulting Lender (other than the waiving of post-default interest rates) and any increase in or extension of such Defaulting Lender’s Commitment) and (ii) any redetermination, whether an increase, decrease or affirmation, of the Borrowing Base shall occur without the participation of a Defaulting Lender, but the Commitment (i.e., the Commitment Percentage of the Borrowing Base) of a Defaulting Lender may not be increased without the consent of such Defaulting Lender;
(c) If any Letter of Credit Exposure exists at the time a Lender becomes a Defaulting Lender, then (i) all or any part of such Letter of Credit Exposure of such Defaulting Lender will, subject to the limitation in the first proviso below, automatically be reallocated (effective on the day such Lender becomes a Defaulting Lender) among the Non-Defaulting Lenders pro rata in accordance with their respective Commitment Percentages; provided that (A) each Non-Defaulting Lender’s Total Exposure may not in any event exceed the Commitment Percentage of the Commitment of such Non-Defaulting Lender as in effect at the time of such reallocation and (B) neither such reallocation nor any payment by a Non-Defaulting Lender pursuant thereto will constitute a waiver or release of any claim the Borrower, the Administrative Agent, the Issuing Banks or any other Lender may have against such Defaulting Lender or cause such Defaulting Lender to be a Non-Defaulting Lender, (ii) to the extent that all or any portion of the Defaulting Lender’s Letter of Credit Exposure cannot, or can only partially, be so reallocated to Non-Defaulting Lenders, whether by reason of the first proviso in Section 2.15(c)(i) or otherwise, the Borrower shall within two (2) Business Days following notice by the Administrative Agent Cash Collateralize for the benefit of the applicable Issuing Bank only the Borrower’s obligations corresponding to such Defaulting Lender’s Letter of Credit Exposure (after giving effect to any partial reallocation pursuant to clause (i) above), in accordance with the procedures set forth in Section 3.7 for so long as such Letter of Credit Exposure is outstanding, (iii) if the Borrower Cash Collateralizes any portion of such Defaulting Lender’s Letter of
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Credit Exposure pursuant to this Section 2.15(c), the Borrower shall not be required to pay any fees to such Defaulting Lender pursuant to Section 4.1(b) with respect to such Defaulting Lender’s Letter of Credit Exposure during the period such Defaulting Lender’s Letter of Credit Exposure is Cash Collateralized (and such fees shall be payable to the Issuing Banks), (iv) if the Letter of Credit Exposure of the Non-Defaulting Lenders is reallocated pursuant to this Section 2.15(c), then the Letter of Credit Fees payable for the account of the Lenders pursuant to Section 4.1(b) shall be adjusted in accordance with such Non-Defaulting Lenders’ Commitment Percentages and the Borrower shall not be required to pay any Letter of Credit Fees to the Defaulting Lender pursuant to Section 4.1(b) with respect to such Defaulting Lender’s Letter of Credit Exposure during the period that such Defaulting Lender’s Letter of Credit Exposure is reallocated, or (v) if any Defaulting Lender’s Letter of Credit Exposure is neither Cash Collateralized nor reallocated pursuant to this Section 2.15(c), then, without prejudice to any rights or remedies of any Issuing Bank or any Lender hereunder, all Letter of Credit Fees payable under Section 4.1(b) with respect to such Defaulting Lender’s Letter of Credit Exposure shall be payable to such Issuing Bank until such Letter of Credit Exposure is Cash Collateralized and/or reallocated;
(d) So long as any Lender is a Defaulting Lender, no Issuing Bank will be required to issue any new Letter of Credit or amend any outstanding Letter of Credit to increase the Stated Amount thereof, alter the drawing terms thereunder or extend the expiry date thereof, unless each Issuing Bank is reasonably satisfied that any exposure that would result from the exposure to such Defaulting Lender is eliminated or fully covered by the Commitments of the Non-Defaulting Lenders or by Cash Collateralization or a combination thereof in accordance with clause (c) above or otherwise in a manner reasonably satisfactory to such Issuing Bank, and participating interests in any such newly issued or increased Letter of Credit shall be allocated among Non-Defaulting Lenders in a manner consistent with Section 2.15(c)(i) (and Defaulting Lenders shall not participate therein);
(e) If the Borrower, the Administrative Agent and each Issuing Bank agree in writing in their discretion that a Lender that is a Defaulting Lender should no longer be deemed to be 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, such Lender will cease to be a Defaulting Lender and will be a Non-Defaulting Lender and any applicable Cash Collateral shall be promptly returned to the Borrower and any Letter of Credit Exposure of such Lender reallocated pursuant to Section 2.15(c) shall be reallocated back to such Lender; provided that, except to the extent otherwise expressly agreed by the affected parties, no change hereunder from Defaulting Lender to Non-Defaulting Lender will constitute a waiver or release of any claim of any party hereunder arising from such Lender’s having been a Defaulting Lender; and
(f) Any payment of principal, interest, fees or other amounts received by the Administrative Agent for the account of that Defaulting Lender (whether voluntary or mandatory, at maturity, pursuant to Section 11 or otherwise, and including any amounts made available to the Administrative Agent by that Defaulting Lender pursuant to Section 13.8), 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 that Defaulting Lender to the Administrative Agent hereunder; second, to the payment on a pro rata basis of any amounts owing by that Defaulting Lender to each Issuing Bank hereunder; third, 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 that Defaulting Lender has failed to fund its portion thereof as required by this Agreement, as determined by the Administrative Agent; fourth, if so determined by the Administrative Agent and the Borrower, to be held in a non-interest bearing deposit account and released in order to satisfy obligations of that Defaulting Lender to fund Loans under this Agreement; fifth, to the payment of any amounts owing to the Lenders, each Issuing Bank as a result of any final judgment of a court of competent jurisdiction obtained by any Lender, such Issuing Bank against that Defaulting Lender as a result of that Defaulting Lender’s breach of its obligations under this Agreement; sixth, so long as no Default or Event of Default exists, to the payment
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of any amounts owing to the Borrower as a result of any final judgment of a court of competent jurisdiction obtained by the Borrower against that Defaulting Lender as a result of that Defaulting Lender’s breach of its obligations under this Agreement; and seventh, to that Defaulting Lender or as otherwise directed by a court of competent jurisdiction; provided that if such payment is a payment of the principal amount of any Loans or Unpaid Drawings, such payment shall be applied solely to pay the relevant Loans of, and Unpaid Drawings owed to, the relevant non-Defaulting Lenders on a pro rata basis prior to being applied in the manner set forth in this Section 2.15(f). 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 Section 3.7 shall be deemed paid to and redirected by that Defaulting Lender, and each Lender irrevocably consents hereto.
2.16 Termination, Revision and Reduction of Commitments and Aggregate Maximum Credit Amounts; Increase, Reduction and Termination of Aggregate Elected Commitment Amount.
(a) Scheduled Termination of Commitments. Unless previously terminated, the Commitments shall terminate on the Maturity Date. If at any time the Aggregate Maximum Credit Amounts, the Borrowing Base or the Aggregate Elected Commitment Amount 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 Aggregate Maximum Credit Amounts.
(i) The Borrower may at any time terminate, or from time to time reduce, the Aggregate Maximum Credit Amounts; provided that (A) each reduction of the Aggregate Maximum Credit Amounts shall be in an amount that is an integral multiple of $1,000,000 and not less than $5,000,000 and (B) the Borrower shall not terminate or reduce the Aggregate Maximum Credit Amounts if, (1) after giving effect to any concurrent prepayment of the Loans in accordance with Section 5.2, the aggregate Total Exposures of all Lenders would exceed the Total Commitment or (2) the Aggregate Maximum Credit Amount would be less than $5,000,000 (unless, with respect to this clause (2), the Aggregate Maximum Credit Amounts are reduced to $0), and (C) upon any reduction of the Aggregate Maximum Credit Amounts that would otherwise result in the Aggregate Maximum Credit Amounts being less than the Aggregate Elected Commitment Amount, the Aggregate Elected Commitment Amount shall be automatically reduced (ratably among the Lenders in accordance with each Lender’s Commitment Percentage) so that they equal the Aggregate Maximum Credit Amounts as so reduced.
(ii) The Borrower shall notify the Administrative Agent of any election to terminate or reduce the Aggregate Maximum Credit Amounts under Section 2.16(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 2.16(b)(ii) shall be irrevocable; provided that a notice of termination or reduction of the Aggregate Maximum Credit Amounts delivered by the Borrower may state that such notice is conditioned upon the effectiveness of other credit facilities or the closing of a specified transaction, in which case such notice may be revoked by the Borrower (by notice to the Administrative Agent on or prior to the specified effective date) if such condition is not satisfied. Any termination or reduction of the Aggregate Maximum Credit Amounts shall be permanent and may not be reinstated. Each reduction of the Aggregate Maximum Credit Amounts shall be made ratably among the Lenders in accordance with each Lender’s Commitment Percentage.
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(c) Increases, Reductions and Terminations of Aggregate Elected Commitment Amount.
(i) Subject to the conditions set forth in Section 2.16(c)(ii) and the prior written approval of the Administrative Agent (not to be unreasonably withheld, conditioned or delayed), the Borrower may increase the Aggregate Elected Commitment Amount then in effect by increasing the Elected Commitment of a Lender and/or by causing a Person that is reasonably acceptable to the Administrative Agent 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”). Notwithstanding anything to the contrary contained in this Agreement, in no case shall an Additional Lender be a natural person, the Borrower or any Affiliate of the Borrower.
(ii) Any increase in the Aggregate Elected Commitment Amount shall be subject to the following additional conditions:
(A) such increase shall not be less than $10,000,000 unless the Administrative Agent otherwise consents, and no such increase shall be permitted if after giving effect thereto the Aggregate Elected Commitment Amount exceeds the Borrowing Base then in effect;
(B) following any Scheduled Redetermination Date, the Borrower may not increase the Aggregate Elected Commitment Amount more than once before the next Scheduled Redetermination Date (for the sake of clarity, all increases in the Aggregate Elected Commitment Amount effective on a single date shall be deemed a single increase in the Aggregate Elected Commitment Amount for purposes of this Section 2.16(c)(ii)(B));
(C) no Event of Default shall have occurred and be continuing on the effective date of such increase;
(D) on the effective date of such increase, no Borrowings of SOFR Loans shall be outstanding or if any Borrowings of SOFR Loans are outstanding, then the effective date of such increase shall be the last day of the Interest Period in respect of such Borrowings of SOFR Loans unless the Borrower pays any compensation required by Section 2.11;
(E) no Lender’s Elected Commitment may be increased without the consent of such Lender;
(F) if the Borrower elects to increase the Aggregate Elected Commitment Amount by increasing the Elected 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 K (an “Elected Commitment Increase Certificate”);
(G) if the Borrower elects to increase the Aggregate Elected Commitment Amount 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 L (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, elect to waive such processing and recordation fee in connection with any such increase), the Administrative Agent and the Issuing Banks shall have given their prior written consent (to the extent that such Additional Lender is not an existing Lender’s Affiliate and in each case, such consent not to be unreasonably withheld or delayed) 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 Maximum Credit Amount, and otherwise duly completed and (2) pay any applicable fees as may have been agreed to between the Borrower and the Additional Lender, and, to the extent applicable and agreed to by the Borrower, the Administrative Agent; and
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(iii) Subject to acceptance and recording thereof pursuant to Section 2.16(c)(iv), from and after the effective date specified in the Elected Commitment Increase Certificate or the Additional Lender Certificate (or if any Borrowings of SOFR Loans are outstanding, then the last day of the Interest Period in respect of such Borrowings of SOFR Loans, unless the Borrower has paid any compensation required by Section 2.11): (A) the amount of the Aggregate Elected Commitment Amount 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 Credit 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 to take all such further action to effectuate such sale) such that each Lender (including any Additional Lender, if applicable) shall hold its Commitment Percentage of the outstanding Loans (and participation interests) after giving effect to the increase in the Aggregate Elected Commitment Amount (and the resulting modifications of each Lender’s Maximum Credit Amount pursuant to Section 2.16(c)(iv) or Section 2.16(c)(v)).
(iv) Upon its receipt of a duly completed Elected 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 processing and recording fee referred to in Section 2.16(c)(ii), if required, the Administrative Questionnaire referred to in Section 2.16(c)(ii) and the break-funding payments from the Borrower, if any, required by Section 2.11, if applicable, the Administrative Agent shall accept such Elected 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 13.6(b). No increase in the Aggregate Elected Commitment Amount shall be effective for purposes of this Agreement unless it has been recorded in the Register as provided in this Section 2.16(c)(iv).
(v) Upon any increase in the Aggregate Elected Commitment Amount pursuant to Section 2.16(c)(iv), (A) each Lender’s Maximum Credit Amount shall be automatically deemed amended to the extent necessary so that each such Lender’s Commitment Percentage equals the percentage of the Aggregate Elected Commitment Amount represented by such Lender’s Elected Commitment, in each case after giving effect to such increase, and (B) Schedule 1.1(a) to this Agreement shall be deemed amended to reflect the Elected Commitment of each Lender (including any Additional Lender) as thereby increased, any changes in the Lenders’ Maximum Credit Amounts pursuant to the foregoing clause (A), and any resulting changes in the Lenders’ Commitment Percentages.
(vi) The Borrower may from time to time terminate or reduce the Aggregate Elected Commitment Amount; provided that (A) each reduction of the Aggregate Elected Commitment Amount shall be in an amount that is an integral multiple of $1,000,000 and not less than $5,000,000 and (B) the Borrower shall not reduce the Aggregate Elected Commitment Amount if, after giving effect to any concurrent prepayment of the Loans in accordance with Section 5.2, the aggregate Total Exposures of all Lenders would exceed the Aggregate Elected Commitment Amount as reduced.
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(vii) The Borrower shall notify the Administrative Agent of any election to terminate or reduce the Aggregate Elected Commitment Amount under Section 2.16(c)(vi) at least three (3) Business Days prior to the effective date of such termination or reduction (or such lesser period as may be reasonably acceptable to the Administrative Agent), specifying such election and the effective date thereof. Promptly following receipt of any notice, the Administrative Agent shall advise the Lenders of the contents thereof. Each notice delivered by the Borrower pursuant to this Section 2.16(c)(vii) shall be irrevocable; provided that a notice of termination or reduction of the Aggregate Elected Commitment Amount delivered by the Borrower may state that such notice is conditioned upon the effectiveness of other credit facilities or the closing of a specified transaction, in which case such notice may be revoked by the Borrower (by notice to the Administrative Agent on or prior to the specified effective date of such termination) if such condition is not satisfied. Any termination or reduction of the Aggregate Elected Commitment Amount shall be permanent and may not be reinstated, except pursuant to Section 2.16(c)(i). Each reduction of the Aggregate Elected Commitment Amount shall be made ratably among the Lenders in accordance with each Lender’s Commitment Percentage.
(viii) 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 Aggregate Elected Commitment Amount, the Aggregate Elected Commitment Amount shall be automatically reduced (ratably among the Lenders in accordance with each Lender’s Commitment Percentage) so that they equal such redetermined Borrowing Base (and Schedule 1.1(a) shall be deemed amended to reflect such amendments to each Lender’s Elected Commitment and the Aggregate Elected Commitment Amount).
(ix) Contemporaneously with any increase in the Borrowing Base pursuant to this Agreement, if (A) the Borrower elects to increase the Aggregate Elected Commitment Amount and (B) each Lender has consented to such increase in its Elected Commitment, then the Aggregate Elected Commitment Amount shall be increased (ratably among the Lenders in accordance with each Lender’s Commitment Percentage) by the amount requested by the Borrower without the requirement that any Lender deliver an Elected Commitment Increase Certificate or that the Borrower pay any amounts under Section 2.11, and Schedule 1.1(a) shall be deemed amended to reflect such amendments to each Lender’s Elected Commitment and the Aggregate Elected Commitment Amount. The Administrative Agent shall record the information regarding such increases in the Register required to be maintained by the Administrative Agent pursuant to Section 13.6(b).
If, after giving effect to any reduction in the Aggregate Elected Commitment Amount pursuant to this Section 2.16(c), the aggregate Total Exposures of all Lenders exceeds the Total Commitment, then the Borrower shall (A) prepay the Borrowings on the date of such termination or reduction in an aggregate principal amount equal to such excess, and (B) if any excess remains after prepaying all of the Borrowings as a result of Letter of Credit Exposure, transfer to the Administrative Agent on behalf of the Lenders an amount equal to such excess to be held as cash collateral as provided in Section 3.7.
SECTION 3. LETTERS OF CREDIT
3.1 Letters of Credit.
(a) Subject to and upon the terms and conditions herein set forth, at any time and from time to time on and after the Closing Date and prior to the L/C Maturity Date, each Issuing Bank, severally, and not jointly, agrees, in reliance upon the agreements of the Lenders set forth in this Section 3, to issue upon the request of the Borrower and for the direct or indirect benefit of the Borrower and its Subsidiaries, Letters
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of Credit in Dollars in such form and with such Issuer Documents as may be approved by the applicable Issuing Bank in its reasonable discretion; provided that the Borrower shall be a co-applicant of, and jointly and severally liable with respect to, each Letter of Credit issued for the account of a Subsidiary; provided further that up to $10,000,000 of Letters of Credit may be requested by the Borrower in support of any obligations of, or for the account of, any Unrestricted Subsidiary, subject to constituting an Investment permitted by Section 10.5.
(b) Notwithstanding the foregoing, (i) no Letter of Credit shall be issued the Stated Amount of which, when added to the Letters of Credit Outstanding at such time, would exceed the Letter of Credit Commitment then in effect, (ii) no Letter of Credit shall be issued the Stated Amount of which would cause the aggregate Total Exposures of all Lenders at such time to exceed the Total Commitment then in effect, (iii) each Letter of Credit shall have an expiration date occurring no later than twelve (12) months after the date of issuance or such longer period of time as may be agreed by the applicable Issuing Bank, unless otherwise agreed upon by the Administrative Agent and the applicable Issuing Bank or as provided under Section 3.2(b); provided that any Letter of Credit may provide for automatic extension thereof for additional periods of up to twelve (12) months or such longer period of time as may be agreed upon by the applicable Issuing Bank, subject to the provisions of Section 3.2(b); provided, further, that in no event shall such expiration date occur later than the L/C Maturity Date unless arrangements which are reasonably satisfactory to the applicable Issuing Bank to Cash Collateralize (or backstop) such Letter of Credit have been made (provided, however, that no Lenders shall be obligated to fund participations in respect of any Letter of Credit after the Maturity Date), (iv) no Letter of Credit shall be issued if it would be illegal under any applicable Requirement of Law for the beneficiary of the Letter of Credit to have a Letter of Credit issued in its favor, (v) no Letter of Credit shall be issued by an Issuing Bank after it has received a written notice from the Administrative Agent or the Majority Lenders stating that a Default or Event of Default has occurred and is continuing until such time as such Issuing Bank shall have received a written notice (A) of rescission of such notice from the party or parties originally delivering such notice, (B) of the waiver of such Default or Event of Default in accordance with the provisions of Section 13.1 or (C) that such Default or Event of Default is no longer continuing, (vi) without the consent of the applicable Issuing Bank, no Letter of Credit shall be issued in any currency other than Dollars and (vii) no such Letter of Credit shall be issued by an Issuing Bank if it would violate one or more policies of such Issuing Bank applicable to letters of credit generally.
(c) Upon at least one (1) Business Day’s prior written notice (or telephonic notice promptly confirmed in writing) to the Administrative Agent and the applicable Issuing Bank (which notice the Administrative Agent shall promptly transmit to each of the applicable Lenders), the Borrower shall have the right, on any day, permanently to terminate or reduce the Letter of Credit Commitment in whole or in part; provided that, after giving effect to such termination or reduction, the Letters of Credit Outstanding shall not exceed the Letter of Credit Commitment.
3.2 Letter of Credit Applications.
(a) Whenever the Borrower desires that a Letter of Credit be issued, amended or extended for its account on its own behalf, or on behalf of its Subsidiaries, the Borrower shall hand deliver or telecopy (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 a Letter of Credit application, amendment request or any such document in the Issuing Bank’s customary form or, if the relevant Issuing Bank does not maintain such a form, in such form as may be approved by the applicable Issuing Bank (each, a “Letter of Credit Application”). Upon receipt of any Letter of Credit Application or amendment request, the applicable Issuing Bank will issue such Letter of Credit or amendment on the second (or such lesser number as may be agreed upon by the Administrative Agent and the Issuing Bank) Business Day after the relevant Letter of Credit Application is received, so long as such Letter of Credit Application is received no later than 3:00 p.m. (New York City time) on such Business Day, or if received after such time or on a day that is not a Business Day, the third (3rd) Business Day next succeeding receipt of such Letter of Credit
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Application. No Issuing Bank shall issue any Letters of Credit unless such Issuing Bank shall have received notice from the Administrative Agent that the conditions to such issuance have been met.
(b) If the Borrower so requests in any applicable Letter of Credit Application, the applicable Issuing Bank may, in its sole and absolute discretion, agree to issue a Letter of Credit that has automatic extension provisions (each, an “Auto-Extension Letter of Credit”); provided that any such Auto-Extension Letter of Credit must permit such Issuing Bank to prevent any such extension at least once in each twelve (12)-month period (commencing with the date of issuance of such Letter of Credit) by giving prior notice to the beneficiary thereof not later than a day (the “Non-Extension Notice Date”) in each such twelve (12)-month period to be agreed upon at the time such Letter of Credit is issued. Unless otherwise directed by the applicable Issuing Bank, the Borrower shall not be required to make a specific request to such Issuing Bank for any such extension. Once an Auto-Extension Letter of Credit has been issued, the Lenders shall be deemed to have authorized (but may not require) the applicable Issuing Bank to permit the extension of such Letter of Credit at any time to an expiry date not later than the L/C Maturity Date; provided, however, that such Issuing Bank shall not permit any such extension if (i) such Issuing Bank has determined that it would not be permitted, or would have no obligation, at such time to issue such Letter of Credit in its revised form (as extended) under the terms hereof (by reason of the provisions of clause (b) of Section 3.1 or otherwise), or (ii) it has received notice (which may be by telephone or in writing) on or before the day that is five (5) Business Days before the Non-Extension Notice Date from the Administrative Agent that one or more of the applicable conditions specified in Section 7 are not then satisfied, and in each such case directing such Issuing Bank not to permit such extension.
(c) Each Issuing Bank (other than the Administrative Agent or any of its Affiliates) shall provide the Administrative Agent with a reasonably detailed notice upon its issuance or amendment of any Letter of Credit, or upon any drawing under any Letter of Credit issued by it; provided that, upon written request from the Administrative Agent, such Issuing Bank shall promptly provide the Administrative Agent with a list of all Letters of Credit issued by it that are outstanding at such time.
3.3 Letter of Credit Participations.^^
(a) Immediately upon the issuance by an Issuing Bank of any Letter of Credit, such Issuing Bank shall be deemed to have sold and transferred to each Lender (each such Lender, in its capacity under this Section 3.3, an “L/C Participant”), and each such L/C Participant shall be deemed irrevocably and unconditionally to have purchased and received from such Issuing Bank, without recourse or warranty, an undivided interest and participation (each an “L/C Participation”), to the extent of such L/C Participant’s Commitment Percentage, in each Letter of Credit, each substitute therefor, each drawing made thereunder and the obligations of the Borrower under this Agreement with respect thereto, and any security therefor or guaranty pertaining thereto.
(b) In determining whether to pay under any Letter of Credit, the relevant Issuing Bank shall have no obligation relative to the L/C Participants other than to confirm that (i) any documents required to be delivered under such Letter of Credit have been delivered, (ii) such Issuing Bank has examined the documents with reasonable care and (iii) the documents appear to comply on their face with the requirements of such Letter of Credit. Any action taken or omitted to be taken by the relevant Issuing Bank under or in connection with any Letter of Credit issued by it, if taken or omitted in the absence of gross negligence or willful misconduct (as finally determined by a court of competent jurisdiction), shall not create for such Issuing Bank any resulting liability.
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(c) In the event that an Issuing Bank makes any payment under any Letter of Credit issued by it and the Borrower shall not have repaid such amount in full to such Issuing Bank pursuant to Section 3.4(a), such Issuing Bank shall promptly notify the Administrative Agent (which shall promptly notify each L/C Participant) of such failure, and each such L/C Participant shall promptly and unconditionally pay to the Administrative Agent for the account of such Issuing Bank, the amount of such L/C Participant’s Commitment Percentage of such unreimbursed payment in Dollars and in immediately available funds. Each L/C Participant shall make available to the Administrative Agent for the account of the relevant Issuing Bank such L/C Participant’s Commitment Percentage of the amount of such payment no later than 1:00 p.m. (New York City time) on the first (1st) Business Day after the date notified by such Issuing Bank in immediately available funds. If and to the extent such L/C Participant shall not have so made its Commitment Percentage of the amount of such payment available to the Administrative Agent for the account of the relevant Issuing Bank, such L/C Participant agrees to pay to the Administrative Agent for the account of such Issuing Bank, forthwith on demand, such amount, together with interest thereon for each day from such date until the date such amount is paid to the Administrative Agent for the account of such Issuing Bank at a rate per annum equal to the Overnight Rate from time to time then in effect, plus any administrative, processing or similar fees customarily charged by such Issuing Bank in connection with the foregoing. The failure of any L/C Participant to make available to the Administrative Agent for the account of any Issuing Bank its Commitment Percentage of any payment under any Letter of Credit shall not relieve any other L/C Participant of its obligation hereunder to make available to the Administrative Agent for the account of such Issuing Bank its Commitment Percentage of any payment under such Letter of Credit on the date required, as specified above, but no L/C Participant shall be responsible for the failure of any other L/C Participant to make available to the Administrative Agent such other L/C Participant’s Commitment Percentage of any such payment.
(d) Whenever an Issuing Bank receives a payment in respect of an unpaid reimbursement obligation as to which the Administrative Agent has received for the account of such Issuing Bank any payments from the L/C Participants pursuant to clause (c) above, such Issuing Bank shall pay to the Administrative Agent and the Administrative Agent shall promptly pay to each L/C Participant that has paid its Commitment Percentage of such reimbursement obligation, in Dollars and in immediately available funds, an amount equal to such L/C Participant’s share (based upon the proportionate aggregate amount originally funded by such L/C Participant to the aggregate amount funded by all L/C Participants) of the principal amount so paid in respect of such reimbursement obligation and interest thereon accruing after the purchase of the respective L/C Participations at the Overnight Rate.
(e) The obligations of the L/C Participants to make payments to the Administrative Agent for the account of an Issuing Bank with respect to Letters of Credit shall be irrevocable and not subject to counterclaim, set-off or other defense or any other qualification or exception whatsoever and shall be made in accordance with the terms and conditions of this Agreement under all circumstances, including under any of the following circumstances:
(i) any lack of validity or enforceability of this Agreement or any of the other Credit Documents;
(ii) the existence of any claim, set-off, defense or other right that the Borrower or any other Person (including an L/C Participant) may have at any time against a beneficiary named in a Letter of Credit, any transferee of any Letter of Credit (or any Person for whom any such transferee may be acting), the Administrative Agent, any Issuing Bank, any Lender or other Person, whether in connection with this Agreement, any Letter of Credit, the transactions contemplated herein or any unrelated transactions (including any underlying transaction between the Borrower and the beneficiary named in any such Letter of Credit);
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(iii) any draft, certificate or any other document presented under any Letter of Credit proving to be forged, fraudulent, invalid or insufficient in any respect or any statement therein being untrue or inaccurate in any respect;
(iv) the surrender or impairment of any security for the performance or observance of any of the terms of any of the Credit Documents; or
(v) the occurrence of any Default or Event of Default; or
(vi) any other event, condition of circumstance, whether or not similar to the foregoing.
3.4 Agreement to Repay Letter of Credit Drawings.^^
(a) The Borrower hereby agrees to reimburse the relevant Issuing Bank by making payment in Dollars or to the Administrative Agent for the account of such Issuing Bank (whether with its own funds or with proceeds of the Loans) in immediately available funds, for any payment or disbursement made by such Issuing Bank under any Letter of Credit issued by it (each such amount so paid until reimbursed, an “Unpaid Drawing”) (i) within one (1) Business Day of the date of such payment or disbursement if such Issuing Bank provides notice to the Borrower of such payment or disbursement prior to 11:00 a.m. (New York City time) on such next succeeding Business Day (from the date of such payment or disbursement) or (ii) if such notice is received after such time, on the next Business Day following the date of receipt of such notice (such required date for reimbursement under clause (i) or (ii), as applicable, on such Business Day (the “Reimbursement Date”)), with interest on the amount so paid or disbursed by such Issuing Bank, from and including the date of such payment or disbursement to but excluding the Reimbursement Date, at the per annum rate for each day equal to the rate described in Section 2.8(a); provided that, notwithstanding anything contained in this Agreement to the contrary, with respect to any Letter of Credit, (i) unless the Borrower shall have notified the Administrative Agent and such Issuing Bank prior to 11:00 a.m. (New York City time) on the Reimbursement Date that the Borrower intends to reimburse such Issuing Bank for the amount of such drawing with funds other than the proceeds of Loans, the Borrower shall be deemed to have given a Notice of Borrowing requesting that the Lenders make Loans (which shall be ABR Loans) on the Reimbursement Date in an amount equal to the amount at such drawing, and (ii) the Administrative Agent shall promptly notify each L/C Participant of such drawing and the amount of its Loan to be made in respect thereof, and each L/C Participant shall be irrevocably obligated to make a Loan to the Borrower in the manner deemed to have been requested in the amount of its Commitment Percentage of the applicable Unpaid Drawing by 12:00 noon (New York City time) on such Reimbursement Date by making the amount of such Loan available to the Administrative Agent. Such Loans made in respect of such Unpaid Drawing on such Reimbursement Date shall be made without regard to the Minimum Borrowing Amount and without regard to the satisfaction of the conditions set forth in Section 7. The Administrative Agent shall use the proceeds of such Loans solely for purpose of reimbursing the relevant Issuing Bank for the related Unpaid Drawing. In the event that the Borrower fails to Cash Collateralize any Letter of Credit that is outstanding on the L/C Maturity Date, the full amount of the Letters of Credit Outstanding in respect of such Letter of Credit shall be deemed to be an Unpaid Drawing subject to the provisions of this Section 3.4 except that such Issuing Bank shall hold the proceeds received from the Lenders as contemplated above as cash collateral for such Letter of Credit to reimburse any Drawing under such Letter of Credit and shall use such proceeds first, to reimburse itself for any Drawings made in respect of such Letter of Credit following the L/C Maturity Date, second, to the extent such Letter of Credit expires or is returned undrawn while any such cash collateral remains, to the repayment of obligations in respect of any Loans that have not paid at such time and third, to the Borrower or as otherwise directed by a court of competent jurisdiction. Nothing in this Section 3.4(a) shall affect the Borrower’s obligation to repay all outstanding Loans when due in accordance with the terms of this Agreement.
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(b) The obligations of the Borrower under this Section 3.4 to reimburse the relevant Issuing Bank with respect to Unpaid Drawings (including, in each case, interest thereon) shall be absolute, unconditional and irrevocable under any and all circumstances and irrespective of any set-off, counterclaim or defense to payment that the Borrower or any other Person may have or have had against such Issuing Bank, the Administrative Agent or any Lender (including in its capacity as an L/C Participant), including any defense based upon (i) the failure of any drawing under a Letter of Credit (each a “Drawing”) to conform to the terms of the Letter of Credit, (ii) any non-application or misapplication by the beneficiary of the proceeds of such Drawing, (iii) any lack of validity or enforceability of any Letter of Credit or this Agreement, or any term or provision therein, (iv) 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 or (v) any other event or circumstance whatsoever, whether or not similar to any of the foregoing, that might, but for the provisions of this Section 3.4, constitute a legal or equitable discharge of, or provide a right of setoff against, the Borrower’s obligations hereunder; provided that the foregoing shall not be construed to excuse the relevant Issuing Bank from liability to the Borrower to the extent of any direct damages (as opposed to special, indirect, consequential or punitive 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 care pursuant to the applicable ICC Rule or applicable law when determining whether drafts and other documents presented under a Letter of Credit comply with the terms thereof. The Borrower agrees that any action taken or omitted to be taken by an Issuing Bank under or in connection with any Letter of Credit or the related drafts or documents, if done in the absence of gross negligence or willful misconduct (as finally determined by a court of competent jurisdiction), shall be binding on the Borrower and shall not result in any liability of such Issuing Bank to the Borrower; provided that the foregoing shall not be construed to excuse such Issuing Bank from liability to the Borrower to the extent of any direct damages suffered by the Borrower that are caused by such Issuing Bank’s failure to exercise care, when determining whether drafts and other documents presented under a Letter of Credit comply with the terms thereof as determined by a final and non-appealable judgment of a court of competent jurisdiction. In furtherance of the foregoing, the parties hereto agree that, with respect to documents presented which appear on their face to be in compliance with the terms of a Letter of Credit, the Issuing Bank that issued such Letter of Credit may in its sole discretion either accept or 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 (unless the Borrower shall consent to payment thereon not withstanding such lack of strict compliance).
3.5 New or Successor Issuing Bank.
(a) Any Issuing Bank may resign as an Issuing Bank upon thirty (30) days’ prior written notice to the Administrative Agent, the Lenders and the Borrower. The Borrower may replace any Issuing Bank for any reason upon written notice to such Issuing Bank and the Administrative Agent and may add Issuing Banks at any time upon notice to the Administrative Agent. If an Issuing Bank shall resign or be replaced, or if the Borrower shall decide to add a new Issuing Bank under this Agreement, then the Borrower may appoint from among the Lenders (who have agreed to act as successor issuer of Letters of Credit or a new Issuing Bank) a successor issuer of Letters of Credit or a new Issuing Bank, as the case may be, or, with the consent of the Administrative Agent (such consent not to be unreasonably withheld) and such new Issuing Bank, another successor or new issuer of Letters of Credit, whereupon such successor issuer shall succeed to the rights, powers and duties of the replaced or resigning Issuing Bank under this Agreement and the other Credit Documents, or such new issuer of Letters of Credit shall be granted the rights, powers and duties of an Issuing Bank hereunder, and the term “Issuing Bank” shall mean such successor or such new issuer of Letters of Credit effective upon such appointment. The acceptance of any appointment as an Issuing Bank hereunder whether as a successor issuer or new issuer of Letters of Credit in accordance with this Agreement, shall be evidenced by an agreement entered into by such new or successor issuer of Letters
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of Credit, in a form reasonably satisfactory to the Borrower and the Administrative Agent and, from and after the effective date of such agreement, such new or successor issuer of Letters of Credit shall become an “Issuing Bank” hereunder. After the resignation or replacement of an Issuing Bank hereunder, the resigning or replaced Issuing Bank shall remain a party hereto and shall continue to have all the rights and obligations of an Issuing Bank under this Agreement and the other Credit Documents with respect to Letters of Credit issued by it prior to such resignation or replacement, but shall not be required to issue additional Letters of Credit. In connection with any resignation or replacement pursuant to this clause (a) (but, in case of any such resignation, only to the extent that a successor issuer of Letters of Credit shall have been appointed), either (i) the Borrower, the resigning or replaced Issuing Bank and the successor issuer of Letters of Credit shall arrange to have any outstanding Letters of Credit issued by the resigning or replaced Issuing Bank replaced with Letters of Credit issued by the successor issuer of Letters of Credit or (ii) the Borrower shall cause the successor issuer of Letters of Credit, if such successor issuer is reasonably satisfactory to the replaced or resigning Issuing Bank, to issue “back-stop” Letters of Credit naming the resigning or replaced Issuing Bank as beneficiary for each outstanding Letter of Credit issued by the resigning or replaced Issuing Bank, which new Letters of Credit shall have a Stated Amount equal to the Letters of Credit being back-stopped and the sole requirement for drawing on such new Letters of Credit shall be a drawing on the corresponding back-stopped Letters of Credit (for the avoidance of doubt, the Stated Amount of such backstopped Letters of Credit shall no longer be deemed outstanding under the Facility). After any resigning or replaced Issuing Bank’s resignation or replacement as Issuing Bank, the provisions of this Agreement relating to an Issuing Bank shall inure to its benefit as to any actions taken or omitted to be taken by it (A) while it was an Issuing Bank under this Agreement or (B) at any time with respect to Letters of Credit issued by such Issuing Bank.
(b) To the extent that there are, at the time of any resignation or replacement as set forth in clause (a) above, any outstanding Letters of Credit, nothing herein shall be deemed to impact or impair any rights and obligations of any of the parties hereto with respect to such outstanding Letters of Credit (including any obligations related to the payment of fees or the reimbursement or funding of amounts drawn), except that the Borrower, the resigning or replaced Issuing Bank and the successor issuer of Letters of Credit shall have the obligations regarding outstanding Letters of Credit described in clause (a) above.
3.6 Role of Issuing Bank. Each Lender and the Borrower agree that, in paying any drawing under a Letter of Credit, no Issuing Bank shall have any responsibility to obtain any document (other than any sight draft, certificates and documents expressly required by the Letter of Credit) or to ascertain or inquire as to the validity or accuracy of any such document or the authority of the Person executing or delivering any such document. None of the Issuing Banks, the Administrative Agent, any of their respective affiliates nor any correspondent, participant or assignee of any Issuing Bank shall be liable to any Lender for (a) any action taken or omitted in connection herewith at the request or with the approval of the Majority Lenders, (b) any action taken or omitted in the absence of gross negligence or willful misconduct or (c) the due execution, effectiveness, validity or enforceability of any document or instrument related to any Letter of Credit or Issuer Document. The Borrower hereby assumes all risks of the acts or omissions of any beneficiary or transferee with respect to its use of any Letter of Credit; provided that this assumption is not intended to, and shall not, preclude the Borrower’s pursuing such rights and remedies as it may have against the beneficiary or transferee at law or under any other agreement. None of the Issuing Banks, the Administrative Agent, any of their respective affiliates nor any correspondent, participant or assignee of any Issuing Bank shall be liable or responsible for any of the matters described in Section 3.3(e); provided that anything in such Section 3.3(e) to the contrary notwithstanding, the Borrower may have a claim against an Issuing Bank, and such Issuing Bank may be liable to the Borrower, to the extent, but only to the extent, of any direct, as opposed to consequential or exemplary, damages suffered by the Borrower which the Borrower proves were caused by such Issuing Bank’s willful misconduct or gross negligence (as finally determined by a court of competent jurisdiction) or such Issuing Bank’s unlawful failure (as finally determined by a court of competent jurisdiction) to pay under any Letter of Credit after the presentation to
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it by the beneficiary of a sight draft and certificate(s) strictly complying with the terms and conditions of a Letter of Credit. In furtherance and not in limitation of the foregoing, any Issuing Bank may accept documents that appear on their face to be in order, without responsibility for further investigation, regardless of any notice or information to the contrary, and no Issuing Bank shall be responsible for the validity or sufficiency of any instrument transferring or assigning or purporting to transfer or assign a Letter of Credit or the rights or benefits thereunder or proceeds thereof, in whole or in part, which may prove to be invalid or ineffective for any reason.
3.7 Cash Collateral.
(a) (i) Upon the request of the Majority Lenders if, as of the L/C Maturity Date, there are any Letters of Credit Outstanding, or (ii) if the Letter of Credit Exposure exceeds the Letter of Credit Commitment at any time as a result of a reduction in the Borrowing Base or the Elected Commitments, the Borrower shall immediately Cash Collateralize the Letters of Credit Outstanding.
(b) If any Event of Default shall occur and be continuing and the Loans shall have been accelerated in accordance with Section 11, the Majority Lenders may require that the L/C Obligations be Cash Collateralized; provided that, upon the occurrence of an Event of Default referred to in Section 11.5 with respect to the Borrower, the Borrower shall immediately Cash Collateralize the Letters of Credit then outstanding and no notice or request by or consent from the Majority Lenders shall be required.
(c) For purposes of this Agreement, “Cash Collateralize” shall mean to (i) pledge and deposit with or deliver to the Administrative Agent, for the benefit of the Issuing Banks and the Lenders, as collateral for the L/C Obligations, cash or deposit account balances (“Cash Collateral”) in an amount equal to the amount of the Letters of Credit Outstanding required to be Cash Collateralized (the “Required Cash Collateral Amount”) or (ii) if the relevant Issuing Bank benefiting from such collateral shall agree in its reasonable discretion, other forms of credit support (including any backstop letter of credit) in a face amount equal to one hundred and five percent (105%) of the Required Cash Collateral Amount from an issuer reasonably satisfactory to such Issuing Bank, in each case under clause (i) and (ii) above pursuant to documentation in form and substance reasonably satisfactory to the Administrative Agent and the relevant Issuing Bank (which documents are hereby consented to by the Lenders). Derivatives of such term have corresponding meanings. The Borrower hereby grants to the Administrative Agent, for the benefit of the Issuing Banks and the L/C Participants, a security interest in all such cash, deposit accounts and all balances therein and all proceeds of the foregoing. Such cash Collateral shall be maintained in blocked, interest bearing deposit accounts established by and in the name of the Borrower subject to a control agreement that provides for the “control” (pursuant to the requirements of Section 9-104(a)(2) of the UCC) of the Administrative Agent at all times.
3.8 Applicability of ISP and UCP. The Borrower agrees that any Issuing Bank may issue Letters of Credit hereunder subject to the Uniform Customs and Practice for Documentary Credits, International Chamber of Commerce (“ICC”) Publication Nos. 600 (2007 Revision) (“UCP 600”) or, at such Issuing Bank’s option, such later revision thereof in effect at the time of issuance of the Letter of Credit or the International Standby Practices 1998, ICC Publication No. 590 or, at such Issuing Bank’s option, such later revision thereof in effect at the time of issuance of any such Letter of Credit (“ISP 98”, and each of the UCP 600 and the ISP 98, an “ICC Rule”). Each Issuing Bank’s privileges, rights and remedies under such ICC Rules shall be in addition to, and not in limitation of, its privileges, rights and remedies expressly provided for herein. The Borrower agrees for matters not addressed by the chosen ICC Rule, each Letter of Credit shall be subject to and governed by the laws of the State of New York and applicable United States Federal laws; provided that if at Borrower’s request, a Letter of Credit chooses a state or country law other than New York State law and United States Federal law or is silent with respect to the choice of an ICC Rule or a governing law, the Issuing Bank shall not be liable for any payment, cost, expense or loss resulting from any action or inaction taken by the Issuing Bank if such action or inaction is or would be justified under an ICC Rule, New York law or applicable United States Federal law, and Borrower shall indemnify Issuing Bank for all such payments, costs, expenses or losses.
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3.9 Conflict with Issuer Documents. In the event of any conflict between the terms hereof and the terms of any Issuer Document, the terms hereof shall control.
3.10 Letters of Credit Issued for Subsidiaries. Notwithstanding that a Letter of Credit issued or outstanding hereunder is in support of any obligations of, or is for the account of, a Subsidiary, the Borrower shall be obligated to reimburse the relevant Issuing Bank hereunder for any and all drawings under such Letter of Credit. The Borrower hereby acknowledges that the issuance of Letters of Credit for the account of Subsidiaries inures to the benefit of the Borrower, and that the Borrower’s business derives substantial benefits from the businesses of such Subsidiaries.
