MGY 8-K
Magnolia Oil & Gas Corp (MGY)
UNITED
STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
CURRENT REPORT
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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).
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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. ¨
Securities registered pursuant to section 12(b) of the Act.
Introductory Note
As previously disclosed on July 20, 2026, Magnolia Oil & Gas Corporation, a Delaware corporation (“Magnolia”), and Magnolia Oil & Gas Operating LLC, a Delaware limited liability company (“Buyer”), entered into a purchase and sale agreement (the “Purchase Agreement”) with WildFire Energy I LLC, a Delaware limited liability company (“Seller”), pursuant to which Buyer agreed to purchase from Seller 100% of the issued and outstanding limited liability company interests (the “Acquisition”) of WildFire Intermediate Holdings, LLC (“Target”).
As consideration for the Acquisition and the transactions contemplated by the Purchase Agreement, the purchase price was comprised of (i) cash in the amount of $2,570 million, subject to final customary adjustments (the “Cash Consideration”), (ii) 32,203,000 shares of Magnolia’s Class A common stock (“common stock”), par value $0.0001 (the “Equity Consideration”) and (iii) the assumption of the 2029 Notes (as defined below).
The Acquisition closed on September 10, 2026 (the “Closing Date”). Immediately after the Acquisition closed, Target and certain subsidiaries of Target merged into Buyer and Buyer assumed the obligations under the 2029 Notes pursuant to the Supplemental Indenture (as defined below).
| Item 1.01 | Entry into a Material Definitive Agreement. |
The information set forth in the “Introductory Note” of this Current Report is hereby incorporated by reference into this Item 1.01.
Target Notes and Supplemental Indenture
2029 Notes
On September 26, 2024, Target issued $600.0 million aggregate principal amount of 7.500% Senior Notes due 2029 (the “2029 Notes”), pursuant to an indenture, dated as of September 26, 2024 (as amended or supplemented from time to time, the “Indenture”), among Target, the guarantors party thereto, and U.S. Bank Trust Company, National Association, as trustee (the “Trustee”).
The 2029 Notes are the general unsecured, senior obligations of the Buyer. The 2029 Notes are guaranteed on a senior unsecured basis by the guarantors party thereto and may be guaranteed by certain future subsidiaries of the Buyer.
The 2029 Notes will mature on October 15, 2029. The 2029 Notes bear interest at the rate of 7.500% per annum, payable semi-annually in arrears on each April 15 and October 15.
At any time prior to October 15, 2026, the Buyer may redeem up to 40% of the aggregate principal amount of the 2029 Notes, with an amount of cash not greater than the net cash proceeds of certain equity offerings at a redemption price equal to 107.500% of the principal amount of the 2029 Notes redeemed, plus accrued and unpaid interest, if any, to, but excluding, the redemption date, if at least 60% of the aggregate principal amount of the 2029 Notes originally issued under the Indenture on the issue date remains outstanding immediately after such redemption and the redemption occurs within 180 days of the closing date of such equity offering.
On or after October 15, 2026, the Buyer may redeem the 2029 Notes, in whole or in part, at the redemption prices set forth in the Indenture, together with accrued and unpaid interest, if any, to, but excluding, the date of redemption.
If the Buyer experiences certain kinds of changes of control, each holder of the 2029 Notes may require the Buyer to repurchase all or a portion of its 2029 Notes for cash at a price equal to 101% of the aggregate principal amount of such 2029 Notes, plus accrued and unpaid interest, if any, to the date of repurchase.
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The Indenture contains covenants that, among other things and subject to certain exceptions and qualifications, limit the ability of the Buyer and of its restricted subsidiaries to: (i) incur or guarantee additional indebtedness or issue certain types of preferred stock; (ii) pay dividends on capital stock or redeem, repurchase or retire its capital stock or subordinated indebtedness; (iii) transfer or sell assets; (iv) make investments; (v) create certain liens; (vi) enter into agreements that restrict dividends or other payments from its restricted subsidiaries to the Buyer or any of their restricted subsidiaries; (vii) consolidate, merge or transfer all or substantially all of its assets; (viii) engage in transactions with affiliates; and (ix) create unrestricted subsidiaries.
Upon an Event of Default (as defined in the Indenture), the Trustee or holders of at least 25% in aggregate principal amount of the 2029 Notes then outstanding may declare the principal of and accrued and unpaid interest on the 2029 Notes to be due and payable immediately.
WFE Supplemental Indenture
On the Closing Date, the Buyer entered into that certain First Supplemental Indenture (the “WFE Supplemental Indenture”) to the Indenture, among Buyer, the guarantor party thereto and the Trustee pursuant to which (i) the Buyer assumed the obligations of the Target under the Indenture and the 2029 Notes issued pursuant thereto and (ii) a subsidiary guarantor of the Buyer became party to the Indenture and provided a guarantee thereof.
The foregoing descriptions of the Indenture and WFE Supplemental Indenture are summaries only and are qualified in their entirety by reference to the Indenture and WFE Supplemental Indenture, copies of which are attached as Exhibit 4.1 and Exhibit 4.2, respectively, to this Current Report on Form 8-K and are incorporated herein by reference.
2032 Notes and 2034 Notes
In connection with the Acquisition, on the Closing Date, the Buyer caused its subsidiary, Magnolia Midstream LLC, a Delaware limited liability company (“Magnolia Midstream”), to enter into the (i) First Supplemental Indenture with Regions Bank to add Magnolia Midstream as a guarantor to the Buyer’s 6.875% Senior Notes due 2032 (the “2032 Notes”) and (ii) First Supplemental Indenture (collectively, the “MGY Supplemental Indentures”) with Regions Bank to add Magnolia Midstream as a guarantor to the Buyer’s 6.625% Senior Notes due 2034 (the “2034 Notes”).
The foregoing descriptions of the MGY Supplemental Indentures are summaries only and are qualified in their entirety by reference to each MGY Supplemental Indenture, copies of which are attached as Exhibit 4.3 and Exhibit 4.4, respectively, to this Current Report on Form 8-K and are incorporated herein by reference.
Registration Rights Agreement
In connection with the closing of the Acquisition, Magnolia and Seller entered into a registration rights agreement (the “Registration Rights Agreement”). Pursuant to the terms of the Registration Rights Agreement, Magnolia will register under the Securities Act of 1933, as amended (the “Securities Act”), the resale of any shares of common stock to be issued as the Equity Consideration. The Registration Rights Agreement provides for certain underwritten demand, “piggy-back” and shelf registration rights, subject to certain customary limitations. Additionally, Seller has agreed to a 30-day lock-up period with respect to shares constituting the Equity Consideration. Magnolia has also agreed to pay certain expenses of Seller incurred in connection with the exercise of its rights under the Registration Rights Agreement and indemnify Seller for certain securities law matters in connection with any registration statement filed pursuant thereto.
The foregoing description of the Registration Rights Agreement is a summary only and is qualified in its entirety by reference to the Registration Rights Agreement, a copy of which is attached as Exhibit 4.5 to this Current Report on Form 8-K and is incorporated herein by reference.
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| 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 is hereby incorporated by reference into this Item 2.01.
As discussed in the Introductory Note, on September 10, 2026, the Acquisition was completed upon the terms and subject to the conditions of the Purchase Agreement. As consideration for the Acquisition and the transactions contemplated by the Purchase Agreement, the purchase price was comprised of (i) Cash Consideration of $2,570 million, subject to final customary adjustments, (ii) Equity Consideration of 32,203,000 shares of common stock and (iii) the assumption of the 2029 Notes.
The foregoing description of the Purchase Agreement is a summary only and is qualified in its entirety by reference to the Purchase Agreement, a copy of which is attached as Exhibit 2.1 to this Current Report on Form 8-K and is incorporated herein by reference.
| Item 2.03 | Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant. |
The information set forth in the “Introductory Note” and Item 1.01 of this Current Report is hereby incorporated by reference into this Item 2.03.
| Item 3.02 | Unregistered Sales of Equity Securities. |
The information set forth in the “Introductory Note” and Item 1.01 of this Current Report regarding the Equity Consideration is hereby incorporated by reference into this Item 3.02. The issuance of shares of common stock was completed in reliance upon the exemption from the registration requirements of the Securities Act, provided by Section 4(a)(2) thereof as a transaction by an issuer not involving any public offering.
| Item 7.01 | Regulation FD Disclosure. |
On September 10, 2026, Magnolia issued a press release announcing the closing of the Acquisition. The full text of the press release is furnished as Exhibit 99.1 hereto and is incorporated herein by reference.
The information furnished pursuant to this Item 7.01 (including Exhibit 99.1) shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and will not be incorporated by reference into any filings under the Securities Act, unless specifically identified therein as being incorporated therein by reference. You should not assume that the information contained herein or the accompanying exhibits is accurate as of any date other than the date of each such document. Our business, financial condition, results of operations, prospects and assumptions that were utilized may have changed since those dates.
| Item 9.01 | Financial Statements and Exhibits. |
(a) Financial statements of businesses acquired.
The audited financial statements of Seller as of and for the years ended December 31, 2025 and 2024 are attached hereto as Exhibits 99.2 and are incorporated herein by reference. The unaudited condensed financial statements of Seller as of and for the three and six months ended June 30, 2026 and 2025 are filed herewith and attached hereto as Exhibits 99.3 and are incorporated herein by reference.
(b) Pro forma financial information.
The unaudited pro forma combined financial information of Magnolia as of and for the six months ended June 30, 2026 and for the year ended December 31, 2025 is filed herewith and attached hereto as Exhibit 99.4 and is incorporated herein by reference.
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(d) Exhibits.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this Current Report to be signed on its behalf by the undersigned hereunto duly authorized.
| Date: September 14, 2026 | MAGNOLIA OIL & GAS CORPORATION | |
| By: | /s/ Timothy D. Yang | |
| Name: | Timothy D. Yang | |
| Title: | Executive Vice President, Chief Legal and Commercial Officer, Corporate Secretary and Land | |
Exhibit 4.1
EXECUTION VERSION
INDENTURE
dated as of September 26, 2024
among
WILDFIRE INTERMEDIATE HOLDINGS, LLC
Each of the Guarantors Party Hereto
and
U.S. BANK TRUST COMPANY, NATIONAL ASSOCIATION,
as Trustee
7.500% SENIOR NOTES DUE 2029
TABLE OF CONTENTS
Page
| ARTICLE I DEFINITIONS AND INCORPORATION BY REFERENCE | 1 | |
| Section 1.01 | Definitions | 1 |
| Section 1.02 | Other Definitions | 50 |
| Section 1.03 | Rules of Construction | 51 |
| Section 1.04 | Acts of Holders | 52 |
| Section 1.05 | Limited Condition Transactions; Measuring Compliance | 53 |
| ARTICLE II THE NOTES | 55 | |
| Section 2.01 | Form and Dating; Terms | 55 |
| Section 2.02 | Execution and Authentication | 56 |
| Section 2.03 | Registrar, Transfer Agent and Paying Agent | 56 |
| Section 2.04 | Paying Agent to Hold Money in Trust | 57 |
| Section 2.05 | Holder Lists | 57 |
| Section 2.06 | Transfer and Exchange | 57 |
| Section 2.07 | Replacement Notes | 67 |
| Section 2.08 | Outstanding Notes | 68 |
| Section 2.09 | Treasury Notes | 68 |
| Section 2.10 | Temporary Notes | 68 |
| Section 2.11 | Cancellation | 68 |
| Section 2.12 | Defaulted Interest | 69 |
| Section 2.13 | CUSIP/ISIN Numbers | 69 |
| ARTICLE III REDEMPTION | 69 | |
| Section 3.01 | Notices to Trustee | 69 |
| Section 3.02 | Selection of Notes to Be Redeemed | 69 |
| Section 3.03 | Notice of Redemption | 70 |
| Section 3.04 | Effect of Notice of Redemption | 71 |
| Section 3.05 | Deposit of Redemption Price | 71 |
| Section 3.06 | Notes Redeemed in Part | 72 |
| Section 3.07 | Optional Redemption | 72 |
| Section 3.08 | Mandatory Redemption | 73 |
| Section 3.09 | Offers to Repurchase by Application of Excess Proceeds | 73 |
| ARTICLE IV COVENANTS | 75 | |
| Section 4.01 | Payment of Notes | 75 |
| Section 4.02 | Maintenance of Office or Agency | 75 |
| Section 4.03 | Reports and Other Information | 76 |
| Section 4.04 | Compliance Certificate | 79 |
| Section 4.05 | Taxes | 79 |
| Section 4.06 | Stay, Extension and Usury Laws | 79 |
| Section 4.07 | Limitation on Restricted Payments | 80 |
| Section 4.08 | Dividend and Other Payment Restrictions Affecting Restricted Subsidiaries | 87 |
| Section 4.09 | Limitation on Incurrence of Indebtedness and Issuance of Disqualified Stock and Preferred Stock | 89 |
| Section 4.10 | Asset Sales | 97 |
| Section 4.11 | Transactions with Affiliates | 99 |
| Section 4.12 | Liens | 103 |
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| Section 4.13 | Company Existence | 104 |
| Section 4.14 | Offer to Repurchase Upon Change of Control | 104 |
| Section 4.15 | Future Subsidiary Guarantees | 106 |
| Section 4.16 | Termination of Covenants | 106 |
| ARTICLE V SUCCESSORS | 107 | |
| Section 5.01 | Merger, Amalgamation, Consolidation or Sale of All or Substantially All Assets | 107 |
| Section 5.02 | Successor Person Substituted | 109 |
| ARTICLE VI DEFAULTS AND REMEDIES | 109 | |
| Section 6.01 | Events of Default | 109 |
| Section 6.02 | Acceleration | 111 |
| Section 6.03 | Other Remedies | 114 |
| Section 6.04 | Waiver of Past Defaults | 114 |
| Section 6.05 | Control by Majority | 114 |
| Section 6.06 | Limitation on Suits | 114 |
| Section 6.07 | Rights of Holders to Receive Payment | 115 |
| Section 6.08 | Collection Suit by Trustee | 115 |
| Section 6.09 | Restoration of Rights and Remedies | 115 |
| Section 6.10 | Rights and Remedies Cumulative | 115 |
| Section 6.11 | Delay or Omission Not Waiver | 115 |
| Section 6.12 | Trustee May File Proofs of Claim | 115 |
| Section 6.13 | Priorities | 116 |
| Section 6.14 | Undertaking for Costs | 116 |
| ARTICLE VII TRUSTEE | 116 | |
| Section 7.01 | Duties of Trustee | 116 |
| Section 7.02 | Rights of Trustee | 117 |
| Section 7.03 | Individual Rights of Trustee | 119 |
| Section 7.04 | Trustee’s Disclaimer | 119 |
| Section 7.05 | Notice of Defaults | 119 |
| Section 7.06 | Compensation and Indemnity | 119 |
| Section 7.07 | Replacement of Trustee | 120 |
| Section 7.08 | Successor Trustee by Merger, etc. | 121 |
| Section 7.09 | Eligibility; Disqualification | 121 |
| ARTICLE VIII LEGAL DEFEASANCE AND COVENANT DEFEASANCE | 121 | |
| Section 8.01 | Option to Effect Legal Defeasance or Covenant Defeasance | 121 |
| Section 8.02 | Legal Defeasance and Discharge | 122 |
| Section 8.03 | Covenant Defeasance | 122 |
| Section 8.04 | Conditions to Legal or Covenant Defeasance | 122 |
| Section 8.05 | Deposited Money and Government Securities to Be Held in Trust; Other Miscellaneous Provisions | 124 |
| Section 8.06 | Repayment to Company | 124 |
| Section 8.07 | Reinstatement | 124 |
| ARTICLE IX AMENDMENT, SUPPLEMENT AND WAIVER | 125 | |
| Section 9.01 | Without Consent of Holders | 125 |
| Section 9.02 | With Consent of Holders | 126 |
| Section 9.03 | Revocation and Effect of Consents | 127 |
| Section 9.04 | Notation on or Exchange of Notes | 127 |
| Section 9.05 | Trustee to Sign Amendments, etc. | 128 |
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| ARTICLE X GUARANTEES | 128 | |
| Section 10.01 | Guarantee | 128 |
| Section 10.02 | Limitation on Guarantor Liability | 129 |
| Section 10.03 | Execution and Delivery | 129 |
| Section 10.04 | Subrogation | 130 |
| Section 10.05 | Benefits Acknowledged | 130 |
| Section 10.06 | Release of Guarantees | 130 |
| ARTICLE XI SATISFACTION AND DISCHARGE | 131 | |
| Section 11.01 | Satisfaction and Discharge | 131 |
| Section 11.02 | Application of Trust Money | 132 |
| ARTICLE XII MISCELLANEOUS | 132 | |
| Section 12.01 | Relation to Trust Indenture Act | 132 |
| Section 12.02 | Notices | 132 |
| Section 12.03 | Communication with Holders of a Global Note | 133 |
| Section 12.04 | Certificate and Opinion as to Conditions Precedent | 134 |
| Section 12.05 | Statements Required in Certificate or Opinion | 134 |
| Section 12.06 | Rules by Trustee and Agents | 134 |
| Section 12.07 | No Personal Liability of Directors, Officers, Employees and Stockholders | 134 |
| Section 12.08 | Governing Law | 134 |
| Section 12.09 | Waiver of Jury Trial | 134 |
| Section 12.10 | Force Majeure | 135 |
| Section 12.11 | No Adverse Interpretation of Other Agreements | 135 |
| Section 12.12 | Successors | 135 |
| Section 12.13 | Severability | 135 |
| Section 12.14 | Counterpart Originals | 135 |
| Section 12.15 | Table of Contents, Headings, etc. | 135 |
| Section 12.16 | Facsimile and PDF Delivery of Signature Pages; Electronic Signature | 135 |
| Section 12.17 | USA PATRIOT Act | 136 |
EXHIBITS:
| Exhibit A | Form of Note |
| Exhibit B | Form of Certificate of Transfer |
| Exhibit C | Form of Certificate of Exchange |
| Exhibit D | Form of Supplemental Indenture to Be Delivered by Subsequent Guarantors |
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INDENTURE, dated as of September 26, 2024, among (a) WildFire Intermediate Holdings, LLC, a Delaware limited liability company, as the Company (as defined herein), (b) certain subsidiaries of the Company, as Guarantors (as defined herein), and (c) U.S. Bank Trust Company, National Association , as Trustee (as defined herein).
W I T N E S E T H
A. WHEREAS, the Company has duly authorized the creation of an issue of $600,000,000 aggregate principal amount of the Company’s 7.500% Senior Notes due 2029 (the “Notes”) to be guaranteed by the Guarantors;
B. WHEREAS, the Company and the Guarantors have duly authorized the execution and delivery of this Indenture (as defined herein); and
C. NOW, THEREFORE, the Company, the Guarantors and the Trustee agree as follows for the benefit of each other and for the equal and ratable benefit of the Holders (as defined herein).
ARTICLE I
DEFINITIONS AND INCORPORATION BY REFERENCE
Section 1.01 Definitions.
“144A Global Note” means a Global Note substantially in the form of Exhibit A hereto, bearing the Global Note Legend and the Private Placement Legend and deposited with or on behalf of, and registered in the name of, the Depositary or its nominee, issued in a denomination equal to the outstanding principal amount of the Notes sold in reliance on Rule 144A.
“Acquired Indebtedness” means, with respect to any specified Person,
(1) Indebtedness of any other Person existing at the time such other Person is merged or consolidated with or into or became a Restricted Subsidiary of such specified Person, including Indebtedness incurred in connection with, or in contemplation of, such other Person merging with or into, or becoming a Restricted Subsidiary of, such specified Person, and
(2) Indebtedness secured by a Lien encumbering any asset acquired by such specified Person.
“Additional Notes” means additional Notes (other than the Initial Notes) issued under this Indenture in accordance with Sections 2.02 and 4.09 hereof, as part of the same series as the Initial Notes.
“Adjusted Consolidated Net Tangible Assets” means (without duplication), as of the date of determination,
| (1) | the sum of: |
(a) the discounted future net revenues from Proved Reserves of the Company and its Restricted Subsidiaries calculated in accordance with SEC guidelines before any state or federal or foreign income taxes, as estimated in the reserve report prepared either as of the end of the Company’s most recently completed fiscal year for which financial statements are available, or, at the Company’s option, the most recently completed fiscal quarter for which financial statements are available, in each case, which reserve report is prepared or audited by independent petroleum engineers as to Proved Reserves accounting for at least 80% of all such discounted future net revenues and by the Company’s petroleum engineers with respect to any other Proved Reserves covered by such report, as increased by, as of the date of determination, the estimated discounted future net revenues from:
(i) estimated Proved Reserves of the Company and its Restricted Subsidiaries acquired (including on the date of determination) since the date of such year-end or quarterly reserve report, as applicable, and
(ii) estimated Proved Reserves of the Company and its Restricted Subsidiaries attributable to extensions, discoveries and other additions and upward revisions of estimates of Proved Reserves (including previously estimated development costs incurred during the period and the accretion of discount since the prior period end) since the date of such year-end or quarterly reserve report, as applicable, due to exploration, development or exploitation, production or other activities which would, in accordance with standard industry practice, cause such revisions,
and decreased by, as of the date of determination, the discounted future net revenue attributable to:
(iii) estimated Proved Reserves of the Company and its Restricted Subsidiaries reflected in such year-end or quarterly reserve report produced or disposed of (including on the date of determination) since the date of such year-end or quarterly reserve report, as applicable, and
(iv) reductions in estimated Proved Reserves of the Company and its Restricted Subsidiaries reflected in such year-end or quarterly reserve report since the date of such year-end or quarterly reserve report attributable to downward revisions of estimates of Proved Reserves since the date of such year-end or quarterly reserve report, as applicable, due to changes in geological conditions or other factors which would, in accordance with standard industry practice, cause such revisions;
in the case of the preceding clauses (i) through (iv), calculated on a pre-tax basis in accordance with SEC guidelines (utilizing the prices utilized in such Person’s year-end or quarterly reserve report, as applicable) and estimated by the Company’s petroleum engineers or any independent petroleum engineers engaged by the Company for that purpose;
(b) the capitalized costs that are attributable to oil and gas properties of the Company and its Restricted Subsidiaries to which no Proved Reserves are attributable, based on the Company’s books and records as of a date no earlier than the last day of the Company’s most recent quarterly or annual period for which internal financial statements are available;
(c) the Net Working Capital of the Company and its Restricted Subsidiaries as of a date no earlier than the last day of the Company’s most recent quarterly or annual period for which internal financial statements are available; and
(d) the greater of:
(i) the net book value, and
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(ii) the fair market value of other tangible assets (including Investments in unconsolidated Subsidiaries),
in each case, of the Company and its Restricted Subsidiaries as of a date no earlier than the last day of the date of the Company’s most recent quarterly or annual period for which internal financial statements are available; provided that the Company shall not be required to obtain such an appraisal of any assets,
minus, to the extent not otherwise taken into account in this clause (1),
| (2) | the sum of: |
(a) any amount included in clauses (1)(a)(i) through (1)(a)(iv) above that is attributable to minority interests;
(b) any net gas balancing liabilities of the Company and its Restricted Subsidiaries as of the last day of the Company’s most recent annual or quarterly period for which internal financial statements are available (to the extent not deducted in calculating Net Working Capital of the Company in accordance with clause (1)(c) above of this definition);
(c) to the extent included in clause (1)(a) above, the discounted future net revenues, calculated on a pre-tax basis in accordance with SEC guidelines (utilizing the prices and costs utilized in the applicable reserve report described in clause (1)(a)), attributable to reserves that are required to be delivered to third parties to fully satisfy the obligations of the Company and its Restricted Subsidiaries with respect to Volumetric Production Payments on the schedules specified with respect thereto; and
(d) to the extent included in clause (1)(a) above, the discounted future net revenues, calculated on a pre-tax basis in accordance with SEC guidelines (utilizing the prices and costs utilized in the applicable reserve report described in clause 1(a)), attributable to reserves subject to Dollar-Denominated Production Payments that, based on the estimates of production, price and cost assumptions included in determining the discounted future net revenues specified in (1)(a) above, would be necessary to fully satisfy the payment obligations of the Company and its Restricted Subsidiaries with respect to Dollar-Denominated Production Payments on the schedules specified with respect thereto.
Notwithstanding anything to the contrary in this definition, the Company may, at its option, (x) calculate Adjusted Consolidated Net Tangible Assets using Strip Prices in lieu of commodity pricing of future net revenues based on SEC guidelines (or any other calculation or adjustment in the foregoing paragraphs (1) and (2) of this definition that is based on SEC guidelines) or (y) on any date of determination, calculate the Company’s Adjusted Consolidated Net Tangible Assets as of a date not more than 30 days prior to the date of determination (the “Calculation Date”) on the following basis: (A) in lieu of commodity pricing of future net revenues based on SEC guidelines (or any other calculation or adjustment in the foregoing paragraphs (1) and (2) of this definition that is based on SEC guidelines), Strip Prices shall be used after giving effect to commodity derivatives contracts in effect as of the Calculation Date, and (B) such calculation shall be based on then current estimates of costs in light of prevailing market conditions, in each case as determined in good faith by the Company, and at its option, by applying such adjustments (i) with internal Company calculations to the previously calculated Adjusted Consolidated Net Tangible Assets amount or (ii) by obtaining a separate reserve report.
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If the Company changes its method of accounting from the successful efforts method to the full cost method or a similar method of accounting, “Adjusted Consolidated Net Tangible Assets” will continue to be calculated as if the Company were still using the successful efforts method of accounting.
“Affiliate” of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person. For purposes of this definition, “control” (including, with correlative meanings, the terms “controlling,” “controlled by” and “under common control with”), as used with respect to any Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of such Person, whether through the ownership of voting securities, by agreement or otherwise.
“Agent” means any Registrar, co-registrar, Transfer Agent, Paying Agent or additional paying agent.
“Applicable Indebtedness” has the meaning assigned to it in the definition of “Weighted Average Life to Maturity.”
“Applicable Premium” means, with respect to any Note on any Redemption Date, the excess, if any, of:
(a) the present value at such Redemption Date of (i) the redemption price of such Note at October 15, 2026 (as set forth in the table appearing in Section 3.07(e)), plus (ii) all required remaining scheduled interest payments due on such Note through October 15, 2026 (in each case, excluding accrued but unpaid interest to, but excluding, the Redemption Date), computed using a discount rate equal to the Treasury Rate as of such Redemption Date plus 50 basis points; over
(b) the then outstanding principal amount of such Note on such Redemption Date,
as calculated by the Company or on behalf of the Company by such Person as the Company will designate; provided that such calculation, including the verification thereof, will not be the duty or obligation of the Trustee, the Paying Agent, the Transfer Agent or the Registrar. Prior to the Redemption Date, the Company will file with the Trustee an Officer’s Certificate setting forth the Applicable Premium and showing the calculation of such in reasonable detail.
“Applicable Procedures” means, with respect to any selection of Notes or any transfer or exchange of or for beneficial interests in any Global Note, the rules and procedures of the Depositary, Euroclear and Clearstream that apply to such selection, transfer or exchange.
“Asset Sale” means:
(1) the sale, conveyance, transfer or other disposition of property or assets (including by way of Production Payments and Reserve Sales) outside the ordinary course of business of the Company or any Restricted Subsidiary (each referred to in this definition as a “disposition”); provided that the sale, conveyance, transfer or other disposition of all or substantially all of the properties or assets of the Company and its Subsidiaries taken as a whole will be governed by Section 4.14 and/or Section 5.01(a) hereof and not by the provisions of Section 4.10; and
(2) the issuance or sale of Equity Interests (other than Preferred Stock or Disqualified Stock of Restricted Subsidiaries issued in compliance with Section 4.09 and directors’ qualifying shares or shares or interests required to be held by foreign nationals or other third parties to the extent required by applicable law) of any Restricted Subsidiary (other than to the Company or another Restricted Subsidiary);
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in each case, other than:
(a) any disposition of (i) Cash Equivalents or Investment Grade Securities, (ii) obsolete, damaged or worn out property or assets in the ordinary course of business or consistent with industry practice or any disposition of inventory or goods (or other assets) held for sale or no longer used or useful in the ordinary course of business, (iii) assets no longer economically practicable or commercially reasonable to maintain (as determined in good faith by the management of the Company), (iv) dispositions to landlords of improvements made to leased real property pursuant to customary terms of leases entered into in the ordinary course of business and (v) assets for purposes of charitable contributions or similar gifts to the extent such assets are not material to the ability of the Company and its Restricted Subsidiaries, taken as a whole, to conduct its business in the ordinary course;
(b) any disposition in connection with the making of any Restricted Payment that is permitted to be made, and is made, under Section 4.07 or any Permitted Investment or any acquisition otherwise permitted by this Indenture;
(c) any disposition of property or assets or issuance or sale of Equity Interests of any Restricted Subsidiary with an aggregate fair market value for any individual transaction or series of related transactions of less than $50.0 million;
(d) any disposition of property or assets or issuance of securities by a Restricted Subsidiary to the Company or by the Company or a Restricted Subsidiary to a Restricted Subsidiary;
(e) to the extent allowable under Section 1031 of the Code, any exchange of like property (excluding any boot thereon) for use in the Oil and Gas Business;
(f) (i) the lease, assignment or sub-lease, license or sublicense of any real or personal property (other than Oil and Gas Properties) in the ordinary course of business or consistent with industry practice and (ii) the exercise of termination rights with respect to any lease, sub-lease, license or sublicense or other agreement;
(g) any issuance, disposition or sale of Equity Interests in, or Indebtedness, assets or other securities of, an Unrestricted Subsidiary (or a Restricted Subsidiary that owns the Equity Interests of an Unrestricted Subsidiary; provided that such Restricted Subsidiary owns no assets other than the Equity Interests of one or more Unrestricted Subsidiaries);
(h) foreclosures, condemnation, expropriation, eminent domain or any similar action (including, for the avoidance of doubt, any casualty event) with respect to assets or the granting of Liens not prohibited by this Indenture;
(i) the sale, lease, assignment, license, sublease or discount of inventory, equipment, accounts receivable, notes receivable or other current assets in the ordinary course of business or consistent with industry practice or the conversion of accounts receivable to notes receivable or other dispositions of accounts receivable in connection with the collection thereof;
(j) the licensing or sub-licensing of intellectual property or other general intangibles in the ordinary course of business or consistent with industry practice;
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(k) any surrender, expiration or waiver of contract rights or oil and natural gas leases or the settlement, release, recovery on or surrender of contract, tort or other rights or litigation claims of any kind in the ordinary course of business or consistent with industry practice;
(l) the unwinding or termination of any Hedging Obligations;
(m) the lapse, abandonment or other disposition of intellectual property rights in the ordinary course of business or consistent with industry practice, which in the reasonable good faith determination of the Company are not material to the conduct of the business of the Company and its Restricted Subsidiaries taken as a whole;
(n) the granting of a Lien that is not prohibited under Section 4.12;
(o) the disposition of any assets (including Equity Interests) (i) acquired in a transaction permitted under this Indenture (other than Oil and Gas Properties), which assets are not used or useful in the principal business of the Company and its Restricted Subsidiaries or (ii) made in connection with the approval of any applicable antitrust authority or otherwise necessary or advisable in the good faith determination of the Company to consummate any acquisition permitted under this Indenture;
(p) dispositions of property to the extent that such property is exchanged for credit against the purchase price of similar replacement property;
(q) a disposition of Hydrocarbons or mineral products inventory in the ordinary course of business;
(r) any Production Payments and Reserve Sales; provided that any such Production Payments and Reserve Sales, other than incentive compensation programs on terms that are reasonably customary in the Oil and Gas Business for geologists, geophysicists and other providers of technical services to the Company or a Restricted Subsidiary, shall have been created, incurred, issued, assumed or guaranteed in connection with the financing of, and within 60 days after the acquisition of, the property that is subject thereto;
(s) the abandonment, farm-out pursuant to a Farm-Out Agreement, lease or sublease of developed or underdeveloped Oil and Gas Properties owned or held by the Company or any Restricted Subsidiary in the ordinary course of business or which are usual and customary in the Oil and Gas Business generally or in the geographic region in which such activities occur;
(t) a disposition (whether or not in the ordinary course of business) of any Oil and Gas Property or interest therein (including undrilled depths) to which no Proved Reserves are attributable at the time of such disposition;
(u) any trade or exchange by the Company or any Restricted Subsidiary of properties or assets used or useful in the Oil and Gas Business for other properties or assets used or useful in the Oil and Gas Business owned or held by another Person (including Capital Stock of a Person engaged in the Oil and Gas Business that is or becomes a Restricted Subsidiary), including any cash or Cash Equivalents necessary in order to achieve an exchange of equivalent value, provided that the fair market value of the properties or assets traded or exchanged by the Company or such Restricted Subsidiary (including any cash or Cash Equivalents to be delivered by the Company or such Restricted Subsidiary) is reasonably equivalent to the fair market value of the properties or assets (together with any cash or Cash Equivalents) to be received by the Company or such Restricted Subsidiary, and provided, further, that any cash received in the transaction must be applied in accordance with Section 4.10; and
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(v) any sale of property or assets, if the acquisition of such property or assets was financed with Excluded Contributions and the proceeds of such sale are used to make a Restricted Payment pursuant to Section 4.07(b)(ix)(B).
In the event that a transaction (or a portion thereof) meets the criteria of a permitted Asset Sale and would also be a permitted Restricted Payment or Permitted Investment, the Company, in its sole discretion, will be entitled to divide and classify such transaction (or a portion thereof) as an Asset Sale and/or one or more of the types of permitted Restricted Payments or Permitted Investments.
“Attributable Indebtedness” means, on any date, in respect of any Finance Lease Obligation of any Person, the amount thereof that would appear as a liability on a balance sheet of such Person prepared as of such date in accordance with GAAP.
“Bankruptcy Law” means Title 11, U.S. Code, as amended, or any similar federal or state law for the relief of debtors.
“Beneficial Owner” has the meaning assigned to such term in Rule 13d-3 and Rule 13d-5 under the Exchange Act, except that in calculating the beneficial ownership of any particular “person”(as that term is used in Section 13(d)(3) of the Exchange Act), such “person” will be deemed to have beneficial ownership of all securities that such “person” has the right to acquire by conversion or exercise of other securities, whether such right is currently exercisable or is exercisable only after the passage of time. The terms “Beneficially Owns” and “Beneficially Owned” have a corresponding meaning. For purposes of this definition, a Person shall be deemed not to Beneficially Own securities that are the subject of a stock or unit purchase agreement, merger agreement or similar agreement until consummation of the transactions or, as applicable, series of related transactions contemplated thereby.
“Board” means, for any Person, the board of directors or other governing body of such Person or, if such Person does not have such a board of directors or other governing body and is owned or managed by a single entity, the Board of such entity, or, in either case, any committee thereof duly authorized to act on behalf of such Board. Unless the context otherwise requires, references herein to the “Board” or to the “Board of the Company” refer to the Board of WildFire Energy I LLC or any successor thereto.
“Borrowing Base” means the maximum amount determined or re-determined by the lenders under the Revolving Credit Facility as the aggregate lending value to be ascribed to the Oil and Gas Properties and other assets of the Company and its Restricted Subsidiaries against which such lenders are prepared to provide loans, letters of credit or other Indebtedness to the Company and the Restricted Subsidiaries under the Revolving Credit Facility, using their customary practices and standards for determining reserve-based borrowing base loans and which are generally applied by commercial lenders to borrowers in the Oil and Gas Business, as determined semiannually during each year and/or on such other occasions, as applicable, as may be provided for by the Revolving Credit Facility, and which is based upon, inter alia, the review by such lenders of the hydrocarbon reserves, royalty interests and assets and liabilities of the Company and the Restricted Subsidiaries.
“Business Day” means any day that is not a Legal Holiday.
“Calculation Date” has the meaning assigned to it in the definition of “Adjusted Consolidated Net Tangible Assets.”
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“Capital Markets Indebtedness” means any Indebtedness consisting of bonds, debentures, notes or other similar debt securities issued in (a) a public offering registered under the Securities Act, (b) a private placement to institutional investors that is resold in accordance with Rule 144A or Regulation S under the Securities Act, whether or not it includes registration rights entitling the holders of such debt securities to registration thereof with the SEC or (c) a private placement to institutional investors. For the avoidance of doubt, the term “Capital Markets Indebtedness” does not include any Indebtedness under commercial bank facilities, Indebtedness incurred in the ordinary course of business of the Company, Finance Lease Obligations or recourse transfer of any financial asset or any other type of Indebtedness incurred in a manner not customarily viewed as a “securities offering.”
“Capital Stock” means:
(1) in the case of a corporation, corporate stock or shares in the capital of such corporation;
(2) in the case of an association or business entity, any and all shares, interests, participations, rights or other equivalents (however designated) of corporate stock;
(3) in the case of a partnership or limited liability company, partnership or membership interests (whether general or limited); and
(4) any other interest or participation that confers on a Person the right to receive a share of the profits and losses of, or distributions of assets of, the issuing Person;
but excluding from all of the foregoing any debt securities convertible into or exchangeable for Capital Stock, whether or not such debt securities include any right of participation with Capital Stock.
“Cash Equivalents” means:
(1) United States dollars;
(2) (a) Euros, Yen, Canadian Dollars, Pounds Sterling or any national currency of any participating member state of the EMU or the United Kingdom; or (b) in the case of any Foreign Subsidiary or any jurisdiction in which the Company or its Restricted Subsidiaries conducts business, such local currencies held by it from time to time in the ordinary course of business or consistent with industry practice;
(3) readily marketable direct obligations 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 36 months or less from the date of acquisition;
(4) certificates of deposit, time deposits and eurodollar time deposits with maturities of three years or less from the date of acquisition, demand deposits, bankers’ acceptances with maturities not exceeding three years and overnight bank deposits, in each case with any domestic or foreign commercial bank having capital and surplus of not less than $500.0 million in the case of U.S. banks and $100.0 million (or the United States dollar equivalent as of the date of determination) in the case of non-U.S. banks;
(5) repurchase obligations for underlying securities of the types described in clauses (3) and (4) above or clauses (7), (8) and (9) below entered into with any financial institution or recognized securities dealer meeting the qualifications specified in clause (4) above;
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(6) commercial paper and variable or fixed rate notes rated at least P-2 by Moody’s or at least A-2 by S&P (or, if at any time neither Moody’s nor S&P is rating such obligations, an equivalent rating from another nationally recognized statistical rating agency selected by the Company) and, in each case, maturing within 36 months after the date of acquisition;
(7) marketable short-term money market and similar liquid funds having a rating of at least P-2 or A-2 from either Moody’s or S&P, respectively (or, if at any time neither Moody’s nor S&P is rating such obligations, an equivalent rating from another nationally recognized statistical rating agency selected by the Company);
(8) securities issued or directly and fully and unconditionally guaranteed by any state, commonwealth or territory of the United States or any political subdivision or taxing authority of any such state, commonwealth or territory or any public instrumentality thereof having maturities of not more than 36 months from the date of acquisition;
(9) readily marketable direct obligations issued or directly and fully and unconditionally guaranteed by any foreign government or any political subdivision or public instrumentality thereof, in each case, having an Investment Grade Rating from either Moody’s or S&P (or, if at any time neither Moody’s nor S&P is rating such obligations, an equivalent rating from another nationally recognized statistical rating agency selected by the Company) with maturities of 36 months or less from the date of acquisition;
(10) Indebtedness or Preferred Stock issued by Persons with a rating of “A” or higher from S&P or “A2” or higher from Moody’s (or, if at any time neither Moody’s nor S&P is rating such obligations, an equivalent rating from another nationally recognized statistical rating agency selected by the Company) with maturities of 36 months or less from the date of acquisition;
(11) Investments with average maturities of 36 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 is rating such obligations, an equivalent rating from another nationally recognized statistical rating agency selected by the Company); and
(12) investment funds investing substantially all of their assets in securities of the types described in clauses (1) through (11) above.
In the case of Investments by any Foreign Subsidiary or Investments made in a country outside the United States, Cash Equivalents will also include (i) investments of the type and maturity described in clauses (1) through (12) above of foreign obligors, which Investments or obligors (or the parents of such obligors) have ratings described in such clauses or equivalent ratings from comparable foreign rating agencies and (ii) other short-term investments utilized by Foreign Subsidiaries in accordance with normal investment practices for cash management in investments analogous to the foregoing investments in clauses (1) through (12) and in this paragraph.
Notwithstanding the foregoing, Cash Equivalents will include amounts denominated in currencies other than those set forth in clauses (1) and (2) above; provided that such amounts, except amounts used to pay non-dollar denominated obligations of the Company or any Restricted Subsidiary in the ordinary course of business, are converted into any currency listed in clause (1) or (2) above as promptly as practicable and in any event within ten (10) Business Days following the receipt of such amounts.
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“Cash Management Agreement” means any agreement entered into from time to time by the Company or any Restricted Subsidiary 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, information reporting services, lockbox services, stop payment services and wire transfer services.
“Cash Management Obligations” means Obligations in connection with, or in respect of, Cash Management Services.
“Cash Management Services” means (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, automatic clearing house fund transfer services, return items and interstate depository network services), (c) foreign exchange, netting and currency management services and (d) any other demand deposit or operating account relationships or other cash management services, including under any Cash Management Agreements.
“Change of Control” means the occurrence of any of the following after the Issue Date:
(1) the sale or transfer, in one or a series of related transactions, of all or substantially all of the assets of the Company and its Restricted Subsidiaries, taken as a whole, to a Person (other than the Company or any of its Restricted Subsidiaries or one or more Permitted Holders) and any “person” (as such term is used in Sections 13(d) and 14(d) of the Exchange Act as in effect on the Issue Date), other than one or more Permitted Holders or any Parent Company, is or becomes the “beneficial owner” (as so defined) of more than 50% of the total voting power of the Voting Stock of the transferee Person in such sale or transfer of assets, as the case may be; provided that (x) so long as the Company is a Subsidiary of any Parent Company, no person shall be deemed to be or become a beneficial owner of more than 50% of the total voting power of the Voting Stock of the Company unless such person shall be or become a beneficial owner of more than 50% of the total voting power of the Voting Stock of such Parent Company (other than a Parent Company that is a Subsidiary of another Parent Company) and (y) any Voting Stock of which any Permitted Holder is the beneficial owner shall not in any case be included in any Voting Stock of which any such Person is the beneficial owner;
(2) the Company becomes aware of (by way of a report or any other filing pursuant to Section 13(d) of the Exchange Act, proxy, vote, written notice or otherwise) any “person” (as such term is used in Sections 13(d) and 14(d) of the Exchange Act as in effect on the Issue Date), other than one or more Permitted Holders or a Parent Company, that is or becomes the “beneficial owner” (as defined in Rules 13d-3 and 13d-5 of the Exchange Act as in effect on the Issue Date) of more than 50% of the total voting power of the Voting Stock of the Company; provided that (x) so long as the Company is a Subsidiary of any Parent Company, no person shall be deemed to be or become a beneficial owner of more than 50% of the total voting power of the Voting Stock of the Company unless such person shall be or become a beneficial owner of more than 50% of the total voting power of the Voting Stock of such Parent Company (other than a Parent Company that is a Subsidiary of another Parent Company) and (y) any Voting Stock of which any Permitted Holder is the beneficial owner shall not in any case be included in any Voting Stock of which any such person is the beneficial owner.
Notwithstanding the preceding or any provision of Section 13(d)-3 of the Exchange Act, (i) 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, (ii) if any group includes one or more Permitted Holders, the issued and outstanding Voting Stock of the Company owned, directly or indirectly, by any Permitted Holders that are part of such group shall not be treated as being beneficially owned by such group or any other member of such group for purposes of determining whether a Change of Control has occurred, (iii) a Person or group will not be deemed to beneficially own the Voting Stock of another Person as a result of its ownership of Voting Stock or other securities of such other Person’s parent entity (or related contractual rights) unless it owns 50% or more of the total voting power of the Voting Stock entitled to vote for the election of directors of such parent entity having a majority of the aggregate votes on the board of directors (or similar body) of such parent entity and (iv) the right to acquire Voting Stock (so long as such Person does not have the right to direct the voting of the Voting Stock subject to such right) or any veto power in connection with the acquisition or disposition of Voting Stock will not cause a party to be a beneficial owner.
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Notwithstanding the foregoing, for the avoidance of doubt, (i) a conversion of the Company from a limited liability company to a corporation, limited partnership or other form of entity or an exchange of all of the outstanding Equity Interests in one form of entity for Equity Interests in such other form of entity shall not constitute a Change of Control, so long as immediately following such conversion or exchange the Persons (including the “persons” as that term is used in Section 13(d) of the Exchange Act) who Beneficially Owned the Capital Stock of the Company immediately prior to such transactions continue, immediately thereafter, to Beneficially Own in the aggregate more than 50% of the Voting Stock of such entity, or continue, immediately thereafter, to Beneficially Own sufficient Equity Interests in such entity to elect a majority of its directors, managers, trustees or other persons serving in a similar capacity for such entity and (ii) a Change of Control shall not occur (A) as a result of the IPOCo Transactions, the Qualified IPO and any transactions relating thereto, including, without limitation, (i) the contribution of the Equity Interests of the Company to IPOCo or (ii) any transaction in which the Company remains a subsidiary of IPOCo but one or more intermediate holding companies between the Company and IPOCo are added, liquidated, merged or consolidated out of existence or (B) if the Company becomes a direct or indirect wholly owned Subsidiary of a parent entity and immediately following that transaction no Person (other than a parent entity satisfying the requirements of this sentence or one or more Permitted Holders) is the beneficial owner, directly or indirectly, of more than 50% of the Voting Stock of such parent entity (or its general partner, if applicable). No Change of Control will be deemed to have occurred unless and until such Change of Control has actually been consummated.
“Change of Control Triggering Event” means both a Change of Control and a Rating Event. Notwithstanding the foregoing, for the avoidance of doubt, no Change of Control Triggering Event will be deemed to have occurred in connection with any particular Change of Control unless and until such Change of Control has actually been consummated.
“Clearstream” means Clearstream Banking, Société Anonyme and its successors.
“Code” means the Internal Revenue Code of 1986, as amended.
“Company” means WildFire Intermediate Holdings, LLC, a Delaware limited liability company, and its successor(s).
“consolidated” means, with respect to any Person, such Person consolidated with its Restricted Subsidiaries and excludes from such consolidation any Unrestricted Subsidiary as if such Unrestricted Subsidiary were not an Affiliate of such Person.
“Company Order” means a written request or order signed on behalf of the Company by an Officer of the Company, who must be the principal executive officer, the principal financial officer, the treasurer or the principal accounting officer of the Company, and delivered to the Trustee.
“Consolidated Depreciation, Depletion and Amortization Expense” means, with respect to any Person for any period, the total amount of depreciation, depletion and amortization expense and accretion expense, including the amortization of intangible assets, deferred financing fees, debt issuance costs, commissions, fees and expenses and the amortization of unrecognized prior service costs and actuarial gains and losses related to pensions and other post-employment benefits, of such Person and its Restricted Subsidiaries for such period on a consolidated basis and otherwise determined in accordance with GAAP.
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“Consolidated EBITDAX” means, with respect to any Person for any period, the Consolidated Net Income of such Person and its Restricted Subsidiaries for such period:
(1) increased (without duplication) by the following, in each case (other than in the case of clause (g) and (j)) to the extent deducted (and not added back) in determining Consolidated Net Income for such period:
(a) total interest expense and, to the extent not reflected in such total interest expense, any losses on Hedging Obligations or other derivative instruments entered into for the purpose of hedging interest rate risk, net of interest income and gains on such Hedging Obligations or such derivative instruments, and bank and letter of credit fees, letter of guarantee and bankers’ acceptance fees and costs of surety bonds in connection with financing activities, together with items excluded from the definition of “Consolidated Interest Expense” pursuant to the definition thereof; plus
(b) provision for taxes based on income or profits or capital, including, federal, state, franchise (including Texas margin tax or gross receipts taxes), excise, property and similar taxes and foreign withholding taxes (including any future taxes or other levies which replace or are intended to be in lieu of such taxes and any penalties and interest related to such taxes or arising from tax examinations) and the net tax expense associated with any adjustments made pursuant to the definition of “Consolidated Net Income,” and any payments to a Parent Company in respect of such taxes permitted to be made under this Indenture; plus
(c) Consolidated Depreciation, Depletion and Amortization Expense for such period; plus
(d) any other non-cash charges, including any write-offs or write-downs (including non-cash losses resulting from mark-to-market in respect of Hedging Obligations) reducing Consolidated Net Income for such period (provided that if any such non-cash charges represent an accrual or reserve for potential cash items in any future period, (A) the Company may determine not to add back such non-cash charge in the current period and (B) to the extent the Company does decide to add back such non-cash charge, the cash payment in respect thereof, with the exception of any cash payments related to the settlement of deferred compensation balances awarded prior to the Issue Date, in such future period shall be subtracted from Consolidated EBITDAX to such extent, and excluding amortization of a prepaid cash item that was paid in a prior period); plus
(e) minority interest expense, the amount of any non-controlling interest consisting of income attributable to non-controlling interests of third parties in any non-Wholly-Owned Restricted Subsidiary, excluding cash distributions in respect thereof, and the amount of any reductions in arriving at Consolidated Net Income resulting from the application of Accounting Standards Codification Topic No. 810, Consolidation; plus
(f) the amount of board of director fees and any management, monitoring, consulting, transaction, advisory and other fees (including termination fees) and indemnities and expenses paid or accrued in such period under any management services agreement or otherwise to the extent permitted under Section 4.11; plus
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(g) cash receipts (or any netting arrangements resulting in reduced cash expenditures) not representing Consolidated EBITDAX or Consolidated Net Income in any prior period to the extent non-cash gains relating to such income were deducted in the calculation of Consolidated EBITDAX pursuant to clause (2) below for any previous period and not added back; plus
(h) any costs or expenses incurred pursuant to any management equity plan, stock option plan or any other management or employee benefit plan, agreement or any stock subscription or shareholder agreement, to the extent that such costs or expenses are funded with cash proceeds contributed to the capital of such Person or net cash proceeds of an issuance of Equity Interests of such Person (other than Disqualified Stock); plus
(i) any net loss from disposed, abandoned or discontinued operations (excluding held-for-sale discontinued operations until actually disposed of and other than Hydrocarbons produced in the ordinary course of business); plus
(j) exploration expenses or costs; and
(2) decreased (without duplication) by the following, in each case to the extent included in determining Consolidated Net Income for such period:
(a) non-cash gains for such period (other than accruals of revenue in the ordinary course of business and excluding any non-cash gain to the extent it represents the reversal of an accrual or reserve for a potential item that reduced Consolidated Net Income or Consolidated EBITDAX in any prior period (other than any such accrual or reserve that has been added back to Consolidated Net Income in calculating Consolidated EBITDAX in accordance with this definition));
(b) the amount of any non-controlling interest consisting of loss attributable to non-controlling interests of third parties in any non-Wholly-Owned Restricted Subsidiary added to (and not deducted from) Consolidated Net Income in such period; and
(c) any income from disposed, abandoned or discontinued operations (excluding held-for-sale discontinued operations until actually disposed of).
“Consolidated Interest Expense” means, with respect to any Person for any period, without duplication, the sum of:
(1) cash interest expense (including that attributable to Finance Lease Obligations), net of cash interest income, with respect to Indebtedness of such Person and its Restricted Subsidiaries for such period, other than Non-Recourse Indebtedness, including commissions, discounts and other fees and charges owed with respect to letters of credit and bankers’ acceptance financing and net cash costs under hedging agreements (other than in connection with the early termination thereof); plus
(2) non-cash interest expense resulting solely from (a) the amortization of original issue discount from the issuance of Indebtedness of such Person and its Restricted Subsidiaries at less than par (excluding the Notes and any Non-Recourse Indebtedness), and (b) pay-in-kind interest expense of such Person and its Restricted Subsidiaries payable pursuant to the terms of the agreements governing Indebtedness for borrowed money,
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excluding, in each case, (i) amortization of deferred financing costs, debt issuance costs, commissions, fees and expenses and any other amounts of non-cash interest other than referred to in clauses (2)(a) and (2)(b) above (including as a result of the effects of acquisition method accounting or pushdown accounting), (ii) interest expense attributable to the movement of the mark-to-market valuation of obligations under Hedging Obligations or other derivative instruments, including pursuant to FASB Accounting Standards Codification Topic 815 -- Derivatives and Hedging, (iii) costs associated with incurring or terminating Hedging Obligations and cash costs associated with breakage in respect of hedging agreements for interest rates, (iv) commissions, discounts, yield, make-whole premium and other fees and charges (including any interest expense) incurred in connection with any Non-Recourse Indebtedness, (v) “additional interest” or “liquidated damages” owing pursuant to a registration rights agreement with respect to any securities, (vi) any payments with respect to make-whole premiums or other breakage costs of any Indebtedness, (vii) penalties and interest relating to taxes, (viii) accretion or accrual of discounted liabilities not constituting Indebtedness, (ix) interest expense attributable to a Parent Company resulting from push-down accounting, (x) any expense resulting from the discounting of Indebtedness in connection with the application of recapitalization or purchase accounting, (xi) any interest expense attributable to the exercise of appraisal rights and the settlement of any claims or actions (whether actual, contingent or potential), with respect thereto in connection with any acquisition or Investment, (xii) annual trustee fees or agency fees paid to the administrative agents and collateral agents (including any security or collateral trust arrangements related thereto) under any Debt Facilities, including the Revolving Credit Facility and the Notes and (xiii) any expensing of bridge commitment and other financing fees related to any acquisitions.
For purposes of this definition, interest on a Finance Lease Obligation will be deemed to accrue at an interest rate reasonably determined by such Person to be the rate of interest implicit in such Finance Lease Obligation in accordance with GAAP.
“Consolidated Leverage Ratio Indebtedness” of any Person as of any date means the aggregate amount of Indebtedness for money borrowed and Finance Lease Obligations of such Person and its Restricted Subsidiaries determined on a consolidated basis.
“Consolidated Net Income” means, for any period, the net income (loss) of the Company and its Restricted Subsidiaries for such period determined on a consolidated basis in accordance with GAAP, excluding (and excluding the effect of), without duplication,
(1) extraordinary, non-recurring or unusual gains, losses, fees, costs, charges or expenses (including relating to any strategic initiatives and accruals and reserves in connection with such gains, losses, charges or expenses); restructuring costs, charges, accruals or reserves (including restructuring and integration costs related to acquisitions and adjustments to existing reserves, and in each case, whether or not classified as such under GAAP); costs and expenses related to any reconstruction, decommissioning, recommissioning or reconfiguration of facilities and fixed assets for alternative uses; Public Company Costs; costs and expenses related to the integration, consolidation, opening, pre-opening and closing of facilities and fixed assets; severance and relocation costs and expenses, one-time compensation costs and expenses, consulting fees, signing, retention or completion bonuses, and executive recruiting costs; costs and expenses incurred in connection with strategic initiatives; transition costs and duplicative running costs; costs and expenses incurred in connection with non-ordinary course product and intellectual property development; costs incurred in connection with acquisitions (or purchases of assets) prior to or after the Issue Date (including integration costs); business optimization expenses (including costs and expenses relating to business optimization programs, new systems design, retention charges, system establishment costs and implementation costs and project start-up costs), accruals and reserves; operating expenses attributable to the implementation of cost-savings initiatives; curtailments and modifications to pension and post-employment employee benefit plans (including any settlement of pension liabilities and charges resulting from changes in estimates, valuations and judgments);
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(2) the cumulative effect of a change in accounting principles and changes as a result of the adoption or modification of accounting policies during such period whether effected through a cumulative effect adjustment or a retroactive application, in each case in accordance with GAAP;
(3) any gain (loss) on asset sales, disposals or abandonments (other than asset sales, disposals or abandonments in the ordinary course of business); provided that the exclusion for the discontinuance of discontinued operations held for sale shall be at the option of the Company pending such sale;
(4) the Net Income for such period of any Person that is an Unrestricted Subsidiary and, solely for the purpose of determining the amount available for Restricted Payments under Section 4.07(a)(3)(A), the Net Income for such period of any Person that is not a Subsidiary or that is accounted for by the equity method of accounting; provided that the Consolidated Net Income of a Person shall be increased by the amount of dividends or distributions or other payments that are actually paid in cash or Cash Equivalents (or to the extent converted into cash or Cash Equivalents), to such Person or a Restricted Subsidiary thereof in respect of such period;
(5) solely for the purpose of determining the amount available for Restricted Payments under Section 4.07(a)(3)(A), the Net Income for such period of any Restricted Subsidiary (other than any Guarantor) to the extent that the declaration or payment of dividends or similar distributions by that Restricted Subsidiary of its Net Income is not at the date of determination permitted without any prior governmental approval (which has not been obtained) or, directly or indirectly, by the operation of the terms of its charter or any agreement, instrument, judgment, decree, order, statute, rule, or governmental regulation applicable to that Restricted Subsidiary or its stockholders, unless such restriction with respect to the payment of dividends or similar distributions has been legally waived (or the Company reasonably believes such restriction could be waived and is using commercially reasonable efforts to pursue such waiver); provided that Consolidated Net Income of a Person will be increased by the amount of dividends or other distributions or other payments actually paid in cash or Cash Equivalents (or to the extent converted into cash or Cash Equivalents), or the amount that could have been paid in cash or Cash Equivalents without violating any such restriction or requiring any such approval, to such Person or a Restricted Subsidiary thereof in respect of such period, to the extent not already included therein;
(6) effects of adjustments (including the effects of such adjustments pushed down to such Person and its Restricted Subsidiaries) related to the application of recapitalization accounting or purchase accounting (including in the inventory, property and equipment, software, goodwill, intangible assets, in process research and development, deferred revenue and debt line items);
(7) income (loss) from the early extinguishment or conversion of (a) Indebtedness or (b) Hedging Obligations, in each case relating to currency or interest rates;
(8) (a) any impairment charges or asset write-off or write-down, in each case pursuant to GAAP, and the amortization of intangibles arising pursuant to GAAP; and (b) any impairment charges, asset write-off or write-down, including ceiling test write-downs on Oil and Gas Properties under GAAP or SEC guidelines;
(9) (a) any equity or phantom equity based or non-cash compensation charge or expense including any such charge or expense arising from grants of stock appreciation rights, equity incentive programs or similar rights, stock options, restricted stock or other rights to, and any cash charges associated with equity incentives or other long term incentive compensation plans, the rollover, acceleration, or payout of, Equity Interests by management, other employees or business partners of such Person or of a Restricted Subsidiary or any Parent Company (b) non-cash compensation expense resulting from the application of Accounting Standards Codification Topic No. 718, Compensation -- Stock Compensation or Accounting Standards Codification Topic 505-50, Equity-Based Payments to Non-Employees and (c) any income (loss) attributable to deferred compensation plans or trusts;
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(10) any fees, expenses or charges incurred during such period, or any amortization thereof for such period, in connection with any acquisition, recapitalizations, Investment, Asset Sale, disposition, incurrence or repayment of Indebtedness (including such fees, expenses or charges related to the offering and issuance of the Notes and the syndication and incurrence of any securities or Debt Facilities), issuance of Equity Interests (including by any direct or indirect parent of the Company), recapitalization, refinancing transaction or amendment or modification of any debt instrument (including any amendment or other modification of the Notes and other securities and any Debt Facilities) and including, in each case, any such transaction whether consummated on, after or prior to the Issue Date and any such transaction undertaken but not completed, and any charges or nonrecurring merger costs incurred during such period as a result of any such transaction, in each case whether or not successful or consummated (including, for the avoidance of doubt, the effects of expensing all transaction related expenses in accordance with Accounting Standards Codification Topic No. 805, Business Combinations);
(11) accruals and reserves that are established or adjusted in connection with an Investment or an acquisition that are required to be established or adjusted as a result of such Investment or such acquisition, in each case in accordance with GAAP;
(12) any expenses, charges or losses to the extent covered by insurance that are, directly or indirectly, reimbursed or reimbursable by a third party, and any expenses, charges or losses that are covered by indemnification or other reimbursement provisions in connection with any acquisition, Investment or any sale, conveyance, transfer or other disposition of assets permitted under this Indenture;
(13) any non-cash gain (loss) attributable to the mark to market movement in the valuation of Hedging Obligations or other derivative instruments pursuant to FASB Accounting Standards Codification Topic 815 -- Derivatives and Hedging or mark to market movement of other financial instruments pursuant to FASB Accounting Standards Codification Topic 825 -- Financial Instruments;
(14) any non-cash gains, losses, income and expenses resulting from fair value accounting required by the applicable standard under GAAP and related interpretations;
(15) without duplication, an amount equal to the amount of distributions actually made to any parent or equity holder of such Person in respect of income taxes for such period in accordance with Section 4.07(b)(xii) shall be included as though such amounts had been paid as income taxes directly by such Person for such period;
(16) non-cash charges for deferred tax asset valuation allowances shall be excluded (except to the extent reversing a previously recognized increase to net income);
(17) the following items shall be excluded:
(i) any fees, expenses or charges incurred during such period, or any amortization thereof for such period, in connection with the entry into or termination of any Hedging Obligations;
(ii) any net unrealized gain or loss (after any offset) resulting in such period from currency transaction or translation gains or losses including those related to currency remeasurements of Indebtedness (including any net loss or gain resulting from (a) Hedging Obligations for currency exchange risk and (b) resulting from intercompany indebtedness) and any other foreign currency transaction or translation gains and losses, to the extent such gain or losses are non-cash items;
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(iii) effects of adjustments to accruals and reserves during a prior period relating to any change in methodology calculating reserves, rebates or other chargebacks; and
(iv) any adjustments resulting from the application of Accounting Standards Codification Topic No. 460, Guarantees, or any comparable regulation;
(18) any non-cash rent expense; and
(19) earn-out and contingent consideration obligations (including to the extent accounted for as bonuses or otherwise) and adjustments thereof and purchase price adjustments.