3.11 Increased Costs. If, after the Closing Date, the adoption of any Change in Law shall either (a) impose, modify or make applicable any reserve, deposit, capital adequacy or similar requirement against Letters of Credit issued by any Issuing Bank, or any L/C Participant’s L/C Participation therein, or (b) impose on any Issuing Bank or any L/C Participant any other conditions, costs or expenses affecting its obligations under this Agreement in respect of Letters of Credit or L/C Participations therein or any Letter of Credit or such L/C Participant’s L/C Participation therein, and the result of any of the foregoing is to increase the cost to such Issuing Bank or such L/C Participant of issuing, maintaining or participating in any Letter of Credit, or to reduce the amount of any sum received or receivable by such Issuing Bank or such L/C Participant hereunder (other than (i) Indemnified Taxes or (ii) Excluded Taxes) in respect of Letters of Credit or L/C Participations therein, then, promptly (and in any event no later than fifteen (15) days) after receipt of written demand to the Borrower by such Issuing Bank or such L/C Participant, as the case may be (a copy of which notice shall be sent by such Issuing Bank or such L/C Participant to the Administrative Agent), the Borrower shall pay to such Issuing Bank or such L/C Participant such additional amount or amounts as will compensate such Issuing Bank or such L/C Participant for such increased cost or reduction, it being understood and agreed, however, that no Issuing Bank or L/C Participant shall be entitled to such compensation as a result of such Person’s compliance with, or pursuant to any request or directive to comply with, any such Requirement of Law as in effect on the Closing Date. A certificate submitted to the Borrower by the relevant Issuing Bank or an L/C Participant, as the case may be (a copy of which certificate shall be sent by such Issuing Bank or such L/C Participant to the Administrative Agent), setting forth in reasonable detail the basis for the determination of such additional amount or amounts necessary to compensate such Issuing Bank or such L/C Participant as aforesaid shall be conclusive and binding on the Borrower absent clearly demonstrable error.
3.12 Independence. The Borrower acknowledges that the rights and obligations of each Issuing Bank under each Letter of Credit issued by it are independent of the existence, performance or nonperformance of any contract or arrangement underlying such Letter of Credit, including contracts or arrangements between such Issuing Bank and the Borrower (other than the Credit Documents and the Issuer Documents) and between the Borrower and the relevant beneficiary.
SECTION 4. FEES.
4.1 Fees.
(a) The Borrower agrees to pay to the Administrative Agent in Dollars, for the account of each Lender (in each case pro rata according to the respective Commitment Percentages of the Lenders), a commitment fee (the “Commitment Fee”) for each day from the Closing Date until but excluding the Termination Date. Each Commitment Fee shall be payable by the Borrower quarterly in arrears on the last
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Business Day of each March, June, September and December (for the three-month period (or portion thereof) ended on such day for which no payment has been received) and on the Termination Date (for the period ended on such date for which no payment has been received), and shall be computed for each day during such period at a rate per annum equal to the Commitment Fee Rate in effect on such day on the Available Commitment in effect on such day.
(b) The Borrower agrees to pay to the Administrative Agent in Dollars for the account of the Lenders pro rata on the basis of their respective Letter of Credit Exposure, a fee in respect of each Letter of Credit (the “Letter of Credit Fee”), for the period from the date of issuance of such Letter of Credit until the termination or expiration date of such Letter of Credit computed at the per annum rate for each day equal to the Applicable Margin for SOFR Loans on the average daily Stated Amount of such Letter of Credit. Such Letter of Credit Fees shall be due and payable (i) quarterly in arrears on the last Business Day of each March, June, September and December and (ii) on the Termination Date (for the period for which no payment has been received pursuant to clause (i) above).
(c) The Borrower agrees to pay to each Issuing Bank a fee in respect of each Letter of Credit issued by it (the “Fronting Fee”), for the period from the date of issuance of such Letter of Credit to the termination or expiration date of such Letter of Credit, computed at the rate for each day equal to 0.125% per annum (or such other amount as may be agreed in a separate writing between the Borrower and the relevant Issuing Bank) on the average daily Stated Amount of such Letter of Credit (or at such other rate per annum as agreed in writing between the Borrower and the relevant Issuing Bank). The Fronting Fee shall be due and payable by the Borrower (i) quarterly in arrears on the last Business Day of each March, June, September and December and (ii) on the Termination Date (for the period for which no payment has been received pursuant to clause (i) above).
(d) The Borrower agrees to pay directly to each Issuing Bank upon each issuance of, drawing under, and/or amendment of, a Letter of Credit issued by it such amount as the relevant Issuing Bank and the Borrower shall have agreed upon for issuances of, drawings under or amendments of, letters of credit issued by it.
(e) The Borrower agrees to pay to the Administrative Agent the administrative agent fees in the amounts and on the dates as set forth in writing from time to time between the Administrative Agent and the Borrower.
SECTION 5. PAYMENTS.
5.1 Voluntary Prepayments. The Borrower shall have the right to prepay Loans without premium or penalty, in whole or in part from time to time on the following terms and conditions:
(a) the Borrower shall give the Administrative Agent at the Administrative Agent’s Office written notice (or telephonic notice promptly confirmed in writing) of its intent to make such prepayment, the amount of such prepayment and (in the case of SOFR Loans) the specific Borrowing(s) being prepaid, which notice shall be given by the Borrower no later than 1:00 p.m. (New York City time) (i) in the case of SOFR Loans, three (3) U.S. Government Securities Business Days prior to the date of such prepayment and (ii) in the case of ABR Loans on the date of such prepayment and shall promptly be transmitted by the Administrative Agent to each of the Lenders;
(b) each partial prepayment of (i) SOFR Loans shall be in a minimum amount of $500,000 and in multiples of $100,000 in excess thereof or a lesser amount to the extent such lesser amount represents the entire aggregate outstanding SOFR Loans at such time, and (ii) any ABR Loans shall be in a minimum amount of $500,000 and in multiples of $100,000 in excess thereof or a lesser amount to the extent such lesser amount represents the entire aggregate outstanding ABR Loans at such time; provided that no partial prepayment of SOFR Loans made pursuant to a single Borrowing shall reduce the outstanding SOFR Loans made pursuant to such Borrowing to an amount less than the applicable Minimum Borrowing Amount for such SOFR Loans; and
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(c) any prepayment of SOFR Loans pursuant to this Section 5.1 on any day other than the last day of an Interest Period applicable thereto shall be subject to compliance by the Borrower with the applicable provisions of, including any breakage costs as set forth in, Section 2.11.
Each such notice shall specify the date and amount of such prepayment and the Type of Loans to be prepaid. At the Borrower’s election in connection with any prepayment pursuant to this Section 5.1, such prepayment shall not be applied to any Loans of a Defaulting Lender.
Notwithstanding anything to the contrary contained in this Agreement, any such notice of prepayment pursuant to Section 5.1 may state that it is conditioned upon the occurrence or non-occurrence of any event specified therein (including the effectiveness of other credit facilities or other transactions), in which case such notice may be revoked by the Borrower (by written notice to the Administrative Agent on or prior to the specified effective date) if such condition is not satisfied.
5.2 Mandatory Prepayments.
(a) Repayment following Optional Reduction of Commitments. If, after giving effect to any termination or reduction of the Aggregate Maximum Credit Amounts pursuant to Section 2.16(b) or of the Aggregate Elected Commitment Amount pursuant to Section 2.16(c), the aggregate Total Exposures of all Lenders exceeds the Total Commitment (as reduced), then the Borrower shall on the same Business Day (i) prepay the Loans on the date of such termination or reduction in an aggregate principal amount equal to such excess and (ii) if any excess remains after prepaying all of the Loans as a result of any Letter of Credit Exposure, pay to the Administrative Agent on behalf of the Issuing Banks and the L/C Participants an amount in cash or otherwise Cash Collateralize an amount equal to such excess as provided in Section 3.7.
(b) Repayment of Loans Following Redetermination or Adjustment of Borrowing Base.
(i) Upon the effectiveness of a redetermination of the Borrowing Base in accordance with Section 2.14(d) or an adjustment of the Borrowing Base pursuant to Section 2.14(g), if a Loan Limit Deficiency exists, then the Borrower shall, within ten (10) days after (x) its receipt of a New Borrowing Base Notice indicating such Loan Limit Deficiency or (y) in the case of Section 2.14(g) the effectiveness of a new Borrowing Base, inform the Administrative Agent that it intends to take one or more of the following actions (provided that, if the Borrower fails to inform the Administrative Agent within such ten (10) day period, the Borrower shall be deemed to have elected (B) below): (A) within thirty (30) days following receipt of the notice provided in clauses (x) and (y) above, prepay the Loans in an aggregate principal amount equal to the Loan Limit Deficiency, (B) prepay the Loans in six equal monthly installments, commencing on the thirtieth (30th) day following receipt of the notice provided in clauses (x) and (y) above, with each payment being equal to l/6th of the aggregate principal amount of the Loan Limit Deficiency, (C) within thirty (30) days following receipt of the notice provided in clauses (x) and (y) above, provide additional Oil and Gas Properties (accompanied by reasonably acceptable Engineering Reports) not evaluated in the most recently delivered Reserve Report (which shall become Mortgaged Properties within the time period prescribed by Section 9.10(c) regardless of whether the Collateral Coverage Minimum is then satisfied) or other Collateral reasonably acceptable to the Administrative Agent having a Borrowing Base Value (as proposed by the Administrative Agent and approved by the Required Lenders in good faith in accordance with their respective usual and customary oil and gas
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lending criteria as they exist at the particular time) sufficient, after giving effect to any other actions taken pursuant to this Section 5.2(b)(i) to eliminate the Loan Limit Deficiency, or (D) undertake a combination of clauses (A), (B), and (C); provided that if, because of Letter of Credit Exposure, a Loan Limit Deficiency remains after prepaying all of the Loans, the Borrower shall Cash Collateralize such remaining Loan Limit Deficiency as provided in Section 3.7; provided further, that any Loan Limit Deficiency must be cured on or prior to the Termination Date.
(ii) Upon any adjustment to the Borrowing Base pursuant to Section 2.14(e), (f) or (h), if a Loan Limit Deficiency exists, as adjusted, then the Borrower shall, (A) prepay the Loans in an aggregate principal amount equal to the Loan Limit Deficiency and (B) if any Loan Limit Deficiency remains after prepaying all of the Loans as a result of any Letter of Credit Exposure, Cash Collateralize such excess as provided in Section 3.7. The Borrower shall be obligated to make any prepayment and/or deposit of cash collateral under this clause (ii) no later than one (1) Business Day following the dates of any applicable adjustment of the Borrowing Base; provided that all payments required to be made pursuant to this clause (ii) must be made on or prior to the Termination Date.
(iii) At any time that Permitted Additional Debt (other than Permitted Refinancing Indebtedness in respect thereof) shall be incurred or issued while a Loan Limit Deficiency exists, the Borrower shall, upon the incurrence or issuance of such Permitted Additional Debt, prepay the Loans in an aggregate principal amount equal to the lesser of (A) one hundred percent (100%) of the Net Cash Proceeds received in respect of such Permitted Additional Debt and (B) the aggregate principal amount equal to (1) such Loan Limit Deficiency and (2) if excess remains after prepaying all of the Loans as a result of any Letter of Credit Exposure, Cash Collateralize such excess as provided in Section 3.7.
(c) Application to Loans. With respect to each prepayment of Loans elected under Section 5.1 or required by Section 5.2, the Borrower may designate (i) the Types of Loans that are to be prepaid and the specific Borrowing(s) being repaid and (ii) the Loans to be prepaid; provided that (A) each prepayment of any Loans made pursuant to a Borrowing shall be applied pro rata among such Loans, and (B) notwithstanding the provisions of the preceding clause (A), no prepayment of Loans shall be applied to the Loans of any Defaulting Lender except in accordance with Section 2.15(f). In the absence of a designation by the Borrower as described in the preceding sentence, the Administrative Agent shall, subject to the above, make such designation in its reasonable discretion with a view, but no obligation, to minimize breakage costs owing under Section 2.11.
(d) SOFR Interest Periods. In lieu of making any payment pursuant to this Section 5.2 in respect of any SOFR Loan, other than on the last day of the Interest Period thereof so long as no Event of Default shall have occurred and be continuing, the Borrower at its option may deposit, on behalf of the Borrower, with the Administrative Agent an amount equal to the amount of the SOFR Loan to be prepaid and such SOFR Loan shall be repaid on the last day of the Interest Period therefor in the required amount. Such deposit shall be held by the Administrative Agent in a corporate time deposit account established on terms reasonably satisfactory to the Administrative Agent, earning interest at the then customary rate for accounts of such type. The Borrower hereby grants to the Administrative Agent, for the benefit of the Lenders, a security interest in all such cash, deposit accounts and all balances therein and all proceeds of the foregoing. Such deposit shall constitute cash collateral for the SOFR Loans to be so prepaid; provided that the Borrower may at any time direct that such deposit be applied to make the applicable payment required pursuant to this Section 5.2.
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(e) Application of Proceeds. The application of proceeds pursuant to this Section 5.2 shall not reduce the aggregate amount of Commitments under the Facility and amounts prepaid may be reborrowed subject to the Available Commitment.
(f) Repayment of Loans from Excess Cash. If Excess Cash as of the last Business Day of any fiscal quarter exceeds the greater of (i) $35,000,000 and (ii) ten percent (10%) of the then effective Borrowing Base, the Borrower shall, on the next succeeding Business Day, prepay the Loans in an aggregate principal amount equal to the amount of such Excess Cash exceeding the greater of (A) $35,000,000 and (B) ten percent (10%) of the then effective Borrowing Base; provided that all payments required to be made pursuant to this Section 5.2(f) must be made on or prior to the Termination Date.
5.3 Method and Place of Payment.
(a) Except as otherwise specifically provided herein, all payments under this Agreement shall be made by the Borrower without set-off, counterclaim or deduction of any kind, to the Administrative Agent for the ratable account of the Lenders entitled thereto or the Issuing Banks entitled thereto, as the case may be, not later than 2:00 p.m. (New York City time), in each case, on the date when due and shall be made in immediately available funds at the Administrative Agent’s Office or at such other office as the Administrative Agent shall specify for such purpose by notice to the Borrower, it being understood that written or facsimile notice by the Borrower to the Administrative Agent to make a payment from the funds in the Borrower’s account at the Administrative Agent’s Office shall constitute the making of such payment to the extent of such funds held in such account. All repayments or prepayments of any Loans (whether of principal, interest or otherwise) hereunder and all other payments under each Credit Document shall be made in Dollars. The Administrative Agent will thereafter cause to be distributed on the same day (if payment was actually received by the Administrative Agent prior to 2:00 p.m. (New York City time) or, otherwise, on the next Business Day in the sole discretion of the Administrative Agent) like funds relating to the payment of principal or interest or fees ratably to the Lenders or the Issuing Banks, as applicable, entitled thereto.
(b) For purposes of computing interest or fees, any payments under this Agreement that are made later than 2:00 p.m. (New York City time) shall be deemed to have been made on the next succeeding Business Day in the sole discretion of the Administrative Agent. Whenever any payment to be made hereunder shall be stated to be due on a day that is not a Business Day, the due date thereof shall be extended to the next succeeding Business Day and, with respect to payments of principal, interest shall be payable during such extension at the applicable rate in effect immediately prior to such extension.
5.4 Net Payments.
(a) Payments Free of Taxes. Any and all payments by or on account of any obligation of the Borrower under any Credit Document shall be made without deduction or withholding for any Taxes, except as required by applicable law. If any applicable law (as determined in the good faith discretion of an applicable Withholding Agent) requires the deduction or withholding of any Tax from any such payment by a Withholding Agent, then the applicable Withholding Agent shall be entitled to make such deduction or withholding and shall timely pay the full amount deducted or withheld to the relevant Governmental Authority in accordance with applicable law and, if such Tax is an Indemnified Tax, then the sum payable by the Borrower shall be increased as necessary so that after such deduction or withholding has been made (including such deductions and withholdings applicable to additional sums payable under this Section 5.4) the applicable Recipient receives an amount equal to the sum it would have received had no such deduction or withholding been made.
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(b) Payment of Other Taxes by Borrower. Without duplication of any amounts payable pursuant to this Section 5.4, the Borrower shall timely pay to the relevant Governmental Authority in accordance with applicable law, or at the option of the Administrative Agent or the applicable Lender timely reimburse it for the payment of, any Other Taxes.
(c) Indemnification by Borrower. Without duplication of any amounts payable pursuant to this Section 5.4, the Borrower shall indemnify each Recipient, within thirty (30) days after demand therefor, for the full amount of any Indemnified Taxes (including Indemnified Taxes imposed or asserted on or attributable to amounts payable under this Section 5.4) payable or paid by such Recipient or required to be withheld or deducted from a payment to such Recipient and any reasonable and documented out-of-pocket expenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate as to the amount of such payment or liability delivered to the Borrower by a Lender (with a copy to the Administrative Agent), or by any Agent on its own behalf or on behalf of a Lender, shall be conclusive absent manifest error.
(d) 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 13.6(c) 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 Credit 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 Credit 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 clause (d).
(e) Evidence of Payments. As soon as practicable after any payment of Taxes by the Borrower to a Governmental Authority pursuant to this Section 5.4, the Borrower shall deliver to the Administrative Agent the original or a certified copy of a receipt issued by such Governmental Authority evidencing such payment, a copy of the return reporting such payment or other evidence of such payment reasonably satisfactory to the Administrative Agent.
(f) Status of Lenders. (i) Any Lender that is entitled to an exemption from or reduction of withholding Tax with respect to payments made under any Credit Document shall deliver to the Borrower and the Administrative Agent, at the time or times reasonably requested by the Borrower or the Administrative Agent, such properly completed and executed documentation reasonably requested by the Borrower or the Administrative Agent as will permit such payments to be made without withholding or at a reduced rate of withholding. In addition, any Lender, if reasonably requested by the Borrower or the Administrative Agent, shall deliver such other documentation prescribed by applicable law or reasonably requested by the Borrower or the Administrative Agent as will enable the Borrower or the Administrative Agent to determine whether or not such Lender is subject to backup withholding or information reporting requirements. Notwithstanding anything to the contrary in the preceding two sentences, the completion, execution and submission of such documentation (other than such documentation set forth in clauses (ii)(A), (ii)(B) and (ii)(D) below) shall not be required if in the Lender’s reasonable judgment such completion, execution or submission would subject such Lender to any material unreimbursed cost or expense or would materially prejudice the legal or commercial position of such Lender.
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(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 IRS Form W-9 (or any successor form) certifying that such Lender is exempt from U.S. federal backup withholding tax;
(B) any Foreign Lender shall, to the extent it is legally entitled to do so, deliver to the Borrower and the Administrative Agent (in such number of copies as shall be requested by the recipient) on or prior to the date on which such Foreign Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of the Borrower or the Administrative Agent), whichever of the following is applicable:
(1) in the case of a Foreign Lender claiming the benefits of an income tax treaty to which the United States is a party (x) with respect to payments of interest under any Credit Document, executed copies of IRS Form W-8BEN or IRS Form W-8BEN-E (or any successor forms) establishing an exemption from, or reduction of, U.S. federal withholding Tax pursuant to the “interest” article of such tax treaty and (y) with respect to any other applicable payments under any Credit Document, IRS Form W-8BEN or IRS Form W-8BEN-E (or any successor forms) establishing an exemption from, or reduction of, U.S. federal withholding Tax pursuant to the “business profits” or “other income” article of such tax treaty;
(2) executed copies of IRS Form W-8ECI (or any successor form);
(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 I-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 871(h)(3)(B) of the Code, or a “controlled foreign corporation” related to the Borrower as described in Section 881(c)(3)(C) of the Code (a “U.S. Tax Compliance Certificate”) and (y) executed copies of IRS Form W-8BEN or IRS Form W-8BEN-E (or any successor forms); or
(4) to the extent a Foreign Lender is not the beneficial owner, executed copies of IRS Form W-8IMY (or any successor form), accompanied by IRS Form W-8ECI, IRS Form W-8BEN, IRS Form W-8BEN-E, a U.S. Tax Compliance Certificate substantially in the form of Exhibit I-2 or Exhibit I-3, IRS Form W-9, and/or other certification documents from each beneficial owner (or any successor forms), 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 I-4 on behalf of each such direct and indirect partner;
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(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 Credit Document would be subject to U.S. federal withholding Tax imposed by FATCA if such Lender were to fail to comply with the applicable reporting requirements of FATCA (including those contained in Section 1471(b) or 1472(b) of the Code, as applicable), such Lender shall deliver to the Borrower and the Administrative Agent at the time or times prescribed by law and at such time or times reasonably requested by the Borrower or the Administrative Agent such documentation prescribed by applicable law (including as prescribed by Section 1471(b)(3)(C)(i) of the Code) and such additional documentation reasonably requested by the Borrower or the Administrative Agent as may be necessary for the Borrower and the Administrative Agent to comply with their obligations under FATCA and to determine that such Lender has complied with such Lender’s obligations under FATCA or to determine the amount, if any, 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.
(E) the Administrative Agent shall deliver to the Borrower, on or prior to the date on which the Administrative Agent becomes the Administrative Agent under this Agreement (and from time to time thereafter upon the reasonable request of the Borrower), whichever of the following is applicable: (i) in the event that the Administrative Agent is a U.S. Person, a duly completed and executed copy of IRS Form W-9 certifying that such Agent is exempt from U.S. federal backup withholding tax, or (ii) in the event that the Administrative Agent is not a U.S. Person, with respect to payments received on account of any Lender, two copies of an executed IRS Form W-8IMY (together with all required accompanying documentation) certifying that the Administrative Agent is either (1) a “qualified intermediary” assuming primary withholding responsibility under Chapters 3 and 4 of the Code and primary IRS Form 1099 reporting and backup withholding responsibility for payments it receives for the accounts of others, or (2) a “U.S. branch” and that the payments it receives for the account of others are not effectively connected with the conduct of a trade or business in the United States, and in the case of each of clauses (1) and (2), that the Administrative Agent is using such form as evidence of its agreement with the Borrower to be treated as a U.S. Person with respect to such payments.
Each Lender and Administrative Agent, as applicable, 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.
(g) Treatment of Certain Refunds. If any party determines, in its sole discretion exercised in good faith, that it has received a refund of any Taxes as to which it has been indemnified pursuant to this Section 5.4 (including by the payment of additional amounts pursuant to this Section), it shall pay to the indemnifying party an amount equal to such refund (but only to the extent of indemnity payments made under this Section 5.4 with respect to the Taxes giving rise to such refund), net of all out-of-pocket expenses (including Taxes) of such indemnified party and without interest (other than any interest paid by the relevant Governmental Authority with respect to such refund). Such indemnifying party, upon the request of such indemnified party, shall repay to such indemnified party the amount paid over pursuant to this clause (g)
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(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 (g), in no event will the indemnified party be required to pay any amount to an indemnifying party pursuant to this clause (g) the payment of which 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 clause (g) shall not be construed to require any indemnified party to make available its Tax returns (or any other information relating to its Taxes that it deems confidential) to the indemnifying party or any other Person.
(h) Defined Terms. For purposes of this Section 5.4, the term “applicable law” includes FATCA.
(i) Survival. The obligations under and agreements in this Section 5.4 shall survive the resignation or replacement of any Agent, any assignment of rights by, or the replacement of, a Lender, the termination of the Commitments, the termination of this Agreement and any other Credit Document and the payment, satisfaction or discharge of all Obligations under any Credit Document.
5.5 Computations of Interest and Fees.
(a) Except as provided in the next succeeding sentence, interest on SOFR Loans and ABR Loans shall be calculated on the basis of a three hundred sixty (360)-day year for the actual days elapsed. Interest on ABR Loans in respect of which the rate of interest is calculated on the basis of the Administrative Agent’s prime rate and interest on overdue interest shall be calculated on the basis of a 365- (or 366-, as the case may be) day year for the actual days elapsed.
(b) Fees and the average daily Stated Amount of Letters of Credit shall be calculated on the basis of a three hundred sixty (360)-day year for the actual days elapsed.
5.6 Limit on Rate of Interest.
(a) No Payment Shall Exceed Lawful Rate. Notwithstanding any other term of this Agreement, the Borrower shall not be obligated to pay any interest or other amounts under or in connection with this Agreement or otherwise in respect to any of the Obligations in excess of the amount or rate permitted under or consistent with any applicable law, rule or regulation.
(b) Payment at Highest Lawful Rate. If the Borrower is not obliged to make a payment that it would otherwise be required to make, as a result of Section 5.6(a), the Borrower shall make such payment to the maximum extent permitted by or consistent with applicable laws, rules and regulations.
(c) Adjustment if Any Payment Exceeds Lawful Rate. If any provision of this Agreement or any of the other Credit Documents would obligate the Borrower or any other Credit Party to make any payment of interest or other amount payable to any Lender in an amount or calculated at a rate that would be prohibited by any applicable Requirement of Law, then notwithstanding such provision, such amount or rate shall be deemed to have been adjusted with retroactive effect to the maximum amount or rate of interest, as the case may be, as would not be so prohibited by applicable Requirements of Law, such adjustment to be effected, to the extent necessary, by reducing the amount or rate of interest required to be paid by the Borrower to the affected Lender under Section 2.8.
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(d) Rebate of Excess Interest. Notwithstanding the foregoing, and after giving effect to all adjustments contemplated thereby, if any Lender shall have received from the Borrower an amount in excess of the maximum permitted by any applicable Requirement of Law, then the Borrower shall be entitled, by notice in writing to the Administrative Agent to obtain reimbursement from that Lender in an amount equal to such excess, and pending such reimbursement, such amount shall be deemed to be an amount payable by that Lender to the Borrower.
SECTION 6. CONDITIONS PRECEDENT TO INITIAL BORROWING.
The Closing Date is subject to the satisfaction of the following conditions precedent, except as otherwise agreed or waived pursuant to Section 13.1.
(a) The Administrative Agent (or its counsel) shall have received from the Borrower (i) a counterpart of this Agreement signed on behalf of such party or (ii) written evidence satisfactory to the Administrative Agent (which may include e-mail transmission of a signed signature page of this Agreement) that such party has signed a counterpart of this Agreement.
(b) The Administrative Agent (or its counsel) shall have received, on behalf of itself, the Collateral Agent and the Lenders, written opinions of (i) Kirkland & Ellis LLP, counsel to the Credit Parties and (ii) local counsel in each jurisdiction where Mortgaged Properties are located, in each case (A) dated the Closing Date, (B) addressed to the Administrative Agent, the Collateral Agent, the Lenders and each Issuing Bank and (C) in form and substance reasonably satisfactory to the Administrative Agent and customary for transactions of this type. The Borrower, the other Credit Parties and the Administrative Agent hereby instruct such counsel to deliver such legal opinions.
(c) The Administrative Agent shall have received, in the case of each Credit Party, a certificate of an officer of each Credit Party dated the Closing Date and certifying:
(i) that attached thereto is a true and complete copy of the bylaws (or limited liability company agreement or other equivalent governing documents) of such Credit Party as in effect on the Closing Date,
(ii) that attached thereto is a true and complete copy of resolutions duly adopted by the board of directors (or managing member or equivalent) of such Credit Party authorizing the execution, delivery and performance of the Credit Documents to which such person is a party and, in the case of the Borrower, the borrowings hereunder, and that such resolutions have not been modified, rescinded or amended and are in full force and effect on the Closing Date,
(iii) that attached thereto is (A) a true and complete copy of the certificate or articles of incorporation or certificate of formation, including all amendments thereto, of such Credit Party, certified as of a recent date by the Secretary of State (or other similar official) of the jurisdiction of its organization, (B) a certificate as to the good standing (to the extent such concept or a similar concept exists under the laws of such jurisdiction) of each such Credit Party in the jurisdiction in which it is formed or organized as of a recent date from such Secretary of State (or other similar official), which has not been amended and, (C) if available after the use of commercially reasonable efforts by the Borrower, a certificate as to the good standing (to the extent such concept or a similar concept exists under the laws of such jurisdiction) of each Credit Party in each jurisdiction where such Credit Party owns material Borrowing Base Properties (other than in the jurisdiction where such Credit Party is formed or organized), as of a recent date from the Secretary of State (or other similar official) of such jurisdiction, which has not been amended,
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(iv) as to the incumbency and specimen signature of each officer executing any Credit Document or any other document delivered in connection herewith on behalf of such Credit Party, and
(v) a certificate of a director or an officer as to the incumbency and specimen signature of the Secretary or Assistant Secretary or similar officer executing the certificate pursuant to subclause (ii) above.
(d) The Administrative Agent shall have received a promissory note substantially in the form of Exhibit G executed by the Borrower in favor of each Lender that has requested a promissory note, evidencing the Loans owing to such Lender.
(e)
(i) All Equity Interests directly owned by the Borrower or any Subsidiary Guarantor, in each case as of the Closing Date, shall have been pledged pursuant to the Collateral Agreement (except that such Credit Parties shall not be required to pledge any Excluded Equity Interests) and the Collateral Agent shall have received all certificates, if any, representing such securities pledged under the Collateral Agreement, accompanied by instruments of transfer and/or undated powers endorsed in blank
(ii) The Administrative Agent shall have received customary UCC, tax and judgment lien searches with respect to the Credit Parties in their applicable jurisdictions of organization, reflecting the absence of Liens and security interests other than those being released on or prior to the Closing Date or which are otherwise permitted under the Credit Documents.
(f) All representations and warranties made by any Credit Party contained herein or in the other Credit Documents are true and correct in all material respects on and as of the Closing Date (except where such representations and warranties expressly relate to an earlier date, in which case such representations and warranties shall have been true and correct in all material respects as of such earlier date and except that any representation and warranty that is qualified as to “materiality,” “Material Adverse Effect” or similar language shall be true and correct (after giving effect to any qualification therein) in all respects on such respective dates) and the Administrative Agent shall have received a certificate of an Authorized Officer of the Borrower certifying as to the satisfaction of such condition.
(g) The Administrative Agent (or its counsel) shall have received copies of the Collateral Agreement, the Mortgages, UCC financing statements and each other Security Document that is required to be executed on the Closing Date, duly executed by each Credit Party party thereto, together with evidence that all other actions, recordings and filings required by the Security Documents as of the Closing Date or that the Collateral Agent may deem reasonably necessary to (A) create the Liens intended to be created by any Security Document and perfect such Liens to the extent required by, and with the priority required by, such Security Document shall have been delivered to the Collateral Agent for filing, registration or recording and (B) comply with Section 9.11, in each case shall have been taken, completed or otherwise provided for in a manner reasonably satisfactory to the Administrative Agent.
(h) The Administrative Agent shall have received (i) the Initial Reserve Report and (ii) lease operating statements and production reports with respect to the Oil and Gas Properties evaluated in the Initial Reserve Report, in form and substance satisfactory to the Administrative Agent, for the fiscal quarter ended December 31, 2023.
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(i) On the Closing Date, the Administrative Agent (or its counsel) shall have received a solvency certificate substantially in the form of Exhibit H hereto and signed by a Financial Officer of the Borrower.
(j) The Administrative Agent shall have received evidence that the Borrower has (i) obtained and effected all insurance required to be maintained pursuant to the Credit Documents and (ii) caused the Administrative Agent to be named as lender loss payee and/or additional insured under each insurance policy with respect to such insurance, as applicable.
(k) All fees and expenses required to be paid hereunder and invoiced, including, without limitation, the reasonable and documented fees and expenses of Paul Hastings LLP, counsel to the Administrative Agent, shall have been paid in full in cash or netted from the proceeds of the initial funding under the Facility, to the extent invoiced at least two (2) Business Days prior to the Closing Date.
(l) The Administrative Agent (or its counsel) and the Lenders shall have received at least three (3) Business Days prior to the Closing Date all documentation and other information required by regulatory authorities under applicable “know your customer” and anti-money laundering rules and regulations, including, the Patriot Act, that has been requested by the Administrative Agent in writing at least five (5) Business Days prior to the Closing Date and (ii) to the extent the Borrower qualifies as a “legal entity customer” under the Beneficial Ownership Regulation, at least three (3) Business Days prior to the Closing Date, any Lender that has requested, in a written notice to the Borrower at least five (5) Business Days prior to the Closing Date, a Beneficial Ownership Certification in relation to the Borrower, shall have received such Beneficial Ownership Certification (provided that, upon the execution and delivery by such Lender of its signature page to this Agreement, the condition set forth in this clause (ii) shall be deemed to be satisfied).
(m) The Credit Parties shall have delivered title information to the Administrative Agent (or its counsel) as the Administrative Agent may reasonably require satisfactory to the Administrative Agent setting forth the status of title to at least eighty-five percent (85%) of the PV-9 value of the Oil and Gas Properties of the Credit Parties evaluated in the Initial Reserve Report.
(n) The Administrative Agent (or its counsel) shall have received executed copies of the Guarantee, executed by each Guarantor on the Closing Date.
(o) The Administrative Agent shall have received a certificate of an Authorized Officer of the Borrower certifying (a) that the Borrower and its Restricted Subsidiaries have received all material third-party and governmental consents and approvals required by the terms of the Credit Documents, (b) since December 31, 2023, there has not been any material adverse change in, or Material Adverse Effect on the business, operations, property, liabilities (actual or contingent) or condition (financial or otherwise) of the Credit Parties, taken as a whole and (c) at the time of this Agreement and also after giving effect to any Borrowing on the Closing Date, no Default or Event of Default shall have occurred and be continuing.
Without limiting the generality of the provisions of Section 12.4, for purposes of determining compliance with the conditions specified in this Section 6, 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 matters required under this Section 6 to be consented to or approved by or acceptable or satisfactory to a Lender unless the Administrative Agent shall have received notice from such Lender prior to the Closing Date specifying its objection thereto.
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SECTION 7. CONDITIONS PRECEDENT TO ALL SUBSEQUENT CREDIT EVENTS.
(a) The agreement of each Lender to make any Loan requested to be made by it on any date (including the initial Borrowing on the Closing Date, but excluding (i) Loans required to be made by the Lenders in respect of Unpaid Drawings pursuant to Sections 3.3 and 3.4 and subject, in the case of clause (a) below, to the provisions set forth in Section 1.11(a) and (ii) Loans to be borrowed on the Fourth Amendment Effective Date to fund the Pinehurst Acquisition (as defined in the Fourth Amendment)), and the obligation of any Issuing Bank to issue, amend, renew or extend Letters of Credit on any date (including the Closing Date), is subject to the satisfaction of the following conditions precedent:
(i) At the time of each such Credit Event and also after giving effect thereto, (i) no Default or Event of Default shall have occurred and be continuing and (ii) all representations and warranties made by any Credit Party contained herein or in the other Credit Documents shall be true and correct in all material respects with the same effect as though such representations and warranties had been made on and as of the date of such Credit Event (except where such representations and warranties expressly relate to an earlier date, in which case such representations and warranties shall have been true and correct in all material respects as of such earlier date and except that any representation and warranty that is qualified as to “materiality,” “Material Adverse Effect” or similar language shall be true and correct (after giving effect to any qualification therein) in all respects on such respective dates).
(ii) Prior to the making of each Loan (other than any Loan made pursuant to Section 3.4(a)), the Administrative Agent shall have received a Notice of Borrowing (whether in writing or by telephone) meeting the requirements of Section 2.3(a).
(iii) Prior to the issuance of each Letter of Credit (or an amendment or extension of a Letter of Credit except in the case of an automatic extension), (i) the Administrative Agent and the applicable Issuing Bank shall have received a Letter of Credit Application meeting the requirements of Section 3.2(a) and (ii) if such Letter of Credit is being issued on behalf of a non-Credit Party, subject to such issuance constituting an Investment permitted by Section 10.5 on a pro forma basis and to the applicable Issuing Bank’s receipt of all documentation and other information required by regulatory authorities under applicable “know your customer” and anti-money laundering rules and regulations, including the Patriot Act and Beneficial Ownership Regulation.
(iv) At the time of and immediately after giving effect to such proposed Credit Event and the use of proceeds thereof, the Borrower and its Restricted Subsidiaries shall not have Excess Cash in excess of the greater of (i) $35,000,000 and (ii) ten percent (10%) of the then effective Borrowing Base.
(b) The agreement of each Lender to make any Loan requested to be made by it on the Fourth Amendment Effective Date to fund the Pinehurst Acquisition (as defined in the Fourth Amendment) is only subject to the satisfaction of the conditions precedent in Section 4 of the Fourth Amendment.
The acceptance of the benefits of each Credit Event after the Closing Date shall constitute a representation and warranty by each Credit Party to each of the Lenders that all the applicable conditions specified in Section 7 above have been satisfied as of that time.
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SECTION 8. REPRESENTATIONS, WARRANTIES AND AGREEMENTS
In order to induce the Lenders to enter into this Agreement, to make the Loans and issue or participate in Letters of Credit as provided for herein, the Borrower makes, on the date of each Credit Event and on each other date as required or set forth in this Agreement, the following representations and warranties to, and agreements with, the Lenders, all of which shall survive the execution and delivery of this Agreement and the making of the Loans and the issuance of the Letters of Credit:
8.1 Existence, Qualification and Power. Each of the Borrower and each Restricted Subsidiary of the Borrower (a) is duly organized and validly existing under the laws of the jurisdiction of its organization and has the corporate or other organizational power and authority to own its property and assets and to transact its business as now conducted and (b) has duly qualified and is authorized to do business and is in good standing (if applicable) in all jurisdictions where it is required to be so qualified, except where the failure to be so qualified or in good standing would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.
8.2 Corporate Power and Authority; Enforceability; Binding Effect. Each Credit Party has the corporate or other organizational power and authority to execute, deliver and carry out the terms and provisions of the Credit Documents to which it is a party and has taken all necessary corporate or other organizational action to authorize the execution, delivery and performance of the Credit Documents to which it is a party. Each Credit Party has duly executed and delivered each Credit Document to which it is a party and each such Credit Document constitutes the legal, valid and binding obligation of such Credit Party enforceable in accordance with its terms, subject to the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization and other similar laws relating to or affecting creditors’ rights generally and general principles of equity (whether considered in a proceeding in equity or law).
8.3 No Violation. None of the execution, delivery or performance by any Credit Party of the Credit Documents to which it is a party will (a) contravene any Requirement of Law, except to the extent such contravention would not reasonably be expected to result in a Material Adverse Effect, (b) result in any breach of any of the terms, covenants, conditions or provisions of, or constitute a default under, or result in the creation or imposition of (or the obligation to create or impose) any Lien upon any of the property or assets of such Credit Party or any of the Restricted Subsidiaries (other than Liens created under the Credit Documents) pursuant to the terms of any indenture, loan agreement, lease agreement, mortgage, deed of trust, agreement or other instrument to which such Credit Party or any of the Restricted Subsidiaries is a party or by which it or any of its property or assets is bound (any such term, covenant, condition or provision, a “Contractual Requirement”) except to the extent such breach, default or Lien that would not reasonably be expected to result in a Material Adverse Effect or (c) violate any provision of the Organization Documents of such Credit Party or any of the Restricted Subsidiaries.
8.4 Litigation. Except as set forth on Schedule 8.4, there are no actions, suits, proceedings, claims or disputes pending or, to the actual knowledge of an Authorized Officer of the Borrower, threatened in writing, at law, in equity, in arbitration or before any Governmental Authority, by or against the Borrower or any of its Restricted Subsidiaries or against any of their properties or revenues that either individually or in the aggregate, would reasonably be expected to have a Material Adverse Effect.
8.5 Margin Regulations. Neither the making of any Loan hereunder nor the use of the proceeds thereof will violate the provisions of Regulation T, Regulation U or Regulation X of the Board. The Borrower is not engaged principally, or as one of its important activities, in the business of extending credit for the purpose of buying or carrying Margin Stock.
8.6 Governmental Authorization. The execution, delivery and performance of each Credit Document do not require any consent or approval of, registration or filing with, or other action by, any Governmental Authority or any other Person, except for (a) such as have been obtained or made and are in full force and effect, (b) filings and recordings in respect of the Liens created pursuant to the Security Documents and (c) such consents, approvals, registrations, filings or actions the failure of which to obtain or make would not reasonably be expected to have a Material Adverse Effect.
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8.7 Investment Company Act. No Credit Party is an “investment company” within the meaning of the Investment Company Act of 1940, as amended.
8.8 True and Complete Disclosure.
(a) All written factual information delivered by or on behalf of the Borrower or any of its Subsidiaries to the Administrative Agent and the Lenders (other than the Projections, pro forma financial information, estimates, forecasts and other forward looking information and information of a general economic nature or general industry nature) (the “Information”) concerning the Borrower, the Restricted Subsidiaries, the Transactions and any other transactions contemplated hereby prepared by or on behalf of the foregoing or their representatives and made available to any Lenders or the Administrative Agent in connection with the Transactions or the other transactions contemplated hereby and the negotiation of the Credit Documents (as modified or supplemented by other information so furnished), when taken as a whole, was true and correct in all material respects, as of the date when made and did not, taken as a whole, contain any untrue statement of a material fact as of the date when made or omit to state a material fact necessary in order to make the statements contained therein, taken as a whole, not materially misleading in light of the circumstances under which such statements were made.
(b) The Projections (i) have been prepared in good faith based upon assumptions believed by the Borrower to be reasonable as of the date made (it being understood that such Projections are as to future events and are not to be viewed as facts, the projections are subject to significant uncertainties and contingencies, many of which are beyond the control of the Borrower and the Subsidiaries, that no assurance can be given that any particular projections will be realized and that actual results during the period or periods covered by any such projections may differ from the projected results and such differences may be material) and (ii) as of the Closing Date, have not been modified in any material respect by the Borrower.
(c) As of the Closing Date, neither the Borrower nor any Restricted Subsidiary has any material Indebtedness, any material guarantee obligations, contingent liabilities, off balance sheet liabilities or unusual forward or long-term commitments that, in each case, have not been disclosed in writing to the Administrative Agent.
(d) As of the Closing Date, to the knowledge of the Borrower, the information included in the Beneficial Ownership Certification delivered, on or prior to the Closing Date, to any Lender in connection with this Agreement is true and correct in all respects.
8.9 Tax Matters. Except as would not, either individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect, each of the Credit Parties and the Restricted Subsidiaries have filed all tax returns required to be filed by it, and have paid all Taxes payable by it (including in its capacity as a withholding agent), except those that are being contested in good faith by appropriate proceedings and as to which adequate reserves have been provided to the extent required by and in accordance with GAAP.
8.10 Compliance with ERISA.
(a) Except as set forth on Schedule 8.10(a) or as would not, either individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect, each Plan maintained by a Credit Party is in compliance with the applicable provisions of ERISA and the Code and the regulations and published interpretations thereunder and other federal or state laws.
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(b) (i) No ERISA Event has occurred during the six (6) year period prior to the date on which this representation is made or deemed made or is reasonably expected to occur; (ii) neither any Credit Party nor any ERISA Affiliate has incurred, or reasonably expects to incur, any liability under Title IV of ERISA with respect to any Pension Plan (other than premiums due and not delinquent under Section 4007 of ERISA); (iii) neither any Credit Party nor any ERISA Affiliate has incurred, or reasonably expects to incur, any liability (and no event has occurred which, with the giving of notice under Section 4219 of ERISA, would result in such liability) under Sections 4201 or 4243 of ERISA with respect to a Multiemployer Plan; and (iv) neither any Credit Party nor any ERISA Affiliate has engaged in a transaction that could be subject to Sections 4069 or 4212(c) of ERISA except, with respect to each of the foregoing clauses of this Section 8.10(b), as would not reasonably be expected, individually or in the aggregate, to result in a Material Adverse Effect or the imposition of a Lien on the assets of any Credit Party.
(c) With respect to each Pension Plan, the adjusted funding target attainment percentage as determined by the applicable Pension Plan’s Enrolled Actuary under Sections 436(j) and 430(d)(2) of the Code and all applicable regulatory guidance promulgated thereunder (“AFTAP”), would not reasonably be expected to result, individually or in the aggregate, in a Material Adverse Effect. Neither any Credit Party nor any ERISA Affiliate maintains or contributes to a Pension Plan that is, or is expected to be, in at-risk status (as defined in Section 303(i)(4) of ERISA or Section 430(i)(4) of the Code) in each case, except as would not reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect.
(d) All Foreign Plans are in compliance with, and have been established, administered and operated in accordance with, the terms of such Foreign Plans and applicable law, except for any failure to so comply, establish, administer or operate the Foreign Plans as would not reasonably be expected to have a Material Adverse Effect. All contributions or other payments which are due with respect to each Foreign Plan have been made in full and there are no funding deficiencies thereunder, except to the extent any such events would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.
8.11 Subsidiaries. Schedule 1.1(c) lists each Subsidiary of the Borrower (and the direct and indirect ownership interest of the Borrower therein), in each case existing on the Closing Date (after giving effect to the Transactions). Each Guarantor, Material Subsidiary and Excluded Subsidiary as of the Closing Date (after giving effect to the Transactions) has been so designated on Schedule 1.1(c).
8.12 Intellectual Property. The Borrower and each of the Restricted Subsidiaries own or have obtained valid rights to use all intellectual property, free from any burdensome restrictions, that to the knowledge of the Borrower is reasonably necessary for the operation of their respective businesses as currently conducted and as proposed to be conducted, except where the failure to obtain any such rights would not reasonably be expected to have a Material Adverse Effect.
8.13 Environmental Laws. Except as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect, (i) the Credit Parties and each of their respective Subsidiaries are in compliance with all applicable Environmental Laws and have no liability thereunder; (ii) neither the Credit Parties nor any of their respective Subsidiaries have received any unresolved written notice of any Environmental Claim, nor are the Credit Parties aware of any reasonable basis for such an Environmental Claim; (iii) neither the Credit Parties nor any of their respective Subsidiaries are conducting or have been ordered by a Governmental Authority to conduct any investigation, removal, remedial, reclamation, closure, or other corrective action pursuant to any Environmental Law related to Hazardous Materials contamination at any location, in each case which remains unresolved; (iv) neither the Credit Parties nor any of their respective Subsidiaries have treated, stored, transported, Released or disposed or arranged for disposal or transport for disposal of Hazardous Materials at, on, under or from any currently or formerly owned, leased or operated facility or from any other location in a manner that would reasonably be expected to give rise to liability of the Credit Parties or any of their respective Subsidiaries under Environmental Law and (v) there has been no Release, or to the knowledge of any Authorized Officer of the Borrower, threatened Release of any Hazardous Materials at, on or under any properties currently owned or leased by the Borrower or any of its Subsidiaries.
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8.14 Properties.
(a) Assuming that all applicable Governmental Authorities have granted approvals, made recordations and taken such other actions as are necessary in connection with the Transactions and any assignments made in connection therewith, except as set forth on Schedule 8.14 hereto or in an exhibit to any Reserve Report Certificate delivered hereunder, the Borrower and each Restricted Subsidiary has good and defensible title to the Borrowing Base Properties evaluated in the most recently delivered Reserve Report (other than those (i) Disposed of in compliance with this Agreement since delivery of such Reserve Report, (ii) leases that have expired in accordance with their terms and (iii) with title defects disclosed in writing to the Administrative Agent), and valid title to all its material personal properties, in each case, free and clear of all Liens other than Liens permitted by Section 10.2, except in each case where the failure to have such title would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect. After giving effect to the Liens permitted by Section 10.2, the Borrower or the Restricted Subsidiary specified as the owner owns the working interests and net revenue interests attributable to the Hydrocarbon Interests as such working interests and net revenue interests are reflected in the most recently delivered Reserve Report, and the ownership of such properties shall not in any material respect obligate the Borrower or such Restricted Subsidiary to bear the costs and expenses relating to the maintenance, development and operations of each such property in an amount in excess of the working interest of each property set forth in the most recently delivered Reserve Report that is not offset by a corresponding proportionate increase in the Borrower’s or such Restricted Subsidiary’s net revenue interest in such property other than as disclosed to the Administrative Agent and the Lenders in writing and set forth in an exhibit to the most recently delivered Reserve Report Certificate.
(b) All material leases and agreements necessary for the conduct of the business of the Borrower and the Restricted Subsidiaries are valid and subsisting, in full force and effect, except to the extent that any such failure to be valid or subsisting would not reasonably be expected to have a Material Adverse Effect.
(c) The rights and properties presently owned, leased or licensed by the Borrower and the Restricted Subsidiaries including all easements and rights of way, include all rights and properties necessary to permit the Borrower and the Restricted Subsidiaries to conduct their respective businesses as currently conducted, except to the extent any failure to have any such rights or properties would not reasonably be expected to have a Material Adverse Effect.
(d) All of the properties of the Borrower and the Restricted Subsidiaries that are reasonably necessary for the operation of their businesses are in good working condition and are maintained in accordance with prudent business standards, except to the extent any failure to satisfy the foregoing would reasonably be expected to have a Material Adverse Effect.
8.15 Solvency. After giving effect to the Transactions, the Borrower and its Restricted Subsidiaries, on a consolidated basis, are Solvent.
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8.16 Security Documents; Restrictions on Liens.
(a) The Security Documents create in favor of the Collateral Agent, for the benefit of the Secured Parties, a legal, valid and enforceable Lien or security interest in the respective Collateral described therein as security for the Obligations to the extent that a legal, valid, binding and enforceable Lien or security interest in such Collateral may be created under any applicable Requirement of Law, which Lien or security interest, upon the filing of financing statements, recordation of the Mortgages or the obtaining of possession or “control,” in each case, as applicable, with respect to the relevant Collateral as required under the applicable UCC or applicable local law, will constitute a fully perfected Lien on, and security interest in, all right, title and interest of the Borrower and each other Credit Party thereunder in such Collateral, in each case prior and superior (except as otherwise provided for in the relevant Security Document) in right to any other Person (other than Liens permitted pursuant to Section 10.2), in each case to the extent that a security interest may be perfected by the filing of a financing statement under the applicable UCC, recordation of the Mortgages under applicable local law or by obtaining possession or “control.”
(b) Neither the Borrower nor any of the Restricted Subsidiaries is a party to any material agreement or arrangement (other than those permitted hereunder), or subject to any order, judgment, writ or decree, which either restricts or purports to restrict its ability to grant Liens to the Administrative Agent and the Lenders on or in respect of their Oil and Gas Properties to secure the Obligations and the Credit Documents.
8.17 Gas Imbalances, Prepayments. Except as set forth on Schedule 8.17 on the Closing Date or as set forth in the most recently delivered certificate pursuant to Section 9.13(c)(v), there are no gas imbalances, take or pay or other prepayments (other than Service Agreement Undertakings), with respect to the Borrower and the Restricted Subsidiaries’ Oil and Gas Properties that in each case would require any Credit Party or Subsidiary thereof to deliver Hydrocarbons either generally or produced from their Borrowing Base Properties at some future time without then or thereafter receiving full payment therefor.
8.18 Marketing of Production. Except as set forth on Schedule 8.18 or otherwise disclosed to the Administrative Agent in writing, as of the most recent date that the certificate described in Section 9.13(c)(vii) is required to be delivered, no material agreements exist (which are not cancelable on ninety (90) days’ notice or less without penalty or detriment) for the sale of production of the Borrower and Restricted Subsidiaries’ Hydrocarbons at a fixed non-index price (including calls on, or other rights to purchase, production, whether or not the same are currently being exercised) that (i) represent in respect of such agreements two and a half percent (2.5%) or more of the Borrower’s and its Restricted Subsidiaries’ average monthly production of Hydrocarbon volumes and (ii) have a maturity or expiry date of longer than six (6) months.
8.19 Financial Statements.
(a) On and after the first date of delivery of financial statements pursuant to Section 9.1(a), the most recent financial statements delivered pursuant to Section 9.1(a) fairly present in all material respects the financial condition of the Borrower and its Subsidiaries as of the date thereof and their results of operations for the period covered thereby in accordance with GAAP consistently applied throughout the period covered thereby (subject to the impact of fresh start accounting), except for customary year-end adjustments and as otherwise expressly noted therein.
(b) On and after the first date of delivery of financial statements pursuant to Section 9.1(b), the most recent financial statements delivered pursuant to Section 9.1(b) fairly present in all material respects the financial condition of the Borrower and its Subsidiaries as of the date thereof and their results of operations for the period covered thereby in accordance with GAAP consistently applied throughout the period covered thereby (subject to the impact of fresh start accounting), except for the absence of the statements of comprehensive income, equity, cash flows and complete footnotes and as otherwise expressly noted therein.
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(c) Since December 31, 2023, there has been no event or circumstance, either individually or in the aggregate, that has had or would reasonably be expected to have a Material Adverse Effect.
8.20 OFAC; Patriot Act; FCPA; Use of Proceeds.
(a) To the extent applicable, each of the Borrower and its Subsidiaries and, to the knowledge of any Authorized Officer of the Borrower and the other Credit Parties, each director, officer, employee, agent acting on behalf of any Credit Party and controlled affiliate of the Borrower or any Subsidiary, is in compliance, in all material respects, with (i) the Trading with the Enemy Act, as amended, the International Emergency Economic Powers Act, as amended, Sanctions Laws, the United States Foreign Corrupt Practices Act of 1977, as amended and other anti-corruption laws, and (ii) the Patriot Act. Neither the Borrower nor any of its Subsidiaries nor, to the knowledge of any Authorized Officer of the Borrower and the other Credit Parties, any director, officer, employee, agent acting on behalf of any Credit Party or controlled affiliate of the Borrower or any Subsidiary is currently the subject of any Sanctions, nor is the Borrower or any of its Subsidiaries located, organized or resident in any country or territory that is the subject of comprehensive Sanctions.
(b) The proceeds of the Loans will be used for the purposes set forth in Section 9.11. No part of the proceeds of the Loans will be used, directly or, to the knowledge of any Authorized Officer of the Borrower, indirectly, by the Borrower (i) in violation of the United States Foreign Corrupt Practices Act of 1977, as amended or (ii) for the purpose of financing any activities or business (x) of or with any Person that, at the time of such financing, is the subject of any Sanctions or (y) in any country or territory that is the subject of comprehensive Sanctions.
8.21 Hedge Agreements. Schedule 8.21 sets forth, as of the Closing Date, and after the Closing Date, each report required to be delivered by the Borrower pursuant to Section 9.1(g) or as may otherwise be disclosed in writing to the Administrative Agent sets forth, a true and complete list of all material commodity Hedge Agreements of each Credit Party, the terms thereof relating to the type, term, effective date, termination date and notional amounts or volumes, and all credit support agreements relating thereto (including any margin required or supplied).
8.22 Affected Financial Institutions. Neither the Borrower nor any of its Restricted Subsidiaries is an Affected Financial Institution.
8.23 Compliance with Laws and Agreements; No Default.
(a) Each of the Borrower and each Restricted Subsidiary is in compliance with each Requirement of Law applicable to it or its property and all agreements and other instruments binding upon it or its property, and possesses all licenses, permits, franchises, exemptions, approvals and other governmental authorizations necessary for the ownership of its property and the conduct of its business, except where the failure to do so, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect.
(b) No Default, Event of Default or Loan Limit Deficiency has occurred and is continuing.
8.24 Insurance. The properties of the Borrower and the Restricted Subsidiaries are insured in the manner contemplated by Section 9.3.
8.25 Foreign Operations. The Borrower and its Restricted Subsidiaries (a) do not have any Foreign Subsidiaries and (b) do not make any material expenditures (whether such expenditure is capital, operating or otherwise) in or related to any Oil and Gas Properties not located within the geographical boundaries, and the territorial waters, of the United States.
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8.26 Qualified ECP Guarantor. Each of the Credit Parties and the Restricted Subsidiaries is a Qualified ECP Guarantor.
SECTION 9. AFFIRMATIVE COVENANTS
The Borrower hereby covenants and agrees that on the Closing Date and thereafter, until Payment in Full has occurred:
9.1 Information Covenants. The Borrower will furnish to the Administrative Agent (which shall promptly make such information available to the Lenders in accordance with its customary practice) within the time periods set forth below (as such time periods as may be extended by the Administrative Agent in its sole discretion):
(a) Annual Financial Statements. As soon as available and in any event within one hundred twenty (120) days after the end of each fiscal year, commencing with the fiscal year ending December 31, 2024, the audited consolidated balance sheets of the Borrower and its Subsidiaries and, if different, the Borrower and the Restricted Subsidiaries, in each case as at the end of such fiscal year, and the related consolidated statements of operations, shareholders’ equity and cash flows (or, in lieu of such audited financial statements of the Borrower and the Restricted Subsidiaries, a reconciliation, reflecting such financial information for the Borrower and the Restricted Subsidiaries, on the one hand, and the Borrower and the Subsidiaries, on the other hand, reflecting adjustments necessary to eliminate the accounts of Unrestricted Subsidiaries (if any) from such consolidated financial statements (for the avoidance of doubt, the Borrower shall be deemed to have satisfied the reconciliation requirement if the financial statements provide in one or more footnotes the financial information for the Unrestricted Subsidiaries, the Restricted Subsidiaries and the Borrower and its Subsidiaries on a consolidated basis)) all in reasonable detail and prepared in accordance with GAAP, and, except with respect to such reconciliation, certified by independent certified public accountants of recognized national standing whose opinion shall not be materially qualified with a scope of audit or “going concern” explanatory paragraph or like qualification or exception (other than an emphasis of matter paragraph) (other than with respect to, or resulting from, (x) the occurrence of an upcoming maturity date of any Indebtedness or (y) any prospective default in the Financial Performance Covenants). Notwithstanding the foregoing, the obligations in this Section 9.1(a) may be satisfied with respect to financial information of the Borrower and its consolidated Subsidiaries by furnishing the Borrower’s or any Parent Entity’s or IPO Vehicle’s annual report on Form 10-K for such year, as filed with the SEC; provided that if such financial information required to be provided under the first sentence of this Section 9.1(a) is included in the notes to the financial statements, such financial statements are accompanied by an opinion of independent certified public accountants whose opinion shall not be materially qualified with a scope of audit or “going concern” explanatory paragraph or like qualification or exception (other than an emphasis of matter paragraph) (other than with respect to, or resulting from, (x) the occurrence of an upcoming maturity date of any Indebtedness or (y) any prospective default in the Financial Performance Covenants).
(b) Quarterly Financial Statements. As soon as available and in any event within sixty (60) days after the end of the first three (3) quarterly accounting periods in each fiscal year of the Borrower, commencing with the fiscal quarter ending September 30, 2024, the consolidated balance sheets of the Borrower and the Subsidiaries and, if different, the Borrower and the Restricted Subsidiaries, in each case as at the end of such quarterly period and the related consolidated statements of operations, shareholders’ equity and cash flows, and setting forth (other than after implementation of fresh start accounting) comparative consolidated figures for the related periods in the prior fiscal year **** or, in the case of such
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consolidated balance sheet, for the last day of such periods in the prior fiscal year (or, in lieu of such unaudited financial statements of the Borrower and the Restricted Subsidiaries, a reconciliation reflecting such financial information for the Borrower and the Restricted Subsidiaries, on the one hand, and the Borrower and the Subsidiaries, on the other hand, reflecting adjustments necessary to eliminate the accounts of Unrestricted Subsidiaries (if any) from such consolidated financial statements (for the avoidance of doubt, the Borrower shall be deemed to have satisfied the reconciliation requirement if the financial statements provide in one or more footnotes the financial information for the Unrestricted Subsidiaries, the Restricted Subsidiaries and the Borrower and its Subsidiaries on a consolidated basis)), all of which shall be certified by a Financial Officer of the Borrower as fairly presenting in all material respects the financial condition, results of operations, shareholders’ equity and cash flows, of the Borrower and its consolidated Subsidiaries in accordance with GAAP, subject to changes resulting from audit and normal year-end audit adjustments and the absence of footnotes, together with, if not otherwise required to be filed with the SEC, a customary management discussion and analysis describing the financial condition and results of operations of the Borrower and its Restricted Subsidiaries. Notwithstanding the foregoing, the obligations in this Section 9.1(b) may be satisfied by furnishing the Borrower’s or any Parent Entity’s or IPO Vehicle’s quarterly report on Form 10-Q for such quarter, as filed with the SEC; provided that such financial information required to be provided under the first sentence of this Section 9.1(b) is included in the notes to the financial statements or the Borrow provides consolidating information that explains in reasonable detail the differences between the information relating to such Parent Entity or IPO Vehicle and its Subsidiaries, on the one hand, and the information relating to the Borrower and its Subsidiaries on a standalone basis, on the other hand.
(c) Officer’s Certificates. At the time of the delivery of the financial statements provided for in Section 9.1(a) and Section 9.1(b), a certificate of a Financial Officer of the Borrower to the effect that no Default or Event of Default exists or, if any Default or Event of Default does exist, specifying the nature and extent thereof, which certificate shall set forth (i) the calculations required to establish whether the Borrower and its Restricted Subsidiaries were in compliance with the Financial Performance Covenants as at the end of such fiscal year or period, as the case may be, (ii) any formation of or change in the identity of the Restricted Subsidiaries, Material Subsidiaries, Excluded Subsidiaries, Guarantors and Unrestricted Subsidiaries as at the end of such fiscal year or period, as the case may be, from the Restricted Subsidiaries, Guarantors and Unrestricted Subsidiaries, respectively, provided to the Lenders on the Closing Date or the most recent fiscal year or period, as the case may be, (iii) a calculation of Distributable Free Cash Flow for the applicable Test Period, including the components thereof in reasonable detail acceptable to the Administrative Agent, (iv) certification as to the compliance by the Borrower and its Restricted Subsidiaries with Section 9.3 and (v) if applicable, a copy of each other material report or opinion submitted to the Borrower or any of its Subsidiaries by independent accountants in connection with any annual, interim or special audit made by them of the books of the Borrower or any such Subsidiary, and a copy of any response by the Borrower or any such Subsidiary, or the Board of Directors of the Borrower or any such Subsidiary, to such material report or opinion.
(d) Notices. Promptly but in no event later than five (5) Business Days (or such later date as agreed by the Administrative Agent in its sole discretion) after an Authorized Officer of the Borrower or any of the Restricted Subsidiaries obtains actual knowledge thereof, notice of (i) the occurrence of any Default or Event of Default, which notice shall specify the nature thereof and what action the Borrower proposes to take with respect thereto, (ii) any litigation or governmental proceeding pending or threatened in writing against the Borrower or any of the Subsidiaries that would reasonably be expected to result in a Material Adverse Effect and (iii) the occurrence of any ERISA Event or similar event with respect to a Foreign Plan, in each case, that would reasonably be expected to have a Material Adverse Effect.
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(e) Environmental Matters. Promptly but in no event later than five (5) Business Days (or such later date as agreed by the Administrative Agent in its sole discretion) after an Authorized Officer of the Borrower or any of the Restricted Subsidiaries obtains actual knowledge of any one or more of the following environmental matters, unless such environmental matters would not, individually, or when aggregated with all other such matters, be reasonably expected to result in a Material Adverse Effect, notice of:
(i) any Environmental Claim brought, filed or threatened in writing against any Credit Party or any Subsidiary thereof and any ruling, decisions or determinations arising out of any such Environmental Claim;
(ii) any condition or occurrence on any Oil and Gas Properties that (A) would reasonably be expected to result in noncompliance by any Credit Party or any Subsidiary thereof with any applicable Environmental Law or (B) would reasonably be anticipated to form the basis of an Environmental Claim against any Credit Party or any Subsidiary thereof or any Oil and Gas Properties;
(iii) any allegation that any Credit Party or any Subsidiary thereof is a potentially responsible party in connection with any Release of Hazardous Material, or any actual or threatened investigation of any Credit Party or any Subsidiary thereof or Oil and Gas Property by any Governmental Authority pursuant to any Environmental Law;
(iv) any condition or occurrence on any Oil and Gas Properties that would reasonably be expected to cause such Oil and Gas Properties to be subject to any restrictions on the ownership, occupancy, use or transferability of such Oil and Gas Properties under any Environmental Law; and
(v) the actual Release or threatened Release of any Hazardous Material on, at, under or from any facility owned or leased by a Credit Party or any Subsidiary thereof in violation of Environmental Laws or as would reasonably be expected to result in liability of a Credit Party or any Subsidiary under Environmental Laws or the conduct of any investigation, or any removal, remedial or other corrective action under Environmental Laws in response to the actual or alleged presence, Release or threatened Release of any Hazardous Material on, at, under or from any facility owned or leased by a Credit Party or any Subsidiary thereof.
All such notices shall describe in reasonable detail the nature of the claim, investigation, condition, occurrence or removal or remedial action.
(f) Other Information. With reasonable promptness, but subject to the limitations set forth in the last sentences of Section 9.2(a) and Section 13.6, such other information regarding the operations, business affairs and the financial condition of the Borrower or the Restricted Subsidiaries as the Administrative Agent on its own behalf or on behalf of any Lender (acting through the Administrative Agent) may reasonably request in writing from time to time.
(g) Certificate of Authorized Officer – Hedge Agreements. Within ten (10) days immediately following the Minimum Hedging Requirement Date, a certificate of an Authorized Officer of the Borrower (a “Hedging Compliance Certificate”), setting forth (i) the calculations required to establish whether the Borrower and its Restricted Subsidiaries were in compliance with Section 9.17 as of such date and (ii) a true and complete list of all commodity Hedge Agreements of the Borrower and each Credit Party, the material terms thereof (in respect of the type, term, effective date, termination date and notional amounts or volumes), any credit support agreements relating thereto not listed on Schedule 8.21 or on any previously
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delivered Hedging Compliance Certificate and any margin required or supplied under any credit support document. Notwithstanding anything contained in this Section 9.1(g) to the contrary, the foregoing requirements set forth in this Section 9.1(g) shall not apply with respect to any Minimum Hedging Requirement Date as of which, after giving effect to any Credit Event occurring on such date, both (i) the pro forma Consolidated Total Net Leverage Ratio as of such date is less than 0.50 to 1.00 and (ii) the Total Exposures as of such date is less than ten percent (10%).
(h) SEC and Other Filings; Reports to Shareholders. Promptly after the same become publicly available, copies of all periodic and other reports, proxy statements and other materials filed by the Borrower or any Subsidiary with the SEC, or with any national securities exchange and distributed by the Borrower to its shareholders.
(i) Notices Under Material Instruments. Promptly after the furnishing thereof, copies of any financial statement, report or notice furnished to or by any Person pursuant to the terms of any preferred stock designation or agreement governing Material Indebtedness, other than this Agreement and not otherwise required to be furnished to the Lenders pursuant to any other provision of this Section 9.1.
(j) List of Purchasers. If reasonably requested by the Administrative Agent, a certificate of an Authorized 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 ninety percent (90%) of the revenues resulting from the sale of all Hydrocarbons from the Borrower and such other Credit Parties during the most recently ended fiscal year.
(k) Sales and Dispositions and Hedge Unwinds.
(i) In the event the Borrower or any Restricted Subsidiary intends to Dispose of any Borrowing Base Properties, or Equity Interests in any Person owning Borrowing Base Properties, in each case, with a PV-9 in excess of five percent (5.0%) of the then-effective Borrowing Base in a single transaction or in multiple transactions since the later of (A) the last Scheduled Redetermination Date and (B) the last adjustment of the Borrowing Base made pursuant to Section 2.14(f) when combined with the Swap PV of any Hedge Agreements terminated, unwound, offset or otherwise Disposed of by the Borrower or any Restricted Subsidiary during such time period (for the avoidance of doubt, excluding any novation of any Hedge Agreements with respect to which the Borrower or applicable Restricted Subsidiary remains a party), three (3) Business Days (or such shorter time period agreed by the Administrative Agent) prior written notice (which, for the avoidance of doubt, may be delivered by email) of such Disposition, the Borrowing Base Properties that are the subject of such Disposition, the price thereof and the anticipated date of closing and any other details thereof reasonably requested by the Administrative Agent.
(ii) In the event that the Borrower or any Restricted Subsidiary intends to terminate, unwind, create offsetting positions or otherwise Dispose of Hedge Agreements with respect to which the Borrower reasonably believes the Swap PV of which (after taking into account the economic effect (including with respect to tenor) of any other Hedge Agreement executed contemporaneously with the taking of such actions and including any anticipated decline in the mark-to market value thereof) is in excess of five percent (5.0%) of the then-effective Borrowing Base in a single transaction or in multiple transactions since the later of (A) the last Scheduled Redetermination Date and (B) the last adjustment of the Borrowing Base made pursuant to Section 2.14(f) when combined with the Borrowing Base Value of any Disposition of any Borrowing Base Properties, or Equity Interests in any Person owning Borrowing Base Properties made during such time period, ten (10) Business Days (or such shorter time period agreed by the Administrative Agent) (which, for the avoidance of doubt, may be delivered by email) of the foregoing, the anticipated decline in the mark-to-market value thereof or net cash proceeds therefrom and any other details thereof reasonably requested by the Administrative Agent.
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(l) Notice of Casualty Events. Prompt written notice after an Authorized Officer of the Borrower obtains actual 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 $16,250,000.
(m) Information Regarding the Borrower and Subsidiaries.
(i) Patriot Act. Promptly upon request, all documentation and other information required by regulatory authorities under applicable “know your customer” and anti-money laundering rules and regulations, including the Patriot Act and Beneficial Ownership Regulation.
(ii) Changes. Prompt written notice (but in any event, within thirty (30) days following such change) of any change (A) in a Credit Party’s corporate name, (B) in the location of a Credit Party’s chief executive office or principal place of business, (C) in a Credit Party’s form of organization, (D) in a Credit Party’s jurisdiction of organization and (E) in a Credit Party’s federal taxpayer identification number.
(iii) New Restricted Subsidiaries. Prompt written notice of the formation of any Restricted Subsidiary of the Borrower, notice thereof and copies of the Organization Documents of such Subsidiary.
(iv) Organization Documents. Promptly after the execution thereof, copies of any amendment, modification or supplement to the Organization Documents of the Borrower or any Restricted Subsidiary.
(v) Beneficial Ownership. Prompt written notice of any change in the information provided in the Beneficial Ownership Certification delivered to any Lender that would result in a change to the list of beneficial owners identified in such certification.
(n) Certificate of Authorized Officer – Production Report and Lease Operating Statement. Concurrently with any delivery of financial statements under Section 9.1(a) or Section 9.1(b), a certificate of an Authorized Officer of the Borrower, setting forth, for each calendar month during the then current fiscal year to date, the volume of production of Hydrocarbons and sales attributable to production of Hydrocarbons (and the prices at which such sales were made and the revenues derived from such sales) for each such calendar month from the Borrowing Base Properties, and setting forth the related ad valorem, severance and production taxes and lease operating expenses attributable thereto for each such calendar month; provided that such certificate shall be required solely to the extent the foregoing information and its certification is not otherwise included in the applicable Reserve Report Certificate delivered in connection with such Reserve Report.
(o) Issuance and Incurrences of Indebtedness. Three (3) Business Days (or such shorter time period agreed by the Administrative Agent) prior written notice (which, for the avoidance of doubt, may be delivered by email) of the incurrence by the Borrower or any Restricted Subsidiary of any Permitted Additional Indebtedness for borrowed money as well as the amount thereof, the anticipated closing date and definitive documentation for the foregoing and any other related information reasonably requested.
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(p) Budget. Concurrently with any delivery of financial statements under Section 9.1(a), a reasonably detailed consolidated budget for the following fiscal year as customarily prepared by management of the Borrower (including a projected consolidated balance sheet of the Borrower and its Subsidiaries as of the end of the following fiscal year, the related consolidated statements of projected cash flow and projected income and a summary of the material underlying assumptions applicable thereto) (collectively, the “Budget”), which Budget shall in each case be accompanied by a certificate of an Authorized Officer stating that such Budget has been prepared in good faith on the basis of the assumptions stated therein, which assumptions were believed to be reasonable at the time of preparation of such Budget, it being understood that actual results may vary from such Budget and that such variations may be material.
It is understood that documents required to be delivered pursuant to Sections 9.1(a) through (o) may be delivered electronically and if so delivered, shall be deemed to have been delivered on the date (i) on which the Borrower posts such documents, or provides a link thereto on the Borrower’s website on the Internet at the website address listed on Schedule 13.2, (ii) on which such documents are posted on the Borrower’s behalf on IntraLinks, DebtDomain or another relevant website, if any, to which each Lender and the Administrative Agent have access (whether a commercial, third-party website or whether sponsored by the Administrative Agent), (iii) on which such documents are filed on record with the SEC or (iv) on which such documents are transmitted by electronic mail to the Administrative Agent; provided that: (A) upon written request by the Administrative Agent, the Borrower shall deliver paper copies of such documents delivered pursuant to Sections 9.1(a), 9.1(b), 9.1(c) and 9.1(f) to the Administrative Agent for further distribution to each Lender until a written request to cease delivering paper copies is given by the Administrative Agent and (B) the Borrower shall notify (which may be by facsimile or electronic mail) the Administrative Agent of the posting of any such documents and provide to the Administrative Agent by electronic mail electronic versions (i.e., soft copies) of such documents (except that no such notice shall be required to the extent such documents are filed on record with the SEC). Each Lender shall be solely responsible for timely accessing posted documents or requesting delivery of paper copies of such documents from the Administrative Agent and maintaining its copies of such documents.
9.2 Books, Records and Inspections.
(a) The Borrower will, and will cause each Restricted Subsidiary to, maintain books of record and account that permit the preparation of financial statements in accordance with GAAP.
(b) The Borrower will, and will cause each of the Restricted Subsidiaries to, permit designated representatives of the Administrative Agent and designated representatives of the Majority Lenders (as accompanied by the Administrative Agent) to visit and inspect any of its properties, to examine its financial and operating records, and to discuss its affairs, finances and accounts with its officers, and independent public accountants (subject to such accountants’ customary policies and procedures), all at the reasonable expense of the Borrower and at such reasonable times during normal business hours and as often as may be reasonably desired, upon reasonable advance notice to the Borrower; provided that, excluding any such visits and inspections during the continuation of an Event of Default, only the Administrative Agent on behalf of the Majority Lenders may exercise rights of the Administrative Agent and the Lenders under this Section 9.2(b) and the Administrative Agent shall not exercise such rights more often than two (2) times during any calendar year and only one (1) such time per calendar year shall be at the Borrower’s expense; provided, further, that when an Event of Default exists, the Administrative Agent or any representative of the Majority Lenders (or any of their respective representatives or independent contractors) may do any of the foregoing at the expense of the Borrower at any time during normal business hours and upon reasonable advance notice. The Administrative Agent and the Majority Lenders shall give the Borrower the opportunity to participate in any discussions with the Borrower’s independent public accountants. Notwithstanding anything to the contrary in this Section 9.2(b), none of the Borrower nor any Restricted Subsidiary shall be required to disclose, permit the inspection, examination or making copies or abstracts of, or discussion of, any document, information or other matter that (i) constitutes non-financial trade secrets or non-financial proprietary information, (ii) in respect of which disclosure to the Administrative
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Agent or any Lender (or their respective representatives or contractors) is prohibited by any Requirement of Law or any binding agreement or (iii) is subject to attorney-client or similar privilege or constitutes attorney work-product; provided, that the Borrower shall notify the Administrative Agent and the Majority Lenders if it is not providing any information pursuant to the foregoing clauses (i) through (iii).
9.3 Maintenance of Insurance. The Borrower will, and will cause each Restricted Subsidiary to, at all times maintain in full force and effect, pursuant to self-insurance arrangements or with insurance companies that the Borrower believes (in the good faith judgment of the management of the Borrower) are financially sound and reputable at the time the relevant coverage is placed or renewed, insurance in at least such amounts (after giving effect to any self-insurance which the Borrower believes (in the good faith judgment of management of the Borrower) is reasonable and prudent in light of the size and nature of its business) and against at least such risks (and with such risk retentions) as the Borrower believes (in the good faith judgment of management of the Borrower) is reasonable and prudent in light of the size and nature of its business; and will furnish to the Administrative Agent, upon reasonable written request from the Administrative Agent, information presented in reasonable detail as to the insurance so carried. The Secured Parties shall be the additional insureds on any such liability insurance as their interests may appear and, if property insurance is obtained, the Collateral Agent shall be the lender loss payee under any such property insurance; provided that, so long as no Event of Default has occurred and is then continuing, the Secured Parties will provide any proceeds of such property insurance to the Borrower.
9.4 Payment of Obligations; Performance of Obligations under Credit Documents.
(a) The Borrower shall, and shall cause each Restricted Subsidiary to, pay, discharge or otherwise satisfy its obligations, including in respect of all Tax liabilities, assessments and governmental charges, before the same shall become delinquent or in default, except where (i) the amount or validity thereof is being contested in good faith by appropriate proceedings and the Borrower or a Subsidiary thereof has set aside on its books adequate reserves therefor in accordance with GAAP (or in the case of a Foreign Subsidiary, the comparable accounting principles in the relevant jurisdiction) or (ii) the failure to make payment could not reasonably be expected, individually or in the aggregate, to result in a Material Adverse Effect.
(b) The Borrower will pay the Loans according to the reading, tenor and effect thereof, and the Borrower will, and will cause each Restricted Subsidiary to, do and perform every act and discharge all of the obligations to be performed and discharged by them under the Credit Documents, including, without limitation, this Agreement, at the time or times and in the manner specified.
9.5 Preservation of Existence, Compliance, Etc. Except as otherwise permitted by this Agreement, the Borrower will, and will cause each Restricted Subsidiary to (a) do, or cause to be done, all things necessary to preserve and keep in full force and effect its (i) legal existence and (ii) corporate rights and authority, except in the case of this clause (ii) to the extent that the failure to do so would not reasonably be expected to have a Material Adverse Effect; provided, however, that the Borrower and its Restricted Subsidiaries may consummate any transaction permitted under Section 10.3, 10.4 or 10.5, (b) comply with all Contractual Requirements except to the extent that the failure to so comply would not reasonably be expected to have a Material Adverse Effect; and (c) maintain in effect and enforce policies and procedures designed to ensure compliance by the Borrower, its Subsidiaries and their respective directors, officers, employees and agents with (i) the Trading with the Enemy Act, as amended, the International Emergency Economic Powers Act, as amended, Sanctions Laws, the United States Foreign Corrupt Practices Act of 1977, as amended and other anti-corruption laws, and (ii) the Patriot Act.
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9.6 Compliance with Requirements of Law. The Borrower will, and will cause each Restricted Subsidiary to, comply with all Requirements of Law applicable to it or its property, including all governmental approvals or authorizations required to conduct its business, and to maintain all such governmental approvals or authorizations in full force and effect, except if the failure to comply therewith could not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.
9.7 ERISA.
(a) Promptly after the Borrower or any ERISA Affiliate knows or has reason to know of the occurrence of any of the following events that, individually or in the aggregate (including in the aggregate such events previously disclosed or exempt from disclosure hereunder, to the extent the liability therefor remains outstanding), would be reasonably likely to have a Material Adverse Effect or a Lien on the assets of any Credit Party, the Borrower will deliver to the Administrative Agent a certificate of an Authorized Officer or any other senior officer of the Borrower setting forth details as to such occurrence and the action, if any, that the Borrower or such ERISA Affiliate is required or proposes to take, together with any notices (required, proposed or otherwise) given to or filed with or by the Borrower, such ERISA Affiliate, the PBGC, a Plan participant (other than notices relating to an individual participant’s benefits) or the Plan administrator with respect thereto: (i) that an ERISA Event has occurred or is likely to occur; (ii) that a Pension Plan has an Unfunded Current Liability that has or will result in a Lien under ERISA or the Code; that proceedings will be or have been instituted to terminate a Pension Plan having an Unfunded Current Liability (including the giving of written notice thereof); (iii) that a proceeding has been instituted against any Credit Party or an ERISA Affiliate pursuant to Section 515 of ERISA to collect a delinquent contribution to a Multiemployer Plan; (iv) or that any Credit Party or any ERISA Affiliate has incurred or will incur (or has been notified in writing that it will incur) any liability (including any contingent or secondary liability) pursuant to Section 409, 502(i), 502(l), 515, 4062, 4063, 4064, 4069, 4201 or 4204 of ERISA or Section 4971 or 4975 of the Code.
(b) Promptly following any request therefor, the Borrower will deliver to the Administrative Agent copies of (i) any documents described in Section 101(k) of ERISA that the Borrower and any of its Subsidiaries or any ERISA Affiliate may request with respect to any Multiemployer Plan and (ii) any notices described in Section 101(l) of ERISA that the Borrower and any of its Subsidiaries or any ERISA Affiliate may request with respect to any Multiemployer Plan; provided that if the Borrower, any of its Subsidiaries or any ERISA Affiliate has not requested such documents or notices from the administrator or sponsor of the applicable Multiemployer Plan, the Borrower, the applicable Subsidiaries or the ERISA Affiliates shall promptly, following a request from the Administrative Agent, make a request for such documents or notices from such administrator or sponsor and shall provide copies of such documents and notices promptly after receipt thereof.
9.8 Maintenance of Properties. The Borrower will, and will cause each of the Restricted Subsidiaries to, except in each case, where the failure to so comply would not reasonably be expected to result in a Material Adverse Effect (it being understood that this Section 9.8 shall not restrict any transaction otherwise permitted by Section 10.3, 10.4 or 10.5):
(a) operate its Oil and Gas Properties and other material properties or cause such Oil and Gas Properties and other material properties to be operated in a careful and efficient manner in accordance with the practices of the industry and in compliance with all applicable Contractual Requirements and all applicable Requirements of Law, including applicable proration requirements and Environmental Laws, and all applicable Requirements of Law 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;
(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 excepted) all of its material Oil and Gas Properties and other material properties, including all equipment, machinery and facilities; and
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(c) to the extent a Credit Party is not the operator of any property, the Borrower shall use commercially reasonable efforts to cause the operator to operate such property in accordance with customary industry practices.
9.9 Compliance with Environmental Laws. The Borrower will, and will cause each of the Restricted Subsidiaries to, except, in each case, to the extent that the failure to do so could not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect, (a) comply, and take all commercially reasonable actions to cause all lessees and other Persons operating or occupying its properties to comply, with all applicable Environmental Laws and Environmental Permits; (b) obtain, maintain and renew all Environmental Permits necessary for its operations and properties; and (c) in each case to the extent the Credit Parties or Subsidiaries are required by Environmental Laws, conduct any investigation, remedial, reclamation, closure, plugging and abandonment, or other corrective action necessary to address Hazardous Materials, idle wells, or other conditions at any property or facility in accordance with applicable Environmental Laws.
9.10 Additional Guarantors and Collateral.
(a) Subject to any applicable limitations set forth in the Guarantee or the Security Documents, the Borrower will cause (i) any direct or indirect Restricted Subsidiary (other than any Excluded Subsidiary) formed or otherwise purchased or acquired after the Closing Date (including pursuant to a Permitted Acquisition) formed or otherwise purchased or acquired after the Closing Date (including pursuant to a Permitted Acquisition) and (ii) any Restricted Subsidiary of the Borrower that ceases to be an Excluded Subsidiary, in each case within thirty (30) days from the date of such formation, acquisition or cessation, as applicable (or such longer period as the Administrative Agent may agree in its reasonable discretion) to (A) execute (x) a supplement to the Guarantee, substantially in the form of Annex A thereto, in order to become a Guarantor; provided that the guarantee of any Foreign Subsidiary shall be limited as the Borrower may reasonably deem necessary to comply with applicable laws, rules or regulations (including general statutory limitations, financial assistance, corporate benefit, fraudulent preference, “thin capitalization” and “capital maintenance” rules), the fiduciary duties of the directors of such subsidiary or to avoid the risk of personal civil or criminal liability for any director or officer of such subsidiary, (y) a supplement to the Collateral Agreement, substantially in the form of Exhibit A thereto, in order to become a grantor and a pledgor thereunder and (z) a counterpart to the Intercompany Note, (B) if reasonably requested by the Administrative Agent or the Collateral Agent, within thirty (30) days after such request (or such longer period as the Administrative Agent may agree in writing in its discretion), deliver to the Administrative Agent a signed copy of an opinion, addressed to the Administrative Agent, the Collateral Agent and the Lenders, of counsel for the Credit Parties reasonably acceptable to the Administrative Agent as to such matters set forth in this Section 9.10 as the Administrative Agent or the Collateral Agent may reasonably request, and (C) as promptly as practicable after the request therefor by the Administrative Agent or Collateral Agent, deliver to the Collateral Agent with respect to each Mortgaged Property of such Subsidiary, (i) any existing title reports or policies, (ii) abstracts, (iii) any existing environmental assessment reports or (iv) surveys, to the extent available and in the possession or control of the Credit Parties or their respective Subsidiaries; provided, however, that there shall be no obligation to deliver to the Administrative Agent any existing environmental assessment report whose disclosure to the Administrative Agent would require the consent of a Person other than the Credit Parties or one of their respective Subsidiaries.
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(b) Subject to any applicable limitations set forth in the Collateral Agreement, the Borrower will pledge, and, if applicable, will cause each Subsidiary Guarantor (or Person required to become a Subsidiary Guarantor pursuant to Section 9.10(a)) to pledge, to the Collateral Agent, for the benefit of the Secured Parties, (i) all of the Equity Interests (other than any Excluded Equity Interests) directly owned by the Borrower or any Credit Party (or Person required to become a Guarantor pursuant to Section 9.10(a)), in each case, formed or otherwise purchased or acquired after the Closing Date, pursuant to supplements to the Collateral Agreement substantially in the form of Annex A, thereto and (ii) except with respect to intercompany Indebtedness, all evidences of Indebtedness for borrowed money in a principal amount in excess of $1,000,000 (individually) that is owing to the Borrower or any Guarantor (or Person required to become a Guarantor pursuant to Section 9.10(a)), in each case pursuant to supplements to the Collateral Agreement substantially in the form of Exhibit A thereto.
(c) In connection with each redetermination (but not any adjustment) of the Borrowing Base, and from time to time upon the request of the Administrative Agent, the Borrower shall review the applicable Reserve Report, if any, and the list of current Mortgaged Properties (as described in Section 9.13(c)), to ascertain whether the PV-9 of the Mortgaged Properties (calculated at the time of redetermination) meets the Collateral Coverage Minimum after giving effect to exploration and production activities, acquisitions, Dispositions and production. In the event that the PV-9 of the Mortgaged Properties (calculated at the time of redetermination) does not meet the Collateral Coverage Minimum, then the Borrower shall, and shall cause the Credit Parties to, grant, within thirty (30) days of delivery of the certificate required under Section 9.13(c) (or such longer period as the Administrative Agent may agree in its reasonable discretion), to the Collateral Agent as security for the Obligations an Acceptable Security Interest on additional Oil and Gas Properties not already subject to a Lien of the Security Documents such that, after giving effect thereto, the PV-9 of the Mortgaged Properties (calculated at the time of redetermination) meets the Collateral Coverage Minimum. All such Acceptable Security Interests will be created and perfected by and in accordance with the provisions of the Security Documents, including, if applicable, any additional Mortgages. In order to comply with the foregoing, if any Restricted Subsidiary places a Lien on its property and such Restricted Subsidiary is not a Guarantor, then it shall become a Guarantor and comply with the provisions of Sections 9.10(a) and (b).
(d) [reserved].
(e) Notwithstanding any provision in this Agreement or any other Credit Document to the contrary, in no event is any Building (as defined in the applicable Flood Insurance Regulation) or Manufactured (Mobile) Home (as defined in the applicable Flood Insurance Regulation) included in the definition of “Mortgaged Properties” and no Building or Manufactured (Mobile) Home is hereby encumbered by this Agreement or any other Credit Document.