In addition, to the extent not already included in the Consolidated Net Income of such Person and its Restricted Subsidiaries, Consolidated Net Income shall include the amount of proceeds received or receivable from business interruption insurance, the amount of any expenses or charges incurred by such Person or its Restricted Subsidiaries during such period that are, directly or indirectly, reimbursed or reimbursable by a third party, and amounts that are covered by indemnification or other reimbursement provisions in connection with any acquisition, Investment or any sale, conveyance, transfer or other disposition of assets permitted under this Indenture.
Notwithstanding the foregoing, for the purpose of Section 4.07 only (other than Section 4.07(a)(3)(D)), there will be excluded from Consolidated Net Income any income arising from any sale or other disposition of Restricted Investments made by such Person and its Restricted Subsidiaries, any repurchases and redemptions of Restricted Investments from such Person and its Restricted Subsidiaries, any repayments of loans and advances which constitute Restricted Investments by such Person or any Restricted Subsidiary, any sale of the stock of an Unrestricted Subsidiary or any distribution or dividend from an Unrestricted Subsidiary, in each case only to the extent such amounts increase the amount of Restricted Payments permitted under Section 4.07(a)(3)(D).
“Consolidated Total Net Debt Ratio” means, as of any date of determination, the ratio of (1) Consolidated Leverage Ratio Indebtedness of the Company and its Restricted Subsidiaries as of such date of determination minus cash and Cash Equivalents that would be stated on the balance sheet of the Company and its Restricted Subsidiaries as of such date of determination to (2) Consolidated EBITDAX of the Company for the most recent Test Period, with such pro forma adjustments as are appropriate and consistent with the pro forma adjustment provisions set forth in the definition of Fixed Charge Coverage Ratio and as determined in good faith by the Company.
“Contingent Obligations” means, with respect to any Person, any obligation of such Person guaranteeing any leases, dividends or other monetary obligations that do not constitute Indebtedness (“primary obligations”) of any other Person (the “primary obligor”) in any manner, whether directly or indirectly, including any obligation of such Person, whether or not contingent:
(1) to purchase any such primary obligation or any property constituting direct or indirect security therefor;
(2) to advance or supply funds:
(a) for the purchase or payment of any such primary obligation, or
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(b) to maintain working capital or equity capital of the primary obligor or otherwise to maintain the net worth or solvency of the primary obligor; or
(3) to purchase property, securities or services primarily for the purpose of assuring the owner of any such primary obligation of the ability of the primary obligor to make payment of such primary obligation against loss in respect thereof.
“Controlled Investment Affiliate” means, as to any Person, any other Person, other than any Investor, 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 Company and/or other companies.
“Corporate Trust Office of the Trustee” shall be at the address of the Trustee specified in Section 12.02 hereof or such other address as to which the Trustee may give notice to the Holders and the Company.
“Custodian” means the Trustee, as custodian with respect to the Notes, each in global form, or any successor entity thereto.
“Customary Recourse Exceptions” means, with respect to any Non-Recourse Indebtedness of an Unrestricted Subsidiary, exclusions from the exculpation provisions with respect to such Non-Recourse Indebtedness for the voluntary bankruptcy of such Unrestricted Subsidiary, fraud, misapplication of cash, environmental claims, waste, willful destruction and other circumstances customarily excluded by lenders from exculpation provisions or included in separate indemnification agreements in non-recourse financings.
“Debt Facilities” means, with respect to the Company or any Restricted Subsidiary, one or more debt facilities, including the Revolving Credit Facility or other financing arrangements (including commercial paper facilities or indentures) providing for revolving credit loans, term loans, note issuances, letters of credit or other long-term indebtedness, including any notes, mortgages, guarantees, collateral documents, instruments and other agreements executed in connection therewith, and any amendments, supplements, modifications, extensions, renewals, restatements or refundings thereof, in whole or in part, and any indentures or credit facilities or commercial paper facilities that replace, refund, supplement, extend, renew, restate, amend, modify or refinance any part of the loans, notes, other credit facilities or commitments thereunder, including any such exchange, replacement, refunding, supplemental, extended, renewed, restated, amended, modified or refinancing facility, arrangement or indenture that increases the amount permitted to be borrowed or issued thereunder or alters the maturity thereof or adds Restricted Subsidiaries as additional borrowers or guarantors thereunder and whether by the same or any other agent, trustee, lender or group of lenders or holders.
“Default” means any event that is, or with the passage of time or the giving of notice or both would be, an Event of Default; provided that any Default that results solely from the taking of an action that would have been permitted but for the continuation of a previous Default will be deemed to be cured if such previous Default is cured prior to becoming an Event of Default.
“Definitive Note” means a certificated Note registered in the name of the Holder thereof and issued in accordance with Section 2.06(c) hereof, substantially in the form of Exhibit A hereto, except that such Note shall not bear the Global Note Legend and shall not have the “Schedule of Exchanges of Interests in the Global Note” attached thereto.
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“Derivative Instrument” with respect to a Person, means any contract, instrument or other right to receive payment or delivery of cash or other assets to which such Person or any Affiliate of such Person that is acting in concert with such Person in connection with such Person’s investment in the Notes (other than a Screened Affiliate) is a party (whether or not requiring further performance by such Person), the value and/or cash flows of which (or any material portion thereof) are materially affected by the value and/or performance of the Notes and/or the creditworthiness of the Company and/or any one or more of the Guarantors (the “Performance References”).
“Depositary” means, with respect to the Notes issuable or issued in whole or in part in global form, any Person specified in Section 2.03 hereof as the Depositary with respect to the Notes, and any and all successors thereto appointed as Depositary hereunder and having become such pursuant to the applicable provision of this Indenture.
“Designated Non-Cash Consideration” means the fair market value of non-cash consideration received by the Company or a Restricted Subsidiary in connection with an Asset Sale that is so designated by the Company as Designated Non-Cash Consideration, less the amount of cash or Cash Equivalents received in connection with a subsequent sale, redemption or repurchase of, or collection or payment on, such Designated Non-Cash Consideration.
“Designated Preferred Stock” means Preferred Stock of the Company or any direct or indirect parent of the Company (other than Disqualified Stock), that is issued for cash (other than to the Company or any of its Subsidiaries or an employee stock ownership plan or trust established by the Company or any of its Subsidiaries) and is so designated as Designated Preferred Stock, pursuant to an Officer’s Certificate.
“Disinterested Director” means, with respect to any Affiliate Transaction, a member of the Board of the Company having no material direct or indirect financial interest in or with respect to such Affiliate Transaction. A member of the Board of the Company shall not be deemed to have such a financial interest solely by reason of such member’s holding Capital Stock of the Company or any options, warrants or other rights in respect of such Capital Stock.
“Disqualified Stock” means, with respect to any Person, any Capital Stock of such Person which, by its terms, or by the terms of any security into which it is convertible or for which it is redeemable or exchangeable, or upon the happening of any event, matures or is mandatorily redeemable (other than (i) for any Qualified Equity Interests or (ii) solely as a result of a change of control, asset sale, casualty, condemnation or eminent domain) pursuant to a sinking fund obligation or otherwise, or is redeemable at the option of the holder thereof (other than for any Qualified Equity Interests or solely as a result of a change of control, asset sale, casualty, condemnation or eminent domain), in whole or in part, in each case prior to the date 91 days after the earlier of the maturity date of the Notes or the date the Notes are no longer outstanding; provided, however, that only the portion of Capital Stock which so matures or is mandatorily redeemable, is so convertible or exchangeable or is so redeemable at the option of the holder thereof prior to such date shall be deemed to be Disqualified Stock; provided, further, that if such Capital Stock is issued pursuant to any plan for the benefit of future, current or former employees, directors, officers, members of management, consultants or independent contractors of the Company or its Subsidiaries or any Parent Company or by any such plan to such employees, directors, officers, members of management, consultants or independent contractors, such Capital Stock will not constitute Disqualified Stock solely because it may be required to be repurchased by the Company or its 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, consultant’s or independent contractor’s termination, death or disability; provided, further that any Capital Stock held by any future, current or former employee, director, officer, member of management, consultant or independent contractor of the Company, any of its Subsidiaries or any Parent Company or any other entity in which the Company or a Restricted Subsidiary has an Investment and is designated in good faith as an “affiliate” by the Board (or the compensation committee thereof), in each case pursuant to any equity subscription or equity holders’ agreement, management equity plan or stock option plan or any other management or employee benefit plan or agreement will not constitute Disqualified Stock solely because it may be required to be repurchased by the Company or its 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, consultant’s or independent contractor’s termination, death or disability. For the purposes hereof, the aggregate principal amount of Disqualified Stock will be deemed to be equal to the greater of its voluntary or involuntary liquidation preference and maximum fixed repurchase price, determined on a consolidated basis in accordance with GAAP.
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“Dollar-Denominated Production Payments” means production payment obligations recorded as liabilities in accordance with GAAP, together with all undertakings and obligations in connection therewith.
“Domestic Subsidiary” means any direct or indirect Subsidiary of the Company that is organized under the laws of the United States, any state thereof or the District of Columbia.
“EMU” means the economic and monetary union as contemplated in the Treaty on European Union.
“Equity Interests” means, with respect to any Person, the Capital Stock of such Person and all warrants, options or other rights to acquire Capital Stock of such Person, but excluding any debt security that is convertible into, or exchangeable for, Capital Stock of such Person.
“Equity Offering” means any public or private sale of common equity or Preferred Stock of the Company or any Parent Company (excluding Disqualified Stock), other than:
(1) public offerings with respect to the Company’s or any Parent Company’s common equity registered on Form S-4 or Form S-8;
(2) issuances to any Restricted Subsidiary of the Company; and
(3) any such public or private sale that constitutes an Excluded Contribution.
“Euroclear” means Euroclear Bank S.A./N.V., as operator of the Euroclear system, and its successors.
“Euros” means the single currency of participating member states of the EMU.
“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations of the SEC promulgated thereunder.
“Excluded Contribution” means net cash proceeds, the fair market value of marketable securities or the fair market value of Qualified Proceeds received by the Company from:
(1) contributions to its common equity capital;
(2) dividends, distributions, fees and other payments from any joint ventures that are not Restricted Subsidiaries; and
(3) the sale (other than to a Restricted Subsidiary of the Company or to any management equity plan or stock option plan or any other management or employee benefit plan or agreement of the Company) of Capital Stock (other than Disqualified Stock) of the Company;
in each case, designated as Excluded Contributions pursuant to an Officer’s Certificate or that are excluded from the calculation set forth in Section 4.07(a)(3); provided that the Company, in its sole discretion, may subsequently undesignate any previously designated Excluded Contribution (to the extent such proceeds have not been applied to make Restricted Payments pursuant to Section 4.07(b)(ix)) pursuant to an Officer’s Certificate.
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“fair market value” means, with respect to any asset or liability, the fair market value of such asset or liability as determined by the Company in good faith.
“Farm-In Agreement” means an agreement whereby a Person agrees to pay all or a share of the drilling, completion or other expenses of one or more exploratory or development wells (which agreement may be subject to a maximum payment obligation, after which expenses are shared in accordance with the working or participation interests therein or in accordance with the agreement of the parties) 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.
“Farm-Out Agreement” means a Farm-In Agreement, viewed from the standpoint of the party that transfers an ownership interest to another.
“Finance Lease Obligation” means an obligation that is required to be classified and accounted for as a finance lease for financial reporting purposes in accordance with GAAP, and the amount of Indebtedness represented by such obligation shall be the capitalized amount of such obligation determined in accordance with GAAP; and the stated maturity thereof shall be the date of the last payment of rent or any other amount due under such lease prior to the first date upon which such lease may be terminated by the lessee without payment of a penalty.
“Financial Officer” means the chief financial officer, accounting officer, treasurer, controller or other senior financial or accounting officer of the Company or any Guarantor, as appropriate.
“Fitch” means Fitch Ratings, Inc. and any successor to its rating agency business.
“Fixed Charge Coverage Ratio” means, with respect to any Test Period, the ratio of (1) Consolidated EBITDAX of the Company for such Test Period to (2) the Fixed Charges of the Company and its Restricted Subsidiaries for such Test Period.
In the event that the Company or any Restricted Subsidiary incurs, assumes, guarantees, redeems, repays, retires or extinguishes any Indebtedness (other than Indebtedness incurred or repaid under any revolving credit facility or line of credit unless such Indebtedness has been permanently repaid and not replaced) or issues, repurchases or redeems Disqualified Stock or Preferred Stock, in each case, subsequent to the commencement of the period for which the Fixed Charge Coverage Ratio is being calculated but prior to or simultaneously with the event for which the calculation of the Fixed Charge Coverage Ratio is made (the “Fixed Charge Coverage Ratio Calculation Date”), then the Fixed Charge Coverage Ratio will be calculated giving pro forma effect to such incurrence, assumption, guarantee, redemption, repayment, retirement or extinguishment of Indebtedness or such issuance, repurchase or redemption of Disqualified Stock or Preferred Stock, as if the same had occurred at the beginning of the most recently ended Test Period; provided, however, that at the election of the Company, the pro forma calculation will not give effect to any Indebtedness incurred or Disqualified Stock or Preferred Stock issued on such determination date pursuant to Section 4.09(b) (other than Section 4.09(b)(xiv)).
For purposes of making the computation referred to above, any Specified Transaction that has been consummated by the Company or any Restricted Subsidiary during any Test Period or subsequent to such Test Period and on or prior to or simultaneously with the Fixed Charge Coverage Ratio Calculation Date will be calculated on a pro forma basis assuming that all such Specified Transactions (and the change in any associated fixed charge obligations and the change in Consolidated EBITDAX resulting therefrom) had occurred on the first day of the Test Period.
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If since the beginning of such Test Period any Person that subsequently became a Restricted Subsidiary or was merged or consolidated with or into the Company or any Restricted Subsidiary since the beginning of such Test Period will have made any Specified Transaction that would have required adjustment pursuant to this definition, then the Fixed Charge Coverage Ratio will be calculated giving pro forma effect thereto for such Test Period as if such Specified Transaction had occurred at the beginning of the most recently ended Test Period.
For purposes of this definition in this Indenture, whenever pro forma effect is to be given to any Specified Transaction, the pro forma calculations will be made in good faith by a Financial Officer of the Company and may include, for the avoidance of doubt, the amount of “run-rate” cost savings, operating expense reductions and synergies projected by the Company in good faith to result from or relating to any Specified Transaction (including acquisitions occurring prior to the Issue Date) which is being given pro forma effect that have been realized or are expected to be realized and for which the actions necessary to realize such cost savings, operating expense reductions and synergies are taken or with respect to which substantial steps have been taken or are expected to be taken (in the good faith determination of the Company) no later than eighteen (18) months after the date of any such Specified Transaction (in each case as though such cost savings, operating expense reductions and synergies had been realized on the first day of the applicable period and as if such cost savings, operating expense reductions and synergies were realized for the entirety of such period). For the purposes of this Indenture, “run-rate” means the full recurring benefit for a period that is associated with any action taken or with respect to which substantial steps have been taken or are expected to be taken (including any savings expected to result from the elimination of a public target’s compliance costs with public company requirements), net of the amount of actual benefits realized during such period from such actions.
If any Indebtedness bears a floating rate of interest and is being given pro forma effect, the interest on such Indebtedness will be calculated as if the rate in effect on the Fixed Charge Coverage Ratio Calculation Date had been the applicable rate for the entire period (taking into account any Hedging Obligations applicable to such Indebtedness). Interest on Indebtedness that may optionally be determined at an interest rate based upon a factor of a prime or similar rate, a eurocurrency interbank offered rate, or other rate, will be deemed to have been based upon the rate actually chosen, or, if none, then based upon such optional rate chosen as the Company may designate. Interest on a Finance Lease Obligation shall be deemed to accrue at an interest rate reasonably determined by a responsible financial or accounting officer of the Company to be the rate of interest implicit in such Finance Lease Obligation in accordance with GAAP. For purposes of making the computation referred to above, interest on any Indebtedness under a revolving credit facility computed on a pro forma basis shall be computed based upon the average daily balance of such Indebtedness during the applicable period.
“Fixed Charge Coverage Ratio Calculation Date” has the meaning assigned to it in the definition of “Fixed Charge Coverage Ratio.”
“Fixed Charge Coverage Ratio Test” has the meaning assigned to it in Section 4.09(a).
“Fixed Charges” means, with respect to any Person for any period, the sum of, without duplication:
(1) Consolidated Interest Expense of such Person for such period;
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(2) all cash dividends or other cash distributions paid (excluding items eliminated in consolidation) on any series of Preferred Stock of any Restricted Subsidiary of such Person during such period; and
(3) all cash dividends or other cash distributions paid (excluding items eliminated in consolidation) on any series of Disqualified Stock or Designated Preferred Stock during such period.
“Foreign Subsidiary” means any direct or indirect Restricted Subsidiary of the Company that is not a Domestic Subsidiary.
“GAAP” means generally accepted accounting principles in the United States of America set forth in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or in such other statements by such other entity as have been approved by a significant segment of the accounting profession, as in effect from time to time.
“Global Note Legend” means the legend set forth in Section 2.06(f)(ii) hereof, which is required to be placed on all Global Notes issued under this Indenture.
“Global Notes” means, individually and collectively, each of the Restricted Global Notes and the Unrestricted Global Notes, substantially in the form of Exhibit A hereto, issued in accordance with Sections 2.01, 2.06(b) or 2.06(d) hereof.
“Government Securities” means securities that are:
(1) direct obligations of the United States for the timely payment of which its full faith and credit is pledged; or
(2) obligations of a Person controlled or supervised by and acting as an agency or instrumentality of the United States the timely payment of which is unconditionally guaranteed as a full faith and credit obligation by the United States,
that, in either case, are not callable or redeemable at the option of the issuers thereof, and will also include a depository receipt issued by a bank (as defined in Section 3(a)(2) of the Securities Act), as custodian with respect to any such Government Securities or a specific payment of principal of or interest on any such Government Securities held by such custodian for the account of the holder of such depository receipt; provided that (except as required by law) such custodian is not authorized to make any deduction from the amount payable to the holder of such depository receipt from any amount received by the custodian in respect of the Government Securities or the specific payment of principal of or interest on the Government Securities evidenced by such depository receipt.
“Governmental Authority” means the government of the United States or any other nation, or of any political subdivision thereof, whether state, local, or otherwise, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government (including any supra-national bodies such as the European Union or the European Central Bank).
“guarantee” means a guarantee (other than by endorsement of negotiable instruments for collection in the ordinary course of business or consistent with industry practice), direct or indirect, in any manner (including letters of credit and reimbursement agreements in respect thereof), of all or any part of any Indebtedness or other obligations. The amount of any guarantee shall be deemed to be an amount equal to the stated or determinable amount of the Indebtedness in respect of which such guarantee is made or, if not stated or determinable, the maximum reasonably anticipated liability in respect thereof as determined by such person in good faith.
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“Guarantee” means the guarantee by any Guarantor of the Company’s Obligations under this Indenture and the Notes.
“Guarantor” means each Restricted Subsidiary of the Company, if any, that Guarantees the Notes in accordance with the terms of this Indenture (excluding any Parent Company that guarantees the Notes).
“Hedging Obligations” means, with respect to any Person, the obligations of such Person under any interest rate swap agreement, interest rate cap agreement, interest rate collar agreement, commodity swap agreement, commodity cap agreement, commodity collar agreement, commodity option, forward commodity contract, basis differential swap, fixed-price physical delivery contract or other similar agreement or arrangement in respect of Hydrocarbons, foreign exchange contract, currency swap agreement, currency collar agreement or similar agreement providing for the transfer, modification or mitigation of interest rate, currency, commodity risks or equity risks either generally or under specific contingencies.
“Holder” at any time, means the Person in whose name a Note is registered on the Registrar’s books at such time.
“Hydrocarbons” means oil, natural gas, casinghead gas, drip gasoline, natural gasoline, condensate, distillate, liquid hydrocarbons, gaseous hydrocarbons and all constituents, elements or compounds thereof and products refined or processed therefrom.
“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.
“Indebtedness” means, with respect to any Person, without duplication:
(1) any indebtedness (including principal and premium) of such Person, whether or not contingent:
(a) in respect of borrowed money;
(b) evidenced by bonds, notes, debentures or similar instruments or letters of credit or bankers’ acceptances (or, without duplication, reimbursement agreements in respect thereof);
(c) representing the deferred and unpaid balance of the purchase price of any property (including Finance Lease Obligations) due more than twelve months after such property is acquired, except (i) any such balance that constitutes an obligation in respect of a commercial letter of credit, a trade payable or similar obligation to a trade creditor, in each case incurred in the ordinary course of business or consistent with industry practice, (ii) any earn-out obligations until such obligation is reflected as a liability on the balance sheet (excluding any footnotes thereto) of such Person in accordance with GAAP and is not paid within 60 days after becoming due and payable, (iii) obligations arising under any firm transportation or take-or-pay contract and (iv) accruals for payroll and other liabilities accrued in the ordinary course of business; or
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(d) representing the net obligations under any Hedging Obligations;
if and to the extent that any of the foregoing Indebtedness (other than obligations in respect of letters of credit and Hedging Obligations) would appear as a liability upon a balance sheet (excluding the footnotes thereto) of such Person prepared in accordance with GAAP; provided that Indebtedness of any Parent Company appearing upon the balance sheet of the Company solely by reason of push-down accounting under GAAP will be excluded;
(2) to the extent not otherwise included, any obligation by such Person to be liable for, or to pay, as obligor, guarantor or otherwise, on the obligations of the type referred to in clause (1) of this definition of a third Person (whether or not such items would appear upon the balance sheet of such obligor or guarantor), other than by endorsement of negotiable instruments for collection in the ordinary course of business or consistent with industry practice; and
(3) to the extent not otherwise included, the obligations of the type referred to in clause (1) of this definition of a third Person secured by a Lien on any asset owned by such first Person, whether or not such Indebtedness is assumed by such first Person; provided that the amount of such Indebtedness will be the lesser of (i) the fair market value of such asset at such date of determination and (ii) the amount of such Indebtedness of such other Person;
provided that notwithstanding the foregoing, Indebtedness will be deemed not to include (a) Contingent Obligations incurred in the ordinary course of business or consistent with industry practice, (b) reimbursement obligations under commercial letters of credit (provided that unreimbursed amounts under commercial letters of credit will be counted as Indebtedness three Business Days after such amount is drawn), (c) accrued expenses, (d) deferred or prepaid revenues, (e) asset retirement obligations and obligations in respect of reclamation and workers compensation (including pensions and retiree medical care), (f) 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, (g) Production Payments and Reserve Sales, (h) any obligation of a Person 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 natural gas property, (i) Hedging Obligations; provided that such agreements are entered into for bona fide hedging purposes of the Company or its Restricted Subsidiaries (as determined in good faith by the Board or senior management of the Company, whether or not accounted for as a hedge in accordance with GAAP) and, in the case of any foreign exchange contract, currency swap agreement, futures contract, option contract or other similar agreement, such agreements are related to business transactions of the Company or its Restricted Subsidiaries entered into in the ordinary course of business and, in the case of any interest rate protection agreement, interest rate futures agreement, interest rate option agreement, interest rate swap agreement, interest rate cap agreement, interest rate collar agreement, interest rate hedge agreement or other similar agreement or arrangement, such agreements substantially correspond in terms of notional amount, duration and interest rates, as applicable, to Indebtedness of the Company or its Restricted Subsidiaries incurred without violation of this Indenture, (j) obligations in respect of surety and bonding requirements of the Company and its Restricted Subsidiaries, (k) in-kind obligations relating to net oil, natural gas liquids or natural gas balancing positions arising in the ordinary course of business, (l) trade and other ordinary course payables, accrued expenses and intercompany liabilities arising in the ordinary course of business, (m) operating leases or sale and leaseback transactions (except any resulting obligations under any Finance Lease Obligation), (n) commitments or obligations of such Person to make capital contributions in another Person or fund construction costs of equipment, gathering, transportation, processing, handling, pipelines and other related systems and facilities which constitute investments in the Oil and Gas Business and (o) in the case of the Company and its Restricted Subsidiaries (x) all intercompany Indebtedness having a term not exceeding 364 days (inclusive of any roll-over or extensions of terms) and made in the ordinary course of business and (y) intercompany liabilities in connection with cash management, tax and accounting operations of the Company and its Restricted Subsidiaries; provided, further that Indebtedness will be calculated without giving effect to the effects of Accounting Standards Codification Topic No. 815-Derivatives and Hedging, and related interpretations to the extent such effects would otherwise increase or decrease an amount of Indebtedness for any purpose under this Indenture as a result of accounting for any embedded derivatives created by the terms of such Indebtedness.
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“Indenture” means this Indenture, as amended, supplemented or otherwise modified from time to time.
“Independent Assets or Operations” means, with respect to any Parent Company, that Parent Company’s total assets, revenues, income from continuing operations before income taxes and cash flows from operating activities (excluding in each case amounts related to its investment in the Company and the Restricted Subsidiaries), determined in accordance with GAAP and as shown on the most recent balance sheet of such Parent Company, is, in each case, more than 5.0% of such Parent Company’s corresponding consolidated amount.
“Independent Financial Advisor” means an accounting, appraisal, investment banking firm or consultant of nationally recognized standing that is, in the good faith judgment of the Company, qualified to perform the task for which it has been engaged.
“Indirect Participant” means a Person who holds a beneficial interest in a Global Note through a Participant.
“Initial Notes” means the initial $600,000,000 aggregate principal amount of Notes issued under this Indenture on the Issue Date.
“Interest Payment Date” means April 15 and October 15 of each year to stated maturity, beginning April 15, 2025 or, if any such day is not a Business Day, on the next succeeding Business Day.
“Investment Grade Rating” means a rating equal to or higher than Baa3 (or the equivalent) by Moody’s, BBB- (or the equivalent) by S&P and BBB- (or the equivalent) by Fitch, or an equivalent rating by any other Rating Agency selected by the Company.
“Investment Grade Securities” means:
(1) securities issued or directly and fully guaranteed or insured by the United States government or any agency or instrumentality thereof (other than Cash Equivalents);
(2) debt securities or debt instruments with an Investment Grade Rating, but excluding any debt securities or debt instruments constituting loans or advances among the Company and its Subsidiaries;
(3) investments in any fund that invests substantially all of its assets in investments of the type described in clauses (1) and (2) of this definition which fund may also hold immaterial amounts of cash pending investment or distribution; and
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(4) corresponding instruments in countries other than the United States customarily utilized for high quality investments.
“Investments” means, with respect to any Person, all investments by such Person in other Persons (including Affiliates) in the form of loans (including guarantees), advances or capital contributions (excluding accounts receivable, credit card and debit card receivables, trade credit, advances to customers, commission, travel and similar advances to employees, directors, officers, members of management, consultants and independent contractors, in each case made in the ordinary course of business or consistent with industry practice) or purchases or other acquisitions for consideration of Indebtedness, Equity Interests or other securities issued by any other Person. For purposes of the definitions of “Permitted Investments” and “Unrestricted Subsidiary” and Section 4.07:
(1) “Investments” will include the portion (proportionate to the Company’s Equity Interest in such Subsidiary) of the fair market value of the net assets of a Subsidiary of the Company at the time that such Subsidiary is designated an Unrestricted Subsidiary; provided that upon a redesignation of such Subsidiary as a Restricted Subsidiary, the Company will be deemed to continue to have a permanent “Investment” in an Unrestricted Subsidiary in an amount (if positive) equal to:
(a) the Company’s “Investment” in such Subsidiary at the time of such redesignation; minus
(b) the portion (proportionate to the Company’s Equity Interest in such Subsidiary) of the fair market value of the net assets of such Subsidiary at the time of such redesignation; and
(2) any property transferred to or from an Unrestricted Subsidiary will be valued at its fair market value at the time of such transfer.
The amount of any Investment outstanding at any time will be the original cost of such Investment, reduced by any dividend, distribution, interest payment, return of capital, repayment or other amount received in cash by the Company or a Restricted Subsidiary in respect of such Investment.
“Investor” means, individually or collectively, Kayne Anderson Capital Advisors, LP, Warburg Pincus LLC, Partners Group and/or their respective Affiliates (including the funds, partnerships or other co-investment vehicles managed, advised or controlled by them or their respective Affiliates).
“IPOCo” means a Person formed to acquire, directly or indirectly, Equity Interests of the Company in order to undertake an initial public offering of such Person’s Capital Stock.
“IPOCo Transactions” means the transactions in connection with the formation and capitalization of IPOCo prior to and in connection with the Qualified IPO, including, without limitation, (1) the legal formation of IPOCo and one or more Subsidiaries of the Permitted Holders to own interests therein, (2) the contribution, directly or indirectly, of the Equity Interest of the Company and other Subsidiaries of the Company to IPOCo, or the other acquisition by IPOCo thereof, (3) the conversion of the outstanding Equity Interest in the Company into a new class of Equity Interests in the Company, (4) the distribution by the Company to the Permitted Holders of any proceeds from the offering of the Notes and cash generated from operations, (5) the issuance of Capital Stock of IPOCo or the Company to the public and the use of proceeds therefrom to pay transaction expenses, distribute funds as a reimbursement for capital expenditures, and other purposes approved by a Permitted Holder, (6) the execution, delivery and performance of customary documentation (and amendments to existing documentation) governing the relations between and among the Company, IPOCo, the Permitted Holders and their respective Subsidiaries, including, without limitation, the execution, delivery and performance of a tax receivables agreement among IPOCo, the Company and the Permitted Holders on customary terms for similar transactions and (7) any other transactions and documentation related to the foregoing or necessary or appropriate in the view of the Permitted Holders or the Board of the Company or any Parent Company in connection with the Qualified IPO.
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“Issue Date” means September 26, 2024.
“Legal Holiday” means Saturday, Sunday or a day on which commercial banking institutions are not required to be open in the State of Texas or the State of New York or at the place of payment.
“Lien” means, with respect to any asset, any mortgage, lien (statutory or otherwise), pledge, hypothecation, charge, security interest or encumbrance of any kind in respect of such asset, whether or not filed, recorded or otherwise perfected under applicable law, including any conditional sale or other title retention agreement, any lease in the nature thereof, any option or other agreement to sell or give a security interest in and any filing of or agreement to give any financing statement under the Uniform Commercial Code (or equivalent statutes) of any jurisdiction; provided that in no event will an operating lease be deemed to constitute a Lien.
“Long Derivative Instrument” means a Derivative Instrument (i) the value of which generally increases, and/or the payment or delivery obligations under which generally decrease, with positive changes to the Performance References and/or (ii) the value of which generally decreases, and/or the payment or delivery obligations under which generally increase, with negative changes to the Performance References.
“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 Company (or a Parent Company) who are holders of Equity Interests of the Company or any Parent Company on the 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 Company or any Parent Company, as applicable, was approved by a vote of a majority of the directors or managers of the Company or any Parent Company, as applicable, then still in office who were either directors or managers on the Issue Date or whose election or nomination was previously so approved and (ii) executive officers and other management personnel of the Company or any Parent Company, as applicable, hired at a time when the directors or managers on the Issue Date together with the directors or managers so approved constituted a majority of the directors or managers of the Company or any Parent Company, as applicable.
“Midstream Business” means the gathering, distributing, marketing, selling, treating, processing, transmission, compression, fractionation, dehydration, sourcing, disposal, stabilization, treatment, transporting of, or storage, disposal, or other handling of, Hydrocarbons, water, carbon dioxide, sand, minerals, chemicals or other products or substances commonly created, used, recovered, produced or processed in the conduct of the Oil and Gas Business.
“Moody’s” means Moody’s Investors Service, Inc. and any successor to its rating agency business.
“Net Income” means, with respect to any Person, the net income (loss) of such Person, determined in accordance with GAAP and before any reduction in respect of Preferred Stock dividends.
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“Net Proceeds” means the aggregate cash and Cash Equivalents received by the Company or any Restricted Subsidiary in respect of any Asset Sale, including any cash and Cash Equivalents received upon the sale or other disposition of any Designated Non-Cash Consideration received in any Asset Sale, net of the costs relating to such Asset Sale and the sale or disposition of such Designated Non-Cash Consideration, including legal, accounting and investment banking fees, payments made in order to obtain a necessary consent or required by applicable law, brokerage and sales commissions, title insurance premiums, related search and recording charges, survey costs and mortgage recording tax paid in connection therewith, all dividends, distributions or other payments required to be made to minority interest holders in Restricted Subsidiaries as a result of any such Asset Sale by a Restricted Subsidiary, the amount of any purchase price or similar adjustment claimed by any Person to be owed by the Company or any Restricted Subsidiary, until such time as such claim will have been settled or otherwise finally resolved, or paid or payable by the Company or any Restricted Subsidiary, in either case in respect of such Asset Sale, any relocation expenses incurred as a result thereof, costs and expenses or other amounts payable in connection with unwinding any Hedging Obligation in connection therewith, other fees and expenses, including title and recordation expenses, taxes paid or payable as a result thereof or any transactions occurring or deemed to occur to effectuate a payment under this Indenture (including the amount of Permitted Tax Distributions actually made or to be made to any Parent Company attributable to such disposition), amounts required to be applied to the repayment of principal, premium, if any, and interest on Indebtedness (other than Subordinated Indebtedness) or amounts required to be applied to the repayments of Indebtedness secured by a Lien on such assets and required (other than required by Section 4.10(b)(i)) to be paid as a result of such transaction, and any deduction of appropriate amounts to be provided by the Company or any Restricted Subsidiary as a reserve in accordance with GAAP against any liabilities associated with the asset disposed of in such transaction and retained by the Company or any Restricted Subsidiary after such sale or other disposition thereof, including pension and other post-employment benefit liabilities and liabilities related to environmental matters or against any indemnification obligations associated with such transaction.
“Net Short” means, with respect to a Holder or beneficial owner, as of a date of determination, either (i) the value of its Short Derivative Instruments exceeds the sum of the (x) the value of its Notes plus (y) the value of its Long Derivative Instruments as of such date of determination or (ii) it is reasonably expected that such would have been the case were a Failure to Pay or Bankruptcy Credit Event (each as defined in the 2014 ISDA Credit Derivatives Definitions) to have occurred with respect to the Company or any Guarantor immediately prior to such date of determination.
“Net Working Capital” of any Person as of any date of determination means the amount (shown on the balance sheet of such Person and its Restricted Subsidiaries prepared on a consolidated basis in accordance with GAAP as of the end of the most recent fiscal quarter of such Person for which internal financial statements are available) by which (a) all current assets of such Person and its Restricted Subsidiaries other than current assets from oil and gas hedging contracts, exceeds (b) all current liabilities of the Company and its Restricted Subsidiaries, other than (i) current liabilities included in Indebtedness, (ii) current liabilities associated with asset retirement obligations relating to oil and gas properties and (iii) any current liabilities from oil and natural gas hedging contracts, in each case as set forth in the consolidated financial statements of the Company prepared in accordance with GAAP (excluding any adjustments made pursuant to FASB ASC 815).
“Non-Recourse Indebtedness” means Indebtedness:
(1) as to which neither the Company nor any of its Restricted Subsidiaries (a) provides credit support of any kind under any undertaking, agreement or instrument that would constitute Indebtedness or (b) is directly or indirectly liable as a guarantor or otherwise, except for Customary Recourse Exceptions; and
(2) as to which the lenders will not have any contractual recourse to the Capital Stock or assets of the Company or any of its Restricted Subsidiaries (other than the Equity Interests of an Unrestricted Subsidiary), except for Customary Recourse Exceptions.
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“Non-U.S. Person” means a Person who is not a U.S. Person.
“Notes” has the meaning assigned to it in the recitals to this Indenture. Except as otherwise provided in this Indenture, the Initial Notes and the Additional Notes shall be treated as a single class for all purposes under this Indenture, and unless the context otherwise requires, all references to the Notes shall include the Initial Notes and any Additional Notes.
“NYMEX” means the New York Mercantile Exchange.
“Obligations” means any principal, interest (including any interest accruing on or subsequent to the filing of a petition in bankruptcy, reorganization or similar proceeding at the rate provided for in the documentation with respect thereto, whether or not such interest is an allowed claim under applicable state, federal or foreign law), premium, penalties, fees, indemnifications, reimbursements (including reimbursement obligations with respect to letters of credit and banker’s acceptances), damages and other liabilities, and guarantees of payment of such principal, interest, penalties, fees, indemnifications, reimbursements, damages and other liabilities, payable under the documentation governing any Indebtedness.
“Offering Memorandum” means the confidential final offering memorandum, dated September 23, 2024, relating to the sale of the Initial Notes.
“Officer” means the Chairman of the Board, the Chief Executive Officer, the Chief Financial Officer, the Chief Operating Officer, the President, any Executive Vice President, Senior Vice President or Vice President, the Treasurer or the Secretary of any Person. Unless otherwise indicated, Officer shall refer to an officer of the Company.
“Officer’s Certificate” means a certificate signed on behalf of a Person by an Officer of such Person that meets the requirements set forth in this Indenture and delivered to the Trustee, provided, however, that if no particular Person is referenced, an Officer’s Certificate shall be deemed to be an Officer’s Certificate of the Company.
“Oil and Gas Business” means:
(1) 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;
(2) the business of gathering, marketing, distributing, treating, processing (but not refining), storing, selling and transporting of any production from such interests or properties;
(3) any business relating to exploration for or development, production, treatment, processing (but not refining), storage, transportation or marketing of oil, gas and other minerals and products produced in association therewith including the Midstream Business;
(4) any business relating to oilfield sales and service;
(5) any business, conducted or proposed to be conducted by the Company or any Restricted Subsidiary on the Issue Date;
(6) any business or other activities that are reasonably similar, ancillary, incidental, complementary or related to (including non-core incidental businesses acquired in connection with any Permitted Investment), or a reasonable extension, development or expansion of, the businesses which the Company and its Restricted Subsidiaries conduct or propose to conduct on the Issue Date;
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(7) any business or other activities relating to renewable or alternative forms of energy generation, energy storage, mobility, advanced fuels, carbon mitigation, hydrogen technologies, fuel cells, electric vehicle infrastructure and other related sectors; and
(8) any business or activity relating to, arising from, or necessary, appropriate, incidental or ancillary to the activities described in the foregoing clauses (1) through (7) of this definition.
“Oil and Gas Properties” means all properties, including equity or other ownership interests therein, owned by a Person which contain or are believed to contain oil and natural gas reserves or other reserves of Hydrocarbons.
“Opinion of Counsel” means a written opinion from legal counsel who is reasonably acceptable to the Trustee. Counsel may be an employee of or counsel to the Company.
“Ordinary course of business” means activity conducted in the ordinary course of business of the Company or any Restricted Subsidiary or other Person in the Oil and Gas Business.
“Parent Company” means any Person that is or becomes after the Issue Date a direct or indirect parent (which may be organized as, among other things, a partnership) or managing member of the Company, including, WildFire Energy I LLC.
“Participant” means, with respect to the Depositary, a Person who has an account with the Depositary (and, with respect to DTC, shall include Euroclear and Clearstream).
“Payment Default” means a Default relating to a failure by the Company to make any payment when due on the Notes.
“Performance References” has the meaning assigned to it in the definition of “Derivative Instrument.”
“Permitted Business Investment” means any Investment and/or expenditure made in the ordinary course of, or of a nature that is or shall have become customary in, the Oil and Gas Business generally or in the geographic region in which such activities occur, including investments or expenditures for actively exploiting, exploring for, acquiring, developing, producing, processing, gathering, marketing, distributing, storing or transporting oil, natural gas or other Hydrocarbons and minerals (including with respect to plugging and abandonment) through agreements, transactions, interests or arrangements which permit one to share risks or costs, comply with regulatory requirements regarding local ownership or satisfy other objectives customarily achieved through the conduct of the Oil and Gas Business jointly with third parties, including:
(1) Investments in ownership interests (including equity or other ownership interests) in oil, natural gas, other Hydrocarbons and minerals properties, liquefied natural gas facilities, processing facilities, gathering systems, pipelines, storage facilities or related systems or ancillary real property interests;
(2) Investments in the form of or pursuant to operating agreements, working interests, royalty interests, mineral leases, processing agreements, Farm-In Agreements, Farm-Out Agreements, contracts for the sale, transportation or exchange of oil, natural gas, other Hydrocarbons and minerals, production sharing agreements, participation agreements, development agreements, area of mutual interest agreements, unitization agreements, pooling agreements, joint bidding agreements, service contracts, joint venture agreements, partnership agreements (whether general or limited), subscription agreements, stock purchase agreements, stockholder agreements and other similar agreements (including for limited liability companies) with third parties;
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(3) Investments in direct or indirect ownership interests in drilling rigs and related equipment, including, without limitation, transportation equipment; and
(4) Investments in (including in equity or other ownership interests in entities engaged in) the development of technology or infrastructure relating to renewable energy generation, energy storage, mobility, advanced fuels, carbon mitigation, hydrogen technologies, fuel cells or electric vehicles.
“Permitted Holder” means (1) any of the Investors and Management Stockholders, (2) any Person that directly or indirectly holds or acquires 100% of the total voting power of the Voting Stock of the Company, and of which no other Person or group (within the meaning of Section 13(d)(3) or Section 14(d)(2) of the Exchange Act, or any successor provision), other than any of the Permitted Holders, holds more than 50% of the total voting power of the Voting Stock thereof (such Person, a “Permitted Parent”), (3) any group (within the meaning of Section 13(d)(3) or Section 14(d)(2) of the Exchange Act) of which any of the Permitted Holders are members; provided that in the case of such group and without giving effect to the existence of such group or any other group, the Investors and Management Stockholders, collectively, have, directly or indirectly, beneficial ownership of more than 50% of the total voting power of the Voting Stock of the Company or any Permitted Parent and (4) any Person acting in the capacity of an underwriter (solely to the extent that and for so long as such Person is acting in such capacity) in connection with a public or private offering of Capital Stock of the Company or any Parent Company. Any Person or group whose acquisition of beneficial ownership constitutes a Change of Control in respect of which any required Change of Control Offer is made in accordance with the requirements of this Indenture (or would have required a Change of Control Offer in the absence of the waiver of such requirement by Holders or otherwise in accordance with the provisions of this Indenture) will thereafter, together with its Affiliates, constitute an additional Permitted Holder.
“Permitted Investments” means:
(1) any Investment in the Company or any Restricted Subsidiary (including guarantees of obligations of the Restricted Subsidiaries);
(2) any Investment in Cash Equivalents or Investment Grade Securities and Investments that were Cash Equivalents or Investment Grade Securities when made;
(3) any Investment by the Company or any Restricted Subsidiary in a Person that is engaged (directly or through entities that will be Restricted Subsidiaries) in the Oil and Gas Business, or in a business unit, line of business or division of such Person, if as a result of such Investment:
(a) such Person becomes a Restricted Subsidiary; or
(b) such Person, in one transaction or a series of related transactions, is merged or consolidated with or into, or transfers or conveys substantially all of its assets or assets constituting such business unit, line of business or division in which such Investment was made, as applicable, to, or is
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liquidated into, the Company or a Restricted Subsidiary; and, in each case, any Investment held by such Person;
provided that such Investment was not acquired by such Person in contemplation of such acquisition, merger, consolidation, transfer or conveyance;
(4) any Investment in securities or other assets not constituting Cash Equivalents or Investment Grade Securities and received in connection with an Asset Sale made pursuant to the provisions described under Section 4.10 or any other disposition of assets not constituting an Asset Sale;
(5) any Investment existing on the Issue Date or made pursuant to binding commitments in effect on the Issue Date or an Investment consisting of any extension, modification, replacement, renewal or reinvestment of any Investment or binding commitment existing on the Issue Date; provided that the amount of any such Investment or binding commitment may be increased only (a) as required by the terms of such Investment or binding commitment as in existence on the Issue Date (including as a result of the accrual or accretion of interest or original issue discount or the issuance of pay-in-kind securities) or (b) as otherwise permitted under this Indenture;
(6) any Investment acquired by the Company or any Restricted Subsidiary:
(a) in exchange for any other Investment, accounts receivable or indorsements for collection or deposit held by the Company or any Restricted Subsidiary 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);
(b) in satisfaction of judgments against other Persons;
(c) as a result of a foreclosure by the Company or any Restricted Subsidiary with respect to any secured Investment or other transfer of title with respect to any secured Investment in default; or
(d) as a result of the settlement, compromise or resolution of (A) litigation, arbitration or other disputes or (B) obligations of trade creditors or customers that were incurred in the ordinary course of business or consistent with industry practice of the Company or any Restricted Subsidiary, including pursuant to any plan of reorganization or similar arrangement upon the bankruptcy or insolvency of any trade creditor or customer;
(7) Hedging Obligations permitted under Section 4.09(b)(x);
(8) Investments the payment for which consists of Equity Interests (other than Disqualified Stock) of the Company or any Parent Company; provided that such Equity Interests will not increase the amount available for Restricted Payments under Section 4.07(a)(3);
(9) (a) guarantees of Indebtedness permitted under Section 4.09 and Contingent Obligations incurred in the ordinary course of business or consistent with industry practice, (b) the creation of Liens on the assets of the Company or any Restricted Subsidiary in compliance with Section 4.12; and (c) guarantees of performance or other obligations (other than Indebtedness) arising in the ordinary course in the Oil and Gas Business, including obligations under Hydrocarbon exploration, development, joint operating and related agreements and licenses, concessions or operating leases related to the Oil and Gas Business;
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(10) any transaction to the extent it constitutes an Investment that is permitted by and made in accordance with (except transactions described in clauses (ii), (iii)(B), (v), (viii), (xi), (xiii), (xiv), (xix) and (xx) of Section 4.11(b));
(11) Investments consisting of purchases and acquisitions of inventory, supplies, material, services, equipment or similar assets or the licensing or contribution of intellectual property pursuant to joint marketing arrangements with other Persons;
(12) Investments, taken together with all other Investments made pursuant to this clause (12) that are at that time outstanding, not to exceed (as of the date such Investment is made) the sum of (x) the greater of (a) $250.0 million and (b) 5.0% of Adjusted Consolidated Net Tangible Assets at the time of such Investment, plus (y) an amount equal to any returns (including dividends, interest, distributions, returns of principal, profits on sale, repayments, income and similar amounts) actually received in respect of any such Investment; provided, however, that if any Investment pursuant to this clause is made in any Person that is not a Restricted Subsidiary at the date of the making of such Investment and such Person becomes a Restricted Subsidiary after such date, such Investment shall thereafter be deemed to have been made pursuant to clause (1) above and shall cease to have been made pursuant to this clause for so long as such Person continues to be a Restricted Subsidiary;
(13) loans and advances to, or guarantees of Indebtedness of, officers, directors, employees, consultants, members of management and independent contractors not in excess of $10.0 million outstanding at any one time, in the aggregate;
(14) loans and advances to employees, directors, officers, members of management, independent contractors and consultants for business-related travel expenses, moving expenses, payroll advances and other similar expenses or payroll expenses, in each case incurred in the ordinary course of business or consistent with past practice or consistent with industry practice or to future, present and former employees, directors, officers, members of management, independent contractors and consultants to fund such Person’s purchase of Equity Interests of the Company or any Parent Company;
(15) advances, loans or extensions of trade credit or prepayments to suppliers or loans or advances made to distributors, in each case, in the ordinary course of business or consistent with past practice or on customary trade terms of the Company or its Restricted Subsidiary or consistent with industry practice by the Company or any Restricted Subsidiary;
(16) any Investment in any Subsidiary or any joint venture in connection with intercompany cash management arrangements or related activities arising in the ordinary course of business or consistent with industry practice;
(17) Investments consisting of purchases and acquisitions of assets or services in the ordinary course of business or consistent with industry practice;
(18) Investments made in the ordinary course of business or consistent with industry practice in connection with obtaining, maintaining or renewing client contracts and loans or advances made to distributors;
(19) Investments in prepaid expenses, negotiable instruments held for collection and lease, utility and workers compensation, performance and similar deposits entered into as a result of the operations of the business in the ordinary course of business or consistent with industry practice;
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(20) the purchase or other acquisition of Indebtedness of the Company or any Restricted Subsidiary to the extent not otherwise prohibited in this Indenture;
(21) Investments in any joint ventures, taken together with all other Investments made pursuant to this clause (21) that are at that time outstanding, without giving effect to the sale of an any joint venture to the extent the proceeds of such sale do not consist of, or have not been subsequently sold or transferred for, Cash Equivalents or marketable securities, not to exceed (as of the date such Investment is made) the greater of (a) $200.0 million and (b) 4.0% of Adjusted Consolidated Net Tangible Assets at the time of such Investment;
(22) Investments in the ordinary course of business or consistent with industry practice consisting of Uniform Commercial Code Article 3 endorsements for collection or deposit and Article 4 customary trade arrangements with customers;
(23) Investments resulting from pledges and deposits permitted pursuant to the definition of “Permitted Liens”;
(24) Investments constituting promissory notes or other non-cash proceeds of dispositions of assets to the extent permitted under Section 4.10; and
(25) Permitted Business Investments.
For purposes of determining compliance with this definition, (A) an Investment need not be incurred solely by reference to one category of Permitted Investments described in this definition but is permitted to be incurred in part under any combination thereof and of any other available exemption and (B) in the event that an Investment (or any portion thereof) meets the criteria of one or more of the categories of Permitted Investments, the Company will, in its sole discretion, classify or reclassify such Investment (or any portion thereof) in any manner that complies with this definition and Section 4.07.
“Permitted Liens” means, with respect to any Person:
(1) Liens securing (i) Obligations in respect of the Notes and the Guarantees, (ii) securing Obligations in respect of Indebtedness subordinated to the Notes or any Guarantee so long as the Notes and Guarantees are secured by a Lien on the same assets that is senior in priority to such Lien and (iii) any Obligations so long as the Notes and any Guarantees are equally and ratably secured;
(2) Liens securing Obligations in respect of Indebtedness permitted to be incurred under any Debt Facilities including any letter of credit facility relating thereto, that was permitted by the terms of this Indenture to be incurred pursuant to Section 4.09(b)(i);
(3) Liens, pledges or deposits by such Person made in connection with (A) workers’ compensation laws, unemployment insurance, health, disability or employee benefits or other social security laws or similar legislation or regulations, (B) insurance-related obligations (including, in respect of deductibles, self-insured retention amounts and premiums and adjustments thereto) or indemnification obligations of (including obligations in respect of letters of credit, bank guarantees or similar documents or instruments for the benefit of) insurance carriers providing property, casualty or liability insurance, or otherwise supporting the payment of items set forth in the foregoing clause (A), (C) bids, tenders, contracts, statutory obligations, surety, indemnity, warranty, release, appeal or similar bonds, or with regard to other regulatory requirements, completion guarantees, stay, customs and appeal bonds, performance bonds, bankers’ acceptance facilities, and other obligations of like nature (including those to secure health, safety and environmental obligations) (other than for the payment of Indebtedness), or deposits to secure public or statutory obligations of such Person or deposits of cash, Cash Equivalents or U.S. government bonds to secure surety or appeal bonds to which such Person is a party, or deposits as security for the payment of rent, contested taxes or import duties and obligations in respect of letters of credit, bank guarantees or similar instruments that have been posted to support the same, in each case incurred in the ordinary course of business or consistent with industry practice or (D) deposits to secure plugging and abandonment obligations or public or statutory obligations of such Person;
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(4) Liens imposed by law, such as landlords’, carriers’, warehousemen’s, materialmen’s, repairmen’s, construction and mechanics’ Liens and other similar Liens, or similar landlord Liens specifically created by contract, and (i) for sums not yet overdue for a period of more than 60 days or, if more than 60 days overdue, are unfiled and no other action has been taken to enforce such Liens or (ii) being contested in good faith by appropriate actions or other Liens arising out of or securing judgments or awards against such Person with respect to which such Person will then be proceeding with an appeal or other proceedings for review if such Liens are adequately bonded or adequate reserves with respect thereto are maintained on the books of such Person in accordance with GAAP;
(5) Liens for taxes, assessments or other governmental charges not yet overdue for a period of more than 30 days or not yet payable or not subject to penalties for nonpayment or which are being contested in good faith by appropriate actions if adequate reserves with respect thereto are maintained on the books of such Person in accordance with GAAP;
(6) Liens (A) in favor of issuers of performance, surety, bid, indemnity, warranty, release, appeal or similar bonds, instruments or obligations or with respect to regulatory requirements or letters of credit or bankers’ acceptance issued, and completion guarantees provided, in each case, pursuant to the request of and for the account of such Person in the ordinary course of its business or consistent with past practice or industry practice and (B) securing other obligations in respect of surety and bonding requirements;
(7) survey exceptions, encumbrances, ground leases, easements, restrictions, protrusions, encroachments or reservations of, or rights of others for, licenses, rights-of-way, servitudes, sewers, electric lines, drains, telegraph, telephone and cable television lines, pipelines, transportation lines, distribution lines for the removal of gas, oil or other minerals and other similar purposes or zoning, building codes or other restrictions (including minor defects or irregularities in title and similar encumbrances) as to the use of real properties or Liens incidental to the conduct of the business of such Person or to the ownership of its properties that were not incurred in connection with Indebtedness and that do not in the aggregate materially impair their use in the operation of the business of such Person and exceptions on mortgage policies insuring Liens granted on mortgaged properties;
(8) Liens securing obligations in respect of Indebtedness, Disqualified Stock or Preferred Stock permitted to be incurred or issued pursuant to Section 4.09(b)(iv) or Section 4.09(b)(xiii) or, with respect to assumed Indebtedness not incurred in contemplation of the relevant acquisition, Disqualified Stock or Preferred Stock only, Section 4.09(b)(xiv); provided that:
(a) Liens securing obligations relating to any Indebtedness, Disqualified Stock or Preferred Stock permitted to be incurred or issued pursuant to Section 4.09(b)(xiii) relate only to obligations relating to Refinancing Indebtedness that is secured by Liens on the same assets as the assets securing the Refinanced Debt (as defined in the definition of “Refinancing Indebtedness”), plus improvements, accessions, proceeds or dividends or distributions in respect thereof and after-acquired property, or serves to refund, refinance, extend, replace, renew or defease Indebtedness incurred under Section 4.09(b)(iv) or Section 4.09(b)(xiii);
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(b) Liens securing obligations in respect of Indebtedness, Disqualified Stock or Preferred Stock permitted to be incurred pursuant to Section 4.09(b)(iv) extend only to the assets so purchased, replaced, leased or improved and proceeds and products thereof; provided, further that individual financings of assets provided by a counterparty may be cross-collateralized to other financings of assets provided by such counterparty; and
(c) Liens securing obligations in respect of Indebtedness permitted to be assumed pursuant to Section 4.09(b)(xiv) are solely on acquired property or the assets of the acquired entity (other than after acquired property that is (A) affixed or incorporated into the property covered by such Lien, (B) after acquired property subject to a Lien securing such Indebtedness, 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 (C) the proceeds and products thereof);
(9) Liens existing, or provided for under binding contracts existing, on the Issue Date (other than Liens pursuant to the Revolving Credit Facility, which shall be deemed to have been incurred pursuant to clause (2) of this definition of “Permitted Liens”);
(10) Liens on property or shares of stock or other assets of a Person at the time such Person becomes a Subsidiary; provided that such Liens are not created or incurred in connection with, or in contemplation of, such other Person becoming such a Subsidiary;
(11) Liens (i) on property or other assets at the time the Company or a Restricted Subsidiary acquired the property or such other assets, including any acquisition by means of a merger or consolidation with or into the Company or any Restricted Subsidiary and any replacement, extension or renewal of any such Lien (to the extent the Indebtedness and other obligations secured by such replacement, extension or renewal Liens are permitted by this Indenture); provided that such replacement, extension or renewal Liens do not cover any property other than the property that was subject to such Liens prior to such replacement, extension or renewal (plus improvements, accessions, proceeds or dividends or distributions in respect thereof and after-acquired property), and (ii) for the purpose of securing the payment of all or a part of the purchase price of, or Finance Lease Obligations, Purchase Money Obligations or other payments incurred to finance the acquisition, lease, improvement or construction of or repairs or additions to, assets or property acquired or constructed by the Company or a Restricted Subsidiary in the ordinary course of business; provided that:
(a) the aggregate principal amount of Indebtedness secured by such Liens is otherwise permitted to be incurred under this Indenture and does not exceed the cost of the assets or property so acquired or constructed; and
(b) such Liens are created within 180 days of the later of the acquisition, lease, completion of improvements, construction, repairs or additions or commencement of full operation of the assets or property subject to such Lien and do not encumber any other assets or property of the Company or any Restricted Subsidiary other than such assets or property and assets affixed or appurtenant thereto;
(12) Liens securing Indebtedness or other obligations of a Restricted Subsidiary owing to the Company or another Restricted Subsidiary permitted to be incurred in accordance with Section 4.09;
(13) Liens securing (x) Hedging Obligations and (y) obligations in respect of Cash Management Services;
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(14) Liens on specific items of inventory or other goods and proceeds of any Person securing such Person’s accounts payable or similar obligations in respect of bankers’ acceptances or letters of credit issued or created for the account of such Person to facilitate the purchase, shipment or storage of such inventory or other goods;
(15) leases, subleases, licenses or sublicenses (or other agreement under which the Company or any Restricted Subsidiary has granted rights to end users to access and use the Company’s or any Restricted Subsidiary’s products, technologies or services) that do not either (a) materially interfere with the business of the Company and its Restricted Subsidiaries, taken as a whole, or (b) secure any Indebtedness;
(16) Liens arising from Uniform Commercial Code (or equivalent statutes) financing statement filings regarding operating leases, consignments or accounts entered into by the Company and its Restricted Subsidiaries in the ordinary course of business or consistent with industry practice or purported Liens evidenced by the filing of precautionary Uniform Commercial Code (or equivalent statutes) financing statements or similar public filings;
(17) Liens in favor of the Company or any Guarantor;
(18) Liens on equipment or vehicles of the Company or any Restricted Subsidiary granted in the ordinary course of business or consistent with industry practice;
(19) Liens to secure any modification, refinancing, refunding, extension, renewal or replacement (or successive modification, refinancing, refunding, extensions, renewals or replacements) as a whole, or in part, of any Indebtedness, Disqualified Stock or Preferred Stock secured by any Lien referred to in clauses (8), (9), (10), (11), (21) or this clause (19) of this definition; provided that (a) such new Lien will be limited to all or part of the same property that secured the original Lien (plus improvements, accessions, proceeds or dividends or distributions in respect thereof and after-acquired property) and (b) the Indebtedness secured by such Lien at such time is not increased to any amount greater than the sum of (i) the outstanding principal amount or, if greater, committed amount of the Indebtedness described under clauses (8), (9), (10), (11), (21) or this clause (19) of this definition at the time the original Lien became a Permitted Lien under this Indenture, plus (ii) any accrued and unpaid interest on the Indebtedness being so refinanced, extended, replaced, refunded, renewed or defeased plus (iii) the amount of any tender premium or penalty or premium required to be paid under the terms of the instrument or documents governing such refinanced Indebtedness and any defeasance costs and any fees and expenses (including original issue discount, upfront fees or similar fees) incurred in connection with the issuance of such new Indebtedness or the extension, replacement, refunding, refinancing, renewal or defeasance of such refinanced Indebtedness;
(20) pledges and deposits made or other security provided to secure liability to insurance brokers, carriers, underwriters or self-insurance arrangements, including Liens or insurance policies and the proceeds thereof securing the financing of the premiums with respect thereto;
(21) other Liens securing obligations (including Indebtedness) in an aggregate outstanding amount not to exceed (as of the date any such Lien is incurred) the greater of (a) $250.0 million and (b) 5.0% of Adjusted Consolidated Net Tangible Assets at the time of incurrence;
(22) Liens securing judgments, attachments or awards for the payment of money, notices of lis pendens not constituting an Event of Default under Section 6.01(f);
(23) Liens (a) of a collection bank arising under Section 4-208 or 4-210 of the Uniform Commercial Code on items in the course of collection, (b) attaching to commodity trading accounts or other brokerage accounts incurred in the ordinary course of business or consistent with industry practice, and (c) in favor of banking or other institutions or other electronic payment service providers arising as a matter of law or under general terms and conditions encumbering deposits or margin deposits or other funds maintained with such institution (including the right of set off) and that are within the general parameters customary in the banking industry;
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(24) Liens deemed to exist in connection with Investments in repurchase agreements permitted under this Indenture; provided that such Liens do not extend to assets other than those that are subject to such repurchase agreements;
(25) Liens that are contractual rights of set-off (a) relating to the establishment of depository relations with banks or other deposit-taking financial institutions or other electronic payment service providers and not given in connection with the issuance of Indebtedness, (b) relating to pooled deposit or sweep accounts to permit satisfaction of overdraft or similar obligations incurred in the ordinary course of business or consistent with industry practice of the Company and its Restricted Subsidiaries or (c) relating to purchase orders and other agreements entered into with customers of the Company or any Restricted Subsidiary in the ordinary course of business or consistent with industry practice;
(26) Liens on cash proceeds (as defined in Article 9 of the Uniform Commercial Code) of assets sold that were subject to a Lien permitted hereunder;
(27) any encumbrance, restriction or other Lien (including put, call arrangements, tag, drag, right of first refusal and similar rights) with respect to Capital Stock of any joint venture or similar arrangement pursuant to any joint venture agreement or similar agreement;
(28) Liens (a) on cash advances or cash earnest money deposits in favor of the seller of any property to be acquired in an Investment permitted under this Indenture to be applied against the purchase price for such Investment and (b) consisting of a letter of intent or an agreement to sell, transfer, lease or otherwise dispose of any property in a transaction permitted pursuant to Section 4.10;
(29) ground leases, subleases, licenses or sublicenses in respect of real property on which facilities owned or leased by the Company or any of its Subsidiaries are located;
(30) Liens on Capital Stock or other securities of an Unrestricted Subsidiary;
(31) any (a) interest or title of a lessor or sublessor under any lease, liens reserved in oil, natural gas or other Hydrocarbons, minerals, leases for bonus, royalty or rental payments and for compliance with the terms of such leases; (b) 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 leases or licenses entered into by the Company or any of the Restricted Subsidiaries in the ordinary course of business or consistent with industry practice; (c) restriction or encumbrance that the interest or title of such lessor or sublessor may be subject to (including, without limitation, ground leases or other prior leases of the demised premises, mortgages, mechanics’ liens, tax liens and easements); or (d) subordination of the interest of the lessee or sublessee under such lease to any restrictions or encumbrance referred to in the preceding clause (c);
(32) deposits of cash with the owner or lessor of premises leased and operated by the Company or any of its Subsidiaries in the ordinary course of business or consistent with industry practice of the Company and such Subsidiary to secure the performance of the Company’s or such Subsidiary’s obligations under the terms of the lease for such premises;
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(33) rights of set-off, banker’s liens, netting arrangements and other Liens arising by operation of law or by the terms of documents of banks or other financial institutions in relation to the maintenance or administration of deposit accounts, securities accounts, cash management arrangements or in connection with the issuance of letters of credit, bank guarantees or other similar instruments;
(34) Liens on cash and Cash Equivalents used to satisfy or discharge Indebtedness; provided that such satisfaction or discharge is permitted under this Indenture;
(35) receipt of progress payments and advances from customers in the ordinary course of business or consistent with industry practice to the extent the same creates a Lien on the related inventory and proceeds thereof and Liens on property or assets under construction arising from progress or partial payments by a third party relating to such property or assets;
(36) Liens securing Guarantees of any Indebtedness or other obligations otherwise permitted to be secured by a Lien under this Indenture;
(37) Liens arising pursuant to Section 107(l) of the Comprehensive Environmental Response, Compensation and Liability Act or other environmental law;
(38) Liens disclosed by the title insurance reports or policies delivered on or prior to the Issue Date and any replacement, extension or renewal of any such Lien (to the extent the Indebtedness and other obligations secured by such replacement, extension or renewal Liens are permitted by this Indenture); provided that such replacement, extension or renewal Liens do not cover any property other than the property that was subject to such Liens prior to such replacement, extension or renewal;
(39) restrictive covenants affecting the use to which real property may be put; provided that the covenants are complied with;
(40) 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 or consistent with industry practice;
(41) zoning, building and other similar land use restrictions, including, without limitation, site plan agreements, development agreements and contract zoning agreements;
(42) Liens on the assets of Restricted Subsidiaries that are not a Guarantor securing Indebtedness or other obligations of such Restricted Subsidiaries or any other Restricted Subsidiaries that are not Guarantors that is permitted under Section 4.09(b) or otherwise not prohibited by this Indenture;
(43) Liens in respect of Production Payments and Reserve Sales;
(44) Liens arising under Farm-Out Agreements, Farm-In Agreements, division orders, contracts for the sale, purchase, exchange, transportation, gathering or processing of Hydrocarbons, unitizations and pooling designations, declarations, orders and agreements, development agreements, joint venture agreements, partnership agreements, operating agreements, royalties, royalty trusts, master limited partnerships, working interests, net profits interests, joint interest billing arrangements, participation agreements, production sales contracts, area of mutual interest agreements, natural gas balancing or deferred production agreements, injection, repressuring and recycling agreements, salt water or other disposal agreements, seismic or geophysical permits or agreements, and other agreements which are or shall have become customary in the Oil and Gas Business; and
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(45) Liens on pipelines or pipeline facilities that arise by operation of law or other like Liens arising by operation of law in the ordinary course of business and incident to the exploration, development, operation and maintenance of Oil and Gas Properties.
If any Liens securing obligations are incurred to refinance Liens securing obligations initially incurred in reliance on a basket measured by reference to a percentage of Adjusted Consolidated Net Tangible Assets, and such refinancing would cause the percentage of Adjusted Consolidated Net Tangible Assets to be exceeded if calculated based on the Adjusted Consolidated Net Tangible Assets on the date of such refinancing, such percentage of Adjusted Consolidated Net Tangible Assets will not be deemed to be exceeded to the extent the principal amount of such obligations secured by such newly incurred Lien does not exceed the principal amount of such obligations secured by such Liens being refinanced, plus any accrued and unpaid interest on the Indebtedness plus the amount of any tender premium or penalty or premium required to be paid under the terms of the instrument or documents governing such refinanced Indebtedness, and any defeasance costs and any fees and expenses (including original issue discount, upfront fees or similar fees) incurred in connection with the issuance of such new Indebtedness, or the extension, replacement, refunding, refinancing, renewal or defeasance of such refinanced Indebtedness.
For purposes of this definition, the term “Indebtedness” will be deemed to include interest and other obligations payable on and with respect to such Indebtedness.
“Permitted Parent” has the meaning assigned to it in the definition of “Permitted Holder.”
“Permitted Tax Distributions” means for any taxable period or portion thereof during which the Company is a passthrough entity for U.S. federal income tax purposes, payments and distributions by the Company to any member or partner of the Company on or prior to each estimated tax payment date, as well as each other applicable due date, in an aggregate amount such that each member or partner (or its direct or indirect members or partners, if applicable) of the Company receives, in the aggregate for such taxable period, payments or distributions not to exceed such member’s or partner’s U.S. federal, state and/or local income taxes (as applicable) attributable to its direct or indirect ownership of the Company and its subsidiaries (to the extent such subsidiaries are passthrough entities) with respect to such taxable period (assuming that each member or partner is subject to the highest combined marginal U.S. federal, state and local income tax rates (including any tax rate imposed on “net investment income” by Section 1411 of the Code) applicable to an individual or corporation (whichever is higher) residing in New York, New York, determined by (A) taking into account (1) the alternative minimum tax, (2) any loss carryforwards of such member or partner available from losses of such member or partner attributable to its direct or indirect ownership of the Company and such 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 (taking into account any limitations on the utilization of such loss to reduce such taxes and to the extent such loss had not already been utilized), and (3) the character of the applicable income, and (B) not taking into account (1) the application of Section 199A of the Code, and (2) the deductibility of state and local income taxes for U.S. federal income tax purposes) provided that such member’s or partner’s U.S. federal, state and/or local income taxes for any taxable period shall include any taxes, interest and penalties imposed on or allocated to such member or partner as a result of the direct or indirect ownership of the Company or any such subsidiary during such taxable period solely as a result of any tax examination, audit or adjustment with respect to any taxable period; provided further that the amount of any Permitted Tax Distributions not made with respect to any taxable period may be made in any future taxable period or periods without limitation.
“Person” means any individual, corporation, limited liability company, partnership, joint venture, association, joint stock company, trust, unincorporated organization, government or any agency or political subdivision thereof or any other entity.
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“Preferred Stock” means any Equity Interest with preferential rights of payment of dividends or upon liquidation, dissolution, or winding up.
“Private Placement Legend” means the legend set forth in Section 2.06(f)(i) hereof to be placed on all Notes issued under this Indenture, except where otherwise permitted by the provisions of this Indenture.
“Production Payments and Reserve Sales” means the grant or transfer by the Company or a Restricted Subsidiary to any Person of a royalty, overriding royalty, net profits interest, production payment (whether volumetric or dollar-denominated), partnership or other interest in Oil and Gas Properties, reserves or 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 Business, including any such grants or transfers.
“Proved Reserves” means crude oil and natural gas reserves constituting “proved oil and gas reserves” as defined in Rule 4-10 of Regulation S-X of the Securities Act. For the avoidance of doubt, “proved oil and gas reserves” shall include any reserves attributable to natural gas liquids.
“Public Company Costs” means the initial costs relating to compliance with the Sarbanes-Oxley Act of 2002, as amended, any related rules or regulations and other initial expenses arising out of or incidental to the Company’s or its Restricted Subsidiaries’ compliance with the obligations of a reporting company, including initial costs, fees and expenses (including legal, accounting and other professional fees) relating to compliance with the provisions of the Securities Act and the Exchange Act and other initial costs, fees and expenses related to listing of securities on a securities exchange.
“Purchase Money Obligations” means any Indebtedness incurred to finance or refinance the acquisition, leasing, construction or improvement of property (real or personal) or assets (other than Capital Stock), and whether acquired through the direct acquisition of such property or assets, or otherwise.
“QIB” means a “qualified institutional buyer” as defined in Rule 144A.
“Qualified Equity Interests” means Equity Interests that are not Disqualified Stock.
“Qualified IPO” means an initial offer and sale of Equity Interests of the Company, IPOCo or other Parent Company in an underwritten public offering for cash pursuant to a registration statement that has been declared effective by the SEC pursuant to the Securities Act (other than a registration statement on Form S-4 or Form S-8 or otherwise relating to Equity Interests of IPOCo or such other parent issuable under any employee benefit plan).
“Qualified Proceeds” means the fair market value of assets that are used or useful in, or Capital Stock of any Person engaged in, the Oil and Gas Business.
“Rating Agencies” means Moody’s, S&P and Fitch or if Moody’s, S&P or Fitch or if all do not make a rating on the Notes publicly available, a nationally recognized statistical rating agency or agencies, as the case may be, selected by the Company which will be substituted for Moody’s, S&P or Fitch or all, as the case may be.
“Record Date” for the interest payable on any applicable Interest Payment Date means the April 1 and October 1 (whether or not a Business Day) immediately preceding such Interest Payment Date.
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“Rating Event” means a decrease of one or more gradations (including gradations within rating categories as well as between rating categories and excluding, for the avoidance of doubt, changes in ratings outlook) in the rating of the Notes by any two of the Rating Agencies on, or within 30 days following, the earlier of (x) the occurrence of a Change of Control or (y) the date of public announcement of the occurrence of a Change of Control or of the intention by the Company to effect a Change of Control, which period shall be extended with respect to a Rating Agency for a period not longer than 30 days so long as the rating of the Notes relating to the Change of Control is under publicly announced consideration for downgrade by the applicable Rating Agency; provided, however, that a downgrade of the Notes by such Rating Agency shall not be deemed to have occurred in respect of a particular Change of Control (and thus shall not be deemed a downgrade for purposes of this definition of Change of Control Triggering Event) if such Rating Agency making the downgrade in rating does not publicly announce or confirm or inform the Company or the Trustee in writing at the request of the Company that the downgrade is a result of the transactions constituting or occurring simultaneously with the applicable Change of Control (whether or not the applicable Change of Control has occurred at the time of such downgrade).
“Refinance” has the meaning assigned in the definition of “Refinancing Indebtedness” and “Refinancing” and “Refinanced” have meanings correlative to the foregoing.
“Refinanced Debt” has the meaning assigned to such term in the definition of “Refinancing Indebtedness.”
“Refinancing Indebtedness” means (x) Indebtedness incurred by the Company or any Restricted Subsidiary, (y) Disqualified Stock issued by the Company or any Restricted Subsidiary or (z) Preferred Stock issued by any Restricted Subsidiary which, in each case, serves to extend, replace, refund, refinance, renew or defease (“Refinance”) any Indebtedness, Disqualified Stock or Preferred Stock, including Refinancing Indebtedness, so long as:
(1) the principal amount (or accreted value, if applicable) of such new Indebtedness, the amount of such new Preferred Stock or the liquidation preference of such new Disqualified Stock does not exceed (a) the principal amount of the Indebtedness, the amount of the Preferred Stock or the liquidation preference of the Disqualified Stock being so extended, replaced, refunded, refinanced, renewed or defeased (such Indebtedness, Disqualified Stock or Preferred Stock, the “Refinanced Debt”), plus (b) any accrued and unpaid interest on, or any accrued and unpaid dividends on, such Refinanced Debt, plus (c) the amount of any tender premium or penalty or premium required to be paid under the terms of the instrument or documents governing such Refinanced Debt and any defeasance costs and any fees and expenses (including original issue discount, upfront fees or similar fees) incurred in connection with the issuance of such new Indebtedness, Preferred Stock or Disqualified Stock or to Refinance such Refinanced Debt;
(2) such Refinancing Indebtedness has a:
(a) Weighted Average Life to Maturity at the time such Refinancing Indebtedness is incurred that is not less than the remaining Weighted Average Life to Maturity of the applicable Refinanced Debt (or, if less, greater than the remaining Weighted Average Life to Maturity of the Notes); and
(b) final scheduled maturity date equal to or later than the final scheduled maturity date of the Refinanced Debt (or, if earlier, the date that is 91 days after the maturity date of the Notes); and
(3) to the extent such Refinancing Indebtedness Refinances (i) Subordinated Indebtedness (other than Subordinated Indebtedness assumed or acquired in an acquisition and not created in contemplation thereof), unless such Refinancing constitutes a Restricted Payment permitted by Section 4.07, such Refinancing Indebtedness is subordinated to the Notes or the Guarantee thereof at least to the same extent as the applicable Refinanced Debt or (ii) Disqualified Stock or Preferred Stock, such Refinancing Indebtedness must be Disqualified Stock or Preferred Stock, respectively;
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provided that (x) clause (2) of this definition will not apply to any Refinancing of any Indebtedness other than Indebtedness incurred under Section 4.09(b)(ii), any Subordinated Indebtedness (other than Subordinated Indebtedness assumed or acquired in an Investment or acquisition and not created in contemplation thereof), Disqualified Stock and Preferred Stock and (y) Refinancing Indebtedness may be incurred in the form of a bridge or other interim credit facility intended to be Refinanced with long-term indebtedness (and such bridge or other interim credit facility shall be deemed to satisfy clause (2) of this definition so long as (x) such credit facility includes customary “rollover” provisions and (y) assuming such credit facility were to be extended pursuant to such “rollover” provisions, such extended credit facility would comply with clause (2) of this definition).
“Regulated Bank” means a commercial bank with a consolidated combined capital and surplus of at least $5,000,000,000 that is (i) a U.S. depository institution the deposits of which are insured by the Federal Deposit Insurance Corporation; (ii) a corporation organized under section 25A of the U.S. Federal Reserve Act of 1913; (iii) a branch, agency or commercial lending company of a foreign bank operating pursuant to approval by and under the supervision of the Board of Governors under 12 CFR part 211; (iv) a non-U.S. branch of a foreign bank managed and controlled by a U.S. branch referred to in clause (iii); or (v) any other U.S. or non-U.S. depository institution or any branch, agency or similar office thereof supervised by a bank regulatory authority in any jurisdiction
“Regulation S” means Regulation S promulgated under the Securities Act.
“Regulation S Global Note” means a Regulation S Temporary Global Note or Regulation S Permanent Global Note, as applicable.
“Regulation S Permanent Global Note” means a permanent Global Note in the form of Exhibit A hereto, bearing the Global Note Legend and the Private Placement Legend and deposited with or on behalf of, and registered in the name of, the Depositary or its nominee, issued in a denomination equal to the outstanding principal amount of the Regulation S Temporary Global Note upon expiration of the applicable Restricted Period.
“Regulation S Temporary Global Note” means a temporary Global Note in the form of Exhibit A hereto, bearing the Global Note Legend, the Private Placement Legend and the Regulation S Temporary Global Note Legend and deposited with or on behalf of, and registered in the name of, the Depositary or its nominee, issued in a denomination equal to the outstanding principal amount of the Notes initially sold in reliance on Rule 903.
“Regulation S Temporary Global Note Legend” means the legend set forth in Section 2.06(f)(iii) hereof.
“Responsible Officer” means, when used with respect to the Trustee, any officer within the corporate trust department of the Trustee, including any director, vice president, assistant vice president, any trust officer or assistant trust officer or any other officer of the Trustee who customarily performs functions similar to those performed by the Persons who at the time shall be such officers, respectively, or to whom any corporate trust matter relating to this Indenture is referred because of such Person’s knowledge of and familiarity with the particular subject and who, in each case, shall have direct responsibility for the administration of this Indenture.
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“Restricted Definitive Note” means a Definitive Note bearing, or that is required to bear, the Private Placement Legend.
“Restricted Global Note” means a Global Note bearing, or that is required to bear, the Private Placement Legend.
“Restricted Investment” means an Investment other than a Permitted Investment.
“Restricted Period” means, in respect of any Note issued pursuant to Regulation S, the 40-day distribution compliance period (as defined in Regulation S) applicable to such Note.
“Restricted Subsidiary” means, at any time, any direct or indirect Subsidiary of the Company (including any Foreign Subsidiary) that is not then an Unrestricted Subsidiary; provided that upon the occurrence of an Unrestricted Subsidiary ceasing to be an Unrestricted Subsidiary, such Subsidiary will be included in the definition of “Restricted Subsidiary.” Wherever the term “Restricted Subsidiary” is used herein with respect to any Subsidiary of a referenced Person that is not the Company, then it will be construed to mean a Person that would be a Restricted Subsidiary of the Company on a pro forma basis following consummation of one or a series of related transactions involving such referenced Person and the Company (unless such transactions would include a designation of a Subsidiary of such Person as an Unrestricted Subsidiary on a pro forma basis in accordance with this Indenture).
“Revolving Credit Facility” means the senior secured revolving facility under the Credit Agreement, dated as of August, 20, 2021, by and among the Company, JPMorgan Chase Bank, N.A., as administrative agent, and the lenders party thereto, as amended or amended and restated to the Issue Date, including any related notes, guarantees, collateral documents, instruments and agreements executed in connection therewith, and, in each case, as amended, restated, modified, renewed, refunded, replaced in any manner (whether upon or after termination or otherwise) or refinanced in whole or in part from time to time.
“Rule 144” means Rule 144 promulgated under the Securities Act.
“Rule 144A” means Rule 144A promulgated under the Securities Act.
“Rule 903” means Rule 903 promulgated under the Securities Act.
“Rule 904” means Rule 904 promulgated under the Securities Act.
“S&P” means S&P Global Ratings or any successor to its rating agency business.
“Sale and Lease-Back Transaction” means any arrangement providing for the leasing by the Company or any Restricted Subsidiary of any real or tangible personal property, which property has been or is to be sold or transferred by the Company or such Restricted Subsidiary to a third Person in contemplation of such leasing. The net proceeds of any Sale and Lease-Back Transaction will be determined giving effect to transaction expenses and the tax effect of such transactions (including taxes paid or payable and tax attributes used as a result of such transactions).
“Screened Affiliate” means any Affiliate of a Holder (i) that makes investment decisions independently from such Holder and any other Affiliate of such Holder that is not a Screened Affiliate, (ii) that has in place customary information screens between it and such Holder and any other Affiliate of such Holder that is not a Screened Affiliate and such screens prohibit the sharing of information with respect to the Company or its Subsidiaries, (iii) whose investment policies are not directed by such Holder or any other Affiliate of such Holder that is acting in concert with such Holder in connection with its investment in the Notes, and (iv) whose investment decisions are not influenced by the investment decisions of such Holder or any other Affiliate of such Holder that is acting in concert with such Holders in connection with its investment in the Notes.
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“SEC” means the U.S. Securities and Exchange Commission or any Governmental Authority succeeding to any of its principal functions.
“Secured Indebtedness” means any Indebtedness of the Company or any Restricted Subsidiary secured by a Lien.
“Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations of the SEC promulgated thereunder.
“Senior Indebtedness” means:
(1) all Indebtedness of the Company or any Guarantor outstanding under the Revolving Credit Facility and the Notes and related Guarantees (including interest accruing on or after the filing of any petition in bankruptcy or similar proceeding or for reorganization of the Company or any Guarantor (at the rate provided for in the documentation with respect thereto, regardless of whether or not a claim for post-filing interest is allowed in such proceedings)), and any and all other fees, expense reimbursement obligations, indemnification amounts, penalties, and other amounts (whether existing on the Issue Date or thereafter created or incurred) and all obligations of the Company or any Guarantor to reimburse any bank or other Person in respect of amounts paid under letters of credit, acceptances or other similar instruments;
(2) all (a) Hedging Obligations (and guarantees thereof) and (b) obligations in respect of Cash Management Services (and guarantees thereof), in the case of each of clauses (a) and (b), owing to a lender under the Revolving Credit Facility or any Affiliate of such lender (or any Person that was a lender or an Affiliate of such lender at the time the applicable agreement giving rise to such Hedging Obligation or Cash Management Obligations was entered into); provided that such Hedging Obligations and obligations in respect of Cash Management Services, as the case may be, are permitted to be incurred under the terms of this Indenture;
(3) any other Indebtedness of the Company or any Guarantor permitted to be incurred under the terms of this Indenture, unless the instrument under which such Indebtedness is incurred expressly provides that it is subordinated in right of payment to the Notes or any related Guarantee; and
(4) all Obligations with respect to the items listed in the preceding clauses (1), (2) and (3); provided that Senior Indebtedness will not include:
(a) any obligation of such Person to the Company or any of its Subsidiaries;
(b) any liability for federal, state, local or other taxes owed or owing by such Person;
(c) any accounts payable or other liability to trade creditors arising in the ordinary course of business or consistent with industry practice;
(d) any Indebtedness or other Obligation of such Person which is subordinate or junior in any respect to any other Indebtedness or other Obligation of such Person; or
(e) that portion of any Indebtedness which at the time of incurrence is incurred in violation of this Indenture.
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“Short Derivative Instrument” means a Derivative Instrument (i) the value of which generally decreases, and/or the payment or delivery obligations under which generally increase, with positive changes to the Performance References and/or (ii) the value of which generally increases, and/or the payment or delivery obligations under which generally decrease, with negative changes to the Performance References.
“Significant Subsidiary” means any Restricted Subsidiary that would be a “significant subsidiary” as defined in Article 1, Rule 1-02 of Regulation S-X of the SEC, as such regulation is in effect on the Issue Date.
“Specified Transaction” means (i) solely for the purposes of determining the applicable cash balance, any contribution of capital, including as a result of an Equity Offering, to the Company, in each case, in connection with an acquisition or Investment, (ii) any designation of operations or assets of the Company or a Restricted Subsidiary as discontinued operations (as defined under GAAP), (iii) any Investment that results in a Person becoming a Restricted Subsidiary, (iv) any designation of a Subsidiary as a Restricted Subsidiary or an Unrestricted Subsidiary in compliance with this Indenture, (v) any purchase or other acquisition of a business of any Person, or assets constituting a business unit, line of business or division of any Person or material Oil and Gas Properties (as determined in good faith by the Company), (vi) any Asset Sale (without regard to any de minimis thresholds set forth therein) (a) that results in a Restricted Subsidiary ceasing to be a Subsidiary of the Company or (b) of a business, business unit, line of business or division of the Company or a Restricted Subsidiary or material Oil and Gas Properties (as determined in good faith by the Company), in each case whether by merger, consolidation or otherwise, (vii) any operational changes identified by the Company that have been made by the Company or any Restricted Subsidiary during the Test Period or (viii) any Restricted Payment or other transaction that by the terms of this Indenture requires a financial ratio to be calculated on a pro forma basis.
“Strip Prices” means, as of any date of determination, the forward month prices for the most comparable Hydrocarbon commodity applicable to such future production month for a five year period (or such shorter period if forward month prices are not quoted for a reasonably comparable Hydrocarbon commodity for the full five year period), with such prices held constant thereafter based on the last quoted forward month price of such period, as such prices are (i) quoted on the NYMEX (or its successor) as of the Company’s most recently completed fiscal year, the Company’s most recently completed fiscal quarter, or the Calculation Date and (ii) as adjusted in good faith by management for energy content, quality and basis differentials; provided that, with respect to estimated future production for which prices are defined, within the meaning of SEC guidelines, by contractual arrangements (excluding escalations based upon future conditions), then such contract prices shall be applied to future production subject to such arrangements.
“Subordinated Indebtedness” means, with respect to the Notes:
(1) any Indebtedness of the Company that is by its terms expressly subordinated in right of payment to the Notes; and
(2) any Indebtedness of any Guarantor that is by its terms expressly subordinated in right of payment to the Guarantee of such entity of the Notes.
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“Subsidiary” means, 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 50% of the total voting power of Voting Stock 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 50% of the Voting Stock 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 specified, all references herein to a “Subsidiary” or to “Subsidiaries” refer to a Subsidiary or Subsidiaries of the Company.
“Test Period” in effect at any time means the Company’s most recently ended four consecutive fiscal quarters for which internal financial statements are available (as determined in good faith by the Company).
“Treasury Rate” means, as of any Redemption Date, the weekly average rounded to the nearest 1/100th of a percentage point (for the most recently completed week for which such information is available as of the date that is two Business Days prior to the Redemption Date) of the yield to maturity of United States Treasury securities with a constant maturity (as compiled and published in the Federal Reserve Statistical Release H.15 with respect to each applicable day during such week (or, if such Statistical Release is no longer published, any publicly available source of similar market data)) most nearly equal to the period from the Redemption Date to October 15, 2026; provided, however, that if the period from the Redemption Date to October 15, 2026 is not equal to the constant maturity of a United States Treasury Security for which such yield is given, the Treasury Rate shall be obtained by linear interpolation (calculated to the nearest one-twelfth of a year) from the weekly average yields of United States Treasury Securities for which such yields are given, except that if the period from the Redemption Date to such date is less than one year, the weekly average yield on actively traded United States Treasury securities adjusted to a constant maturity of one year will be used.
“Trust Indenture Act” means the Trust Indenture Act of 1939, as amended (15 U.S.C. §§ 77aaa-777bbbb).
“Trustee” means U.S. Bank Trust Company, National Association, and any successor replacing it in accordance with the applicable provisions of this Indenture and thereafter means the successor serving hereunder.
“Uniform Commercial Code” means the Uniform Commercial Code or any successor provision thereof as the same may from time to time be in effect in the State of New York.
“Unrestricted Definitive Note” means one or more Definitive Notes that do not bear and are not required to bear the Private Placement Legend.
“Unrestricted Global Note” means a permanent Global Note, substantially in the form of Exhibit A hereto, that bears the Global Note Legend and that has the “Schedule of Exchanges of Interests in the Global Note” attached thereto, and that is deposited with or on behalf of and registered in the name of the Depositary, representing Notes that do not bear and are not required to bear the Private Placement Legend.
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“Unrestricted Subsidiary” means:
(a) any Subsidiary of the Company which at the time of determination is an Unrestricted Subsidiary (as designated by the Company, as provided below); and
(2) any Subsidiary of an Unrestricted Subsidiary.
The Company may designate any Subsidiary of the Company (including any existing Subsidiary and any newly acquired or newly formed Subsidiary) to be an Unrestricted Subsidiary unless such Subsidiary or any of its Subsidiaries owns any Equity Interests or Indebtedness of, or owns or holds any Lien on, any property of, the Company or any Subsidiary of the Company (other than solely any Subsidiary of the Subsidiary to be so designated); provided that:
(a) such designation complies with Section 4.07; and
(b) each of (a) the Subsidiary to be so designated and (b) its Subsidiaries is not at the time of designation directly or indirectly liable with respect to any Indebtedness pursuant to which the lender has recourse to any of the assets of the Company or any Restricted Subsidiary (other than Equity Interests in an Unrestricted Subsidiary, except as would be permitted as an Investment or Permitted Investment).
The Company may designate any Unrestricted Subsidiary to be a Restricted Subsidiary; provided that immediately after giving effect to such designation, (i) no Event of Default will have occurred and be continuing and (ii) the Company could incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio Test;
Any such designation by the Company will be notified by the Company to the Trustee by promptly filing with the Trustee an Officer’s Certificate giving effect to such designation and certifying that such designation complied with the foregoing provisions.
“U.S. Person” means a U.S. person as defined in Rule 902(k) under the Securities Act.
“Volumetric Production Payments” means production payment obligations recorded as deferred revenue in accordance with GAAP, together with all undertaking and obligations in connection therewith.
“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 such Person; provided that with respect to a limited partnership or other entity that does not have a Board, 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.
“Weighted Average Life to Maturity” means, when applied to any Indebtedness, Disqualified Stock or Preferred Stock, as the case may be, at any date, the quotient obtained by dividing:
(a) the sum of the products of the number of years (calculated to the nearest one-twenty-fifth) from the date of determination to the date of each successive scheduled principal payment of such Indebtedness or redemption or similar payment with respect to such Disqualified Stock or Preferred Stock, multiplied by the amount of such payment; by
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(b) the sum of all such payments; provided that for purposes of determining the Weighted Average Life to Maturity of any Indebtedness that is being Refinanced (the “Applicable Indebtedness”), the effects of any amortization or prepayments made on such Applicable Indebtedness prior to the date of the applicable Refinancing will be disregarded.
“Wholly-Owned Restricted Subsidiary” is any Wholly-Owned Subsidiary that is a Restricted Subsidiary.
“Wholly-Owned Subsidiary” of any Person means a Subsidiary of such Person, 100% of the outstanding Equity Interests of which (other than directors’ qualifying shares and shares of Capital Stock of Foreign Subsidiaries issued to foreign nationals as required under applicable law) is at the time owned by such Person and/or by one or more Wholly-Owned Subsidiaries of such Person.
Section 1.02 Other Definitions.
| Term | Defined in Section |
| “Advance Offer” | 4.10(d) |
| “Advance Portion” | 4.10(d) |
| “Affiliate Transaction” | 4.11(a) |
| “Alternate Offer” | 4.14(c) |
| “Applicable Premium Deficit” | 8.04(a) |
| “Asset Sale Offer” | 4.10(d) |
| “Asset Sale Proceeds Application Period” | 4.10(b) |
| “Authentication Order” | 2.02 |
| “Change of Control Offer” | 4.14(a) |
| “Change of Control Payment” | 4.14(a) |
| “Change of Control Payment Date” | 4.14(a)(ii) |
| “Covenant Defeasance” | 8.03 |
| “Covenant Termination Event” | 4.16(a) |
| “Directing Holder” | 6.02 |
| “DTC” | 2.03 |
| “Event of Default” | 6.01 |
| “Excess Proceeds” | 4.10(d) |
| “incur” and “incurrence” | 4.09(a) |
| “Increased Amount” | 4.12 |
| “Legal Defeasance” | 8.02 |
| “Limited Condition Transaction” | 1.05(a) |
| “Note Register” | 2.03 |
| “Noteholder Direction” | 6.02 |
| “Offer Amount” | 3.09(b) |
| “Offer Period” | 3.09(b) |
| “Pari Passu Indebtedness” | 4.10(d) |
| “Paying Agent” | 2.03 |
| “Position Representation” | 6.02 |
| “Purchase Date” | 3.09(b) |
| “Qualified Reporting Subsidiary” | 4.03(d) |
| “Redemption Date” | 3.01 |
| “Refunding Capital Stock” | 4.07(b)(ii) |
| “Registrar” | 2.03 |
| “Restricted Payments” | 4.07(a) |
| “Reversion Date” | 4.16(c) |
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| Term | Defined in Section |
| “Successor Company” | 5.01(a)(i)(A) |
| “Successor Person” | 5.01(b)(i)(A) |
| “Tax Group” | 4.07(b)(xiii)(B) |
| “Terminated Covenants” | 4.16(a) |
| “Termination Date” | 4.16(a) |
| “Transaction Agreement Date” | 1.05(a) |
| “Transfer Agent” | 2.03 |
| “Treasury Capital Stock” | 4.07(b)(ii)(A)(i) |
| “Verification Covenant” | 6.02 |
Section 1.03 Rules of Construction. Unless the context otherwise requires:
(a) a term has the meaning assigned to it;
(b) an accounting term not otherwise defined has the meaning assigned to it in accordance with GAAP;
(c) “or” is not exclusive;
(d) the words “including,” “includes” and similar words shall be deemed to be followed by without limitation;
(e) words in the singular include the plural, and in the plural include the singular;
(f) “will” shall be interpreted to express a command;
(g) provisions apply to successive events and transactions;
(h) references to sections of, or rules under, the Securities Act or the Exchange Act shall be deemed to include substitute, replacement or successor sections or rules adopted by the SEC from time to time;
(i) unless the context otherwise requires, any reference to an “Article,” “Section” or “clause” refers to an Article, Section or clause, as the case may be, of this Indenture;
(j) the words “herein,” “hereof” and “hereunder” and other words of similar import refer to this Indenture as a whole and not any particular Article, Section, clause or other subdivision;
(k) the principal amount of any Preferred Stock at any time shall be (i) the maximum liquidation value of such Preferred Stock at such time or (ii) the maximum mandatory redemption or mandatory repurchase price with respect to such Preferred Stock at such time, whichever is greater;
(l) words used herein implying any gender shall apply to both genders; and
(m) in the computation of periods of time from a specified date to a later specified date, the word “from” means “from and including”; the words “to” and “until” each mean “to but excluding”; and the word “through” means “to and including.”
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Section 1.04 Acts of Holders.
(a) Any request, demand, authorization, direction, notice, consent, waiver or other action provided by this Indenture to be given or taken by Holders may be embodied in and evidenced by one or more instruments of substantially similar tenor signed by such Holders in person or by an agent duly appointed in writing. Except as herein otherwise expressly provided, such action shall become effective when such instrument or instruments are delivered to the Trustee and, where it is hereby expressly required, to the Company. Proof of execution of any such instrument or of a writing appointing any such agent, or the holding by any Person of a Note, shall be sufficient for any purpose of this Indenture and (subject to Section 7.01 hereof) conclusive in favor of the Trustee and the Company, if made in the manner provided in this Section 1.04.
(b) The fact and date of the execution by any Person of any such instrument or writing may be proved by the affidavit of a witness of such execution or by the certificate of any notary public or other officer authorized by law to take acknowledgments of deeds, certifying that the individual signing such instrument or writing acknowledged to him the execution thereof. Where such execution is by or on behalf of any legal entity other than an individual, such certificate or affidavit shall also constitute proof of the authority of the Person executing the same. The fact and date of the execution of any such instrument or writing, or the authority of the Person executing the same, may also be proved in any other manner that the Trustee deems sufficient.
(c) The ownership of Notes shall be proved by the Note Register.
(d) Any request, demand, authorization, direction, notice, consent, waiver or other action by the Holder of any Note shall bind every future Holder of the same Note and the Holder of every Note issued upon the registration of transfer thereof or in exchange therefor or in lieu thereof, in respect of any action taken, suffered or omitted by the Trustee or the Company in reliance thereon, whether or not notation of such action is made upon such Note.
(e) Unless otherwise specified, if not set by the Company prior to the first solicitation of a Holder made by any Person in respect of any such action, or in the case of any such vote, prior to such vote, any such record date shall be the later of 10 days prior to the first solicitation of such consent or the date of the most recent list of Holders furnished to the Trustee prior to such solicitation.
(f) Without limiting the foregoing, a Holder entitled to take any action hereunder with regard to any particular Note may do so with regard to all or any part of the principal amount of such Note or by one or more duly appointed agents, each of which may do so pursuant to such appointment with regard to all or any part of such principal amount. Any notice given or action taken by a Holder or its agents with regard to different parts of such principal amount pursuant to this paragraph shall have the same effect as if given or taken by separate Holders of each such different part.
(g) Without limiting the generality of the foregoing, a Holder, including DTC, that is a Holder of a Global Note, may make, give or take, by a proxy or proxies duly appointed in writing, any request, demand, authorization, direction, notice, consent, waiver or other action provided in this Indenture to be made, given or taken by Holders, and any Person, that is a Holder of a Global Note, including DTC, may provide its proxy or proxies to the beneficial owners of interests in any such Global Note through such Depositary’s standing instructions and customary practices.
(h) The Company may fix a record date for the purpose of determining the Persons who are beneficial owners of interests in any Global Note held by DTC entitled under the procedures of such Depositary to make, give or take, by a proxy or proxies duly appointed in writing, any request, demand, authorization, direction, notice, consent, waiver or other action provided in this Indenture to be made, given or taken by Holders. If such a record date is fixed, the Holders on such record date or their duly appointed proxy or proxies, and only such Persons, shall be entitled to make, give or take such request, demand, authorization, direction, notice, consent, waiver or other action, whether or not such Holders remain Holders after such record date. No such request, demand, authorization, direction, notice, consent, waiver or other action shall be valid or effective if made, given or taken more than 120 days after such record date.
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Section 1.05 Limited Condition Transactions; Measuring Compliance.
(a) With respect to any (x) Investment or acquisition, in each case, the consummation by the Company or any Subsidiary of which is not conditioned on the availability of, or on obtaining, third-party financing for such Investment or acquisition (whether by merger, consolidation or other business combination or the acquisition of Capital Stock or otherwise) as applicable and (y) redemption, repurchase, defeasance, satisfaction and discharge or repayment of Indebtedness, Disqualified Stock or Preferred Stock requiring irrevocable notice in advance of such redemption, repurchase, defeasance, satisfaction and discharge or repayment (any transaction described in clauses (x) or (y), a “Limited Condition Transaction”), in each case for purposes of determining:
(i) whether any Indebtedness (including Acquired Indebtedness), Disqualified Stock or Preferred Stock that is being incurred or issued in connection with such Limited Condition Transaction is permitted to be incurred in compliance with Section 4.09;
(ii) whether any Lien being incurred in connection with such Limited Condition Transaction or to secure any such Indebtedness, Disqualified Stock or Preferred Stock is permitted to be incurred in accordance with Section 4.12 or the definition of “Permitted Liens”;
(iii) whether any other transaction (including any Investment or Restricted Payment) undertaken or proposed to be undertaken in connection with such Limited Condition Transaction complies with the covenants or agreements contained in this Indenture or the Notes; and
(iv) any calculation of the Consolidated Total Net Debt Ratio, Fixed Charge Coverage Ratio, Net Income, Consolidated Net Income and/or Consolidated EBITDAX and/or Adjusted Consolidated Net Tangible Assets and, whether a Default or Event of Default exists in connection with the foregoing,
at the option of the Company, the date that the definitive agreement (or other relevant definitive documentation) for such Limited Condition Transaction is entered into (the “Transaction Agreement Date”) may be used as the applicable date of determination, as the case may be, in each case with such pro forma adjustments as are appropriate and consistent with the pro forma adjustment provisions set forth in the definition of “Fixed Charge Coverage Ratio” or “Consolidated EBITDAX” and if the Company or the Restricted Subsidiaries could have taken such action on the relevant Transaction Agreement Date in compliance with the applicable ratios or other provisions, such provisions shall be deemed to have been complied with. For the avoidance of doubt, if the Company elects to use the Transaction Agreement Date as the applicable date of determination in accordance with the foregoing, (a) such election may not be revoked, (b) any fluctuation or change in the Consolidated Total Net Debt Ratio, Fixed Charge Coverage Ratio, Net Income, Consolidated Net Income, Consolidated EBITDAX or Adjusted Consolidated Net Tangible Assets of the Company, the target business, or assets to be acquired subsequent to the Transaction Agreement Date and prior to the consummation of such Limited Condition Transaction, will not be taken into account for purposes of determining whether any Investment, Restricted Payment, Indebtedness, Disqualified Stock, Preferred Stock or Lien that is being made, incurred or issued in connection with such Limited Condition Transaction is permitted to be made, incurred or issued or in connection with compliance by the Company or any of the Restricted Subsidiaries with any other provision of this Indenture or the Notes or any other action or transaction undertaken in connection with such Limited Condition Transaction and (c) until such Limited Condition Transaction is consummated or the definitive agreements related thereto are terminated, such Limited Condition Transaction and all transactions proposed to be undertaken in connection therewith (including the making of any Restricted Payment, or Investments, or the incurrence of Indebtedness and Liens) will be given pro forma effect when determining compliance of other transactions (including the making of any Restricted Payment, or Investments, or the incurrence or issuance of Indebtedness, Disqualified Stock, Preferred Stock and Liens unrelated to such Investment, acquisition or repayment, repurchase or refinancing of Indebtedness) that are consummated after the Transaction Agreement Date and on or prior to the consummation of such Limited Condition Transaction and any such transactions (including any incurrence or issuance of Indebtedness, Disqualified Stock or Preferred Stock and the use of proceeds thereof) will be deemed to have occurred on the Transaction Agreement Date and outstanding thereafter for purposes of calculating any baskets or ratios under this Indenture after the date of such agreement and before the consummation of such Limited Condition Transaction; provided that for purposes of any such calculation of the Fixed Charge Coverage Ratio, Consolidated Interest Expense will be calculated using an assumed interest rate for the Indebtedness to be incurred in connection with such Limited Condition Transaction based on the indicative interest margin contained in any financing commitment documentation with respect to such Indebtedness or, if no such indicative interest margin exists, as reasonably determined by the Company in good faith.
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Notwithstanding anything herein to the contrary, if the Company or any of its Restricted Subsidiaries (x) incurs Indebtedness, issues Disqualified Stock or Preferred Stock, creates Liens, makes Asset Sales, makes Investments, makes Restricted Payments, designates any Subsidiary as a Restricted Subsidiary or an Unrestricted Subsidiary or repays any Indebtedness, Disqualified Stock or Preferred Stock in connection with any Limited Condition Transaction under a ratio-based basket and (y) incurs Indebtedness, issues Disqualified Stock or Preferred Stock, creates Liens, makes Asset Sales, Investments or Restricted Payments, designates any as a Restricted Subsidiary or an Unrestricted Subsidiary or repays any Indebtedness, Disqualified Stock or Preferred Stock in connection with any Limited Condition Transaction under a non-ratio-based basket (which shall occur within five (5) Business Days of the events in clause (x) above), then the applicable ratio will be calculated with respect to any such action under the applicable ratio-based basket without regard to any such action under such non-ratio-based basket made in connection with such Limited Condition Transaction.
In addition, compliance with any requirement relating to absence of Default or Event of Default may be determined as of the Transaction Agreement Date and not as of any later date as would otherwise be required under this Indenture.
(b) In the event an item of Indebtedness, Disqualified Stock or Preferred Stock (or any portion thereof) is incurred or issued, any Lien is incurred or other transaction is undertaken on the same date that any other item of Indebtedness, Disqualified Stock or Preferred Stock (or any portion thereof) is incurred or issued, any other Lien is incurred or other transaction is undertaken on reliance on a ratio basket based on the Fixed Charge Coverage Ratio or the Consolidated Total Net Debt Ratio, then such ratio will be calculated with respect to such incurrence, issuance or other transaction without regard to any other incurrence, issuance or transaction. Each item of Indebtedness, Disqualified Stock or Preferred Stock that is incurred or issued, each Lien incurred and each other transaction undertaken will be deemed to have been incurred, issued or taken first, to the extent available, pursuant to the relevant Fixed Charge Coverage Ratio or Consolidated Total Net Debt Ratio test.
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ARTICLE II
THE NOTES
Section 2.01 Form and Dating; Terms.
(a) General. The Notes and the Trustee’s certificate of authentication shall be substantially in the form of Exhibit A hereto. The Notes may have notations, legends or endorsements required by law, stock exchange rules or usage. Each Note shall be dated the date of its authentication. The Notes shall be issued initially in minimum denominations of $2,000 and any integral multiple of $1,000 in excess of $2,000.
(b) Global Notes. Notes issued in global form shall be substantially in the form of Exhibit A hereto (including the Global Note Legend thereon and the “Schedule of Exchanges of Interests in the Global Note” attached thereto). Notes issued in definitive form shall be substantially in the form of Exhibit A hereto (but without the Global Note Legend thereon and without the “Schedule of Exchanges of Interests in the Global Note” attached thereto). Each Global Note shall represent such of the outstanding Notes as shall be specified in the “Schedule of Exchanges of Interests in the Global Note” attached thereto and each shall provide that it shall represent up to the aggregate principal amount of Notes from time to time endorsed thereon and that the aggregate principal amount of outstanding Notes represented thereby may from time to time be reduced or increased, as applicable, to reflect exchanges and redemptions. Any endorsement of a Global Note to reflect the amount of any increase or decrease in the aggregate principal amount of outstanding Notes represented thereby shall be made by the Trustee or the Custodian, at the direction of the Trustee, in accordance with instructions given by the Holder thereof as required by Section 2.06 hereof.
(c) Temporary Global Notes. Notes offered and sold in reliance on Regulation S shall be issued initially in the form of the Regulation S Temporary Global Note, which shall be deposited on behalf of the purchasers of the Notes represented thereby with the Custodian and registered in the name of the Depositary or the nominee of the Depositary for the accounts of designated agents holding on behalf of Euroclear or Clearstream, duly executed by the Company and authenticated by the Trustee as hereinafter provided.
Following the termination of the applicable Restricted Period, the Regulation S Temporary Global Note Legend shall be deemed removed from the Regulation S Temporary Global Note, following which temporary beneficial interests in the Regulation S Temporary Global Note shall automatically become beneficial interests in the Regulation S Permanent Global Note pursuant to the Applicable Procedures.
The aggregate principal amount of a Regulation S Temporary Global Note and a Regulation S Permanent Global Note may from time to time be increased or decreased by adjustments made on the records of the Trustee and the Depositary or its nominee, as the case may be, in connection with transfers of interest as hereinafter provided.
(d) Terms. The aggregate principal amount of Notes that may be authenticated and delivered under this Indenture is unlimited.
The terms and provisions contained in the Notes shall constitute, and are hereby expressly made, a part of this Indenture and the Company and the Trustee, by their execution and delivery of this Indenture (or the applicable supplemental indenture), expressly agree to such terms and provisions and to be bound thereby. However, to the extent any provision of any Note conflicts with the express provisions of this Indenture, the provisions of this Indenture shall govern and be controlling.
Additional Notes ranking pari passu with the Initial Notes may be issued from time to time by the Company without notice to or consent of the Holders and shall be consolidated with and form a single class with the Initial Notes and shall have the same terms as to status, redemption or otherwise as the Initial Notes except that interest may accrue on the Additional Notes from their date of issuance (or such other date specified by the Company), subject to the Company’s right to issue Additional Notes of a different series as set forth in the next paragraph; provided that the Company’s ability to issue Additional Notes shall be subject to the Company’s compliance with Section 4.09 and that a separate CUSIP or ISIN will be issued for Additional Notes, if the Initial Notes and the Additional Notes are not treated as fungible for U.S. federal income tax purposes, with the Initial Notes or any other Additional Notes bearing the same CUSIP or ISIN.
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The Company may designate the maturity date, interest rate and optional redemption provisions applicable to each series of Additional Notes, which may differ from the maturity date, interest rate and optional redemption provisions applicable to the Initial Notes. Additional Notes that differ with respect to maturity date, interest rate or optional redemption provisions from the Initial Notes will constitute a different series of Notes from the Initial Notes. Additional Notes that have the same maturity date, interest rate and optional redemption provisions as the Initial Notes will be treated as the same series as the Initial Notes unless otherwise designated by the Company. The Company similarly may vary the application of related other provisions (including the issue price and any applicable original issue discount legend) to any series of Additional Notes.
(e) Euroclear and Clearstream Applicable Procedures. The provisions of the “Operating Procedures of the Euroclear System” and “Terms and Conditions Governing Use of Euroclear” and the “General Terms and Conditions of Clearstream Banking” and “Customer Handbook” of Clearstream shall be applicable to transfers of beneficial interests in the Regulation S Temporary Global Note and the Regulation S Permanent Global Notes that are held by Participants through Euroclear or Clearstream and this Indenture shall not govern such transfers.
Section 2.02 Execution and Authentication. At least one Officer of the Company shall execute the Notes on behalf of the Company by manual or facsimile signature.
If an Officer whose signature is on a Note no longer holds that office at the time the Trustee authenticates the Note, the Note shall nevertheless be valid.
A Note shall not be entitled to any benefit under this Indenture or be valid or obligatory for any purpose until authenticated substantially in the form of Exhibit A hereto, by the manual signature of the Trustee. The signature shall be conclusive evidence that the Note has been duly authenticated and delivered under this Indenture.
On the Issue Date, the Trustee shall, upon receipt of a Company Order (an “Authentication Order”), authenticate and deliver the Initial Notes in the aggregate principal amount or amounts specified in such Authentication Order. In addition, at any time, from time to time, the Trustee shall, upon receipt of an Authentication Order (together with such other documents as may be required pursuant to this Indenture), authenticate and deliver any Additional Notes for an aggregate principal amount specified in such Authentication Order for such Additional Notes issued or increased hereunder.
The Trustee may appoint an authenticating agent reasonably acceptable to the Company to authenticate Notes. An authenticating agent may authenticate Notes whenever the Trustee may do so. Each reference in this Indenture to authentication by the Trustee includes authentication by such agent. An authenticating agent has the same rights as an Agent to deal with Holders or an Affiliate of the Company.
Section 2.03 Registrar, Transfer Agent and Paying Agent. The Company shall maintain (i) an office or agency where Notes may be presented for registration (“Registrar”), (ii) an office or agency where Notes may be presented for transfer or for exchange (“Transfer Agent”) and (iii) an office or agency where Notes may be presented for payment (“Paying Agent”). The Registrar shall keep a register of the Notes (“Note Register”) and of their transfer and exchange. The registered Holder will be treated as the owner of the Note for all purposes. Only registered Holders will have rights under this Indenture and the Notes. The Company may appoint one or more co-registrars, one or more co-transfer agents and one or more additional paying agents. The term “Registrar” includes any co-registrar, the term “Transfer Agent” includes any co-transfer agent and the term “Paying Agent” includes any additional paying agents. The Company may change any Paying Agent, Transfer Agent or Registrar without prior notice to any Holder. The Company shall notify the Trustee in writing of the name and address of any Agent not a party to this Indenture. If the Company fail to appoint or maintain another entity as Registrar, Transfer Agent or Paying Agent, the Trustee shall act as such. The Company or any of its Subsidiaries may act as Paying Agent, Transfer Agent or Registrar.
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The Notes will be issued in registered form and the registered Holder of a Note will be treated as the owner of such Note for all purposes. The Company initially appoints The Depository Trust Company (“DTC”) to act as Depositary with respect to the Global Notes.
The Company initially appoints the Trustee to act as the Paying Agent, Transfer Agent and Registrar for the Notes and to act as Custodian with respect to the Global Notes.
If any Notes are listed on an exchange, and the rules of such exchange so require, the Company will satisfy any requirement of such exchange as to Paying Agents, registrars and transfer agents and will comply with any notice requirements required under such exchange in connection with any change of any Paying Agent, registrar or transfer agent.
Section 2.04 Paying Agent to Hold Money in Trust. The Company shall require each Paying Agent other than the Trustee to agree in writing that such Paying Agent shall hold in trust for the benefit of Holders or the Trustee all money held by such Paying Agent for the payment of principal, premium, if any, or interest on the Notes, and will notify the Trustee in writing of any default by the Company in making any such payment. While any such default continues, the Trustee may require a Paying Agent to pay all money held by it to the Trustee for its own benefit and for the benefit of the Holders. The Company at any time may require a Paying Agent to pay all money held by it to the Trustee for its own benefit and for the benefit of the Holders. Upon payment over to the Trustee, the Paying Agent (if other than the Company or a Subsidiary or the Trustee) shall have no further liability for the money. If any of the Company or a Subsidiary acts as Paying Agent, it shall segregate and hold in a separate trust fund for the benefit of the Holders all money held by it as Paying Agent. Upon any bankruptcy or reorganization proceedings relating to any of the Company, the Trustee shall serve as Paying Agent for the Notes.
Section 2.05 Holder Lists. The Registrar shall preserve in as current a form as is reasonably practicable the most recent list available to it of the names and addresses of all Holders. If the Trustee is not the Registrar, the Company shall furnish to the Trustee at least five Business Days before each Interest Payment Date and at such other times as the Trustee may request in writing, a list in such form and as of such date as the Trustee may reasonably require of the names and addresses of the Holders.
Section 2.06 Transfer and Exchange.
(a) Transfer and Exchange of Global Notes. Except as otherwise set forth in this Section 2.06, a Global Note may be transferred, in whole and not in part, only to another nominee of the Depositary or to a successor thereto or a nominee of such successor thereto. A beneficial interest in a Global Note may not be exchanged for a Definitive Note of the same series unless (A) the Depositary (x) notifies the Company that it is unwilling or unable to continue as Depositary for such Global Note or (y) has ceased to be a clearing agency registered under the Exchange Act, and, in either case, a successor Depositary is not appointed by the Company within 90 days or (B) upon the request of a Holder if there shall have occurred and be continuing an Event of Default with respect to the Notes. Upon the occurrence of any of the events in clauses (A) or (B) above, Definitive Notes delivered in exchange for any Global Note of the same series or beneficial interests therein will be registered in the names, and issued in any approved denominations, requested by or on behalf of the Depositary (in accordance with its customary procedures). Global Notes also may be exchanged or replaced, in whole or in part, as provided in Section 2.07 and Section 2.10. Every Note authenticated and delivered in exchange for, or in lieu of, a Global Note of the same series or any portion thereof, pursuant to this Section 2.06 or Section 2.07 or Section 2.10, shall be authenticated and delivered in the form of, and shall be, a Global Note, except for Definitive Notes issued subsequent to any of the events in (A) or (B) above and pursuant to Section 2.06(b)(ii)(B) and (c) hereof. A Global Note may not be exchanged for another Note other than as provided in this Section 2.06(a); provided, however, that beneficial interests in a Global Note may be transferred and exchanged as provided in Sections 2.06(b) or (c) hereof.