9.11 Use of Proceeds. The Borrower will use the proceeds of the Loans and Letters of Credit made (a) to refinance amounts outstanding under the Existing Credit Agreement, (b) for the acquisition, development and exploration of oil and gas properties, (c) for development, expansion and acquisitions related to the Energy Business, (d) to provide for the working capital needs of the Borrower and its Subsidiaries, (e) for other general corporate purposes and (f) for fees and expenses related to the transactions contemplated hereby (in each case, as permitted by the Credit Documents). The Borrower shall not use, and shall procure that its Subsidiaries and its or their respective directors, officers, employees and agents shall not use, the proceeds of the Loans (A) in furtherance of an offer, payment, promise to pay, or authorization of the payment or giving of money, or anything else of value, to any Person in violation of the United States Foreign Corrupt Practices Act of 1977, as amended, and other applicable anti-corruption laws, (B) for the purpose of funding, financing or facilitating any activities, business or transaction of or with any Person that is, or is owned or controlled by a Person that is, at the time of such financing, the subject or target of any Sanctions, or in any country or territory that is the subject of comprehensive Sanctions, (C) in any manner that would result in the violation of any Sanctions Laws applicable to any party hereto or (D) in violation of the provisions of Regulation T, Regulation U or Regulation X of the Board.
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9.12 Further Assurances.
(a) Subject to the applicable limitations set forth in the Security Documents, the Borrower will, and will cause each other Credit Party to, execute and/or deliver any and all further documents, financing statements, agreements and instruments, and take all such further actions (including the filing and recording of financing statements, fixture filings, assignments of as-extracted collateral arising from the Borrowing Base Properties, mortgages, deeds of trust and other documents) that the Collateral Agent or the Required Lenders may reasonably request, in order to grant, preserve, protect and perfect the validity and priority of the security interests created or intended to be created by the applicable Security Documents, all at the expense of the Borrower and the Restricted Subsidiaries.
(b) Notwithstanding anything to the contrary in this Agreement, the Collateral Agreement, or any other Credit Document, the Administrative Agent may grant extensions of time for or waivers of the requirements of the creation or perfection of security interests in or the obtaining of title opinions or other title information, title insurance policies, legal opinions, appraisals and surveys with respect to particular assets (including extensions beyond the Closing Date for the perfection of security interests in the assets of the Credit Parties on such date) where it reasonably determines, in consultation with the Borrower, that perfection or obtaining of such items is not required by law or cannot be accomplished without undue effort or expense by the time or times at which it would otherwise be required by this Agreement or the other Credit Documents.
9.13 Reserve Reports.
(a) On or before March 1, 2026 (or such later date as the Administrative Agent may agree in its sole discretion), the Borrower shall furnish to the Administrative Agent a Reserve Report evaluating, as of December 31, 2025, the Proved Reserves and other applicable Oil and Gas Properties of the Borrower and the Credit Parties located within the geographic boundaries, and the territorial waters, of the United States of America. On or before each February 1 and August 1 of each year, commencing August 1, 2026, the Borrower shall furnish to the Administrative Agent a Reserve Report evaluating, as of the immediately preceding December 31 and June 30, the Proved Reserves and other applicable Oil and Gas Properties of the Borrower and the Credit Parties located within the geographic boundaries, and the territorial waters, of the United States of America. Each Reserve Report as of (i) December 31 (each, the “December 31 Reserve Report”) shall (y) be prepared by one or more Approved Petroleum Engineers or (z) be prepared by or under the supervision of the chief of reserves of the Borrower and be audited by one or more Approved Petroleum Engineers and (ii) June 30 shall, at the sole election of the Borrower, (y) be prepared by one or more Approved Petroleum Engineers or (z) be prepared by or under the supervision of the chief of reserves of the Borrower in accordance with the procedures used in the immediately preceding December 31 Reserve Report or the Initial Reserve Report, if no December 31 Reserve Report has been delivered.
(b) In the event of an Interim Redetermination, the Borrower shall furnish to the Administrative Agent a Reserve Report prepared by one or more Approved Petroleum Engineers or prepared under the supervision of the chief of reserves of the Borrower or a Restricted Subsidiary. For any Interim Redetermination pursuant to Section 2.14(b), the Borrower shall provide such Reserve Report with an “as of” date as required by the Administrative Agent, as soon as possible, but in any event no later than forty-five (45) days, in the case of any Interim Redetermination requested by the Borrower, or sixty (60) days, in the case of any Interim Redetermination requested by the Administrative Agent or the Lenders, following the receipt of such request.
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(c) With the delivery of each Reserve Report, the Borrower shall provide to the Administrative Agent a Reserve Report Certificate from an Authorized Officer of the Borrower certifying that in all material respects:
(i) in the case of June 30 Reserve Reports prepared by or under the supervision of the chief of reserves of the Borrower or a Restricted Subsidiary, such Reserve Report has been prepared, except as otherwise specified therein, in accordance with the procedures used in the immediately preceding December 31 Reserve Report or the Initial Reserve Report, if no December 31 Reserve Report has been delivered;
(ii) for each calendar month during the then current fiscal year to date, the volume of production of Hydrocarbons and sales attributable to production of Hydrocarbons (and the prices at which such sales were made and the revenues derived from such sales) for each such calendar month from the Borrowing Base Properties, and setting forth the related ad valorem, severance and production taxes and lease operating expenses attributable thereto for each such calendar month;
(iii) the information contained in the Reserve Report and any other information delivered in connection therewith is true and correct in all material respects;
(iv) assuming that all applicable Governmental Authorities have granted approvals, made recordations and taken such other actions as are necessary in connection with the Transactions and any assignments made in connection therewith, except as set forth in an exhibit to such certificate, the Borrower or another Credit Party has good and defensible title to the material Borrowing Base Properties evaluated in such Reserve Report (other than those (w) to be acquired in connection with an acquisition, (x) Disposed of since delivery of such Reserve Report as permitted in accordance with the terms hereof, (y) leases that have expired in accordance with their terms and (z) with title defects disclosed in writing to the Administrative Agent) and such material Borrowing Base Properties are free (or will be at the time of the acquisition thereof) of all Liens except for Liens permitted by Section 10.2;
(v) except as set forth on an exhibit to such certificate, there are no gas imbalances, take or pay or other prepayments (other than Service Agreement Undertakings) with respect to the Credit Parties’ Oil and Gas Property evaluated in such Reserve Report that in each case would require the Borrower or any other Credit Party 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;
(vi) none of the Borrowing Base Properties have been Disposed of since the date of the last Borrowing Base determination except those Borrowing Base Properties listed on such certificate as having been Disposed of; and
(vii) the certificate shall also attach, as schedules thereto, a list of (1) all material marketing agreements (which are not cancellable on sixty (60) days’ notice or less without penalty or detriment) entered into subsequent to the later of the Closing Date and the most recently delivered Reserve Report for the sale of production of the Credit Parties’ Hydrocarbons at a fixed non-index price (including calls on, or other parties rights to purchase, production, whether or not the same are currently being exercised) that represent in respect of such agreements two and a half percent (2.5%) or more of the Credit Parties’ average monthly production of Hydrocarbon volumes and that have a maturity date or expiry date of longer than six (6) months from the last day of such fiscal year or period, as applicable and (2) all Borrowing Base Properties evaluated by such Reserve Report that are Collateral and demonstrating compliance with (calculated at the time of delivery of such Reserve Report) the Collateral Coverage Minimum.
9.14 Reserved.
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9.15 Title Information.
(a) On or before
(i) the Closing Date, the Borrower will deliver title information (in form and substance reasonably satisfactory to the Administrative Agent) with respect to the Borrowing Base Properties consistent with usual and customary standards for the geographic regions in which the Borrowing Base Properties are located, taking into account the size, scope and number of leases and wells of the Borrower and its Restricted Subsidiaries as is required to demonstrate satisfactory title on eighty-five percent (85%) of the PV-9 value of the Oil and Gas Properties of the Borrower and the other Credit Parties evaluated by the Initial Reserve Report; and
(ii) the date of delivery to the Administrative Agent of each Reserve Report required by Section 9.13(a) following the Closing Date, the Borrower will deliver title information (in form and substance reasonably satisfactory to the Administrative Agent) with respect to the Borrowing Base Properties consistent with usual and customary standards for the geographic regions in which the Borrowing Base Properties are located, taking into account the size, scope and number of leases and wells of the Borrower and the other Credit Parties as is required to demonstrate satisfactory title on eighty-five percent (85%) of the PV-9 value of the Oil and Gas Properties of the Borrower and the other Credit Parties evaluated by such Reserve Report; provided that with respect to any Oil and Gas Properties for which title information reasonably acceptable to the Administrative Agent was provided prior to the date of the current request by the Administrative Agent, the Borrower shall be under no obligation to provide additional title information.
(b) If title information has been provided under Section 9.15(a) and the Administrative Agent provides written notice to the Borrower that title defects or exceptions exist with respect to such properties, then the Borrower shall, within sixty (60) days of its receipt of such notice (or such longer period as the Administrative Agent may agree in its reasonable discretion) (i) cure any such title defects or exceptions (including defects or exceptions as to priority of the Collateral Agent’s Liens that are not permitted by Section 10.2) raised by such information, (ii) substitute acceptable Mortgaged Properties having an equivalent value with no title defects or exceptions except for Liens permitted by Section 10.2 and/or (iii) deliver title information (in form and substance reasonably satisfactory to the Administrative Agent) so that the Administrative Agent shall have received, (including title information previously made available to the Administrative Agent) reasonably satisfactory title information on at least eighty-five percent (85%) of the PV-9 of the Oil and Gas Properties of the Borrower and the other Credit Parties evaluated by such Reserve Report.
(c) If any title defect or exception requested by the Administrative Agent to be cured cannot be cured or if the Borrower is unable to provide reasonably acceptable title information on at least eighty-five percent (85%) of the PV-9 of the Oil and Gas Properties of the Borrower and the other Credit Parties evaluated by such Reserve Report, in each case, within such sixty (60)-day period (or longer period as the Administrative Agent may agree in its reasonable discretion), such default shall not be a Default or Event of Default, but instead the Administrative Agent and Required Lenders shall have the right to adjust the Borrowing Base as contemplated by Section 2.14(g).
9.16 Deposit Account, Securities Account and Commodity Account Control Agreements.
(a) The Borrower will, and will cause each Guarantor and Restricted Subsidiary to, in connection with any Deposit Account, Securities Account or Commodity Account (in each case, other than any Excluded Account for so long as it is an Excluded Account) (i) held or maintained on the Closing Date by the Borrower or any such Guarantor, promptly but in any event within forty-five (45) days of the Closing
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Date (or such later date as the Collateral Agent may agree in its sole discretion), enter into and deliver to the Collateral Agent a deposit account control agreement (a “Deposit Account Control Agreement”), securities account control agreement (a “Securities Account Control Agreement”) or commodity account control agreement (a “Commodity Account Control Agreement”), as applicable, in form and substance reasonably satisfactory to the Collateral Agent and the account bank, securities intermediary or commodity intermediary, as applicable, for any such Deposit Account, Securities Account or Commodity Account and (ii) established or ceasing to be an Excluded Account on or after the Closing Date by the Borrower, any such Guarantor or any such Restricted Subsidiary substantially concurrently with the establishment of such Deposit Account, Securities Account or Commodity Account or with the date an Excluded Account ceases to be an Excluded Account, as applicable (or, in each case, such later date as the Collateral Agent may agree in its sole discretion) enter into and deliver to the Collateral Agent a Deposit Account Control Agreement, Securities Account Control Agreement or Commodity Account Control Agreement, as applicable, in form and substance reasonably satisfactory to the Collateral Agent and the account bank, securities intermediary or commodity intermediary, as applicable, for any such Deposit Account, Securities Account or Commodity Account (and with respect to any Restricted Subsidiary that is not a Guarantor, enter into and deliver to the Collateral Agent such agreements or instruments pledging any such Deposit Account, Securities Account or Commodity Account as Collateral in form and substance reasonably satisfactory to the Collateral Agent); provided that the Borrower or such Guarantor or other Restricted Subsidiary shall be deemed to have satisfied the requirements of this Section 9.16(a)(ii) with respect to any Deposit Account, Securities Account or Commodity Account that (1) is acquired by the Borrower or such Guarantor or other Restricted Subsidiary as a result of a Permitted Acquisition of an unaffiliated third party and (2) was not created in anticipation of such Permitted Acquisition, so long as, within forty-five (45) days after the date of such Permitted Acquisition (or such later date as the Collateral Agent may agree in its sole discretion), the Borrower or such Guarantor or other Restricted Subsidiary (A) causes such account to be subject to a Deposit Account Control Agreement, Securities Account Control Agreement or Commodity Account Control Agreement, as applicable, that satisfies the requirements of this Section 9.16(a)(ii) or (B) closes such account and transfers any funds therein to an account that satisfies the requirements of this Section 9.16(a)(ii); provided further that the Borrower or the applicable Guarantors or other Restricted Subsidiaries, or any of their respective Affiliates, do not direct or redirect any funds into any such accounts during such forty-five (45) day period, unless a Deposit Account Control Agreement, Securities Account Control Agreement or Commodity Account Control Agreement, as applicable, has been established with respect to the applicable account in accordance with this Section 9.16(a). After the occurrence and during the continuance of an Event of Default, the Collateral Agent may give instructions directing the disposition of funds credited to any Controlled Account and/or withhold any withdrawal rights from the Borrower or any Guarantor or other Restricted Subsidiary with respect to funds credited to any Controlled Account.
(b) The Borrower will, and will cause each of the Guarantors and other Restricted Subsidiaries, on and after the date referred to in Section 9.16(a)(i), to maintain the proceeds of the Loans in a Controlled Account until such proceeds are transferred to a third party in a transaction not prohibited by the Credit Documents or a Deposit Account which is not required to be a Controlled Account for a purpose that is permitted by the Credit Documents.
9.17 Minimum Hedged Volumes.
(a) If as of the last day of any fiscal quarter (after giving effect to any Credit Event occurring on such day) (each such date, a “Minimum Hedging Requirement Date”), either (i) the aggregate Total Exposures of all Lenders at such time equals or exceeds 25% of the then effective Total Commitments but is less than or equal to 50% of the then effective Total Commitment or (ii) the pro forma Consolidated Total Net Leverage Ratio is less than or equal to 1.00 to 1.00 and equal to or greater than 0.50 to 1.00, on or before the date that is thirty (30) days immediately following the Minimum Hedging Requirement Date the Borrower shall deliver to the Administrative Agent, a report and other evidence reasonably satisfactory to
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the Administrative Agent that the Borrower has entered into, or shall have caused another Credit Party to enter into, Acceptable Commodity Hedge Agreements hedging aggregate notional volumes of crude oil, natural gas and natural gas liquids covering at least 25% of the reasonably projected total production on a boe (barrel of oil equivalent) basis of crude oil, natural gas (measured on a 1:6 basis with crude oil) and natural gas liquids from the Credit Parties’ Proved Developed Producing Reserves evaluated in the Reserve Report most recently delivered to the Administrative Agent for each full calendar month during the period of twelve (12) full calendar months following such Minimum Hedging Requirement Date.
(b) If as of any Minimum Hedging Requirement Date (after giving effect to any Credit Event occurring on such day), either (i) the aggregate Total Exposures of all Lenders at such time exceeds 50% of the then effective Total Commitments or (ii) the pro forma Consolidated Total Net Leverage Ratio exceeds 1.00 to 1.00, on or before the date that is thirty (30) days immediately following the Minimum Hedging Requirement Date the Borrower shall deliver to the Administrative Agent, a report and other evidence reasonably satisfactory to the Administrative Agent that the Borrower has entered into, or shall have caused another Credit Party to enter into, Acceptable Commodity Hedge Agreements hedging aggregate notional volumes of crude oil, natural gas and natural gas liquids covering at least 50% of the reasonably projected total production on a boe (barrel of oil equivalent) basis of crude oil, natural gas (measured on a 1:6 basis with crude oil) and natural gas liquids from the Credit Parties’ Proved Developed Producing Reserves evaluated in the Reserve Report most recently delivered to the Administrative Agent for each full calendar month during the period of eighteen (18) full calendar months following such Minimum Hedging Requirement Date.
9.18 Unrestricted Subsidiaries. The Borrower:
(a) will cause the management, business and affairs of each of the Borrower and its Restricted Subsidiaries to be conducted in such a manner (including, without limitation, by keeping separate books of account, furnishing separate financial statements of Unrestricted Subsidiaries to creditors and potential creditors thereof and by not permitting properties of the Borrower and its respective Restricted Subsidiaries to be commingled) so that each Unrestricted Subsidiary that is a corporation will be treated as a corporate entity separate and distinct from the Borrower and the Restricted Subsidiaries.
(b) will not, and will not permit any of the Restricted Subsidiaries to, incur, assume, guarantee or be or become liable for any Indebtedness of any of the Unrestricted Subsidiaries other than as permitted by Section 10.5.
(c) will not permit any Unrestricted Subsidiary to hold any Equity Interest in, or any Indebtedness of, the Borrower or any Restricted Subsidiary.
Notwithstanding anything to the contrary herein, nothing in Section 9.18(a) or 9.18(b) shall limit the ability of the Borrower or any of its Subsidiaries to engage in Permitted Intercompany Activities.
9.19 Marketing Activities. The Borrower will not, and will not permit any of its Restricted Subsidiaries to, enter into contracts for the purchase and sale of Hydrocarbons (or Hedge Agreements for the purchase and sale of Hydrocarbons) other than (a) except with respect to fixed-price physical delivery contracts of natural gas or natural gas liquids with a tenor greater than ninety (90) days, (i) contracts for the sale of Hydrocarbons scheduled or reasonably estimated to be produced from their Proved Reserves during the period of such contract, (ii) contracts for the sale of Hydrocarbons scheduled or reasonably estimated to be produced from Proved Reserves of third parties during the period of such contract associated with the Oil and Gas Properties of the Borrower and its Restricted Subsidiaries that the Borrower or one of its Restricted Subsidiaries has the right to market pursuant to joint operating agreements, unitization agreements or other similar contracts that are usual and customary in the Energy Business and (iii) other contracts for the
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purchase and/or sale of Hydrocarbons of third parties (A) which have generally offsetting provisions (i.e., corresponding pricing mechanics, delivery dates and points and volumes) such that no “position” is taken and (B) for which appropriate credit support has been taken to the extent the Borrower determines such credit support to be reasonably necessary to alleviate the material credit risks of the counterparty thereto and (b) with respect to fixed-price physical delivery contracts of natural gas or natural gas liquids with a tenor greater than ninety (90) days, fixed-price physical delivery contracts of natural gas or natural gas liquids with a tenor not extending over thirty (30) months from the date of execution (i) covering aggregate volumes of natural gas and natural gas liquids (x) not to exceed fifty percent (50%) of reasonably anticipated projected production from Proved Developed Producing Reserves for each quarterly period set forth in the most recently delivered Reserve Report and (y) that would not exceed the maximum volumes set forth in Section 10.10 if such fixed-price physical delivery contracts were deemed to be Hedge Agreements; and (ii) that are either unsecured and contain no adequate assurance provisions, or are secured by Letters of Credit or Permitted Liens and/or contain adequate assurance provisions that, in each case, are consistent with prior practice in the ordinary course of business. Notwithstanding anything to the contrary herein, this Section 9.19 shall not limit the ability of the Borrower or any other Credit Party to purchase Hydrocarbons from third parties to the extent such Hydrocarbons are intended to be consumed by the Borrower or any other Credit Party in their respective operations or used in connection with the Energy Business.
9.20 Keepwell. The Borrower will, and will cause each Guarantor to, provide such funds or other support as may be needed from time to time by the Borrower or any Guarantor, as applicable, to honor all of its obligations under this Agreement and any other Credit Document in respect of Swap Obligations (provided, however, that each Qualified ECP Guarantor shall only be liable under this Section 9.20 for the maximum amount of such liability that can be hereby incurred without rendering its obligations under this Section 9.20, or otherwise under this Agreement or any other Credit Document, as it relates to the Borrower, any Restricted Subsidiary or any Guarantor, as applicable, voidable under applicable law relating to fraudulent conveyance or fraudulent transfer, and not for any greater amount). The obligations of each Guarantor under this Section 9.20 shall remain in full force and effect until Payment in Full. The Borrower intends that this Section 9.20 constitute, and this Section 9.20 shall be deemed to constitute, a “keepwell, support, or other agreement” for the benefit the Borrower and any Guarantor, as applicable, for all purposes of Section 1a(18)(A)(v)(II) of the Commodity Exchange Act.
9.21 Post-Closing Matters. Notwithstanding any provision herein or in any other Credit Document to the contrary, to the extent not actually delivered on or prior to the Closing Date, the Borrower shall, and shall cause each applicable Credit Party, to take such actions set forth on Schedule 9.21 by the times specified on such Schedule 9.21 with respect to such actions, or such later time as the Administrative Agent may agree in its sole discretion. All conditions precedent, covenants and representations and warranties contained in this Agreement and the other Credit Documents shall be deemed modified to the extent necessary to effect the foregoing (and to permit the taking of the actions described on Schedule 9.21 within the time periods required by this Section 9.21, rather than as elsewhere provided in the Credit Documents).
SECTION 10. NEGATIVE COVENANTS.
The Borrower hereby covenants and agrees that on the Closing Date and thereafter, until Payment in Full has occurred:
10.1 Limitation on Indebtedness. The Borrower will not, and will not permit any of the Restricted Subsidiaries to, create, incur, assume or suffer to exist any Indebtedness other than the following:
(a) Indebtedness arising under the Credit Documents (including pursuant to Section 2.16 and including the Obligations);
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(b) [reserved];
(c) Indebtedness of (i) the Borrower or any Guarantor owing to the Borrower or any Subsidiary; provided that such Indebtedness shall be unsecured and subordinated to the Obligations pursuant to the Intercompany Note, (ii) any Subsidiary that is not a Guarantor owing to any other Subsidiary that is not a Guarantor and (iii) to the extent permitted by Section 10.5, any Subsidiary that is not a Guarantor owing to the Borrower or any Guarantor;
(d) Indebtedness in respect of any bankers’ acceptances, bank guarantees, letters of credit, warehouse receipts or similar instruments entered into in the ordinary course of business or consistent with past practice or industry practice (including in respect of workers compensation claims, health, disability or other employee benefits or property, casualty or liability insurance or self-insurance or other Indebtedness with respect to reimbursement-type obligations regarding workers compensation claims); provided that any reimbursement obligations in respect thereof are reimbursed within thirty (30) days following the incurrence thereof;
(e) subject to compliance with Section 10.5, Guarantee Obligations incurred by (i) Restricted Subsidiaries in respect of Indebtedness or other obligations of the Borrower or other Restricted Subsidiaries that is permitted to be incurred under this Agreement (except that a Restricted Subsidiary that is not a Guarantor may not, by virtue of this Section 10.1(e), guarantee Indebtedness that such Restricted Subsidiary could not otherwise itself incur or is expressly prohibited from guaranteeing under this Section 10.1) and (ii) the Borrower in respect of Indebtedness of Restricted Subsidiaries that is permitted to be incurred under this Agreement; provided that (A) if the Indebtedness being guaranteed under this Section 10.1(e) is subordinated to the Obligations, such Guarantee Obligations shall be subordinated to the Guarantee of the Obligations pursuant to a Subordination Agreement on terms at least as favorable to the Lenders as those contained in the subordination of such Indebtedness and (B) no guarantee by any Restricted Subsidiary of any Indebtedness under clause (h) of this Section 10.1 or Other Debt shall be permitted unless such Restricted Subsidiary shall have also provided a guarantee of the Obligations substantially on the terms set forth in the Guarantee;
(f) Guarantee Obligations (i) incurred in the ordinary course of business in respect of obligations of (or to) suppliers, customers, franchisees, lessors, licensees or sublicensees or (ii) subject to clauses (e)(A) and (B) of this Section 10.1, otherwise constituting Investments permitted by Sections 10.5(d), (g), (h), (i), (n) and (q);
(g) (i) Indebtedness (including Indebtedness arising under Capitalized Leases) incurred substantially concurrently or within one hundred eighty (180) days following the acquisition, construction, lease, repair, replacement, expansion or improvement of assets (real or personal, and whether through the direct purchase of property or the Equity Interests of a Person owning such property) to finance the acquisition, construction, lease, repair, replacement, expansion, or improvement of such assets, (ii) Indebtedness arising under Capitalized Leases, other than Capitalized Leases entered into pursuant to subclause (i) above; and (iii) any Permitted Refinancing Indebtedness issued or incurred to Refinance any such Indebtedness under this Section 10.1(g); provided, that the aggregate principal amount of Indebtedness permitted by subclauses (i), (ii) and (iii) of this Section 10.1(g) shall not exceed the Threshold Amount at the time of incurrence;
(h) Indebtedness outstanding on the date hereof and set forth on Schedule 10.1 and any Permitted Refinancing Indebtedness issued or incurred to Refinance such Indebtedness;
(i) Indebtedness in respect of Hedge Agreements, subject to the limitations set forth in Section 10.10;
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(j) Indebtedness of the Borrower (including, for the avoidance of doubt, with respect to any Permitted Refinancing Indebtedness issued or incurred to Refinance such Indebtedness) incurred in connection or assumed with any Permitted Acquisition or similar Investment permitted under Section 10.5 in an aggregate principal amount of Indebtedness outstanding at any time (i) not to exceed five percent (5.0%) of the Borrowing Base then in effect, so long as immediately after giving pro forma effect to such Permitted Acquisition or similar Investment and the incurrence or assumption of such Indebtedness, the Borrower shall be in compliance with the Financial Performance Covenants on a pro forma basis and no Event of Default shall have occurred and be continuing or (ii) not to exceed an amount that would cause the Consolidated Total Net Leverage Ratio to exceed 2.00 to 1.00 at the time of incurrence of such Indebtedness on a pro forma basis, so long as immediately after giving pro forma effect to such Permitted Acquisition or similar Investment and the incurrence or assumption of such Indebtedness, no Event of Default shall have occurred and be continuing; provided that, in each case, the Equity Interests of the Person acquired in such Permitted Acquisition or similar Investment shall be pledged to the Collateral Agent and such Person shall become a Guarantor in accordance with Section 9.10, in the case of any such Indebtedness secured by a Lien that is junior to the Lien securing the Obligations, the Borrowing Base shall be adjusted to the extent required by Section 2.14(e), and in the case of any such secured Indebtedness incurred or assumed pursuant to this Section 10.1(j), the holders of such Indebtedness have no recourse to property other than the property so acquired and the property so acquired secured by such Indebtedness shall not constitute Oil and Gas Properties (and any Person acquired in such Permitted Acquisition or other Investment shall not own or hold any Oil and Gas Properties secured by such Indebtedness); provided, further that in the case of Indebtedness incurred or assumed pursuant to this Section 10.1(j) or any applicable Permitted Refinancing Indebtedness thereof, any such Indebtedness shall have a maturity date that is after the Maturity Date and have a Weighted Average Life to Maturity not shorter than the longest remaining Weighted Average Life to Maturity of the Facility; provided further, that the requirements of this Section 10.1(j) shall not apply to any Indebtedness of the type that could have been incurred under Section 10.1(g);
(k) Indebtedness arising from Permitted Intercompany Activities to the extent constituting an Investment permitted by Section 10.5, subject, in each case, to the extent applicable, to the requirements of Section 10.1(c);
(l) Indebtedness in respect of performance bonds, bid bonds, appeal bonds, surety bonds and completion guarantees and similar obligations not in connection with borrowed money, and obligations in respect of letters of credit, bank guaranties or instruments related thereto, in each case provided in the ordinary course of business or consistent with past practice or industry practice, including those incurred to secure health, safety and environmental obligations in the ordinary course of business or consistent with past practice or industry practice;
(m) (i) other additional Indebtedness, provided that (A) the aggregate principal amount of Indebtedness outstanding at any time pursuant to this Section 10.1(m) shall not at the time of incurrence thereof and immediately after giving effect thereto and the use of proceeds thereof on a pro forma basis exceed the Threshold Amount at the time of incurrence and (B) immediately after giving effect to the incurrence or issuance thereof and the use of proceeds therefrom, (I) no Event of Default shall have occurred and be continuing and (II) no Loan Limit Deficiency shall result therefrom and (ii) any Permitted Refinancing Indebtedness issued or incurred to Refinance such Indebtedness;
(n) Indebtedness in respect of (i) Permitted Additional Debt; provided that (x) immediately after giving effect to the incurrence or issuance thereof and the use of proceeds therefrom, (A) the Borrower shall be in compliance with the Financial Performance Covenants on a pro forma basis, (B) no Event of Default shall have occurred and be continuing and (C) no Loan Limit Deficiency shall result therefrom, (y) the Borrowing Base shall be adjusted to the extent required by Section 2.14(e), and (z) to the extent such Indebtedness is expressly subordinated in right of payment to the Obligations, such Indebtedness shall be subject to a Subordination Agreement and (ii) any Permitted Refinancing Indebtedness issued or incurred to Refinance such Indebtedness;
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(o) Cash Management Obligations, Cash Management Services and other Indebtedness in respect of netting services, automatic clearing house arrangements, employees’ credit or purchase cards, overdraft protections and similar arrangements;
(p) Indebtedness incurred in the ordinary course of business in respect of obligations of the Borrower or any Restricted Subsidiary to pay the deferred purchase price of goods or services or progress payments in connection with such goods and services;
(q) Indebtedness arising from agreements of the Borrower or any Restricted Subsidiary providing for indemnification, adjustment of purchase price or similar obligations (including earn-outs), in each case assumed or entered into in connection with the Transactions or other Investments permitted by Section 10.5 and the Disposition of any business, assets or Equity Interests not prohibited hereunder;
(r) Indebtedness of the Borrower or any Restricted Subsidiary consisting of financing of insurance premiums incurred in the ordinary course of business;
(s) Indebtedness representing deferred compensation to employees, consultants or independent contractors of the Borrower or, to the extent attributable to the ownership or operation of the Borrower and its Subsidiaries and the Restricted Subsidiaries incurred in the ordinary course of business or consistent with past practice or industry practice;
(t) Indebtedness consisting of obligations of the Borrower and the Restricted Subsidiaries under deferred compensation or other similar arrangements incurred by such Person in connection with the Transactions or any other Investment permitted hereunder;
(u) Indebtedness associated with bonds or surety obligations required by Requirements of Law in connection with the operation of Oil and Gas Properties in the ordinary course of business;
(v) Indebtedness supported by a Letter of Credit, in a principal amount not to exceed the face amount of such Letter of Credit;
(w) Indebtedness consisting of obligations in respect of Service Agreement Undertakings; and
(x) all premiums (if any), interest (including post-petition interest), fees, expenses, charges, and additional or contingent interest on obligations described in clauses (a) through (w) above.
For the purposes of determining compliance with, and the outstanding principal amount of Indebtedness incurred pursuant to and in compliance with, this Section 10.1, in the event that Indebtedness meets the criteria of more than one of the types of Indebtedness described in this Section 10.1, the Borrower, in its sole discretion, shall classify, and may from time to time reclassify, such item of Indebtedness and only be required to include the amount and type of such Indebtedness in one of the clauses of this Section 10.1.
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10.2 Limitation on Liens. The Borrower will not, and will not permit any of the Restricted Subsidiaries to, create, incur, assume or suffer to exist any Lien upon any property or assets of any kind (real or personal, tangible or intangible) of the Borrower or any Restricted Subsidiary, whether now owned or hereafter acquired, except:
(a) Liens arising under the Credit Documents to secure the Obligations (including Liens in respect of any Letter of Credit or Letter of Credit Application or Liens contemplated by Section 3.7) or permitted in respect of any Mortgaged Property by the terms of the applicable Mortgage;
(b) Permitted Liens;
(c) Liens (including liens arising under Capitalized Leases to secure obligations under any Capitalized Lease) securing Indebtedness permitted pursuant to Section 10.1(g); provided that (i) such Liens attach concurrently with or within one hundred eighty (180) days after the acquisition, lease, repair, replacement, construction, expansion or improvement (as applicable) financed thereby, (ii) other than the property financed by such Indebtedness, such Liens do not at any time encumber any property, except for replacements thereof and accessions and additions to such property and the proceeds and the products thereof and customary security deposits and (iii) with respect to Capitalized Leases, such Liens do not at any time extend to or cover any assets (except for accessions and additions to such assets, replacements and products thereof and customary security deposits) other than the assets subject to, or acquired, constructed, repaired, replaced or improved with the proceeds of, such Indebtedness; provided that in each case individual financings provided by one lender may be cross collateralized to other financings provided by such lender (and its Affiliates);
(d) Liens existing on the date hereof that are listed on Schedule 10.2(d);
(e) Liens to secure any refinancing, refunding, extension, renewal or replacement (or successive refinancings, refundings, extensions, renewals or replacements) as a whole, or in part, of any Indebtedness permitted under Section 10.1 (other than Indebtedness under Section 10.1(a)) and permitted to be secured by any Lien permitted by this Section 10.2; provided, however, that (x) such new Lien shall be limited to all or part of the same type of property that secured the original Indebtedness (plus improvements on and accessions to such property) (or upon or in after-acquired property (i) that is affixed or incorporated into the property covered by such Lien or (ii) if the terms of such Indebtedness require or include a pledge of after-acquired property (it being understood that such requirement shall not be permitted to apply to any property to which such requirement would not have applied but for such acquisition)), (y) the Indebtedness secured by such Lien at such time is not increased to any amount greater than the sum of (A) the outstanding principal amount or, if greater, committed amount of the applicable Indebtedness at the time the original Lien became a Lien permitted hereunder, and (B) an amount necessary to pay any fees and expenses, including premiums, related to such refinancing, refunding, extension, renewal or replacement and (z) on the date of the incurrence of the Indebtedness secured by such Liens, the grantors of any such Liens shall comprise only the same Persons or a subset of such Persons that were the grantors of the Liens securing the debt being refinanced, refunded, extended, renewed or replaced;
(f) Liens existing on the assets of any Person that becomes a Subsidiary, or existing on assets acquired (other than Liens on the Equity Interests of any Person that becomes a Restricted Subsidiary), pursuant to a Permitted Acquisition or other Investment permitted by Section 10.5; provided that (1) if the Liens on such assets secure Indebtedness, such Indebtedness is permitted under Section 10.1(j), (2) such Liens attach at all times only to the same assets (or upon or in after-acquired property that is (i) affixed or incorporated into the property covered by such Lien, (ii) after-acquired property subject to a Lien securing Indebtedness permitted under Section 10.1(j), the terms of which Indebtedness require or include a pledge of after-acquired property (it being understood that such requirement shall not be permitted to apply to any property to which such requirement would not have applied but for such acquisition) and (iii) the proceeds (and products thereof) that such Liens attached to, and to the extent such Liens secure Indebtedness, secure only the same Indebtedness (or any Permitted Refinancing Indebtedness incurred to Refinance such Indebtedness) that such Liens secured, immediately prior to such Permitted Acquisition or other Investment and (3) the assets on which such Liens exist are not Collateral;
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(g) Liens securing Indebtedness or other obligations (i) of the Borrower or a Restricted Subsidiary in favor of a Guarantor and (ii) of any Restricted Subsidiary that is not a Guarantor in favor of any Restricted Subsidiary that is not a Guarantor;
(h) Liens (i) of a collecting bank arising under Section 4-210 of the UCC on items in the course of collection, (ii) attaching to commodity trading accounts or other commodity brokerage accounts incurred in the ordinary course of business and (iii) in favor of a banking institution arising as a matter of law encumbering deposits (including the right of set-off) or other funds maintained with a financial institution (including the right of setoff) and that are within the general parameters customary in the banking industry or arising pursuant to such banking institution’s general terms and conditions;
(i) Liens (i) on cash advances in favor of the seller of any property to be acquired in an Investment permitted pursuant to Section 10.5 to be applied against the purchase price for such Investment and (ii) consisting of an agreement to Dispose of any property in a transaction permitted under Section 10.4, in each case, solely to the extent such Investment or Disposition, as the case may be, would have been permitted on the date of the creation of such Lien;
(j) Liens arising out of conditional sale, title retention, consignment or similar arrangements for sale or purchase of goods entered into by the Borrower or any of the Restricted Subsidiaries in the ordinary course of business permitted by this Agreement;
(k) Liens deemed to exist in connection with Investments in repurchase agreements permitted under Section 10.5;
(l) Liens encumbering reasonable customary initial deposits and margin deposits and similar Liens attaching to brokerage accounts incurred in the ordinary course of business and not for speculative purposes;
(m) Liens that are contractual rights of set-off (i) relating to the establishment of depository relations with banks not given in connection with the issuance or incurrence of Indebtedness, (ii) relating to pooled deposit or sweep accounts of the Borrower or any Restricted Subsidiary to permit satisfaction of overdraft or similar obligations incurred in the ordinary course of business of the Borrower and the Restricted Subsidiaries or (iii) relating to purchase orders and other agreements entered into with customers of the Borrower or any Restricted Subsidiary in the ordinary course of business;
(n) Liens solely on any cash earnest money deposits made by the Borrower or any of the Restricted Subsidiaries in connection with any letter of intent or purchase agreement in connection with an investment permitted by Section 10.5;
(o) Liens on insurance policies and the proceeds thereof securing the financing of the premiums with respect thereto;
(p) the prior right of consignees and their lenders under consignment arrangements entered into in the ordinary course of business;
(q) agreements to subordinate any interest of the Borrower or any Restricted Subsidiary in any accounts receivable or other proceeds arising from inventory consigned by the Borrower or any Restricted Subsidiary pursuant to an agreement entered into in the ordinary course of business;
(r) [reserved];
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(s) Liens securing any Indebtedness permitted by Section 10.1(e) (solely and to the same extent that the Indebtedness guaranteed by such Guarantee Obligations is permitted to be subject to a Lien hereunder), Section 10.1(l), Section 10.1(o) (as long as such Liens attach only to cash and securities and securities held by the relevant Cash Management Bank) and Section 10.1(u);
(t) Liens arising pursuant to Section 107(l) of the Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C. § 9607(l), or other Environmental Law, unless such Lien (i) by action of the lienholder, or by operation of law, takes priority over any Liens arising under the Credit Documents on the property upon which it is a Lien, or (ii) materially impairs the use of the property covered by such Lien for the purposes for which such property is held;
(u) Liens on cash or Permitted Investments held by a trustee under any indenture or other debt agreement issued in escrow pursuant to customary escrow arrangements pending the release thereof, or under any indenture or other debt agreement pursuant to customary discharge, redemption or defeasance provisions, in each case solely to the extent the relevant release, discharge, redemption or defeasance would be permitted hereunder;
(v) additional Liens on property not constituting Borrowing Base Properties or Collateral securing obligations not in excess of the Threshold Amount at any time; and
(w) Liens on Equity Interests in (i) a joint venture that does not constitute a Subsidiary securing obligations of such joint venture so long as the assets of such joint venture do not constitute Collateral and (ii) Unrestricted Subsidiaries.
For purposes of determining compliance with this Section 10.2, (i) a Lien need not be incurred solely by reference to one category of Liens permitted under this Section 10.2, but may be incurred under any combination of such categories (including in part under one such category and in part under any other such category) and (ii) in the event that a Lien (or any portion thereof) meets the criteria of one or more of such categories of Liens permitted under this Section 10.2, the Borrower shall, in its sole discretion, classify or reclassify such Lien (or any portion thereof) in any manner that complies with this Section 10.2. In addition, with respect to any Lien securing Indebtedness that was permitted to secure such Indebtedness at the time of the incurrence of such Indebtedness, such Lien shall also be permitted to secure any and all premiums, interest (including post-petition interest), fees, expenses, charges, and additional or contingent interest on obligations of such Indebtedness.
No intention to subordinate the first priority Lien granted in favor of the Secured Parties is to be hereby implied or expressed by the permitted existence of the Liens permitted under this Section 10.2 or the use of the phrase “subject to” when used in connection with Permitted Liens, Liens permitted by this Section 10.2 or otherwise.
10.3 Limitation on Fundamental Changes. The Borrower will not, and will not permit any of the Restricted Subsidiaries to, consummate any merger, division, consolidation or amalgamation, or liquidate, wind up or dissolve itself (or suffer any liquidation or dissolution), or Dispose of, all or substantially all its business units, assets or other properties, except that:
(a) any Subsidiary of the Borrower or any other Person may be merged, amalgamated or consolidated with or into the Borrower; provided that (i) the Borrower shall be the continuing or surviving Person (and the Borrower shall remain an entity organized or existing under the laws of the United States, any state thereof or the District of Columbia) or, in the case of a merger, amalgamation or consolidation with or into the Borrower, the Person formed by or surviving any such merger, amalgamation or consolidation shall be an entity organized or existing under the laws of the United States, any state thereof
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or the District of Columbia (the Borrower or such Person, as the case may be, being herein referred to as the “Successor Borrower”), (ii) the Successor Borrower (if other than the Borrower) shall expressly assume all the obligations of the Borrower under this Agreement and the other Credit Documents pursuant to a supplement hereto or thereto in form reasonably satisfactory to the Administrative Agent, (iii) no Event of Default or Loan Limit Deficiency has occurred and is continuing at the date of such merger, amalgamation or consolidation or would result from such consummation of such merger, amalgamation or consolidation, (iv) the Borrower’s Consolidated Total Net Leverage Ratio on a pro forma basis shall not exceed that of the Borrower immediately prior to the consummation of such merger, amalgamation or consolidation, (v) such merger, amalgamation or consolidation does not adversely affect the Collateral, taken as a whole, in any material respect, (vi) if such merger, amalgamation or consolidation involves the Borrower and a Person that, prior to the consummation of such merger, amalgamation or consolidation, is not a Subsidiary of the Borrower (A) each Guarantor, unless it is the other party to such merger, amalgamation or consolidation or unless the Successor Borrower is the Borrower, shall have by a supplement to the Guarantee confirmed that its Guarantee shall apply to the Successor Borrower’s obligations under this Agreement, (B) each Subsidiary Guarantor and each Subsidiary pledgor, unless it is the other party to such merger, amalgamation or consolidation or unless the Successor Borrower is the Borrower, shall have by a supplement to the Credit Documents confirmed that its obligations thereunder shall apply to the Successor Borrower’s obligations under this Agreement, (C) each mortgagor of a Mortgaged Property, unless it is the other party to such merger, amalgamation or consolidation or unless the Successor Borrower is the Borrower, shall have by an amendment to or restatement of the applicable Mortgage confirmed that its obligations thereunder shall apply to the Successor Borrower’s obligations under this Agreement, (D) the Borrower shall have delivered to the Administrative Agent an officer’s certificate stating that such merger, amalgamation or consolidation and any supplements to the Credit Documents preserve the enforceability of the Guarantee and the perfection and priority of the Liens under the Security Documents and as to the matters of the nature referred to in Section 6(c), (E) if reasonably requested by the Administrative Agent, an opinion of counsel shall be required to be provided to the effect that such merger, amalgamation or consolidation does not violate this Agreement or any other Credit Document and as to such other matters regarding the Successor Borrower and the Credit Documents as the Administrative Agent or its counsel may reasonably request; provided, further, that if the foregoing are satisfied, the Successor Borrower (if other than the Borrower) will succeed to, and be substituted for, the Borrower under this Agreement and (F) such merger, amalgamation or consolidation shall comply with all the conditions set forth in the definition of the term “Permitted Acquisition” or is otherwise permitted under Section 10.5; and (vii) the Administrative Agent shall have received at least five (5) days prior to the date of such merger, amalgamation or consolidation all documentation and other information about such Successor Borrower, Subsidiary or other Person required under applicable “know your customer” and anti-money laundering rules and regulations, including the Patriot Act that has been requested by the Administrative Agent;
(b) any Subsidiary of the Borrower or any other Person (other than the Borrower) may be merged, amalgamated or consolidated with or into any one or more Subsidiaries of the Borrower; provided that (i) in the case of any merger, amalgamation or consolidation involving one or more Restricted Subsidiaries, (A) a Restricted Subsidiary shall be the continuing or surviving Person or (B) the Borrower shall take all steps necessary to cause the Person formed by or surviving any such merger, amalgamation or consolidation (if other than a Restricted Subsidiary) to become a Restricted Subsidiary, (ii) in the case of any merger, amalgamation or consolidation involving one or more Guarantors, unless otherwise permitted by Section 10.5, a Guarantor shall be the continuing or surviving Person or the Person formed by or surviving any such merger, amalgamation or consolidation (if other than a Guarantor) shall execute a supplement to the Guarantee, the Collateral Agreement and any applicable Mortgage, and a joinder to the Intercompany Note, in form and substance reasonably satisfactory to the Collateral Agent in order for the surviving Person to become a Guarantor, and pledgor, mortgagor and grantor of Collateral for the benefit of the Secured Parties and to acknowledge and agree to the terms of the Intercompany Note, (iii) no Default, Event of Default or Loan Limit Deficiency has occurred and is continuing on the date of such merger,
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amalgamation or consolidation or would result from the consummation of such merger, amalgamation or consolidation, (iv) if such merger, amalgamation or consolidation involves a Subsidiary and a Person that, prior to the consummation of such merger, amalgamation or consolidation, is not a Restricted Subsidiary of the Borrower, (A) the Borrower’s Consolidated Total Net Leverage Ratio on a pro forma basis shall not exceed that of the Borrower immediately prior to the consummation of such merger, amalgamation or consolidation, (B) the Borrower shall have delivered to the Administrative Agent an officer’s certificate stating that such merger, amalgamation or consolidation and such supplements to any Credit Document preserve the enforceability of the Guarantee and the perfection and priority of the Liens under the Collateral Agreement and (C) such merger, amalgamation or consolidation shall comply with all the conditions set forth in the definition of the term “Permitted Acquisition” or is otherwise permitted under Section 10.5; and (v) the Administrative Agent shall have received at least five (5) days prior to the date of such merger, amalgamation or consolidation all documentation and other information about such Subsidiary or other Person required under applicable “know your customer” and anti-money laundering rules and regulations, including the Patriot Act that has been requested by the Administrative Agent or any Lender;
(c) any Restricted Subsidiary that is not a Guarantor may (i) merge, amalgamate or consolidate with or into any other Restricted Subsidiary that is not a Guarantor and (ii) Dispose of any or all of its assets (upon voluntary liquidation or otherwise) to the Borrower, a Guarantor or any other Restricted Subsidiary of the Borrower;
(d) any Subsidiary Guarantor may (i) merge, amalgamate or consolidate with or into any other Subsidiary Guarantor and (ii) Dispose of any or all of its assets (upon voluntary liquidation or otherwise) to the Borrower or any other Guarantor;
(e) any Restricted Subsidiary may liquidate or dissolve if (i) the Borrower determines in good faith that such liquidation or dissolution is in the best interests of the Borrower and is not materially disadvantageous to the Lenders and (ii) to the extent such Restricted Subsidiary is a Credit Party, any assets or business of such Restricted Subsidiary not otherwise Disposed of or transferred in accordance with Section 10.4 or 10.5, in the case of any such business, discontinued, shall be transferred to, or otherwise owned or conducted by, a Guarantor after giving effect to such liquidation or dissolution;
(f) the Borrower and its Restricted Subsidiaries may consummate the Transactions;
(g) the Borrower and the Restricted Subsidiaries may consummate a merger, dissolution, liquidation, amalgamation, consolidation or Disposition, the purpose of which is to effect a Disposition permitted pursuant to Section 10.4 or an Investment permitted by Section 10.5; and
(h) a Credit Party may consummate any merger the sole purpose of which is to reincorporate or reorganize such Credit Party in another jurisdiction in the United States as long as such merger does not adversely affect the value of the Collateral in any material respect and the surviving entity assumes all Obligations of the applicable Credit Party under the Credit Documents by delivering the information required by Section 9.10 and delivers any applicable information required by Section 9.1(m).