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(b) Transfer and Exchange of Beneficial Interests in the Global Notes. The transfer and exchange of beneficial interests in the Global Notes shall be effected through the Depositary in accordance with the provisions of this Indenture and the Applicable Procedures. Beneficial interests in the Restricted Global Notes shall be subject to restrictions on transfer comparable to those set forth herein to the extent required by the Securities Act. Transfers of beneficial interests in the Global Notes also shall require compliance with either subparagraph (i) or (ii) below, as applicable, as well as one or more of the other following subparagraphs, as applicable:
(i) Transfer of Beneficial Interests in the Same Global Note. Beneficial interests in any Restricted Global Note may be transferred to Persons who take delivery thereof in the form of a beneficial interest in the same Restricted Global Note in accordance with the transfer restrictions set forth in the Private Placement Legend; provided that prior to the expiration of the Restricted Period, transfers of beneficial interests in the Regulation S Temporary Global Note may not be made to a U.S. Person or for the account or benefit of a U.S. Person. Beneficial interests in any Unrestricted Global Note may be transferred to Persons who take delivery thereof in the form of a beneficial interest in an Unrestricted Global Note. No written orders or instructions shall be required to be delivered to the Registrar to effect the transfers described in this Section 2.06(b)(i).
(ii) All Other Transfers and Exchanges of Beneficial Interests in Global Notes. In connection with all transfers and exchanges of beneficial interests that are not subject to Section 2.06(b)(i) hereof, the transferor of such beneficial interest must deliver to the Registrar either (A) (1) a written order from a Participant or an Indirect Participant given to the Depositary in accordance with the Applicable Procedures directing the Depositary to credit or cause to be credited a beneficial interest in another Global Note in an amount equal to the beneficial interest to be transferred or exchanged and (2) instructions given in accordance with the Applicable Procedures containing information regarding the Participant account to be credited with such increase or (B) (1) a written order from a Participant or an Indirect Participant given to the Depositary in accordance with the Applicable Procedures directing the Depositary to cause to be issued a Definitive Note of the same series in an amount equal to the beneficial interest to be transferred or exchanged and (2) instructions given by the Depositary to the Registrar containing information regarding the Person in whose name such Definitive Note shall be registered to effect the transfer or exchange referred to in (1) above; provided that in no event shall Definitive Notes be issued upon the transfer or exchange of beneficial interests in the Regulation S Temporary Global Note prior to (A) the expiration of the Restricted Period therefor and (B) the receipt by the Registrar of any certificates required pursuant to Rule 903(b)(3)(ii)(B). Upon satisfaction of all of the requirements for transfer or exchange of beneficial interests in Global Notes contained in this Indenture and the Notes or otherwise applicable under the Securities Act, the Trustee shall adjust the principal amount of the relevant Global Note(s) pursuant to Section 2.06(g) hereof.
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(iii) Transfer of Beneficial Interests to Another Restricted Global Note. A beneficial interest in any Restricted Global Note may be transferred to a Person who takes delivery thereof in the form of a beneficial interest in another Restricted Global Note if the transfer complies with the requirements of Section 2.06(b)(ii) hereof and the Registrar receives the following:
(A) if the transferee will take delivery in the form of a beneficial interest in the 144A Global Note, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications in item (1) thereof; or
(B) if the transferee will take delivery in the form of a beneficial interest in a Regulation S Global Note, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications in item (2) thereof.
(iv) Transfer and Exchange of Beneficial Interests in a Restricted Global Note for Beneficial Interests in an Unrestricted Global Note. A beneficial interest in any Restricted Global Note may be exchanged by any holder thereof for a beneficial interest in an Unrestricted Global Note or transferred to a Person who takes delivery thereof in the form of a beneficial interest in an Unrestricted Global Note if the exchange or transfer complies with the requirements of Section 2.06(b)(ii) hereof and the Registrar receives the following:
(A) if the holder of such beneficial interest in a Restricted Global Note proposes to exchange such beneficial interest for a beneficial interest in an Unrestricted Global Note of the same series, a certificate from such Holder substantially in the form of Exhibit C hereto, including the certifications in item (1)(a) thereof; or
(B) if the holder of such beneficial interest in a Restricted Global Note proposes to transfer such beneficial interest to a Person who shall take delivery thereof in the form of a beneficial interest in an Unrestricted Global Note of the same series, a certificate from such holder in the form of Exhibit B hereto, including the certifications in item (4) thereof;
and, in each such case set forth in this Section 2.06(b)(iv), if the Registrar or the Company so requests or if the Applicable Procedures so require, an Opinion of Counsel in form reasonably acceptable to the Company to the effect that such exchange or transfer is in compliance with the Securities Act and that the restrictions on transfer contained herein and in the Private Placement Legend are no longer required in order to maintain compliance with the Securities Act.
If any such transfer is effected pursuant to this Section 2.06(b)(iv) at a time when an Unrestricted Global Note has not yet been issued, the Company shall issue and, upon receipt of an Authentication Order in accordance with Section 2.02 hereof, the Trustee shall authenticate one or more Unrestricted Global Notes in an aggregate principal amount equal to the aggregate principal amount of beneficial interests transferred pursuant to this Section 2.06(b)(iv).
Beneficial interests in an Unrestricted Global Note cannot be exchanged for, or transferred to Persons who take delivery thereof in the form of, a beneficial interest in a Restricted Global Note.
(c) Transfer or Exchange of Beneficial Interests for Definitive Notes.
(i) Beneficial Interests in Restricted Global Notes to Restricted Definitive Notes. If any holder of a beneficial interest in a Restricted Global Note proposes to exchange such beneficial interest for a Restricted Definitive Note or to transfer such beneficial interest to a Person who takes delivery thereof in the form of a Restricted Definitive Note, then, upon the receipt by the Registrar of the following documentation:
(A) if the holder of such beneficial interest in a Restricted Global Note proposes to exchange such beneficial interest for a Restricted Definitive Note, a certificate from such holder substantially in the form of Exhibit C hereto, including the certifications in item (2)(a) thereof;
(B) if such beneficial interest is being transferred to a person reasonably believed to be a QIB in accordance with Rule 144A, a certificate substantially in the form of Exhibit B hereto, including the certifications in item (1) thereof;
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(C) if such beneficial interest is being transferred to a Non-U.S. Person in an offshore transaction in accordance with Rule 903 or Rule 904, a certificate substantially in the form of Exhibit B hereto, including the certifications in item (2) thereof;
(D) if such beneficial interest is being transferred pursuant to an exemption from the registration requirements of the Securities Act in accordance with Rule 144, a certificate substantially in the form of Exhibit B hereto, including the certifications in item (3)(a) thereof; or
(E) if such beneficial interest is being transferred to the Company or any of its Subsidiaries, a certificate substantially in the form of Exhibit B hereto, including the certifications in item (3)(b) thereof;
the Trustee shall cause the aggregate principal amount of the applicable Global Note to be reduced accordingly pursuant to Section 2.06(g) hereof, and the Company shall execute and the Trustee shall, upon receipt of an Authentication Order, authenticate and mail to the Person designated in the instructions a Definitive Note in the applicable principal amount. Any Definitive Note issued in exchange for a beneficial interest in a Restricted Global Note pursuant to this Section 2.06(c) shall be registered in such name or names and in such authorized denomination or denominations as the holder of such beneficial interest shall instruct the Registrar through instructions from the Depositary and the Participant or Indirect Participant. The Trustee shall mail such Definitive Notes to the Persons in whose names such Notes are so registered. Any Definitive Note issued in exchange for a beneficial interest in a Restricted Global Note pursuant to this Section 2.06(c)(i) shall bear the Private Placement Legend and shall be subject to all restrictions on transfer contained therein.
(ii) Beneficial Interests in Regulation S Temporary Global Note to Definitive Notes. Notwithstanding Sections 2.06(c)(i)(A) and (C) hereof, a beneficial interest in the Regulation S Temporary Global Note may not be exchanged for a Definitive Note or transferred to a Person who takes delivery thereof in the form of a Definitive Note prior to (A) the expiration of the Restricted Period and (B) the receipt by the Registrar of any certificates required pursuant to Rule 903(b)(3)(ii)(B) of the Securities Act, except in the case of a transfer pursuant to an exemption from the registration requirements of the Securities Act other than Rule 903 or Rule 904.
(iii) Beneficial Interests in Restricted Global Notes to Unrestricted Definitive Notes. A holder of a beneficial interest in a Restricted Global Note may exchange such beneficial interest for an Unrestricted Definitive Note or may transfer such beneficial interest to a Person who takes delivery thereof in the form of an Unrestricted Definitive Note only the Registrar receives the following:
(A) if the holder of such beneficial interest in a Restricted Global Note proposes to exchange such beneficial interest for an Unrestricted Definitive Note, a certificate from such holder substantially in the form of Exhibit C hereto, including the certifications in item (1)(b) thereof; or
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(B) if the holder of such beneficial interest in a Restricted Global Note proposes to transfer such beneficial interest to a Person who shall take delivery thereof in the form of an Unrestricted Definitive Note, a certificate from such holder substantially in the form of u hereto, including the certifications in item (4) thereof;
and, in each such case set forth in this Section 2.06(c)(iii), if the Registrar or the Company so requests or if the Applicable Procedures so require, an Opinion of Counsel in form reasonably acceptable to the Company to the effect that such exchange or transfer is in compliance with the Securities Act and that the restrictions on transfer contained herein and in the Private Placement Legend are no longer required in order to maintain compliance with the Securities Act.
(iv) Beneficial Interests in Unrestricted Global Notes to Unrestricted Definitive Notes. If any holder of a beneficial interest in an Unrestricted Global Note proposes to exchange such beneficial interest for a Definitive Note or to transfer such beneficial interest to a Person who takes delivery thereof in the form of a Definitive Note, then, upon satisfaction of the conditions set forth in Section 2.06(b)(ii) hereof, the Trustee shall cause the aggregate principal amount of the applicable Global Note to be reduced accordingly pursuant to Section 2.06(g) hereof, and the Company shall execute and the Trustee shall authenticate and mail to the Person designated in the instructions a Definitive Note in the applicable principal amount. Any Definitive Note issued in exchange for a beneficial interest pursuant to this Section 2.06(c)(iv) shall be registered in such name or names and in such authorized denomination or denominations as the holder of such beneficial interest shall instruct the Registrar through instructions from or through the Depositary and the Participant or Indirect Participant. The Trustee shall mail such Definitive Notes to the Persons in whose names such Notes are so registered. Any Definitive Note issued in exchange for a beneficial interest pursuant to this Section 2.06(c)(iv) shall not bear the Private Placement Legend.
(d) Transfer and Exchange of Definitive Notes for Beneficial Interests.
(i) Restricted Definitive Notes to Beneficial Interests in Restricted Global Notes. If any Holder of a Restricted Definitive Note proposes to exchange such Note for a beneficial interest in a Restricted Global Note or to transfer such Restricted Definitive Note to a Person who takes delivery thereof in the form of a beneficial interest in a Restricted Global Note, then, upon receipt by the Registrar of the following documentation:
(A) if the Holder of such Restricted Definitive Note proposes to exchange such Note for a beneficial interest in a Restricted Global Note, a certificate from such Holder substantially in the form of Exhibit C hereto, including the certifications in item (2)(b) thereof;
(B) if such Restricted Definitive Note is being transferred to a person reasonably believed to be a QIB in accordance with Rule 144A, a certificate substantially in the form of Exhibit B hereto, including the certifications in item (1) thereof;
(C) if such Restricted Definitive Note is being transferred to a Non-U.S. Person in an offshore transaction in accordance with Rule 903 or Rule 904, a certificate substantially in the form of Exhibit B hereto, including the certifications in item (2) thereof;
(D) if such Restricted Definitive Note is being transferred pursuant to an exemption from the registration requirements of the Securities Act in accordance with Rule 144, a certificate substantially in the form of Exhibit B hereto, including the certifications in item (3)(a) thereof; or
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(E) if such Restricted Definitive Note is being transferred to the Company or any of its Subsidiaries, a certificate substantially in the form of Exhibit B hereto, including the certifications in item (3)(b) thereof;
the Trustee shall cancel the Restricted Definitive Note and increase or cause to be increased the aggregate principal amount of, in the case of clause (A) above, the applicable Restricted Global Note, in the case of clause (B) above, the applicable 144A Global Note and, in the case of clause (C) above, the applicable Regulation S Global Note.
(ii) Restricted Definitive Notes to Beneficial Interests in Unrestricted Global Notes. A Holder of a Restricted Definitive Note may exchange such Note for a beneficial interest in an Unrestricted Global Note or transfer such Restricted Definitive Note to a Person who takes delivery thereof in the form of a beneficial interest in an Unrestricted Global Note only if the Registrar receives the following:
(A) if the Holder of such Definitive Notes proposes to exchange such Notes for a beneficial interest in the Unrestricted Global Note, a certificate from such Holder substantially in the form of Exhibit C hereto, including the certifications in item (1)(c) thereof; or
(B) if the Holder of such Definitive Notes proposes to transfer such Notes to a Person who shall take delivery thereof in the form of a beneficial interest in the Unrestricted Global Note, a certificate from such Holder substantially in the form of Exhibit B hereto, including the certifications in item (4) thereof;
and, in each such case set forth in this Section 2.06(d)(ii), if the Registrar or the Company so requests or if the Applicable Procedures so require, an Opinion of Counsel in form reasonably acceptable to the Company to the effect that such exchange or transfer is in compliance with the Securities Act and that the restrictions on transfer contained herein and in the Private Placement Legend are no longer required in order to maintain compliance with the Securities Act.
Upon satisfaction of the conditions of any of the subparagraphs in this Section 2.06(d)(ii), the Trustee shall cancel the Restricted Definitive Note and increase or cause to be increased the aggregate principal amount of the Unrestricted Global Note.
(iii) Unrestricted Definitive Notes to Beneficial Interests in Unrestricted Global Notes. A Holder of an Unrestricted Definitive Note may exchange such Note for a beneficial interest in an Unrestricted Global Note or transfer such Definitive Notes to a Person who takes delivery thereof in the form of a beneficial interest in an Unrestricted Global Note at any time. Upon receipt of a request for such an exchange or transfer, the Trustee shall cancel the applicable Unrestricted Definitive Note and increase or cause to be increased the aggregate principal amount of one of the Unrestricted Global Notes.
If any such exchange or transfer from a Definitive Note to a beneficial interest is effected pursuant to sub-paragraph (ii) or (iii) above at a time when an Unrestricted Global Note has not yet been issued, the Company shall issue and, upon receipt of an Authentication Order in accordance with Section 2.02 hereof, the Trustee shall authenticate one or more Unrestricted Global Notes in an aggregate principal amount equal to the principal amount of Definitive Notes so transferred.
(e) Transfer and Exchange of Definitive Notes for Definitive Notes. Upon request by a Holder of Definitive Notes and such Holder’s compliance with this Section 2.06(e), the Registrar shall register the transfer or exchange of Definitive Notes. Prior to such registration of transfer or exchange, the requesting Holder shall present or surrender to the Registrar the Definitive Notes duly endorsed or accompanied by a written instruction of transfer or exchange in form satisfactory to the Registrar duly executed by such Holder or by its attorney, duly authorized in writing.
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In addition, the requesting Holder shall provide any additional certifications, documents and information, as applicable, required pursuant to the following provisions of this Section 2.06(e):
(i) Restricted Definitive Notes to Restricted Definitive Notes. Any Restricted Definitive Note may be transferred to and registered in the name of Persons who take delivery thereof in the form of a Restricted Definitive Note if the Registrar receives the following:
(A) if the transfer will be made to a person reasonably believed to be a QIB in accordance with Rule 144A, then the transferor must deliver a certificate substantially in the form of Exhibit B hereto, including the certifications in item (1) thereof;
(B) if the transfer will be made pursuant to Rule 903 or Rule 904, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications in item (2) thereof; or
(C) if the transfer will be made pursuant to any other exemption from the registration requirements of the Securities Act, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications required by item (3) thereof, if applicable.
(ii) Restricted Definitive Notes to Unrestricted Definitive Notes. Any Restricted Definitive Note may be exchanged by the Holder thereof for an Unrestricted Definitive Note or transferred to a Person or Persons who take delivery thereof in the form of an Unrestricted Definitive Note if the Registrar receives the following:
(A) if the Holder of such Restricted Definitive Notes proposes to exchange such Notes for an Unrestricted Definitive Note, a certificate from such Holder substantially in the form of Exhibit C hereto, including the certifications in item (1)(d) thereof; or
(B) if the Holder of such Restricted Definitive Notes proposes to transfer such Notes to a Person who shall take delivery thereof in the form of an Unrestricted Definitive Note, a certificate from such Holder substantially in the form of Exhibit B hereto, including the certifications in item (4) thereof;
and, in each such case set forth in this Section 2.06(e)(ii), if the Registrar or the Company so requests, an Opinion of Counsel in form reasonably acceptable to the Company to the effect that such exchange or transfer is in compliance with the Securities Act and that the restrictions on transfer contained herein and in the Private Placement Legend are no longer required in order to maintain compliance with the Securities Act.
(iii) Unrestricted Definitive Notes to Unrestricted Definitive Notes. A Holder of Unrestricted Definitive Notes may transfer such Notes to a Person who takes delivery thereof in the form of an Unrestricted Definitive Note. Upon receipt of a request to register such a transfer, the Registrar shall register the Unrestricted Definitive Notes pursuant to the instructions from the Holder thereof.
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(f) Legends. The following legends shall appear on the face of all Global Notes and Definitive Notes issued under this Indenture unless specifically stated otherwise in the applicable provisions of this Indenture:
(i) Private Placement Legend.
(A) Except as permitted by subparagraph (B) below, each Global Note and each Definitive Note (and all Notes issued in exchange therefor or substitution thereof) shall bear the legend in substantially the following form:
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS, EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. BY ITS ACQUISITION HEREOF OR OF A BENEFICIAL INTEREST HEREIN, THE HOLDER (1) REPRESENTS THAT (A) IT IS A “QUALIFIED INSTITUTIONAL BUYER” (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) (A “QIB”) OR (B) IT IS NOT A U.S. PERSON, IS NOT ACQUIRING THIS NOTE FOR THE ACCOUNT OR BENEFIT OF A U.S. PERSON AND IS ACQUIRING THIS NOTE IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH REGULATION S UNDER THE SECURITIES ACT, (2) AGREES THAT IT WILL NOT, PRIOR TO THE DATE THAT IS ONE YEAR AFTER THE LATER OF THE ORIGINAL ISSUE DATE HEREOF, THE ORIGINAL ISSUE DATE OF THE ISSUANCE OF ANY ADDITIONAL NOTES AND THE LAST DATE ON WHICH THE ISSUER, OR ANY OF ITS AFFILIATES, WAS THE OWNER OF THIS NOTE (OR ANY PREDECESSOR OF SUCH NOTE), RESELL OR OTHERWISE TRANSFER THIS NOTE EXCEPT (A) TO THE ISSUER OR ANY SUBSIDIARY THEREOF, (B) TO A PERSON WHOM THE HOLDER REASONABLY BELIEVES IS A QIB PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QIB IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT, (C) OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT, (D) PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE) OR (E) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND, IN EACH CASE, IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS, AND (3) AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS NOTE OR AN INTEREST HEREIN IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IN CONNECTION WITH ANY TRANSFER OF THIS NOTE OR ANY INTEREST HEREIN WITHIN THE TIME PERIOD REFERRED TO ABOVE, THE HOLDER MUST COMPLETE AND SUBMIT TO THE TRUSTEE THE CERTIFICATE SPECIFIED IN THE INDENTURE RELATING TO THE MANNER OF SUCH TRANSFER (THE FORM OF WHICH CERTIFICATE CAN BE OBTAINED FROM THE TRUSTEE). BY ITS ACQUISITION OF THIS NOTE, THE HOLDER WILL BE DEEMED TO HAVE REPRESENTED AND WARRANTED THAT EITHER (1) NO PORTION OF THE ASSETS USED BY SUCH HOLDER TO ACQUIRE OR HOLD THIS NOTE (OR ANY INTEREST IN THIS NOTE) CONSTITUTES THE ASSETS OF ANY (A) EMPLOYEE BENEFIT PLAN THAT IS SUBJECT TO TITLE I OF THE U.S. EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED (“ERISA”), (B) PLAN, INDIVIDUAL RETIREMENT ACCOUNT OR OTHER ARRANGEMENT THAT IS SUBJECT TO SECTION 4975 OF THE U.S. INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE “CODE”), OR ANY GOVERNMENTAL PLAN, CHURCH PLAN, OR NON-U.S. PLAN SUBJECT TO OTHER FEDERAL, STATE, LOCAL, NON-U.S. OR OTHER LAWS OR REGULATIONS THAT ARE SUBSTANTIALLY SIMILAR TO SUCH PROVISIONS OF ERISA OR THE CODE (“SIMILAR LAWS”), OR (C) ENTITY WHOSE UNDERLYING ASSETS ARE CONSIDERED TO INCLUDE “PLAN ASSETS” OF ANY OF THE FOREGOING DESCRIBED IN CLAUSES (A) AND (B) (EACH OF THE FOREGOING DESCRIBED IN CLAUSES (A), (B) AND (C) A “PLAN”), OR (2) THE ACQUISITION, HOLDING AND SUBSEQUENT DISPOSITION OF THIS NOTE (OR ANY INTEREST IN THIS NOTE) WILL NOT CONSTITUTE A NON-EXEMPT PROHIBITED TRANSACTION UNDER SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE OR A SIMILAR VIOLATION UNDER ANY APPLICABLE SIMILAR LAWS. AS USED HEREIN, THE TERMS “OFFSHORE TRANSACTION,” “UNITED STATES” AND “U.S. PERSON” HAVE THE MEANINGS GIVEN TO THEM BY RULE 902 OF REGULATION S UNDER THE SECURITIES ACT.
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(B) Notwithstanding the foregoing, any Global Note or Definitive Note issued pursuant to subparagraphs (b)(iv), (c)(iii), (c)(iv), (d)(ii), (d)(iii), (e)(ii) or (e)(iii) of this Section 2.06 (and all Notes issued in exchange therefor or substitution thereof) shall not bear the Private Placement Legend.
(ii) Global Note Legend. Each Global Note shall bear a legend in substantially the following form (with appropriate changes in the last sentence if DTC is not the Depositary):
THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE INDENTURE GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY CIRCUMSTANCES EXCEPT THAT (I) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS MAY BE REQUIRED PURSUANT TO SECTION 2.06(G) OF THE INDENTURE, (II) THIS GLOBAL NOTE MAY BE EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.06(A) OF THE INDENTURE, (III) THIS GLOBAL NOTE MAY BE DELIVERED TO THE TRUSTEE FOR CANCELLATION PURSUANT TO SECTION 2.11 OF THE INDENTURE AND (IV) THIS GLOBAL NOTE MAY BE TRANSFERRED TO A SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN CONSENT OF THE COMPANY. UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN DEFINITIVE FORM, THIS NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY. UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (55 WATER STREET, NEW YORK, NEW YORK) (“DTC”) TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS MAY BE REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR SUCH OTHER ENTITY AS MAY BE REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
(iii) Regulation S Temporary Global Note Legend. The Regulation S Temporary Global Note shall bear a legend in substantially the following form:
THE RIGHTS ATTACHING TO THIS REGULATION S TEMPORARY GLOBAL NOTE, AND THE CONDITIONS AND THE CONDITIONS AND PROCEDURES GOVERNING ITS EXCHANGE FOR A REGULATION S PERMANENT GLOBAL NOTE, ARE AS SPECIFIED IN THE INDENTURE (AS DEFINED HEREIN). NEITHER THE HOLDER NOR THE BENEFICIAL OWNERS OF THIS REGULATION S TEMPORARY GLOBAL NOTE SHALL BE ENTITLED TO RECEIVE PAYMENT OF INTEREST HEREON.
(g) Cancellation and/or Adjustment of Global Notes. At such time as all beneficial interests in a particular Global Note have been exchanged for Definitive Notes or a particular Global Note has been redeemed, repurchased or cancelled in whole and not in part, each such Global Note shall be returned to or retained and cancelled by the Trustee in accordance with Section 2.11 hereof. At any time prior to such cancellation, if any beneficial interest in a Global Note is exchanged for or transferred to a Person who will take delivery thereof in the form of a beneficial interest in another Global Note or for Definitive Notes, the principal amount of Notes represented by such Global Note shall be reduced accordingly and an endorsement shall be made on such Global Note by the Trustee or by the Depositary at the direction of the Trustee to reflect such reduction; and if the beneficial interest is being exchanged for or transferred to a Person who will take delivery thereof in the form of a beneficial interest in another Global Note, such other Global Note shall be increased accordingly and an endorsement shall be made on such Global Note by the Trustee or by the Depositary at the direction of the Trustee to reflect such increase.
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(h) General Provisions Relating to Transfers and Exchanges.
(i) To permit registrations of transfers and exchanges, the Company shall execute and the Trustee shall authenticate Global Notes and Definitive Notes upon receipt of an Authentication Order in accordance with Section 2.02 hereof or at the Registrar’s request.
(ii) No service charge shall be made to a holder of a beneficial interest in a Global Note or to a Holder of a Definitive Note for any registration of transfer or exchange, but the Company shall require payment of a sum sufficient to cover any transfer tax or similar governmental charge payable in connection therewith (other than any such transfer taxes or similar governmental charge payable upon exchange or transfer pursuant to Sections 2.07, 2.10, 3.06, 3.09, 4.10, 4.14 and 9.04 hereof).
(iii) Neither the Company nor the Registrar shall be required (A) to issue, to register the transfer of or to exchange any Notes during a period beginning at the opening of business 15 days before the delivery of a notice of redemption of the Notes to be redeemed under Section 3.03 hereof and ending at the close of business on the day of such mailing, (B) to register the transfer of or to exchange any Note so selected for redemption in whole or in part, except the unredeemed portion of any Note being redeemed in part, (C) to register the transfer of or to exchange a Note between a Record Date and the next succeeding Interest Payment Date or (D) to register the transfer of or to exchange any Notes tendered (and not withdrawn) for repurchase in connection with a Change of Control Offer or an Asset Sale Offer.
(iv) Neither the Registrar nor the Company shall be required to register the transfer of or exchange any Note selected for redemption in whole or in part, except the unredeemed portion of any Note being redeemed in part.
(v) All Global Notes and Definitive Notes issued upon any registration of transfer or exchange of Global Notes or Definitive Notes shall be the valid obligations of the Company, evidencing the same debt, and entitled to the same benefits under this Indenture, as the Global Notes or Definitive Notes surrendered upon such registration of transfer or exchange.
(vi) Prior to due presentment for the registration of a transfer of any Note, the Trustee, any Agent and the Company shall deem and treat the Person in whose name any Note is registered as the absolute owner of such Note for the purpose of receiving payment of principal of (and premium, if any) and interest on such Notes and for all other purposes, and none of the Trustee, any Agent or the Company shall be affected by notice to the contrary.
(vii) Upon surrender for registration of transfer of any Note at the office or agency of the Company designated pursuant to Section 4.02 hereof, the Company shall execute, and the Trustee shall authenticate and mail, in the name of the designated transferee or transferees, one or more replacement Notes of any authorized denomination or denominations of a like aggregate principal amount.
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(viii) At the option of the Holder, subject to Section 2.06(a) hereof, Notes may be exchanged for other Notes of any authorized denomination or denominations of a like aggregate principal amount upon surrender of the Notes to be exchanged at such office or agency. Whenever any Global Notes or Definitive Notes are so surrendered for exchange, the Company shall execute, and the Trustee shall authenticate and mail, the replacement Global Notes and Definitive Notes to which the Holder making the exchange is entitled in accordance with Section 2.02.
(ix) The Trustee shall have no obligation or duty to monitor, determine or inquire as to compliance with any restrictions on transfer imposed under this Indenture or under applicable law with respect to any transfer of any interest in any Note (including any transfers between or among Depositary Participants or beneficial owners of interests in any Global Notes) other than to require delivery of such certificates and other documentation or evidence as are expressly required by, and to do so if and when expressly required by the terms of, this Indenture, and to examine the same to determine substantial compliance as to form with the express requirements hereof.
(x) Neither the Trustee nor any Agent shall have any responsibility or liability for any actions taken or not taken by the Depositary. The Trustee shall have no responsibility or obligation to any beneficial owner of a Global Note, a member of, or a participant in the Depositary or other Person with respect to the accuracy of the records of the Depositary or its nominee or of any participant or member thereof, with respect to any ownership interest in the Notes or with respect to the delivery to any participant, member, beneficial owner or other Person (other than the Depositary) of any notice (including any notice of redemption) or the payment of any amount, under or with respect to such Notes. All notices and communications to be given to the Holders and all payments to be made to Holders under the Notes shall be given or made only to or upon the order of the registered Holders (which shall be the Depositary or its nominee in the case of a Global Note). The rights of beneficial owners in any Global Note shall be exercised only through the Depositary subject to the applicable rules and procedures of the Depositary. The Trustee may rely and shall be fully protected in relying upon information furnished by the Depositary with respect to its members, participants and any beneficial owners. The Company, the Trustee and the Agents shall be entitled to deal with the Depositary in the case of Global Notes, and any nominee thereof, that is the registered holder of any Global Note for all purposes of this Indenture relating to such Global Note (including the payment of principal, premium, if any, and interest, and the giving of instructions or directions by or to the owner or holder of a beneficial ownership interest in such Global Note) as the sole holder of such Global Note. None of the Company, the Trustee or the Agents shall have any responsibility or liability for the records of any such depositary, including records in respect of beneficial ownership interests in respect of any such Global Note, for any transactions between the Depositary and any Participant or between or among the Depositary, any such Participant and/or any holder or owner of a beneficial interest in such Global Note, or for any transfers of beneficial interests in any such Global Note.
Section 2.07 Replacement Notes. If either (x) any mutilated Note is surrendered to the Trustee, the Registrar or the Company or (y) if the Company and the Trustee receive evidence to their satisfaction of the ownership and destruction, loss or theft of any Note, then the Company shall issue and the Trustee, upon receipt of an Authentication Order, shall authenticate a replacement Note. An indemnity bond must be supplied by the Holder that is sufficient in the judgment of the Trustee to protect the Trustee and of the Company to protect the Company, the Trustee, any Agent and any authenticating agent from any loss that any of them may suffer if a Note is replaced. The Company and the Trustee shall charge the Holder for their expenses in replacing a Note.
Every replacement Note is a contractual obligation of the Company and shall be entitled to all of the benefits of this Indenture equally and proportionately with all other Notes duly issued hereunder.
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Section 2.08 Outstanding Notes. The Notes outstanding at any time are all the Notes authenticated by the Trustee except for those cancelled by it, those delivered to it for cancellation, those reductions in the interest in a Global Note effected by the Trustee in accordance with the provisions hereof and those described in this Section 2.08 as not outstanding. Except as set forth in Section 2.09 hereof, a Note does not cease to be outstanding because any of the Company, a Guarantor or an Affiliate of the Company or a Guarantor holds the Note.
If a Note is replaced pursuant to Section 2.07 hereof, it ceases to be outstanding unless the Trustee receives proof satisfactory to it that the replaced Note is held by a protected purchaser (as defined in Section 8-303 of the Uniform Commercial Code).
If the principal amount of any Note is considered paid under Section 4.01 hereof, it ceases to be outstanding and interest on it ceases to accrue.
If the Paying Agent (other than the Company or a Guarantor or an Affiliate of the Company or a Guarantor) holds, on a Redemption Date or maturity date, money sufficient to pay Notes (or portions thereof) payable on that date, then on and after that date such Notes (or portions thereof) shall be deemed to be no longer outstanding and shall cease to accrue interest.
Section 2.09 Treasury Notes. In determining whether the Holders of the required principal amount of Notes have concurred in any direction, waiver or consent, Notes owned by the Company or a Guarantor or by any Affiliate of the Company or a Guarantor shall be considered as though not outstanding, except that for the purposes of determining whether the Trustee shall be protected in relying on any such direction, waiver or consent, only Notes that a Responsible Officer of the Trustee actually knows are so owned shall be so disregarded. Notes so owned which have been pledged in good faith shall not be disregarded if the pledgee establishes to the satisfaction of the Trustee the pledgee’s right to deliver any such direction, waiver or consent with respect to such pledged Notes and that the pledgee is not the Company or a Guarantor or any Affiliate of the Company or a Guarantor.
Section 2.10 Temporary Notes. Until certificates representing Notes are ready for delivery, the Company may prepare and the Trustee, upon receipt of an Authentication Order, shall authenticate temporary Notes. Temporary Notes shall be substantially in the form of certificated Notes but may have variations that the Company consider appropriate for temporary Notes and as shall be reasonably acceptable to the Trustee. Without unreasonable delay, the Company shall prepare and the Trustee shall authenticate definitive Notes in exchange for temporary Notes.
Holders and beneficial holders, as the case may be, of temporary Notes shall be entitled to all of the benefits accorded to Holders, or beneficial holders, respectively, of Notes under this Indenture.
Section 2.11 Cancellation. The Company at any time may deliver Notes to the Trustee for cancellation. The Registrar and Paying Agent shall forward to the Trustee any Notes surrendered to them for registration of transfer, exchange or payment. The Trustee or, at the direction of the Trustee, the Registrar or the Paying Agent and no one else shall cancel all Notes surrendered for registration of transfer, exchange, payment, replacement or cancellation and shall dispose of such cancelled Notes in accordance with its customary procedures (subject to the record retention requirement of the Exchange Act). Certification of the cancellation of all surrendered Notes shall be delivered to the Company at the Company’s written request. The Company may not issue new Notes to replace Notes that it has paid or that have been delivered to the Trustee for cancellation.
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Section 2.12 Defaulted Interest. If the Company defaults in a payment of interest on the Notes, it shall pay the defaulted interest in any lawful manner plus, to the extent lawful, interest payable on the defaulted interest, in each case at the rate provided in the Notes and in Section 4.01 hereof. The Company may pay the defaulted interest to the Persons who are Holders on a subsequent special record date; provided that no special record date shall be required with respect to default interest paid within the applicable grace period. The Company shall notify the Trustee in writing of the amount of defaulted interest proposed to be paid on each Note and the date of the proposed payment, and at the same time the Company shall deposit with the Trustee an amount of money equal to the aggregate amount proposed to be paid in respect of such defaulted interest or shall make arrangements satisfactory to the Trustee for such deposit prior to the date of the proposed payment, such money when deposited to be held in trust for the benefit of the Persons entitled to such defaulted interest as provided in this Section 2.12. The Company shall fix or cause to be fixed any such special record date and payment date; provided that no such special record date shall be less than 10 days prior to the related payment date for such defaulted interest. The Company shall promptly notify the Trustee of any such special record date. At least 15 days before any such special record date, the Company (or, upon the written request of the Company, the Trustee in the name and at the expense of the Company) shall mail or cause to be mailed, first-class postage prepaid, or otherwise deliver in accordance with the Applicable Procedures, to each Holder, with a copy to the Trustee, a notice at his or her address as it appears in the Note Register that states the special record date, the related payment date and the amount of such interest to be paid. The Trustee will have no duty whatsoever to determine whether any defaulted interest is payable or the amount thereof.
Subject to this Section 2.12 and for greater certainty, each Note delivered under this Indenture upon registration of transfer of or in exchange for or in lieu of any other Note shall carry the rights to interest accrued and unpaid, and to accrue, which were carried by such other Note.
Section 2.13 CUSIP/ISIN Numbers. The Company in issuing the Notes may use CUSIP and ISIN numbers (in each case, if then generally in use) and, if so, the Trustee shall use CUSIP and ISIN numbers in notices of redemption as a convenience to Holders; provided that any such notice may state that no representation is made as to the correctness of such numbers either as printed on the Notes or as contained in any notice of redemption and that reliance may be placed only on the other identification numbers printed on the Notes, and any such redemption shall not be affected by any defect in or omission of such numbers. The Company will as promptly as practicable notify the Trustee in writing of any change in the CUSIP and ISIN numbers.
ARTICLE III
REDEMPTION
Section 3.01 Notices to Trustee. If the Company elects to redeem the Notes pursuant to Section 3.07 hereof, it shall furnish to the Trustee, at least two Business Days (unless the Trustee agrees to a shorter period) before notice of redemption is required to be delivered to Holders pursuant to Section 3.03 hereof, an Officer’s Certificate setting forth (i) the paragraph or subparagraph of such Note and/or Section of this Indenture pursuant to which the redemption shall occur, (ii) the date of redemption, which will be selected by the Company in its discretion, subject to any limitations set forth herein (the “Redemption Date”), (iii) the principal amount of the Notes to be redeemed and (iv) the redemption price, if then ascertainable.
Section 3.02 Selection of Notes to Be Redeemed. If the Company is redeeming (pursuant to Section 3.07) or purchasing (pursuant to Section 3.09 or 4.10) less than all of the Notes issued under this Indenture at any time, the Trustee will, upon prior written request of the Company, select the Notes to be redeemed or purchased (a) if the Notes are listed on an exchange, in compliance with the requirements of such exchange or (b) if the Notes are not listed on an exchange, on a pro rata basis, and in the case of Global Notes, in accordance with the Applicable Procedures to the extent applicable. In the event of partial redemption by lot, the particular Notes to be redeemed shall be selected, unless otherwise provided herein, prior to the Redemption Date by the Trustee from the outstanding Notes not previously called for redemption.
The Trustee shall promptly notify the Company in writing of the Notes selected for redemption and, in the case of any Note selected for partial redemption, the principal amount thereof to be redeemed. No Notes of $2,000 or less can be redeemed or purchased in part, except that if all of the Notes of a Holder are to be redeemed, the entire outstanding amount of Notes held by such Holder shall be redeemed. Except as provided in the preceding sentence, provisions of this Indenture that apply to Notes called for redemption also apply to portions of Notes called for redemption.
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Section 3.03 Notice of Redemption. The Company shall deliver electronically, mail or cause to be mailed by first-class mail, postage prepaid (or in the case of Notes issued in global form, delivered electronically in accordance with Applicable Procedures), notices of redemption at least 10 days but not more than 60 days (except as set forth in Section 3.03(i)) before the Redemption Date to each Holder of Notes to be redeemed at such Holder’s registered address (or in the case of Notes issued in global form, in accordance with Applicable Procedures), except that redemption notices may be delivered or mailed more than 60 days prior to a Redemption Date if the notice is issued in connection with Section 3.03(i), Article VIII or Article XI hereof.
The notice shall identify the Notes to be redeemed and will state:
(a) the Redemption Date;
(b) the redemption price;
(c) if any Definitive Note is to be redeemed in part only, the portion of the principal amount of that Note that is to be redeemed and that, upon request, after the Redemption Date upon surrender of such Note, a new Note or Notes in principal amount equal to the unredeemed portion of the original Note representing the same indebtedness to the extent not redeemed will be issued in the name of the Holder upon cancellation of the original Note;
(d) the name and address of the Paying Agent;
(e) that Notes called for redemption must be surrendered to the Paying Agent to collect the redemption price;
(f) that, unless the Company defaults in making such redemption payment, interest on Notes called for redemption ceases to accrue on and after the Redemption Date;
(g) the paragraph or subparagraph of the Notes and/or section of this Indenture pursuant to which the Notes called for redemption are being redeemed;
(h) the CUSIP and ISIN number, if any, printed on the Notes being redeemed and that no representation is made as to the correctness or accuracy of any such CUSIP and ISIN number that is listed in such notice or printed on the Notes; and
(i) if such redemption is subject to satisfaction of one or more conditions precedent, a description of such conditions and, if applicable, will state that, in the Company’s discretion, the Redemption Date may be delayed until such time (including more than 60 days after the date the redemption notice was mailed or delivered, including by electronic transmission) as any or all such conditions are satisfied (or waived by the Company in its sole discretion), or that such redemption may not occur and such notice may be rescinded in the event that any or all such conditions are not satisfied (or waived by the Company in its sole discretion) by the Redemption Date, or by the Redemption Date so delayed, or such notice may be rescinded at any time in the Company’s discretion if in the good faith judgment of the Company any or all of such conditions will not be satisfied. The Company shall provide written notice of the delay of such date of redemption or the rescission of such notice of redemption to the Trustee no later than the date of redemption. Upon receipt of such notice of the delay of such date of redemption or the rescission of such notice of redemption, such date of redemption shall be automatically delayed or such notice of redemption shall be automatically rescinded, as applicable, and the redemption of the Notes shall be automatically delayed or rescinded and cancelled, as applicable, as provided in such notice.
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At the Company’s request, the Trustee shall give the notice of redemption in the Company’s name and at its expense; provided that the Company shall have delivered to the Trustee, at least two Business Days before notice of redemption is required to be delivered, mailed or caused to be mailed to Holders pursuant to this Section 3.03 (unless a shorter notice shall be agreed to by the Trustee), an Officer’s Certificate requesting that the Trustee give such notice and setting forth the information to be stated in such notice as provided in the preceding paragraph.
The Company may redeem Notes pursuant to one or more of the Sections of this Indenture, and a single redemption notice may be delivered with respect to redemptions made pursuant to different Sections. Any such notice may provide that redemptions made pursuant to different Sections will have different Redemption Dates.
The Company may provide in such notice that payment of the redemption price and performance of the Company’s obligations with respect to such redemption may be performed by another Person. In no event will the Trustee be responsible for monitoring, or charged with knowledge of, the maximum aggregate amount of Notes eligible hereunder to be redeemed. Notes will remain outstanding until redeemed, notwithstanding that they have been called for redemption or are subject to a notice of redemption.
Section 3.04 Effect of Notice of Redemption. Once notice of redemption is delivered in accordance with Section 3.03 hereof, subject to satisfaction of any conditions precedent relating thereto specified in the applicable notice of redemption, Notes called for redemption become irrevocably due and payable on the Redemption Date at the redemption price, except as set forth in Section 3.03(i). The notice, if delivered, mailed or caused to be mailed in a manner herein provided, shall be conclusively presumed to have been given, whether or not the Holder receives such notice. In any case, failure to deliver such notice or any defect in the notice to the Holder of any Note designated for redemption in whole or in part shall not affect the validity of the proceedings for the redemption of any other Note. Subject to Section 3.05 hereof, on and after the Redemption Date or the date of purchase, interest shall cease to accrue on Notes or portions of Notes called for redemption or purchase.
Section 3.05 Deposit of Redemption Price.
(a) Prior to 11:00 a.m. (New York City time) on the Redemption Date, the Company shall deposit with the Trustee or with the Paying Agent money sufficient to pay the redemption price of and accrued and unpaid interest on all Notes to be redeemed on that Redemption Date. The Trustee or the Paying Agent shall promptly return to the Company any money deposited with the Trustee or the Paying Agent by the Company in excess of the amounts necessary to pay the redemption price of, and accrued and unpaid interest on, all Notes to be redeemed.
(b) If the Company complies with Section 3.05(a), on and after the Redemption Date, interest shall cease to accrue on the Notes or the portions of Notes called for redemption. If a Note is redeemed on or after a Record Date but on or prior to the related Interest Payment Date, then any accrued and unpaid interest to the Redemption Date shall be paid on the Redemption Date to the Person in whose name such Note was registered at the close of business on such Record Date. If any Note called for redemption shall not be so paid upon surrender for redemption because of the failure of the Company to comply with the preceding paragraph, interest shall be paid on the unpaid principal, from the Redemption Date until such principal is paid, and to the extent lawful on any interest accrued to the Redemption Date not paid on such unpaid principal, in each case at the rate provided in the Notes and in Section 4.01 hereof.
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Section 3.06 Notes Redeemed in Part. Upon surrender of a Definitive Note that is redeemed in part, upon request the Company shall issue and the Trustee shall authenticate for the Holder at the expense of the Company a new Note equal in principal amount to the unredeemed portion of the Note surrendered representing the same indebtedness to the extent not redeemed; provided that each new Note will be in a principal amount of $2,000 and any integral multiple of $1,000 in excess of $2,000. It is understood that, notwithstanding anything in this Indenture to the contrary, only an Authentication Order and not an Opinion of Counsel or Officer’s Certificate is required for the Trustee to authenticate such new Note.
Section 3.07 Optional Redemption.
(a) At any time prior to October 15, 2026 the Company may, at its option and on one or more occasions redeem all or a part of the Notes, upon notice as described under Section 3.03 at a redemption price (as calculated by the Company) equal to the sum of (1) 100.000% of the principal amount of the Notes redeemed, plus (2) the Applicable Premium, plus (3) accrued and unpaid interest, if any, to, but excluding, the Redemption Date, subject to the right of Holders of record on the relevant Record Date to receive interest due on the relevant Interest Payment Date.
(b) At any time prior to October 15, 2026, the Company may, at its option and on one or more occasions, redeem up to 40% of the aggregate principal amount of Notes and Additional Notes issued under this Indenture, with an amount equal to or less than the net cash proceeds from one or more Equity Offerings to the extent such net cash proceeds are received by, or contributed to the Company, at a redemption price equal to 107.500% of the aggregate principal amount thereof plus accrued and unpaid interest thereon, if any, to, but excluding, the Redemption Date, subject to the right of Holders of record on the relevant Record Date to receive interest due on the relevant Interest Payment Date; provided that (a) at least 60% of the sum of the aggregate principal amount of Notes originally issued under this Indenture on the Issue Date remains outstanding immediately after the occurrence of each such redemption (unless all such Notes are redeemed substantially concurrently) and (b) each such redemption occurs within 180 days of the date of closing of the applicable Equity Offering or contribution.
(c) In connection with any Change of Control Offer, Alternate Offer or other tender offer to purchase all of the Notes, if Holders of not less than 90.0% of the aggregate principal amount of the then outstanding Notes validly tender and do not validly withdraw such Notes in such Change of Control Offer, Alternate Offer or other tender offer and the Company purchases, or any third party making such Change of Control Offer, Alternate Offer or other tender offer in lieu of the Company purchases, all of the Notes validly tendered and not validly withdrawn by such Holders, the Company or such third party will have the right upon not less than 10 days’ nor more than 60 days’ prior notice, given not more than 60 days following such purchase date, to redeem all Notes that remain outstanding following such purchase at a price equal to the price offered to each other Holder in such Change of Control Offer, Alternate Offer or other tender offer , plus, to the extent not included in the Change of Control Offer, Alternate Offer or other tender offer payment, accrued and unpaid interest, if any, thereon, to, but excluding, the Redemption Date (subject to the right of the Holders of record on the relevant Record Date to receive interest due on an Interest Payment Date that is on or prior to the Redemption Date).
(d) Except pursuant to clause (a), (b) or (c) of this Section 3.07, the Notes will not be redeemable at the Company’s option prior to October 15, 2026.
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(e) On and after October 15, 2026, the Company may, at its option and on one or more occasions redeem the Notes, in whole or in part, upon notice in accordance with Section 3.03, at the redemption prices (expressed as percentages of principal amount of the Notes to be redeemed) set forth below, plus accrued and unpaid interest, if any, to, but excluding, the Redemption Date, subject to the right of Holders of record on the relevant Record Date to receive interest due on the relevant Interest Payment Date, if redeemed during the twelve-month period beginning on October 15 of the years indicated below:
| Year | Percentage | |||
| 2026 | 103.750 | % | ||
| 2027 | 101.875 | % | ||
| 2028 and thereafter | 100.000 | % | ||
(f) Any redemption pursuant to this Section 3.07 shall be made pursuant to Sections 3.01 through 3.06.
(g) In addition to any redemption pursuant to this Section 3.07, the Company or its Affiliates may at any time and from time to time acquire Notes by means other than a redemption, whether by tender offer, in the open market, negotiated transaction or otherwise.
Section 3.08 Mandatory Redemption. The Company will not be required to make any mandatory redemption or sinking fund payments with respect to the Notes.
Section 3.09 Offers to Repurchase by Application of Excess Proceeds.
(a) In the event that, pursuant to Section 4.10 hereof, the Company shall be required to commence an Asset Sale Offer, it shall follow the procedures specified below.
(b) The Asset Sale Offer shall remain open for a period of 20 Business Days following its commencement and no longer, except to the extent that a longer period is required by applicable law (the “Offer Period”). No later than five Business Days after the termination of the Offer Period (the “Purchase Date”), the Company shall apply all Excess Proceeds (the “Offer Amount”) to the purchase of Notes and, if required, Pari Passu Indebtedness (on a pro rata basis, if applicable), or, if less than the Offer Amount has been tendered, all Notes and Pari Passu Indebtedness tendered in response to the Asset Sale Offer. Payment for any Notes so purchased shall be made in the same manner as interest payments are made.
(c) If the Purchase Date is on or after a Record Date and on or before the related Interest Payment Date, any accrued and unpaid interest, up to but excluding the Purchase Date, shall be paid on the Purchase Date to the Person in whose name a Note is registered at the close of business on such Record Date, and no additional interest shall be payable to Holders who tender Notes pursuant to the Asset Sale Offer.
(d) Upon the commencement of an Asset Sale Offer, the Company shall deliver electronically or send, by first-class mail, postage prepaid (or, in the case Notes issued in global form, delivered electronically in accordance with Applicable Procedures), a notice to each of the Holders, with a copy to the Trustee. The notice shall contain all instructions and materials necessary to enable such Holders to tender Notes pursuant to the Asset Sale Offer. The Asset Sale Offer shall be made to all Holders and holders of such Pari Passu Indebtedness. The notice, which shall govern the terms of the Asset Sale Offer, shall state:
(i) that the Asset Sale Offer is being made pursuant to this Section 3.09 and Section 4.10 hereof and the length of time the Asset Sale Offer shall remain open;
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(ii) the Offer Amount, the purchase price and the Purchase Date;
(iii) that any Note not tendered or accepted for payment shall continue to accrue interest;
(iv) that, unless the Company defaults in making such payment, any Note accepted for payment pursuant to the Asset Sale Offer shall cease to accrue interest on and after the Purchase Date;
(v) that any Holder electing to have less than all of the aggregate principal amount of its Notes purchased pursuant to an Asset Sale Offer may elect to have Notes purchased in an amount not less than $2,000 and integral multiples of $1,000 in excess thereof;
(vi) that Holders electing to have a Note purchased pursuant to any Asset Sale Offer shall be required to surrender the Note, with the form entitled “Option of Holder to Elect Purchase” attached to the Note completed, or transfer such Note by book-entry transfer, to the Company, the Depositary, if appointed by the Company, or a Paying Agent at the address specified in the notice at least two Business Days before the Purchase Date;
(vii) that Holders shall be entitled to withdraw their election if the Company, the Depositary or the Paying Agent, as the case may be, receives, not later than the expiration of the Offer Period, a facsimile transmission or letter setting forth the name of the Holder, the principal amount of the Note the Holder delivered for purchase and a statement that such Holder is withdrawing its election to have such Note purchased;
(viii) that, if the aggregate principal amount of Notes and/or the Pari Passu Indebtedness surrendered by the holders thereof exceeds the Offer Amount, the Trustee, in accordance with the Applicable Procedures, will select the Notes to be purchased in accordance with Section 3.02 and the Company will select such Pari Passu Indebtedness to be purchased pursuant to the terms of such Pari Passu Indebtedness; provided that as between the Notes and any Pari Passu Indebtedness, such purchases will be made on a pro rata basis based on the accreted value or principal amount of the Notes or such Pari Passu Indebtedness tendered with adjustments as necessary so that no Notes or Pari Passu Indebtedness will be repurchased in part in an unauthorized denomination; and
(ix) that Holders whose certificated Notes were purchased only in part shall be issued new Notes equal in principal amount to the unpurchased portion of the Notes surrendered (or transferred by book-entry transfer) representing the same indebtedness to the extent not repurchased.
(e) On or before the Purchase Date, the Company shall, to the extent lawful, (1) accept for payment, on a pro rata basis as described in clause (d)(viii) of this Section 3.09, the Offer Amount of Notes or portions thereof validly tendered pursuant to the Asset Sale Offer, or if less than the Offer Amount has been tendered, all Notes tendered and (2) deliver or cause to be delivered to the Trustee the Notes properly accepted, together with an Officer’s Certificate stating the aggregate principal amount of Notes or portions thereof so tendered and not validly withdrawn.
(f) The Company, the Depositary or the Paying Agent, as the case may be, shall promptly mail or deliver to each tendering Holder an amount equal to the purchase price of the Notes properly tendered by such Holder and accepted by the Company for purchase, and the Company shall promptly issue a new Note, and the Trustee, upon receipt of an Authentication Order, shall authenticate and mail or deliver (or cause to be transferred by book-entry) such new Note to such Holder (it being understood that, notwithstanding anything in this Indenture to the contrary, no Opinion of Counsel or Officer’s Certificate is required for the Trustee to authenticate and mail or deliver such new Note) in a principal amount equal to any unpurchased portion of the Note surrendered representing the same indebtedness to the extent not repurchased. Any Note not so accepted shall be promptly mailed or delivered by the Company to the Holder thereof. The Company shall publicly announce the results of the Asset Sale Offer on or as soon as practicable after the Purchase Date.
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(g) Prior to 11:00 a.m. (New York City time) on the Purchase Date, the Company shall deposit with the Trustee or with the Paying Agent money sufficient to pay the purchase price of and accrued and unpaid interest on all Notes to be purchased on that Purchase Date. The Trustee or the Paying Agent shall promptly return to the Company any money deposited with the Trustee or the Paying Agent by the Company in excess of the amounts necessary to pay the purchase price of, and accrued and unpaid interest on, all Notes to be redeemed.
ARTICLE IV
COVENANTS
Section 4.01 Payment of Notes. The Company shall pay or cause to be paid the principal of, premium, if any, and interest on the Notes on the dates and in the manner provided in the Notes and this Indenture. Principal, premium, if any, and interest shall be considered paid on the date due if the Paying Agent, if other than the Company or a Guarantor or an Affiliate of the Company or a Guarantor, holds as of 11:00 a.m. (New York City time) on the due date money deposited by the Company in immediately available funds and designated for and sufficient to pay all principal, premium, if any, and interest then due.
The Company shall pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue principal at the rate equal to the then applicable interest rate on the Notes to the extent lawful; the Company shall pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue installments of interest (without regard to any applicable grace period) at the same rate to the extent lawful.
Section 4.02 Maintenance of Office or Agency. The Company shall maintain the offices or agencies (which may be an office of the Trustee or an affiliate of the Trustee, Registrar or Transfer Agent) required under Section 2.03 hereof where Notes may be surrendered for registration of transfer or for exchange or presented for payment and where notices and demands to or upon the Company in respect of the Notes and this Indenture may be made. The Company shall give prompt written notice to the Trustee of the location, and any change in the location, of such office or agency. If at any time the Company shall fail to maintain any such required office or agency or shall fail to furnish the Trustee with the address thereof, such presentations, surrenders, notices and demands may be made at the Corporate Trust Office of the Trustee.
The Company may also from time to time designate one or more other offices or agencies where the Notes may be presented or surrendered for any or all such purposes and may from time to time rescind such designations; provided that no such designation or rescission shall in any manner relieve the Company of its obligation to maintain such offices or agencies as required by Section 2.03 hereof for such purposes. The Company shall give prompt written notice to the Trustee of any such designation or rescission and of any change in the location of any such other office or agency.
The Company hereby designates the Corporate Trust Office of the Trustee as one such office or agency of the Company in accordance with Section 2.03 hereof; provided the Corporate Trust Office of the Trustee shall not be an office or agency of the Company for the purpose of effecting service of legal process on the Company.
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Section 4.03 Reports and Other Information.
(a) So long as any Notes are outstanding, the Company will furnish to the Holders:
(i) within 120 days after the end of each fiscal year of the Company, commencing with the year ending December 31, 2024, all annual financial statements of the Company substantially in the form that would be required to be contained in a filing with the SEC on Form 10-K (but only to the extent similar information is included in the Offering Memorandum), in accordance with the requirements of such Form 10-K as of the Issue Date, if the Company was required to file such form, together with a report thereon by the Company’s independent accountants, and a “Management’s discussion and analysis of financial condition and results of operations,” and data and information relating to Hydrocarbon proved reserves that is substantially consistent with the tabular presentation thereof included in “Summary—Summary Reserve, Production and Operating Data” in the Offering Memorandum;
(ii) within 60 days after the end of each of the first three calendar quarters of each fiscal year, all quarterly financial statements of the Company substantially in the form that would be required to be contained in a filing with the SEC on Form 10-Q (but only to the extent similar information is included in the Offering Memorandum), in accordance with the requirements of such Form 10-Q as of the Issue Date, if the Company was required to file such form, provided that, for removal of doubt, such financial statements need not be reviewed or opined on by the Company’s auditor, and a “Management’s discussion and analysis of financial condition and results of operations”; and
(iii) within ten Business Days after the occurrence of any of the following events, a current report that contains a brief summary of the material terms, facts and/or circumstances involved to the extent not otherwise publicly disclosed: (i) entry by the Company or a Restricted Subsidiary into an agreement outside the ordinary course of business that is material to the Company and its Subsidiaries, taken as a whole, any material amendment thereto or termination of any such agreement other than in accordance with its terms (excluding, for the avoidance of doubt, employee compensatory or benefit agreements or plans), (ii) completion of a merger of the Company with or into another Person or a material acquisition or disposition of assets by the Company or a Restricted Subsidiary outside the ordinary course of business, (iii) the institution of, or material development under, bankruptcy proceedings under the U.S. Bankruptcy Code or similar proceedings under state or federal law with respect to the Company or a Significant Subsidiary, (iv) the Company’s incurring Indebtedness outside the ordinary course of business that is material to the Company (other than under a Debt Facility or other arrangement described in the Offering Memorandum or borrowings under a Debt Facility that has otherwise been disclosed previously), or a triggering event that causes the increase or acceleration of any such obligation and, in any such case, the consequences thereof are material to the Company or any Restricted Subsidiary.
(b) Notwithstanding the foregoing,
(i) no such reports referenced under clause (iii) above will be required to include as an exhibit or summary of terms of, any employment or compensatory arrangement agreement, plan or understanding between the Company (or any of its Subsidiaries or any Parent Company) and any director, manager or executive officer, of the Company (or any of its Subsidiaries or any Parent Company);
(ii) in no event will such reports be required to comply with Section 302, Section 404 or Section 906 of the Sarbanes-Oxley Act of 2002, or related Items 307 and 308 of Regulation S-K promulgated by the SEC;
(iii) in no event will such reports be required to comply with Item 302 of Regulation S-K promulgated by the SEC;
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(iv) in no event will such reports be required to comply with Article 13 or Rule 3-10 of Regulation S-X promulgated by the SEC or contain separate financial statements for the Company, the Guarantors or other Subsidiaries the shares of which may be pledged to secure the Notes or any Guarantee that would be required under (i) Rule 3-09 of Regulation S-X or (ii) Rule 3-16 of Regulation S-X, respectively, promulgated by the SEC;
(v) in no event will such reports be required to comply with Regulation G under the Exchange Act or Item 10(e) of Regulation S-K promulgated by the SEC with respect to any non-GAAP financial measures contained therein;
(vi) no such reports referenced under clause (iii) above will be required to be furnished if the Company determines in its good faith judgment that such event is not material to the Holders or the business, assets, operations or financial position of the Company and its Restricted Subsidiaries, taken as a whole;
(vii) in no event will such reports be required to comply with Item 601 of Regulation S-K promulgated by the SEC (with respect to exhibits) or, with respect to reports referenced in clause (iii) above, to include as an exhibit copies of any agreements, financial statements or other items that would be required to be filed as exhibits to a current report on Form 8-K;
(viii) in no event shall the Company be required to provide any climate-related disclosures related to SEC Release Nos. 33-11275 and 34-99678, including, without limitation, any information, reports or exhibits required by Article 14 of Regulation S-X or Item 1506 of Regulation S-K;
(ix) trade secrets and other confidential information that is competitively sensitive in the good faith and reasonable determination of the Company may be excluded from any disclosures;
(x) such information will not be required to contain any “segment reporting;” and
(xi) in no event will such reports be required to contain compensation or beneficial ownership information.