10.4 Limitation on Sale of Assets. The Borrower will not, and will not permit any of the Restricted Subsidiaries to, (x) convey, sell, lease, sell and leaseback, assign, transfer (including any Production Payments and Reserve Sales) or otherwise dispose of any of its property, business or assets (including receivables and leasehold interests), whether now owned or hereafter acquired or (y) sell to any Person (other than the Borrower or a Guarantor) any shares owned by it of any Restricted Subsidiary’s Equity Interests (each of the foregoing a “Disposition”), except that:
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(a) the Borrower and the Restricted Subsidiaries may Dispose of (i) inventory and other goods held for sale, including Hydrocarbons, obsolete, worn out, used or surplus equipment, vehicles and other assets (other than accounts receivable) in the ordinary course of business, (ii) Permitted Investments and (iii) assets for the purposes of community and public outreach, including, without limitation, charitable contributions and similar gifts, funding of or participation in trade, business and technical associations, and political contributions made in accordance with applicable Requirement of Law, to the extent such assets are not material to the ability of the Borrower and its Subsidiaries, taken as a whole, to conduct its business in the ordinary course;
(b) the Borrower and the Restricted Subsidiaries may Dispose of any Oil and Gas Properties (or of any Subsidiary owning Oil and Gas Properties), including, without limitation, Dispositions in respect of Production Payments and Reserve Sales and in connection with operating agreements, Farm-In Agreements, Farm-Out Agreements, joint exploration and development agreements and other agreements customary in the oil and gas industry for the purpose of developing such Oil and Gas Properties, so long as (i) such Disposition is for Fair Market Value, (ii) at least seventy-five percent (75%) of the consideration for such Disposition is cash received by the Borrower or Restricted Subsidiary making such Disposition and (iii) no Event of Default or Loan Limit Deficiency exists or would result therefrom (unless, in the case of a Loan Limit Deficiency, the Net Cash Proceeds of such Disposition are sufficient, together with Unrestricted Cash, to eliminate any Loan Limit Deficiency that would result therefrom); provided, that if the sum of (x) the Borrowing Base Value of terminated, unwound and/or off-setting positions in respect of commodity hedge positions (whether evidenced by a floor, put or Hedge Agreement) (after taking into account any other similar Hedge Agreements acceptable to the Required Lenders executed contemporaneously with the taking of such actions) plus (y) the aggregate Borrowing Base Value of all such Oil and Gas Properties Disposed of (after giving effect to any concurrent acquisitions of and other investments in Oil and Gas Properties by the Borrower and the other Credit Parties with respect to which the Borrower has delivered an acceptable Reserve Report to the Required Lenders in accordance with Section 9.13(b)), in each case, since the later of (A) the most recent Scheduled Redetermination Date and (B) the last adjustment of the Borrowing Base made pursuant to Section 2.14(f) exceeds five percent (5.0%) of the then-effective Borrowing Base, then the Borrower shall provide notice to the Administrative Agent of such Disposition pursuant to Section 9.1(k) and the Oil and Gas Properties so Disposed and the Borrowing Base may be adjusted in accordance with the provisions of Section 2.14(f);
(c) (i) the Borrower and the other Guarantors may Dispose of property or assets to any other Guarantor, (ii) any Restricted Subsidiary may Dispose of property or assets to the Borrower or to a Guarantor and (iii) any Restricted Subsidiary that is not a Guarantor may Dispose of property or assets to any other Restricted Subsidiary that is not a Guarantor;
(d) to the extent such transaction constitutes a Disposition, the Borrower and any Restricted Subsidiary may effect any transaction permitted by Sections 10.2 (other than Section 10.2(s)), Section 10.3 (other than Section 10.3(g)), Section 10.5 (other than Section 10.5(t)) or Section 10.6 (other than in the case of Section 10.6, to the extent any such Restricted Payment by the Borrower consists of Oil and Gas Properties); provided that if the aggregate Borrowing Base Value of all Oil and Gas Properties Disposed of pursuant to a transaction permitted by Section 10.5 (after giving effect to any concurrent acquisitions of and other investments in Oil and Gas Properties by the Borrower and the other Credit Parties with respect to which the Borrower has delivered an acceptable Reserve Report to the Required Lenders in accordance with Section 9.13(b)), in each case, since the later of (A) the most recent Scheduled Redetermination Date and (B) the last adjustment of the Borrowing Base made pursuant to Section 2.14(f) exceeds five percent (5.0%) of the then-effective Borrowing Base, then the Borrower shall provide notice to the Administrative Agent of such Disposition pursuant to Section 9.1(k) and the Oil and Gas Properties so Disposed and the Borrowing Base may be adjusted in accordance with the provisions of Section 2.14(f);
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(e) the Borrower and the Restricted Subsidiaries may lease, sublease, license or sublicense real property (other than Oil and Gas Properties, except to the extent such Oil and Gas Properties represent fee owned real property leased to a Guarantor), personal property or intellectual property in the ordinary course of business; provided that, with respect to intellectual property, the Borrower or any of its Restricted Subsidiaries receives (or retains) a license or other ownership rights to use such intellectual property;
(f) Dispositions (including like-kind exchanges and reverse like-kind exchanges) of property to the extent that (i) such property is exchanged for credit against the purchase price of similar replacement property or (ii) the proceeds of such Disposition are applied to the purchase price of such replacement property; provided if Oil and Gas Properties are Disposed of pursuant to this clause (f), after giving effect to such Disposition, the difference between (x) the Borrowing Base in effect immediately prior to such Disposition minus (y) the PV-9 (calculated at the time of such Disposition) of the Borrowing Base Properties Disposed of since the later of (i) the last Scheduled Redetermination Date and (ii) the last adjustment of the Borrowing Base made pursuant to Section 2.14(f) exceeds the Aggregate Elected Commitment Amount in effect immediately prior to such Disposition;
(g) (i) Dispositions of, or Farm-Out Agreements with respect to, undeveloped acreage to which no Proved Reserves are attributable and assignments in connection with such Dispositions or Farm-Out Agreements and (ii) Dispositions of surface interests or properties that are not Borrowing Base Properties;
(h) Dispositions of Investments in joint ventures (regardless of the form of legal entity) to the extent required by, or made pursuant to, customary buy/sell arrangements between the joint venture parties set forth in joint venture arrangements and similar binding arrangements;
(i) transfers of property subject to a Casualty Event or in connection with any condemnation proceeding with respect to Collateral;
(j) the unwinding or termination of any Hedge Agreement (subject to the terms of Section 2.14(f) and Section 10.4(b));
(k) Dispositions of Oil and Gas Properties or any interest therein, in each case, to which no Proved Reserves are attributed, or the Equity Interests of any Restricted Subsidiary or of any Minority Investment owning Oil and Gas Properties to which no Proved Reserves are attributed and other assets not included in the Borrowing Base provided that (i) such Disposition shall be for Fair Market Value and (ii) no Event of Default shall have occurred and be continuing;
(l) any conveyance, issuance or sale of Equity Interests in, or sale of Indebtedness or other securities of, an Unrestricted Subsidiary (or a Restricted Subsidiary which owns an Unrestricted Subsidiary so long as such Restricted Subsidiary owns no assets other than the Equity Interests of such Unrestricted Subsidiary) for Fair Market Value;
(m) subject to adjustment of the Borrowing Base as set forth in Section 2.14(f) to the extent applicable, any swap of assets (other than cash equivalents) in exchange for services or assets of the same type in the ordinary course of business of comparable or greater value or usefulness to the business of the Borrower and its Subsidiaries as a whole, as determined in good faith by the management of the Borrower;
(n) [reserved];
(o) Disposition of any asset between or among the Borrower and/or its Subsidiaries as a substantially concurrent interim Disposition in connection with a transaction permitted by Section 10.3, or in connection with an Investment otherwise permitted pursuant to Section 10.5 or a Disposition otherwise permitted pursuant to clauses (a) through (m) above, so long as any such Disposition to a non-Guarantor shall be subject to adjustment of the Borrowing Base as set forth in Section 2.14(f) to the extent applicable;
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(p) the lapse or abandonment in the ordinary course of business of any registrations or applications for registration of any intellectual property right that is not material to the operation of the business of the Borrower and its Restricted Subsidiaries;
(q) Dispositions for Fair Market Value of assets up to an aggregate value for all such Dispositions of $7,500,000 in any fiscal year; provided, that if the aggregate Borrowing Base Value of all such Borrowing Base Properties Disposed of pursuant to this Section 10.4(q) (after giving effect to any concurrent acquisitions of and other investments in Oil and Gas Properties by the Borrower and the other Credit Parties with respect to which the Borrower has delivered an acceptable Reserve Report to the Required Lenders in accordance with Section 9.13(b)), in each case, since the later of (A) the most recent Scheduled Redetermination Date and (B) the last adjustment of the Borrowing Base made pursuant to Section 2.14(f) exceeds five percent (5.0%) of the then-effective Borrowing Base, then the Borrower shall provide notice to the Administrative Agent of such Disposition pursuant to Section 9.1(k) and the Borrowing Base Properties so Disposed and the Borrowing Base may be adjusted in accordance with the provisions of Section 2.14(f);
(r) Disposition of any easement on any surface rights to any Governmental Authority to satisfy the requirements of any “conservation easements” or similar programs established by any Governmental Authority; provided that such Disposition does not materially impair the exploitation and development of the affected Oil and Gas Properties;
(s) (i) the issuance or sale of any Permitted Convertible Debt by the Borrower, (ii) the sale of any Permitted Warrant Transaction by the Borrower, (ii) the purchase of any Permitted Bond Hedge Transaction by the Borrower, (iv) the performance by the Borrower of its obligations under any Permitted Convertible Debt, any Permitted Warrant Transaction or any Permitted Bond Hedge Transaction, in each case as permitted by this Agreement or (v) the early unwind or termination of any Permitted Bond Hedge Transactions or any Permitted Warrant Transactions; and
(t) substantially concurrently with a Qualifying IPO, the Borrower may Dispose of the Equity Interests in INR Inc. in connection with reorganization transactions of such Qualifying IPO so long as at the time of such Disposition INR Inc. (i) is not a Guarantor or Credit Party and (ii) owns no assets other than Equity Interests and otherde minimis assets.
To the extent any Collateral is Disposed of as expressly permitted by this Section 10.4 to any Person other than a Credit Party, such Collateral shall be sold free and clear of the Liens created by the Credit Documents, and, if requested by the Administrative Agent, upon the certification by the Borrower that such Disposition is permitted by this Agreement, the Administrative Agent shall be authorized to take any actions deemed appropriate in order to effect the foregoing at Borrower’s sole cost and expense.
10.5 Limitation on Investments. The Borrower will not, and will not permit any of the Restricted Subsidiaries, to (i) purchase or acquire (including pursuant to any merger, consolidation or amalgamation with a person that is not a Wholly owned Subsidiary immediately prior to such merger, consolidation or amalgamation) any Equity Interests, evidences of Indebtedness or other securities of any other Person, (ii) make any loans or advances to or guarantees of the Indebtedness of any other Person, or (iii) purchase or otherwise acquire (in one transaction or a series of related transactions) (x) all or substantially all of the property and assets or business of another Person or (y) assets constituting a business unit, line of business or division of such Person (each, an “Investment”), except:
(a) extensions of trade credit and purchases of assets and services (including purchases of inventory, supplies and materials) in the ordinary course of business;
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(b) Investments in assets that constituted Permitted Investments at the time such Investments were made;
(c) loans and advances to officers, directors, employees and consultants of the Borrower or any of its Restricted Subsidiaries (i) for reasonable and customary business-related travel, entertainment, relocation and analogous ordinary business purposes (including employee payroll advances) and (ii) in connection with such Person’s purchase of Equity Interests of the Borrower or Parent Entity; provided that, (x) to the extent such loans and advances are made in cash, the amount of such loans and advances used to acquire such Equity Interests shall be contributed to the Borrower in cash and (y) the aggregate principal amount outstanding pursuant to this clause (c) shall not exceed $2,500,000;
(d) (i) Investments existing on, or made pursuant to commitments in existence on, the Closing Date as set forth on Schedule 10.5(d), (ii) Investments existing on the Closing Date of the Borrower or any Subsidiary in any other Subsidiary and (iii) any extensions, modifications, replacements, renewals or reinvestments thereof, so long as the amount of any Investment made pursuant to this clause (d) is not increased at any time above the amount of such Investment as of the Closing Date (other than (a) pursuant to an increase as required by the terms of any such Investment as in existence on the Closing Date or (b) as otherwise permitted under this Section 10.5);
(e) any Investment acquired by the Borrower or any of its Restricted Subsidiaries: (i) in exchange for any other Investment, accounts receivable or endorsements for collection or deposit held by the Borrower or any such Restricted Subsidiary in each case in connection with or as a result of a bankruptcy, workout, reorganization or recapitalization of, or settlement of delinquent accounts and disputes with or judgments against, the issuer of such other Investment or accounts receivable (including any trade creditor or customer), (ii) in satisfaction of judgments against other Persons, (iii) as a result of a foreclosure by the Borrower or any of its Restricted Subsidiaries with respect to any secured Investment or other transfer of title with respect to any secured Investment in default or (iv) as a result of the settlement, compromise or resolution of litigation, arbitration or other disputes with Persons who are not Affiliates;
(f) Investments to the extent that payment for such Investments is made with Qualified Equity Interests of the Borrower;
(g) Investments (i) by the Borrower in any Guarantor or by any Guarantor in the Borrower, and (ii) by any Guarantor in any other Guarantor; provided, that Investments by any Guarantor in the Borrower or any Guarantor shall be subordinated in right of payment to the Loans;
(h) Investments constituting Permitted Acquisitions;
(i) Investments made at any such time during which, immediately after giving effect to the making of any such Investment on a pro formabasis, the Restricted Payment Conditions are satisfied;
(j) Investments constituting promissory notes and other non-cash proceeds of Dispositions of assets to the extent permitted by Section 10.4 or any other disposition of assets not constituting a Disposition;
(k) Investments consisting of Restricted Payments permitted under Section 10.6 (other than Section 10.6(c));
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(l) Investments consisting of extensions of credit in the nature of accounts receivable or notes receivable arising from the grant of trade credit in the ordinary course of business, and Investments received in satisfaction or partial satisfaction thereof from financially troubled account debtors and other credits to suppliers in the ordinary course of business;
(m) Investments in the ordinary course of business consisting of endorsements for collection or deposit and customary trade arrangements with customers consistent with past practices or industry practice;
(n) advances of payroll payments to employees, consultants or independent contractors or other advances of salaries or compensation to employees, consultants or independent contractors, in each case of the Borrower or any Restricted Subsidiary and in the ordinary course of business;
(o) guarantee obligations of the Borrower or any Restricted Subsidiary of leases (other than Capitalized Leases) or of other obligations that do not constitute Indebtedness, in each case entered into in the ordinary course of business;
(p) Investments held by a Person acquired (including by way of merger, amalgamation or consolidation) after the Closing Date otherwise in accordance with this Section 10.5 to the extent that such Investments were not made in contemplation of or in connection with such acquisition, merger, amalgamation or consolidation and were in existence on the date of such acquisition, merger, amalgamation or consolidation;
(q) Investments in Industry Investments;
(r) to the extent constituting Investments, the Transactions;
(s) Investments in Hedge Agreements permitted by each of Section 10.1 and Section 10.10;
(t) Investments consisting of fundamental changes and Dispositions permitted under Sections 10.3 (other than Sections 10.3(a), (c) and (g)) and 10.4 (other than Section 10.4(d));
(u) in the case of the Borrower and the Guarantors, Investments consisting of intercompany Indebtedness having a term not exceeding three hundred sixty-four (364) days (inclusive of any roll over or extension of terms) and made in the ordinary course of business; provided that, in the case of any such Indebtedness owing by the Borrower or a Guarantor to a Subsidiary that is not a Guarantor, such Indebtedness shall be subordinated to the Obligations pursuant to the Intercompany Note; provided, further, that in the case of any such Indebtedness owing by a Subsidiary that is not a Guarantor to the Borrower or a Guarantor, (i) such Indebtedness shall be evidenced by the Intercompany Note pledged in favor of the Collateral Agent for the benefit of the Secured Parties pursuant to the Collateral Agreement and (ii) the aggregate amount of all such Indebtedness owing by a Subsidiary that is not a Guarantor to the Borrower or a Guarantor pursuant to this Section 10.5(u) shall not exceed the greater of (A) $6,500,000 **** and (B) two percent (2.0%) of the Borrowing Base at the time such Indebtedness is incurred;
(v) Investments resulting from pledges and deposits under clauses (d) and (e) of the definition of “Permitted Liens” and clauses (i), (p) and (u) of Section 10.2;
(w) advances in the form of a prepayment of expenses, so long as such expenses are being paid in accordance with customary trade terms of the Borrower or the relevant Restricted Subsidiary;
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(x) Investments consisting of licensing of intellectual property pursuant to joint marketing arrangements with other Persons in the ordinary course of business;
(y) Investments made in the ordinary course of business in connection with obtaining, maintaining or renewing client contacts and loans or advances made to distributors in the ordinary course of business;
(z) Investments in Excluded Subsidiaries having an aggregate fair market value, taken together with all other Investments made pursuant to this Section 10.5(z) that are at the time outstanding, without giving effect to the sale of an Excluded Subsidiary to the extent the proceeds of such sale do not consist of marketable securities (until such proceeds are converted to cash equivalents) not to exceed (i) $10,000,000, so long as immediately after giving effect to the making of any such Investment on a pro forma basis, no Default, Event of Default or Loan Limit Deficiency shall have occurred and be continuing, or (ii) $3,000,000, so long as immediately after giving effect to the making of any such Investment on a pro forma basis, no Event of Default or Loan Limit Deficiency shall have occurred and be continuing;
(aa) Investments in Unrestricted Subsidiaries consisting of (i) undeveloped acreage to which no Proved Reserves are attributable or (ii) assets that are not Borrowing Base Properties and other assets not included in the Borrowing Base, in each case, in relation to Farm-In Agreements, Farm-Out Agreements, joint operating, joint venture, joint development activities or other similar oil and gas exploration and production business arrangement; provided that immediately after giving effect to the making of any such Investment made in cash on a pro forma basis, the Restricted Payment Conditions are satisfied; and
(bb) any Investment constituting a Disposition or transfer of any asset between or among the Borrower and/or its Restricted Subsidiaries as a substantially concurrent interim Disposition or transfer in connection with an Investment otherwise permitted pursuant to clauses (a) through (aa) above or in connection with a transaction permitted by Section 10.3 or in connection with a Disposition permitted pursuant to Section 10.4.
Notwithstanding anything to the contrary herein, in no event shall any Permitted Bond Hedge Transactions or any Permitted Warrant Transactions (or any performance of obligations under any Permitted Bond Hedge Transactions and/or any Permitted Warrant Transactions, as permitted by this Agreement) be considered an “Investment” for purposes of this Agreement.
Notwithstanding the foregoing, Borrower may repurchase, exchange or induce the conversion of Permitted Convertible Debt by delivery of shares of Borrower’s common stock and/or a different series of Permitted Convertible Debt and/or by payment of cash (in an amount that does not exceed the proceeds received by Borrower from the substantially concurrent issuance of shares of Borrower’s common stock and/or such different series of Permitted Convertible Debt minus the net cost of any Permitted Bond Hedge Transaction and any related Permitted Warrant Transaction entered into in connection therewith plus the net cash proceeds, if any, received by Borrower pursuant to the related exercise or early unwind or termination of the related Permitted Bond Hedge Transactions and Permitted Warrant Transactions, if any, pursuant to the immediately following proviso); provided that, for the avoidance of doubt, substantially concurrently with, or a commercially reasonable period of time before or after, the related settlement date for the Permitted Convertible Debt that are so repurchased, exchanged or converted, Borrower may exercise or unwind or terminate early (whether in cash, shares or any combination thereof) the portion of the Permitted Bond Hedge Transactions and Permitted Warrant Transactions, if any, corresponding to such Permitted Convertible Debt that are so repurchased, exchanged or converted.
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10.6 Limitation on Restricted Payments. The Borrower will not directly or indirectly pay any dividend or make any other distribution (by reduction of capital or otherwise), whether in cash, property, securities or a combination thereof, with respect to any of its Equity Interests (other than dividends and distributions on Equity Interests payable solely by the issuance of additional Qualified Equity Interests) or redeem, purchase, retire or otherwise acquire for value any of its Equity Interests (other than through the issuance of additional Qualified Equity Interests), or permit any Restricted Subsidiary to purchase or otherwise acquire for consideration (except in connection with an Investment permitted under Section 10.5) any Equity Interests of the Borrower, now or hereafter outstanding (all of the foregoing, “Restricted Payments”); except that:
(a) (i) the Borrower may redeem in whole or in part any of its Equity Interests in exchange for another class of its Equity Interests or with proceeds from substantially concurrent equity contributions or issuances of new Equity Interests; provided that such new Equity Interests contain terms and provisions at least as advantageous to the Lenders in all material respects to their interests as those contained in the Equity Interests redeemed thereby, (ii) the Borrower may pay premium in respect of, and otherwise perform its obligations under (including the unwinding of), any Permitted Bond Hedge Transaction(s) permitted or required in accordance with terms thereof, and (iii) the Borrower may settle any related Permitted Warrant Transaction(s) (I) by delivery of shares of the Borrower’s common stock upon settlement thereof or (II) by (A) set-off against the related Permitted Bond Hedge Transaction or (B) payment of an early termination amount thereof in common stock upon any early termination thereof;
(b) the Borrower may redeem, acquire, retire or repurchase shares of its Equity Interests held by any present or former officer, manager, consultant, director or employee (or their respective Affiliates, estates, spouses, former spouses, successors, executors, administrators, heirs, legatees, distributees or immediate family members) of the Borrower and its Restricted Subsidiaries, in connection with the death, disability, retirement or termination of employment of any such Person or otherwise in accordance with any equity option or equity appreciation rights plan, any management, director and/or employee equity ownership, benefit or incentive plan or agreement, equity subscription plan, employment termination agreement or any other employment agreements or equity holders’ agreement; provided that the aggregate amount of Restricted Payments made under this clause (b) shall not exceed (A) $5,000,000 in any calendar year (with unused amounts in any calendar year being carried over to succeeding calendar years subject to a maximum of $10,000,000 in any calendar year), plus (B) all Net Cash Proceeds obtained by or contributed to the Borrower during such calendar year from the sales of Equity Interests to other present or former officers, consultants, employees, directors and managers in connection with any permitted compensation and incentive arrangements plus (C) all net cash proceeds obtained from any key-man life insurance policies received during such calendar year plus (D) the amount of any cash bonuses otherwise payable to members of management, directors or consultants of the Borrower or its Subsidiaries in connection with the Transactions that are foregone in return for the receipt of Equity Interests; notwithstanding the foregoing, the Borrower may elect to apply all or any portion of the aggregate increase contemplated by clauses (B), (C) and (D) above in any calendar year and provided, further, that cancellation of Indebtedness owing to the Borrower or any of its Restricted Subsidiaries from any future, present or former employees, directors, officers, members of management or consultants, of the Borrower, any Restricted Subsidiary, any direct or indirect parent company of the Borrower or any of the Borrower’s Restricted Subsidiaries in connection with a repurchase of Equity Interests of the Borrower or any of its direct or indirect parent companies will not be deemed to constitute a Restricted Payment for purposes of this covenant or any other provision of this Agreement;
(c) to the extent constituting Restricted Payments, the Borrower may make Investments permitted by Section 10.5 (other than Sections 10.5(m) and (w));
(d) to the extent constituting Restricted Payments, the Borrower may consummate transactions expressly permitted by Section 10.3;
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(e) the Borrower may repurchase Equity Interests of the Borrower upon exercise of stock options or warrants if such Equity Interests represents all or a portion of the exercise price of such options or warrants;
(f) the Borrower may make Restricted Payments in the form of Equity Interests of the Borrower (other than Disqualified Stock not otherwise permitted by Section 10.1);
(g) the Borrower or any of the Restricted Subsidiaries may pay cash in lieu of fractional shares in connection with any dividend, split or combination thereof or other Investment permitted under Section 10.5 or any redemption or conversion of any convertible debt;
(h) the Borrower may pay any dividends or distributions within sixty (60) days after the date of declaration thereof, if at the date of declaration such payment would have complied with the other clauses of this Section 10.6;
(i) so long as, immediately after giving effect thereto on a pro forma basis, the Restricted Payment Conditions are satisfied, the Borrower may declare and pay cash interest payments on Disqualified Stock and additional Restricted Payments without limit in cash to the holders of its Equity Interests;
(j) the Borrower may consummate the Transactions (and pay fees and expenses in connection therewith on or following the Closing Date), and make payments described in Section 10.14(a), (e) and (f) (subject to the conditions set out therein);
(k) payments made or expected to be made by the Borrower or any of the Restricted Subsidiaries in respect of required withholding or similar non-U.S. Taxes with respect to any future, present or former employee, director, manager or consultant and any repurchases of Equity Interests in consideration of such payments including deemed repurchases in connection with the exercise of stock options;
(l) payments and distributions to dissenting stockholders pursuant to applicable law, pursuant to or in connection with a consolidation, merger, amalgamation or transfer of all or substantially all of the assets of the Borrower and its Restricted Subsidiaries taken as a whole that complies with the terms of this Agreement;
(m) the distribution, by dividend or otherwise, of Equity Interests of, or Indebtedness owed to the Borrower or a Restricted Subsidiary by, an Unrestricted Subsidiary (or a Restricted Subsidiary that owns an Unrestricted Subsidiary); provided that such Restricted Subsidiary owns no assets other than Equity Interests of an Unrestricted Subsidiary (other than Unrestricted Subsidiaries the primary assets of which are cash and/or Permitted Investments);
(n) payments and distributions to any direct or indirect parent of the Borrower, the proceeds of which shall be used to pay franchise Taxes and other fees, Taxes and expenses required to maintain its corporate or legal existence or good standing under Requirements of Law;
(o) the Borrower may make Permitted Tax Distributions in cash; and
(p) other Restricted Payments not to exceed $1,000,000 in any calendar year so long as no Default, Event of Default or Loan Limit Deficiency shall have occurred and be continuing at the time of, and immediately following such Restricted Payment.
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For the avoidance of doubt, this Section 10.6 shall not prohibit the conversion by holders of (including any cash payment upon conversion), or required payment of any principal or premium on (including, for the avoidance of doubt, in respect of a required repurchase in connection with the redemption of Permitted Convertible Debt upon satisfaction of a condition related to the stock price of Borrower’s common stock) or required payment of any interest with respect to, any Permitted Convertible Debt in each case, in accordance with the terms of the indenture governing such Permitted Convertible Debt.
Notwithstanding the foregoing, Borrower may repurchase, exchange or induce the conversion of Permitted Convertible Debt by delivery of shares of Borrower’s common stock and/or a different series of Permitted Convertible Debt and/or by payment of cash (in an amount that does not exceed the proceeds received by Borrower from the substantially concurrent issuance of shares of Borrower’s common stock and/or such different series of Permitted Convertible Debt minus the net cost of any Permitted Bond Hedge Transaction and related Permitted Warrant Transaction entered into in connection therewith plus the net cash proceeds, if any, received by Borrower pursuant to the related exercise or early unwind or termination of the related Permitted Bond Hedge Transactions and Permitted Warrant Transactions, if any, pursuant to the immediately following proviso); provided that, for the avoidance of doubt, substantially concurrently with, or a commercially reasonable period of time before or after, the related settlement date for the Permitted Convertible Debt that are so repurchased, exchanged or converted, Borrower may exercise or unwind or terminate early (whether in cash, shares or any combination thereof) the portion of the Permitted Bond Hedge Transactions and Permitted Warrant Transactions, if any, corresponding to such Permitted Convertible Debt that are so repurchased, exchanged or converted.
10.7 Limitations on Debt Payments and Amendments.
(a) The Borrower will not, and will not permit any Restricted Subsidiary to, prepay, repurchase or redeem or otherwise defease prior to its scheduled maturity any Permitted Additional Debt, any Material Indebtedness or any other Indebtedness for borrowed money that is expressly subordinated in right of payment or payment priority (or any Permitted Refinancing Indebtedness in respect thereof to the extent constituting Other Debt) (such Permitted Additional Debt, Material Indebtedness or other Indebtedness or any Permitted Refinancing Indebtedness in respect thereof, “Other Debt”) (for the avoidance of doubt, it being understood that payments of regularly-scheduled cash interest in respect of Other Debt and any AHYDO payments shall be permitted unless expressly prohibited by the terms of the documents governing any such subordination); provided, however, that the Borrower or any Restricted Subsidiary may prepay, repurchase, redeem or defease prior to its scheduled maturity any Other Debt (i) in exchange for or with the proceeds of any Permitted Refinancing Indebtedness, (ii) by converting or exchanging any Other Debt to Qualified Equity Interests, (iii) so long as, immediately after giving effect thereto on a pro forma basis, the Restricted Payment Conditions are satisfied, (iv) in exchange for or with proceeds of any Qualified Equity Interests within thirty (30) days of receipt of such proceeds, (v) owed to the Borrower or any Restricted Subsidiary to the extent not prohibited by the subordination provisions contained in the Intercompany Note, (vi) with respect to any Bridge Facility, to the extent required pursuant to any mandatory prepayment or redemptions in connection with the issuance of Indebtedness or Equity Interests, Dispositions or other customary mandatory prepayments or redemptions under “bridge” loan facilities and (vii) customary special mandatory redemptions of Anticipated Acquisition Debt; provided, further, that, after giving effect to any adjustment of the Borrowing Base made pursuant to Section 2.14(f) and any repayment of the Loans required in connection therewith, so long as no Event of Default then exists, the Borrower or any Guarantor may make mandatory prepayments in respect of any Other Debt with the proceeds of the disposition of any assets that have been pledged to secure such Other Debt;
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(b) The Borrower will not amend or modify the terms of any Other Debt, other than amendments or modifications that (i) would otherwise comply with the definition of “Permitted Refinancing Indebtedness” that may be incurred to Refinance any such Indebtedness, (ii) would have the effect of converting any Other Debt to Qualified Equity Interests or (iii) to the extent such amendment or modification would not have been prohibited under this Agreement at the time such Permitted Refinancing Indebtedness, Other Debt or documentation was first issued, incurred or entered into, as applicable (it being understood that in no event shall such amendment or modification (x) make earlier the final maturity date of such Indebtedness or reduce the Weighted Average Life to Maturity of such Indebtedness or (y) shall include any financial maintenance covenants that are more restrictive than the financial maintenance covenants under the Credit Documents or prohibit prior repayment or prepayment of the Loans and the covenants and events of default applicable to such Other Debt shall not be more restrictive to the Borrower and its Subsidiaries than the covenants and events of default under the Credit Documents, taken as a whole; in each case, as reasonably determined by the Borrower in good faith, unless such covenants or events of default are incorporated into this Agreement and, (z) with respect to any Permitted Additional Debt or Permitted Refinancing Indebtedness thereof, such analysis shall assume that the Agreement in effect at the time of such amendment or modification constituted the Agreement at the time when such Permitted Refinancing Indebtedness or Other Debt was first issued, incurred or entered into, as applicable); and
(c) Notwithstanding the foregoing and for the avoidance of doubt, nothing in this Section 10.7 shall prohibit (i) the repayment or prepayment of intercompany subordinated Indebtedness owed among the Borrower and/or the Restricted Subsidiaries, in either case, unless an Event of Default has occurred and is continuing and the Borrower has received a notice from the Collateral Agent instructing it not to make or permit the Borrower and/or the Restricted Subsidiaries to make any such repayment or prepayment, or (ii) substantially concurrent transfers of credit positions in connection with intercompany debt restructurings so long as such Indebtedness is permitted by Section 10.1 after giving effect to such transfer.
10.8 Negative Pledge Agreements. The Borrower will not, and will not permit any of the Restricted Subsidiaries to, enter into or permit to exist any Contractual Requirement (other than this Agreement or any other Credit Document) that limits the ability of the Borrower or any Restricted Subsidiary to create, incur, assume or suffer to exist Liens on property of such Person for the benefit of the Secured Parties with respect to the Obligations or under the Credit Documents; provided that the foregoing shall not apply to each of the following Contractual Requirements that:
(a) (i) exist on the Closing Date and (to the extent not otherwise permitted by this Section 10.8) are listed on Schedule 10.8 and (ii) to the extent Contractual Requirements permitted by subclause (i) are set forth in an agreement evidencing Indebtedness or other obligations, are set forth in any agreement evidencing any Permitted Refinancing Indebtedness incurred to Refinance such Indebtedness or obligation so long as such Permitted Refinancing Indebtedness does not expand the scope of such Contractual Requirement;
(b) are binding on a Restricted Subsidiary at the time such Restricted Subsidiary first becomes a Restricted Subsidiary of the Borrower, so long as such Contractual Requirements were not entered into solely in contemplation of such Person becoming a Restricted Subsidiary of the Borrower;
(c) represent Indebtedness permitted under Section 10.1 of a Restricted Subsidiary of the Borrower that is not a Guarantor so long as such Contractual Requirement applies only to such Subsidiary and its Subsidiaries;
(d) arise pursuant to agreements entered into with respect to any sale, transfer, lease or other Disposition permitted by Section 10.4 and applicable solely to assets under such sale, transfer, lease or other Disposition;
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(e) are customary provisions in joint venture agreements and other similar agreements permitted by Section 10.5 and applicable to joint ventures or otherwise arise in (A) agreements which restrict the Disposition or distribution of assets or property subject to oil and gas leases, joint operating agreements, joint exploration and/or development agreements, participation agreements or (B) any Production Sharing Contracts or similar instrument on which a Lien cannot be granted without the consent of a third party (to the extent the Administrative Agent and the Lenders otherwise have an Acceptable Security Interest in the property covered by such contract or instrument pursuant to the definition thereof or the property covered thereby is not required to be pledged as Collateral pursuant to the Credit Documents) and, in each case other similar agreements entered into in the ordinary course of the oil and gas exploration and development business and customary provisions in any Agreement of the type described in the definition of “Industry Investments” entered into in the ordinary course of business;
(f) are customary restrictions on leases, subleases, licenses or asset sale agreements otherwise permitted hereby so long as such restrictions relate to the assets subject thereto;
(g) are customary provisions restricting subletting or assignment of any lease governing a leasehold interest of the Borrower or any Restricted Subsidiary or in leases prohibiting Liens on retained property rights of the lessor in connection with operations of the lessee conducted on the leased property;
(h) are customary provisions restricting assignment of any agreement entered into in the ordinary course of business;
(i) restrict the use of cash or other deposits imposed by customers under contracts entered into in the ordinary course of business;
(j) exist under any documentation governing any Permitted Refinancing Indebtedness incurred to Refinance any Indebtedness but only to the extent such Contractual Requirement is not materially more restrictive, taken as a whole, than the Contractual Requirement in the Indebtedness being refinanced;
(k) are customary net worth provisions contained in real property leases entered into by any Restricted Subsidiary of the Borrower, so long as the Borrower has determined in good faith that such net worth provisions would not reasonably be expected to impair the ability of the Borrower and the Restricted Subsidiaries to meet their ongoing obligation;
(l) are included in any agreement relating to any Lien, so long as (i) such Lien is permitted under Section 10.2(b), (c) or (f) and such restrictions or conditions relate only to the specific asset subject to such Lien and (ii) such restrictions and conditions are not created for the purpose of avoiding the restrictions imposed by this Section 10.8;
(m) are restrictions imposed by any agreement relating to Indebtedness incurred pursuant to Section 10.1 or Permitted Refinancing Indebtedness in respect thereof, to the extent such restrictions are not materially more restrictive, taken as a whole, than the restrictions contained in the Credit Documents as determined by the Borrower in good faith;
(n) are restrictions regarding licenses or sublicenses by the Borrower and the Restricted Subsidiaries of intellectual property in the ordinary course of business (in which case such restriction shall relate only to such intellectual property);
(o) arise in connection with cash or other deposits permitted under Sections 10.2 and 10.5 and limited to such cash or deposit; and
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(p) are encumbrances or restrictions imposed by any amendments, modifications, restatements, renewals, increases, supplements, refundings, replacements or refinancings of the contracts, instruments or obligations referred to in clauses (a) through (o) above; provided that such amendments, modifications, restatements, renewals, increases, supplements, refundings, replacements or refinancings are, in the good faith judgment of the Borrower’s board of directors, no more restrictive in any material respect with respect to such encumbrance and other restrictions taken as a whole than those prior to such amendment, modification, restatement, renewal, increase, supplement, refunding, replacement or refinancing.
10.9 Limitation on Subsidiary Distributions. The Borrower will not, and will not permit any of its Restricted Subsidiaries that are not Guarantors to, directly or indirectly, create or otherwise cause or suffer to exist or become effective any consensual encumbrance or consensual restriction on the ability of any such Restricted Subsidiary to pay dividends or make any other distributions to the Borrower or any Restricted Subsidiary on its Equity Interests or with respect to any other interest or participation in, or measured by, its profits or transfer any property to the Borrower or any Restricted Subsidiary except (in each case) for such encumbrances or restrictions existing under or by reason of:
(a) contractual encumbrances or restrictions in effect on the Closing Date, including pursuant to the Credit Documents;
(b) purchase money obligations for property acquired in the ordinary course of business and obligations under any Capitalized Lease that impose restrictions on transferring the property so acquired;
(c) any agreement or other instrument of a Person acquired by or merged or consolidated with or into the Borrower or any Restricted Subsidiary, or of an Unrestricted Subsidiary that is designated a Restricted Subsidiary, or that is assumed in connection with the acquisition of assets from such Person, in each case that is in existence at the time of such transaction (but not created in contemplation thereof), which encumbrance or restriction is not applicable to any Person, or the properties or assets of any Person, other than the Person and its Subsidiaries, or the property or assets of the Person and its Subsidiaries, so acquired or designated;
(d) secured Indebtedness otherwise permitted to be incurred pursuant to Section 10.1(m) as it relates to the right of the debtor to dispose of the assets securing such Indebtedness;
(e) restrictions on cash or other deposits or net worth imposed by customers under contracts entered into in the ordinary course of business;
(f) other Indebtedness of Borrower and its Restricted Subsidiaries permitted to be incurred subsequent to the Closing Date pursuant to Sections 10.1(a), (j), (m) and (n) and (x) so long as the provisions relating to such encumbrance or restriction contained in such Indebtedness are no less favorable to the Borrower, taken as a whole, as determined by the board of directors of the Borrower in good faith, than the provisions contained in this Agreement as in effect on the Closing Date;
(g) customary provisions in joint venture agreements or agreements governing property held with a common owner and other similar agreements or arrangements relating solely to such joint venture or property or are otherwise customary encumbrances or restrictions imposed pursuant to any agreement of the type described in the definition of “Industry Investments” entered into in the ordinary course of business of the Energy Business;
(h) customary provisions contained in leases, sub-leases, licenses, sub-licenses or similar agreements, in each case, entered into in the ordinary course of business;
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(i) any agreements entered into with respect to any sale, transfer, lease or other Disposition permitted by Section 10.4 and applicable solely to assets under such sale, transfer, lease or other Disposition; and
(j) any encumbrances or restrictions imposed by any amendments, modifications, restatements, renewals, increases, supplements, refundings, replacements or refinancings of the contracts, instruments or obligations referred to in clauses (a) through (i) above; provided that such amendments, modifications, restatements, renewals, increases, supplements, refundings, replacements or refinancings are, in the good faith judgment of the Borrower’s board of directors, no more restrictive in any material respect with respect to such encumbrance and other restrictions taken as a whole than those prior to such amendment, modification, restatement, renewal, increase, supplement, refunding, replacement or refinancing.