(c) The Company may satisfy its obligations in this Section 4.03 with respect to financial information relating to the Company by furnishing financial information relating to any Parent Company; provided that if and so long as such Parent Company has Independent Assets or Operations, the same is accompanied by consolidating information (which need not be audited) that explains in reasonable detail the differences between the information relating to such Parent Company, on the one hand, and the information relating to the Company and its Restricted Subsidiaries on a stand-alone basis, on the other hand.
(d) In addition, notwithstanding the foregoing, the financial statements, information, auditors’ reports and other documents and information required to be provided pursuant to Section 4.03(a) may be, rather than those of the Company, those of (a) any predecessor or successor of the Company, (b) any Wholly-Owned Restricted Subsidiary of the Company that, together with its consolidated Subsidiaries, constitutes substantially all of the assets of the Company and its consolidated Subsidiaries (“Qualified Reporting Subsidiary”) or (c) any Parent Company; provided that, if the financial information required to be provided pursuant to clauses (i) and (ii) of Section 4.03(a) relates to such Qualified Reporting Subsidiary of the Company or such Parent Company, such financial information will be accompanied by consolidating information (which need not be audited), which may be posted to the website of the Company or on Intralinks, SyndTrak, ClearPar or any comparable password protected online data system, that explains in reasonable detail (in the good faith judgment of the Company) the differences between the information relating to such Qualified Reporting Subsidiary or such Parent Company (as the case may be), on the one hand, and the information relating to the Company and its Subsidiaries on a standalone basis, on the other hand.
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(e) Notwithstanding anything herein to the contrary, the Company will not be deemed to have failed to comply with any of its obligations under this Section 4.03 for purposes of Section 6.01(c) hereof until 180 days after the date any report is due under this Section 4.03.
(f) The Company will make available such information and such reports to any Holder and, upon request, to any beneficial owner of the Notes, in each case by posting such information on its website, on Intralinks, SyndTrak, ClearPar or any comparable password protected online data system that will require a confidentiality acknowledgement, and will make such information readily available to any Holder, or any bona fide prospective investor in the Notes (which prospective investors will be limited to QIBs or non-U.S. persons that certify their status as such to the reasonable satisfaction of the Company) provided that the Company may in good faith deny access to any competitively-sensitive information otherwise to be provided pursuant to this paragraph to any such Holder or prospective investor that is a competitor of the Company and its Subsidiaries, or an affiliate of such a competitor (other than any affiliate that is a bona fide bank debt fund, distressed asset fund, hedge fund, mutual fund, insurance company, financial institution or investment vehicle engaged in the business of investing in, acquiring or trading commercial loans, bonds and similar extensions of credit in the ordinary course (and not organized primarily for the purpose of making equity investments)) to the extent that the Company determines in good faith that the provision of such information to such Person would be competitively harmful to the Company and its Subsidiaries; and provided further that such Holders or prospective investors will agree to (1) treat all such reports (and the information contained therein) and information as confidential, (2) not use such reports and the information contained therein for any purpose other than their investment or potential investment in the Notes and (3) not publicly disclose or distribute any such reports (and the information contained therein). The Trustee shall have no duty to monitor any Holder’s or bona fide prospective investor’s use of any reports, information or documents provided or made available to any such Holder or bona fide prospective investor.
(g) In addition, to the extent not satisfied by the reports required by this Section 4.03 or otherwise made publicly-available by the Company, the Company will furnish to Holders thereof and prospective investors in the Notes, upon their request, the information, if any, required to be delivered pursuant to Rule 144A(d)(4) (or any successor provision) under the Securities Act.
(h) The Company will be deemed to have furnished the reports in Section 4.03(a)(i), (ii) and (iii) if the Company or any Parent Company has filed the corresponding reports containing such information with the SEC via the EDGAR filing system (or any successor system).
(i) To the extent any information is not provided within the time periods specified in this Section 4.03 and such information is subsequently provided, the Company will be deemed to have satisfied its obligations with respect thereto at such time and any Default with respect thereto will be deemed to have been cured.
(j) The Company shall use its commercially reasonable efforts, consistent with its judgment as to what is prudent at the time, to participate in quarterly conference calls after the delivery of the information referred to in Section 4.03(a)(i) or (ii) above (which may be a single conference call together with investors and lenders holding other securities or Indebtedness of the Company and/or its Restricted Subsidiaries and/or any Parent Company of the Company) to discuss financial and operating results and related matters unless the Company reasonably determines that to do so would conflict with applicable securities laws. The Company shall issue a press release or otherwise provide notice of such conference call in the same manner in which information was delivered pursuant to Section 4.03(a)(i) and (ii) above which will provide the date and time of any such call and will direct Holders, prospective investors and securities analysts to contact the investor relations office of the Company to obtain access to the conference call.
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(k) It is understood that the Trustee shall have no duty or obligation whatsoever to (x) monitor or confirm, on a continuing basis or otherwise, the Company’s compliance with this Section 4.03, to determine whether or not such financial statements, information, documents or reports have been posted on any website or online data system or filed with the SEC via the EDGAR filing system (or any successor system) or to participate in any conference calls or (y) collect any such reports, information or documents from any website or online data system or filed with the SEC via the EDGAR filing system (or any successor system). The posting or delivery of any such financial statements, information, documents or reports to the Trustee is for informational purposes only and the Trustee’s receipt of such shall not constitute actual or constructive knowledge or notice of any information contained therein or determinable from information contained therein, including the Company’s compliance with any of the covenants under this Indenture (as to which the Trustee is entitled to rely exclusively on an Officer’s Certificate).
(l) During registration with respect to a Qualified IPO, the Company or other Person that may provide the information required by this Section 4.03 will not be required to disclose any information or take any actions that, in the view of the Company, would violate the applicable securities laws or the SEC’s “gun jumping” rules or otherwise have an adverse effect on the Qualified IPO.
Section 4.04 Compliance Certificate.
(a) The Company shall deliver to the Trustee, within 120 days after the end of each fiscal year ending after the Issue Date, a certificate from the principal executive officer, principal financial officer or principal accounting officer stating that a review of the activities of the Company and its Restricted Subsidiaries during the preceding fiscal year has been made under the supervision of the signing Officer with a view to determining whether the Company has kept, observed, performed and fulfilled its obligations under this Indenture, and further stating, as to such Officer signing such certificate, that to the best of his or her knowledge the Company has kept, observed, performed and fulfilled each and every condition and covenant contained in this Indenture during such fiscal year and is not in Default in the performance or observance of any of the terms, provisions, covenants and conditions of this Indenture (or, if a Default shall have occurred, describing all such Defaults of which he or she may have knowledge and what action the Company is taking or proposes to take with respect thereto).
(b) When any Default or Event of Default has occurred and is continuing under this Indenture, the Company shall promptly (which shall be no more than ten (10) days after becoming aware of such Default or Event of Default) deliver to the Trustee by registered or certified mail or by electronic (in “.pdf” format) or facsimile transmission an Officer’s Certificate specifying such Default or Event of Default, its status and what actions the Company proposes to take with respect thereto.
Section 4.05 Taxes. The Company shall pay or discharge, and shall cause each of its Restricted Subsidiaries to pay or discharge, prior to delinquency, all material taxes, lawful assessments, and governmental levies except such as are contested in good faith and by appropriate actions or where the failure to effect such payment or discharge is not adverse in any material respect to the Holders.
Section 4.06 Stay, Extension and Usury Laws. The Company and each of the Guarantors covenant (to the extent that they may lawfully do so) that they shall not at any time insist upon, plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay, extension or usury law wherever enacted, now or at any time hereafter in force, that may affect the covenants or the performance of this Indenture; and the Company and each of the Guarantors (to the extent that they may lawfully do so) hereby expressly waive all benefit or advantage of any such law, and covenant (to the extent that they may lawfully do so) that they shall not, by resort to any such law, hinder, delay or impede the execution of any power herein granted to the Trustee, but shall suffer and permit the execution of every such power as though no such law has been enacted.
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Section 4.07 Limitation on Restricted Payments.
(a) The Company will not, and will not permit any of its Restricted Subsidiaries, directly or indirectly, to:
(i) declare or pay any dividend or make any payment or distribution on account of the Company’s or any Restricted Subsidiary’s Equity Interests (in each case, solely in such Person’s capacity as holder of such Equity Interests), including any dividend or distribution payable in connection with any merger or consolidation, other than:
(A) dividends, payments or distributions payable solely in Equity Interests (other than Disqualified Stock) of the Company or a Parent Company or in options, warrants or other rights to purchase such Equity Interests; or
(B) dividends, payments or distributions by a Restricted Subsidiary so long as, in the case of any dividend, payment or distribution payable on or in respect of any class or series of securities issued by a Restricted Subsidiary other than a Wholly-Owned Subsidiary, the Company or a Restricted Subsidiary receives at least its pro rata share of such dividend, payment or distribution in accordance with its Equity Interests in such class or series of securities or such other amount to which it is entitled pursuant to the terms of such Equity Interest;
(ii) purchase, redeem, defease or otherwise acquire or retire for value any Equity Interests of the Company or any Parent Company, including in connection with any merger or consolidation, in each case held by Persons other than the Company or a Restricted Subsidiary;
(iii) make any principal payment on, or redeem, repurchase, defease or otherwise acquire or retire for value, in each case, prior to any scheduled repayment, sinking fund payment or final maturity, any Subordinated Indebtedness (excluding any intercompany Indebtedness between or among the Company and any of its Restricted Subsidiaries), except (A) payments of interest or (B) payments of principal at or within one year prior to the stated maturity thereof; or
(iv) make any Restricted Investment;
(all such payments and other actions set forth in clauses Section 4.07(a)(i) through (iv) above being collectively referred to as “Restricted Payments”), unless, at the time of and immediately after giving effect to such Restricted Payment:
(1) no Payment Default or Event of Default will have occurred and be continuing or would occur as a consequence thereof;
(2) immediately after giving effect to any such Restricted Payment on a pro forma basis, the Company could incur $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio Test; and
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(3) such Restricted Payment, together with the aggregate amount of all other Restricted Payments (including the fair market value of any non-cash amount) made by the Company and its Restricted Subsidiaries after the Issue Date (excluding Restricted Payments permitted by Section 4.07(b), other than Section 4.07(b)(i)), is less than the sum of (without duplication):
(A) 50% of the Consolidated Net Income of the Company for the period (taken as one accounting period) from July 1, 2024 to the end of the most recently ended fiscal quarter for which internal financial statements are available (as determined in good faith by the Company) preceding such Restricted Payment, or, in the case such Consolidated Net Income for such period is a deficit, minus 100% of such deficit; plus
(B) 100% of the aggregate net cash proceeds and the fair market value of marketable securities or other property received by the Company and its Restricted Subsidiaries since the Issue Date (other than net cash proceeds to the extent such net cash proceeds have been used to incur Indebtedness or issue Disqualified Stock or Preferred Stock pursuant to Section 4.09(b)(xii)(A)) from the issue or sale of:
(i) (A) Equity Interests of the Company, including Treasury Capital Stock, but excluding cash proceeds and the fair market value of marketable securities or other property received from the sale of Equity Interests to any future, present or former employees, directors, officers, members of management, consultants or independent contractors of the Company, its Subsidiaries or any Parent Company after the Issue Date to the extent such amounts have been applied to Restricted Payments made in accordance with Section 4.07(b)(iv); and (B) Equity Interests of Parent Companies, to the extent the proceeds of any such issuance or consideration for any such sale are contributed to the Company (excluding contributions to the extent such amounts have been applied to Restricted Payments made in accordance with Section 4.07(b)(iv)); or
(ii) Indebtedness of the Company or any Restricted Subsidiary, that has been converted into or exchanged for Equity Interests of the Company or any Parent Company;
provided that this clause (3)(B) will not include the proceeds from (W) Refunding Capital Stock applied in accordance with Section 4.07(b)(ii), (X) Equity Interests or convertible debt securities of the Company sold to a Restricted Subsidiary, (Y) Disqualified Stock or debt securities or Indebtedness that have been converted into Disqualified Stock, or (Z) Excluded Contributions; plus
(C) 100% of the aggregate amount of cash, Cash Equivalents and the fair market value of marketable securities or other property contributed to the capital of the Company (other than in the form of Disqualified Stock) since the Issue Date (including the fair market value of any Indebtedness contributed to the Company or its Restricted Subsidiaries for cancellation, Equity Interests of Persons, other than the Company and its Restricted Subsidiaries, engaged primarily in the Oil and Gas Business or assets used or useful in the Oil and Gas Business) or that becomes part of the capital of the Company through consolidation or merger following the Issue Date, in each case not involving cash consideration payable by the Company (other than (X) cash, Cash Equivalents and marketable securities or other property that are contributed by a Restricted Subsidiary, (Y) net cash proceeds to the extent such net cash proceeds have been used to incur Indebtedness or issue Disqualified Stock or Preferred Stock pursuant to Section 4.09(b)(xii)(A) or (Z) Excluded Contributions); plus
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(D) 100% of the aggregate amount received in cash and the fair market value of marketable securities or other property received by the Company or a Restricted Subsidiary by means of:
(i) the sale or other disposition (other than to the Company or a Restricted Subsidiary) of, or other returns on Investments from, Restricted Investments made by the Company or its Restricted Subsidiaries (including cash distributions and cash interest received in respect of such Restricted Investments) and repurchases and redemptions of such Restricted Investments from the Company or its Restricted Subsidiaries (other than by the Company or a Restricted Subsidiary) and repayments of loans or advances, and releases of guarantees, which constitute Restricted Investments made by the Company or its Restricted Subsidiaries, in each case after the Issue Date (excluding any Excluded Contributions made pursuant to clause (2) of the definition thereof); or
(ii) the sale (other than to the Company or a Restricted Subsidiary) of Equity Interests of an Unrestricted Subsidiary or a distribution from an Unrestricted Subsidiary (other than, in each case, to the extent the Investment in such Unrestricted Subsidiary constituted a Permitted Investment, but including such cash or fair market value to the extent exceeding the amount of such Permitted Investment) or a dividend from an Unrestricted Subsidiary after the Issue Date (excluding any Excluded Contribution made pursuant to clause (2) of the definition thereof); or
(iii) any returns, profits, distributions and similar amounts received on account of any Permitted Investment subject to a dollar-denominated or ratio-based basket (to the extent in excess of the original amount of such Investment); plus
(E) in the case of the redesignation of an Unrestricted Subsidiary as a Restricted Subsidiary or the merger or consolidation of an Unrestricted Subsidiary into the Company or a Restricted Subsidiary or the transfer of all or substantially all of the assets of an Unrestricted Subsidiary to the Company or a Restricted Subsidiary after the Issue Date, the fair market value of the Investment in such Unrestricted Subsidiary (or the assets transferred) at the time of the redesignation of such Unrestricted Subsidiary as a Restricted Subsidiary or at the time of such merger, consolidation or transfer of assets, other than to the extent the Investment in such Unrestricted Subsidiary constituted a Permitted Investment, but, to the extent exceeding the amount of such Permitted Investment, including such excess amounts of cash or fair market value.
(b) Section 4.07(a) will not prohibit:
(i) the payment of any dividend or other distribution or the consummation of any irrevocable redemption within 60 days after the date of declaration of the dividend or other distribution or giving of the redemption notice, as the case may be, if at the date of declaration or notice, the dividend or other distribution or redemption payment would have complied with the provisions of this Indenture;
(ii) (A) the redemption, repurchase, defeasance, discharge, retirement or other acquisition of (i) any Equity Interests of the Company or any Restricted Subsidiary or any Parent Company, including any accrued and unpaid dividends thereon (“Treasury Capital Stock”), or (ii) Subordinated Indebtedness, in each case, made (x) in exchange for, or out of the proceeds of, a sale or issuance (other than to a Restricted Subsidiary) of Equity Interests of the Company or any Parent Company (in the case of proceeds, to the extent any such proceeds therefrom are contributed to the Company), in each case, other than Disqualified Stock (“Refunding Capital Stock”) and (y) within 120 days of such sale or issuance (provided that the amount of any such net cash proceeds that are utilized for any such Restricted Payment will not be considered to be net cash proceeds from an Equity Offering for purposes of Section 3.07) and (b) the declaration and payment of dividends on Treasury Capital Stock out of the proceeds of a sale or issuance (other than to a Restricted Subsidiary of the Company or to an employee stock ownership plan or any trust established by the Company or any Restricted Subsidiary) of Refunding Capital Stock made within 120 days of such sale or issuance;
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(iii) the principal payment on, defeasance, redemption, repurchase, exchange or other acquisition or retirement of (A) Subordinated Indebtedness of the Company or a Guarantor made (i) by exchange for, or out of the net cash proceeds of the sale, issuance or incurrence of, new Subordinated Indebtedness of the Company or a Guarantor or Disqualified Stock of the Company or a Guarantor and (ii) within 120 days of such sale, issuance or incurrence, (B) Disqualified Stock of the Company or a Guarantor made by exchange for, or out of the proceeds of the sale, issuance or incurrence of, Disqualified Stock or Subordinated Indebtedness of the Company or a Guarantor, made within 120 days of such sale, issuance or incurrence, (C) Preferred Stock of a Restricted Subsidiary that is not a Guarantor made by exchange for, or out of the proceeds of the sale or issuance of, Preferred Stock of a Restricted Subsidiary that is not a Guarantor made within 120 days of such sale or issuance that, in each case, is incurred as Refinancing Indebtedness or issued, as applicable, in compliance with Section 4.09;
(iv) so long as no Payment Default or Event of Default has occurred and is continuing, the repurchase, redemption or other acquisition or retirement for value of any Equity Interests of the Company, any Restricted Subsidiary of the Company or any Parent Company held by any current or former officer, director or employee of the Company or any of its Restricted Subsidiaries or such Parent Company pursuant to any equity subscription agreement, stock option agreement, shareholders’ agreement, compensation agreement or arrangement or similar agreement; provided that the aggregate price paid for all such repurchased, redeemed, acquired or retired Equity Interests may not exceed $10.0 million in any calendar year (with any portion of such $10.0 million amount that is unused in any calendar year to be carried forward to successive calendar years and added to such amount);
(v) so long as no Payment Default or Event of Default has occurred and is continuing or would be caused thereby, the declaration and payment of dividends or distributions to holders of any class or series of Disqualified Stock or Designated Preferred Stock of the Company or any Restricted Subsidiary or any class or series of Preferred Stock of any Restricted Subsidiary issued in accordance with Section 4.09 to the extent such dividends or distributions are included in the definition of “Fixed Charges”;
(vi) (A) payments made or expected to be made by the Company or any Restricted Subsidiary in respect of withholding or similar taxes payable by any future, present or former employee, director, officer, member of management, consultant or independent contractor of the Company or any Restricted Subsidiary or any Parent Company, (B) any repurchases or withholdings of Equity Interests in connection with the exercise of stock options, warrants or similar rights if such Equity Interests represent a portion of the exercise price of, or withholding obligations with respect to, such options, warrants or similar rights or required withholding or similar taxes and (C) loans or advances to officers, directors, employees, managers, consultants and independent contractors of the Company, or any Parent Company or any Restricted Subsidiary of the Company in connection with such Person’s purchase of Equity Interests of the Company or any Parent Company; provided that no cash is actually advanced pursuant to this clause (C) other than to pay taxes due in connection with such purchase, unless immediately repaid;
(vii) the declaration and payment of dividends on the Company’s common equity (or the payment of dividends to any Parent Company to fund a payment of dividends on such Parent Company’s common equity), following the first public offering of the Company’s common equity or the common equity of any Parent Company after the Issue Date, in an amount not to exceed 6.0% per annum of the net cash proceeds received by or contributed to the Company in or from any such public offering, other than public offerings with respect to the Company’s or such Parent Company’s common equity registered on Form S-4 or Form S-8;
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(viii) so long as no Payment Default or Event of Default has occurred and is continuing or would be caused thereby, other Restricted Payments in an aggregate amount not to exceed the greater of (a) $150.0 million and (b) 3.0% of Adjusted Consolidated Net Tangible Assets at the time of such Restricted Payment;
(ix) Restricted Payments that are made (A) in an amount that does not exceed the aggregate amount of Excluded Contributions received since the Issue Date or (B) without duplication with clause (A), in an amount equal to the Net Proceeds from an Asset Sale in respect of property or assets acquired after the Issue Date, if the acquisition of such property or assets was financed with Excluded Contributions received since the Issue Date;
(x) so long as no Payment Default or Event of Default has occurred and is continuing or would be caused thereby, (a) any Restricted Payments, so long as, after giving pro forma effect to the payment of any such Restricted Payment, the Consolidated Total Net Debt Ratio shall be no greater than 1.00 to 1.00 and (b) any Restricted Payments of up to 25.0% of the Company’s Consolidated EBITDAX for the most recently ended four full fiscal quarters for which internal financial statements are available, so long as, after giving pro forma effect to the payment of any such Restricted Payment, the Consolidated Total Net Debt Ratio shall be no greater than 1.25 to 1.00; provided that if this clause (x) is utilized to make a Restricted Investment, the amount deemed to be utilized under this clause (x) will be the amount of such Restricted Investment at any time outstanding (with the fair market value of such Investment being measured at the time made and without giving effect to subsequent changes in value, but subject to adjustment as set forth in the definition of “Investment”);
(xi) the repurchase, redemption, defeasance, acquisition or retirement for value of any Subordinated Indebtedness at a purchase price not greater than (i) 101% of the principal amount of such Subordinated Indebtedness in the event of a Change of Control Triggering Event or (ii) 100% of the principal amount of such Subordinated Indebtedness in the event of an Asset Sale, in each case, plus accrued and unpaid interest thereon, to the extent required by the terms of such Indebtedness, but only if: (i) at or prior to such repurchase, redemption, defeasance, acquisition or retirement, the Company (or a third person permitted by this Indenture) has made any required Change of Control Offer or Asset Sale Offer, as applicable, to purchase the Notes on the terms provided in this Indenture applicable to Change of Control Offers or Asset Sale Offers, respectively, and (ii) all Notes validly tendered and not validly withdrawn by Holders in any such Change of Control Offer or Asset Sale Offer, as applicable, have been repurchased, redeemed, acquired or retired for value;
(xii) Permitted Tax Distributions;
(xiii) the declaration and payment of dividends or distributions or other expenses or payments by the Company or a Restricted Subsidiary to, or the making of loans or advances to, the Company or any Parent Company in amounts required for any Parent Company to pay, in each case without duplication:
(A) franchise, excise and similar taxes and other fees and expenses required to maintain their respective corporate or other legal existence;
(B) for any taxable period (or portion thereof) for which the Company or any of its Restricted Subsidiaries are members of a consolidated, combined, unitary or similar income tax group for U.S. federal or applicable foreign, state or local income tax purposes of which a Parent Company is the common parent (a “Tax Group”) (i) to pay the portion of any U.S. federal, foreign, state or local income taxes (as applicable) of such Tax Group or such Parent Company for such taxable period that are attributable to the net taxable income of the Company and/or the applicable Restricted Subsidiaries (and, to the extent permitted below, the applicable Unrestricted Subsidiaries); provided that for each taxable period, (x) the amount of such payments made in respect of such taxable period in the aggregate will not exceed the amount that the Company and the applicable Restricted Subsidiaries (and, to the extent permitted below, the applicable Unrestricted Subsidiaries), as applicable, would have been required to pay in respect of such net taxable income as stand-alone taxpayers or a stand-alone Tax Group and (y) the amount of such payments made in respect of an Unrestricted Subsidiary will be permitted only to the extent that cash distributions were made by such Unrestricted Subsidiary to the Company or any Restricted Subsidiary for such purpose, plus (ii) such amounts as are needed to pay any amounts owed by a Parent Company or IPOCo, as applicable, under any tax receivable agreement as contemplated by the definition of “IPOCo Transactions”;
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(C) without duplication, salary, bonus, severance and other benefits payable to, and indemnities provided on behalf of, employees, directors, officers, members of management, consultants and independent contractors of any Parent Company and any payroll, social security or similar taxes thereof;
(D) general corporate or other operating, administrative, legal, insurance, compliance and overhead costs and expenses (including expenses relating to auditing and other accounting matters) of any Parent Company;
(E) reasonable and customary fees and expenses (including ongoing compliance costs and listing expenses) related to any equity or debt offering of a Parent Company (whether or not consummated);
(F) amounts that would be permitted to be paid directly by the Company or its Restricted Subsidiaries under Section 4.11(b) (other than clauses (ii)(A), (iii)(B), (v), (ix), (x), (xiii), and (xvi) thereof);
(G) interest or principal on Indebtedness, the proceeds of which have been contributed to the Company or any Restricted Subsidiary or that has been guaranteed by, or is otherwise considered Indebtedness of, the Company or any Restricted Subsidiary incurred in accordance with Section 4.09; and
(H) to finance Investments or other acquisitions or investments otherwise permitted to be made pursuant to this covenant if made by the Company; provided that (A) such Restricted Payment must be made within 120 days of the closing of such Investment, acquisition or investment, (B) such Parent Company must, promptly following the closing thereof, cause (1) all property acquired (whether assets or Equity Interests) to be contributed to the capital of the Company or one of its Restricted Subsidiaries or (2) the merger, consolidation, or sale of the Person formed or acquired into the Company or one of its Restricted Subsidiaries (to the extent not prohibited by Section 5.01) in order to consummate such Investment, acquisition or investment, (C) such Parent Company and its Affiliates (other than the Company or a Restricted Subsidiary) receives no consideration or other payment in connection with such transaction except to the extent the Company or a Restricted Subsidiary could have given such consideration or made such payment in compliance with this Indenture, (D) any property received by the Company may not increase amounts available for Restricted Payments pursuant to Section 4.07(a)(3) and (E) to the extent constituting an Investment, such Investment will be deemed to be made by the Company or such Restricted Subsidiary pursuant to another provision of this covenant or pursuant to the definition of “Permitted Investments”;
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(xiv) the distribution, by dividend or otherwise, or other transfer or disposition of shares of Capital Stock of, Equity Interests in, or Indebtedness owed to the Company or a Restricted Subsidiary by, Unrestricted Subsidiaries (or a Restricted Subsidiary that owns an Unrestricted Subsidiary; provided that such Restricted Subsidiary owns no assets other than the Equity Interests of one or more Unrestricted Subsidiaries) (other than Unrestricted Subsidiaries, substantially all the assets of which are cash and Cash Equivalents);
(xv) cash payments, or loans, advances, dividends or distributions to any Parent Company to make payments, in lieu of issuing fractional shares in connection with share dividends, share splits, reverse share splits, mergers, consolidations or other business combinations and in connection with the exercise of warrants, options or other securities convertible into or exchangeable for Equity Interests of the Company, any of its Restricted Subsidiaries or any Parent Company;
(xvi) payments and distributions to dissenting stockholders of the Company or any Restricted Subsidiary pursuant to applicable law, pursuant to or in connection with a consolidation, reorganization, merger or transfer of all or substantially all of the assets of the Company or any Restricted Subsidiary that complies with the terms of this Indenture or any other transaction that complies with the terms of this Indenture; and
(xvii) payments made in connection with the IPOCo Transactions, the Qualified IPO and the transactions relating thereto, and the payment of all reasonable and customary fees and expenses incurred in connection therewith or owed by the Company, a Parent Company or Restricted Subsidiaries of the Company to Affiliates, in each case to the extent permitted by Section 4.11.
(c) For purposes of determining compliance with this Section 4.07, in the event that any Restricted Payment or Investment (or a portion thereof) meets the criteria of more than one of the categories of Restricted Payments described in Section 4.07(a) or Section 4.07(b)(i) through (xvii) above and/or one or more of the clauses contained in the definition of “Permitted Investments,” the Company will, in its sole discretion, be entitled to divide or classify (or later divide, classify or reclassify), in whole or in part, such Restricted Payment or Investment (or any portion thereof) among Section 4.07(a) and/or 4.07(b)(i) through (xvii) and/or one or more clauses contained in the definition of “Permitted Investments,” in a manner that otherwise complies with this Section 4.07.
(d) The amount of all Restricted Payments (other than cash) will be the fair market value on the date the Restricted Payment is made, or at the Company’s election, the date a commitment is made to make such Restricted Payment, of the assets or securities proposed to be transferred or issued by the Company or any Restricted Subsidiary, as the case may be, pursuant to the Restricted Payment.
(e) As of the Issue Date, all of the Company’s Subsidiaries will be Restricted Subsidiaries. The Company will not permit any Unrestricted Subsidiary to become a Restricted Subsidiary except pursuant to the penultimate sentence of the definition of “Unrestricted Subsidiary.” For purposes of designating any Restricted Subsidiary as an Unrestricted Subsidiary, all outstanding Investments by the Company and its Restricted Subsidiaries (except to the extent repaid) in the Subsidiary so designated will be deemed to be Restricted Payments or Permitted Investments in an amount determined as set forth in the definition of “Investments.” Such designation will be permitted only if a Restricted Payment in such amount would be permitted at such time pursuant to this Section 4.07 or if an Investment would be permitted at such time, pursuant to the definition of “Permitted Investments”, and if such Subsidiary otherwise meets the definition of an Unrestricted Subsidiary. Unrestricted Subsidiaries will not be subject to any of the restrictive covenants set forth in this Indenture.
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Section 4.08 Dividend and Other Payment Restrictions Affecting Restricted Subsidiaries.
(a) The Company will not, and will not permit any Restricted Subsidiary that is not a Guarantor to, create or otherwise cause to exist or become effective any consensual encumbrance or consensual restriction on the ability of any such Restricted Subsidiary to:
(i) (A) pay dividends or make any other distributions to the Company or any Restricted Subsidiary that is a Guarantor on its Capital Stock or with respect to any other interest or participation in, or measured by, its profits, or
(B) pay any Indebtedness owed to the Company or to any Restricted Subsidiary that is a Guarantor;
(ii) make loans or advances to the Company or to any Restricted Subsidiary that is a Guarantor; or
(iii) sell, lease or transfer any of its properties or assets to the Company or to any Restricted Subsidiary that is a Guarantor;
provided that dividend or liquidation priority between or among classes or series of Capital Stock, and the subordination of any obligation (including the application of any remedy bars thereto) to any other obligation will not be deemed to constitute such an encumbrance or restriction.
(b) The restrictions in Section 4.08(a) above will not apply to encumbrances or restrictions existing under or by reason of:
(i) encumbrances or restrictions in effect on the Issue Date, including the Revolving Credit Facility and the related documentation and Hedging Obligations and the related documentation;
(ii) this Indenture, the Notes and the Guarantees thereof;
(iii) Purchase Money Obligations and Finance Lease Obligations that impose restrictions of the nature discussed in Section 4.08(a)(iii) on the property so acquired;
(iv) applicable law or any applicable rule, regulation or order;
(v) any agreement or other instrument of a Person, or relating to Indebtedness or Equity Interests of a Person, acquired by or merged or consolidated with and into the Company or any Restricted Subsidiary or an Unrestricted Subsidiary that is designated as a Restricted Subsidiary, or any other transaction entered into in connection with any such acquisition, merger or consolidation in existence at the time of such acquisition or at the time it merges or consolidates with or into the Company or any Restricted Subsidiary or an Unrestricted Subsidiary that is designated as a Restricted Subsidiary or assumed in connection with the acquisition of assets from such Person (but, in any such case, 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 so acquired and its Subsidiaries, or the property or assets of the Person so acquired or designated and its Subsidiaries or the property or assets so acquired or designated;
(vi) contracts or agreements for the sale or disposition of assets, including any restrictions with respect to a Subsidiary of the Company pursuant to an agreement that has been entered into for the sale or disposition of any of the Capital Stock or assets of such Subsidiary;
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(vii) Secured Indebtedness otherwise permitted to be incurred pursuant to Sections 4.09 and 4.12 that limits the right of the debtor to dispose of assets or incur Liens;
(viii) restrictions on cash or other deposits or net worth imposed by customers under contracts entered into in the ordinary course of business or consistent with industry practice or arising in connection with any Permitted Liens;
(ix) provisions in agreements governing Indebtedness, Disqualified Stock or Preferred Stock of Restricted Subsidiaries that are not Guarantors permitted to be incurred subsequent to the Issue Date pursuant to Section 4.09;
(x) provisions in joint venture agreements and other similar agreements (including equity holder agreements) relating to such joint venture or its members or entered into in the ordinary course of business;
(xi) customary provisions contained in leases, sub-leases, licenses, sub-licenses, Equity Interests or similar agreements, including with respect to intellectual property and other agreements;
(xii) restrictions or conditions contained in any trading, netting, operating, construction, service, supply, purchase, sale or other agreement to which the Company or any Restricted Subsidiary is a party entered into in the ordinary course of business or consistent with industry practice; provided that such agreement prohibits the encumbrance of solely the property or assets of the Company or such Restricted Subsidiary that are subject to such agreement, the payment rights arising thereunder or the proceeds thereof and does not extend to any other asset or property of the Company or such Restricted Subsidiary or the assets or property of another Restricted Subsidiary;
(xiii) customary provisions restricting subletting or assignment of any lease governing a leasehold interest of the Company or any Restricted Subsidiary;
(xiv) any customary encumbrances or restrictions imposed pursuant to any agreement of the type described in the definition of “Permitted Business Investment”;
(xv) customary provisions restricting assignment of any agreement;
(xvi) restrictions arising in connection with cash or other deposits permitted under Section 4.12;
(xvii) any other agreement or instrument governing any Indebtedness, Disqualified Stock, or Preferred Stock permitted to be incurred or issued by the Company or any Restricted Subsidiary pursuant to Section 4.09 entered into after the Issue Date that contains encumbrances and restrictions that either (i) are no more restrictive in any material respect, taken as a whole, with respect to the Company or any Restricted Subsidiary than (A) the restrictions contained in this Indenture or the Revolving Credit Facility as of the Issue Date or (B) those encumbrances and other restrictions that are in effect on the Issue Date with respect to the Company or that Restricted Subsidiary pursuant to agreements in effect on the Issue Date, (ii) are not materially more disadvantageous, taken as a whole, to the Holders than is customary in comparable financings for similarly situated issuers or (iii) will not materially impair the Company’s ability to make payments on the Notes when due, in each case in the good faith judgment of the Company;
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(xviii) (i) under terms of Indebtedness and Liens in respect of Indebtedness permitted to be incurred pursuant to Section 4.09(b)(iv) and any permitted refinancing in respect of the foregoing and (ii) agreements entered into in connection with a Sale and Lease-Back Transaction entered into in the ordinary course of business or consistent with industry practice, in each case which limitations are only applicable to the assets that are the subject of such agreements;
(xix) customary restrictions and conditions contained in documents relating to any Lien so long as (i) such Lien is a Permitted Lien 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 covenant;
(xx) any encumbrance or restriction with respect to a Restricted Subsidiary that was previously an Unrestricted Subsidiary which encumbrance or restriction exists pursuant to or by reason of an agreement that such Subsidiary is a party to or entered into before the date on which such Subsidiary became a Restricted Subsidiary; provided that such agreement was not entered into in anticipation of an Unrestricted Subsidiary becoming a Restricted Subsidiary and any such encumbrance or restriction does not extend to any assets or property of the Company or any other Restricted Subsidiary other than the assets and property of such Restricted Subsidiary;
(xxi) 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 (i) through (xx) of this Section 4.08(b); provided that such amendments, modifications, restatements, renewals, increases, supplements, refundings, replacements or refinancings are, in the good faith judgment of the Company, 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;
(xxii) any encumbrance or restriction existing under, by reason of or with respect to Refinancing Indebtedness; provided that the encumbrances and restrictions contained in the agreements governing that Refinancing Indebtedness are, in the good faith judgment of the Company, not materially more restrictive, taken as a whole, than those contained in the agreements governing the Indebtedness being refinanced; and
(xxiii) applicable law or any applicable rule, regulation or order in any jurisdiction where Indebtedness, Disqualified Stock or Preferred Stock of Foreign Subsidiaries permitted to be incurred or issued pursuant to Section 4.09 is incurred or issued.
Section 4.09 Limitation on Incurrence of Indebtedness and Issuance of Disqualified Stock and Preferred Stock.
(a) The Company will not, and will not permit any of its Restricted Subsidiaries to, create, incur, issue, assume, guarantee or otherwise become directly or indirectly, liable, contingently or otherwise (collectively, “incur” and collectively, an “incurrence”) with respect to any Indebtedness (including Acquired Indebtedness) and the Company will not issue any shares of Disqualified Stock and will not permit any Restricted Subsidiary to issue any shares of Disqualified Stock or permit any Restricted Subsidiary that is not a Guarantor to issue any shares of Preferred Stock; provided that the Company may incur Indebtedness (including Acquired Indebtedness) or issue shares of Disqualified Stock, and any Restricted Subsidiary may incur Indebtedness (including Acquired Indebtedness), issue shares of Disqualified Stock and issue shares of Preferred Stock, if the Fixed Charge Coverage Ratio of the Company for the Company’s most recently ended Test Period preceding the date on which such additional Indebtedness is incurred or such Disqualified Stock or Preferred Stock is issued would have been at least 2.00 to 1.00, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if the additional Indebtedness had been incurred or the Disqualified Stock or Preferred Stock had been issued, as the case may be, and the application of proceeds therefrom had occurred at the beginning of such Test Period (the “Fixed Charge Coverage Ratio Test”).
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(b) Section 4.09(a) will not apply to:
(i) the incurrence of Indebtedness pursuant to Debt Facilities by the Company or any Restricted Subsidiary and the issuance and creation of letters of credit and bankers’ acceptances thereunder (with letters of credit and bankers’ acceptances being deemed to have a principal amount equal to the face amount thereof) in an aggregate principal amount at any time outstanding under this clause (i) not to exceed the greatest of (a) $1,500.0 million, (b) 35.0% of Adjusted Consolidated Net Tangible Assets at the time of incurrence and (c) the Borrowing Base at the time of incurrence;
(ii) the incurrence by the Company and any Guarantor of Indebtedness represented by the Notes and related Guarantees (but excluding any Additional Notes issued after the Issue Date);
(iii) the incurrence of Indebtedness by the Company and any Restricted Subsidiary in existence on the Issue Date (excluding Indebtedness described in Sections 4.09(b)(i) and (ii));
(iv) the incurrence of (A) Attributable Indebtedness and (B) Indebtedness (including Finance Lease Obligations and Purchase Money Obligations) and Disqualified Stock incurred or issued by the Company or any Restricted Subsidiary and Preferred Stock issued by any Restricted Subsidiary to finance the purchase, lease, expansion, construction, installation, replacement, repair or improvement of property (real or personal), equipment or other assets, including assets that are used or useful in an Oil and Gas Business, whether through the direct purchase of assets or the Capital Stock of any Person owning such assets in an aggregate principal amount, together with any Refinancing Indebtedness in respect thereof and all other Indebtedness, Disqualified Stock and/or Preferred Stock incurred or issued and outstanding under this clause (iv) at such time, not to exceed (as of the date such Indebtedness, Disqualified Stock and/or Preferred Stock is issued, incurred or otherwise obtained) the greater of (i) $150.0 million and (ii) 3.0% of Adjusted Consolidated Net Tangible Assets at the time of incurrence;
(v) Indebtedness incurred by the Company or any Restricted Subsidiary (a) constituting reimbursement obligations with respect to letters of credit, bank guarantees, banker’s acceptances, warehouse receipts, or similar instruments issued or entered into, or relating to obligations or liabilities incurred, in the ordinary course of business or consistent with industry practice, including in respect of workers’ compensation claims, performance, completion or surety bonds, health, disability or other employee benefits or property, casualty or liability insurance or self-insurance, unemployment insurance or other social security legislation, or other Indebtedness with respect to reimbursement-type obligations regarding workers’ compensation claims, performance, completion or surety bonds, health, disability or other employee benefits or property, casualty or liability insurance or self-insurance or (b) as an account party in respect of letters of credit, bank guarantees or similar instruments in favor of suppliers, trade creditors or other Persons issued or incurred in the ordinary course of business or consistent with industry practice;
(vi) the incurrence of Indebtedness arising from agreements of the Company or any Restricted Subsidiary providing for indemnification, adjustment of purchase price, earnouts or similar obligations, in each case, incurred or assumed in connection with any Investment or any acquisition or disposition of any business, assets or a Subsidiary, other than guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or a Subsidiary for the purpose of financing such acquisition;
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(vii) the incurrence of Indebtedness by the Company and owing to a Restricted Subsidiary or the issuance of Disqualified Stock of the Company to a Restricted Subsidiary (or to any Parent Company which is substantially contemporaneously transferred to any Restricted Subsidiary); provided that any such Indebtedness owing to a Restricted Subsidiary that is not a Guarantor is expressly subordinated in right of payment to the Notes; provided, further, that any subsequent issuance or transfer of any Capital Stock or any other event that results in any such Restricted Subsidiary ceasing to be a Restricted Subsidiary or any other subsequent transfer of any such Indebtedness or Disqualified Stock (except to the Company or another Restricted Subsidiary or any pledge of such Indebtedness or Disqualified Stock constituting a Permitted Lien) will be deemed, in each case, to be an incurrence of such Indebtedness (to the extent such Indebtedness is then outstanding) or issuance of such Disqualified Stock (to the extent such Disqualified Stock is then outstanding) not permitted by this clause (vii);
(viii) the incurrence of Indebtedness of a Restricted Subsidiary to the Company or another Restricted Subsidiary (or to any Parent Company which is substantially contemporaneously transferred to the Company or any Restricted Subsidiary); provided that any such Indebtedness incurred by a Guarantor and owing to a Restricted Subsidiary that is not a Guarantor is expressly subordinated in right of payment to the Guarantee of the Notes of such Guarantor; provided, further, that any subsequent issuance or transfer of any Capital Stock or any other event which results in any such Restricted Subsidiary ceasing to be a Restricted Subsidiary or any such subsequent transfer of any such Indebtedness (except to the Company or another Restricted Subsidiary or any pledge of such Indebtedness constituting a Permitted Lien) will be deemed, in each case, to be an incurrence of such Indebtedness (to the extent such Indebtedness is then outstanding) not permitted by this clause (viii);
(ix) the issuance of shares of Preferred Stock or Disqualified Stock of a Restricted Subsidiary to the Company or another Restricted Subsidiary (or to any Parent Company which is substantially contemporaneously transferred to the Company or any Restricted Subsidiary); provided that any subsequent issuance or transfer of any Capital Stock or any other event that results in any such Restricted Subsidiary that holds such Preferred Stock or Disqualified Stock ceasing to be a Restricted Subsidiary or any other subsequent transfer of any such shares of Preferred Stock or Disqualified Stock (except to the Company or another Restricted Subsidiary or any pledge of such Preferred Stock or Disqualified Stock constituting a Permitted Lien) will be deemed, in each case, to be an issuance of such shares of Preferred Stock or Disqualified Stock (to the extent such Preferred Stock or Disqualified Stock is then outstanding) not permitted by this clause (ix);
(x) the incurrence of Hedging Obligations (excluding Hedging Obligations entered into for speculative purposes);
(xi) the incurrence of obligations in respect of self-insurance and obligations in respect of performance, bid, appeal and surety bonds and performance, banker’s acceptance facilities and completion guarantees and similar obligations provided by the Company or any Restricted Subsidiary or obligations in respect of letters of credit, bank guarantees or similar instruments related thereto, in each case in the ordinary course of business or consistent with industry practice, including those incurred to secure health, safety and environmental obligations;
(xii) the incurrence or issuance of:
(A) Indebtedness or Disqualified Stock of the Company and Indebtedness, Disqualified Stock or Preferred Stock of the Company or any Restricted Subsidiary in an aggregate principal amount or liquidation preference up to 100% of the net cash proceeds received by the Company since immediately after the Issue Date from the issue or sale of Equity Interests of the Company or cash contributed to the capital of the Company (in each case, other than Excluded Contributions, proceeds of Disqualified Stock or sales of Equity Interests to the Company or any of its Subsidiaries) as determined in accordance with Section 4.07(a)(3)(B) and Section 4.07(a)(3)(C) to the extent such net cash proceeds or cash have not been applied pursuant to such clauses to make Restricted Payments pursuant to Section 4.07(a) or to make Permitted Investments specified in clauses (10), (12) or (21) of the definition thereof; and
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(B) Indebtedness or Disqualified Stock of the Company and Indebtedness, Disqualified Stock or Preferred Stock of any Restricted Subsidiary in an aggregate principal amount or liquidation preference that, when aggregated with the principal amount and liquidation preference of all other Indebtedness, Disqualified Stock and Preferred Stock then outstanding and incurred or issued, as applicable, pursuant to this clause (xii)(B), together with any Refinancing Indebtedness in respect thereof, does not exceed (as of the date such Indebtedness, Disqualified Stock or Preferred Stock is issued, incurred or otherwise obtained) the greater of (x) $250.0 million and (y) 5.0% of Adjusted Consolidated Net Tangible Assets at the time of incurrence;
(xiii) the incurrence or issuance by the Company of Refinancing Indebtedness or the incurrence or issuance by a Restricted Subsidiary of Refinancing Indebtedness that serves to refund, refinance, extend, replace, renew or defease (collectively, “refinance” with “refinances,” “refinanced,” and “refinancing” having a correlative meaning) any Indebtedness incurred or Disqualified Stock or Preferred Stock issued as permitted under Section 4.09(a) and Sections 4.09(b)(ii), (iii) and (iv), this Section 4.09(b)(xiii) and Sections 4.09(b)(xiv) and 4.09(b)(xxx), or any successive Refinancing Indebtedness with respect to any of the foregoing;
(xiv) the incurrence or issuance of:
(A) Indebtedness or Disqualified Stock of the Company or Indebtedness, Disqualified Stock or Preferred Stock of a Restricted Subsidiary, incurred or issued to finance an acquisition or investment (or other purchase of assets) or that is assumed by the Company or any Restricted Subsidiary in connection with such acquisition or investment (or other purchase of assets); and
(B) Indebtedness, Disqualified Stock or Preferred Stock of Persons that are acquired by the Company or any Restricted Subsidiary or merged into or consolidated with the Company or a Restricted Subsidiary in accordance with the terms of this Indenture; provided that in each case:
(1) after giving pro forma effect to such acquisition, consolidation or merger, the Company would be permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio Test set forth in Section 4.09(a); or
(2) after giving pro forma effect to such acquisition, consolidation or merger, the Fixed Charge Coverage Ratio of the Company for the Test Period preceding the date on which such additional Indebtedness is incurred or such Disqualified Stock or Preferred Stock is issued would be no less than the Fixed Charge Coverage Ratio immediately prior to giving effect to such incurrence of Indebtedness or issuance of Disqualified Stock or Preferred Stock, in each case, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if the additional Indebtedness had been incurred, or the Disqualified Stock or Preferred Stock had been issued, as the case may be, and the application of proceeds therefrom had occurred at the beginning of such Test Period;
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(xv) the incurrence of Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument drawn against insufficient funds in the ordinary course of business or consistent with industry practice;
(xvi) the incurrence of Indebtedness of the Company or any Restricted Subsidiary supported by a letter of credit or bank guarantee issued pursuant to any Debt Facilities, in a principal amount not in excess of the stated amount of such letter of credit or bank guarantee;
(xvii) (a) the incurrence of any guarantee by the Company or a Restricted Subsidiary of Indebtedness or other obligations of the Company or any Restricted Subsidiary so long as the incurrence of such Indebtedness or other obligation incurred by the Company or such Restricted Subsidiary is permitted under the terms of this Indenture, or (b) any co-issuance by the Company or any Restricted Subsidiary of any Indebtedness or other obligations of the Company or any Restricted Subsidiary so long as the incurrence of such Indebtedness or other obligations by the Company or such Restricted Subsidiary was permitted under the terms of this Indenture;
(xviii) the incurrence of Indebtedness issued by the Company or any Restricted Subsidiary to future, present or former employees, directors, officers, members of management, consultants and independent contractors of the Company, any Restricted Subsidiary or any Parent Company, in each case to finance the purchase or redemption of Equity Interests of the Company or any Parent Company to the extent described in Section 4.07(b)(iv);
(xix) customer deposits and advance payments received in the ordinary course of business or consistent with industry practice from customers for goods and services purchased in the ordinary course of business or consistent with industry practice;
(xx) the incurrence of (a) Indebtedness owed to banks and other financial institutions incurred in the ordinary course of business or consistent with industry practice in connection with ordinary banking arrangements to manage cash balances of the Company and its Restricted Subsidiaries and (b) Indebtedness in respect of Cash Management Services, including Cash Management Obligations;
(xxi) Indebtedness incurred by the Company or a Restricted Subsidiary in connection with bankers’ acceptances, discounted bills of exchange or the discounting or factoring of receivables for credit management purposes, in each case incurred or undertaken in the ordinary course of business or consistent with industry practice on arm’s length commercial terms;
(xxii) the incurrence of Indebtedness of the Company or any Restricted Subsidiary consisting of (A) the financing of insurance premiums or (B) take-or-pay obligations contained in supply arrangements in each case, incurred in the ordinary course of business or consistent with industry practice;
(xxiii) the incurrence of Indebtedness by the Company or any Restricted Subsidiary undertaken in connection with cash management (including netting services, automatic clearinghouse arrangements, overdraft protections, employee credit card programs and related or similar services or activities) with respect to the Company, any Subsidiaries or any joint venture in the ordinary course of business or consistent with industry practice, including with respect to financial accommodations of the type described in the definition of Cash Management Services;
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(xxiv) the incurrence of Indebtedness by the Company or any Restricted Subsidiary to the extent that the net proceeds thereof are promptly deposited with the Trustee to satisfy and discharge the Notes in accordance with this Indenture;
(xxv) guarantees incurred in the ordinary course of business or consistent with industry practice in respect of obligations to suppliers, customers, franchisees, lessors, licensees, sub-licensees, and distribution partners and guarantees required by Governmental Authorities in the ordinary course of business;
(xxvi) the incurrence of Indebtedness attributable to (but not incurred to finance) the exercise of appraisal rights or the settlement of any claims or actions (whether actual, contingent or potential) with respect to any acquisition (by merger or consolidation or otherwise) in accordance with the terms of this Indenture;
(xxvii) the incurrence of Indebtedness representing deferred compensation to employees of any Parent Company, the Company or any Restricted Subsidiary, including Indebtedness consisting of obligations under deferred compensation or any other similar arrangements incurred in connection with any Investment or any acquisition (by merger or consolidation or otherwise) permitted under this Indenture;
(xxviii) Indebtedness associated with bonds or surety obligations required by requirements of law or by Governmental Authorities in connection with the operation of Oil and Gas Properties in the ordinary course of business;
(xxix) Indebtedness consisting of the undischarged balance of any Production Payments and Reserve Sales;
(xxx) Indebtedness incurred on behalf of, or guarantee obligations in respect of the Indebtedness of, joint ventures (regardless of the form of legal entity) that are not Subsidiaries in an aggregate principal amount, when aggregated with the outstanding principal amount of Indebtedness then outstanding incurred pursuant to this clause (xxx), not to exceed the greater of (x) $200.0 million and (y) 4.0% of Adjusted Consolidated Net Tangible Assets at the time of incurrence; and
(xxxi) all premiums (if any), interest (including post-petition interest), fees, expenses, charges and additional or contingent interest on obligations described in clauses (i) through (xxx) of this Section 4.09(b).
(c) For purposes of determining compliance with this Section 4.09:
(i) in the event that an item of Indebtedness, Disqualified Stock or Preferred Stock (or any portion thereof) at any time, whether at the time of incurrence or upon the application of all or a portion of the proceeds thereof or subsequently, meets the criteria of more than one of the categories of permitted Indebtedness, Disqualified Stock or Preferred Stock described in clauses (i) through (xxx) of Section 4.09(b) or is entitled to be incurred pursuant to Section 4.09(a), the Company, in its sole discretion, may divide and classify and may subsequently re-divide and reclassify such item of Indebtedness, Disqualified Stock or Preferred Stock (or any portion thereof) and will only be required to include the amount and type of such Indebtedness, Disqualified Stock or Preferred Stock (or a portion thereof) in such of the above clauses or under Section 4.09(a) as determined by the Company at such time; provided that (i) all Indebtedness outstanding under the Revolving Credit Facility on the Issue Date will be treated as incurred under Section 4.09(b)(i) and may not be reclassified and (ii) (if the Company shall so determine) any Indebtedness incurred pursuant to Section 4.09(b)(xii) shall cease to be deemed incurred or outstanding for purposes of such clause but shall be deemed incurred for the purposes of Section 4.09(a) from and after any date designated by the Company on which the Company or any Restricted Subsidiary could have incurred such Indebtedness under Section 4.09(a) without reliance on such clause;
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(ii) the Company is entitled to divide and classify an item of Indebtedness, Disqualified Stock or Preferred Stock in more than one of the types of Indebtedness, Disqualified Stock or Preferred Stock described in Section 4.09(a) and Section 4.09(b), subject to the proviso to Section 4.09(c)(i);
(iii) the principal amount of Indebtedness outstanding under any clause of this Section 4.09 will be determined after giving effect to the application of proceeds of any such Indebtedness to refinance any such other Indebtedness;
(iv) in the event an item of Indebtedness, Disqualified Stock or Preferred Stock (or any portion thereof) is incurred or issued pursuant to Section 4.09(b) (other than Section 4.09(b)(xiv)) on the same date that an item of Indebtedness, Disqualified Stock or Preferred Stock (or any portion thereof) is incurred or issued under Section 4.09(a) or Section 4.09(b)(xiv), then the Fixed Charge Coverage Ratio will be calculated with respect to such incurrence or issuance under Section 4.09(a) or Section 4.09(b)(xiv) without regard to any incurrence or issuance under Section 4.09(b) (other than with respect to any incurrence or issuance under Section 4.09(b)(xiv)). Unless the Company elects otherwise, the incurrence or issuance of Indebtedness, Disqualified Stock or Preferred Stock will be deemed incurred or issued first under Section 4.09(a) or Section 4.09(b)(xiv) to the extent permitted, with the balance incurred or issued under Section 4.09(b) (other than pursuant to Section 4.09(b)(xiv)); and
(v) guarantees of, or obligations in respect of letters of credit relating to, Indebtedness that are otherwise included in the determination of a particular amount of Indebtedness will not be included in the determination of such amount of Indebtedness; provided that the incurrence of the Indebtedness represented by such guarantee or letter of credit, as the case may be, was incurred in compliance with this Section 4.09.
Accrual of interest or dividends, the accretion of accreted value, the accretion or amortization of original issue discount, and the payment of interest or dividends in the form of additional Indebtedness, Disqualified Stock or Preferred Stock and increases in the amount of Indebtedness outstanding solely as a result of fluctuations in the exchange rate of currencies, will, in each case, not be deemed to be an incurrence of Indebtedness or an issuance of Disqualified Stock or Preferred Stock for purposes of this Section 4.09. Any Indebtedness incurred, or Disqualified Stock or Preferred Stock issued, to refinance Indebtedness incurred, or Disqualified Stock or Preferred Stock issued, pursuant to Section 4.09(a) or pursuant to Section 4.09(b)(i), (ii), (iii), (iv), (xii), (xiii) and (xiv), will be permitted to include additional Indebtedness, Disqualified Stock or Preferred Stock incurred to pay (I) any accrued and unpaid interest on the Indebtedness, any accrued and unpaid dividends on the Preferred Stock and any accrued and unpaid dividends on the Disqualified Stock being so refinanced, extended, replaced, refunded, renewed or defeased and (II) the amount of any tender premium or penalty or premium required to be paid under the terms of the instrument or documents governing such refinanced
Indebtedness, Preferred Stock or Disqualified Stock and any defeasance costs and any fees and expenses (including original issue discount, upfront fees or similar fees) incurred in connection with the issuance of such new Indebtedness, Preferred Stock or Disqualified Stock or the extension, replacement, refunding, refinancing, renewal or defeasance of such refinanced Indebtedness, Preferred Stock or Disqualified Stock.
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For purposes of determining compliance with any U.S. dollar-denominated restriction on the incurrence of Indebtedness or issuance of Disqualified Stock or Preferred Stock, the U.S. dollar-equivalent principal amount of Indebtedness, liquidation preference of Disqualified Stock or amount of Preferred Stock denominated in a foreign currency will be calculated based on the relevant currency exchange rate in effect on the date such Indebtedness, Disqualified Stock or Preferred Stock was incurred or issued (or, in the case of revolving credit debt, the date such Indebtedness was first committed or first incurred (whichever yields the lower U.S. dollar equivalent)); provided that if such Indebtedness is incurred or Disqualified Stock or Preferred Stock is issued to refinance other Indebtedness, Disqualified Stock or Preferred Stock, as applicable, denominated in a foreign currency, and such refinancing would cause the applicable U.S. dollar-denominated restriction to be exceeded if calculated at the relevant currency exchange rate in effect on the date of such refinancing, such U.S. dollar-denominated restriction will be deemed not to have been exceeded so long as the principal amount of such refinancing Indebtedness, Disqualified Stock or Preferred Stock does not exceed (1) the principal amount of such Indebtedness, the liquidation preference of such Disqualified Stock or the amount of such Preferred Stock (as applicable) being refinanced, extended, replaced, refunded, renewed or defeased, plus (2) any accrued and unpaid interest on the Indebtedness, any accrued and unpaid dividends on the Preferred Stock and any accrued and unpaid dividends on the Disqualified Stock being so refinanced, extended, replaced, refunded, renewed or defeased, plus (3) the amount of any tender premium or penalty or premium required to be paid under the terms of the instrument or documents governing such refinanced Indebtedness, Preferred Stock or Disqualified Stock and any defeasance costs and any fees and expenses (including original issue discount, upfront fees or similar fees) incurred in connection with the issuance of such new Indebtedness, Preferred Stock or Disqualified Stock or the extension, replacement, refunding, refinancing, renewal or defeasance of such refinanced Indebtedness, Preferred Stock or Disqualified Stock.
The principal amount of any Indebtedness incurred or Disqualified Stock or Preferred Stock issued to refinance other Indebtedness, Disqualified Stock or Preferred Stock, if incurred or issued in a different currency from the Indebtedness, Disqualified Stock or Preferred Stock, as applicable, being refinanced, will be calculated based on the currency exchange rate applicable to the currencies in which such respective Indebtedness, Disqualified Stock or Preferred Stock is denominated that is in effect on the date of such refinancing. The principal amount of any non-interest bearing Indebtedness or other discount security constituting Indebtedness at any date will be the principal amount thereof that would be shown on a balance sheet of the Company dated such date prepared in accordance with GAAP.
For purposes of this Indenture (1) unsecured Indebtedness will not be deemed to be subordinated or junior to Secured Indebtedness merely because it is unsecured, (2) Indebtedness will not be deemed to be subordinated or junior to any other Indebtedness merely because it is issued or guaranteed by other obligors and (3) Secured Indebtedness will not be deemed to be subordinated or junior to any other Secured Indebtedness merely because it has a junior priority lien with respect to the same collateral.
If any Indebtedness is incurred, or Disqualified Stock or Preferred Stock is issued, in reliance on a basket measured by reference to a percentage of Adjusted Consolidated Net Tangible Assets, and any refinancing thereof would cause the percentage of Adjusted Consolidated Net Tangible Assets to be exceeded if calculated based on the Adjusted Consolidated Net Tangible Assets on the date of such refinancing, such percentage of Adjusted Consolidated Net Tangible Assets will not be deemed to be exceeded to the extent the principal amount of such newly incurred Indebtedness, the liquidation preference of such newly issued Disqualified Stock or the amount of such newly issued Preferred Stock does not exceed the sum of (i) the principal amount of such Indebtedness, the liquidation preference of such Disqualified Stock or the amount of such Preferred Stock being refinanced, extended, replaced, refunded, renewed or defeased plus (ii) any accrued and unpaid interest on the Indebtedness, any accrued and unpaid dividends on the Preferred Stock and any accrued and unpaid dividends on the Disqualified Stock being so refinanced, extended, replaced, refunded, renewed or defeased plus (iii) the amount of any tender premium or penalty or premium required to be paid under the terms of the instrument or documents governing such refinanced Indebtedness, Preferred Stock or Disqualified Stock and any defeasance costs and any fees and expenses (including original issue discount, upfront fees or similar fees) incurred in connection with the issuance of such new Indebtedness, Preferred Stock or Disqualified Stock or the extension, replacement, refunding, refinancing, renewal or defeasance of such refinanced Indebtedness, Preferred Stock or Disqualified Stock.
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Section 4.10 Asset Sales.
(a) The Company will not, and will not permit any Restricted Subsidiary to, consummate an Asset Sale, unless:
(i) the Company or such Restricted Subsidiary, as the case may be, receives consideration (including by way of relief from, or by any other Person assuming responsibility for, any liabilities, contingent or otherwise, in connection with such Asset Sale) at least equal to the fair market value (measured at the time of contractually agreeing to such Asset Sale) of the assets sold or otherwise disposed of; and
(ii) at least 75.0% of the consideration for such Asset Sale, together with all other Asset Sales since the Issue Date (on a cumulative basis), received by the Company or a Restricted Subsidiary, as the case may be, is in the form of cash or Cash Equivalents; provided that each of the following will be deemed to be cash or Cash Equivalents for purposes of this Section 4.10(a)(ii):
(A) any liabilities (as shown on the Company’s or any Restricted Subsidiary’s most recent balance sheet or in the notes thereto or, if incurred or accrued subsequent to the date of such balance sheet, such liabilities that would have been reflected on the Company’s or a Restricted Subsidiary’s consolidated balance sheet or in the notes thereto if such incurrence or accrual had taken place on or prior to the date of such balance sheet, as determined in good faith by the Company) of the Company or any Restricted Subsidiary, other than contingent liabilities or liabilities that are by their terms subordinated in right of payment to the Notes or any Guarantor’s Guarantee of the Notes, that are (i) assumed by the transferee of any such assets (or a third party in connection with such transfer) or (ii) otherwise cancelled or terminated in connection with the transaction with such transferee (other than intercompany debt owed to the Company or a Restricted Subsidiary);
(B) any securities, notes or other obligations or assets received by the Company or a Restricted Subsidiary from such transferee or in connection with such Asset Sale (including earnouts and similar obligations) that are converted by the Company or a Restricted Subsidiary into cash or Cash Equivalents, or by their terms are required to be satisfied for cash or Cash Equivalents (to the extent of the cash or Cash Equivalents received) within 180 days following the closing of such Asset Sale;
(C) any Designated Non-Cash Consideration received by the Company or a Restricted Subsidiary in such Asset Sale having an aggregate fair market value, taken together with all other Designated Non-Cash Consideration received pursuant to this clause (C) that is at that time outstanding, not to exceed the greater of (i) $250.0 million and (ii) 5.0% of Adjusted Consolidated Net Tangible Assets of the Company at the time of the receipt of such Designated Non-Cash Consideration, with the fair market value of each item of Designated Non-Cash Consideration being measured, at the Company’s option, either at the time of contractually agreeing to such Asset Sale or at the time received and, in either case, without giving effect to subsequent changes in value;
(D) any Investment, Capital Stock, assets, property or capital or other expenditure of the kind referred to in Section 4.10(b)(iii); and
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(E) with respect to any Asset Sale of Oil and Gas Properties disposed of by the Company or any Restricted Subsidiary in which the Company or any Restricted Subsidiary retains an interest, the costs and expenses related to the exploration, development, completion or production of such Oil and Gas Properties and activities related thereto agreed to be assumed by the transferee (or an Affiliate thereof).
(b) Within 365 days after the receipt of any Net Proceeds of any Asset Sale (as may be extended pursuant to clause (iii) below, the “Asset Sale Proceeds Application Period”), the Company or a Restricted Subsidiary, at its option, may apply an amount equal to the Net Proceeds from such Asset Sale:
(i) to repay, redeem or repurchase Obligations in respect of Senior Indebtedness in each case owing to a Person other than the Company, any Restricted Subsidiary or a Parent Company;
(ii) to repay, redeem or repurchase Obligations in respect of Indebtedness of a Restricted Subsidiary that is not a Guarantor, other than Obligations owed to the Company or a Restricted Subsidiary;
(iii) to make (A) an Investment in any one or more businesses; provided that such Investment in any business is in the form of the acquisition of Capital Stock and results in the Company or any Restricted Subsidiary owning an amount of the Capital Stock of such business such that it constitutes or continues to constitute a Restricted Subsidiary, (B) capital expenditures with respect to the Company’s or any Restricted Subsidiary’s Oil and Gas Business, (C) acquisitions by the Company or any Restricted Subsidiary of Oil and Gas Properties (including fee and leasehold interests) or (D) acquisitions by the Company or any Restricted Subsidiary of other assets, other than securities, in the case of clauses (A), (C) and this clause (D), either (i) that are or will be used or useful in the Oil and Gas Business or (ii) that replace, in whole or in part, the properties or assets that are the subject of such Asset Sale; provided that in the case of this clause (iii), a binding commitment will be treated as a permitted application of the Net Proceeds from the date of such commitment so long as the Company or a Restricted Subsidiary enters into such commitment with the good faith expectation that such Net Proceeds will be applied to satisfy such commitment within 180 days of such commitment, or, if later, 365 days after the receipt of such Net Proceeds; provided, further, that if any such commitment is later cancelled or terminated for any reason before such Net Proceeds are applied, then such Net Proceeds will constitute Excess Proceeds (as defined below); or
(iv) any combination of the foregoing.
(c) Pending the final application of the amount of any Net Proceeds pursuant to this covenant, the Company and its Restricted Subsidiaries may temporarily reduce Indebtedness, or otherwise use such Net Proceeds in any manner not prohibited by this Indenture.
(d) The amount equal to the Net Proceeds from Asset Sales that are not invested or applied as provided and within the time period set forth in Section 4.10(b) will be deemed to constitute “Excess Proceeds.” When the aggregate amount of Excess Proceeds exceeds $50.0 million, the Company will make an offer to all Holders and, at the option of the Company, to any holders of any Indebtedness that is pari passu with the Notes (“Pari Passu Indebtedness” and such offer, an “Asset Sale Offer”), to purchase the maximum aggregate principal amount of the Notes and such Pari Passu Indebtedness that is in an amount equal to at least $2,000, or an integral multiple of $1,000 in excess of $2,000, that may be purchased out of the Excess Proceeds at an offer price, in the case of the Notes, in cash in an amount equal to 100% of the principal amount thereof, plus accrued and unpaid interest, if any (or, in respect of such Pari Passu Indebtedness, such other price, if any, as may be provided for by the terms of such Pari Passu Indebtedness), to, but excluding, the date fixed for the closing of such offer, in accordance with the procedures set forth in Section 3.09 (or, in respect of such Pari Passu Indebtedness, the agreement or instrument governing the terms thereof). The Company will commence an Asset Sale Offer with respect to Excess Proceeds within 30 days after the date that the amount of Excess Proceeds exceeds $50.0 million by mailing (or in the case of Notes issued in global form, delivering electronically in accordance with Applicable Procedures) the notice required pursuant to Section 3.09, with a copy to the Trustee. The Company may satisfy the foregoing obligation with respect to any Net Proceeds from an Asset Sale by making an offer to purchase Notes with respect to the amount of all or part of the available Net Proceeds (the “Advance Portion”) prior to the expiration of the Asset Sale Proceeds Application Period with respect to the amount of all or a part of the available Net Proceeds in advance of being required to do so by this Indenture (the “Advance Offer”).
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To the extent that the aggregate principal amount of Notes and such Pari Passu Indebtedness tendered pursuant to an Asset Sale Offer is less than the Excess Proceeds (or in the case of an Advance Offer, the Advance Portion), the Company and its Restricted Subsidiaries may use any remaining Excess Proceeds (or in the case of an Advance Offer, the Advance Portion) in any manner not prohibited by this Indenture. If the aggregate principal amount (or accreted value, as applicable) of Notes and/or the Pari Passu Indebtedness surrendered in an Asset Sale Offer exceeds the amount of Excess Proceeds (or in the case of an Advance Offer, the Advance Portion), the Trustee will select the Notes to be purchased in the manner described under Section 3.02 and the Company will select such Pari Passu Indebtedness to be purchased pursuant to the terms of such Pari Passu Indebtedness; provided that as between the Notes and any Pari Passu Indebtedness, such purchases will be made on a pro rata basis based on the principal amount of the Notes or such Pari Passu Indebtedness tendered with adjustments as necessary so that no Notes or Pari Passu Indebtedness will be repurchased in part in an unauthorized denomination. Upon completion of any such Asset Sale Offer, for purposes of this provision the amount of Excess Proceeds (or in the case of an Advance Offer, the Advance Portion) that resulted in the Asset Sale Offer or Advance Offer will be reset to zero (regardless of whether there are any remaining Excess Proceeds (or Advance Portion) upon such completion) and the Company may use any remaining Excess Proceeds for any purpose not otherwise prohibited under this Indenture. An Asset Sale Offer or Advance Offer may be made at the same time as consents are solicited with respect to an amendment, supplement or waiver of this Indenture, Notes and/or Guarantees (but the Asset Sale Offer or Advance Offer may not condition tenders on the delivery of such consents).
(e) The Company will comply with the requirements of Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder to the extent such laws or regulations are applicable in connection with the repurchase of the Notes pursuant to an Asset Sale Offer or Advance Offer. To the extent that the provisions of any securities laws or regulations conflict with the provisions of this Indenture, the Company will comply with the applicable securities laws and regulations and will not be deemed to have breached its obligations described in this Indenture by virtue thereof.
(f) The Company’s obligation to make an offer to repurchase the Notes pursuant to this Section 4.10 may be waived or modified with the written consent of the Holders of a majority in principal amount of the then outstanding Notes.
Section 4.11 Transactions with Affiliates.
(a) The Company will not, and will not permit any Restricted Subsidiary to, make any payment to, or sell, lease, transfer or otherwise dispose of any of its properties or assets to, or purchase any property or assets from, or enter into or make or amend any transaction, contract, agreement, understanding, loan, advance or guarantee with, or for the benefit of, any Affiliate of the Company (each of the foregoing, an “Affiliate Transaction”) involving aggregate payments or consideration in excess of $10.0 million, unless:
(i) such Affiliate Transaction is on terms, taken as a whole, that are not materially less favorable to the Company or the relevant Restricted Subsidiaries than those that would have been obtained at such time in a comparable transaction by the Company or such Restricted Subsidiary with a Person other than an Affiliate of the Company on an arm’s-length basis or such Affiliate Transaction is otherwise fair to the Company or such Restricted Subsidiary from a financial point of view; and
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(ii) the Company delivers to the Trustee with respect to any Affiliate Transaction or series of related Affiliate Transactions requiring aggregate payments or consideration in excess of $40.0 million, a resolution adopted by the majority of the Board approving such Affiliate Transaction and approved by a majority of the Disinterested Directors of the Company, if any, and set forth in an Officer’s Certificate certifying that such Affiliate Transaction complies with Section 4.11(a)(i) above.
Any Affiliate Transaction shall be deemed to have satisfied the adoption by the majority of the Board requirement set forth in clause (ii) of this paragraph if such Affiliate Transaction is approved by a majority of the Disinterested Directors of the Company, if any.
(b) Section 4.11(a) will not apply to the following:
(i) (A) transactions between or among the Company and one or more Restricted Subsidiaries or between or among Restricted Subsidiaries or, in any case, any entity that becomes a Restricted Subsidiary as a result of such transaction and (B) any merger or consolidation of the Company and any Parent Company; provided that such merger or consolidation of the Company is otherwise in compliance with the terms of this Indenture and effected for a bona fide business purpose;
(ii) (A) Restricted Payments permitted by Section 4.07 hereof (including any transaction specifically excluded from the definition of the term “Restricted Payments,” including pursuant to the exceptions contained in the definition thereof and the parenthetical exclusions of such definition) and (B) any “Permitted Investments”;
(iii) (A) the payment of indemnification and similar amounts to, and reimbursement of reasonable and customary expenses to, the Investors and their officers, directors, employees and Affiliates, in each case, approved by, or pursuant to arrangements approved by, the Board, (B) payments, loans, advances or guarantees (or cancellation of loans, advances or guarantees) to future, present or former employees, officers, directors, managers, consultants or independent contractors of the Company or any Parent Company or its affiliates, or guarantees in respect thereof for bona fide business purposes or in the ordinary course of business or consistent with industry practice and (C) any subscription agreement or similar agreement pertaining to the repurchase of Equity Interests pursuant to put / call rights or similar rights with current, former or future officers, directors, employees, managers, consultants and independent contractors of the Company or any Parent Company;
(iv) the payment of reasonable and customary fees and compensation paid to, and indemnities and reimbursements and employment and severance arrangements provided to, or on behalf of, or for the benefit of, present, future or former employees, directors, officers, members of management, consultants or independent contractors of the Company, any Parent Company or any Restricted Subsidiary;
(v) transactions in which the Company or any Restricted Subsidiary, as the case may be, delivers to the Trustee a letter from an Independent Financial Advisor stating that such transaction is fair to the Company or such Restricted Subsidiary from a financial point of view or stating that the terms, when taken as a whole, are not materially less favorable to the Company or the relevant Restricted Subsidiary than those that would have been obtained in a comparable transaction by the Company or such Restricted Subsidiary with a Person that is not an Affiliate of the Company on an arm’s-length basis;
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(vi) the existence of, or the performance by the Company or any Restricted Subsidiary of its obligations under the terms of, any agreement as in effect as of the Issue Date, or any amendment thereto or replacement thereof (so long as any such amendment or replacement is not materially disadvantageous in the good faith judgment of the Board to the Holders when taken as a whole as compared to the applicable agreement as in effect on the Issue Date);
(vii) the existence of, or the performance by the Company or any Restricted Subsidiary of its obligations under the terms of, any equity holder agreement or the equivalent (including any registration rights agreement or purchase agreement related thereto) to which it is a party as of the Issue Date and any amendment thereto and similar agreements or arrangements that it may enter into thereafter; provided that the existence of, or the performance by the Company or any Restricted Subsidiary of obligations under any future amendment to any such existing agreement or arrangement or under any similar agreement or arrangement entered into after the Issue Date will only be permitted by this clause (vii) to the extent that the terms of any such amendment or new agreement or arrangement are not otherwise materially disadvantageous in the good faith judgment of the Board to the Company when taken as a whole (as compared to the original agreement or arrangement in effect on the Issue Date);
(viii) transactions with customers, clients, suppliers, contractors, joint venture partners or purchasers or sellers of goods or services, or transactions otherwise relating to the purchase or sale of goods or services, in each case in the ordinary course of business or consistent with industry practice and otherwise in compliance with the terms of this Indenture that are fair to the Company and the Restricted Subsidiaries, in the reasonable determination of the Board or the senior management of the Company, or are on terms at least as favorable as might reasonably have been obtained at such time from an unaffiliated party;
(ix) the issuance, sale or transfer of Equity Interests (other than Disqualified Stock) of the Company or any Parent Company to any Person and the granting and performing of customary rights (including registration rights) in connection therewith, and any contribution to the capital of the Company;
(x) payments by the Company or any Restricted Subsidiary made for any financial advisory, consulting, financing, underwriting or placement services or in respect of other investment banking activities, including in connection with acquisitions or divestitures, which payments are approved by, or made pursuant to arrangements approved by, a majority of the Board in good faith;
(xi) payments with respect to Indebtedness, Disqualified Stock and other Equity Interests (and cancellation of any thereof) of the Company, any Parent Company and any Restricted Subsidiary and Preferred Stock (and cancellation of any thereof) of any Restricted Subsidiary to any future, current or former employee, director, officer, member of management, consultant or independent contractor of the Company, any of its Subsidiaries or any Parent Company pursuant to any management equity plan or stock option plan or any other management or employee benefit plan or agreement or any equity subscription or equity holder agreement that are, in each case, approved by the Company in good faith; and any employment agreements, severance arrangements, stock option plans and other compensatory arrangements (and any successor plans thereto) and any supplemental executive retirement benefit plans or arrangements with any such employees, directors, officers, members of management, consultants or independent contractors that are, in each case, approved by the Company in good faith;
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(xii) (A) investments by Affiliates in securities or Indebtedness of the Company or any Restricted Subsidiary (and payment of reasonable out-of-pocket expenses incurred by such Affiliates in connection therewith) so long as the investment is being offered by the Company or such Restricted Subsidiary generally to other unaffiliated investors on the same or more favorable terms and (B) payments to Affiliates in respect of securities or Indebtedness of the Company or any Restricted Subsidiary contemplated in the foregoing subclause (A) or that were acquired from Persons other than the Company and the Restricted Subsidiaries, in each case, in accordance with the terms of such securities or Indebtedness;
(xiii) payments to or from, and transactions with, any joint venture or Unrestricted Subsidiary in the ordinary course of business or consistent with past practice, industry practice or industry norms (including any cash management activities related thereto), including, without limitation customary arrangements between the Company and its Restricted Subsidiaries pursuant to joint operating agreements with respect to the operation of Oil and Gas Properties;
(xiv) (a) payments by the Company (and any Parent Company) and its Subsidiaries pursuant to, and the entry into, tax sharing agreements among the Company (and any Parent Company) and its Subsidiaries; provided that in each case the amount of such payments by the Company and its Subsidiaries are permitted under Section 4.07(b)(xii) or Section 4.07(b)(xiii) and (b) 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;
(xv) any lease (other than any lease of Oil and Gas Properties) entered into between the Company or any Restricted Subsidiary, as lessee, and any Affiliate of the Company, as lessor, and transactions pursuant to that lease which lease is approved by the Board or senior management of the Company in good faith;
(xvi) intellectual property licenses in the ordinary course of business or consistent with industry practice;
(xvii) the payment of reasonable out-of-pocket costs and expenses relating to registration rights and indemnities provided to equity holders of the Company or any Parent Company pursuant to any equity holders agreement or registration rights agreement entered into on or after the Issue Date;
(xviii) transactions permitted by, and complying with, Section 5.01 solely for the purpose of (a) reorganizing to facilitate any initial public offering of securities of the Company or any Parent Company, (b) forming a holding company and (c) reincorporating the Company or (d) consummating the IPOCo Transactions;
(xix) transactions undertaken in good faith (as determined by the Board or by senior management of the Company) for the purposes of improving the consolidated tax efficiency of the Company and its Restricted Subsidiaries and not for the purpose of circumventing any covenant set forth in this Indenture;
(xx) (a) transactions with a Person that is an Affiliate of the Company (other than an Unrestricted Subsidiary) solely because the Company or any Restricted Subsidiary owns Equity Interests in such Person and (b) transactions with any Person that is an Affiliate of the Company solely because a director of such Person is a director of the Company, any Restricted Subsidiary or any Parent Company; provided that such director abstains from voting as a director of the Company, any Restricted Subsidiary or any Parent Company on any matter involving such other Person;
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(xxi) (a) pledges and other transfers of Equity Interests in Unrestricted Subsidiaries and (b) any transactions with an Affiliate of the Company in which the consideration paid consists solely of Equity Interests of the Company or a Parent Company;
(xxii) the sale, issuance or transfer of Equity Interests (other than Disqualified Stock) of the Company;
(xxiii) payments on the Notes in accordance with this Indenture and payments of Obligations under the Debt Facility and payments in respect of Obligations under other Indebtedness, Disqualified Stock or Preferred Stock of the Company and its Subsidiaries held by Affiliates; provided that such Obligations were acquired by an Affiliate of the Company in compliance with this Indenture;
(xxiv) transactions undertaken in the ordinary course of business pursuant to membership in a purchasing consortium; and
(xxv) any transactions with or among the Company, IPOCo, their respective Restricted Subsidiaries and the Permitted Holders in connection with the IPOCo Transactions and the Qualified IPO, the transactions relating thereto, and the payment of all fees and expenses related thereto, including fees to the Investors.
Section 4.12 Liens. The Company will not, and will not permit any Restricted Subsidiary to, create, incur or assume any Lien (except Permitted Liens) that secures Obligations under any Indebtedness or any related guarantee of Indebtedness, on any asset or property of the Company or any Restricted Subsidiary, or any income or profits therefrom, or assign or convey any right to receive income therefrom, unless:
(a) in the case of Liens securing Subordinated Indebtedness, the Notes and related Guarantees are secured by a Lien on such property, assets or proceeds that is senior in priority to such Liens until such time as such Subordinated Indebtedness is no longer secured by such Liens; and
(b) in all other cases, the Notes or the Guarantees are equally and ratably secured until such time as such Obligations are no longer secured by such Liens.
For purposes of determining compliance with this Section 4.12, (A) a Lien need not be incurred solely by reference to one category of Permitted Liens described in the definition thereof but is permitted to be incurred in part under any combination thereof and of any other available exemption and (B) in the event that a Lien (or any portion thereof) meets the criteria of one or more of the categories of Permitted Liens, the Company will, in its sole discretion, be entitled to divide, classify or reclassify, in whole or in part, any such Lien (or any portion thereof) among one or more of such categories or clauses in any manner.
Any Lien created for the benefit of the Holders pursuant to this Section 4.12 will be deemed automatically and unconditionally released and discharged upon the release and discharge of each of the Liens described in clauses (a) and (b) of this Section 4.12 or upon such Liens no longer attaching to assets or property of the Company or a Restricted Subsidiary.
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 Increased Amount of such Indebtedness. The “Increased Amount” of any Indebtedness shall mean any increase in the amount of such Indebtedness in connection with any accrual of interest, the accretion of accreted value, the amortization of original issue discount, the payment of interest in the form of additional Indebtedness with the same terms, accretion of original issue discount or liquidation preference and increases in the amount of Indebtedness outstanding solely as a result of fluctuations in the exchange rate of currencies or increases in the value of property securing Indebtedness.
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Section 4.13 Company Existence. The Company shall do or cause to be done all things necessary to preserve and keep in full force and effect its organizational existence, and the corporate, partnership or other organizational existence of each of its Restricted Subsidiaries, in accordance with the respective organizational documents (as the same may be amended from time to time) of the Company or any such Restricted Subsidiary; provided that the Company shall not be required to preserve the corporate, partnership or other organizational existence of its Restricted Subsidiaries, if the Company in good faith shall determine that the preservation thereof is no longer desirable in the conduct of the business of the Company and its Restricted Subsidiaries, taken as a whole. Notwithstanding the foregoing, the Company and any Restricted Subsidiary shall not be deemed to be in breach of this covenant as a result of any transaction that complies with Article V hereof.
Section 4.14 Offer to Repurchase Upon Change of Control.
(a) If a Change of Control Triggering Event occurs, unless the Company has previously or concurrently electronically delivered or mailed a redemption notice with respect to all the outstanding Notes as described under Section 3.07, the Company will make an offer to purchase all of the Notes pursuant to the offer described below (the “Change of Control Offer”) at a price in cash (the “Change of Control Payment”) equal to 101% of the aggregate principal amount thereof plus accrued and unpaid interest, if any, to, but excluding, the date of repurchase, subject to the right of Holders of record on the relevant Record Date to receive interest due on the relevant Interest Payment Date prior to such repurchase.
Within 30 days following any Change of Control Triggering Event, the Company will send notice of such Change of Control Offer electronically or by first-class mail, postage prepaid (or in the case of Notes issued in global form, delivered electronically in accordance with the Applicable Procedures), with a copy to the Trustee, to each Holder at such Holder’s registered address (or in the case of Notes issued in global form, in accordance with the Applicable Procedures), with the following information:
(i) a Change of Control Offer is being made pursuant to this Section 4.14 and all Notes properly tendered pursuant to such Change of Control Offer will be accepted for payment by the Company;
(ii) the purchase price and the purchase date, which will be no earlier than 20 Business Days nor later than 60 days from the date such notice is mailed or otherwise delivered (the “Change of Control Payment Date”), subject to extension (in the case where such notice is mailed or otherwise delivered prior to the occurrence of the Change of Control) in the event that the occurrence of the Change of Control is delayed;
(iii) any Note not properly tendered will remain outstanding and continue to accrue interest;
(iv) unless the Company defaults in the payment of the Change of Control Payment, all Notes accepted for payment pursuant to the Change of Control Offer will cease to accrue interest on the Change of Control Payment Date;
(v) Holders electing to have any Notes purchased pursuant to a Change of Control Offer will be required to surrender such Notes, with the form entitled “Option of Holder to Elect Purchase” on the reverse of such Notes completed to the Paying Agent at the address specified in the notice or otherwise in accordance with the Applicable Procedures, prior to the close of business on the third Business Day preceding the Change of Control Payment Date;
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(vi) Holders will be entitled to withdraw their tendered Notes and their election to require the Company to purchase such Notes; provided that the Paying Agent receives, not later than the close of business on the second Business Day prior to the expiration date of the Change of Control Offer, a facsimile transmission or letter or other notice in accordance with the Applicable Procedures setting forth the name of the Holder, the principal amount of Notes tendered for purchase, and a statement that such Holder is withdrawing its tendered Notes and its election to have such Notes purchased;
(vii) Holders whose Notes are being purchased only in part will be issued new Notes and such new Notes will be equal in principal amount to the unpurchased portion of the Notes surrendered; provided that the unpurchased portion of the Notes must be equal to at least $2,000 or any integral multiple of $1,000 in excess of $2,000;
(viii) if such notice is delivered prior to the occurrence of a Change of Control, stating that the Change of Control Offer is conditional on the occurrence of such Change of Control and describing each such condition, and, if applicable, stating that, in the Company’s discretion, the Change of Control Payment Date may be delayed until such time (including more than 60 days after the date the notice was mailed or delivered, including by electronic transmission) as any or all such conditions are satisfied (or waived by the Company in its sole discretion), or such purchase may not occur and such notice may be rescinded in the event that any or all such conditions are not satisfied (or waived by the Company in its sole discretion) by the Change of Control Payment Date, or by the Change of Control Payment Date as so delayed, or such notice may be rescinded at any time in the Company’s discretion if in the good faith judgment of the Company any or all of such conditions will not be satisfied. In addition, the Company may provide in such notice that payment of the purchase price and performance of the Company’s obligations with respect to such purchase may be performed by another Person; and
(ix) the other instructions, as determined by the Company, consistent with this Section 4.14, that a Holder must follow in order to have its Notes repurchased.
While the Notes are in global form and the Company makes an offer to purchase all of the Notes pursuant to the Change of Control Offer, a Holder may exercise its option to elect for the purchase of the Notes through the facilities of the Depositary, subject to its rules and regulations.
The Company will comply, to the extent applicable, with the requirements of Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder to the extent such laws or regulations are applicable in connection with the repurchase of Notes by the Company pursuant to a Change of Control Offer. To the extent that the provisions of any securities laws or regulations conflict with the provisions of this Indenture, the Company will comply with the applicable securities laws and regulations and will not be deemed to have breached its obligations described in this Indenture by virtue thereof.
(b) On the Change of Control Payment Date, the Company will, to the extent permitted by law:
(i) accept for payment all Notes or portions thereof properly tendered pursuant to the Change of Control Offer;
(ii) deposit with the Paying Agent an amount equal to the aggregate Change of Control Payment in respect of all Notes or portions thereof validly tendered and not validly withdrawn; and
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(iii) deliver, or cause to be delivered, to the Trustee (a) an Officer’s Certificate to the Trustee stating that such Notes or portions thereof have been tendered to and purchased by the Company and (b) at the Company’s option, the Notes so accepted for cancellation.
(c) The Company will not be required to make a Change of Control Offer following a Change of Control Triggering Event if (i) a third party makes the Change of Control Offer in the manner, at the times and otherwise in compliance with the requirements set forth in this Indenture applicable to a Change of Control Offer made by the Company and purchases all Notes validly tendered and not validly withdrawn under such Change of Control Offer or (ii) in connection with or in contemplation of any Change of Control Triggering Event, the Company has made an offer to purchase (an “Alternate Offer”) any and all Notes validly tendered at a cash price equal to or higher than the Change of Control Payment and has purchased all Notes properly tendered in accordance with the terms of the Alternate Offer.
(d) A Change of Control Offer or Alternate Offer may be made in advance of a Change of Control and conditional upon such Change of Control Triggering Event, if a definitive agreement is in place for the Change of Control at the time of making of the Change of Control Offer or Alternate Offer. The closing date of any such Change of Control Offer or Alternate Offer made in advance of a Change of Control Triggering Event may be changed to conform to the actual closing date of the Change of Control; provided that such closing date is not earlier than 20 Business Days nor later than 60 days from the date the Change of Control Offer notice is sent, subject to extension, pursuant to Section 4.14(a).
(e) A Change of Control Offer may be made at the same time as consents are solicited with respect to an amendment, supplement or waiver of this Indenture, Notes and/or Guarantees (but the Change of Control Offer may not condition tenders on the delivery of such consents).
The Company’s obligation to make an offer to repurchase the Notes pursuant to this Section 4.14 may be waived or modified (at any time, including after a Change of Control Triggering Event) with the written consent of the Holders of a majority in principal amount of the Notes then outstanding.
Section 4.15 Future Subsidiary Guarantees. If any Subsidiary that is not already a Guarantor guarantees any Indebtedness of the Company or a Guarantor under a Debt Facility or Capital Markets Indebtedness, then such Restricted Subsidiary will become a Guarantor by executing a supplemental indenture and delivering it to the Trustee within 30 Business Days of the date on which it incurred or guaranteed such Indebtedness or is acquired or created, as the case may be; provided that the foregoing shall not apply to Subsidiaries of the Company that have properly been designated as Unrestricted Subsidiaries in accordance with this Indenture for so long as they continue to constitute Unrestricted Subsidiaries. Any such Guarantee shall be subject to the terms of Article X.
The Company may elect, in its sole discretion, to cause any Subsidiary that is not otherwise required to be a Guarantor to become a Guarantor, and such Guarantee may be released at any time in the Company’s sole discretion.
Section 4.16 Termination of Covenants. If on any date following the Issue Date:
(i) the Notes have an Investment Grade Rating from at least two of Moody’s, S&P and Fitch (or, if any such entity ceases to rate the Notes for reasons outside of the control of the Company, the equivalent Investment Grade Rating from any other “nationally recognized statistical rating organization” within the meaning of Section 3(a)(62) of the Exchange Act selected by the Company as a replacement agency); and
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(ii) no Default or Event of Default has occurred and is continuing,
then, upon the Company’s delivery to the Trustee of an Officer’s Certificate notifying the Trustee of such events, the covenants specifically listed under the following sections will be terminated and the limitations in such covenants will thereafter cease to apply (a “Covenant Termination Event”): Section 4.07, Section 4.08, Section 4.09, Section 4.10, Section 4.11, Section 4.15, Section 5.01(a)(i)(D) and 5.01(b) hereof (collectively, the “Terminated Covenants”).
(b) The Trustee shall have no duty to (i) monitor the ratings of the Notes, (ii) determine whether a Covenant Termination Event has occurred, (iii) notify Holders of any of the foregoing or (iv) determine the consequences thereof, but may provide a copy of such Officer’s Certificate to any Holder upon request.
ARTICLE V
SUCCESSORS
Section 5.01 Merger, Amalgamation, Consolidation or Sale of All or Substantially All Assets.
(a) The Company may not consolidate, amalgamate or merge with or into or wind up into (whether or not the Company is the surviving Person), or sell, assign, transfer, lease, convey or otherwise dispose of all or substantially all of its assets, in one or more related transactions, to any Person unless:
(i) (A) the Company is the surviving Person or the Person formed by or surviving any such consolidation, amalgamation or merger (if other than the Company), or to which such sale, assignment, transfer, lease, conveyance or other disposition is made, is a Person organized or existing under the laws of the United States, any state thereof, the District of Columbia, or any territory thereof (such Person, as the case may be, being herein called the “Successor Company”);
(B) the Successor Company, if other than the Company, expressly assumes all the obligations of the Company under the Notes pursuant to supplemental indentures or other customary documents or instruments;
(C) immediately after such transaction, no Event of Default exists;
(D) immediately after giving pro forma effect to such transaction and any related financing transactions, as if such transactions had occurred at the beginning of the most recently ended Test Period, either:
(1) the Company (or Successor Company, as applicable) would be permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio Test, or
(2) the Fixed Charge Coverage Ratio for the Company (or Successor Company, as applicable) would be equal to or greater than the Fixed Charge Coverage Ratio for the Company immediately prior to such transaction; and
(E) the Company (or the Successor Company, as applicable), will have delivered to the Trustee an Officer’s Certificate and an Opinion of Counsel, each stating that such consolidation, amalgamation, merger or transfer and such supplemental indentures, if any, comply with this Indenture; or
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(ii) in the case of assets comprised of Equity Interests of Subsidiaries that are not Guarantors, such Equity Interests are sold, assigned, transferred, leased, conveyed or otherwise disposed of to one or more Restricted Subsidiaries.
Notwithstanding clauses (C) through (E) of Section 5.01(a)(i),
(i) the Company may consolidate or amalgamate with or merge with or into or transfer all or part of its properties and assets to a Guarantor;
(ii) any Restricted Subsidiary may consolidate with or merge with or into or wind up into or sell, assign, lease, convey, transfer or otherwise dispose of all or part of its properties and assets to the Company or any other Restricted Subsidiary,
(iii) the Company may consolidate with, amalgamate with or merge with or into, or wind up into an Affiliate of the Company for the purpose of reincorporating the Company in the United States, any state thereof, the District of Columbia or any territory thereof so long as the amount of Indebtedness of the Company and its Restricted Subsidiaries is not increased thereby,
(iv) the Company may convert into a corporation, partnership, limited partnership, limited liability company or trust organized or existing under the laws of the jurisdiction of organization of the Company or the laws of a jurisdiction in the United States, and
(v) the Company or a Guarantor may change its name.
(b) Subject to Section 10.06, no Guarantor will, and the Company will not permit any Guarantor to, consolidate, amalgamate or merge with or into or wind up into (whether or not such Guarantor is the surviving Person), or sell, assign, transfer, lease, convey or otherwise dispose of all or substantially all of its properties or assets, in one or more related transactions, to any Person unless:
(i) (A) such Guarantor is the surviving Person or the Person formed by or surviving any such consolidation, amalgamation or merger (if other than such Guarantor), assignment, transfer, lease, conveyance or other disposition will have been made (the “Successor Person”) expressly assumes all the obligations of such Guarantor under this Indenture and such Guarantor’s related Guarantee pursuant to supplemental indentures or other documents or instruments; and
(B) immediately after such transaction, no Event of Default exists; or
(ii) the transaction does not violate Section 4.10; or
(iii) in the case of assets comprised of Equity Interests of Subsidiaries that are not Guarantors, such Equity Interests are sold, assigned, transferred, leased, conveyed or otherwise disposed of to one or more Restricted Subsidiaries.
(c) Notwithstanding the foregoing, any Guarantor may (1) merge, amalgamate or consolidate with or into, wind up into or sell, assign, transfer, lease, convey or otherwise dispose of all or part of its properties and assets to another Guarantor or the Company, (2) merge with an Affiliate of the Company for the purpose of reincorporating the Guarantor in the United States, any state thereof, the District of Columbia or any territory thereof, (3) convert into a corporation, partnership, limited partnership, limited liability company or trust organized or existing under the laws of the jurisdiction of organization of such Guarantor or the laws of a jurisdiction in the United States, (4) liquidate or dissolve or change its legal form if the Company determines in good faith that such action is in the best interests of the Company and is not materially disadvantageous to the Holders of the Notes or (5) change its name.
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(d) Notwithstanding the foregoing, compliance with this Section 5.01 will not be required with respect to (1) any sale, assignment, transfer, conveyance, lease or other disposition of properties or assets between or among the Company and its Restricted Subsidiaries or (2) the IPOCo Transactions.
Section 5.02 Successor Person Substituted. Upon any consolidation, amalgamation or merger, or any winding up, sale, assignment, transfer, lease, conveyance or other disposition of all or substantially all of the assets of the Company or a Guarantor in accordance with Section 5.01 hereof, the Successor Person formed by such consolidation or amalgamation or into or with which the Company or such Guarantor, as applicable, is merged or to which such wind up, sale, assignment, transfer, lease, conveyance or other disposition is made shall succeed to, and be substituted for (so that from and after the date of such consolidation, amalgamation, merger, sale, lease, conveyance or other disposition, the provisions of this Indenture, the Notes and the Guarantees referring to the Company or such Guarantor, as applicable, shall refer instead to the Successor Person and not to the Company or such Guarantor, as applicable), and may exercise every right and power of the Company or such Guarantor, as applicable, under this Indenture, the Notes and the Guarantees with the same effect as if such Successor Person had been named as the Company or a Guarantor, as applicable, herein, and such Guarantor’s Guarantee and such Guarantor will be automatically released and discharged from its obligations hereunder, and, in the case of a predecessor Company shall automatically be released from its obligations thereunder; provided that the predecessor Company shall not be relieved from the obligations under this Indenture, the Notes and the Guarantees in the case of any lease.
ARTICLE VI
DEFAULTS AND REMEDIES
Section 6.01 Events of Default. An “Event of Default,” wherever used herein, means any one of the following events (whatever the reason for such Event of Default and whether it shall be voluntary or involuntary or be effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body):
(a) default in payment when due and payable, upon redemption, acceleration or otherwise, of principal of, or premium, if any, on the Notes;
(b) default for 30 days or more in the payment when due of interest on or with respect to the Notes;
(c) failure by the Company for 180 days after receipt of written notice given by the Trustee or the Holders of not less than 25% in principal amount of the then outstanding Notes (with a copy to the Trustee) to comply with any of its obligations, covenants or agreements contained in Section 4.03;
(d) failure by the Company or any Guarantor for 60 days after receipt of written notice given by the Trustee or the Holders of not less than 25% in principal amount of the then outstanding Notes (with a copy to the Trustee) to comply with any of its obligations, covenants or agreements (other than a default referred to in clause (a), (b) or (c) of this Section 6.01) contained in this Indenture or the Notes;
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(e) default under any mortgage, indenture or instrument under which there is issued or by which there is secured or evidenced any Indebtedness for money borrowed by the Company or any Significant Subsidiary (or any group of Restricted Subsidiaries that taken together (as of the latest consolidated financial statements of the Company made available to the Holders) would constitute a Significant Subsidiary) or the payment of which is guaranteed by the Company or any Significant Subsidiary (or any group of Restricted Subsidiaries that taken together (as of the latest consolidated financial statements of the Company made available to the Holders) would constitute a Significant Subsidiary), other than Indebtedness owed to the Company or a Restricted Subsidiary, whether such Indebtedness or guarantee now exists or is created after the issuance of the Notes, if both:
(i) such default either results from the failure to pay any principal of such Indebtedness at its stated final maturity (after giving effect to any applicable grace periods) or relates to an obligation other than the obligation to pay principal of any such Indebtedness at its stated final maturity and results in the holder or holders of such Indebtedness causing such Indebtedness to become due prior to its stated maturity; and
(ii) the principal amount of such Indebtedness, together with the principal amount of any other such Indebtedness in default for failure to pay principal at its stated final maturity (after giving effect to any applicable grace periods), or the maturity of which has been so accelerated, aggregates $75.0 million or more at any one time outstanding;
and, within 20 Business Days of such payment default or acceleration, such Indebtedness has not been discharged or such payment default has not been cured or such acceleration has not been rescinded or annulled;
(f) failure by the Company or any Restricted Subsidiary that is a Significant Subsidiary (or any group of Restricted Subsidiaries that taken together (as of the latest consolidated financial statements of the Company made available to the Holders) would constitute a Significant Subsidiary) to pay final judgments aggregating in excess of $75.0 million (net of amounts covered by insurance policies), which final judgments remain unpaid, undischarged, unwaived and unstayed for a period of more than 90 days after such judgment becomes final;
(g) the Company or any Significant Subsidiary (or any group of Restricted Subsidiaries that taken together (as of the latest consolidated financial statements of the Company made available to the Holders) would constitute a Significant Subsidiary), pursuant to or within the meaning of any Bankruptcy Law:
(i) commences proceedings to be adjudicated bankrupt or insolvent;
(ii) consents to the institution of bankruptcy or insolvency proceedings against it, or the filing by it of a petition or answer or consent seeking reorganization or relief under applicable Bankruptcy Law;
(iii) consents to the appointment of a receiver, liquidator, assignee, trustee, sequestrator or other similar official of it or for all or substantially all of its property; or
(iv) makes a general assignment for the benefit of its creditors;
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(h) a court of competent jurisdiction enters an order or decree under any Bankruptcy Law that:
(i) is for relief against the Company or any of its Significant Subsidiaries (or any group of Restricted Subsidiaries that taken together (as of the latest consolidated financial statements of the Company made available to the Holders), would constitute a Significant Subsidiary), in a proceeding in which the Company or any such Significant Subsidiary (or any group of Restricted Subsidiaries that taken together (as of the latest consolidated financial statements of the Company made available to the Holders), would constitute a Significant Subsidiary), is to be adjudicated bankrupt or insolvent;
(ii) appoints a receiver, liquidator, assignee, trustee, sequestrator or other similar official of the Company or any of its Significant Subsidiaries (or any group of Restricted Subsidiaries that taken together (as of the latest consolidated financial statements of the Company made available to the Holders), would constitute a Significant Subsidiary), or for all or substantially all of the property of the Company or any of its Significant Subsidiaries (or any group of Restricted Subsidiaries that taken together (as of the latest consolidated financial statements of the Company made available to the Holders), would constitute a Significant Subsidiary); or
(iii) orders the liquidation of the Company or any of its Significant Subsidiaries (or any group of Restricted Subsidiaries that, taken together (as of the latest consolidated financial statements of the Company made available to the Holders), would constitute a Significant Subsidiary);
and the order or decree remains unstayed and in effect for 60 consecutive days; or
(i) the Guarantee of any Significant Subsidiary (or any group of Restricted Subsidiaries that taken together (as of the latest consolidated financial statements of the Company made available to the Holders) would constitute a Significant Subsidiary) will for any reason cease to be in full force and effect except as contemplated by the terms of this Indenture or be declared null and void in a final non-appealable judgment of a court of competent jurisdiction or any Financial Officer of any Guarantor that is a Significant Subsidiary (or the responsible officers of any group of Restricted Subsidiaries that taken together (as of the latest consolidated financial statements of the Company made available to the Holders) would constitute a Significant Subsidiary), as the case may be, denies in writing that it has any further liability under its Guarantee or gives written notice to such effect, other than by reason of the termination of this Indenture or the release of any such Guarantee in accordance with this Indenture.
Section 6.02 Acceleration. If any Event of Default (other than an Event of Default specified in clause (g) or (h) of Section 6.01 with respect to the Company) occurs and is continuing under this Indenture, the Trustee by written notice to the Company or the Holders of at least 25% in principal amount of the then total outstanding Notes by written notice to the Company and the Trustee may declare the principal of, and accrued and unpaid interest, if any, on all the then outstanding Notes to be due and payable immediately; provided that no such declaration may be made with respect to any action taken, and reported publicly or to Holders, more than two years prior to such declaration. Upon the effectiveness of such declaration, such principal of and accrued and unpaid interest, if any, all outstanding Notes will be due and payable immediately.
Any notice of Default under clauses (c), (d), (e), (f) or (i) of Section 6.01, notice of acceleration with respect to an Event of Default under clauses (c), (d), (e), (f) or (i) of Section 6.01, instruction to the Trustee to provide a notice of Default under clauses (c), (d), (e), (f) or (i) of Section 6.01, notice of acceleration with respect to an Event of Default under clauses (c), (d), (e), (f) or (i) of Section 6.01 or instruction to the Trustee to take any other action with respect to an alleged Default or Event of Default under clauses (c), (d), (e), (f) or (i) of Section 6.01 (a “Noteholder Direction”) provided by any one or more Holders (other than a Regulated Bank) (each, a “Directing Holder”) must be accompanied by a written representation from each such Holder delivered that such Holder is not (or, in the case such Holder is DTC or DTC’s nominee, that such Holder is being instructed solely by beneficial owners that are not) Net Short (a “Position Representation”), which representation, in the case of a Noteholder Direction relating to delivery of a notice of Default shall be deemed a continuing representation until the resulting Event of Default is cured or otherwise ceases to exist or the Notes are accelerated.
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In addition, each Directing Holder is deemed, at the time of providing a Noteholder Direction, to covenant to provide the Company with such other information as the Company may reasonably request from time to time in order to verify the accuracy of such Directing Holder’s Position Representation within five Business Days of request therefor (a “Verification Covenant”). In any case in which the Holder is DTC or DTC’s nominee, any Position Representation or Verification Covenant required hereunder shall be provided by the beneficial owner of the Notes in lieu of DTC or DTC’s nominee and DTC shall be entitled to conclusively rely on such Position Representation and Verification Covenant in delivering its direction to the Trustee. The Trustee shall have no duty whatsoever to provide this information to the Company or to obtain this information for the Company.
If, following the delivery of a Noteholder Direction, but prior to acceleration of the Notes, the Company determines in good faith that there is a reasonable basis to believe a Directing Holder was, at any relevant time, in breach of its Position Representation and the Company provides to the Trustee an Officer’s Certificate certifying that the Company has (i) a good faith reasonable basis to believe that one or more Directing Holders were at any relevant time in breach of their Position Representation or their Verification Covenant and (ii) initiated litigation in a court of competent jurisdiction seeking a determination that such Directing Holders were, at such time, in breach of their Position Representation, and seeking to invalidate any Event of Default that resulted from the applicable Noteholder Direction, the cure period with respect to such Default shall be automatically stayed and the cure period with respect to such Event of Default shall be automatically reinstituted and any remedy stayed pending a final and nonappealable determination of a court of competent jurisdiction on such matter. If such Officer’s Certificate has been delivered to the Trustee, the Trustee shall refrain from acting in accordance with such Noteholder Direction until such time as the Company provides to the Trustee an Officer’s Certificate stating that (i) such Directing Holders have satisfied their Verification Covenant or (ii) a final nonappealable determination of a court of competent jurisdiction has been made that such Directing Holders have failed to satisfy its Verification Covenant, and during such time the cure period with respect to any Default shall be automatically stayed and the cure period with respect to any Event of Default that resulted from the applicable Noteholder Direction shall be automatically reinstituted and any remedy stayed pending satisfaction of such Verification Covenant. Any breach of the Position Representation as confirmed by a final nonappealable determination of a court of competent jurisdiction on such matter shall result in such Directing Holder’s participation in such Noteholder Direction being disregarded; and, if, without the participation of such Directing Holder, the percentage of Notes held by the remaining Holders that provided such Noteholder Direction would have been insufficient to validly provide such Noteholder Direction, such Noteholder Direction shall be void ab initio, with the effect that such Event of Default shall be deemed never to have occurred, and any related acceleration rescinded, and the Trustee shall be deemed not to have received such Noteholder Direction or any notice of such alleged Default or Event of Default, shall not be permitted to act thereon and shall be restricted from accepting and acting on any future Noteholder Direction in relation to such Event of Default; provided, however, this shall not invalidate any indemnity or security provided by the Directing Holders to the Trustee which obligations shall continue to survive. If the Directing Holder has satisfied its Verification Covenant, then the Trustee shall be permitted to act in accordance with such Noteholder Direction. Notwithstanding the above, if such Directing Holder’s participation is not required to achieve the requisite level of consent of Holders required under this Indenture to give such Noteholder Direction, the Trustee shall be permitted to act in accordance with such Noteholder Direction notwithstanding any action taken or to be taken by the Company (as described above). The Trustee shall be entitled to conclusively rely on any Noteholder Direction or Officer’s Certificate delivered to it without verification, investigation or otherwise as to the statements made therein.
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Notwithstanding anything in the preceding four paragraphs to the contrary, any Noteholder Direction delivered to the Trustee during the pendency of an Event of Default as the result of a bankruptcy or similar proceeding shall not require compliance with the foregoing paragraphs. In addition, for the avoidance of doubt, the foregoing paragraphs shall not apply to any Holder that is a Regulated Bank. Each Holder by accepting a Note acknowledges and agrees that the Trustee (and any agent) shall not be liable to any person for acting or refraining to act in accordance with (i) the foregoing provisions, (ii) any Noteholder Direction, (iii) any Officer’s Certificate or (iv) its duties under this Indenture, as the Trustee may determine in its sole discretion. The Trustee shall have no obligation (i) to monitor, investigate, verify or otherwise determine if a Holder has a Net Short position, (ii) investigate the accuracy or authenticity of any Position Representation, (iii) inquire if the Company will seek action to determine if a Directing Holder has breached its Position Representation, (iv) enforce any Verification Covenant, (v) monitor any court proceedings undertaken in connection therewith, (vi) monitor or investigate whether any Default or Event of Default has been publicly reported or (vii) otherwise make any calculations, investigations or determinations with respect to any Derivative Instruments, Net Short position, Long Derivative Instrument, Short Derivative Instrument or otherwise. Upon the effectiveness of such declaration, or in the case of clauses (c), (d), (e), (f) or (i) of Section 6.01, upon a valid Noteholder Direction, to accelerate the Notes, such principal of and premium, if any, and interest will be due and payable immediately. Notwithstanding the foregoing, in the case of an Event of Default arising under clauses (g) or (h) of Section 6.01, the principal of, and accrued and unpaid interest, if any, on all outstanding Notes will become due and payable without further action or notice.
The Company hereby waives any and all claims, in law and/or in equity, against the Trustee, and agrees not to commence any legal proceeding against the Trustee in respect of, and agrees that the Trustee will not be liable for any action that the Trustee takes in accordance with the foregoing provisions, or arising out of or in connection with following instructions or taking actions in accordance with a Noteholder Direction. The Company hereby confirms that any and all other actions that the Trustee takes or omits to take under with the foregoing provisions and all fees, costs and expenses of the Trustee and its agents and counsel arising thereunder and in connection therewith shall be covered by Section 7.06 hereof.
If a Default or an Event of Default occurs and is continuing and is actually known to a Responsible Officer of the Trustee, the Trustee shall mail or otherwise deliver to each Holder notice of the Default or Event of Default within 60 days after the occurrence thereof. Except in the case of a Default or an Event of Default in payment of principal of, premium, if any, or interest on any Notes, the Trustee may withhold the notice to the Holders of the Notes if the Trustee determines in good faith that withholding the notice is in the interest of the Holders of the Notes.
The Holders of a majority of the aggregate principal amount of the then outstanding Notes, by written notice to the Trustee, may on behalf of the Holders of all of the Notes waive any existing Default and its consequences under this Indenture (except a continuing Default in the payment of interest on, premium, if any, or the principal of any Note held by a non-consenting Holder) and rescind any acceleration with respect to the Notes and its consequences (except if such rescission would conflict with any judgment of a court of competent jurisdiction).
In the event of any Event of Default specified in Section 6.01(e) hereof, such Event of Default and all consequences thereof (excluding any resulting payment default, other than as a result of acceleration of the Notes) will be annulled, waived and rescinded, automatically and without any action by the Trustee or the Holders, if:
(a) the Indebtedness or guarantee that is the basis for such Event of Default has been discharged;
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(b) the requisite holders thereof have rescinded or waived the acceleration, notice or action (as the case may be) giving rise to such Event of Default; or
(c) the default that is the basis for such Event of Default has been cured, waived or is no longer continuing.
Section 6.03 Other Remedies. If an Event of Default occurs and is continuing, the Trustee may pursue any available remedy to collect the payment of principal, premium, if any, and interest on the Notes or to enforce the performance of any provision of the Notes or this Indenture.
The Trustee may maintain a proceeding even if it does not possess any of the Notes or does not produce any of them in the proceeding. A delay or omission by the Trustee or any Holder of a Note in exercising any right or remedy accruing upon an Event of Default shall not impair the right or remedy or constitute a waiver of or acquiescence in the Event of Default. All remedies are cumulative to the extent permitted by law.
Section 6.04 Waiver of Past Defaults. Subject to Section 6.02 hereof, Holders of a majority in aggregate principal amount of the then outstanding Notes, by written notice to the Trustee, may on behalf of the Holders of all of the Notes waive any existing Default and its consequences hereunder (except a continuing Default in the payment of interest on, premium, if any, or the principal of any Note held by a non-consenting Holder). Upon any such waiver, such Default shall cease to exist, and any Event of Default arising therefrom shall be deemed to have been cured for every purpose of this Indenture; but no such waiver shall extend to any subsequent or other Default or impair any right consequent thereon.
Section 6.05 Control by Majority. Holders of a majority in principal amount of the then total outstanding Notes may direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or of exercising any trust or power conferred on the Trustee. The Trustee, however, may refuse to follow any direction that conflicts with law or this Indenture or that the Trustee determines is unduly prejudicial to the rights of any other Holder (it being understood that the Trustee does not have an affirmative duty to ascertain whether or not any such direction is unduly prejudicial to the rights of such other Holder) or that would involve the Trustee in personal liability.
Section 6.06 Limitation on Suits. Subject to Section 6.07 hereof, no Holder of a Note may pursue any remedy with respect to this Indenture or the Notes unless:
(a) such Holder has previously given the Trustee written notice that an Event of Default is continuing and, if such Event of Default is in respect of clause (c), (d), (e), (f) or (i) of Section 6.01, such Holder is not in breach of a Position Representation or Verification Covenant;
(b) the Holders, or in the case of clauses (c), (d), (e), (f) or (i) of Section 6.01, Directing Holders that are not in breach of a Position Representation or Verification Covenant, comprising at least 25% in the aggregate in principal amount of the then total outstanding Notes have requested in writing the Trustee to pursue the remedy;
(c) Holders of the Notes have offered (and if requested, provided) the Trustee security or indemnity satisfactory to the Trustee against any loss, liability or expense;
(d) the Trustee has not complied with such request within 60 days after the receipt thereof and the offer of security or indemnity; and
(e) Holders of a majority in principal amount of the then total outstanding Notes have not given the Trustee a direction inconsistent with such written request within such 60-day period.
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A Holder of a Note may not use this Indenture to prejudice the rights of another Holder of a Note or to obtain a preference or priority over another Holder of a Note (it being understood that the Trustee does not have an affirmative duty to ascertain whether or not such actions or forbearances are unduly prejudicial to such Holders).
Section 6.07 Rights of Holders to Receive Payment. Notwithstanding any other provision of this Indenture, the contractual right of any Holder of a Note to bring suit for the enforcement of any payment of principal of, premium, if any, and interest on the Notes on or after the respective due dates expressed in the Note (including in connection with an Asset Sale Offer or a Change of Control Offer), shall not be amended or modified in a manner adverse to a Holder without the consent of such Holder.
Section 6.08 Collection Suit by Trustee. If an Event of Default specified in Section 6.01(a) or (b) hereof occurs and is continuing, the Trustee is authorized to recover judgment in its own name and as trustee of an express trust against the Company for the whole amount of principal of, premium, if any, and interest remaining unpaid on the Notes and interest on overdue principal and, to the extent lawful, interest and such further amount as shall be sufficient to cover the costs and expenses of collection, including the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel.
Section 6.09 Restoration of Rights and Remedies. If the Trustee or any Holder has instituted any proceeding to enforce any right or remedy under this Indenture and such proceeding has been discontinued or abandoned for any reason, or has been determined adversely to the Trustee or to such Holder, then and in every such case, subject to any determination in such proceedings, the Company, the Trustee and the Holders shall be restored severally and respectively to their former positions hereunder and thereafter all rights and remedies of the Trustee and the Holders shall continue as though no such proceeding has been instituted.
Section 6.10 Rights and Remedies Cumulative. Except as otherwise provided with respect to the replacement or payment of mutilated, destroyed, lost or stolen Notes in Section 2.07 hereof, no right or remedy herein conferred upon or reserved to the Trustee or to the Holders is intended to be exclusive of any other right or remedy, and every right and remedy shall, to the extent permitted by law, be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other appropriate right or remedy.
Section 6.11 Delay or Omission Not Waiver. No delay or omission of the Trustee or of any Holder of any Note to exercise any right or remedy accruing upon any Event of Default shall impair any such right or remedy or constitute a waiver of any such Event of Default or an acquiescence therein. Every right and remedy given by this Article or by law to the Trustee or to the Holders may be exercised from time to time, and as often as may be deemed expedient, by the Trustee or by the Holders, as the case may be.