10.10 Hedge Agreements. The Borrower will not, and will not permit any Restricted Subsidiary to, enter into any Hedge Agreements with any Person other than:
(a) Hedge Agreements with Approved Counterparties in respect of Hydrocarbons entered into not for speculative purposes, the aggregate notional volumes for which (when aggregated with other commodity Hedge Agreements then in effect, other than (i) puts, floors and basis differential swaps on volumes already hedged pursuant to other Hedge Agreements) do not exceed, as of the date the latest hedging transaction is entered into under a Hedge Agreement, ninety percent (90%) of the reasonably anticipated projected Hydrocarbon production of crude oil, natural gas and natural gas liquids, calculated in accordance with Section 1.9, from the Credit Parties’ total Proved Reserves (as forecast based upon the Initial Reserve Report or the most recent Reserve Report delivered pursuant to Section 9.13(a), as applicable) for the sixty (60) month period from the date of creation of such hedging arrangement, based on daily volumes on an annual basis; provided, however, the individual notional volume hedged of each of (x) crude oil, (y) natural gas and (z) natural gas liquids shall not exceed 100% of the reasonably anticipated projected production of (1) crude oil, (2) natural gas, and (3) natural gas liquids, respectively, in each case, calculated separately; provided further, notwithstanding the foregoing volume limitation, the Borrower and/or the Restricted Subsidiaries may enter into Hedge Agreements in respect of purchased puts and floors not intended to be physically settled so long as the net notional volumes of all Hedge Agreements in respect of Hydrocarbons subject to this Section 10.10(a) do not exceed (when aggregated with other commodity Hedge Agreements then in effect, other than puts, floors and basis differential swaps on volumes already hedged pursuant to other Hedge Agreements), as of the date the latest hedging transaction is entered into under a Hedge Agreement, one hundred percent (100%) of the reasonably anticipated projected Hydrocarbon production of crude oil, natural gas and natural gas liquids, calculated separately, from the Credit Parties’ total Proved Reserves (as forecast based upon the Initial Reserve Report or the most recent Reserve Report delivered pursuant to Section 9.13(a), as applicable) for the sixty (60) month period from the date of creation of such hedging arrangement, based on daily volumes on an annual basis (the “Ongoing Hedges”), (ii) any Permitted Bond Hedge Transaction(s), and (iii) any Permitted Warrant Transaction. If, after the end of any fiscal quarter, the Borrower determines that the aggregate volume of all commodity Hedge Agreements for which settlement payments were calculated in such fiscal quarter exceeded 100% of actual production of crude oil, natural gas and natural gas, calculated separately, in such fiscal quarter, then the Borrower shall, or shall cause one or more other Credit Parties to, within thirty (30) days of such determinations terminate, create off-setting positions, allocate volumes to other production for which the Borrower and the other Credit Parties are marketing, or otherwise unwind existing commodity Hedge Agreements such that, at such time, future hedging volumes will not exceed 100% of reasonably anticipated projected production for the then-current and any succeeding fiscal quarters. In no event shall any Hedge Agreement entered into by the Credit Parties have a tenor longer than sixty (60) months. In addition to the Ongoing Hedges, the Credit Parties may also enter into incremental hedging contracts with respect to reasonably anticipated projected production from Oil and Gas Properties not then owned by the Credit
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10.11 Financial Covenants.
(a) Consolidated Total Net Leverage Ratio. The Borrower will not permit the Consolidated Total Net Leverage Ratio as of the last day of the Test Period ending on September 30, 2024 and as of the last day of each Test Period ending thereafter to be greater than 3.00 to 1.00.
(b) Current Ratio. The Borrower will not permit the Current Ratio as of the last day of each fiscal quarter ending on or after September 30, 2024 to be less than 1.00 to 1.00.
10.12 Accounting Changes; Amendments to Organization Documents. The Borrower shall not and shall not permit any of its Restricted Subsidiaries to (a) have its fiscal year end on a date other than December 31 or have the first three fiscal quarters in each of its fiscal years end on dates other than March 31, June 30 and September 30, respectively, or (b) amend, supplement or otherwise modify (or permit to be amended, supplemented or modified) its Organization Document in a manner that is material and adverse to the interests of the Administrative Agent or the Lenders without the consent of the Majority Lenders and the Administrative Agent.
10.13 Change in Business. The Borrower and its Restricted Subsidiaries, taken as a whole, will not fundamentally and substantively alter the character of their business, taken as a whole, from (i) the business conducted by them on the Closing Date or (ii) any other business reasonably related, complementary, incidental, synergistic or ancillary thereto or reasonable extensions thereof.
10.14 Transactions with Affiliates. The Borrower shall not conduct, and cause each of the Restricted Subsidiaries not to conduct, any transactions involving aggregate payments or consideration in excess of $10,000,000 with any of its Affiliates (other than the Borrower and the Restricted Subsidiaries or any entity that becomes a Restricted Subsidiary as a result of such transaction) unless such transactions are on terms that are substantially no less favorable to the Borrower or such Restricted Subsidiary as it would obtain at the time in a comparable arm’s-length transaction with a Person that is not an Affiliate, as determined by the board of directors or managers of the Borrower or such Restricted Subsidiary in good faith; provided that the foregoing restrictions shall not apply to:
(a) the consummation of the Transactions, including the payment of Transaction Expenses;
(b) the issuance of Equity Interests of the Borrower to any officer, director, employee or consultant of any of the Borrower or any of its Subsidiaries;
(c) equity issuances, repurchases, retirements, redemptions or other acquisitions or retirements of Equity Interests by the Borrower permitted under Section 10.6;
(d) loans, advances and other transactions between or among the Borrower, any Subsidiary or any joint venture (regardless of the form of legal entity) in which the Borrower or any Subsidiary has invested (and which Subsidiary or joint venture would not be an Affiliate of the Borrower or such Subsidiary, but for the Borrower’s or such Subsidiary’s ownership of Equity Interests in such joint venture or such Subsidiary) to the extent permitted under Section 10;
(e) employment and severance arrangements and health, disability and similar insurance or benefit plans between the Borrower and the Subsidiaries and their respective future, current or former directors, officers, employees or consultants (including management and employee benefit plans or agreements, subscription agreements or similar agreements pertaining to the repurchase of Equity Interests pursuant to put/call rights or similar rights with future, current or former employees, officers, directors or consultants and equity option or incentive plans and other compensation arrangements) in the ordinary course of business or as otherwise approved by the board of directors or managers of the Borrower;
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(f) transactions pursuant to agreements in existence on the Closing Date and set forth on Schedule 10.14 or any amendment thereto or arrangement similar thereto to the extent such amendment or arrangement is not adverse, taken as a whole, to the Lenders in any material respect (as determined by the Borrower in good faith);
(g) any issuance of Equity Interests or other payments, awards or grants in cash, securities, Equity Interests or otherwise pursuant to, or the funding of, employment arrangements, equity options and equity ownership plans approved by the board of directors or board of managers of the Borrower;
(h) payments or loans (or cancellation of loans) to officers, directors, employees or consultants which are approved by a majority of the Board of Directors of the Borrower in good faith;
(i) any lease entered into between the Borrower or any Restricted Subsidiary, as lessee and any Affiliate of the Borrower, as lessor, which is approved by a majority of the disinterested members of the Board of Directors in good faith or, any lease entered into between the Borrower or any Restricted Subsidiary, as lessee, and any Affiliate of the Borrower, as lessor, in the ordinary course of business;
(j) Permitted Intercompany Activities;
(k) the formation and maintenance of any consolidated group or subgroup for tax, accounting or cash pooling or management purposes in the ordinary course of business;
(l) Restricted Payments, redemptions, repurchases and other actions permitted under Section 10.6;
(m) Investments permitted under Section 10.5; and
(n) transactions with customers, clients, joint venture partners, suppliers or purchasers or sellers of goods or services, in each case in the ordinary course of business and otherwise in compliance with the terms of this Agreement that are fair to the Borrower and the Restricted Subsidiaries, in the reasonable determination of the Board of Directors or the senior management of the Borrower, or are on terms at least as favorable as might reasonably have been obtained at such time from an unaffiliated party; and
10.15 Sale or Discount of Receivables. Except for (a) receivables obtained by the Borrower or any Restricted Subsidiary out of the ordinary course of business, (b) the settlement of joint interest billing accounts in the ordinary course of business or discounts granted to settle collection of accounts receivable or the sale of defaulted accounts arising in the ordinary course of business in connection with the compromise or collection thereof and not in connection with any financing transaction or (c) a sale of receivables to the extent the proceeds thereof are used to prepay any Loans then outstanding, neither the Borrower nor any Restricted Subsidiary will discount or sell (with or without recourse) any of its notes receivable or accounts receivable.
10.16 Gas Imbalances. The Borrower shall not, and shall not permit its Restricted Subsidiaries to have, gas imbalances, take or pay or other prepayments (other than Service Agreement Undertakings), that in each case would require any Credit Party to deliver Hydrocarbons either generally or produced from their Oil and Gas Properties at some future time without then or thereafter receiving full payment therefor, except as set forth on Schedule 8.17 on the Closing Date or as set forth in the most recently delivered certificate pursuant to Section 9.13(c)(v).
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10.17 ERISA Compliance. The Borrower will not, and will not permit any Subsidiary to, at any time:
(a) engage, or permit any ERISA Affiliate to engage, in any transaction in connection with which the Borrower, a Subsidiary or any ERISA Affiliate could be subjected to either a civil penalty assessed pursuant to subsections (c), (i), (l) or (m) of Section 502 of ERISA or a tax imposed by Chapter 43 of Subtitle D of the Code, if either of which would have a Material Adverse Effect;
(b) fail to make, or permit any ERISA Affiliate to fail to make, full payment when due of all amounts which, under the provisions of any such Plan, agreement relating thereto or applicable law, the Borrower, a Subsidiary or any ERISA Affiliate is required to pay as contributions thereto, if such failure could reasonably be expected to have a Material Adverse Effect; or
(c) except as set forth on Schedule 10.17(c), contribute to or assume an obligation to contribute to, or permit any ERISA Affiliate to contribute to or assume an obligation to contribute to (i) any employee welfare benefit plan, as defined in Section 3(1) of ERISA, including, without limitation, any such plan maintained to provide benefits to former employees of such entities, that may not be terminated by such entities in their sole discretion at any time without any material liability other than the payment of accrued benefits under such plan, or (ii) any employee pension benefit plan, as defined in Section 3(2) of ERISA, that is subject to Title IV of ERISA, Section 302 of ERISA or Section 412 of the Code if either would have a Material Adverse Effect.
SECTION 11. EVENTS OF DEFAULT
Upon the occurrence of any of the following specified events (each an “Event of Default”):
11.1 Payments. The Borrower shall (a) default in the payment when due of any principal of the Loans or any Unpaid Drawings (to the extent such Unpaid Drawing is not paid with an ABR Loan pursuant to Section 3.4(a)) or (b) default, and such default shall continue for five or more days, in the payment when due of any interest on the Loans, fees or of any other amounts owing hereunder or under any other Credit Document (other than any amount referred to in clause (a) above).
11.2 Representations, Etc. Any representation, warranty or statement made or deemed made by any Credit Party herein or in any other Credit Document or any certificate, report or notice delivered or required to be delivered pursuant hereto or thereto shall prove to be untrue in any material respect on the date as of which made or deemed made.
11.3 Covenants. Any Credit Party shall:
(a) default in the due performance or observance by it of any term, covenant or agreement contained in Sections 9.1(d)(i), 9.5 (solely with respect to the Borrower), 9.11, 9.16, 9.21 or Section 10; or
(b) default in the due performance or observance by it of any term, covenant or agreement (other than those referred to in Section 11.1 or 11.2 or clause (a) of this Section 11.3) contained in this Agreement or any Credit Document and such default shall continue unremedied for a period of at least thirty (30) days after receipt of written notice thereof by the Borrower from the Administrative Agent.
11.4 Default Under Other Agreements. (a) The Borrower or any of the Restricted Subsidiaries shall (i) default in any payment with respect to any Indebtedness with an aggregate principal amount exceeding $25,000,000 (other than the Indebtedness described in Section 11.1) beyond the period of grace, if any, provided in the instrument of agreement under which such Indebtedness was created or (ii) default in the observance or performance of any agreement or condition relating to any such Indebtedness or contained in any instrument or agreement evidencing, securing or relating thereto, or any other event shall occur or condition exist (other than (A) with respect to indebtedness in respect of any Hedge Agreements,
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termination events or equivalent events pursuant to the terms of such Hedge Agreements, (B) any event requiring prepayment pursuant to customary asset sale provisions, (C) secured Indebtedness that becomes due as a result of a Disposition (including as a result of Casualty Event) of the property or assets securing such indebtedness permitted under this Agreement and (D) (x) the occurrence of any customary event or condition that vests the right of any holder of Permitted Convertible Debt to submit any Permitted Convertible Debt for conversion, exchange or exercise in accordance with its terms or (y) any actual conversion, exchange or exercise of any Permitted Convertible Debt in accordance with its terms), the effect of which default or other event or condition is to cause, or to permit the holder or holders of such Indebtedness (or a trustee or agent on behalf of such holder or holders) to cause, any such Indebtedness to become due or to be repurchased, prepaid, defeased or redeemed (automatically or otherwise), or an offer to repurchase, prepay, defease or redeem such Indebtedness to be made, prior to its stated maturity, unless, in the case of each of the foregoing, such holder or holders shall have (or through its or their trustee or agent on its or their behalf) waived such default in a writing to the Borrower, or
(b) Without limiting the provisions of clause (a) above, any such default under any such Indebtedness shall cause such Indebtedness to be declared to be due and payable, or required to be prepaid other than by a regularly scheduled required prepayment or as a mandatory prepayment (and (i) with respect to Indebtedness consisting of any Hedge Agreements, other than due to a termination event or equivalent event pursuant to the terms of such Hedge Agreements, (ii) other than pursuant to customary asset sale provisions and (iii) other than secured Indebtedness that becomes due as a result of a Disposition (including as a result of Casualty Event) of the property or assets securing such Indebtedness permitted under this Agreement) prior to the stated maturity thereof.
11.5 Bankruptcy, Etc. The Borrower or any Restricted Subsidiary shall commence a voluntary case, proceeding or action concerning itself under (a) Title 11 of the United States Code entitled “Bankruptcy” or any other applicable insolvency, debtor relief, or debt adjustment law; or (b) in the case of any Foreign Subsidiary that is a Restricted Subsidiary, any domestic or foreign law relating to bankruptcy, judicial management, insolvency, reorganization, administration or relief of debtors in effect in its jurisdiction of incorporation, in each case as now or hereafter in effect, or any successor thereto (collectively, the “Bankruptcy Code”); or an involuntary case, proceeding or action is commenced against the Borrower or any Restricted Subsidiary and the petition is not dismissed or stayed within sixty (60) days after commencement of the case, proceeding or action, the Borrower or the applicable Restricted Subsidiary consents to the institution of such case, proceeding or action prior to such sixty (60)-day period, or any order of relief or other order approving any such case, proceeding or action is entered; or a custodian (as defined in the Bankruptcy Code), receiver, receiver manager, trustee, conservator, liquidator, examiner, rehabilitator, administrator, or similar person is appointed for, or takes charge of, the Borrower or any Restricted Subsidiary or all or any substantial portion of the property or business thereof; or the Borrower or any Restricted Subsidiary suffers any appointment of any custodian, receiver, receiver manager, trustee, conservator, liquidator, examiner, rehabilitator, administrator, or the like for it or any substantial part of its property or business to continue undischarged or unstayed for a period of sixty (60) days; or the Borrower or any Restricted Subsidiary makes a general assignment for the benefit of creditors.
11.6 ERISA. (i) An ERISA Event occurs with respect to a Pension Plan or Multiemployer Plan, (ii) any Credit Party or any ERISA Affiliate fails to pay when due, after the expiration of any applicable grace period, any installment payment with respect to its Withdrawal Liability under Section 4201 of ERISA under a Multiemployer Plan, or (iii) a termination, withdrawal or noncompliance with applicable law or plan terms or termination, withdrawal or other event similar to an ERISA Event occurs with respect to a Foreign Plan, in each case if any of the events set forth in (i)-(iii) above results in a Lien on the assets of a Credit Party, or either individually or when taken together with other such events, could reasonably be expected to result in a Material Adverse Effect.
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11.7 Credit Documents. The Credit Documents or any material provision thereof shall cease to be in full force or effect (other than pursuant to the terms hereof and thereof) or any Guarantor or any other Credit Party shall assert in writing that any such Credit Party’s obligations thereunder are not to be in effect or are not to be legal, valid and binding obligations (other than pursuant to the terms hereof or thereof).
11.8 Security Documents. The Mortgage or any other Security Document or any material provision thereof shall cease to be in full force or effect (other than pursuant to the terms hereof or thereof), or any grantor thereunder or any other Credit Party shall assert in writing that any grantor’s obligations under the Collateral Agreement, the Mortgage or any other Security Document are not in effect or not legal, valid and binding obligations (other than pursuant to the terms hereof or thereof).
11.9 Judgments. One or more monetary judgments or decrees shall be entered against the Borrower or any of the Restricted Subsidiaries involving a liability in excess of $25,000,000 in the aggregate for all such judgments and decrees for the Borrower and the Restricted Subsidiaries (to the extent not paid or covered by insurance provided by a carrier not disputing coverage), which judgments or decrees are not satisfied, vacated, discharged or effectively waived or stayed or bonded pending appeal within sixty (60) consecutive days after the entry thereof.
11.10 Change of Control. A Change of Control shall have occurred.
11.11 Intercreditor Agreements. (i) Any of the Obligations of the Credit Parties under the Credit Documents for any reason shall cease to be “Senior Debt,” “Senior Indebtedness,” “Guarantor Senior Debt” or “Senior Secured Financing” (or any comparable term) under, and as defined in, any document governing Other Debt” or (ii) the subordination provisions set forth in any Subordination Agreement or other document governing Other Debt shall, in whole or in part, cease to be effective or cease to be legally valid, binding and enforceable against the holders of such Other Debt or parties to (or purported to be bound by) the Subordination Agreement, in each case, if applicable.
Then, and in any such event, and at any time thereafter, if any Event of Default shall then be continuing, the Administrative Agent may with the consent of and, upon the written request of the Majority Lenders, shall, by written notice to the Borrower, take any or all of the following actions, without prejudice to the rights of the Administrative Agent or any Lender to enforce its claims against the Borrower or any other Credit Party, except as otherwise specifically provided for in this Agreement (provided that, if an Event of Default specified in Section 11.5 shall occur with respect to the Borrower, the result that would occur upon the giving of written notice by the Administrative Agent as specified in clauses (a), (b) and (c) below shall occur automatically without the giving of any such notice): (a) declare the Total Commitment terminated, whereupon the Commitment of each Lender shall forthwith terminate immediately and any fees theretofore accrued shall forthwith become due and payable without any other notice of any kind, (b) declare the principal of and any accrued interest and fees in respect of any or all Loans and any or all Obligations owing hereunder and thereunder to be, whereupon the same shall become, forthwith due and payable without presentment, demand, protest or other notice of any kind, all of which are hereby waived by the Borrower, and/or (c) demand cash collateral in respect of any outstanding Letter of Credit pursuant to Section 3.7(b) in an amount equal to the aggregate Stated Amount of all Letters of Credit issued and then outstanding. In addition, after the occurrence and during the continuance of an Event of Default, the Administrative Agent and the Lenders will have all other rights and remedies available at law and equity.
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11.12 Application of Proceeds. Any amount received by the Administrative Agent or the Collateral Agent from any Credit Party (or from proceeds of any Collateral) following any acceleration of the Obligations under this Agreement or any Event of Default with respect to the Borrower under Section 11.5 shall be applied:
First, to payment of that portion of the Obligations constituting fees, indemnities, expenses and other amounts (including fees, disbursements and other charges of counsel payable under Section 12.7 and amounts payable under Section 2) payable to the Administrative Agent and/or Collateral Agent in such Person’s capacity as such;
Second, to payment of that portion of the Obligations constituting fees, indemnities and other amounts (other than principal, interest and Letter of Credit Fees) payable to the Lenders and the Issuing Banks (including fees, disbursements and other charges of counsel payable under Section 12.7) arising under the Credit Documents and amounts payable under Section 2, ratably among them in proportion to the respective amounts described in this clause Second payable to them;
Third, to payment of that portion of the Obligations constituting accrued and unpaid Letter of Credit Fees and interest on the Loans and Unpaid Drawings, ratably among the Lenders and the Issuing Banks in proportion to the respective amounts described in this clause Third payable to them;
Fourth, (i) to payment of that portion of the Obligations constituting unpaid principal of the Loans, the Unpaid Drawings and Obligations then owing under Secured Hedge Agreements and the Secured Cash Management Agreements and (ii) to Cash Collateralize that portion of Letters of Credit Outstanding comprising the aggregate undrawn amount of Letters of Credit to the extent not otherwise Cash Collateralized by the Borrower pursuant to Section 3.7, ratably among the Lenders, the Issuing Banks, the Hedge Banks and the Cash Management Banks in proportion to the respective amounts described in this clause Fourth held by them; provided that (x) any such amounts applied pursuant to the foregoing clause (ii) shall be paid to the Administrative Agent for the ratable account of the applicable Issuing Bank to Cash Collateralize such Letters of Credit Outstanding, (y) subject to Section 3.7, amounts used to Cash Collateralize the aggregate undrawn amount of Letters of Credit pursuant to this clause Fourth shall be applied to satisfy drawings under such Letters of Credit as they occur and (z) upon the expiration of any Letter of Credit, the pro rata share of Cash Collateral attributable to such expired Letter of Credit shall be distributed in accordance with this clause Fourth;
Fifth, to the payment of all other Obligations of the Credit Parties owing under or in respect of the Credit Documents that are due and payable to the Administrative Agent and the other Secured Parties on such date, ratably based upon the respective aggregate amounts of all such Obligations owing to the Administrative Agent and the other Secured Parties on such date; and
Last, the balance, if any, after all of the Obligations have been paid, to the Borrower or as otherwise required by Requirements of Law.
Subject to Section 3.7, amounts used to Cash Collateralize the aggregate undrawn amount of Letters of Credit pursuant to clause Fourth above shall be applied to satisfy drawings under such Letters of Credit as they occur. If any amount remains on deposit as Cash Collateral after all Letters of Credit have either been fully drawn or expired, such remaining amount shall be applied to the other Obligations, if any, in the order set forth above. Notwithstanding the foregoing, no amounts received from any Guarantor shall be applied to any Excluded Swap Obligations of such Guarantor.
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11.13 Equity Cure.
(a) Notwithstanding anything to the contrary contained in this Section 11 or in any Credit Document, in the event that the Borrower fails to comply with the Leverage Ratio Covenant and/or the Current Ratio Covenant, then (A) until the expiration of the tenth (10th) Business Day subsequent to the date the compliance certificate for calculating the applicable Financial Performance Covenant is required to be delivered pursuant to Section 9.1(c) (the “Cure Deadline”), the Borrower shall have the right to cure such failure (the “Cure Right”) by receiving cash proceeds (which cash proceeds shall be received no earlier than the first day of the applicable fiscal quarter for which there is a failure to comply with the applicable Financial Performance Covenant) from an issuance of Qualified Equity Interests (other than Disqualified Stock) for cash as a cash capital contribution (or from any other contribution of cash to capital or issuance or sale of any other Equity Interests on terms reasonably acceptable to the Administrative Agent), and upon receipt by the Borrower of such cash proceeds (such cash amount being referred to as the “Cure Amount”) pursuant to the exercise of such Cure Right, the Leverage Ratio Covenant and/or the Current Ratio Covenant (as applicable) shall be recalculated giving effect to the following pro forma adjustments:
(i) (A) Consolidated EBITDAX shall be increased, solely for the purpose of determining the existence of an Event of Default resulting from a breach of the Leverage Ratio Covenant with respect to any Test Period that includes the fiscal quarter for which the Cure Right was exercised and not for any other purpose under this Agreement, by an amount equal to the Cure Amount and/or (B) Consolidated Current Assets shall be increased, solely for the purpose of determining the existence of an Event of Default resulting from a breach of the Current Ratio Covenant with respect to any Test Period that includes the fiscal quarter for which the Cure Right was exercised and not for any other purpose under this Agreement, by an amount equal to the Cure Amount;
(ii) neither Consolidated Total Debt nor Consolidated Current Liabilities for such Test Period shall be decreased by any prepayments of Indebtedness with the proceeds of the Cure Amount and any cash proceeds shall not be “netted” for purposes of ratio calculations with respect to any four fiscal quarter period in which the fiscal quarter period in which such equity cure has been made is included; and
(iii) if, after giving effect to the foregoing recalculations, the Borrower shall then be in compliance with the requirements of the Financial Performance Covenants, the Borrower shall be deemed to have satisfied the requirements of the Financial Performance Covenants as of the relevant date of determination with the same effect as though there had been no failure to comply therewith at such date, and the applicable breach or default of the applicable Financial Performance Covenant that had occurred shall be deemed cured for the purposes of this Agreement; provided that (A) in each period of four (4) consecutive fiscal quarters there shall be at least two (2) fiscal quarters in which no Cure Right is exercised, (B) Cure Rights shall not be exercised more than four (4) times during the term of this Agreement, (C) if the Borrower cures the failure to comply with both Financial Performance Covenants in the same fiscal quarter, such cures shall constitute a single cure for purposes of the preceding subclause (B), (D) if the Borrower cures the failure to comply with both Financial Performance Covenants in the same fiscal quarter, the same dollar of the Cure Amount shall be applied only once to either increase Consolidated EBITDAX or Consolidated Current Assets but not both, (E) each Cure Amount shall be no greater than the amount required to cause the Borrower to be in compliance with the applicable Financial Performance Covenant above (such amount, the “Necessary Cure Amount”); provided that if the Cure Right is exercised prior to the date financial statements are required to be delivered for such fiscal quarter, then the Cure Amount shall be equal to the amount reasonably determined by the Borrower in good faith that is required for purposes of complying with the Financial Performance Covenants for such fiscal quarter (such amount, the “Expected Cure Amount”), (F) in respect of the fiscal quarter in which such Cure Right was exercised and for each Test Period that includes such fiscal quarter, all Cure Amounts shall be disregarded for the purposes of any financial ratio determination under the Credit Documents other than for determining compliance with the Financial Performance Covenants and (G) no Lender or Issuing Bank shall be required to make any extension of credit hereunder during the ten (10) Business Day period referred to above, unless the Borrower shall have received the Cure Amount; and
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(iv) upon receipt by the Administrative Agent of written notice, on or prior to the Cure Deadline, that the Borrower intends to exercise the Cure Right in respect of a fiscal quarter, the Lenders shall not be permitted to accelerate Loans held by them or to exercise remedies against the Collateral on the basis of a failure to comply with the requirements of the Financial Performance Covenants, unless such failure is not cured pursuant to the exercise of the Cure Right on or prior to the Cure Deadline.
(b) Expected Cure Amount. Notwithstanding anything herein to the contrary, to the extent that the Expected Cure Amount is less than the Necessary Cure Amount, then not later than the applicable Cure Deadline, the Borrower must receive cash proceeds from issuance of Equity Interests (other than Disqualified Stock) or a cash capital contribution, which cash proceeds received by Borrower shall be equal to the shortfall between such Expected Cure Amount and such Necessary Cure Amount.
SECTION 12. THE AGENTS
12.1 Appointment.
(a) Each Lender hereby irrevocably designates and appoints the Administrative Agent as the agent of such Lender under this Agreement and the other Credit Documents and irrevocably authorizes the Administrative Agent, in such capacity, to take such action on its behalf under the provisions of this Agreement and the other Credit Documents and to exercise such powers and perform such duties as are expressly delegated to the Administrative Agent by the terms of this Agreement and the other Credit Documents, together with such other powers as are reasonably incidental thereto. The provisions of this Section 12 (other than Section 12.1(c) with respect to the Arrangers, and Sections 12.9, 12.10, 12.11 and the last sentence of Section 12.4 with respect to the Borrower) are solely for the benefit of the Agents and the Lenders, and the Borrower shall not have rights as third party beneficiary of any such provision. Notwithstanding any provision to the contrary elsewhere in this Agreement, the Administrative Agent shall not have any duties or responsibilities, except those expressly set forth herein, or any fiduciary relationship with any Lender, and no implied covenants, functions, responsibilities, duties, obligations or liabilities shall be read into this Agreement or any other Credit Document or otherwise exist against the Administrative Agent.
(b) The Administrative Agent, each Lender and each Issuing Bank hereby irrevocably designate and appoint the Collateral Agent as the agent with respect to the Collateral, and each of the Administrative Agent, each Lender and each Issuing Bank irrevocably authorizes the Collateral Agent, in such capacity, to take such action on its behalf under the provisions of this Agreement and the other Credit Documents and to exercise such powers and perform such duties as are expressly delegated to the Collateral Agent by the terms of this Agreement and the other Credit Documents, together with such other powers as are reasonably incidental thereto. Notwithstanding any provision to the contrary elsewhere in this Agreement, the Collateral Agent shall not have any duties or responsibilities except those expressly set forth herein, or any fiduciary relationship with any of the Administrative Agent, the Lenders or the Issuing Banks, and no implied covenants, functions, responsibilities, duties, obligations or liabilities shall be read into this Agreement or any other Credit Document or otherwise exist against the Collateral Agent.
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(c) The Arrangers, in their capacity as such, shall not have any obligations, duties or responsibilities under this Agreement but shall be entitled to all benefits of this Section 12.
12.2 Delegation of Duties. The Administrative Agent and the Collateral Agent may each execute any of its duties under this Agreement and the other Credit Documents by or through agents, sub-agents, employees or attorneys-in-fact (each, a “Subagent”) and shall be entitled to advice of counsel concerning all matters pertaining to such duties; provided,however, that no such Subagent shall be authorized to take any action with respect to any Collateral unless and except to the extent expressly authorized in writing by the Administrative Agent. If any Subagent, or successor thereto, shall die, become incapable of acting, resign or be removed, all rights, powers, privileges and duties of such Subagent, to the extent permitted by law, shall automatically vest in and be exercised by the Administrative Agent until the appointment of a new Subagent. Neither the Administrative Agent nor the Collateral Agent shall be responsible for the negligence or misconduct of any Subagents selected by it.
12.3 Exculpatory Provisions. No Agent nor any of its Related Parties shall be (a) liable for any action lawfully taken or omitted to be taken by any of them under or in connection with this Agreement or any other Credit Document (except for its or such Person’s own gross negligence or willful misconduct, as determined in the final judgment of a court of competent jurisdiction, in connection with its duties expressly set forth herein) (IT BEING THE INTENTION OF THE PARTIES HERETO THAT EACH AGENT AND ITS RELATED PARTIES SHALL, IN ALL CASES, BE INDEMNIFIED FOR ITS ORDINARY, COMPARATIVE, CONTRIBUTORY OR SOLE NEGLIGENCE ) or (b) responsible in any manner to any of the Lenders or any participant for any recitals, statements, representations or warranties made by any of the Borrower, any other Credit Party or any officer thereof contained in this Agreement or any other Credit Document or in any certificate, report, statement or other document referred to or provided for in, or received by such Agent under or in connection with, this Agreement or any other Credit Document or for the value, validity, effectiveness, genuineness, enforceability or sufficiency of this Agreement or any other Credit Document, or the perfection or priority of any Lien or security interest created or purported to be created under the Security Documents or for any failure of the Borrower or any other Credit Party to perform its obligations hereunder or thereunder. No Agent shall be under any obligation to any Lender to ascertain or to inquire as to the observance or performance of any of the agreements contained in, or conditions of, this Agreement or any other Credit Document, or to inspect the properties, books or records of any Credit Party or any Affiliate thereof. The Collateral Agent shall not be under any obligation to the Administrative Agent, any Lender or any Issuing Bank to ascertain or to inquire as to the observance or performance of any of the agreements contained in, or conditions of, this Agreement or any other Credit Document, or to inspect the properties, books or records of any Credit Party.
12.4 Reliance by Agents. The Administrative Agent and the Collateral Agent shall be entitled to rely, and shall be fully protected in relying, upon any writing, resolution, notice, consent, certificate, affidavit, letter, telecopy, telex or teletype message, email, statement, order or other document or instruction believed by it to be genuine and correct and to have been signed, sent or made by the proper Person or Persons and upon advice and statements of legal counsel (including counsel to the Borrower), independent accountants and other experts selected by the Administrative Agent or the Collateral Agent. The Administrative Agent may deem and treat the Lender specified in the Register with respect to any amount owing hereunder as the owner thereof for all purposes unless a written notice of assignment, negotiation or transfer thereof shall have been filed with the Administrative Agent. The Administrative Agent and the Collateral Agent shall be fully justified in failing or refusing to take any action under this Agreement or any other Credit Document unless it shall first receive such advice or concurrence of the Majority Lenders as it deems appropriate and/or it shall first be indemnified to its satisfaction by the Lenders against any and all liability and expense that may be incurred by it by reason of taking or continuing to take any such action. Notwithstanding any provision in this Agreement to the contrary, the Administrative Agent and the Collateral Agent shall in all cases be fully protected in acting, or in refraining from acting, under this Agreement and the other Credit Documents in accordance with a request of the Majority Lenders, and such request and any action taken or failure to act pursuant thereto shall be binding upon all the Lenders and all future holders of the Loans; provided that the Administrative Agent and Collateral Agent shall not be required to take any action or
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refuse to take any action where, in its opinion or in the opinion of its counsel, the taking or refusal to take such action may expose it to liability or that is contrary to any Credit Document or applicable Requirements of Law. For purposes of determining compliance with the conditions specified in Section 6 and Section 7 on the Closing Date, each Lender that has signed this Agreement shall be deemed to have consented to, approved or accepted or to be satisfied with, each document or other matter required thereunder to be consented to or approved by or acceptable or satisfactory to a Lender unless the Administrative Agent shall have received notice from such Lender prior to the proposed Closing Date specifying its objection thereto.
12.5 Notice of Default. Neither the Administrative Agent nor the Collateral Agent shall be deemed to have knowledge or notice of the occurrence of any Default or Event of Default hereunder unless the Administrative Agent or Collateral Agent, as applicable, has received written notice from a Lender or the Borrower referring to this Agreement, describing such Default or Event of Default and stating that such notice is a “notice of default”. In the event that the Administrative Agent receives such a notice, it shall give notice thereof to the Lenders and the Collateral Agent. The Administrative Agent shall take such action with respect to such Default or Event of Default as shall be reasonably directed by the Majority Lenders; provided that unless and until the Administrative Agent shall have received such directions, the Administrative Agent may (but shall not be obligated to) take such action, or refrain from taking such action, with respect to such Default or Event of Default as it shall deem advisable in the best interests of the Lenders except to the extent that this Agreement requires that such action be taken only with the approval or consent of the Majority Lenders, the Required Lenders, each individual lender or adversely affected Lender, as applicable.
12.6 Non-Reliance on Administrative Agent, Collateral Agent and Other Lenders. Each Lender expressly acknowledges that neither the Administrative Agent nor the Collateral Agent nor any of their respective Related Parties has made any representations or warranties to it and that no act by the Administrative Agent or Collateral Agent hereinafter taken, including any review of the affairs of the Borrower or any other Credit Party, shall be deemed to constitute any representation or warranty by the Administrative Agent or Collateral Agent or their respective Related Parties to any Lender or any Issuing Bank. Each Lender and each Issuing Bank represents to the Administrative Agent and the Collateral Agent that it has, independently and without reliance upon the Administrative Agent, Collateral Agent, any other Lender or any of their respective Related Parties, and based on such documents and information as it has deemed appropriate, made its own appraisal of, and an investigation into, the business, operations, property, financial and other condition and creditworthiness of the Borrower and each other Credit Party and made its own decision to make its Loans hereunder and enter into this Agreement. Each Lender also represents that it will, independently and without reliance upon the Administrative Agent, Collateral Agent, 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 analysis, appraisals and decisions in taking or not taking action under this Agreement and the other Credit Documents, and to make such investigation as it deems necessary to inform itself as to the business, operations, property, financial and other condition and creditworthiness of the Borrower and any other Credit Party. Except for notices, reports and other documents expressly required to be furnished to the Lenders by the Administrative Agent hereunder, neither the Administrative Agent nor the Collateral Agent shall have any duty or responsibility to provide any Lender with any credit or other information concerning the business, assets, operations, properties, financial condition, prospects or creditworthiness of the Borrower or any other Credit Party that may come into the possession of the Administrative Agent or Collateral Agent or any of their respective Related Parties.
12.7 Indemnification. The Lenders severally agree to indemnify the Administrative Agent and the Collateral Agent and their respective Related Parties, each in its capacity as such (to the extent not reimbursed by the Guarantors and without limiting the obligation of the Guarantors to do so), ratably according to their respective portions of the Commitments or Loans, as applicable, outstanding in effect on the date on which indemnification is sought (or, if indemnification is sought after Payment in Full, ratably in accordance with
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their respective portions of the Total Exposure in effect immediately prior to such date on which Payment in Full occurred), from and against any and all Indemnified Liabilities; provided that no Lender shall be liable to the Administrative Agent or the Collateral Agent or their respective Related Parties for the payment of any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements resulting from such Administrative Agent’s or the Collateral Agent’s or Related Party’s, as applicable, gross negligence or willful misconduct as determined by a final non-appealable judgment of a court of competent jurisdiction; provided, further, that no action taken in accordance with the directions of the Majority Lenders (or such other number or percentage of the Lenders as shall be required by the Credit Documents) shall be deemed to constitute gross negligence or willful misconduct for purposes of this Section 12.7. In the case of any investigation, litigation or proceeding giving rise to any liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind whatsoever that may at any time occur (including at any time following the payment of the Loans), this Section 12.7 applies whether any such investigation, litigation or proceeding is brought by any Lender or any other Person. Without limitation of the foregoing, each Lender shall reimburse the Administrative Agent and the Collateral Agent upon demand for its ratable share of any costs or out-of-pocket expenses (including Attorney Costs) incurred by such Agent in connection with the preparation, execution, delivery, administration, modification, amendment or enforcement (whether through negotiations, legal proceedings or otherwise) of, or legal advice rendered in respect of rights or responsibilities under, this Agreement, any other Credit Document, or any document contemplated by or referred to herein, to the extent that such Agent is not reimbursed for such expenses by or on behalf of the Borrower; provided that such reimbursement by the Lenders shall not affect the Borrower’s or the other Guarantors’ continuing reimbursement obligations with respect thereto. If any indemnity furnished to any Agent for any purpose shall, in the opinion of such Agent, be insufficient or become impaired, such Agent may call for additional indemnity and cease, or not commence, to do the acts indemnified against until such additional indemnity is furnished; provided, in no event shall this sentence require any Lender to indemnify any Agent against any liability, obligation, loss, damage, penalty, action, judgment, suit, cost, expense or disbursement in excess of such Lender’s pro rata portion thereof; and provided, further, this sentence shall not be deemed to require any Lender to indemnify any Agent against any liability, obligation, loss, damage, penalty, action, judgment, suit, cost, expense or disbursement resulting from such Agent’s gross negligence or willful misconduct as determined by a final non-appealable judgment of a court of competent jurisdiction. The agreements in this Section 12.7 shall survive the payment of the Loans and all other amounts payable hereunder. This Section 12.7 shall not apply with respect to Taxes other than any Taxes that represent losses, claims, damages, etc. arising from any non-Tax claim.
12.8 Agents in Its Individual Capacities. Each Agent and its Affiliates may make loans to, accept deposits from and generally engage in any kind of business with the Borrower and any other Credit Party as though such Agent were not an Agent hereunder and under the other Credit Documents. With respect to the Loans made by it, each Agent shall have the same rights and powers under this Agreement and the other Credit Documents as any Lender and may exercise the same as though it were not an Agent, and the terms “Lender” and “Lenders” shall include each Agent in its individual capacity.
12.9 Successor Agents. Each of the Administrative Agent and Collateral Agent may at any time give notice of its resignation to the Lenders, the Issuing Banks and the Borrower. If the Administrative Agent and/or Collateral Agent becomes a Defaulting Lender, then such Administrative Agent or Collateral Agent, may be removed as Administrative Agent or Collateral Agent, as the case may be, at the reasonable request of the Borrower upon ten (10) days’ notice to the Lenders. Upon receipt of any such notice of resignation or removal, as the case may be, the Majority Lenders shall have the right, subject to the consent of the Borrower (not to be unreasonably withheld or delayed) so long as no Default under Section 11.1 or 11.5 is continuing, to appoint a successor, which shall be a bank with an office in New York. If, in the case of a resignation of a retiring Agent, no such successor shall have been so appointed by the Majority Lenders and shall have accepted such appointment within thirty (30) days after the retiring Agent gives notice of its
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resignation, then the retiring Agent may on behalf of the Lenders and the Issuing Banks, appoint a successor Agent meeting the qualifications set forth above (provided that if the Administrative Agent shall notify the Borrower and the Lenders that no qualifying Person has accepted such appointment, then such resignation shall nonetheless become effective in accordance with such notice and (a) the retiring Agent shall be discharged from its duties and obligations hereunder and under the other Credit Documents (except that in the case of any collateral security held by such Agent on behalf of the Lenders or Issuing Banks under and Credit Documents, the retiring Agent shall continue to hold such collateral security until such time as a successor Agent is appointed) and (b) all payments, communications and determinations provided to be made by, to or through the retiring Agent shall instead be made by or to each Lender and Issuing Bank directly, until such time as the Majority Lenders appoint a successor Agent as provided for above in this Section 12.9). Upon the acceptance of a successor’s appointment as the Administrative Agent or Collateral Agent, as the case may be, hereunder, and upon the execution and filing or recording of such financing statements, or amendments thereto, and such other instruments or notices, as may be necessary or desirable, or as the Majority Lenders may request, in order to continue the perfection of the Liens granted or purported to be granted by the Security Documents, such successor shall succeed to and become vested with all of the rights, powers, privileges and duties of the retiring (or retired) Agent, and the retiring Agent shall be discharged from all of its duties and obligations hereunder or under the other Credit Documents (if not already discharged therefrom as provided above in this Section 12.9). After the retiring Agent’s resignation hereunder and under the other Credit Documents, the provisions of this Section 12 (including Section 12.7) and Section 13.5 shall continue in effect for the benefit of such retiring Agent, its Subagents and their respective Agent-Related Parties in respect of any actions taken or omitted to be taken by any of them while the retiring Agent was acting as an Agent.
Any resignation of any Person as Administrative Agent pursuant to this Section 12.9 shall also constitute its resignation as Issuing Bank. Upon the acceptance of a successor’s appointment as Administrative Agent hereunder (a) such successor shall succeed to and become vested with all of the rights, powers, privileges and duties of the retiring Issuing Bank, (b) the retiring Issuing Bank shall be discharged from all of its duties and obligations hereunder and under the other Credit Documents, and (c) the successor Issuing Bank shall issue letters of credit in substitution for the Letters of Credit, if any, outstanding at the time of such succession or make other arrangements satisfactory to the retiring Issuing Bank to effectively assume the obligations of the retiring Issuing Bank with respect to such Letters of Credit.
12.10 Security Documents and Collateral Agent under Security Documents and Guarantee. Each Secured Party hereby further authorizes the Administrative Agent or Collateral Agent, as applicable, on behalf of and for the benefit of Secured Parties, to be the agent for and representative of the Secured Parties with respect to the Collateral and the Security Documents. Subject to Section 13.1, without further written consent or authorization from any Secured Party, the Administrative Agent or Collateral Agent, as applicable, may take such action and execute and deliver any such instruments, documents and agreements necessary or desirable to evidence and confirm the release of any Guarantor or Collateral pursuant to Section 13.17. Furthermore, the Lenders, the Issuing Banks and any other Secured Parties (including in their capacities as potential Cash Management Bank and potential Hedge Banks) hereby authorize the Administrative Agent and the Collateral Agent to subordinate any Lien on any property granted to or held by the Administrative Agent or Collateral Agent under any Credit Document to the holder of any Lien on such property that is permitted by clause (j) of the definition of “Permitted Liens” and clauses (c), (i), (n), (o), (q), (t) and (w)(i) of Section 10.2; provided that prior to any such request, the Borrower shall have in each case delivered to the Administrative Agent a certificate of an Authorized Officer of the Borrower certifying that such subordination is permitted under this Agreement.
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12.11 Right to Realize on Collateral and Enforce Guarantee. Anything contained in any of the Credit Documents to the contrary notwithstanding, the Borrower, the Agents and each Secured Party hereby agree that (a) no Secured Party shall have any right individually to realize upon any of the Collateral or to enforce the Guarantee, it being understood and agreed that all powers, rights and remedies hereunder may be exercised solely by the Administrative Agent, on behalf of the Secured Parties in accordance with the terms hereof and all powers, rights and remedies under the Security Documents may be exercised solely by the Collateral Agent, and (b) in the event of a foreclosure by the Collateral Agent on any of the Collateral pursuant to a public or private sale or other disposition, the Collateral Agent or any Lender may be the purchaser or licensor of any or all of such Collateral at any such sale or other disposition and the Collateral Agent, as agent for and representative of the Secured Parties (but not any Lender or Lenders in its or their respective individual capacities unless the Majority Lenders shall otherwise agree in writing) shall be entitled, for the purpose of bidding and making settlement or payment of the purchase price for all or any portion of the Collateral sold at any such public sale, to use and apply any of the Obligations as a credit on account of the purchase price for any collateral payable by the Collateral Agent at such sale or other disposition.
12.12 Administrative Agent May File Proofs of Claim. In case of the pendency of any receivership, insolvency, liquidation, bankruptcy, reorganization, arrangement, adjustment, composition or other judicial proceeding, constituting an Event of Default under Section 11.5, the Administrative Agent (irrespective of whether the principal of any Loan shall then be due and payable as herein expressed or by declaration or otherwise and irrespective of whether the Administrative Agent shall have made any demand on the Borrower) shall be entitled and empowered, by intervention in such proceeding or otherwise:
(a) to file and prove a claim for the whole amount of the principal and interest owing and unpaid hereunder or under any other Credit Document in respect of the Loans and all other Indebtedness 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 and the Administrative Agent (including any claim for the reasonable compensation, expenses, disbursements and advances of the Lenders and the Administrative Agent and their respective Related Parties, to the extent due under Section 13.5) allowed in such judicial proceeding; and
(b) to collect and receive any monies or other property payable or deliverable on any such claims and to distribute the same;
and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such judicial proceeding is hereby authorized by each Lender to make such payments to the Administrative Agent and, in the event that the Administrative Agent shall consent to the making of such payments directly to the Lenders, to pay to the Administrative Agent any amount due for the reasonable compensation, expenses, disbursements and advances of the Administrative Agent and its Related Parties, to the extent due under Section 13.5.
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 any plan of reorganization, arrangement, adjustment or composition affecting the Indebtedness or the rights of any Lender or to authorize the Administrative Agent to vote in respect of the claim of any Lender in any such proceeding.
12.13 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 the Collateral Agent, 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 Section 3(42) of ERISA or otherwise) of one or more Benefit Plans with respect to such Lender’s entrance into, participation in, administration of and performance of the Loans, the Letters of Credit, the Commitments, or this Agreement,
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(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
(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 in accordance with 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 the Collateral Agent, and not, for the avoidance of doubt, to or for the benefit of the Borrower or any other Credit Party, that neither the Administrative Agent nor the Collateral Agent is a fiduciary with respect to the assets of such Lender involved in such Lender’s entrance into, participation in, administration of and performance of the Loans, the Letters of Credit, the Commitments and this Agreement (including in connection with the reservation or exercise of any rights by the Administrative Agent under this Agreement, any Credit Document or any documents related hereto or thereto).
12.14 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
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such credit bid and purchase, the Obligations owed to the Secured Parties shall be entitled to be credit bid by the Administrative Agent at the direction of the Majority Lenders on a ratable basis (with 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 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 13.1 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, 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, such Obligations shall automatically be reassigned to the Secured Parties pro rata and the equity interests and/or debt instruments issued by any acquisition vehicle on account of such 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 Section 12.14(b)(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.
12.15 Erroneous Payments.
(a) If the Administrative Agent (x) notifies a Lender, Issuing Bank or Secured Party, or any Person who has received funds on behalf of a Lender, Issuing Bank or Secured Party (any such Lender, Issuing Bank, Secured Party or other recipient (and each of their respective successors and assigns), a “Payment Recipient”) that the Administrative Agent has determined in its sole discretion (whether or not after receipt of any notice under immediately succeeding clause (b)) that any funds (as set forth in such notice from the Administrative Agent) received by such Payment Recipient from the Administrative Agent or any of its Affiliates were erroneously or mistakenly transmitted to, or otherwise erroneously or mistakenly received by, such Payment Recipient (whether or not known to such Lender, Issuing Bank, Secured Party or other Payment Recipient on its behalf) (any such funds, whether transmitted or received as a payment, prepayment or repayment of principal, interest, fees, distribution or otherwise, individually and collectively, an “Erroneous Payment”) and (y) demands in writing the return of such Erroneous Payment (or a portion thereof), such Erroneous Payment shall at all times remain the property of the Administrative Agent pending its return or repayment as contemplated below in this Section 12.15 and held in trust for the benefit of the Administrative Agent, and such Lender, Issuing Bank or Secured Party shall
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(or, with respect to any Payment Recipient who received such funds on its behalf, shall cause such Payment Recipient to) promptly, but in no event later than two Business Days thereafter (or such later date as the Administrative Agent may, in its sole discretion, specify in writing), return to the Administrative Agent the amount of any such Erroneous Payment (or portion thereof) as to which such a demand was made, in same day funds (in the currency so received), together with interest thereon (except to the extent waived in writing by the Administrative Agent) in respect of each day from and including the date such Erroneous Payment (or portion thereof) was received by such Payment Recipient to the date such amount is repaid to the Administrative Agent in same day funds at the greater of the Overnight Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation from time to time in effect. A notice of the Administrative Agent to any Payment Recipient under this clause (a) shall be conclusive, absent manifest error.
(b) Without limiting immediately preceding clause (a), each Lender, Issuing Bank, Secured Party or any Person who has received funds on behalf of a Lender, Issuing Bank or Secured Party (and each of their respective successors and assigns), agrees that if it receives a payment, prepayment or repayment (whether received as a payment, prepayment or repayment of principal, interest, fees, distribution or otherwise) from the Administrative Agent (or any of its Affiliates) (x) that is in a different amount than, or on a different date from, that specified in this Agreement or in a notice of payment, prepayment or repayment sent by the Administrative Agent (or any of its Affiliates) with respect to such payment, prepayment or repayment, (y) that was not preceded or accompanied by a notice of payment, prepayment or repayment sent by the Administrative Agent (or any of its Affiliates), or (z) that such Lender, Issuing Bank or Secured Party, or other such recipient, otherwise becomes aware was transmitted, or received, in error or by mistake (in whole or in part), then in each such case:
(i) it acknowledges and agrees that (A) in the case of immediately preceding clauses (x) or (y), an error and mistake shall be presumed to have been made (absent written confirmation from the Administrative Agent to the contrary) or (B) an error and mistake has been made (in the case of immediately preceding clause (z)), in each case, with respect to such payment, prepayment or repayment; and
(ii) such Lender, Issuing Bank or Secured Party shall use commercially reasonable efforts to (and shall use commercially reasonable efforts to cause any other recipient that receives funds on its respective behalf to) promptly (and, in all events, within one Business Day of its knowledge of the occurrence of any of the circumstances described in immediately preceding clauses (x), (y) and (z)) notify the Administrative Agent of its receipt of such payment, prepayment or repayment, the details thereof (in reasonable detail) and that it is so notifying the Administrative Agent pursuant to this Section 12.15(b).
For the avoidance of doubt, the failure to deliver a notice to the Administrative Agent pursuant to this Section 12.15(b) shall not have any effect on a Payment Recipient’s obligations pursuant to Section 12.15(a) or on whether or not an Erroneous Payment has been made.
(c) Each Lender, Issuing Bank or Secured Party hereby authorizes the Administrative Agent to set off, net and apply any and all amounts at any time owing to such Lender, Issuing Bank or Secured Party under any Credit Document, or otherwise payable or distributable by the Administrative Agent to such Lender, Issuing Bank or Secured Party under any Credit Document with respect to any payment of principal, interest, fees or other amounts, against any amount that the Administrative Agent has demanded to be returned under Section 12.15(a).
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(d)
(i) In the event that an Erroneous Payment (or portion thereof) is not recovered by the Administrative Agent for any reason, after demand therefor in accordance with Section 12.15(a), from any Lender that has received such Erroneous Payment (or portion thereof) (and/or from any Payment Recipient who received such Erroneous Payment (or portion thereof) on its respective behalf) (such unrecovered amount, an “Erroneous Payment Return Deficiency”), upon the Administrative Agent’s notice to such Lender at any time, then effective immediately (with the consideration therefor being acknowledged by the parties hereto), (A) such Lender shall be deemed to have assigned its Loans (but not its Commitments) of the relevant class with respect to which such Erroneous Payment was made (the “Erroneous Payment Impacted Class”) in an amount equal to the Erroneous Payment Return Deficiency (or such lesser amount as the Administrative Agent may specify) (such assignment of the Loans (but not Commitments) of the Erroneous Payment Impacted Class, the “Erroneous Payment Deficiency Assignment”) (on a cashless basis and such amount calculated at par plus any accrued and unpaid interest (with the assignment fee to be waived by the Administrative Agent in such instance)), and is hereby (together with the Borrower) deemed to execute and deliver an Assignment and Assumption (or, to the extent applicable, an agreement incorporating an Assignment and Assumption by reference pursuant to an electronic platform as to which the Administrative Agent and such parties are participants) with respect to such Erroneous Payment Deficiency Assignment, and such Lender shall deliver any Notes evidencing such Loans to the Borrower or the Administrative Agent (but the failure of such Person to deliver any such Notes shall not affect the effectiveness of the foregoing assignment), (B) the Administrative Agent as the assignee Lender shall be deemed to have acquired the Erroneous Payment Deficiency Assignment, (C) upon such deemed acquisition, the Administrative Agent as the assignee Lender shall become a Lender, as applicable, hereunder with respect to such Erroneous Payment Deficiency Assignment and the assigning Lender shall cease to be a Lender, as applicable, hereunder with respect to such Erroneous Payment Deficiency Assignment, excluding, for the avoidance of doubt, its obligations under the indemnification provisions of this Agreement and its applicable Commitments which shall survive as to such assigning Lender, (D) the Administrative Agent and the Borrower shall each be deemed to have waived any consents required under this Agreement to any such Erroneous Payment Deficiency Assignment, and (E) the Administrative Agent will reflect in the Register its ownership interest in the Loans subject to the Erroneous Payment Deficiency Assignment. For the avoidance of doubt, no Erroneous Payment Deficiency Assignment will reduce the Commitments of any Lender and such Commitments shall remain available in accordance with the terms of this Agreement.
(ii) Subject to Section 13.1 (but excluding, in all events, any assignment consent or approval requirements (whether from the Borrower or otherwise)), the Administrative Agent may, in its discretion, sell any Loans acquired pursuant to an Erroneous Payment Deficiency Assignment and upon receipt of the proceeds of such sale, the Erroneous Payment Return Deficiency owing by the applicable Lender shall be reduced by the net proceeds of the sale of such Loan (or portion thereof), and the Administrative Agent shall retain all other rights, remedies and claims against such Lender (and/or against any recipient that receives funds on its respective behalf). In addition, an Erroneous Payment Return Deficiency owing by the applicable Lender (x) shall be reduced by the proceeds of prepayments or repayments of principal and interest, or other distribution in respect of principal and interest, received by the Administrative Agent on or with respect to any such Loans acquired from such Lender pursuant to an Erroneous Payment Deficiency Assignment (to the extent that any such Loans are then owned by the Administrative Agent) and (y) may, in the sole discretion of the Administrative Agent, be reduced by any amount specified by the Administrative Agent in writing to the applicable Lender from time to time.
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(e) The parties hereto agree that (x) irrespective of whether the Administrative Agent may be equitably subrogated, in the event that an Erroneous Payment (or portion thereof) is not recovered from any Payment Recipient that has received such Erroneous Payment (or portion thereof) for any reason, the Administrative Agent shall be subrogated to all the rights and interests of such Payment Recipient (and, in the case of any Payment Recipient who has received funds on behalf of a Lender, Issuing Bank or Secured Party, to the rights and interests of such Lender, Issuing Bank or Secured Party, as the case may be) under the Credit Documents with respect to such amount (the “Erroneous Payment Subrogation Rights”) (provided that the Credit Parties’ Obligations under the Credit Documents in respect of the Erroneous Payment Subrogation Rights shall not be duplicative of such Obligations in respect of Loans that have been assigned to the Administrative Agent under an Erroneous Payment Deficiency Assignment) and (y) an Erroneous Payment shall not pay, prepay, repay, discharge or otherwise satisfy any Obligations owed by the Borrower or any other Credit Party; provided that this Section 12.15 shall not be interpreted to increase (or accelerate the due date for), or have the effect of increasing (or accelerating the due date for), the Obligations of the Borrower relative to the amount (and/or timing for payment) of the Obligations that would have been payable had such Erroneous Payment not been made by the Administrative Agent; provided, further, that for the avoidance of doubt, immediately preceding clauses (x) and (y) shall not apply to the extent any such Erroneous Payment is, and solely with respect to the amount of such Erroneous Payment that is, comprised of funds received by the Administrative Agent from the Borrower for the purpose of making such Erroneous Payment.
(f) To the extent permitted by applicable law, no Payment Recipient shall assert any right or claim to an Erroneous Payment, and hereby waives, and is deemed to waive, any claim, counterclaim, defense or right of set-off or recoupment with respect to any demand, claim or counterclaim by the Administrative Agent for the return of any Erroneous Payment received, including, without limitation, any defense based on “discharge for value” or any similar doctrine.
(g) Each party’s obligations, agreements and waivers under this Section 12.15 shall survive the resignation or replacement of the Administrative Agent, any transfer of rights or obligations by, or the replacement of, a Lender or Issuing Bank, the termination of the Commitments and/or the repayment, satisfaction or discharge of all Obligations (or any portion thereof) under any Credit Document.
SECTION 13. MISCELLANEOUS.
13.1 Amendments, Waivers and Releases.
(a) Except as expressly set forth in this Agreement, neither this Agreement nor any other Credit Document, nor any terms hereof or thereof, may be amended, supplemented or modified except in accordance with the provisions of this Section 13.1. The Majority Lenders may, or, with the written consent of the Majority Lenders, the Administrative Agent and/or the Collateral Agent shall, from time to time, (a) enter into with the relevant Credit Party or Credit Parties written amendments, supplements or modifications hereto and to the other Credit Documents for the purpose of adding any provisions to this Agreement or the other Credit Documents or changing in any manner the rights of the Lenders or of the Credit Parties hereunder or thereunder or (b) waive in writing, on such terms and conditions as the Majority Lenders or the Administrative Agent and/or Collateral Agent, as the case may be, may specify in such instrument, any of the requirements of this Agreement or the other Credit Documents or any Default or Event of Default and its consequences; provided, however, that each such waiver and each such amendment, supplement or modification shall be effective only in the specific instance and for the specific purpose for which given; provided, further, that no such waiver and no such amendment, supplement or modification shall (i) forgive or reduce any portion of any Loan or reduce the stated rate (it being understood that only the consent of the Majority Lenders shall be necessary to waive any obligation of the Borrower to pay interest at the Default Rate or amend Section 2.8(c)), or forgive or reduce any portion, or extend the date for the payment (including the Maturity Date), of any principal, interest or fee payable hereunder (other than as a result of waiving the applicability of any post-default increase in interest rates and any change due
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to a change in the Borrowing Base or Available Commitment), or extend the final expiration date of any Lender’s Commitment (provided that (1) any Lender, upon the request of the Borrower, may extend the final expiration date of its Commitment in a manner that has no adverse impact on any other Lender without the consent of any other Lender, including the Majority Lenders, and (2) it is being understood that waivers or modifications of conditions precedent, covenants, Defaults or Events of Default shall not constitute an increase of the Commitments of any Lender) or extend the final expiration date of any Letter of Credit beyond the L/C Maturity Date, or increase the amount of the Commitment of any Lender (provided that, any Lender, upon the request of the Borrower, may increase the amount of its Commitment without the consent of any other Lender, including the Majority Lenders), or make any Loan, interest, fee or other amount payable in any currency other than Dollars, in each case without the written consent of each Lender directly and adversely affected thereby, or (ii) amend, modify or waive any provision of this Section 13.1 in a manner that would reduce the voting rights of any Lender, or reduce the percentages specified in the definitions of the terms “Majority Lenders” or “Required Lenders” or any other provision hereof specifying the number or percentage of Lenders which are required to waive, amend or modify any rights hereunder or make any determination or grant any consent hereunder, consent to the assignment or transfer by the Borrower of its rights and obligations under any Credit Document to which it is a party (except as permitted pursuant to Section 10.3), in each case without the written consent of each Lender, or (iii) amend the provisions of Section 2.7, Section 11.12, Section 13.8 or any analogous provision of any Credit Document, in a manner that would by its terms alter the order of payment specified therein or the pro rata sharing of payments required thereby, without the prior written consent of each Lender, or (iv) amend, modify or waive any provision of Section 12 without the written consent of the then-current Administrative Agent and Collateral Agent, as applicable, or any other former or current Agent to whom Section 12 then applies in a manner that directly and adversely affects such Person, or (v) amend, modify or waive any provision of Section 3 with respect to any Letter of Credit without the written consent of each Issuing Bank to whom Section 3 then applies, or (vi) amend the definitions of the terms “Approved Counterparty”, “Hedge Bank”, “Obligations”, “Secured Hedge Agreement”, or “Secured Parties” or Section 12.10, in each case, without the prior consent of each Lender or (vii) release all or substantially all of the aggregate value of the Guarantees without the prior written consent of each Lender, or (viii) release all or substantially all of the Collateral under the Security Documents without the prior written consent of each Lender, or (ix) amend Section 2.9 so as to permit Interest Period intervals greater than six (6) months without regard to availability to Lenders, without the written consent of each Lender directly and adversely affected thereby, or (x) increase the Borrowing Base or waive a condition in or modify in any manner adverse to a Lender Section 7 without the written consent of each Lender (subject to Section 13.1(b) in the case of a Defaulting Lender) or decrease or maintain the Borrowing Base without the written consent of the Required Lenders or otherwise modify Section 2.14(b), (c), (d), (e), (f) or (g) if such modification would have the effect of increasing the Borrowing Base without the written consent of each Lender (other than Defaulting Lenders); provided that a Scheduled Redetermination may be postponed by, and an automatic reduction in the Borrowing Base may be waived by, the Required Lenders; provided, further, that this clause (x) shall not apply (or be deemed to apply) to any waiver, consent, amendment or other modification that directly or indirectly reduces the amount of, or waives the implementation of, any provision that would otherwise reduce the Borrowing Base, or (xi) affect the rights or duties of, or any fees or other amounts payable to, any Agent under this Agreement or any other Credit Document without the prior written consent of such Agent, (xii) subordinate (A) the Obligations in right of payment or (B) the Liens on a material portion of the Collateral securing the Obligations, other than in each case Liens securing Indebtedness incurred pursuant to Section 10.1(g), in any such case, without the consent of each Lender directly affected thereby (provided that no such Lender’s consent shall be required pursuant to this subclause (xii) in connection with any “debtor-in-possession” financing or the use of the Collateral in any insolvency proceeding provided that each affected Lender has been offered a bona fide opportunity to fund or otherwise provide its pro rata share of such “debtor-in-possession” financing or the use of the Collateral in any insolvency proceeding) or (xiii) solely to the extent that any Specified Hedge Agreement remains existing, (A) amend the definitions of “Hedge Bank”, “Obligations”, “Specified Hedge Agreement”, “Secured Hedge Agreement”,
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“Secured Parties” or “Payment in Full”, Section 11.12 or this Section 13.1(a), Section 13.17 or Section 13.22 in a manner adverse to East West Bank, (B) release all or substantially all of the aggregate value of the Guarantees or (C) release all or substantially all of the Collateral under the Security Documents, in each case, without the prior written consent of East West Bank. Any such waiver and any such amendment, supplement or modification shall apply equally to each of the affected Lenders and shall be binding upon the Borrower, such Lenders, the Administrative Agent and all future holders of the affected Loans. In the case of any waiver, the Borrower, the Lenders and the Administrative Agent shall be restored to their former positions and rights hereunder and under the other Credit Documents, and any Default or Event of Default waived shall be deemed to be cured and not continuing; it being understood that no such waiver shall extend to any subsequent or other Default or Event of Default or impair any right consequent thereon. In connection with the foregoing provisions, the Administrative Agent may, but shall have no obligations to, with the concurrence of any Lender, execute amendments, modifications, waivers or consents on behalf of such Lender whose consent is required hereunder.
(b) Notwithstanding anything to the contrary herein, no Defaulting Lender shall have any right to approve or disapprove any amendment, waiver or consent hereunder (and any amendment, waiver or consent which by its terms requires the consent of all Lenders or each affected Lender may be effected with the consent of the applicable Lenders other than Defaulting Lenders), except that the Commitment of such Defaulting Lender may not be increased or extended without the consent of such Defaulting Lender and no such amendment, waiver or consent shall disproportionately adversely affect such Defaulting Lender without its consent as compared to other Lenders (it being understood that any Commitments or Loans held or deemed held by any Defaulting Lender shall be excluded for a vote of the Lenders hereunder requiring any consent of the Lenders).
(c) Without the consent of any Lender or Issuing Bank, the Credit Parties and the Administrative Agent or Collateral Agent may (in their respective sole discretion, or shall, to the extent required by any Credit Document) enter into any amendment, modification or waiver of any Credit Document, or enter into any new agreement or instrument, to effect the granting, perfection, protection, expansion or enhancement of any security interest in any Collateral or additional property to become Collateral for the benefit of the Secured Parties, or as required by local law to give effect to, or protect any security interest for the benefit of the Secured Parties, in any property or so that the security interests therein comply with applicable law or this Agreement or in each case to otherwise enhance the rights or benefits of any Lender under any Credit Document.
(d) Notwithstanding anything to the contrary herein, no Lender consent is required to effect any amendment, modification or supplement to any subordination agreement or other intercreditor agreement or arrangement permitted under this Agreement or in any document pertaining to any Indebtedness permitted hereby that is permitted to be secured by the Collateral (i) that is for the purpose of adding the holders of such secured or subordinated Indebtedness permitted to be incurred under this Agreement (or, in each case, a representative with respect thereto), as parties thereto, as expressly contemplated by the terms of such subordination agreement or such other intercreditor agreement or arrangement permitted under this Agreement, as applicable (it being understood that any such amendment or supplement may make such other changes to the applicable intercreditor agreement as, in the good faith determination of the Administrative Agent, are required to effectuate the foregoing and provided that such other changes are not adverse, in any material respect (taken as a whole), to the interests of the Lenders) or (ii) that is expressly contemplated by any subordination agreement or other intercreditor agreement or arrangement permitted under this Agreement or in any document pertaining to any Indebtedness permitted hereby that is permitted to be secured by the Collateral or (iii) otherwise, with respect to any material amendments, modifications or supplements, to the extent such amendment, modification or supplement is reasonably satisfactory to the Administrative Agent and provided that such other changes are not adverse, in any material respect (taken as a whole), to the interests of the Lenders; provided, further, that no such agreement shall amend, modify or otherwise affect the rights or duties of the Administrative Agent or Collateral Agent hereunder or under any other Credit Document without the prior written consent of the Administrative Agent or Collateral Agent, as applicable.
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(e) The Administrative Agent may, without the consent of any Lender, enter into amendments or modifications to this Agreement or any of the other Credit Documents or to enter into additional Credit Documents as the Administrative Agent reasonably deems appropriate in order to implement any Benchmark Replacement or any Benchmark Replacement Conforming Changes or otherwise effectuate the terms of Section 2.10(d) in accordance with the terms of Section 2.10(d).
(f) Notwithstanding the foregoing, technical and conforming modifications to the Credit Documents (including any exhibit, schedule or other attachment) may be made with the consent of the Borrower and the Administrative Agent (i) if such modifications are not adverse in any material respect to the Lenders or the Issuing Banks (in which case, the consent of the Issuing Banks shall be required) or (ii) to the extent necessary to cure any ambiguity, omission, mistake, defect or inconsistency so long as the Lenders and the Issuing Banks shall have received at least five (5) Business Days’ prior written notice thereof and the Administrative Agent shall not have received, within five (5) Business Days of the date of such notice to the Lenders, a written notice from the Majority Lenders stating that the Majority Lenders object to such amendment.
13.2 Notices. Unless otherwise expressly provided herein, all notices and other communications provided for hereunder or under any other Credit Document shall be in writing (including by facsimile transmission). All such written notices shall be mailed, faxed or delivered to the applicable address, facsimile number or electronic mail address, and all notices and other communications expressly permitted hereunder to be given by telephone shall be made to the applicable telephone number, as follows:
(a) if to the Borrower, the Administrative Agent, the Collateral Agent or any Issuing Bank, to the address, facsimile number, electronic mail address or telephone number specified for such Person on Schedule 13.2 or to such other address, facsimile number, electronic mail address or telephone number as shall be designated by such party in a notice to the other parties; and
(b) if to any other Lender, to the address, facsimile number, electronic mail address or telephone number specified in its Administrative Questionnaire or to such other address, facsimile number, electronic mail address or telephone number as shall be designated by such party in a notice to the Borrower, the Administrative Agent, the Collateral Agent and the Issuing Banks.
All such notices and other communications shall be deemed to be given or made upon the earlier to occur of (i) actual receipt by the relevant party hereto and (ii)(A) if delivered by hand or by courier, when signed for by or on behalf of the relevant party hereto; (B) if delivered by mail, three (3) Business Days after deposit in the mails, postage prepaid; (C) if delivered by facsimile, when sent and receipt has been confirmed by telephone; and (D) if delivered by electronic mail, when delivered; provided that notices and other communications to the Administrative Agent or the Lenders pursuant to Sections 2.3, 2.6, 2.9 and 5.1 shall not be effective until received.
(c) Platform.
(i) The Borrower (and each Guarantor by signing its guaranty) agrees that the Administrative Agent may, but shall not be obligated to, make the Communications (as defined below) available to the Issuing Banks and the Lenders by posting the Communications on Debt Domain, Intralinks, Syndtrak or a substantially similar electronic transmission system (the “Platform”).
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(ii) The Platform is provided “as is” and “as available.” The Agent-Related Parties do not warrant the adequacy of the Platform and expressly disclaim liability for errors or omissions in the Communications. No warranty of any kind, express, implied, or statutory, including any warranty of merchantability, fitness for a particular purpose, non-infringement of third-party rights or freedom from viruses or other code defects, is made by any Agent-Related Party in connection with the Communications or the Platform. In no event shall any Agent-Related Party have any liability to the Borrower or the other Credit Parties, any Lender, 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 the Borrower’s, any other Credit Party’s, the Administrative Agent’s, or any other Secured Party’s transmission of communications through the Platform except for direct damages suffered by the Borrower or another Credit Party to the extent such damages, losses or expenses resulted from the gross negligence or willful misconduct by any such Agent-Related Party as determined by a final non-appealable judgment of a court of competent jurisdiction. “Communications” means, collectively, any notice, demand, communication.
13.3 No Waiver; Cumulative Remedies. No failure to exercise and no delay in exercising, on the part of the Administrative Agent, the Collateral Agent or any Lender, any right, remedy, power or privilege hereunder or under the other Credit Documents shall operate as a waiver thereof, nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege. The rights, remedies, powers and privileges herein provided are cumulative and not exclusive of any rights, remedies, powers and privileges provided by Requirements of Law.
13.4 Survival of Representations and Warranties. All representations and warranties made hereunder, in the other Credit Documents and in any document, certificate or statement delivered pursuant hereto or in connection herewith shall survive the execution and delivery of this Agreement and the making of the Loans hereunder. Such representations and warranties shall continue in full force and effect as long as any Loan or any other Obligation hereunder shall remain unpaid or unsatisfied (other than contingent indemnification obligations not then due and payable).
13.5 Payment of Expenses; Indemnification.
(a) The Borrower agrees (i) to pay or reimburse the Administrative Agent and the other Agents and the Arrangers for all reasonable and documented out-of-pocket costs and expenses incurred in connection with the preparation, negotiation, syndication and execution of this Agreement and the other Credit Documents, and any amendment, waiver, consent or other modification of the provisions hereof and thereof (whether or not the transactions contemplated thereby are consummated), and the consummation and administration (including all reasonable and documented costs, expenses, Other Taxes, assessments and other charges incurred by the Administrative Agent, Collateral Agent or any Lender in connection with any filing, registration, recording or perfection of any security interest contemplated by this Agreement or any Security Document or any other document referred to therein or conducting of title reviews, mortgage matches and collateral reviews) of the transactions contemplated hereby and thereby, including all Attorney Costs, which shall be limited to Paul Hastings LLP and one local counsel as reasonably necessary in any relevant jurisdiction material to the interests of the Lenders taken as a whole and one regulatory counsel to all such Persons as reasonably necessary with respect to a relevant regulatory matter, taken as a whole, (and solely in the case of an actual conflict of interest, one additional counsel and (if reasonably necessary) one local counsel and one regulatory counsel in each relevant jurisdiction to the affected Indemnitees similarly situated) and (ii) to pay or reimburse the Administrative Agent, Collateral Agent, the Issuing Banks and each Lender for all reasonable and documented out-of-pocket costs and expenses incurred in connection with the enforcement of any rights or remedies under this Agreement or the other Credit Documents
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(including all such costs and expenses incurred during any legal proceeding, including any bankruptcy or insolvency proceeding, and including all respective Attorney Costs). The agreements in this Section 13.5 and Section 4.1(d) shall survive the repayment of all other Obligations. All amounts due under this Section 13.5 and Section 4.1(d) shall be paid within thirty (30) days after written demand therefor (together with backup documentation supporting such reimbursement request). If any Credit Party fails to pay when due any costs, expenses or other amounts payable by it hereunder or under any Credit Document, such amount may be paid on behalf of such Credit Party by the Administrative Agent in its discretion.
(b) The Borrower shall indemnify and hold harmless each Agent, Lender, Issuing Bank, Arranger, Agent-Related Party and their Affiliates, and their respective Related Parties (collectively the “Indemnitees”) from and against any and all liabilities, losses, damages, claims, or out-of-pocket expenses (including Attorney Costs but limited in the case of legal fees and expenses to the reasonable and documented out-of-pocket fees, disbursements and other charges of one counsel to all Indemnitees taken as a whole (and solely in the case of an actual conflict of interest, one additional counsel to the affected Indemnitees, taken as a whole) and (if reasonably necessary) one local counsel, in any relevant material jurisdiction) of any kind or nature whatsoever which may at any time be imposed on, incurred by or asserted against any such Indemnitee in any way relating to or arising out of or in connection with (i) the execution, delivery, enforcement, performance or administration of any Credit Document or any other agreement, letter or instrument delivered in connection with the transactions contemplated thereby or the consummation of the transactions contemplated thereby, (ii) any Commitment, Letter of Credit, or Loan or the use or proposed use of the proceeds therefrom (including any refusal by an Issuing Bank to honor a demand for payment under a Letter of Credit if the documents presented in connection with such demand do not strictly comply with the terms of such Letter of Credit), (iii) the violation of, noncompliance with or liability under, any applicable Environmental Law by the Credit Parties, any actual or alleged Environmental Claim regarding liability or obligation of or relating to the Credit Parties or any Subsidiary, or any actual or alleged presence, Release or threatened Release of Hazardous Materials involving or relating to the operations of the Borrower, any of its Subsidiaries or any of the Oil and Gas Properties, including any Release or threatened Release that occurs during any period when any Agent or Lender is in possession of any Oil and Gas Property to the extent not arising out of the action or omission of such Agent or Lender, or (iv) any actual or prospective claim, litigation, investigation or proceeding relating to any of the foregoing, whether based on contract, tort or any other theory (including any investigation of, preparation for, or defense of any pending or threatened claim, investigation, litigation or proceeding) (a “Proceeding”) and regardless of whether any Indemnitee is a party thereto or whether or not such Proceeding is brought by the Borrower or any other Person and, in each case, whether or not caused by or arising, in whole or in part, out of the negligence of the Indemnitee (all of the foregoing, collectively, the “Indemnified Liabilities”); provided that such indemnity shall not, as to any Indemnitee, be available to the extent that such liabilities, losses, damages, claims or out-of-pocket expenses resulted from (x) the gross negligence or willful misconduct of such Indemnitee or of any of its Related Indemnified Persons, as determined by a final non-appealable judgment of a court of competent jurisdiction (y) other than with respect to any Agent or Agent-Related Party and their Affiliates, a material breach of any obligations under any Credit Document by such Indemnitee or of any of its Related Indemnified Persons, as determined by a final non-appealable judgment of a court of competent jurisdiction or (z) any dispute solely among Indemnitees other than any claims against an Indemnitee in its capacity or in fulfilling its role as an administrative agent or collateral agent or arranger or any similar role under this Agreement and other than any claims arising out of any act or omission of the Borrower or any of its Affiliates (as determined in a final and non-appealable judgment of a court of competent jurisdiction). No Indemnitee shall be liable for any damages arising from the use by others of any information or other materials obtained through IntraLinks or other similar information transmission systems in connection with this Agreement (except for direct (as opposed to indirect, special, punitive or consequential) damages resulting from the gross negligence or willful misconduct, as determined by a court of competent jurisdiction in a final and non-appealable judgment, of such Indemnitee), nor shall any Indemnitee, Agent-Related Parties, Credit Party
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or any Subsidiary have any liability for any special, punitive, indirect or consequential damages relating to this Agreement or any other Credit Document or arising out of its activities in connection herewith or therewith (whether before or after the Closing Date) (other than, in the case of any Credit Party, in respect of any such damages incurred or paid by an Indemnitee to a third party, or which are included in a third-party claim, for which the Borrower is required to indemnify such Indemnitee pursuant to this Section 13.5(b), and for any out-of-pocket expenses related thereto). In the case of an investigation, litigation or other Proceeding to which the indemnity in this Section 13.5 applies, such indemnity shall be effective whether or not such investigation, litigation or Proceeding is brought by any Credit Party, any Subsidiary of any Credit Party, its directors, stockholders or creditors or an Indemnitee or any other Person, whether or not any Indemnitee is otherwise a party thereto and whether or not any of the transactions contemplated hereunder or under any of the other Credit Documents are consummated. All amounts due under this Section 13.5 shall be paid within thirty (30) days after written demand therefor (together with backup documentation supporting such reimbursement request); provided, however, that such Indemnitee shall promptly refund such amount to the extent that there is a final judicial determination that such Indemnitee was not entitled to indemnification rights with respect to such payment pursuant to the express terms of this Section 13.5. The agreements in this Section 13.5 shall survive the resignation of the Administrative Agent, the Collateral Agent or Issuing Bank, the replacement of any of the foregoing or any Lender and the repayment, satisfaction or discharge of all the other Obligations. For the avoidance of doubt, this Section 13.5(b) shall not apply to Taxes, except any Taxes that represent liabilities, obligations, losses, damages, penalties, claims, demands, actions, prepayments, suits, costs, expenses and disbursements arising from any non-Tax claims.
13.6 Successors and Assigns; Participations and Assignments.
(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 each Issuing Bank that issues any Letter of Credit), except that (i) except as expressly permitted by Section 10.3, the Borrower may not assign or otherwise transfer any of its rights or obligations hereunder without the prior written consent of the Administrative Agent and each Lender (and any attempted assignment or transfer by the Borrower without such consent shall be null and void) and (ii) no Lender may assign or otherwise transfer any of its rights or obligations hereunder except in accordance with this Section 13.6. 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 each Issuing Bank that issues any Letter of Credit), Participants (to the extent provided in clause (c) of this Section 13.6) and, to the extent expressly contemplated hereby, the Agent-Related Parties and each other Person entitled to indemnification under Section 13.5) any legal or equitable right, remedy or claim under or by reason of this Agreement.
(b) (i) Subject to the conditions set forth in Section 13.6(b)(ii) below, any Lender may at any time assign to one or more assignees (other than the Borrower, its Subsidiaries and their respective Affiliates, any natural person, or any Defaulting Lender) all or a portion of its rights and obligations under this Agreement (including all or a portion of its Commitments and the Loans (including participations in L/C Obligations) at the time owing to it) with the prior written consent of:
(A) the Borrower (not to be unreasonably withheld or delayed); provided that the Borrower shall be deemed to have consented to any such assignment unless it shall object thereto by written notice to the Administrative Agent within ten (10) Business Days after having received notice thereof; provided, further, that no consent of the Borrower shall be required (x) for an assignment to an existing Lender and their Affiliates and (y) for an assignment if an Event of Default has occurred and is continuing; and
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(B) the Administrative Agent and each Issuing Bank (in each case, not to be unreasonably withheld or delayed); provided that no consent of the Administrative Agent shall be required for an assignment to an existing Lender and their Affiliates.
(ii) Assignments shall be subject to the following additional conditions:
(A) except in the case of an assignment of the entire remaining amount of the assigning Lender’s Commitment or Loans, the amount of the Commitment or Loans of the assigning Lender subject to each such assignment (determined as of the date the Assignment and Assumption with respect to such assignment is delivered to the Administrative Agent) shall not be less than $5,000,000 or an integral multiple of $5,000,000, unless each of the Borrower, each Issuing Bank and the Administrative Agent otherwise consents (which consents shall not be unreasonably withheld or delayed); 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, together with a processing and recordation fee in the amount 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 and the Administrative Agent shall enter the relevant information in the Register pursuant to clause (b)(iv) of this Section 13.6; and
(D) the assignee, if it shall not be a Lender immediately prior to such assignment, shall deliver to the Administrative Agent an Administrative Questionnaire and applicable Tax forms (including those described in Section 5.4(f)).
(iii) Subject to acceptance and recording thereof pursuant to clause (b)(iv) of this Section 13.6, 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 Sections 2.10, 2.11, 3.11, 5.4 and 13.5 (subject to the obligations and limitations of such Sections)). Any assignment or transfer by a Lender of rights or obligations under this Agreement that does not comply with this Section 13.6 shall be treated for purposes of this Agreement as a sale by such Lender of a participation in such rights and obligations in accordance with clause (c) of this Section 13.6.
(iv) The Administrative Agent, acting solely for this purpose as a nonfiduciary agent of the Borrower, shall maintain at the Administrative Agent’s Office a copy of each Assignment and Assumption delivered to it and a register for the recordation of the names and addresses of the Lenders (including any SPVs that provide all or any part of a Loan pursuant to Section 13.6(g) hereof), and the Maximum Credit Amount and Elected Commitment, and principal amount (and stated interest amounts) of the Loans and L/C Obligations and any payment made by each Issuing Bank under any applicable Letter of Credit owing to, each Lender pursuant to the terms hereof from
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time to time (the “Register”). Further, the Register shall contain the name and address of the Administrative Agent and the lending office through which each such Person acts under this Agreement. The entries in the Register shall be conclusive absent manifest error, and the Borrower, the Administrative Agent, the Collateral Agent, each Issuing Bank and the Lenders shall treat each Person whose name is recorded in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement, notwithstanding notice to the contrary. The Register shall be available for inspection by the Borrower, the Collateral Agent, each Issuing Bank and, solely with respect to itself, each other Lender, and any other Person to the extent necessary to establish that such obligations are in registered form under Section 5f.103-1(c) of the United States Treasury Regulations, at any reasonable time and from time to time upon reasonable prior notice. The parties intend that all extensions of credit to the Borrower and, if applicable, its Affiliates hereunder, shall at all times be treated as being in registered form within the meaning of Sections 163(f), 871(h)(2) and 881(c)(2) of the Code (and any successor provisions) and the regulations thereunder and shall interpret the provisions herein regarding the Register and the Participant Register (as defined in paragraph (c) below) consistent with such intent.
(v) Upon its receipt of a duly completed Assignment and Assumption executed by an assigning Lender and an assignee, the assignee’s completed Administrative Questionnaire (unless the assignee shall already be a Lender hereunder), the processing and recordation fee referred to in clause (b) of this Section 13.6 (unless waived) and any written consent to such assignment required by clause (b) of this Section 13.6, the Administrative Agent shall accept such Assignment and Assumption and record the information contained therein in the Register.
(c) (i) Any Lender may, without the consent of the Borrower, the Administrative Agent or any Issuing Bank, sell participations to one or more banks or other entities other than any Defaulting Lender, the Borrower or any Subsidiary of the Borrower or their respective Affiliates or natural persons (each, a “Participant”) in all or a portion of such Lender’s rights and obligations under this Agreement (including all or a portion of its Commitments and the Loans owing to it); provided that (A) such Lender’s obligations under this Agreement shall remain unchanged, (B) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations and (C) the Borrower, the Administrative Agent, each Issuing Bank and the other Lenders shall continue to deal solely and directly with such Lender in connection with such Lender’s rights and obligations under this Agreement. Any agreement or instrument pursuant to which a Lender sells such a participation shall provide that such Lender shall retain the sole right to enforce this Agreement and to approve any amendment, modification or waiver of any provision of this Agreement or any other Credit Document; provided that such agreement or instrument may provide that such Lender will not, without the consent of the Participant, agree to any amendment, modification or waiver described in clause (i) or (ii) of the second proviso of the second sentence of Section 13.1(a) that affects such Participant, provided that the Participant shall have no right to consent to any modification to the percentages specified in the definitions of the terms “Majority Lenders” or “Required Lenders”. Subject to clause (c)(ii) of this Section 13.6, the Borrower agrees that each Participant shall be entitled to the benefits of Sections 2.10, 2.11, 3.11 and 5.4 to the same extent as if it were a Lender (subject to the limitations and requirements of those Sections and Sections 2.12 and 13.7 (it being understood that the documents required under Section 5.4(f) shall be delivered to the participating Lender)) and had acquired its interest by assignment pursuant to clause (b) of this Section 13.6). To the extent permitted by Requirements of Law, each Participant also shall be entitled to the benefits of Section 13.8(b) as though it were a Lender; provided such Participant agrees to be subject to Section 13.8(a) as though it were a Lender.
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(ii) A Participant shall not be entitled to receive any greater payment under Section 2.10, 2.11, 3.11 or 5.4 than the applicable Lender would have been entitled to receive with respect to the participation sold to such Participant, except to the extent the entitlement to receive a greater payment results from a Change in Law that occurs after the Participant acquired the applicable participation; provided that the Participant shall be subject to the provisions in Section 2.12 as if it were an assignee under clauses (a) and (b) of this Section 13.6. Each Lender that sells a participation or grants the right to make all or part of any Loan to a SPV (the “SPV Loan”) shall, acting solely for this purpose as a nonfiduciary agent of the Borrower, maintain a register on which it enters the name and address of each participant and SPV and the principal amounts (and stated interest amounts) of each Participant’s and SPV’s interest in the Loans or other obligations under this Agreement (the “Participant Register”). The entries in the Participant Register shall be conclusive, absent manifest error, and each party hereto shall treat each Person whose name is recorded in the Participant Register as the owner of such participation and SPV Loan for all purposes of this Agreement notwithstanding any notice to the contrary. No Lender shall have any obligation to disclose all or any portion of the Participant Register to any Person (including the identity of any Participant or any information relating to a Participant’s and a SPV’s interest in any commitments, loans, letters of credit or its other obligations under any Credit Document) except to the extent that such disclosure is necessary to establish that such commitment, loan, letter of credit or other obligation is in registered form under Section 5f.103-1(c) or Proposed Section 1.163-5(b) of the United States Treasury Regulations (or, in each case, any amended or successor version).