Section 6.12 Trustee May File Proofs of Claim. The Trustee is authorized to file such proofs of claim and other papers or documents as may be necessary or advisable in order to have the claims of the Trustee (including any claim for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel) and the Holders allowed in any judicial proceedings relative to the Company (or any other obligor upon the Notes including the Guarantors), its creditors or its property and shall be entitled and empowered to participate as a member in any official committee of creditors appointed in such matter and to collect, receive and distribute any money or other property payable or deliverable on any such claims and any custodian in any such judicial proceeding is hereby authorized by each Holder to make such payments to the Trustee on behalf of such Holder, and in the event that the Trustee shall consent to the making of such payments directly to the Holders, to pay to the Trustee any amount due to it for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, and any other amounts due the Trustee under Section 7.06 hereof. To the extent that the payment of any such compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, and any other amounts due the Trustee under Section 7.06 hereof out of the estate in any such proceeding, shall be denied for any reason, payment of the same shall be secured by a Lien on, and shall be paid out of, any and all distributions, dividends, money, securities and other properties that the Holders may be entitled to receive in such proceeding whether in liquidation or under any plan of reorganization or arrangement or otherwise. Nothing herein contained shall be deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf of any Holder any plan of reorganization, arrangement, adjustment or composition affecting the Notes or the rights of any Holder, or to authorize the Trustee to vote in respect of the claim of any Holder in any such proceeding.
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Section 6.13 Priorities. If the Trustee or any Agent collects any money or property pursuant to this Article VI, it shall pay out the money or property in the following order:
(a) to the Trustee, such Agent, their agents and attorneys for amounts due under Section 7.06 hereof, including payment of all compensation, expenses and liabilities incurred, and all advances made, by the Trustee or such Agent and the costs and expenses of collection;
(b) to Holders for amounts due and unpaid on the Notes for principal, premium, if any, and interest, ratably, without preference or priority of any kind, according to the amounts due and payable on the Notes for principal, premium, if any, and interest, respectively; and
(c) to the Company or to such party as a court of competent jurisdiction shall direct including a Guarantor, if applicable.
The Trustee may fix a record date and payment date for any payment to Holders pursuant to this Section 6.13.
Section 6.14 Undertaking for Costs. In any suit for the enforcement of any right or remedy under this Indenture or in any suit against the Trustee for any action taken or omitted by it as a Trustee, a court in its discretion may require the filing by any party litigant in the suit of an undertaking to pay the costs of the suit, and the court in its discretion may assess reasonable costs, including reasonable attorneys’ fees and expenses, against any party litigant in the suit, having due regard to the merits and good faith of the claims or defenses made by the party litigant. This Section 6.14 does not apply to a suit by the Trustee, a suit by a Holder of a Note pursuant to Section 6.07 hereof, or a suit by Holders of more than 10% in principal amount of the then outstanding Notes.
ARTICLE VII
TRUSTEE
Section 7.01 Duties of Trustee.
(a) If an Event of Default has occurred and is continuing of which the Trustee has received written notice or which is actually known to a Responsible Officer of the Trustee, the Trustee shall exercise such of the rights and powers vested in it by this Indenture on behalf of the Holders, and use the same degree of care and skill in its exercise, as a prudent person would exercise or use under the circumstances in the conduct of such person’s own affairs.
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(b) Except during the continuance of an Event of Default:
(i) the duties of the Trustee shall be determined solely by the express provisions of this Indenture and the Trustee need perform only those duties that are specifically set forth in this Indenture and no others, and no implied covenants or obligations shall be read into this Indenture against the Trustee; and
(ii) in the absence of bad faith on its part, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Trustee and conforming to the requirements of this Indenture. However, in the case of any such certificates or opinions which by any provision hereof are specifically required to be furnished to the Trustee, the Trustee shall examine the certificates and opinions to determine whether or not they conform to the requirements of this Indenture (but need not confirm or investigate the accuracy of mathematical calculations or other facts stated therein).
(c) The Trustee may not be relieved from liabilities for its own grossly negligent action, its own grossly negligent failure to act, or its own willful misconduct, except that:
(i) this paragraph (c) does not limit the effect of paragraph (b) of this Section 7.01;
(ii) the Trustee shall not be liable for any error of judgment made in good faith by a Responsible Officer, unless it is proved in a court of competent jurisdiction that the Trustee was grossly negligent in ascertaining the pertinent facts; and
(iii) the Trustee shall not be liable with respect to any action it takes or omits to take in good faith in accordance with a direction received by it pursuant to Section 6.02, 6.04 or 6.05 hereof.
(d) Whether or not therein expressly so provided, every provision of this Indenture that in any way relates to the Trustee is subject to paragraphs (a), (b) and (c) of this Section 7.01 and Section 7.01(f).
(e) The Trustee shall be under no obligation to exercise any of its rights or powers under this Indenture at the request or direction of any of the Holders unless the Holders have offered (and if requested, provided) to the Trustee indemnity or security satisfactory to it against any loss, liability or expense that might be incurred by it in compliance with such request or direction.
(f) The Trustee shall not be liable for interest on any money received by it except as the Trustee may agree in writing with the Company. Money held in trust by the Trustee need not be segregated from other funds except to the extent required by law.
Section 7.02 Rights of Trustee.
(a) The Trustee may conclusively rely upon and shall be fully protected in acting or refraining from acting upon any document believed by it to be genuine and to have been signed or presented by the proper Person. The Trustee need not investigate any fact or matter stated in the document, but the Trustee, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit, and, if the Trustee shall determine to make such further inquiry or investigation, it shall be entitled to examine the books, records and premises of the Company, personally or by agent or attorney at the sole cost of the Company and shall incur no liability or additional liability of any kind by reason of such inquiry or investigation.
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(b) Before the Trustee acts or refrains from acting, it may require an Officer’s Certificate or an Opinion of Counsel or both. The Trustee shall not be liable for any action it takes or omits to take in good faith in reliance on such Officer’s Certificate or Opinion of Counsel. The Trustee may consult with counsel of its selection and the advice of such counsel or any Opinion of Counsel shall be full and complete authorization and protection from liability in respect of any action taken, suffered or omitted by it hereunder in good faith and in reliance thereon.
(c) The Trustee may act through its attorneys and agents and shall not be responsible for the misconduct or negligence of any agent or attorney appointed with due care.
(d) The Trustee shall not be liable for any action it takes or omits to take in good faith that it believes to be authorized or within the rights or powers conferred upon it by this Indenture.
(e) Unless otherwise specifically provided in this Indenture, any demand, request, direction or notice from the Company shall be sufficient if signed by an Officer thereof.
(f) None of the provisions of this Indenture shall require the Trustee to expend or risk its own funds or otherwise to incur any liability, financial or otherwise, in the performance of any of its duties hereunder, or in the exercise of any of its rights or powers if an indemnity satisfactory to it against such risk or liability is not assured to it.
(g) The Trustee shall not be deemed to have notice of any Default or Event of Default unless a Responsible Officer of the Trustee has actual knowledge thereof or unless written notice of any event which is in fact such a Default or Event of Default is received by the Trustee at the Corporate Trust Office of the Trustee, and such notice references the Notes and this Indenture.
(h) In no event shall the Trustee be responsible or liable for special, indirect, punitive or consequential loss or damage of any kind whatsoever (including, but not limited to, loss of profit) irrespective of whether the Trustee has been advised of the likelihood of such loss or damage and regardless of the form of action.
(i) The rights, privileges, protections, immunities and benefits given to the Trustee, including, without limitation, its right to be indemnified, are extended to, and shall be enforceable by, the Trustee in each of its capacities hereunder, and each agent, custodian and other Person employed to act hereunder.
(j) Delivery of reports (including, without limitation reports contemplated by Section 4.03 hereof), information and documents to the Trustee is for informational purposes only and the Trustee’s receipt of such shall not constitute actual or constructive knowledge or notice of any information contained therein or determinable from information contained therein, including the Company’s compliance with any of its covenants hereunder (as to which the Trustee is entitled to rely exclusively on Officer’s Certificates).
(k) The permissive rights of the Trustee to take certain actions under this Indenture shall not be construed as a duty unless so specified herein.
(l) The Trustee shall not be required to give any bond or surety in respect of the performance of its powers and duties hereunder.
(m) The Trustee may request that the Company deliver a certificate setting forth the names of individuals and/or titles of officers authorized at such time to take specified actions pursuant to this Indenture.
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(n) No provision of this Indenture shall be deemed to impose any duty or obligation on the Trustee to take or omit to take any action, in the performance of its duties or obligations under this Indenture, or to exercise any right or power thereunder, to the extent that taking or omitting to take such action would violate applicable law binding upon it.
(o) Under no circumstances shall the Trustee be liable in its individual capacity for the obligations evidenced by the Notes.
(p) The Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, consent, order, approval, bond, debenture, note or other paper or document unless requested in writing to do so by the Holders of not less than a majority in principal amount of the Notes at the time outstanding, but the Trustee, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit.
(q) The Trustee shall have no duty to inquire as to the performance of the Issuer with respect to the covenants contained in Article 4 or to make any calculation in connection therewith or in connection with any redemption of the Notes. In addition, except as otherwise expressly provided herein, the Trustee shall have no obligation to monitor or verify compliance by the Issuer or any Guarantor with any other obligation or covenant under this Indenture.
Section 7.03 Individual Rights of Trustee. The Trustee in its individual or any other capacity may become the owner or pledgee of Notes and may otherwise deal with the Company or any of its Affiliates with the same rights it would have if it were not Trustee. However, in the event that the Trustee acquires any conflicting interest (as defined in the Trust Indenture Act) after a Default has occurred and is continuing and if it is known to the Trustee as provided in Section 7.02(g) hereof, it must eliminate such conflict within 90 days or resign. Any Agent may do the same with like rights and duties. The Trustee is also subject to Section 7.10 hereof.
Section 7.04 Trustee’s Disclaimer. The Trustee shall not be responsible for and makes no representation as to the validity or adequacy of this Indenture or the Notes, it shall not be accountable for the Company’s use of the proceeds from the Notes or any money paid to the Company or upon the Company’s direction under any provision of this Indenture, it shall not be responsible for the use or application of any money received by any Paying Agent other than the Trustee, and it shall not be responsible for any statement or recital herein or any statement in the Notes or any other document in connection with the sale of the Notes or pursuant to this Indenture other than its certificate of authentication.
Section 7.05 Notice of Defaults. If a Default occurs and is continuing and if it is known to the Trustee as provided in Section 7.02(g) hereof, the Trustee shall deliver to Holders a notice of the Default within 60 days after it occurs and becomes known, unless such Default shall have been cured or waived. Except in the case of a Default relating to the payment of principal, premium, if any, or interest on any Note, the Trustee may withhold from the Holders notice of any continuing Default if and so long as it in good faith determines that withholding the notice is in the interests of the Holders.
Section 7.06 Compensation and Indemnity. The Company shall pay to the Trustee from time to time such compensation for its acceptance of this Indenture and services hereunder as the parties shall agree in writing from time to time. The Trustee’s compensation shall not be limited by any law on compensation of a trustee of an express trust. The Company shall reimburse the Trustee promptly upon request for all reasonable out-of-pocket disbursements, advances and expenses incurred or made by it in addition to the compensation for its services. Such expenses shall include the reasonable compensation, disbursements and expenses of the Trustee’s agents and counsel.
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The Company and the Guarantors, jointly and severally, shall indemnify, defend and protect the Trustee and its officers, directors, employees and agents for, and hold the Trustee harmless against, any and all loss, damage, claims, liability or expense (including taxes (other than taxes based upon, or measured by or determined by the income of the Trustee) and reasonable attorneys’ fees and expenses and court costs) incurred by it in connection with the acceptance or administration of this trust and the performance of its duties hereunder or in connection with enforcing this Indenture against the Company or any of the Guarantors (including this Section 7.06) or defending itself against any claim whether asserted by any Holder, the Company or any Guarantor, or any other Person or liability in connection with the acceptance, exercise or performance of any of its powers or duties hereunder. The Trustee shall notify the Company promptly of any claim for which it may seek indemnity. Failure by the Trustee to so notify the Company shall not relieve the Company of its obligations hereunder. The Company shall defend the claim and the Trustee may have separate counsel and the Company shall pay the reasonable fees and expenses of such counsel. Neither the Company nor any Guarantor need reimburse any expense or indemnify against any loss, liability or expense incurred by the Trustee through the Trustee’s own willful misconduct or gross negligence, as determined by a final, non-appealable judgment of a court of competent jurisdiction. Neither the Company nor any Guarantor need to pay for any settlement made without its consent, which consent shall not be unreasonably withheld.
The obligations of the Company under this Section 7.06 and the immunities of the Trustee contained in Article VII shall survive the satisfaction and discharge of this Indenture or the earlier resignation or removal of the Trustee.
To secure the payment obligations of the Company and the Guarantors in this Section 7.06, the Trustee shall have a Lien prior to the Notes on all money or property held or collected by the Trustee, except for money or property held in trust to pay principal and interest on particular Notes. Such Lien shall survive the satisfaction and discharge of this Indenture.
When the Trustee incurs expenses or renders services after an Event of Default specified in Section 6.01(g) or (h) hereof occurs, the expenses and the compensation for the services (including the reasonable fees and expenses of its agents and counsel) are intended to constitute expenses of administration under any Bankruptcy Law.
Section 7.07 Replacement of Trustee. A resignation or removal of the Trustee and appointment of a successor Trustee shall become effective only upon the successor Trustee’s acceptance of appointment as provided in this Section 7.07. The Trustee may resign in writing at any time and be discharged from the trust hereby created by so notifying the Company. The Holders of a majority in principal amount of the then outstanding Notes may remove the Trustee by so notifying the Trustee and the Company in writing not less than 30 days prior to the effective date of such removal. The Company may remove the Trustee if:
(a) the Trustee fails to comply with Section 7.09 hereof;
(b) the Trustee is adjudged bankrupt or insolvent or an order for relief is entered with respect to the Trustee under any Bankruptcy Law;
(c) a custodian or public officer takes charge of the Trustee or its property; or
(d) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the office of Trustee for any reason, the Company shall promptly appoint a successor Trustee. Within one year after the successor Trustee takes office, the Holders of a majority in principal amount of the then outstanding Notes may appoint a successor Trustee to replace the successor Trustee appointed by the Company.
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If a successor Trustee does not take office within 30 days after the retiring Trustee resigns or is removed, the retiring Trustee (at the Company’s expense), the Company or the Holders of at least 10% in principal amount of the then outstanding Notes may petition any court of competent jurisdiction for the appointment of a successor Trustee.
If the Trustee, after written request by any Holder who has been a Holder for at least six months, fails to comply with Section 7.09 hereof, such Holder may petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor Trustee.
A successor Trustee shall deliver a written acceptance of its appointment to the retiring Trustee and to the Company. Thereupon, the resignation or removal of the retiring Trustee shall become effective, and the successor Trustee shall have all the rights, powers and duties of the Trustee under this Indenture. The successor Trustee shall mail a notice of its succession to Holders. The retiring Trustee shall promptly transfer all property held by it as Trustee to the successor Trustee; provided that all sums owing to the Trustee hereunder have been paid and subject to the Lien provided for in Section 7.06 hereof. Notwithstanding replacement of the Trustee pursuant to this Section 7.07, the Company’s obligations under Section 7.06 hereof shall continue for the benefit of the retiring Trustee.
The resigning Trustee shall have no responsibility or liability for any action or inaction of a successor Trustee.
Section 7.08 Successor Trustee by Merger, etc. If the Trustee consolidates, merges or converts into, or transfers all or substantially all of its corporate trust business to, another Person, the successor Person without any further act shall be the successor Trustee, subject to Section 7.09.
Section 7.09 Eligibility; Disqualification. There shall at all times be a Trustee hereunder that is a corporation organized and doing business under the laws of the United States of America or of any state thereof that is authorized under such laws to exercise corporate trustee power, that is subject to supervision or examination by federal or state authorities and that has, together with its parent, a combined capital and surplus of at least $50,000,000 as set forth in its most recent published annual report of condition.
ARTICLE VIII
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
Section 8.01 Option to Effect Legal Defeasance or Covenant Defeasance. The Company may, at its option and at any time, elect to have either Section 8.02 or 8.03 hereof applied to all outstanding Notes and all obligations of the Guarantors with respect to the Guarantees upon compliance with the conditions set forth below in this Article VIII.
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Section 8.02 Legal Defeasance and Discharge. Upon the Company’s exercise under Section 8.01 hereof of the option applicable to this Section 8.02, the Company and the Guarantors shall, subject to the satisfaction of the conditions set forth in Section 8.04 hereof, be deemed to have been discharged from their obligations with respect to all outstanding Notes and Guarantees on the date the conditions set forth below are satisfied (“Legal Defeasance”). For this purpose, Legal Defeasance means that the Company and the Guarantors shall be deemed to have paid and discharged the entire Indebtedness represented by the outstanding Notes, which shall thereafter be deemed to be “outstanding” only for the purposes of Section 8.05 hereof, to have cured all then existing Events of Default and to have satisfied all its other obligations under such Notes and this Indenture including that of the Guarantors with each Guarantor released from all of its obligations with respect to its Guarantee (and the Trustee, on demand of and at the expense of the Company, shall execute such instruments requested by the Company acknowledging the same), except for the following provisions which shall survive until otherwise terminated or discharged hereunder:
(a) the rights of Holders to receive payments in respect of the principal of, premium, if any, and interest on the Notes when such payments are due solely out of the trust created pursuant to this Indenture referred to in Section 8.04 hereof;
(b) the Company’s obligations with respect to Notes concerning issuing temporary Notes, registration of such Notes, mutilated, destroyed, lost or stolen Notes and the maintenance of an office or agency for payment and money for security payments held in trust;
(c) the rights, powers, trusts, duties and immunities of the Trustee, and the Company’s obligations in connection therewith; and
(d) this Section 8.02.
Subject to compliance with this Article VIII, the Company may exercise its option under this Section 8.02 notwithstanding the prior exercise of its option under Section 8.03 hereof.
Section 8.03 Covenant Defeasance. Upon the Company’s exercise under Section 8.01 hereof of the option applicable to this Section 8.03, the Company and the Guarantors shall, subject to the satisfaction of the conditions set forth in Section 8.04 hereof, be released from their obligations under the covenants contained in Sections 4.03, 4.04, 4.05, 4.07, 4.08, 4.09, 4.10, 4.11, 4.12, 4.13, 4.14 and 4.15 hereof and Sections 5.01(a)(i)(C), (D) and (E), and Section 5.01(b) hereof with respect to the outstanding Notes on and after the date the conditions set forth in Section 8.04 hereof are satisfied (“Covenant Defeasance”), and the Notes will thereafter be deemed not “outstanding” for the purposes of any direction, waiver, consent or declaration or act of Holders (and the consequences of any thereof) in connection with such covenants, but shall continue to be deemed “outstanding” for all other purposes hereunder (it being understood that such Notes shall not be deemed outstanding for accounting purposes). For this purpose, Covenant Defeasance means that, with respect to the outstanding Notes and the Guarantees, the Company and the Guarantors may omit to comply with and shall have no liability in respect of any term, condition or limitation set forth in any such covenant, whether directly or indirectly, by reason of any reference elsewhere herein to any such covenant or by reason of any reference in any such covenant to any other provision herein or in any other document, and such omission to comply shall not constitute a Default or an Event of Default under Section 6.01 hereof, but, except as specified above, the remainder of this Indenture and such Notes shall be unaffected thereby. If the Company exercises the Covenant Defeasance option, each Guarantor will be released from all of its obligations with respect to its Guarantee. In addition, upon the Company’s exercise under Section 8.01 hereof of the option applicable to this Section 8.03 hereof, subject to the satisfaction of the conditions set forth in Section 8.04 hereof, Sections 6.01(c), 6.01(d) (solely with respect to the covenants that are released upon a Covenant Defeasance), 6.01(e), 6.01(f), 6.01(g) (solely with respect to the Company’s Restricted Subsidiaries), 6.01(h) (solely with respect to the Company’s Restricted Subsidiaries) and 6.01(i) hereof shall not constitute Events of Default.
Section 8.04 Conditions to Legal or Covenant Defeasance. In order to exercise either Legal Defeasance or Covenant Defeasance with respect to the Notes:
(a) the Company must irrevocably deposit with the Trustee, in trust, for the benefit of the Holders, cash in U.S. dollars, U.S. dollar-denominated Government Securities, or a combination thereof, in such amounts as will be sufficient, in the opinion of an Independent Financial Advisor to the extent such amounts consist of U.S. dollar-denominated Government Securities, to pay the principal of, premium, if any, and interest due on the Notes on the stated maturity date or on the applicable Redemption Date, as the case may be, and the Company must specify whether such Notes are being defeased to maturity or to a particular Redemption Date; provided that upon any redemption that requires the payment of the Applicable Premium, the amount deposited will be sufficient for purposes of this Indenture to the extent that an amount is deposited with the Trustee is equal to the Applicable Premium calculated as of the date of the notice of redemption, with any deficit as of the date of redemption (any such amount, the “Applicable Premium Deficit”) only required to be deposited with the Trustee on or prior to the date of redemption (it being understood that any Legal Defeasance or Covenant Defeasance shall be subject to the condition subsequent that such Applicable Premium Deficit is in fact paid); provided, further, that the Trustee shall have no liability whatsoever in the event that such Applicable Premium Deficit is not in fact paid after any Legal Defeasance or Covenant Defeasance. Any Applicable Premium Deficit will be set forth in an Officer’s Certificate delivered to the Trustee simultaneously with the deposit of such Applicable Premium Deficit that confirms that such Applicable Premium Deficit will be applied toward such redemption;
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(b) in the case of Legal Defeasance, the Company will have delivered to the Trustee an Opinion of Counsel confirming that, subject to customary assumptions and exclusions:
(i) the Company has received from, or there has been published by, the United States Internal Revenue Service a ruling, or
(ii) since the issuance of the Notes, there has been a change in the applicable U.S. federal income tax law,
in either case to the effect that, and based thereon such Opinion of Counsel will confirm that, subject to customary assumptions and exclusions, the Holders will not recognize income, gain or loss for U.S. federal income tax purposes, as applicable, as a result of such Legal Defeasance and will be subject to U.S. federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Legal Defeasance had not occurred;
(c) in the case of Covenant Defeasance, the Company will have delivered to the Trustee an Opinion of Counsel confirming that, subject to customary assumptions and exclusions, the Holders will not recognize income, gain or loss for U.S. federal income tax purposes as a result of such Covenant Defeasance and will be subject to such tax on the same amounts, in the same manner and at the same times as would have been the case if such Covenant Defeasance had not occurred;
(d) no Default or Event of Default (other than that resulting from borrowing funds to be applied to make such deposit and any similar and simultaneous deposit relating to other Indebtedness and, in each case, the granting of Liens and the consummation of other transactions in connection therewith) will have occurred and be continuing on the date of such deposit;
(e) such Legal Defeasance or Covenant Defeasance will not result in a breach or violation of, or constitute a default under the Revolving Credit Facility or any other material agreement, instrument or documents (other than this Indenture) to which, the Company or any Guarantor is a party or by which the Company or any Guarantor is bound (other than that resulting from any borrowing of funds to be applied to make the deposit required to effect such Legal Defeasance or Covenant Defeasance and any similar and simultaneous deposit relating to other Indebtedness to be redeemed, and, in each case, the granting of Liens and the consummation of other transactions in connection therewith);
(f) the Company will have delivered to the Trustee an Officer’s Certificate stating that the deposit was not made by the Company with the intent of defeating, hindering, delaying or defrauding any creditors of the Company or any Guarantor or others; and
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(g) the Company will have delivered to the Trustee an Officer’s Certificate and an Opinion of Counsel (which Opinion of Counsel may be subject to customary assumptions and exclusions) each stating that all conditions precedent provided for or relating to the Legal Defeasance or the Covenant Defeasance, as the case may be, have been complied with.
Notwithstanding the foregoing, an Opinion of Counsel required by clause (b) of the immediately preceding paragraph with respect to Legal Defeasance need not be delivered if all of the Notes not theretofore delivered to the Trustee for cancellation (i) have become due and payable or (ii) will become due and payable within one year or are to be called for redemption within one year under arrangements satisfactory to the Trustee for the giving of notice of redemption by the Trustee in the name, and at the expense, of the Company.
Section 8.05 Deposited Money and Government Securities to Be Held in Trust; Other Miscellaneous Provisions.
Subject to Section 8.06 hereof, all money and Government Securities (including the proceeds thereof) deposited with the Trustee (or other qualifying trustee, collectively for purposes of this Section 8.05, the “Trustee”) pursuant to Section 8.04 hereof in respect of the outstanding Notes shall be held in trust and applied by the Trustee, in accordance with the provisions of such Notes and this Indenture, to the payment, either directly or through any Paying Agent (including the Company or a Guarantor acting as Paying Agent) as the Trustee may determine, to the Holders of such Notes of all sums due and to become due thereon in respect of principal, premium and interest, but such money need not be segregated from other funds except to the extent required by law.
The Company shall pay and indemnify the Trustee against any tax, fee or other charge imposed on or assessed against the cash or Government Securities deposited pursuant to Section 8.04 hereof or the principal and interest received in respect thereof other than any such tax, fee or other charge which by law is for the account of the Holders of the outstanding Notes.
Anything in this Article VIII to the contrary notwithstanding, the Trustee shall deliver or pay to the Company from time to time upon the request of the Company any money or Government Securities held by it as provided in Section 8.04 hereof which, in the opinion of an Independent Financial Advisor expressed in a written certification thereof delivered to the Trustee to the extent such requested amount consists of Government Securities (which may be the opinion delivered under Section 8.04(a) hereof), are in excess of the amount thereof that would then be required to be deposited to effect an equivalent Legal Defeasance or Covenant Defeasance.
Section 8.06 Repayment to Company. Subject to any applicable abandoned property law, any money deposited with the Trustee or any Paying Agent, or then held by the Company, in trust for the payment of the principal of, premium, if any, or interest on any Note and remaining unclaimed for two years after such principal, and premium, if any, or interest has become due and payable shall be paid to the Company on its request or (if then held by the Company) shall be discharged from such trust; and the Holder of such Note shall thereafter look only to the Company for payment thereof, and all liability of the Trustee or such Paying Agent with respect to such trust money, and all liability of the Company as trustee thereof, shall thereupon cease.
Section 8.07 Reinstatement. If the Trustee or Paying Agent is unable to apply any United States dollars or Government Securities in accordance with Section 8.02 or 8.03 hereof, as the case may be, by reason of any order or judgment of any court or governmental authority enjoining, restraining or otherwise prohibiting such application, then the Company’s and the Guarantors’ obligations under this Indenture and the Notes and the Guarantees shall be revived and reinstated as though no deposit had occurred pursuant to Section 8.02 or 8.03 hereof until such time as the Trustee or Paying Agent is permitted to apply all such money in accordance with Section 8.02 or 8.03 hereof, as the case may be; provided that, if the Company makes any payment of principal of, premium, if any, or interest on any Note following the reinstatement of its obligations, the Company shall be subrogated to the rights of the Holders of such Notes to receive such payment from the money held by the Trustee or Paying Agent.
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ARTICLE IX
AMENDMENT, SUPPLEMENT AND WAIVER
Section 9.01 Without Consent of Holders. Notwithstanding Section 9.02 hereof, the Company, any Guarantor and the Trustee may amend or supplement this Indenture and any Guarantee or Notes without the consent of any Holder:
(a) to cure any ambiguity, omission, mistake, defect or inconsistency;
(b) to provide for uncertificated Notes in addition to or in place of certificated Notes;
(c) to comply with Section 5.01 hereof;
(d) to provide for the assumption of the Company’s or any Guarantor’s obligations to the Holders;
(e) to make any change that would provide any additional rights or benefits to the Holders or that does not materially adversely affect (as determined in good faith by the Company) the legal rights under this Indenture of any such Holder;
(f) to add covenants for the benefit of the Holders or to surrender any right or power conferred upon the Company or any Guarantor;
(g) at the Company’s election, to comply with requirements of the SEC in order to effect or maintain the qualification of this Indenture under the Trust Indenture Act, if applicable (it being agreed that this Indenture need not qualify under the Trust Indenture Act);
(h) to evidence and provide for the acceptance and appointment under this Indenture of a successor Trustee hereunder pursuant to the requirements hereof;
(i) to add a Guarantor or co-obligor under this Indenture or to release a Guarantor in accordance with the terms of this Indenture;
(j) to conform the text of this Indenture, Guarantees or the Notes to any provision of the “Description of notes” section of the Offering Memorandum to the extent that such provision in such “Description of notes” section was intended to be a verbatim recitation of a provision of this Indenture, Guarantee or Notes, as provided to the Trustee in an Officer’s Certificate;
(k) to make any amendment to the provisions of this Indenture relating to the transfer and legending of Notes as permitted by this Indenture, including, to facilitate the issuance and administration of the Notes; provided that (a) compliance with this Indenture as so amended would not result in Notes being transferred in violation of the Securities Act or any applicable securities law and (b) such amendment does not materially and adversely affect the rights of Holders to transfer Notes;
(l) to provide for the issuance of Additional Notes in accordance with the terms of this Indenture; or
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(m) to secure the Notes and/or the related Guarantees or to add collateral thereto.
Upon the request of the Company, and upon receipt by the Trustee of the documents described in Section 9.05 hereof (to the extent requested by the Trustee), the Trustee shall join with the Company and the Guarantors in the execution of any amended or supplemental indenture authorized or permitted by the terms of this Indenture and to make any further appropriate agreements and stipulations that may be therein contained, but the Trustee shall have the right, but not be obligated to, enter into such amended or supplemental indenture that affects its own rights, duties or immunities under this Indenture or otherwise. Notwithstanding the foregoing, no Opinion of Counsel shall be required in connection with the addition of a Guarantor under this Indenture upon execution and delivery by such Guarantor and the Trustee of a supplemental indenture to this Indenture, the form of which is attached as Exhibit D hereto.
Section 9.02 With Consent of Holders. Except as provided below in this Section 9.02, the Company, the Guarantors and the Trustee may amend or supplement this Indenture, the Notes and the Guarantees with the consent of the Holders of at least a majority in principal amount of the Notes (including Additional Notes, if any) then outstanding voting as a single class (including consents obtained in connection with a purchase of, tender offer or exchange offer for, the Notes), and, subject to Section 6.04 and 6.07 hereof, any existing Default or Event of Default (other than a Default or Event of Default in the payment of the principal of, premium, if any, on, or interest on, the Notes, except a payment default resulting from an acceleration that has been rescinded) or compliance with any provision of this Indenture, the Guarantees or the Notes may be waived with the consent of the Holders of a majority in principal amount of the then outstanding Notes (including Additional Notes, if any), other than Notes beneficially owned by the Company or its Affiliates, voting as a single class (including consents obtained in connection with a tender offer or exchange offer or offer to purchase with respect to the Notes). Section 2.08 hereof and Section 2.09 hereof shall determine which Notes are considered to be “outstanding” for the purposes of this Section 9.02.
Upon the request of the Company, and upon the filing with the Trustee of evidence satisfactory to the Trustee of the consent of the Holders as aforesaid, and upon receipt by the Trustee of the documents described in Section 9.05 hereof, the Trustee shall join with the Company and the Guarantors (solely with respect to the Guarantee to which it is a party) in the execution of such amended or supplemental indenture unless such amended or supplemental indenture directly affects the Trustee’s own rights, duties or immunities under this Indenture or otherwise, in which case the Trustee may in its discretion, but shall not be obligated to, enter into such amended or supplemental indenture.
It shall not be necessary for the consent of the Holders under this Section 9.02 to approve the particular form of any proposed amendment or waiver, but it shall be sufficient if such consent approves the substance thereof.
For the avoidance of doubt, no amendment to, or deletion of any of the covenants in Articles IV or V or action taken in compliance with the covenants in effect at the time of such action, shall be deemed to impair or affect any legal rights of any Holders of the Notes to receive payment of principal of or premium, if any, or interest on the Notes or to institute suit for the enforcement of any payment on or with respect to such Holder’s Notes.
After an amendment, supplement or waiver under this Section 9.02 becomes effective, the Company shall deliver to the Holders affected thereby (with a copy to the Trustee) a notice briefly describing the amendment, supplement or waiver. Any failure of the Company to deliver such notice, or any defect therein, shall not, however, in any way impair or affect the validity of any such amended or supplemental indenture or waiver.
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Without the consent of each affected Holder (including, for the avoidance of doubt, any Notes held by Affiliates), an amendment or waiver under this Section 9.02 may not, with respect to any Notes held by a non-consenting Holder:
(a) reduce the principal amount of such Notes whose Holders must consent to an amendment, supplement or waiver;
(b) reduce the principal of or change the fixed final maturity of any such Note or reduce the premium payable upon the redemption of such Notes on any date (other than the provisions relating to Section 3.09, Section 4.10 and Section 4.14); provided that any amendment to the notice requirements may be made with the consent of the Holders of a majority in aggregate principal amount of then outstanding Notes;
(c) reduce the rate of or change the time for payment of interest on any Note;
(d) waive a Default or Event of Default in the payment of principal of or premium, if any, or interest on the Notes, except a rescission of acceleration of the Notes by the Holders of at least a majority in aggregate principal amount of the Notes and a waiver of the payment default that resulted from such acceleration, or in respect of a covenant or provision contained in this Indenture or any Guarantee which cannot be amended or modified without the consent of all affected Holders;
(e) make any Note payable in money other than that stated therein;
(f) make any change in the provisions of this Indenture relating to waivers of past Defaults;
(g) make any change in this Article IX that is materially adverse to the Holders;
(h) modify the contractual right under this Indenture of any Holder to institute suit for the payment of principal, interest or premium (if any) on or with respect to such Holder’s Notes on or after the respective due dates;
(i) make any change to or modify the ranking of the Notes that would adversely affect the Holders; or
(j) except as expressly permitted by this Indenture, modify the Guarantees of any Guarantor in any manner materially adverse to the Holders.
Section 9.03 Revocation and Effect of Consents. Until an amendment, supplement or waiver becomes effective, a consent to it by a Holder of a Note is a continuing consent by the Holder of a Note and every subsequent Holder of a Note or portion of a Note that evidences the same debt as the consenting Holder’s Note, even if notation of the consent is not made on any Note. However, any such Holder of a Note or subsequent Holder of a Note may revoke the consent as to its Note if the Trustee receives written notice of revocation before the date the amendment, supplement or waiver becomes effective. An amendment, supplement or waiver becomes effective in accordance with its terms and thereafter binds every Holder.
Section 9.04 Notation on or Exchange of Notes. The Trustee may place an appropriate notation about an amendment, supplement or waiver on any Note thereafter authenticated. The Company in exchange for all Notes may issue and the Trustee shall, upon receipt of an Authentication Order, authenticate new Notes that reflect the amendment, supplement or waiver.
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Failure to make the appropriate notation or issue a new Note shall not affect the validity and effect of such amendment, supplement or waiver.
Section 9.05 Trustee to Sign Amendments, etc. The Trustee shall sign any amendment, supplement or waiver authorized pursuant to this Article IX if the amendment, supplement or waiver does not adversely affect the rights, duties, liabilities or immunities of the Trustee. In executing any amendment, supplement or waiver, the Trustee shall receive, and shall be fully protected in relying conclusively upon, in addition to the documents required by Section 12.04 hereof, an Officer’s Certificate and an Opinion of Counsel stating that the execution of such amended or supplemental indenture is authorized or permitted by this Indenture and that such amendment, supplement or waiver is the legal, valid and binding obligation of the Company and any Guarantors party thereto, enforceable against them in accordance with its terms, subject to customary exceptions, and complies with the provisions hereof.
ARTICLE X
GUARANTEES
Section 10.01 Guarantee. Subject to this Article X, each of the Guarantors hereby, jointly and severally, irrevocably and unconditionally guarantees, on an unsecured basis, to each Holder of a Note authenticated and delivered by the Trustee and to the Trustee and its successors and assigns, irrespective of the validity and enforceability of this Indenture, the Notes or the Obligations of the Company hereunder or thereunder, that (a) the principal of and interest and premium, if any, on the Notes shall be promptly paid in full when due, whether at maturity, by acceleration, redemption or otherwise, and interest on the overdue principal of and interest on the Notes, if any, if lawful, and all other obligations of the Company to the Holders or the Trustee hereunder or thereunder, including for expenses, indemnification or otherwise, shall be promptly paid in full, all in accordance with the terms hereof and thereof; and (b) in case of any extension of time of payment or renewal of any Notes or any of such other Obligations, that same shall be promptly paid in full when due in accordance with the terms of the extension or renewal, whether at stated maturity, by acceleration or otherwise. Failing payment when due of any amount so guaranteed for whatever reason, the Guarantors shall be jointly and severally obligated to pay the same promptly. Each Guarantor agrees that this is a guarantee of payment and not a guarantee of collection.
The Guarantors hereby agree that their obligations hereunder shall be unconditional, irrespective of the validity, regularity or enforceability of the Notes or this Indenture, the absence of any action to enforce the same, any waiver or consent by any Holder with respect to any provisions hereof or thereof, the recovery of any judgment against the Company, any action to enforce the same or any other circumstance which might otherwise constitute a legal or equitable discharge or defense of a guarantor (other than payment in full of all of the Obligations of the Company hereunder and under the Notes).
Each Guarantor hereby waives, to the fullest extent permitted by law, diligence, presentment, demand of payment, filing of claims with a court in the event of insolvency or bankruptcy of the Company, any right to require a proceeding first against the Company, protest, notice and all demands whatsoever and covenants that this Guarantee shall not be discharged except by full payment of the obligations contained in the Notes and this Indenture or by release in accordance with the provisions of this Indenture.
Each Guarantor also agrees to pay any and all costs and expenses (including reasonable attorneys’ fees and expenses) incurred by the Trustee or any Holder in enforcing any rights under this Section 10.01.
If any Holder or the Trustee is required by any court or otherwise to return to the Company, the Guarantors or any custodian, trustee, liquidator or other similar official acting in relation to any of the Company or the Guarantors, then any amount paid either to the Trustee or such Holder, then this Guarantee, to the extent theretofore discharged, shall be reinstated in full force and effect.
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Each Guarantor further agrees that, as between the Guarantors, on the one hand, and the Holders and the Trustee, on the other hand, (x) the maturity of the obligations guaranteed hereby may be accelerated as provided in Article VI hereof for the purposes of this Guarantee, notwithstanding any stay, injunction or other prohibition preventing such acceleration in respect of the obligations guaranteed hereby, and (y) in the event of any declaration of acceleration of such obligations as provided in Article VI hereof, such obligations (whether or not due and payable) shall forthwith become due and payable by the Guarantors for the purpose of this Guarantee. The Guarantors shall have the right to seek contribution from any nonpaying Guarantor so long as the exercise of such right does not impair the rights of the Holders under the Guarantees.
Each Guarantee shall remain in full force and effect and continue to be effective should any petition be filed by or against the Company for liquidation, reorganization, should any of the Company become insolvent or make an assignment for the benefit of creditors or should a receiver or trustee be appointed for all or any significant part of the Company’s assets, and shall, to the fullest extent permitted by law, continue to be effective or be reinstated, as the case may be, if at any time payment of the Notes are, pursuant to applicable law, rescinded or reduced in amount, or must otherwise be restored or returned by any obligee on the Notes or Guarantees, whether as a “voidable preference,” “fraudulent transfer” or otherwise, all as though such payment had not been made. In the event that any payment or any part thereof, is rescinded, reduced, restored or returned, the Notes shall, to the fullest extent permitted by law, be reinstated and deemed reduced only by such amount paid and not so rescinded, reduced, restored or returned.
In case any provision of any Guarantee shall be invalid, illegal or unenforceable, the validity, legality, and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.
The Guarantee issued by any Guarantor shall be a general unsecured senior obligation of such Guarantor.
Each payment to be made by a Guarantor in respect of its Guarantee shall be made without setoff, counter-claim, reduction or diminution of any kind or nature.
Section 10.02 Limitation on Guarantor Liability. Each Guarantor, and by its acceptance of the Notes, each Holder, hereby confirms that it is the intention of all such parties that the Guarantee of such Guarantor not constitute a fraudulent transfer or conveyance for purposes of Bankruptcy Law, the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent Transfer Act or any similar federal or state law to the extent applicable to any Guarantee. To effectuate the foregoing intention, the Trustee, the Holders and the Guarantors hereby irrevocably agree that the obligations of each Guarantor shall be limited to the maximum amount as will, after giving effect to such maximum amount and all other contingent and fixed liabilities of such Guarantor that are relevant under such laws and after giving effect to any collections from, rights to receive contribution from or payments made by or on behalf of any other Guarantor in respect of the obligations of such other Guarantor under this Article X, result in the obligations of such Guarantor under its Guarantee not constituting a fraudulent conveyance or fraudulent transfer under applicable law. Each Guarantor that makes a payment under its Guarantee shall be entitled upon payment in full of all guaranteed obligations under this Indenture to a contribution from each other Guarantor in an amount equal to such other Guarantor’s pro rata portion of such payment based on the respective net assets of all the Guarantors at the time of such payment determined in accordance with GAAP.
Section 10.03 Execution and Delivery. To evidence its Guarantee set forth in Section 10.01 hereof, each Guarantor hereby agrees that this Indenture (or, in the case of each Guarantor that becomes a party hereto after the date hereof, a supplemental indenture in the form of Exhibit D) shall be executed on behalf of such Guarantor by one of its authorized Officers.
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Each Guarantor hereby agrees that its Guarantee set forth in Section 10.01 hereof shall remain in full force and effect notwithstanding the absence of the endorsement of any notation of such Guarantee on the Notes.
If an Officer whose signature is on this Indenture no longer holds that office at the time the Trustee authenticates the Note, the Guarantee of such Guarantor shall be valid nevertheless.
The delivery of any Note by the Trustee, after the authentication thereof hereunder, shall constitute due delivery of the Guarantee set forth in this Indenture on behalf of the Guarantors.
Section 10.04 Subrogation. Until its Guarantee is terminated in accordance with Section 10.06, each Guarantor agrees that it shall not be entitled to exercise any right of subrogation in relation to the Holders in respect of any obligations guaranteed hereby until payment in full of all obligations guaranteed hereby.
Section 10.05 Benefits Acknowledged. Each Guarantor acknowledges that it will receive direct and indirect benefits from the financing arrangements contemplated by this Indenture and that the guarantee and waivers made by it pursuant to its Guarantee are knowingly made in contemplation of such benefits.
Section 10.06 Release of Guarantees. (a) Each Guarantee by a Guarantor shall be automatically and unconditionally released and discharged and shall thereupon terminate and be of no further force and effect, and no further action by such Guarantor, the Company or the Trustee is required for the release of such Guarantor’s Guarantee, upon:
(i) any sale, exchange, issuance, disposition or transfer (by merger, consolidation, dividend, distribution or otherwise) of (i) the Capital Stock of such Guarantor, after which the applicable Guarantor is no longer a Restricted Subsidiary, or (ii) all or substantially all of the assets of such Guarantor (including to any of the Company or another Guarantor), in each case if such sale, exchange, issuance, disposition or transfer does not violate the applicable provisions of this Indenture;
(ii) the release or discharge of the guarantee by, or direct obligation of, such Guarantor of Indebtedness under all Debt Facilities and Capital Markets Indebtedness (other than the Notes) of the Company or Guarantor that resulted in the creation of such Guarantee such that it would not, if not a Guarantor, be required to become a Guarantor under Section 4.15;
(iii) the designation of any Restricted Subsidiary that is a Guarantor as an Unrestricted Subsidiary in compliance with the applicable provisions of this Indenture or the occurrence of any event following which the Guarantor is no longer a Restricted Subsidiary in compliance with the applicable provisions of this Indenture;
(iv) (A) the exercise by the Company of its Legal Defeasance option or Covenant Defeasance option in accordance with Article VIII hereof or (B) the discharge of the Company’s obligations under this Indenture in accordance with the terms of this Indenture;
(v) the merger or consolidation of any Guarantor with and into the Company or a Guarantor that is the surviving Person in such merger, consolidation, or upon the liquidation of a Guarantor following the transfer of all or substantially all of its assets, in each case, in a transaction that complies with the applicable provisions hereof; or
(vi) as described under Article IX.
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Notwithstanding the foregoing, any guarantee by a Parent Company may be automatically and unconditionally released and discharged for any reason. The Trustee shall execute any documents reasonably requested by the Company in order to evidence the release of any Guarantor from its obligations under its Guarantee; provided that prior to executing such documents, the Trustee shall be entitled to receive from the Company an Officer’s Certificate and Opinion of Counsel compliant with Section 12.04 to the effect that the conditions precedent, if any, to such release have been satisfied. Any failure by the Trustee to execute such documents shall, however, not affect the automatic release and discharge of the Guarantee and the other obligations of any Guarantor as contemplated by the foregoing provisions of this Section 10.06.
(b) The Company will have the right, upon delivery of an Officer’s Certificate and an Opinion of Counsel to the Trustee, to cause any Guarantor that has not guaranteed any Indebtedness under any Debt Facility or Capital Markets Indebtedness of the Company or a Guarantor, and is not otherwise required by the applicable terms of this Indenture to provide a Guarantee, to be unconditionally released and discharged from all obligations under its Guarantee, and such Guarantee will thereupon automatically and unconditionally terminate and be discharged and of no further force or effect.
ARTICLE XI
SATISFACTION AND DISCHARGE
Section 11.01 Satisfaction and Discharge. This Indenture shall be discharged and shall cease to be of further effect as to all Notes, when either:
(a) all Notes theretofore authenticated and delivered, except lost, stolen or destroyed Notes that have been replaced or paid and Notes for whose payment money has theretofore been deposited in trust, have been delivered to the Trustee for cancellation; or
(b) (i) all Notes not theretofore delivered to the Trustee for cancellation have become due and payable by reason of the making of one or more notices of redemption or otherwise, will become due and payable within one year or may be called for redemption within one year under arrangements satisfactory to the Trustee for the giving of notice of redemption by the Trustee in the name, and at the expense, of the Company, and the Company or any Guarantor has irrevocably deposited or caused to be deposited with the Trustee as trust funds in trust solely for the benefit of the Holders, cash in U.S. dollars, U.S. dollar-denominated Government Securities, or a combination thereof, in such amounts as will be sufficient (without consideration of any reinvestment of interest), in the opinion of an Independent Financial Advisor to the extent such amounts consist of U.S. dollar-denominated Government Securities, to pay and discharge the entire indebtedness on the Notes not theretofore delivered to the Trustee for cancellation for principal, premium, if any, and accrued interest to the date of maturity or redemption; provided that upon any redemption that requires the payment of the Applicable Premium, the amount deposited will be sufficient for purposes of this Indenture to the extent that an amount is deposited with the Trustee is equal to the Applicable Premium calculated as of the date of the notice of redemption, with any Applicable Premium Deficit only required to be deposited with the Trustee on or prior to the date of redemption (it being understood that any satisfaction and discharge of this Indenture shall be subject to the condition subsequent that such Applicable Premium Deficit is in fact paid); provided, further, that the Trustee shall have no liability whatsoever in the event that such Applicable Premium Deficit is not in fact paid after any satisfaction and discharge of this Indenture. Any Applicable Premium Deficit will be set forth in an Officer’s Certificate delivered to the Trustee simultaneously with the deposit of such Applicable Premium Deficit that confirms that such Applicable Premium Deficit will be applied toward such redemption;
(ii) the Company has paid or caused to be paid all sums payable by it under this Indenture; and
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(iii) the Company has delivered irrevocable instructions to the Trustee to apply the deposited money toward the payment of the Notes at maturity or the Redemption Date, as the case may be.
In addition, the Company must deliver an Officer’s Certificate and an Opinion of Counsel to the Trustee stating that all conditions precedent to satisfaction and discharge have been satisfied, upon which the Trustee shall be entitled to conclusively rely, and shall be fully protected in relying, upon without investigation. Such Opinion of Counsel may rely on such Officer’s Certificate as to matters of fact, including clauses (b)(i), (ii) and (iii) above.
Notwithstanding the satisfaction and discharge of this Indenture, Section 7.06 and, if money shall have been deposited with the Trustee pursuant to subclause (i) of clause (b) of this Section 11.01, Section 11.02 and Section 8.06 hereof shall survive such satisfaction and discharge.
Section 11.02 Application of Trust Money. Subject to Section 8.06, all money deposited with the Trustee pursuant to Section 11.01 hereof shall be held in trust and applied by it, in accordance with the provisions of the Notes and this Indenture, to the payment, either directly or through any Paying Agent (including the Company or a Guarantor acting as its own Paying Agent) as the Trustee may determine, to the Persons entitled thereto, of the principal (and premium, if any) and interest for whose payment such money has been deposited with the Trustee; but such money need not be segregated from other funds except to the extent required by law.
The Company shall pay and indemnify the Trustee against any tax, fee or other charge imposed on or assessed against the cash or Government Securities deposited pursuant to Section 11.01 hereof or the principal and interest received in respect thereof other than any such tax, fee or other charge which by law is for the account of the Holders of the outstanding Notes.
If the Trustee or Paying Agent is unable to apply any money or Government Securities in accordance with Section 11.01 hereof by reason of any legal proceeding or by reason of any order or judgment of any court or governmental authority enjoining, restraining or otherwise prohibiting such application, the Company’s and any Guarantor’s obligations under this Indenture and the Notes shall be revived and reinstated as though no deposit had occurred pursuant to Section 11.01 hereof; provided that if the Company has made any payment of principal of, premium, if any, or interest on any Notes because of the reinstatement of its obligations, the Company shall be subrogated to the rights of the Holders of such Notes to receive such payment from the money or Government Securities held by the Trustee or Paying Agent.
ARTICLE XII
MISCELLANEOUS
Section 12.01 Relation to Trust Indenture Act. This Indenture shall not be subject to the Trust Indenture Act.
Section 12.02 Notices. Any notice or communication by the Company, any Guarantor or the Trustee to the others is duly given if in writing and delivered in person or mailed by first-class mail (registered or certified, return receipt requested), facsimile, electronically (in “.pdf” or other format) or overnight air courier guaranteeing next day delivery, to the others’ address:
If to the Company and/or any Guarantor on or after the Issue Date:
WildFire Intermediate Holdings, LLC
920 Memorial City Way Suite 1400
Houston, Texas 77024
Attention: Chief Financial Officer
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If to the Trustee:
U.S. Bank Trust Company, National Association
13737 Noel Road, Suite 800
Dallas, Texas 75240
Attention: WildFire Intermediate Holdings Administrator
The Company, any Guarantor or the Trustee, by notice to the others, may designate additional or different addresses for subsequent notices or communications.
All notices and communications (other than those sent to Holders) shall be deemed to have been duly given: at the time delivered by hand, if personally delivered; five calendar days after being deposited in the mail, postage prepaid, if mailed by first-class mail; on the first date on which publication is made or electronic delivery made; and the next Business Day after timely delivery to the courier, if sent by overnight air courier guaranteeing next day delivery; provided that any notice or communication delivered to the Trustee shall be deemed effective upon actual receipt thereof.
Any notice or communication to a Holder shall be electronically delivered, mailed by first-class mail, certified or registered, return receipt requested, or by overnight air courier guaranteeing next day delivery to its address shown on the Note Register kept by the Registrar.
Failure to deliver a notice or communication to a Holder or any defect in it shall not affect its sufficiency with respect to other Holders.
Notwithstanding any other provision of this Indenture or any Note, where this Indenture or any Note provides for notice of any event (including any notice of redemption or purchase) to a Holder of a Global Note (whether by mail or otherwise), such notice shall be sufficiently given if given to the Depositary pursuant to the standing instructions from the Depositary.
If a notice or communication is mailed or otherwise delivered in the manner provided above within the time prescribed, such notice or communication shall be deemed duly given, whether or not the addressee receives it.
If the Company delivers or mail a notice or communication to Holders, it shall deliver or mail a copy to the Trustee and each Agent at the same time.
Section 12.03 Communication with Holders of a Global Note. Notwithstanding any other provision of this Indenture or any Note, where this Indenture or any Note provides for notice of any event or any other communication (including any notice of redemption or repurchase) to a holder of a Global Note (whether by mail or otherwise), such notice shall be sufficiently given if given to the Depositary (or its designee) pursuant to the standing instructions from the Depositary or its designee, including by electronic mail in accordance with accepted practices at the Depositary.
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Section 12.04 Certificate and Opinion as to Conditions Precedent. Upon any request or application by the Company or any of the Guarantors to the Trustee to take any action under this Indenture (other than as set forth in the last sentence of Section 9.01 and with respect to clause (b) below, in connection with the initial issuance of Notes on the Issue Date), the Company or such Guarantor, as the case may be, shall furnish to the Trustee:
(a) An Officer’s Certificate in form reasonably satisfactory to the Trustee (which shall include the statements set forth in Section 12.05 hereof) stating that, in the opinion of the signers, all conditions precedent and covenants, if any, provided for in this Indenture relating to the proposed action have been satisfied; and
(b) An Opinion of Counsel in form reasonably satisfactory to the Trustee (which shall include the statements set forth in Section 12.05 hereof) stating that, in the opinion of such counsel, all such conditions precedent and covenants have been satisfied.
Section 12.05 Statements Required in Certificate or Opinion. Each certificate or opinion with respect to compliance with a condition or covenant provided for in this Indenture shall include:
(a) a statement that the Person making such certificate or opinion has read such covenant or condition;
(b) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based;
(c) a statement that, in the opinion of such Person, he or she has made such examination or investigation as is necessary to enable him to express an informed opinion as to whether or not such covenant or condition has been complied with (and, in the case of an Opinion of Counsel, may be limited to reliance on an Officer’s Certificate as to matters of fact); and
(d) a statement as to whether or not, in the opinion of such Person, such condition or covenant has been complied with; provided, however, that with respect to matters of fact, an Opinion of Counsel may rely on an Officer’s Certificate or certificates of public officials.
Section 12.06 Rules by Trustee and Agents. The Trustee may make reasonable rules for action by or at a meeting of Holders. The Registrar or Paying Agent may make reasonable rules and set reasonable requirements for its functions.
Section 12.07 No Personal Liability of Directors, Officers, Employees and Stockholders. No past, present or future director, officer, employee, incorporator, member, partner or equity holder of the Company, any Guarantor or any Parent Company will have any liability for any obligations of the Company or the Guarantors under the Notes, the Guarantees, this Indenture or any supplemental indenture or for any claim based on, in respect of, or by reason of such obligations or their creation. Each Holder by accepting Notes waives and releases all such liability. The waiver and release are part of the consideration for issuance of the Notes.
Section 12.08 Governing Law. THIS INDENTURE, THE NOTES AND ANY GUARANTEE WILL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
Section 12.09 Waiver of Jury Trial. EACH OF THE COMPANY, THE GUARANTORS, AND THE TRUSTEE HEREBY, AND EACH HOLDER OF A NOTE BY ITS ACCEPTANCE THEREBY, IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS INDENTURE, THE NOTES OR THE TRANSACTIONS CONTEMPLATED HEREBY.
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Section 12.10 Force Majeure. In no event shall the Trustee be responsible or liable for any failure or delay in the performance of its obligations under this Indenture arising out of or caused by, directly or indirectly, forces beyond its reasonable control, including without limitation, (i) any act or provision of any present or future law or regulation or governmental authority, (ii) labor disputes, strikes or work stoppages, (iii) accidents, (iv) acts of war or terrorism, (v) civil or military disturbances or unrest, (vi) disease, (vii) epidemic or pandemic, (viii) quarantine, (ix) national emergency, (x) nuclear or natural catastrophes or acts of God, (xi) interruptions, loss or malfunctions of utilities, communications or computer (software and hardware) services, (xii) communications system failure, (xiii) malware or ransomware, (xiv) unavailability of the Federal Reserve Bank wire or other funds transfer systems, or (xv) unavailability of any securities clearing system; it being understood that the Trustee shall undertake commercially reasonable efforts to resume performance as soon as practicable under the circumstances.
Section 12.11 No Adverse Interpretation of Other Agreements. This Indenture may not be used to interpret any other indenture, loan or debt agreement of the Company or its Restricted Subsidiaries or of any other Person. Any such indenture, loan or debt agreement may not be used to interpret this Indenture.
Section 12.12 Successors. All agreements of the Company in this Indenture and the Notes shall bind its successors. All agreements of the Trustee in this Indenture shall bind its successors. All agreements of each Guarantor in this Indenture shall bind its successors, except as otherwise provided in Section 10.06 hereof.
Section 12.13 Severability. In case any provision or any part of any provision in this Indenture or in the Notes shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.
Section 12.14 Counterpart Originals. The parties may sign any number of copies of this Indenture. Each signed copy shall be an original, but all of them together represent the same agreement. This Indenture may be executed in multiple counterparts, which, when taken together, shall constitute one instrument.
Section 12.15 Table of Contents, Headings, etc. The Table of Contents, Cross-Reference Table and headings of the Articles and Sections of this Indenture have been inserted for convenience of reference only, are not to be considered a part of this Indenture and shall in no way modify or restrict any of the terms or provisions hereof.
Section 12.16 Facsimile and PDF Delivery of Signature Pages; Electronic Signature. The exchange of copies of this Indenture and of signature pages by facsimile or portable document format (“PDF”) transmission shall constitute effective execution and delivery of this Indenture as to the parties hereto and may be used in lieu of the original Indenture for all purposes. Signatures of the parties hereto transmitted by facsimile or PDF shall be deemed to be their original signatures for all purposes. This Indenture and any certificate, agreement or other document to be signed in connection with this Indenture and the transactions contemplated hereby shall be valid, binding, and enforceable against a party only when executed and delivered by an authorized individual on behalf of the party by means of (i) an original manual signature; (ii) a faxed, scanned, or photocopied manual signature; or (iii) in the case of this Indenture and any certificate, agreement or other document to be signed in connection with this Indenture and the transactions contemplated hereby, other than any Notes, any electronic signature permitted by the federal Electronic Signatures in Global and National Commerce Act, state enactments of the Uniform Electronic Transactions Act, and/or any other relevant electronic signatures law, including relevant provisions of the Uniform Commercial Code (collectively, “Signature Law”). Each electronic signature (except in the case of authentication of any Notes) or faxed, scanned, or photocopied manual signature shall for all purposes have the same validity, legal effect, and admissibility in evidence as an original manual signature. Each party hereto shall be entitled to conclusively rely upon, and shall have no liability with respect to, any faxed, scanned, or photocopied manual signature, or other electronic signature (except in the case of any Notes), of any party and shall have no duty to investigate, confirm or otherwise verify the validity or authenticity thereof. For avoidance of doubt, original manual signatures shall be used for execution or indorsement of writings when required under the Uniform Commercial Code or other Signature Law due to the character or intended character of the writings.
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Section 12.17 USA PATRIOT Act. The parties hereto acknowledge that in order to help the government fight the funding of terrorism and money laundering activities, pursuant to federal regulations that became effective on October 1, 2003, Section 326 of the USA PATRIOT Act requires all financial institutions to obtain, verify, and record information that identifies each person establishing a relationship or opening an account with the Trustee. The parties hereto agree that they will provide the Trustee with name, address, tax identification number, if applicable, and other information that will allow the Trustee to identify the individual or entity who is establishing the relationship, and will further provide the Trustee with formation documents such as articles of incorporation or other identifying documents.