(d) Any Lender may, without the consent of the Borrower, any Issuing Bank or the Administrative Agent, 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 any central bank having jurisdiction over such Lender, and this Section 13.6 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. In order to facilitate such pledge or assignment or for any other reason, the Borrower hereby agrees that, upon request of any Lender at any time and from time to time after the Borrower has made its initial borrowing hereunder, the Borrower shall provide to such Lender, at the Borrower’s own expense, a promissory note, substantially in the form of Exhibit G evidencing the Loans owing to such Lender.
(e) Subject to Section 13.16, the Borrower authorizes each Lender to disclose to any Participant, secured creditor of such Lender or assignee (each, a “Transferee”) and any prospective Transferee any and all Confidential Information and financial information in such Lender’s possession concerning the Borrower and its Affiliates that has been delivered to such Lender by or on behalf of the Borrower and its Affiliates pursuant to this Agreement or that has been delivered to such Lender by or on behalf of the Borrower and its Affiliates in connection with such Lender’s credit evaluation of the Borrower and its Affiliates prior to becoming a party to this Agreement.
(f) The words “execution,” “signed,” “signature,” and words of like import in any Assignment and Assumption shall be deemed to include electronic signatures or the keeping of records in electronic form, each of which shall be of the same legal effect, validity or enforceability as a manually executed signature or the use of a paper-based recordkeeping system, as the case may be, to the extent and as provided for in any applicable law, including the Federal Electronic Signatures in Global and National Commerce Act, the New York State Electronic Signatures and Records Act, or any other similar state laws based on the Uniform Electronic Transactions Act.
(g) Notwithstanding anything to the contrary contained herein, any Lender (a “Granting Lender”) may grant to a special purpose funding vehicle (a “SPV”), identified as such in writing from time to time by the Granting Lender to the Administrative Agent and the Borrower, the option to provide to the Borrower all or any part of any Loan that such Granting Lender would otherwise be obligated to make the
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Borrower pursuant to this Agreement; provided that (i) nothing herein shall constitute a commitment by any SPV to make any Loan and (ii) if an SPV elects not to exercise such option or otherwise fails to provide all or any part of such Loan, the Granting Lender shall be obligated to make such Loan pursuant to the terms hereof. The making of a Loan by an SPV hereunder shall utilize the Commitment of the Granting Lender to the same extent, and as if, such Loan were made by such Granting Lender. Each party hereto hereby agrees that no SPV shall be liable for any indemnity or similar payment obligation under this Agreement (all liability for which shall remain with the Granting Lender). In furtherance of the foregoing, each party hereto hereby agrees (which agreement shall survive the termination of this Agreement) that, prior to the date that is one (1) year and one (1) day after the payment in full of all outstanding commercial paper or other senior indebtedness of any SPV, it shall not institute against, or join any other person in instituting against, such SPV any bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings under the laws of the United States or any state thereof. In addition, notwithstanding anything to the contrary contained in this Section 13.6, any SPV may (A) with notice to, but without the prior written consent of, the Borrower and the Administrative Agent and without paying any processing fee therefor, assign all or a portion of its interests in any Loans to the Granting Lender or to any financial institutions (consented to by the Borrower and Administrative Agent) providing liquidity and/or credit support to or for the account of such SPV to support the funding or maintenance of Loans and (B) disclose on a confidential basis any non-public information relating to its Loans to any rating agency, commercial paper dealer or provider of any surety, guarantee or credit or liquidity enhancement to such SPV. This Section 13.6(g) may not be amended without the written consent of the SPV. Notwithstanding anything to the contrary in this Agreement, subject to the following sentence, each SPV shall be entitled to the benefits of Sections 2.10, 2.11, 3.11 and 5.4 to the same extent as if it were a Lender (subject to the limitations and requirements of Sections 2.10, 2.11, 3.11 and 5.4 as though it were a Lender, and Sections 2.12 and 13.7), and had acquired its interest by assignment pursuant to clause (b) of this Section 13.6). Notwithstanding the prior sentence, an SPV shall not be entitled to receive any greater payment under Section 2.10, 2.11, 3.11 or 5.4 than its Granting Lender would have been entitled to receive absent the grant to such SPV, unless such grant to such SPV is made with the Borrowers’ prior written consent.
(h) Any request for consent of the Borrower pursuant to Section 13.6(b)(i)(A) and related communications, with respect to any request for consent in respect of any assignment relating to Commitments or Loans, shall be delivered by the Administrative Agent simultaneously to (A) any recipient that is an employee of the Borrower, as designated in writing to the Administrative Agent by the Borrower from time to time (if any) and (B) the chief financial officer of the Borrower or any other Authorized Officer designated by the Borrower in writing to the Administrative Agent from time to time.
13.7 Replacements of Lenders under Certain Circumstances.
(a) In the event that any Lender (i) requests reimbursement for amounts owing, or requires any Credit Party to pay any Indemnified Taxes or additional amounts to such Lender or any Governmental Authority for the account of such Lender, pursuant to Section 2.10, 3.11 or 5.4 (other than Section 5.4(b)), (ii) is affected in the manner described in Section 2.10(a)(ii) and as a result thereof any of the actions described in such Section is required to be taken or (iii) becomes a Defaulting Lender, the Borrower shall be entitled to replace such Lender; provided that, (A) such replacement does not conflict with any Requirement of Law, (B) the replacement bank or institution shall purchase, at par, all Loans and the Borrower shall pay all other amounts (other than any disputed amounts), pursuant to Section 2.10, 3.11 or 5.4, as the case may be owing to such replaced Lender prior to the date of replacement, (C) the replacement bank or institution, if not already a Lender, and the terms and conditions of such replacement, shall be reasonably satisfactory to the Administrative Agent and each Issuing Bank (except to the extent such Issuing Banks is, or is an Affiliate of, the Lender being replaced), (D) the replaced Lender shall be obligated to make such replacement in accordance with the provisions of Section 13.6(b) (provided that the Borrower shall be obligated to pay the registration and processing fee referred to therein as long as the replacement Lender pays such fee) and (E) in the case of a replacement resulting from a claim for compensation under Section 2.10, such replacement will result in a reduction in such compensation or payments thereafter.
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(b) If any Lender (such Lender, a “Non-Consenting Lender”) failed to consent to a proposed amendment, waiver, discharge or termination that pursuant to the terms of Section 13.1 requires the consent of all of the Lenders affected or the Required Lenders and with respect to which the Majority Lenders (or, in the case of a Lender becoming a Non-Consenting Lender due to its failure to consent to a proposed increase in the Borrowing Base, the Required Lenders) shall have granted their consent then the Borrower shall have the right (unless such Non-Consenting Lender grants such consent or approves such Proposed Borrowing Base and provided that no Event of Default shall have occurred and be continuing) to replace such Non-Consenting Lender by requiring such Non-Consenting Lender to assign its Loans and its Commitments hereunder to one or more assignees reasonably acceptable to the Administrative Agent and each Issuing Bank (except to the extent any such Issuing Bank is, or is an Affiliate of, the Lender being replaced); provided that, (i) all Obligations of the Borrower owing to such Non-Consenting Lender being replaced (other than principal and interest) shall be paid in full to such Non-Consenting Lender concurrently with such assignment, (ii) the replacement Lender shall purchase the foregoing by paying to such Non-Consenting Lender a price equal to the principal amount thereof plus accrued and unpaid interest thereon, (iii) the Borrower, the Administrative Agent and such Non-Consenting Lender shall otherwise comply with Section 13.6 (provided that the Borrower shall not be obligated to pay the registration and processing fee referred to therein as long as the replacement Lender pays such fee) and (iv) the replacement Lender shall consent to such proposed amendment, waiver, discharge, termination or Borrowing Base determination that the Non-Consenting Lender failed to consent to.
(c) Notwithstanding anything herein to the contrary each party hereto agrees that any assignment pursuant to the terms of this Section 13.7 may be effected pursuant to an Assignment and Assumption executed by the Borrower, the Administrative Agent, each Issuing Bank and the assignee and that the Lender making such assignment need not be a party thereto.
(d) Any such Lender replacement pursuant to this Section 13.7 shall not be deemed to be a waiver of any rights that the Borrower, the Administrative Agent or any other Lender shall have against the replaced Lender.
13.8 Adjustments; Set-off.
(a) If any Lender (a “Benefited Lender”) shall at any time receive any payment in respect of any principal of or interest on all or part of the Loans made by it, or the participations in Letter of Credit Obligations held by it, or receive any collateral in respect thereof (whether voluntarily or involuntarily, by set-off, pursuant to events or proceedings of the nature referred to in Section 11.5, or otherwise), in a greater proportion than any such payment to or collateral received by any other Lender entitled thereto, if any, in respect of such other Lender’s Loans, or interest thereon, such Benefited Lender shall (i) notify the Administrative Agent of such fact, and (ii) purchase for cash at face value from the other Lenders a participating interest in such portion of each such other Lender’s Loans, or shall provide such other Lenders with the benefits of any such collateral, or the proceeds thereof, as shall be necessary to cause such Benefited Lender to share the excess payment or benefits of such collateral or proceeds ratably in accordance with the aggregate principal of and accrued interest on their respective Loans and other amounts owing them; provided, however, that (A) if all or any portion of such excess payment or benefits is thereafter recovered from such Benefited Lender, such purchase shall be rescinded, and the purchase price and benefits returned, to the extent of such recovery, but without interest and (B) the provisions of this paragraph shall not be construed to apply to (1) any payment made by the Borrower or any other Guarantor pursuant to and in accordance with the terms of this Agreement and the other Credit Documents, (2) any payment obtained by a Lender as consideration for the assignment of or sale of a participation in any of its
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Loans, Commitments or participations in Drawings to any assignee or participant or (3) any disproportionate payment obtained by a Lender as a result of the extension by Lenders of the maturity date or expiration date of some but not all Loans or Commitments or any increase in the Applicable Margin in respect of Loans or Commitments of Lenders that have consented to any such extension. Each Credit Party consents to the foregoing and agrees, to the extent it may effectively do so under Requirements of Law, that any Lender acquiring a participation pursuant to the foregoing arrangements may exercise against such Credit Party rights of set-off and counterclaim with respect to such participation as fully as if such Lender were a direct creditor of such Credit Party in the amount of such participation.
(b) After the occurrence and during the continuance of an Event of Default, in addition to any rights and remedies of the Lenders and Issuing Banks provided by Requirements of Law, each Lender, each Issuing Bank and their respective Affiliates, shall have the right, without prior notice to the Borrower, any such notice being expressly waived by the Borrower to the extent permitted by applicable Requirements of Law, upon any amount becoming due and payable by the Credit Parties hereunder or under any Credit Document (whether at the stated maturity, by acceleration or otherwise) to set-off and appropriate and apply against such amount any and all deposits (general or special, time or demand, provisional or final), in any currency, and any other credits, indebtedness or claims, in any currency, in each case whether direct or indirect, absolute or contingent, matured or unmatured, at any time held or owing by such Lender or any branch or agency thereof to or for the credit or the account of the Borrower. Each Lender or Issuing Bank agrees promptly to notify the Borrower (and the Credit Parties, if applicable) and the Administrative Agent after any such set-off and application made by such Lender; provided that the failure to give such notice shall not affect the validity of such set-off and application.
13.9 Counterparts. This Agreement may be executed by one or more of the parties to this Agreement on any number of separate counterparts (including by facsimile or other electronic transmission, i.e. a “pdf” or a “tif”), and all of said counterparts taken together shall be deemed to constitute one and the same instrument. A set of the copies of this Agreement signed by all the parties shall be lodged with the Borrower and the Administrative Agent. The words “execution”, “execute”, “signed”, “signature”, “delivery” and words of like import in or related to any document to be signed in connection with this Agreement, the other Credit Documents and the transactions contemplated hereby shall be deemed to include electronic signatures or the keeping of records in electronic form, each of which shall be of the same legal effect, validity or enforceability as a manually executed signature or the use of a paper-based recordkeeping system, as the case may be, to the extent and as provided for in any applicable law, including the Federal Electronic Signatures in Global and National Commerce Act, the New York State Electronic Signatures and Records Act, or any other similar state laws based on the Uniform Electronic Transactions Act; provided that 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, that, without limiting the foregoing, (i) 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 (ii) upon the request of the Administrative Agent any electronic signature shall be promptly followed by a manually executed original counterpart. Notwithstanding anything to the contrary herein, the Administrative Agent acknowledges and agrees that any (i) Notice of Borrowing and (ii) notice of prepayment pursuant to Section 5.1 or Section 5.2 digitally signed and/or electronically transmitted by telecopy, emailed “.pdf” or any other electronic means that reproduces an image of an actual executed signature page shall have the same legal effect, validity and enforceability as any paper original.
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13.10 Severability. Any provision of this Agreement that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.
13.11 Integration. This Agreement and the other Credit Documents represent the agreement of the Borrower, the Guarantors, the Collateral Agent, the Administrative Agent and the Lenders with respect to the subject matter hereof and thereof, and there are no promises, undertakings, representations or warranties by the Borrower, the Guarantors, any Agent nor any Lender relative to subject matter hereof not expressly set forth or referred to herein or in the other Credit Documents.
13.12 GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
13.13 Submission to Jurisdiction; Waivers. Each party hereto hereby irrevocably and unconditionally:
(a) submits for itself and its property in any legal action or proceeding relating to this Agreement and the other Credit Documents to which it is a party, or for recognition and enforcement of any judgment in respect thereof, to the exclusive general jurisdiction of the courts of the State of New York and the courts of the United States of America for the Southern District of New York, in each case located in New York County, and appellate courts from any thereof; provided that nothing contained herein or in any other Credit Document will prevent any Lender, the Collateral Agent or the Administrative Agent from bringing any action to enforce any award or judgment or exercise any right under the Credit Documents or against any Collateral or any other property of any Credit Party in any other forum in which jurisdiction can be established;
(b) consents that any such action or proceeding shall be brought in such courts and waives any objection that it may now or hereafter have to the venue of any such action or proceeding in any such court or that such action or proceeding was brought in an inconvenient court and agrees not to plead or claim the same;
(c) agrees that service of process in any such action or proceeding may be effected by mailing a copy thereof by registered or certified mail (or any substantially similar form of mail), postage prepaid, to such Person at its address set forth on Schedule 13.2 at such other address of which the Administrative Agent shall have been notified pursuant to Section 13.2;
(d) agrees that nothing herein shall affect the right to effect service of process in any other manner permitted by Requirements of Law or shall limit the right to sue in any other jurisdiction;
(e) without limitation of Sections 12.7 and 13.5, waives, to the maximum extent not prohibited by law, any right it may have to claim or recover in any legal action or proceeding referred to in this Section 13.13 any special, exemplary, punitive or consequential damages (other than, in the case of any Credit Party, in respect of any such damages incurred or paid by an Indemnitee to a third party, or which are included in a third-party claim, and for any out-of-pocket expenses related thereto); and
(f) agrees that a final judgment in any 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.
13.14 Acknowledgments. The Borrower hereby acknowledges that:
(a) it has been advised by counsel in the negotiation, execution and delivery of this Agreement and the other Credit Documents;
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(b) (i) the credit facility provided for hereunder and any related arranging or other services in connection therewith (including in connection with any amendment, waiver or other modification hereof or of any other Credit Document) are an arm’s-length commercial transaction between the Borrower and the other Credit Parties, on the one hand, and the Administrative Agent, the Lenders and the other Agents on the other hand, and the Borrower and the other Credit Parties are capable of evaluating and understanding and understand and accept the terms, risks and conditions of the transactions contemplated hereby and by the other Credit Documents (including any amendment, waiver or other modification hereof or thereof); (ii) in connection with the process leading to such transaction, each of the Administrative Agent, other Agents and the Lenders, is and has been acting solely as a principal and is not the financial advisor, agent or fiduciary for any of the Borrower, any other Credit Parties or any of their respective Affiliates, equity holders, creditors or employees or any other Person; (iii) neither the Administrative Agent, any other Agent, any Arranger, nor any Lender has assumed or will assume an advisory, agency or fiduciary responsibility in favor of the Borrower or any other Credit Party with respect to any of the transactions contemplated hereby or the process leading thereto, including with respect to any amendment, waiver or other modification hereof or of any other Credit Document (irrespective of whether the Administrative Agent or any other Agent, any Arranger, or any Lender has advised or is currently advising any of the Borrower, the other Credit Parties or their respective Affiliates on other matters) and none of the Administrative Agent, any Agent, any Arranger or any Lender has any obligation to any of the Borrower, the other Credit Parties or their respective Affiliates with respect to the transactions contemplated hereby except those obligations expressly set forth herein and in the other Credit Documents; (iv) the Administrative Agent and its Affiliates, each other Agent and each of its Affiliates and each Lender and its Affiliates may be engaged in a broad range of transactions that involve interests that differ from those of the Borrower and its respective Affiliates, and none of the Administrative Agent, any other Agent or any Lender has any obligation to disclose any of such interests by virtue of any advisory, agency or fiduciary relationship; and (v) none of the Administrative Agent, any Agent or any Lender has provided and none will provide any legal, accounting, regulatory or tax advice with respect to any of the transactions contemplated hereby (including any amendment, waiver or other modification hereof or of any other Credit Document) and the Borrower has consulted its own legal, accounting, regulatory and tax advisors to the extent it has deemed appropriate. The Borrower hereby waives and releases, to the fullest extent permitted by law, any claims that it may have against the Administrative Agent and each Agent with respect to any breach or alleged breach of agency or fiduciary duty; and
(c) no joint venture is created hereby or by the other Credit Documents or otherwise exists by virtue of the transactions contemplated hereby among the Lenders or among the Borrower, on the one hand, and any Lender, on the other hand.
13.15 WAIVERS OF JURY TRIAL. THE BORROWER, EACH AGENT, EACH ISSUING BANK AND EACH LENDER HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER CREDIT DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.
13.16 Confidentiality. The Administrative Agent, each other Agent, any Issuing Bank and each other Lender shall hold all information not marked as “public information” and furnished by or on behalf of the Borrower or any of its Subsidiaries in connection with such Lender’s evaluation of whether to become a Lender hereunder or obtained by such Lender, the Administrative Agent, any Issuing Bank or such other Agent pursuant to the requirements of this Agreement (“Confidential Information”), confidential in accordance with its customary procedure for handling confidential information of this nature and in any event may make disclosure to any other Lender hereto and (a) to its Affiliates and its Affiliates’ employees, legal counsel, independent auditors and other experts or agents (collectively, the “Representatives“) who need to know such information in connection with the Transactions and are informed of the confidential nature of such information (it being understood that the Persons to whom such disclosure is made will be informed
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of the confidential nature of such information and instructed to keep such information confidential); (b) to the extent requested by any Governmental Authority or self-regulatory authority having jurisdiction over such Person; provided that unless prohibited by applicable Requirements of Law the Administrative Agent or such Lender, as applicable, agrees that it will notify the Borrower (without any liability for a failure to so notify the Borrower) as soon as practicable in the event of any such disclosure by such Person (other than at the request of a regulatory authority or examiner); (c) to the extent required by applicable Requirements of Law or regulations or by any subpoena or similar legal process; provided, that the Administrative Agent or such Lender, as applicable, agrees that it will notify the Borrower as soon as practicable in the event of any such disclosure by such Person (other than at the request of a regulatory authority or examiner) unless such notification is prohibited by law, rule or regulation; (d) subject to an agreement containing provisions at least as restrictive as those set forth in this Section 13.16 (or as may otherwise be reasonably acceptable to the Borrower), to any pledgee referred to in Section 13.6(d), counterparty to a Hedge Agreement, credit insurer, eligible assignee of or participant in, or any prospective eligible assignee of or participant in any of its rights or obligations under this Agreement pursuant to Section 13.6, provided that the disclosure of any such Confidential Information to any Lenders or eligible assignees or participants shall be made subject to the acknowledgement and acceptance by such Lender, eligible assignee or participant that such Confidential Information is being disseminated on a confidential basis (on substantially the terms set forth in this Section 13.16 or as otherwise reasonably acceptable to the Borrower) in accordance with the standard processes of the Administrative Agent or customary market standards for dissemination of such type of Confidential Information; (e) with the prior written consent of the Borrower; (f) to the extent such Confidential Information becomes public other than by reason of disclosure by such Person in breach of this Agreement; (g) to any rating agency when required by it (it being understood that, prior to any such disclosure, such rating agency shall undertake to preserve the confidentiality of any information relating to Credit Parties and their Subsidiaries received by it from such Lender) or to the CUSIP Service Bureau or any similar organization; or (h) to the extent such Confidential Information is independently developed by or was in the prior possession of the Administrative Agent, the Arrangers, such Lender or any of their respective Affiliates so long as not based on information obtained in a manner that would violate this Section 13.6; provided that in no event shall any Lender, the Administrative Agent, any Issuing Bank or any other Agent be obligated or required to return any materials furnished by the Borrower or any Subsidiary. In addition, each Lender, the Administrative Agent and each other Agent may provide Confidential Information to prospective Transferees or to any pledgee referred to in Section 13.6 or to prospective direct or indirect contractual counterparties in Hedge Agreements to be entered into in connection with Loans made hereunder as long as such Person is advised of and agrees to be bound by the provisions of this Section 13.16 or confidentiality provisions at least as restrictive as those set forth in this Section 13.16. “Information” means all information received from the Borrower relating to the Borrower or its business, other than any such information that is available to the Administrative Agent, any Issuing Bank or any Lender on a non-confidential basis prior to disclosure by the Borrower and other than information pertaining to this Agreement routinely provided by the arrangers to data service providers, including league table providers, that serve the lending industry.
Each Lender acknowledges that information furnished to it pursuant to this Agreement or the other Credit Documents may include material non-public information concerning the Borrower and its Affiliates and their related parties or their respective securities, and confirms that it has developed compliance procedures regarding the use of material non-public information and that it will handle such material non-public information in accordance with those procedures and applicable law, including federal and state securities laws.
All information, including requests for waivers and amendments, furnished by the Borrower or the Administrative Agent pursuant to, or in the course of administering, this Agreement or the other Credit Documents will be syndicate-level information, which may contain material non-public information about the Borrower and its Affiliates and their related parties or their respective securities. Accordingly, each Lender represents to the Borrower and the Administrative Agent that it has identified in its Administrative Questionnaire a credit contact who may receive information that may contain material non-public information in accordance with its compliance procedures and applicable law, including federal and state securities laws.
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13.17 Release of Collateral and Guarantee Obligations.
(a) The Lenders hereby irrevocably agree that the Liens granted to the Collateral Agent by the Credit Parties on any Collateral shall be automatically released (i) in full, as set forth in clause (b) below, (ii) upon the Disposition of such Collateral (including as part of or in connection with any other Disposition permitted hereunder) to any Person other than another Credit Party, to the extent such Disposition is made in compliance with the terms of this Agreement (and the Collateral Agent may rely conclusively on a certificate to that effect provided to it by any Credit Party upon its reasonable request without further inquiry), (iii) upon any Collateral becoming an Excluded Equity Interest, an Excluded Asset or becoming owned by an Excluded Subsidiary other than a Subsidiary Guarantor, (iv) to the extent such Collateral is comprised of property leased to a Credit Party, upon termination or expiration of such lease, (v) if the release of such Lien is approved, authorized or ratified in writing by the Majority Lenders (or such other Secured Parties whose consent may be required in accordance with Section 13.1), (vi) to the extent the property constituting such Collateral is owned by any Guarantor, upon the release of such Guarantor from its obligations under the Guarantee in accordance with the second succeeding sentence or Section 5.14 of the Guarantee and (vii) as required by the Collateral Agent to effect any Disposition of Collateral in connection with any exercise of remedies of the Collateral Agent pursuant to the Security Documents. Any such release shall not in any manner discharge, affect, or impair the Obligations or any Liens (other than those being released) upon (or obligations (other than those being released) of the Credit Parties in respect of) all interests retained by the Credit Parties, including the proceeds of any Disposition, all of which shall continue to constitute part of the Collateral except to the extent otherwise released in accordance with the provisions of the Credit Documents. Additionally, the Lenders hereby irrevocably agree that the Guarantors shall be released from the Guarantees upon consummation of any transaction permitted hereunder resulting in such Subsidiary ceasing to constitute a Restricted Subsidiary or otherwise becoming an Excluded Subsidiary. Any representation, warranty or covenant contained in any Credit Document relating to any such Collateral or Guarantor shall no longer be deemed to be repeated. In connection with any release hereunder, the Administrative Agent and Collateral Agent shall promptly take such action and execute any such documents as may be reasonably requested by the Borrower and at the Borrower’s expense in connection with the release of any Liens created by any Credit Document in respect of such Subsidiary, property or asset.
(b) Notwithstanding anything to the contrary contained herein or any other Credit Document, when Payment in Full has occurred (subject to any contingent or indemnification obligations not then due and payable), upon request of the Borrower, the Administrative Agent and/or Collateral Agent, as applicable, shall (without notice to, or vote or consent of, any Secured Party) take such actions as shall be required to release its security interest in all Collateral, and to release all obligations under any Credit Document, whether or not on the date of such release there may be any contingent or indemnification obligations not then due and payable. Any such release of Obligations shall be deemed subject to the provision that such Obligations shall be reinstated if after such release any portion of any payment in respect of the Obligations guaranteed thereby shall be rescinded or must otherwise be restored or returned upon the insolvency, bankruptcy, dissolution, liquidation or reorganization of the Borrower or any Guarantor, or upon or as a result of the appointment of a receiver, intervenor or conservator of, or trustee or similar officer for, the Borrower or any Guarantor or any substantial part of its property, or otherwise, all as though such payment had not been made.
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13.18 Patriot Act. The Agents and each Lender hereby notify 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 “Patriot Act”), it is required to obtain, verify and record information that identifies each Credit Party, which information includes the name and address of each Credit Party and other information that will allow such Agent and such Lender to identify each Credit Party in accordance with the Patriot Act.
13.19 Payments Set Aside. To the extent that any payment by or on behalf of the Borrower is made to any Agent or any Lender, or any Agent or any Lender exercises its right of setoff, and such payment or the proceeds of such setoff or any part thereof is subsequently invalidated, declared to be fraudulent or preferential, set aside or required (including pursuant to any settlement entered into by such Agent or such Lender in its discretion) to be repaid to a trustee, receiver or any other party, in connection with any proceeding or otherwise, then (a) to the extent of such recovery, the obligation or part thereof originally intended to be satisfied shall be revived and continued in full force and effect as if such payment had not been made or such setoff had not occurred, and (b) each Lender severally agrees to pay to the Administrative Agent upon demand its applicable share of any amount so recovered from or repaid by any Agent, plus interest thereon from the date of such demand to the date such payment is made at a rate per annum equal to the applicable Overnight Rate from time to time in effect.
13.20 Reinstatement. This Agreement shall continue to be effective, or be reinstated, as the case may be, if at any time payment, or any part thereof, of any of the Obligations is rescinded or must otherwise be restored or returned by the Administrative Agent or any other Secured Party upon the insolvency, bankruptcy, dissolution, liquidation or reorganization of the Borrower, or upon or as a result of the appointment of a receiver, intervenor or conservator of, or trustee or similar officer for, the Borrower or any substantial part of its property, or otherwise, all as though such payments had not been made.
13.21 Disposition of Proceeds. The Security Documents contain an assignment by the Borrower and/or the Guarantors unto and in favor of the Collateral Agent for the benefit of the Lenders of all of the Borrower’s or each Guarantor’s interest in and to their as-extracted collateral in the form of production and all proceeds attributable thereto which may be produced from or allocated to the Mortgaged Property. The Security Documents further provide in general for the application of such proceeds to the satisfaction of the Obligations described therein and secured thereby. Notwithstanding the assignment contained in such Security Documents, until the occurrence of an Event of Default, (a) the Administrative Agent and the Lenders agree that they will neither notify the purchaser or purchasers of such production nor take any other action to cause such proceeds to be remitted to the Administrative Agent or the Lenders, but the Lenders will instead permit such proceeds to be paid to the Borrower and its Subsidiaries and (b) the Lenders hereby authorize the Administrative Agent to take such actions as may be necessary to cause such proceeds to be paid to the Borrower and/or such Subsidiaries.
13.22 Collateral Matters; Hedge Agreements. The benefit of the Security Documents and of the provisions of this Agreement relating to any Collateral securing the Obligations shall also extend to and be available on a pro rata basis pursuant to terms agreed upon in the Credit Documents to any Person (a) under any Secured Hedge Agreement, in each case, after giving effect to all netting arrangements relating to such Hedge Agreements or (b) under any Secured Cash Management Agreement. No Person shall have any voting rights under any Credit Document solely as a result of the existence of obligations owed to it under any such Secured Hedge Agreement or Secured Cash Management Agreement, except as expressly described herein. Solely to the extent that any Specified Hedge Agreement remains existing, East West Bank shall be a third-party beneficiary with respect to Section 11.12, Section 13.1(a), Section 13.17 and this Section 13.22.
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13.23 Agency of the Borrower for the Other Credit Parties. Each of the other Credit Parties hereby appoints the Borrower as its agent for all purposes relevant to this Agreement and the other Credit Documents, including the giving and receipt of notices and the execution and delivery of all documents, instruments and certificates contemplated herein and therein and all modifications hereto and thereto.
13.24 Acknowledgement and Consent to Bail-In of EEA Financial Institutions.
Notwithstanding anything to the contrary in any Credit 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 Credit Document, to the extent such liability is unsecured, may be subject to the Write-Down and Conversion Powers of the applicable Resolution Authority and agrees and consents to, and acknowledges and agrees to be bound by:
(a) the application of any Write-Down and Conversion Powers by the applicable Resolution Authority to any such liabilities arising hereunder which may be payable to it by any party hereto that is an Affected Financial Institution; and
(b) the effects of any Bail-In Action on any such liability, including, if applicable:
(i) a reduction in full or in part or cancellation of any such liability;
(ii) a conversion of all, or a portion of, such liability into shares or other instruments of ownership in such Affected Financial Institution, its parent undertaking, or a bridge institution that may be issued to it or otherwise conferred on it, and that such shares or other instruments of ownership will be accepted by it in lieu of any rights with respect to any such liability under this Agreement or any other Credit Document; or
(iii) the variation of the terms of such liability in connection with the exercise of the Write-Down and Conversion Powers of the applicable Resolution Authority.
13.25 Acknowledgement Regarding Any Supported QFCs. To the extent that the Credit Documents provide support, through a guarantee or otherwise, for Hedge 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 Credit 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 Credit 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 Credit Documents were
175
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.
[Signature Pages Follow.]
176
Schedule 1.1(a)
COMMITMENTS
| Lender | ApplicablePercentage | ElectedCommitment | Maximum CreditAmounts | ||||
|---|---|---|---|---|---|---|---|
| Citibank, N.A. | 12.285714285 | % | $ | 107,500,000.00 | $ | 184,285,714.28 | |
| Bank of America, N.A. | 10.000000000 | % | $ | 87,500,000.00 | $ | 150,000,000.00 | |
| Capital One, National Association | 10.000000000 | % | $ | 87,500,000.00 | $ | 150,000,000.00 | |
| Fifth Third, National Association | 10.000000000 | % | $ | 87,500,000.00 | $ | 150,000,000.00 | |
| KeyBank National Association | 10.000000000 | % | $ | 87,500,000.00 | $ | 150,000,000.00 | |
| Royal Bank of Canada | 10.000000000 | % | $ | 87,500,000.00 | $ | 150,000,000.00 | |
| Truist Bank | 10.000000000 | % | $ | 87,500,000.00 | $ | 150,000,000.00 | |
| U.S. Bank National Association | 10.000000000 | % | $ | 87,500,000.00 | $ | 150,000,000.00 | |
| BOKF, NA | 7.428571429 | % | $ | 65,000,000.00 | $ | 111,428,571.43 | |
| First-Citizens Bank & Trust Company | 5.714285714 | % | $ | 50,000,000.00 | $ | 85,714,285.71 | |
| SouthState Bank N.A. | 2.285714286 | % | $ | 20,000,000.00 | $ | 34,285,714.29 | |
| Zions Bancorporation, N.A. dba Amegy Bank | 2.285714286 | % | $ | 20,000,000.00 | $ | 34,285,714.29 | |
| TOTAL | 100.000000000 | % | $ | 875,000,000.00 | $ | 1,500,000,000.00 |
Schedule 1.1(a) to Fourth Amendment to Credit Agreement
(Infinity Natural Resources, LLC)
Annex I
FORM OF SOLVENCY CERTIFICATE
[DATE]
SOLVENCY CERTIFICATE
[__], **** [__]
This Solvency Certificate (this “Certificate”) is delivered pursuant to Section [__] of the [Credit Agreement] (the “Credit Agreement”), dated as of the date hereof among [______________], a [_____] (the “Borrower ”) and [_______], as the Administrative Agent and the other Lenders parties thereto. Unless otherwise defined herein, capitalized terms used in this Certificate shall have the meanings set forth in the Credit Agreement.
I, [_______], solely in my capacity as the [Chief Financial Officer][Chief Executive Officer] of the Borrower, do hereby certify on behalf of the Borrower that as of the date hereof, after giving effect to the consummation of the Transactions contemplated by the Credit Agreement:
The sum of the debt (including contingent liabilities) of the Borrower and the Subsidiaries, on a consolidated basis, does not exceed the present fair saleable value of the present assets of the Borrower and the Subsidiaries, on a consolidated basis.
The capital of the Borrower and the Subsidiaries, on a consolidated basis, is not unreasonably small in relation to their business as contemplated on the date hereof.
The Borrower and the Subsidiaries, on a consolidated basis, have not incurred and do not intend to incur, or believe that they will incur, debts including current obligations, beyond their ability to pay such debts as they become due (whether at maturity or otherwise).
The Borrower and the Subsidiaries, on a consolidated basis, are “solvent” within the meaning given to that term and similar terms under applicable laws relating to fraudulent transfers and conveyances.
For purposes of this Certificate, the amount of any contingent liability has been computed as the amount that, in light of all of the facts and circumstances existing as of the date hereof, represents the amount that can reasonably be expected to become an actual or matured liability.
In reaching the conclusions set forth in this Certificate, I have made such other investigations and inquiries as I have deemed appropriate, having taken into account the nature of the particular business anticipated to be conducted by the Borrower and the Subsidiaries after the consummation of the Transactions contemplated by the Credit Agreement.
[Remainder of this page intentionally left blank.]
Annex I to Fourth Amendment to Credit Agreement
(Infinity Natural Resources, LLC)
IN WITNESS WHEREOF, I have executed this Certificate as of the date first written above.
| [ ] | |
|---|---|
| By: | |
| Name: | [_______] |
| Title: | [_______] |
Annex I to Fourth Amendment to Credit Agreement
(Infinity Natural Resources, LLC)
EX-99.1
Exhibit 99.1
INFINITY NATURAL RESOURCES COMPLETES
TRANSFORMATIONAL $1.2 BILLION ACQUISITION OF OHIO
UTICA ASSETS
Transaction Supported by $350 Million Strategic Equity Investment from Quantum Capital Group and
Carnelian Energy Capital Management
February 23, 2026
Morgantown, WestVirginia—Infinity Natural Resources, Inc. (“Infinity” or the “Company”) (NYSE: INR) today announced the successful completion of its transformational $1.2 billion acquisition of upstream and midstream assets in the Ohio Utica Shale from Antero Resources Corporation and Antero Midstream Corporation (the “Transaction”). Announced on December 8, 2025, the Transaction represents INR’s acquisition of an undivided 60% interest, increased from the originally announced 51% interest following the Company’s previously announced $350 million strategic equity investment from Quantum Capital Group (“Quantum”) and Carnelian Energy Capital Management (“Carnelian”) that closed simultaneously with the Transaction. In addition to using proceeds from the strategic equity investment, the Transaction was funded through Infinity’s existing credit facility and cash on hand, requiring no additional equity issuance.
The addition of these assets to Infinity’s portfolio significantly enhances the Company’s position in the core Ohio Utica Shale, adding approximately 71,000 net horizontal acres in the core of the Utica Shale concentrated in Ohio’s Guernsey, Belmont and Harrison counties, and 110+ undeveloped long lateral drilling locations totaling 1.6 million lateral feet across volatile oil, rich gas and dry gas windows, on an 8/8ths basis. The midstream and marketing assets include 141 miles of high- and low-pressure gathering lines with 600 mmcf/d throughput capacity, providing immediate vertical integration benefits and substantial operational synergies.
In connection with the closing of the preferred investment, Matt Kelly from Carnelian was appointed to the Board of Directors, and Brian Seline and Sarah James from NGP resigned from the Board.
“This transformational acquisition represents a hand-in-glove fit with our existing Ohio operations and further solidifies our compelling long-term growth platform,” said Zack Arnold, President and Chief Executive Officer of Infinity Natural Resources. “We are acquiring a position we know very well that provides us with the opportunity to demonstrate our capabilities to deliver shareholder value through our best-in-class operations and focused development of the area. The combination of high-quality acreage, extensive drilling inventory, and integrated midstream infrastructure augments our capital efficiency and returns while positioning us to capitalize on the significant development opportunities in the Ohio Utica core.
“We are also pleased to have Quantum and Carnelian as strategic partners. Their energy sector expertise and collaborative approach make them ideal long-term partners for Infinity, and we welcome Matt Kelly to the Board. We’d also like to thank Brian Seline and Sarah James for their invaluable service to our Board and Company. NGP’s contributions have been integral in supporting our growth and execution for many years,” concluded Mr. Arnold.
“With our reduced ownership percentage after the preferred investment, we felt this was the right time to step away from the Board. We are excited about the future of Infinity and feel confident in the newly constructed Board to continue Infinity’s strategic growth and execution,” said Brian Seline, Partner at NGP.
The transaction creates substantial operational and financial benefits for Infinity:
| • | Combined pro forma Ohio Utica position of approximately 102,000 net acres propels Infinity to a leading operator<br>position in the basin while expanding total company inventory to 575 locations, including 347 high-quality Ohio Utica locations, normalized to 10,000 feet |
|---|---|
| • | Average lateral length of approximately 13,700 feet for Utica locations opens immediate access to multiple<br>development windows across oil, rich gas, and dry gas zones while creating significant optimization opportunities through extended laterals |
| --- | --- |
| • | Expected $25 million in annual synergies from operational integration and midstream optimization is expected<br>to accelerate Adjusted EBITDAX margins, operating cash flow, and production per share metrics |
| --- | --- |
| • | Transaction-driven Adjusted EBITDAX growth acceleration and the preferred investment position the Company to<br>achieve net leverage at or below 1.0x by year-end 2026 |
| --- | --- |
Infinity plans to operate two rigs during 2026 to accelerate development. The acquired Ohio Utica assets’ substantial untapped development potential, supported by midstream infrastructure that is well-positioned to accommodate growth, creates a compelling runway for value creation. The Company’s strategic approach is expected to drive significant production growth while maintaining focus on high-return locations. Additional details regarding the Company’s 2026 outlook will be provided when Infinity reports its fourth quarter and full year 2025 financial results in March.
About Infinity
Infinity (NYSE: INR) is a growth oriented, free cash flow generating, independent energy company focused on the acquisition, development, and production of hydrocarbons in the Appalachian Basin. Our operations are focused on the Utica Shale in eastern Ohio as well as our stacked dry gas assets in both the Marcellus and Utica Shales in southwestern Pennsylvania.
Cautionary Statement Regarding Forward-Looking Statements
This release contains statements that express the Company’s opinions, expectations, beliefs, plans, objectives, assumptions or projections regardingfuture events or future results, in contrast with statements that reflect historical facts. All statements, other than statements of historical fact, included in this release regarding our strategy, future operations, financial position, estimatedrevenues and losses, projected costs, prospects, plans and objectives of management, future commodity prices, future production targets, leverage targets or debt repayment, hedging strategy, future capital spending plans, capital efficiency, ourability to make share repurchases, expected drilling and completions plans and projected well costs are forward-looking statements. When used in this release, words such as “may,” “assume,” “forecast,”“could,” “should,” “will,” “plan,” “believe,” “anticipate,” “intend,” “estimate,” “expect,” “project,” “budget” andsimilar expressions are used to identify forward-looking statements, although not all forward-looking statements contain such identifying words. These forward-looking statements are based on management’s current belief, based on currentlyavailable information, as to the outcome and timing of future events at the time such statement was made.
Such statements are subject to a numberof assumptions, risks and uncertainties, including those incident to the development, production, gathering and sale of oil, natural gas and NGLs, most of which are difficult to predict and many of which are beyond the control of the Company. Theseinclude, but are not limited to, our failure to realize, in full or at all, the anticipated benefits of the preferred investment and the Transaction, including synergies; commodity price volatility; inflation; lack of availability and cost ofdrilling, completion and production equipment and services; supply chain disruption; project construction delays; environmental risks; drilling, completion and other operating risks; lack of availability or capacity of midstream gathering andtransportation infrastructure; regulatory changes; the uncertainty inherent in estimating reserves and in projecting future rates of production, cash flow and access to capital; the timing of development expenditures; the concentration of theCompany’s operations in the Appalachian Basin; difficult and adverse conditions in the domestic and global capital and credit markets; impacts of geopolitical events and world health events, including trade wars; lack of transportation andstorage capacity as a result of oversupply, government regulations or other factors; potential financial losses or earnings reductions resulting from the Company’s commodity price risk management program or any inability to manage itscommodity risks; failure to realize expected value creation from property acquisitions and trades; weather related risks; competition in the oil and natural gas industry; loss of production and leasehold rights due to mechanical failure or depletionof wells and the Company’s inability to re-establish production; the Company’s ability to service its indebtedness; political and economic conditions and events in foreign oil and natural gasproducing countries, including embargoes, continued hostilities in the Middle East and other sustained military campaigns, the armed conflict in Ukraine and associated economic sanctions on Russia, conditions in South America, Central America, Chinaand Russia, and acts of terrorism or sabotage; evolving cybersecurity risks such as those involving unauthorized access, denial-of-service attacks, malicious software,data privacy breaches by employees, insiders or others with authorized access, cyber or phishing-attacks, ransomware, social engineering, physical breaches or other actions; risks related to the Company’s ability to expand its business,including through the recruitment and retention of qualified personnel; and the other risks described in our filings with the SEC, including our most recent Annual Report on Form 10-K and any subsequentQuarterly Reports on Form 10-Q or Current Reports on Form 8-K.
Reserve engineering is a process of estimating underground accumulations of hydrocarbons that cannot bemeasured in an exact way. The accuracy of any reserve estimates depends on the quality of available data, the interpretation of such data and price and cost assumptions made by reserve engineers. In addition, the results of drilling, testing andproduction activities may justify revisions of estimates that were made previously. If significant, such revisions would change the schedule of any future production and development program. Accordingly, reserve estimates may differ significantlyfrom the quantities of oil and natural gas that are ultimately recovered.
Please read the Company’s filings with the SEC, including“Risk Factors” in the Company’s most recent Annual Report on Form 10-K, and in our other filings we make with the SEC, for a discussion of the risks and uncertainties that could cause actualresults to differ from those in such forward-looking statements. As a result, actual outcomes and results could materially differ from what is expressed, implied to forecast in such statements. Therefore, these forward-looking statements are not aguarantee of our performance, and you should not place undue reliance on such statements. All forward-looking statements, expressed or implied, included in this press release are expressly qualified in their entirety by this cautionary statement.Any forward-looking statement speaks only as of the date on which such statement is made, and the Company undertakes no obligation to correct or update any forward-looking statement, whether as a result of new information, future events orotherwise, except to the extent required by law.
Contacts
Thomas Marchetti
Vice President, Investor Relations
Infinity Natural Resources, Inc.
Email: ir@infinitynr.com
Source: Infinity Natural Resources, Inc.