[Signatures on following page]
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IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly executed as of the date first above written,
| WILDFIRE INTERMEDIATE HOLDINGS, LLC, as Company | ||
| By: | /s/ Andrew J. Cozby | |
| Name: | Andrew J. Cozby | |
| Title: | Chief Financial Officer | |
| WILDFIRE ENERGY I INTERMEDIATE LLC, as Guarantor | ||
| By: | /s/ Andrew J. Cozby | |
| Name: | Andrew J. Cozby | |
| Title: | Chief Financial Officer | |
| WILDFIRE ENERGY OPERATING LLC, as Guarantor | ||
| By: | /s/ Andrew J. Cozby | |
| Name: | Andrew J. Cozby | |
| Title: | Chief Financial Officer | |
| WILDFIRE ENERGY LLC, as Guarantor | ||
| By: | /s/ Andrew J. Cozby | |
| Name: | Andrew J. Cozby | |
| Title: | Chief Financial Officer | |
| OCIR ACQUISITION LLC, as Guarantor | ||
| By: | /s/ Andrew J. Cozby | |
| Name: | Andrew J. Cozby | |
| Title: | Chief Financial Officer | |
[Signature Page to Indenture]
| WILDFIRE MADISON LLC, as Guarantor | ||
| By: | /s/ Andrew J. Cozby | |
| Name: | Andrew J. Cozby | |
| Title: | Chief Financial Officer | |
| HAWKWOOD ENERGY EAST TEXAS LLC, as Guarantor | ||
| By: | /s/ Andrew J. Cozby | |
| Name: | Andrew J. Cozby | |
| Title: | Chief Financial Officer | |
| WILDFIRE ENERGY MIDSTREAM LLC, as Guarantor | ||
| By: | /s/ Andrew J. Cozby | |
| Name: | Andrew J. Cozby | |
| Title: | Chief Financial Officer | |
| BRAZOS VALLEY LONGHORN, LLC, as Guarantor | ||
| By: | /s/ Andrew J. Cozby | |
| Name: | Andrew J. Cozby | |
| Title: | Chief Financial Officer | |
| WHE ACQCO. LLC, as Guarantor | ||
| By: | /s/ Andrew J. Cozby | |
| Name: | Andrew J. Cozby | |
| Title: | Chief Financial Officer | |
| WILDHORSE RESOURCES II LLC, as Guarantor | ||
| By: | /s/ Andrew J. Cozby | |
| Name: | Andrew J. Cozby | |
| Title: | Chief Financial Officer | |
| BURLESON SAND LLC as Guarantor | ||
| By: | /s/ Andrew J. Cozby | |
| Name: | Andrew J. Cozby | |
| Title: | Chief Financial Officer | |
[Signature Page to Indenture]
| WHR EAGLE FORD LLC, as Guarantor | ||
| By: | /s/ Andrew J. Cozby | |
| Name: | Andrew J. Cozby | |
| Title: | Chief Financial Officer | |
| ESQUISTO RESOURCES II, LLC, as Guarantor | ||
| By: | /s/ Andrew J. Cozby | |
| Name: | Andrew J. Cozby | |
| Title: | Chief Financial Officer | |
| PETROMAX E&P BURLESON, LLC, as Guarantor | ||
| By: | /s/ Andrew J. Cozby | |
| Name: | Andrew J. Cozby | |
| Title: | Chief Financial Officer | |
| BURLESON WATER RESOURCES, LLC, as Guarantor | ||
| By: | /s/ Andrew J. Cozby | |
| Name: | Andrew J. Cozby | |
| Title: | Chief Financial Officer | |
[Signature Page to Indenture]
| U.S. BANK TRUST COMPANY, NATIONAL ASSOCIATION, as Trustee | ||
| By: | /s/ Brian T. Jensen | |
| Name: | Brian T. Jensen | |
| Title: | Vice President | |
[Signature Page to Indenture]
EXHIBIT A
[Face of Note]
[Insert the Global Note Legend, if applicable pursuant to the provisions of the Indenture]
[Insert the Private Placement Legend, if applicable pursuant to the provisions of the Indenture]
[Insert the Regulation S Temporary Global Note Legend, if applicable pursuant to the provisions of the Indenture]
| Exhibit A - 1 |
CUSIP [___________]
ISIN [__________]1
[RULE 144A][REGULATION S] [GLOBAL] NOTE
7.500% Senior Notes due 2029
No. [_______]
$[_______]
WILDFIRE INTERMEDIATE HOLDINGS, LLC
promises to pay to __________ or registered assigns, the principal sum of ________________ DOLLARS [,or such greater or lesser amount set forth on the Schedule of Exchange of Interests in the Global Note attached hereto,]2 on October 15, 2029.
Interest Payment Dates: April 15 and October 15, beginning April 15, 2025
Record Dates: April 1 and October 1
| 1 | Rule 144A Note CUSIP: 96812H AA6 |
Rule 144A Note ISIN: US96812HAA68
Regulation S Note CUSIP: U9830H AA4
Regulation S Note ISIN: USU9830HAA42
| 2 | For Global Notes. |
| Exhibit A - 2 |
IN WITNESS HEREOF, the Company has caused this instrument to be duly executed.
| WILDFIRE INTERMEDIATE HOLDINGS, LLC, as Company | ||
| By: | ||
| Name: | ||
| Title: | ||
| Exhibit A - 3 |
| This is one of the Notes referred to in the within-mentioned Indenture: | ||
| U.S. BANK TRUST COMPANY, NATIONAL ASSOCIATION, as Trustee | ||
| By: | ||
| Authorized Signatory | ||
| Dated: | ||
| Exhibit A - 4 |
[Back of Note]
7.500% Senior Note due 2029
Capitalized terms used herein shall have the meanings assigned to them in the Indenture referred to below unless otherwise indicated.
1. INTEREST. WildFire Intermediate Holdings, LLC (the “Company”) promises to pay interest on the unpaid principal amount of this Note at a rate per annum of 7.500% until maturity. The Company will pay interest on this Note semi-annually in arrears on April 15 and October 15 of each year, beginning [ ] or, if any such day is not a Business Day, on the next succeeding Business Day (each, an “Interest Payment Date”). The Company will make each interest payment to the Holder of record of this Note on the immediately preceding April 1 and October 1 (each, a “Record Date”). Interest on this Note will accrue from the most recent date to which interest has been paid or, if no interest has been paid, from the date of issuance. The Company will pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue principal and premium, if any, from time to time on demand at the rate borne by this Note; it shall pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue installments of interest (without regard to any applicable grace periods) from time to time on demand at the rate borne by this Note. Interest will be computed on the basis of a 360-day year comprised of twelve 30-day months.
2. METHOD OF PAYMENT. The Company will pay interest on this Note to the Person who is the registered Holder of this Note at the close of business on the Record Date (whether or not a Business Day) on the next preceding the Interest Payment Date, even if this Note is cancelled after such Record Date and on or before such Interest Payment Date, except as provided in Section 2.12 of the Indenture with respect to defaulted interest. Payments of principal of, premium, if any, and interest on the Notes will be payable at the office or agency of the Company maintained pursuant to Section 4.02 of the Indenture or, at the option of the Company, may be made by wire transfer to a U.S. dollar account maintained by the payee with a bank in the United States if such Holder elects payment by wire transfer by giving written notice to the Trustee or the Paying Agent to such effect designating such account no later than 30 days immediately preceding the relevant due date for payment (or such later date as the Trustee may accept in its discretion) and such payee owns $5,000,000 or more of the Notes, provided that (a) all payments of principal, premium, if any, and interest on, Notes represented by Global Notes registered in the name of or held by DTC or its nominee will be made by wire transfer of immediately available funds to the accounts specified by the Holder or Holders thereof and (b) all payments of principal, premium, if any, and interest with respect to certificated Notes may, at the option of the Company, be made by wire transfer to a U.S. dollar account maintained by the payee with a bank in the United States if such Holder elects payment by wire transfer by giving written notice to the Trustee or the Paying Agent to such effect designating such account no later than 30 days immediately preceding the relevant due date for payment (or such later date as the Trustee may accept in its discretion) and such payee owns $5,000,000 or more of the Notes. Such payment shall be in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts. If a payment date is on a Legal Holiday, payment will be made on the next succeeding day that is not a Legal Holiday and no interest shall accrue for the intervening period.
3. PAYING AGENT AND REGISTRAR. Initially, U.S. Bank Trust Company, National Association, the Trustee under the Indenture, will act as Paying Agent and Registrar. The Company may change any Paying Agent or Registrar without prior notice to any Holder. The Company or any of its Subsidiaries may act in any such capacity.
4. INDENTURE. The Company issued the Notes under an Indenture, dated as of September 26, 2024 (the “Indenture”), among (a) the Company, (b) certain subsidiaries of the Company, as Guarantors, and (c) the Trustee. The Company shall be entitled to issue Additional Notes pursuant to Sections 2.01 and 4.09 of the Indenture. The terms of the Notes include those stated in the Indenture. The Notes are subject to all such terms, and Holders are referred to the Indenture for a statement of such terms. To the extent any provision of this Note conflicts with the express provisions of the Indenture, the provisions of the Indenture shall govern and be controlling.
| Exhibit A - 5 |
5. OPTIONAL REDEMPTION.
(a) At any time prior to October 15, 2026, the Company may, at its option and on one or more occasions redeem all or a part of the Notes, upon notice as described under Section 3.03 of the Indenture, at a redemption price (as calculated by the Company) equal to the sum of (i) 100.00% of the principal amount of the Notes redeemed, plus (ii) the Applicable Premium, plus (iii) accrued and unpaid interest, if any, to, but excluding, the Redemption Date, subject to the right of Holders of record on the relevant Record Date to receive interest due on the relevant Interest Payment Date. Any notice of redemption may, at the Company’s discretion, be subject to one or more conditions precedent, including, but not limited to, the completion or occurrence of a related transaction or event (including, but not limited to, an Equity Offering, contribution, refinancing, Change of Control, Asset Sale or other transaction), as the case may be.
(b) At any time prior to October 15, 2026, the Company may, at its option and on one or more occasions, redeem up to 40% of the aggregate principal amount of Notes and Additional Notes issued under the Indenture, with an amount equal to or less than the net cash proceeds from one or more Equity Offerings to the extent such net cash proceeds are received by, or contributed to the Company, at a redemption price equal to 107.500% of the aggregate principal amount thereof plus accrued and unpaid interest thereon, if any, to, but excluding, the Redemption Date, subject to the right of Holders of record on the relevant Record Date to receive interest due on the relevant Interest Payment Date; provided that (a) at least 60% of the sum of the aggregate principal amount of Notes originally issued under the Indenture on the Issue Date remains outstanding immediately after the occurrence of each such redemption (unless all such Notes are redeemed substantially concurrently) and (b) each such redemption occurs within 180 days of the date of closing of the applicable Equity Offering or contribution.
(c) In connection with any Change of Control Offer, Alternate Offer or other tender offer to purchase all of the Notes, if Holders of not less than 90.0% of the aggregate principal amount of the then outstanding Notes validly tender and do not validly withdraw such Notes in such Change of Control Offer, Alternate Offer or other tender offer and the Company purchases, or any third party making such Change of Control Offer, Alternate Offer or other tender offer in lieu of the Company purchases, all of the Notes validly tendered and not validly withdrawn by such Holders, the Company or such third party will have the right upon not less than 10 days’ nor more than 60 days’ prior notice, given not more than 60 days following such purchase date, to redeem all Notes that remain outstanding following such purchase at a price equal to the price offered to each other Holder in such Change of Control Offer, Alternate Offer or other tender offer, plus, to the extent not included in the Change of Control Offer, Alternate Offer or other tender offer payment, accrued and unpaid interest, if any, thereon, to, but excluding, the Redemption Date (subject to the right of the Holders of record on the relevant Record Date to receive interest due on an Interest Payment Date that is on or prior to the Redemption Date).
(d) Except pursuant to clause (a), (b) or (c) of Section 3.07 of the Indenture or clause 5(e) of this Note, the Notes will not be redeemable at the Company’s option prior to October 15, 2026.
| Exhibit A - 6 |
(e) On and after October 15, 2026, the Company may, at its option and on one or more occasions, redeem all or a part of the Notes, in whole or in part, upon notice in accordance with Section 3.03 of the Indenture, at the redemption prices (expressed as percentages of principal amount of the Notes to be redeemed) set forth below, plus accrued and unpaid interest, if any, to, but excluding, the Redemption Date, subject to the right of Holders of record on the relevant Record Date to receive interest due on the relevant Interest Payment Date, if redeemed during the twelve-month period beginning on October 15 of the years indicated below:
| Year | Percentage | |||
| 2026 | 103.750 | % | ||
| 2027 | 101.875 | % | ||
| 2028 and thereafter | 100.000 | % | ||
(f) Any redemption pursuant to Section 3.07 of the Indenture shall be made pursuant to Sections 3.01 through 3.06 of the Indenture.
6. MANDATORY REDEMPTION; OFFERS TO PURCHASE AND OPEN MARKET PURCHASES. The Company will not be required to make any mandatory redemption or sinking fund payments with respect to the Notes. However, under certain circumstances, the Company may be required to offer to purchase Notes as described under Sections 3.09, 4.10 and 4.14 of the Indenture.
7. NOTICE OF REDEMPTION. Subject to Section 3.03 of the Indenture, the Company shall deliver electronically, mail or cause to be mailed by first-class mail, postage prepaid (or in the case of Notes issued in global form, delivered electronically in accordance with Applicable Procedures), notices of redemption at least 10 but not more than 60 days (except as set forth in Section 3.03(i) of the Indenture) before the Redemption Date to each Holder of the Notes to be redeemed at such Holder’s registered address (or in the case of Notes issued in global form, in accordance with Applicable Procedures), except that redemption notices may be delivered or mailed more than 60 days prior to a Redemption Date if the notice is issued in connection with Section 3.03(i), Article VIII or Article XI of the Indenture.
8. DENOMINATIONS, TRANSFER, EXCHANGE. The Notes are in registered form without coupons in minimum denominations of $2,000 and any integral multiple of $1,000 in excess of $2,000. The transfer of Notes shall be registered and Notes may only be exchanged as provided in the Indenture. The Registrar, Transfer Agent and the Trustee may require a Holder, among other things, to furnish appropriate endorsements and transfer documents and the Company may require a Holder to pay any taxes and fees required by law or permitted by the Indenture. The Company need not issue, exchange or register the transfer of any Note or portion of a Note selected for redemption, except for the unredeemed portion of any Note being redeemed in part. Also, the Company need not issue, exchange or register the transfer of any Notes during the period of 15 days before the mailing of a notice of redemption of Notes to be redeemed or between a Record Date with respect to such Note and the next succeeding Interest Payment Date with respect to such Note.
9. PERSONS DEEMED OWNERS. The registered Holder shall be treated as its owner for all purposes. Only registered Holders shall have rights hereunder.
10. AMENDMENT, SUPPLEMENT AND WAIVER. The Indenture, the Guarantees or the Notes may be amended or supplemented as provided in the Indenture.
11. DEFAULTS AND REMEDIES. The Events of Default relating to the Notes are defined in Section 6.01 of the Indenture. If any Event of Default (other than an Event of Default specified in clause (g) or (h) of Section 6.01 of the Indenture with respect to the Company) occurs and is continuing, the Trustee or the Holders of at least 25% in principal amount of the then total outstanding Notes by written notice to the Company may declare the principal of, and accrued and unpaid interest, if any, on all the then outstanding Notes to be due and payable immediately. Holders may not enforce the Indenture, the Notes or the Guarantees except as provided in the Indenture. Subject to certain limitations, Holders of a majority in principal amount of the then total outstanding Notes may direct the Trustee in its exercise of any trust or power. The Trustee may withhold from Holders notice of any continuing Default (except a Default relating to the payment of principal, premium, if any, or interest) if it determines that withholding notice is in their interest. The Holders of a majority of the aggregate principal amount of the then outstanding Notes, by written notice to the Trustee, may on behalf of the Holders of all of the Notes waive any existing Default and its consequences under the Indenture (except a continuing Default in payment of the principal of, premium, if any, or interest on any of the Notes held by a nonconsenting Holder). The Company is required to deliver to the Trustee annually a statement regarding compliance with the Indenture, and the Company is required, within ten (10) days after becoming aware of any Default or Event of Default, to deliver to the Trustee a statement specifying such Default or Event of Default, its status and what actions the Company proposes to take with respect thereto.
| Exhibit A - 7 |
12. AUTHENTICATION. This Note shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose until authenticated by the manual signature of the Trustee.
13. GOVERNING LAW. THE INDENTURE, THIS NOTE AND ANY GUARANTEE WILL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
14. CUSIP AND ISIN NUMBERS. Pursuant to a recommendation promulgated by the Committee on Uniform Security Identification Procedures, the Company has caused CUSIP and ISIN numbers to be printed on the Notes and the Trustee may use CUSIP and ISIN numbers in notices of redemption as a convenience to Holders. No representation is made as to the accuracy of such numbers either as printed on the Notes or as contained in any notice of redemption and reliance may be placed only on the other identification numbers placed thereon.
The Company will furnish to any Holder upon written request and without charge a copy of the Indenture. Requests may be made to the Company at the following address:
WildFire Intermediate Holdings, LLC
920 Memorial City Way Suite 1400
Houston, Texas 77024
Attention: General Counsel
| Exhibit A - 8 |
ASSIGNMENT FORM
| To assign this Note, fill in the form below: | |
| (Insert assignee’s soc. Sec. or tax I.D. no.) |
| (Insert assignee’s soc. Sec. or tax I.D. no.) |
and irrevocably appoint ___________________________________________ to transfer this Note on the books of the Company. The agent may substitute another to act for him.
Date: _______________________
| Your Signature | |
| (Sign exactly as your name appears on the face of this Note) | |
| Tax Identification No.: | |
| Signature Guarantee*: _____________________ |
* Participant in a recognized Signature Guarantee Medallion Program (or other signature guarantor acceptable to the Trustee).
| Exhibit A - 9 |
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Note purchased by the Company pursuant to Section 4.10 or Section 4.14 of the Indenture, check the appropriate box below:
[____] Section 4.10 [_____] Section 4.14
If you want to elect to have only part of this Note purchased by the Company pursuant to Section 4.10 or Section 4.14 of the Indenture, state the amount you elect to have purchased:
$
Date: _______________________
| Your Signature | ||
| (Sign exactly as your name appears on the face of this Note) | ||
| Tax Identification No.: | ||
| Signature Guarantee*: | ||
* Participant in a recognized Signature Guarantee Medallion Program (or other signature guarantor acceptable to the Trustee).
| Exhibit A - 10 |
SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL NOTE*
The initial outstanding principal amount of this Global Note is $_____. The following exchanges of a part of this Global Note for an interest in another Global Note or for a Definitive Note, or exchanges of a part of another Global or Definitive Note for an interest in this Global Note, have been made:
| Date of Exchange | Amount
of decrease in Principal Amount of this Global Note |
Amount
of increase in Principal Amount of this Global Note |
Principal
Amount of this Global Note following such decrease or increase |
Signature
of authorized signatory of Trustee or Custodian |
* This schedule should be included only if the Note is issued in global form.
| Exhibit A - 11 |
EXHIBIT B
FORM OF CERTIFICATE OF TRANSFER
WildFire Intermediate Holdings, LLC
920 Memorial City Way Suite 1400
Houston, Texas 77024
Attention: General Counsel
U.S. Bank Trust Company, National Association
13737 Noel Road, Suite 800
Dallas, Texas 75240
Attention: WildFire Intermediate Holdings, LLC Company Administrator
Re: 7.500% Senior Notes due 2029
Reference is hereby made to the Indenture, dated as of September 26, 2024 (the “Indenture”), among (a) WildFire Intermediate Holdings, LLC, as the Company, (b) certain subsidiaries of the Company, as Guarantors, and (c) the Trustee. Capitalized terms used but not defined herein shall have the meanings given to them in the Indenture.
_____________ (the “Transferor”) owns and proposes to transfer the Note[s] or interest in such Note[s] specified in Annex A hereto, in the principal amount of $___________ in such Note[s] or interests (the “Transfer”), ____________ to _____________ (the “Transferee”), as further specified in Annex A hereto. In connection with the Transfer, the Transferor hereby certifies that:
[CHECK ALL THAT APPLY]
1. [_____] CHECK IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL INTEREST IN THE RELEVANT 144A GLOBAL NOTE OR RELEVANT DEFINITIVE NOTE PURSUANT TO RULE 144A. The Transfer is being effected pursuant to and in accordance with Rule 144A under the United States Securities Act of 1933, as amended (the “Securities Act”), and, accordingly, the Transferor hereby further certifies that the beneficial interest or Definitive Note is being transferred to a Person that the Transferor reasonably believes is purchasing the beneficial interest or Definitive Note for its own account, or for one or more accounts with respect to which such Person exercises sole investment discretion, and such Person and each such account is a “qualified institutional buyer” within the meaning of Rule 144A in a transaction meeting the requirements of Rule 144A, and such Transfer is in compliance with any applicable blue sky securities laws of any state of the United States.
2. [_____] CHECK IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL INTEREST IN THE RELEVANT REGULATION S GLOBAL NOTE OR RELEVANT DEFINITIVE NOTE PURSUANT TO REGULATION S. The Transfer is being effected pursuant to and in accordance with Rule 903 or Rule 904 under the Securities Act and, accordingly, the Transferor hereby further certifies that (i) the Transfer is not being made to a person in the United States and (x) at the time the buy order was originated, the Transferee was outside the United States or such Transferor and any Person acting on its behalf reasonably believed and believes that the Transferee was outside the United States or (y) the transaction was executed in, on or through the facilities of a designated offshore securities market and neither such Transferor nor any Person acting on its behalf knows that the transaction was prearranged with a buyer in the United States, (ii) no directed selling efforts have been made in contravention of the requirements of Rule 903(b) or Rule 904(b) of Regulation S under the Securities Act, (iii) the transaction is not part of a plan or scheme to evade the registration requirements of the Securities Act and (iv) if the proposed transfer is being made prior to the expiration of the applicable Restricted Period, the transfer is not being made to a U.S. Person or for the account or benefit of a U.S. Person (other than an initial purchaser). Upon consummation of the proposed transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Definitive Note will be subject to the restrictions on Transfer enumerated in the Indenture and the Securities Act.
| Exhibit B - 1 |
3. [_____] CHECK AND COMPLETE IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL INTEREST IN THE RELEVANT DEFINITIVE NOTE PURSUANT TO ANY PROVISION OF THE SECURITIES ACT OTHER THAN RULE 144A OR REGULATION S. The Transfer is being effected in compliance with the transfer restrictions applicable to beneficial interests in Restricted Global Notes and Restricted Definitive Notes and pursuant to and in accordance with the Securities Act and any applicable blue sky securities laws of any state of the United States, and accordingly the Transferor hereby further certifies that (check one):
(a) [___] such Transfer is being effected pursuant to and in accordance with Rule 144 under the Securities Act; or
(b) [___] such Transfer is being effected to the Company or a Subsidiary thereof.
4. [_______] CHECK IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL INTEREST IN AN UNRESTRICTED GLOBAL NOTE OR OF AN UNRESTRICTED DEFINITIVE NOTE.
(a) [___] CHECK IF TRANSFER IS PURSUANT TO RULE 144. (i) The Transfer is being effected pursuant to and in accordance with Rule 144 under the Securities Act and in compliance with the transfer restrictions contained in the Indenture and any applicable blue sky securities laws of any state of the United States and (ii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act. Upon consummation of the proposed Transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Definitive Note will no longer be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the Restricted Global Notes, on Restricted Definitive Notes and in the Indenture.
(b) [___] CHECK IF TRANSFER IS PURSUANT TO REGULATION S. (i) The Transfer is being effected pursuant to and in accordance with Rule 903 or Rule 904 under the Securities Act and in compliance with the transfer restrictions contained in the Indenture and any applicable blue sky securities laws of any state of the United States and (ii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act. Upon consummation of the proposed Transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Definitive Note will no longer be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the Restricted Global Notes, on Restricted Definitive Notes and in the Indenture.
(c) [___] CHECK IF TRANSFER IS PURSUANT TO OTHER EXEMPTION. (i) The Transfer is being effected pursuant to and in compliance with an exemption from the registration requirements of the Securities Act other than Rule 144, Rule 903 or Rule 904 and in compliance with the transfer restrictions contained in the Indenture and any applicable blue sky securities laws of any State of the United States and (ii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act. Upon consummation of the proposed Transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Definitive Note will not be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the Restricted Global Notes or Restricted Definitive Notes and in the Indenture.
| Exhibit B - 2 |
This certificate and the statements contained herein are made for your benefit and the benefit of the Company.
| [Insert Name of Transferor] | ||
| By: | ||
| Name: | ||
| Title: | ||
| Dated: | ||
| Exhibit B - 3 |
ANNEX A TO CERTIFICATE OF TRANSFER
1. The Transferor owns and proposes to transfer the following:
[CHECK ONE OF (a) OR (b)]
(a) [___] a beneficial interest in the:
(i) [___] 144A Global Note (CUSIP: 96812H AA6), or
(ii) [___] Regulation S Global Note (CUSIP: U9830H AA4), or
(b) [___] a Restricted Definitive Note.
2. After the Transfer the Transferee will hold:
[CHECK ONE]
(a) [___] a beneficial interest in the:
[___] 144A Global Note (CUSIP: 96812H AA6), or
[___] Regulation S Global Note (CUSIP: U9830H AA4), or
[___] Unrestricted Global Note ([___] [___]), or
(b) [___] a Restricted Definitive Note; or
(c) [___] an Unrestricted Definitive Note, in accordance with the terms of the Indenture.
| Exhibit B - 4 |
EXHIBIT C
FORM OF CERTIFICATE OF EXCHANGE
WildFire Intermediate Holdings, LLC
920 Memorial City Way Suite 1400
Houston, Texas 77024
Attention: General Counsel
U.S. Bank Trust Company, National Association
13737 Noel Road, Suite 800
Dallas, Texas 75240
Attention: WildFire Intermediate Holdings, LLC Company Administrator
Re: 7.500% Senior Notes due 2029
Reference is hereby made to the Indenture, dated as of September 26, 2024 (the “Indenture”), among (a) WildFire Intermediate Holdings, LLC, as the Company, (b) certain subsidiaries of the Company, as Guarantors, and (d) the Trustee. Capitalized terms used but not defined herein shall have the meanings given to them in the Indenture.
____________ (the “Owner”) owns and proposes to exchange the Note[s] or interest in such Note[s] specified herein, in the principal amount of $_______ in such Note[s] or interests (the “Exchange”). In connection with the Exchange, the Owner hereby certifies that:
1) EXCHANGE OF RESTRICTED DEFINITIVE NOTES OR BENEFICIAL INTERESTS IN A RESTRICTED GLOBAL NOTE FOR UNRESTRICTED DEFINITIVE NOTES OR BENEFICIAL INTERESTS IN AN UNRESTRICTED GLOBAL NOTE OF THE SAME SERIES
a) [___] CHECK IF EXCHANGE IS FROM BENEFICIAL INTEREST IN A RESTRICTED GLOBAL NOTE TO BENEFICIAL INTEREST IN AN UNRESTRICTED GLOBAL NOTE OF THE SAME SERIES. In connection with the Exchange of the Owner’s beneficial interest in a Restricted Global Note for a beneficial interest in an Unrestricted Global Note of the same series in an equal principal amount, the Owner hereby certifies (i) the beneficial interest is being acquired for the Owner’s own account without transfer, (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to the Global Notes and pursuant to and in accordance with the United States Securities Act of 1933, as amended (the “Securities Act”), (iii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act and (iv) the beneficial interest in an Unrestricted Global Note is being acquired in compliance with any applicable blue sky securities laws of any state of the United States.
b) [___] CHECK IF EXCHANGE IS FROM BENEFICIAL INTEREST IN A RESTRICTED GLOBAL NOTE TO UNRESTRICTED DEFINITIVE NOTE OF THE SAME SERIES. In connection with the Exchange of the Owner’s beneficial interest in a Restricted Global Note for an Unrestricted Definitive Note of the same series, the Owner hereby certifies (i) the Definitive Note is being acquired for the Owner’s own account without transfer, (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to the Restricted Global Notes and pursuant to and in accordance with the Securities Act, (iii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act and (iv) the Definitive Note is being acquired in compliance with any applicable blue sky securities laws of any state of the United States.
| Exhibit C - 1 |
c) [___] CHECK IF EXCHANGE IS FROM RESTRICTED DEFINITIVE NOTE TO BENEFICIAL INTEREST IN AN UNRESTRICTED GLOBAL NOTE OF THE SAME SERIES. In connection with the Owner’s Exchange of a Restricted Definitive Note for a beneficial interest in an Unrestricted Global Note of the same series, the Owner hereby certifies (i) the beneficial interest is being acquired for the Owner’s own account without transfer, (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to Restricted Definitive Notes and pursuant to and in accordance with the Securities Act, (iii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act and (iv) the beneficial interest is being acquired in compliance with any applicable blue sky securities laws of any state of the United States.
d) [___] CHECK IF EXCHANGE IS FROM RESTRICTED DEFINITIVE NOTE TO UNRESTRICTED DEFINITIVE NOTE OF THE SAME SERIES. In connection with the Owner’s Exchange of a Restricted Definitive Note for an Unrestricted Definitive Note of the same series, the Owner hereby certifies (i) the Unrestricted Definitive Note is being acquired for the Owner’s own account without transfer, (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to Restricted Definitive Notes and pursuant to and in accordance with the Securities Act, (iii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act and (iv) the Unrestricted Definitive Note is being acquired in compliance with any applicable blue sky securities laws of any state of the United States.
2) EXCHANGE OF RESTRICTED DEFINITIVE NOTES OR BENEFICIAL INTERESTS IN RESTRICTED GLOBAL NOTES FOR RESTRICTED DEFINITIVE NOTES OF THE SAME SERIES OR BENEFICIAL INTERESTS IN RESTRICTED GLOBAL NOTES OF THE SAME SERIES
a) [___] CHECK IF EXCHANGE IS FROM BENEFICIAL INTEREST IN A RESTRICTED GLOBAL NOTE TO RESTRICTED DEFINITIVE NOTE OF THE SAME SERIES. In connection with the Exchange of the Owner’s beneficial interest in a Restricted Global Note for a Restricted Definitive Note of the same series with an equal principal amount, the Owner hereby certifies that the Restricted Definitive Note is being acquired for the Owner’s own account without transfer. Upon consummation of the proposed Exchange in accordance with the terms of the Indenture, the Restricted Definitive Note issued will continue to be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the Restricted Definitive Note and in the Indenture and the Securities Act.
b) [___] CHECK IF EXCHANGE IS FROM RESTRICTED DEFINITIVE NOTE TO BENEFICIAL INTEREST IN A RESTRICTED GLOBAL NOTE OF THE SAME SERIES. In connection with the Exchange of the Owner’s Restricted Definitive Note for a beneficial interest in the [CHECK ONE]:
[_____] 144A Global Note, or
[_____] Regulation S Global Note
in each case of the same series, with an equal principal amount, the Owner hereby certifies (i) the beneficial interest is being acquired for the Owner’s own account without transfer and (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to the Restricted Global Notes and pursuant to and in accordance with the Securities Act, and in compliance with any applicable blue sky securities laws of any state of the United States. Upon consummation of the proposed Exchange in accordance with the terms of the Indenture, the beneficial interest issued will be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the relevant Restricted Global Note and in the Indenture and the Securities Act.
| Exhibit C - 2 |
This certificate and the statements contained herein are made for your benefit and the benefit of the Company and are dated
| [Insert Name of Transferor] | ||
| By: | ||
| Name: | ||
| Title: | ||
| Dated: | ||
| Exhibit C - 3 |
EXHIBIT D
FORM OF SUPPLEMENTAL INDENTURE
TO BE DELIVERED BY SUBSEQUENT GUARANTORS
[___________] Supplemental Indenture (this “Supplemental Indenture”), dated as of [__________], among [__________] (the “Guaranteeing Subsidiary”), the Existing Guarantors party hereto (the “Existing Guarantors”), WildFire Intermediate Holdings, LLC, a Delaware limited liability company (the “Company”), and U.S. Bank Trust Company, National Association, a national banking association, as trustee (the “Trustee”).
W I T N E S E T H
WHEREAS, the Company and certain Guarantors have heretofore executed and delivered to the Trustee an Indenture (as amended, supplemented or modified from time to time, the “Indenture”), dated as of September 26, 2024, providing for the issuance of an unlimited aggregate principal amount of 7.500% Senior Notes due 2029 (the “Notes”);
WHEREAS, the Indenture provides that under certain circumstances the Guaranteeing Subsidiary shall execute and deliver to the Trustee a supplemental indenture pursuant to which the Guaranteeing Subsidiary shall unconditionally guarantee all of the Company’s Obligations under the Notes and the Indenture on the terms and conditions set forth herein and under the Indenture (the “Guarantee”); and
WHEREAS, pursuant to Section 9.01 of the Indenture, the Trustee is authorized to execute and deliver this Supplemental Indenture.
NOW THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt of which is hereby acknowledged, the parties mutually covenant and agree for the equal and ratable benefit of the Holders as follows:
1. Capitalized Terms. Capitalized terms used herein without definition shall have the meanings assigned to them in the Indenture.
2. Agreement to Guarantee. The Guaranteeing Subsidiary acknowledges that it has received and reviewed a copy of the Indenture and all other documents it deems necessary to review in order to enter into this Supplemental Indenture and (i) hereby joins and becomes a party to the Indenture as indicated by its signature below as a Guarantor and (ii) acknowledges and agrees to (x) be bound by the Indenture as a Guarantor and (y) perform all obligations and duties required of a Guarantor pursuant to the Indenture.
3. No Recourse Against Others. No past, present or future director, officer, employee, incorporator, member, partner or equity holder of the Company or any Guarantor or any Parent Company will have any liability for any obligations of the Company or the Guarantors under the Notes, the Guarantees, the Indenture or this Supplemental Indenture or for any claim based on, in respect of, or by reason of such obligations or their creation. Each Holder by accepting Notes waives and releases all such liability. The waiver and release are part of the consideration for issuance of the Notes.
4. Governing Law. THIS SUPPLEMENTAL INDENTURE WILL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
5. Counterparts. The parties may sign any number of copies of this Supplemental Indenture. Each signed copy shall be an original, but all of them together represent the same agreement. This Supplemental Indenture may be executed in multiple counterparts, which, when taken together, shall constitute one instrument. The exchange of copies of this Supplemental Indenture and of signature pages by facsimile or electronic (by .pdf) transmissions shall constitute effective execution and delivery of this Supplemental Indenture as to the parties hereto and may be used in lieu of the original Supplemental Indenture for all purposes. Signatures of the parties hereto transmitted by facsimile or electronically (by .pdf) shall be deemed to be their original signatures for all purposes.
| Exhibit D - 1 |
6. Effect of Headings. The Section headings herein are for convenience only and shall not affect the construction hereof.
7. The Trustee. The Trustee shall not be responsible in any manner whatsoever for or in respect of the validity or sufficiency of this Supplemental Indenture or for or in respect of the recitals contained herein, all of which recitals are made solely by the Guaranteeing Subsidiary. Except as otherwise expressly provided herein, no duties, responsibilities or liabilities are assumed, or shall be construed to be assumed, by the Trustee by reason of this Supplemental Indenture. This Supplemental Indenture is executed and accepted by the Trustee subject to all the terms and conditions set forth in the Indenture with the same force and effect as if those terms and conditions were repeated at length herein and made applicable to the Trustee with respect hereto.
8. Benefits Acknowledged. Upon execution and delivery of this Supplemental Indenture the Guaranteeing Subsidiary will be subject to the terms and conditions set forth in the Indenture. The Guaranteeing Subsidiary acknowledges that it will receive direct and indirect benefits from the financing arrangements contemplated by the Indenture and this Supplemental Indenture and that its obligations as a result of this Supplemental Indenture are knowingly made in contemplation of such benefits.
9. Successors. All agreements of the Guaranteeing Subsidiary in this Supplemental Indenture shall bind its successors, except as otherwise provided in this Supplemental Indenture. All agreements of the Trustee in this Supplemental Indenture shall bind its successors.
| Exhibit D - 2 |
IN WITNESS WHEREOF, the parties hereto have caused this Supplemental Indenture to be duly executed, all as of the date first above written.
| [GUARANTEEING SUBSIDIARY] | ||
| By: | ||
| Name: | ||
| Title: | ||
| [EXISTING GUARANTORS] | ||
| By: | ||
| Name: | ||
| Title: | ||
| U.S. BANK TRUST COMPANY, NATIONAL ASSOCIATION, as Trustee | ||
| By: | ||
| Name: | ||
| Title: | ||
| Exhibit D - 3 |
Exhibit 4.2
FIRST SUPPLEMENTAL INDENTURE
This FIRST SUPPLEMENTAL INDENTURE, dated as of September 10, 2026 (this “Supplemental Indenture”), is entered into by and among Magnolia Oil & Gas Operating LLC, a Delaware limited liability company (the “Company”), the party that is signatory hereto as Guarantor (the “Guaranteeing Subsidiary”) and U.S. Bank Trust Company, National Association, as trustee (the “Trustee”).
W I T N E S S E T H:
WHEREAS, WildFire Intermediate Holdings, LLC, a Delaware limited liability company (the “Issuer”), certain subsidiaries of the Issuer, as guarantors (the “Prior Guarantors”), and the Trustee have heretofore executed and delivered an indenture, dated as of September 26, 2024 (as amended, supplemented or modified from time to time, the “Indenture”) providing for the issuance of $600,000,000 aggregate principal amount of 7.500% Senior Notes due 2029 (the “Notes”);
WHEREAS, on September 10, 2026, the Issuer and certain of the Prior Guarantors merged into the Company and each ceased to exist;
WHEREAS, the Company is executing and delivering to the Trustee this Supplemental Indenture to become party to the Indenture and assume all of the obligations of the Issuer under the Notes and the Indenture, as applicable, and the Guaranteeing Subsidiary is executing and delivering to the Trustee this Supplemental Indenture to unconditionally guarantee, on a joint and several basis with any other guarantors party thereto, all of the Company’s obligations under the Notes and the Indenture on the terms and conditions set forth herein and under the Indenture (the “Guarantee”);
WHEREAS, pursuant to Section 9.01 of the Indenture, the Trustee, the Company and the Guaranteeing Subsidiary are authorized to execute and deliver a supplemental indenture to comply with Section 5.01 of the Indenture (clause (c) of Section 9.01 of the Indenture) and assume the Issuer’s and the Prior Guarantors’ obligations (clause (d) of Section 9.01 of the Indenture) under the Indenture and the Notes without the consent of Holders of the Notes; and
WHEREAS, all acts, conditions, proceedings and requirements necessary to make this Supplemental Indenture a valid, binding and legal agreement enforceable in accordance with its terms for the purposes expressed herein, in accordance with its terms, have been duly done and performed.
NOW, THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt of which is hereby acknowledged, the parties mutually covenant and agree for the equal and ratable benefit of the Holders as follows:
1. Capitalized Terms. Capitalized terms used herein without definition shall have the meanings assigned to them in the Indenture.
2. Company Assumption. The Company hereby agrees, as of the date hereof, to assume, to be bound by, to perform and to be liable, as a primary obligor and not as a guarantor or surety, with respect to, any and all payment obligations under the Indenture and the Notes on the terms and subject to the conditions set forth in the Indenture and the Notes and all other obligations and agreements of the Issuer under the Indenture and the Notes and to become the “Company” under and as defined in the Indenture and the Notes.
3. Guarantee. The Guaranteeing Subsidiary acknowledges that it has received and reviewed a copy of the Indenture and all other documents it deems necessary to review in order to enter into this Supplemental Indenture and (i) hereby joins and becomes a party to the Indenture as indicated by its signature below as a Guarantor and (ii) acknowledges and agrees to (x) be bound by the Indenture as a Guarantor and (y) perform all obligations and duties required of a Guarantor pursuant to the Indenture.
4. No Recourse Against Others. No past, present or future director, officer, employee, incorporator, member, partner or equity holder of the Company or any Guarantor or any Parent Company will have any liability for any obligations of the Company or the Guarantors under the Notes, the Guarantees, the Indenture or this Supplemental Indenture or for any claim based on, in respect of, or by reason of such obligations or their creation. Each Holder by accepting Notes waives and releases all such liability. The waiver and release are part of the consideration for issuance of the Notes.
5. Governing Law. THIS SUPPLEMENTAL INDENTURE WILL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
6. Counterparts. The parties may sign any number of copies of this Supplemental Indenture. Each signed copy shall be an original, but all of them together represent the same agreement. This Supplemental Indenture may be executed in multiple counterparts, which, when taken together, shall constitute one instrument. The exchange of copies of this Supplemental Indenture and of signature pages by facsimile or electronic (by .pdf) transmissions shall constitute effective execution and delivery of this Supplemental Indenture as to the parties hereto and may be used in lieu of the original Supplemental Indenture for all purposes. Signatures of the parties hereto transmitted by facsimile or electronically (by .pdf) shall be deemed to be their original signatures for all purposes.
7. Effect of Headings. The Section headings herein are for convenience only and shall not affect the construction hereof.
8. The Trustee. The Trustee shall not be responsible in any manner whatsoever for or in respect of the validity or sufficiency of this Supplemental Indenture or for or in respect of the recitals contained herein, all of which recitals are made solely by the Company and the Guaranteeing Subsidiary. Except as otherwise expressly provided herein, no duties, responsibilities or liabilities are assumed, or shall be construed to be assumed, by the Trustee by reason of this Supplemental Indenture. This Supplemental Indenture is executed and accepted by the Trustee subject to all the terms and conditions set forth in the Indenture with the same force and effect as if those terms and conditions were repeated at length herein and made applicable to the Trustee with respect hereto.
9. Benefits Acknowledged. Upon execution and delivery of this Supplemental Indenture, the Company and the Guaranteeing Subsidiary will be subject to the terms and conditions set forth in the Indenture. Each of the Company and the Guaranteeing Subsidiary acknowledges that it will receive direct and indirect benefits from the financing arrangements contemplated by the Indenture and this Supplemental Indenture and that its obligations as a result of this Supplemental Indenture are knowingly made in contemplation of such benefits.
10. Successors. All agreements of both the Company and the Guaranteeing Subsidiary in this Supplemental Indenture shall bind its successors, except as otherwise provided in this Supplemental Indenture. All agreements of the Trustee in this Supplemental Indenture shall bind its successors.
[Signatures on following page]
IN WITNESS WHEREOF, the parties hereto have caused this Supplemental Indenture to be duly executed, all as of the date first above written.
MAGNOLIA OIL & GAS OPERATING LLC, as Company | ||
| By: | /s/ Christopher Stavros | |
| Name: Christopher Stavros | ||
| Title: President and Chief Executive Officer | ||
MAGNOLIA OIL & GAS FINANCE CORP., As Guaranteeing Subsidiary | ||
| By: | /s/ Christopher Stavros | |
| Name: Christopher Stavros | ||
| Title: President and Chief Executive Officer | ||
| U.S. BANK TRUST COMPANY, NATIONAL ASSOCIATION, as Trustee | ||
| By: | /s/ Bradley E. Scarbrough | |
| Name: Bradley E. Scarbrough | ||
| Title: Vice President | ||
[Signature Page to Supplemental Indenture]
Exhibit 4.3
FIRST SUPPLEMENTAL INDENTURE
First Supplemental Indenture (this “Supplemental Indenture”), dated as of September 10, 2026, among Magnolia Midstream LLC, a Delaware limited liability company (the “New Guarantor”), a Subsidiary of Magnolia Oil & Gas Operating LLC, a Delaware limited liability company (the “Company”), and Regions Bank, an Alabama banking corporation, as trustee (the “Trustee”).
W I T N E S S E T H
WHEREAS, the Company, Magnolia Oil & Gas Finance Corp. and certain subsidiaries and affiliates of the Company have heretofore executed and delivered to the Trustee an Indenture (as amended, supplemented or modified from time to time, the “Indenture”), dated as of November 26, 2024, providing for the issuance of an unlimited aggregate principal amount of 6.875% Senior Notes due 2032 (the “Notes”);
WHEREAS, the Indenture provides that under certain circumstances the New Guarantor shall execute and deliver to the Trustee a supplemental indenture pursuant to which the New Guarantor shall unconditionally guarantee all of the Issuers’ Obligations under the Notes and the Indenture on the terms and conditions set forth herein and under the Indenture (the “Guarantee”); and
WHEREAS, pursuant to Section 9.01 of the Indenture, the Trustee is authorized to execute and deliver this Supplemental Indenture.
NOW THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt of which is hereby acknowledged, the parties mutually covenant and agree for the equal and ratable benefit of the Holders as follows:
(1) Capitalized Terms. Capitalized terms used herein without definition shall have the meanings assigned to them in the Indenture.
(2) Agreement to Guarantee. The New Guarantor acknowledges that it has received and reviewed a copy of the Indenture and all other documents it deems necessary to review in order to enter into this Supplemental Indenture and (i) hereby joins and becomes a party to the Indenture as indicated by its signature below as a Subsidiary Guarantor and (ii) acknowledges and agrees to (x) be bound by the Indenture as a Subsidiary Guarantor and (y) perform all obligations and duties required of a Subsidiary Guarantor pursuant to the Indenture.
(3) No Recourse Against Others. No past, present or future director, officer, employee, incorporator, member, partner or equity holder of the Company or the Co-Issuer or any Guarantor or any Parent Company will have any liability for any obligations of the Company or the Co-Issuer or the Guarantors under the Notes, the Guarantees, the Indenture or this Supplemental Indenture or for any claim based on, in respect of, or by reason of such obligations or their creation. Each Holder by accepting Notes waives and releases all such liability. The waiver and release are part of the consideration for issuance of the Notes.
(4) Governing Law. THIS SUPPLEMENTAL INDENTURE WILL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
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(5) Counterparts. The parties may sign any number of copies of this Supplemental Indenture. Each signed copy shall be an original, but all of them together represent the same agreement. This Supplemental Indenture may be executed in multiple counterparts, which, when taken together, shall constitute one instrument. The exchange of copies of this Supplemental Indenture and of signature pages by facsimile or electronic (by ‘.pdf’ or other format) transmissions shall constitute effective execution and delivery of this Supplemental Indenture as to the parties hereto and may be used in lieu of the original Supplemental Indenture for all purposes. Signatures of the parties hereto transmitted by facsimile or electronically (by ‘.pdf’ or other format) shall be deemed to be their original signatures for all purposes.
(6) Effect of Headings. The Section headings herein are for convenience only and shall not affect the construction hereof.
(7) The Trustee. The Trustee shall not be responsible in any manner whatsoever for or in respect of the validity or sufficiency of this Supplemental Indenture or for or in respect of the recitals contained herein, all of which recitals are made solely by the New Guarantor.
(8) Benefits Acknowledged. Upon execution and delivery of this Supplemental Indenture the New Guarantor will be subject to the terms and conditions set forth in the Indenture. The New Guarantor acknowledges that it will receive direct and indirect benefits from the financing arrangements contemplated by the Indenture and this Supplemental Indenture and that its obligations as a result of this Supplemental Indenture are knowingly made in contemplation of such benefits.
(9) Successors. All agreements of the New Guarantor in this Supplemental Indenture shall bind its successors, except as otherwise provided in this Supplemental Indenture. All agreements of the Trustee in this Supplemental Indenture shall bind its successors.
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IN WITNESS WHEREOF, the parties hereto have caused this Supplemental Indenture to be duly executed, all as of the date first above written.
| MAGNOLIA MIDSTREAM LLC, as Subsidiary Guarantor | ||
| By: |
/s/ Timothy Yang | |
| Name: Timothy Yang | ||
| Title: Executive Vice President, Chief Legal and Commercial Officer, Corporate Secretary and Land | ||
| REGIONS BANK, as Trustee | ||
| By: |
/s/ Shawn Bednasek | |
| Name: Shawn Bednasek | ||
| Title: Vice President | ||
[Signature Page to First Supplemental Indenture (2032 Notes)]
Exhibit 4.4
FIRST SUPPLEMENTAL INDENTURE
First Supplemental Indenture (this “Supplemental Indenture”), dated as of September 10, 2026, among Magnolia Midstream LLC, a Delaware limited liability company (the “New Guarantor”), a Subsidiary of Magnolia Oil & Gas Operating LLC, a Delaware limited liability company (the “Company”), and Regions Bank, an Alabama banking corporation, as trustee (the “Trustee”).
W I T N E S S E T H
WHEREAS, the Company, Magnolia Oil & Gas Finance Corp. and certain subsidiaries and affiliates of the Company have heretofore executed and delivered to the Trustee an Indenture (as amended, supplemented or modified from time to time, the “Indenture”), dated as of August 5, 2026, providing for the issuance of an unlimited aggregate principal amount of 6.625% Senior Notes due 2034 (the “Notes”);
WHEREAS, the Indenture provides that under certain circumstances the New Guarantor shall execute and deliver to the Trustee a supplemental indenture pursuant to which the New Guarantor shall unconditionally guarantee all of the Issuers’ Obligations under the Notes and the Indenture on the terms and conditions set forth herein and under the Indenture (the “Guarantee”); and
WHEREAS, pursuant to Section 9.01 of the Indenture, the Trustee is authorized to execute and deliver this Supplemental Indenture.
NOW THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt of which is hereby acknowledged, the parties mutually covenant and agree for the equal and ratable benefit of the Holders as follows:
(1) Capitalized Terms. Capitalized terms used herein without definition shall have the meanings assigned to them in the Indenture.
(2) Agreement to Guarantee. The New Guarantor acknowledges that it has received and reviewed a copy of the Indenture and all other documents it deems necessary to review in order to enter into this Supplemental Indenture and (i) hereby joins and becomes a party to the Indenture as indicated by its signature below as a Subsidiary Guarantor and (ii) acknowledges and agrees to (x) be bound by the Indenture as a Subsidiary Guarantor and (y) perform all obligations and duties required of a Subsidiary Guarantor pursuant to the Indenture.
(3) No Recourse Against Others. No past, present or future director, officer, employee, incorporator, member, partner or equity holder of the Company or the Co-Issuer or any Guarantor or any Parent Company will have any liability for any obligations of the Company or the Co-Issuer or the Guarantors under the Notes, the Guarantees, the Indenture or this Supplemental Indenture or for any claim based on, in respect of, or by reason of such obligations or their creation. Each Holder by accepting Notes waives and releases all such liability. The waiver and release are part of the consideration for issuance of the Notes.
(4) Governing Law. THIS SUPPLEMENTAL INDENTURE WILL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
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(5) Counterparts. The parties may sign any number of copies of this Supplemental Indenture. Each signed copy shall be an original, but all of them together represent the same agreement. This Supplemental Indenture may be executed in multiple counterparts, which, when taken together, shall constitute one instrument. The exchange of copies of this Supplemental Indenture and of signature pages by facsimile or electronic (by ‘.pdf’ or other format) transmissions shall constitute effective execution and delivery of this Supplemental Indenture as to the parties hereto and may be used in lieu of the original Supplemental Indenture for all purposes. Signatures of the parties hereto transmitted by facsimile or electronically (by ‘.pdf’ or other format) shall be deemed to be their original signatures for all purposes.
(6) Effect of Headings. The Section headings herein are for convenience only and shall not affect the construction hereof.
(7) The Trustee. The Trustee shall not be responsible in any manner whatsoever for or in respect of the validity or sufficiency of this Supplemental Indenture or for or in respect of the recitals contained herein, all of which recitals are made solely by the New Guarantor.
(8) Benefits Acknowledged. Upon execution and delivery of this Supplemental Indenture the New Guarantor will be subject to the terms and conditions set forth in the Indenture. The New Guarantor acknowledges that it will receive direct and indirect benefits from the financing arrangements contemplated by the Indenture and this Supplemental Indenture and that its obligations as a result of this Supplemental Indenture are knowingly made in contemplation of such benefits.
(9) Successors. All agreements of the New Guarantor in this Supplemental Indenture shall bind its successors, except as otherwise provided in this Supplemental Indenture. All agreements of the Trustee in this Supplemental Indenture shall bind its successors.
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IN WITNESS WHEREOF, the parties hereto have caused this Supplemental Indenture to be duly executed, all as of the date first above written.
| MAGNOLIA MIDSTREAM LLC, as Subsidiary Guarantor | ||
| By: |
/s/ Timothy Yang | |
| Name: Timothy Yang | ||
| Title: Executive Vice President, Chief Legal and Commercial Officer, Corporate Secretary and Land | ||
| REGIONS BANK, as Trustee | ||
| By: |
/s/ Shawn Bednasek | |
| Name: Shawn Bednasek | ||
| Title: Vice President | ||
[Signature Page to First Supplemental Indenture (2034 Notes)]
Exhibit 4.5
Execution Version
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (this “Agreement”) is dated as of September 10, 2026, by and among Magnolia Oil & Gas Corporation, a Delaware corporation (the “Company”), and each of the persons listed under the heading “Holders” on the signature pages attached hereto (the “Holders,” and each individually, a “Holder”).
RECITALS
WHEREAS, the Company, Magnolia Oil and Gas Operating LLC, a Delaware limited liability company and a wholly owned subsidiary of the Company, and WildFire Energy I LLC, a Delaware limited liability company (“WildFire”), entered into a Purchase and Sale Agreement, dated July 19, 2026 (the “Purchase Agreement”);
WHEREAS, in connection with the closing of the transactions contemplated by the Purchase Agreement, on the date hereof, the Holders will receive, in the aggregate, 32,203,000 shares (the “Shares”) of the Company’s Class A common stock, par value $0.0001 per share (“Common Stock”), pursuant to the Purchase Agreement; and
WHEREAS, resales by the Holders of the Common Stock may be required to be registered under the Securities Act and applicable state securities laws, depending upon the status of a Holder or the intended method of distribution of the Common Stock.
NOW, THEREFORE, in consideration of the foregoing, the mutual covenants and agreements hereinafter set forth, and other good and valuable consideration, the receipt and sufficiency of which are acknowledged, the parties hereto, intending to be legally bound, hereby agree as follows:
Article I
DEFINITIONS
As used in this Agreement, the following terms shall have the meanings indicated:
“$” means United States dollars.
“Affiliate” shall mean, with respect to any person, any other person that, directly or indirectly, through one or more intermediaries, controls or is controlled by, or is under common control with, another person. The term “control” and its derivatives with respect to any person mean the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such person, whether through the ownership of voting securities, by contract or otherwise. With respect to a natural person, such person’s Affiliate shall also include such person’s spouse, children, brothers, sisters, parents, grandparents, spouse’s parents, the trustee of any trust that treats such natural person or the persons as mentioned above as beneficiary or the object of such trust, or any entities or trusts that are controlled by the foregoing persons.
“Agreement” has the meaning set forth in the Preamble.
“Automatic Shelf Registration Statement” means an “automatic shelf registration statement” as defined under Rule 405 under the Securities Act.
“Block Trade” has the meaning set forth in Section 2.4.
“Block Trade Notice” has the meaning set forth in Section 2.4.
“Block Trade Offer Notice” has the meaning set forth in Section 2.4.
“Board” means the board of directors of the Company.
“Business Day” is any Monday, Tuesday, Wednesday, Thursday or Friday other than a day on which banks and other financial institutions are authorized or required to be closed for business in the State of New York.
“Common Stock” has the meaning set forth in the recitals to this Agreement.
“Company” has the meaning set forth in the Preamble.
“Exchange Act” shall mean the Securities Exchange Act of 1934, as amended, and the rules and regulations of the SEC promulgated thereunder.
“FINRA” means the Financial Industry Regulatory Authority.
“General Disclosure Package” has the meaning set forth in Section 7.1(i).
“Holder” or “Holders” has the meaning set forth in the Preamble.
“Indemnified Party” has the meaning set forth in Section 7.3.
“Indemnifying Party” has the meaning set forth in Section 7.3.
“Initiating Holder” has the meaning set forth in Section 3.1.
“Kayne” means Kayne Private Energy Income Fund II, L.P., Kayne Private Energy Income Fund II-B, L.P., and Kayne Anderson Energy Fund VIII, L.P. and any successor entities thereto.
“Lock-Up Period” has the meaning set forth in Section 2.6.
“Major Holders” means Warburg, Kayne, WildFire and the individuals listed on Annex A attached hereto, and each of their respective Affiliates and Permitted Transferees, respectively, in each case for so long as such Major Holder is a Holder hereunder.
“Opt-Out Notice” has the meaning set forth in Section 4.1.
“Permitted Transferee” of a Holder shall mean any person in which the Holder owns a majority of the equity interests or any other investment entity that is controlled, advised or managed by the same person or persons that control the Holder or is an Affiliate of such person.
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“Piggyback Offering” has the meaning set forth in Section 3.1.
“Purchase Agreement” has the meaning set forth in the recitals to this Agreement.
“Registrable Shares” shall mean, with respect to any Holder, the Shares and any other securities issued or issuable with respect to, in exchange for or in substitution for the Shares by way of a stock dividend or stock split or in connection with a combination of shares, recapitalization, merger, consolidation or reorganization. For purposes of this Agreement, Registrable Shares shall cease to be Registrable Shares when such Registrable Shares (i) have been disposed of pursuant to any offering or sale in accordance with the Shelf Registration Statement, or have been sold pursuant to Rule 144 or Rule 145 (or any successor provisions) under the Securities Act or in any other transaction in which the purchaser does not receive “restricted securities” (as that term is defined for purposes of Rule 144), (ii) have been transferred to a transferee that has not agreed in writing and for the benefit of the Company to be bound by the terms and conditions of this Agreement, or (iii) have ceased to be of a class of securities of the Company that is listed and traded on a recognized national securities exchange or automated quotation system. Notwithstanding the foregoing, (A) with respect to any Holder, such Holder’s Shares shall not constitute Registrable Shares if all of such Holder’s Shares (together with any Shares held by Affiliates of such Holder) are eligible for immediate sale in a single transaction pursuant to Rule 144 (or any successor provision) with no volume or manner-of-sale restrictions and without current public information, and (B) for one year from the date of this Agreement, Registrable Shares shall not cease to be Registrable Shares pursuant to clause (i) as a result of an in-kind distribution in which registration rights were transferred pursuant to Section 11.5.
“Registration Expenses” shall mean all expenses incurred in connection with the preparation, printing and distribution of any Shelf Registration Statement and prospectus and all amendments and supplements thereto, and any and all expenses incident to the performance by the Company of its obligations pursuant to this Agreement, including: (i) all registration, qualification and filing fees; (ii) all fees and expenses associated with a required listing of the Registrable Shares on any securities exchange or market; (iii) fees and expenses with respect to filings required to be made with the New York Stock Exchange (or such other securities exchange or market on which the Shares are then listed or quoted) or FINRA; (iv) fees and expenses of compliance with securities or “blue sky” laws (including reasonable and documented fees and disbursements of counsel in connection with blue sky qualifications of the Registrable Shares); (v) fees and expenses related to registration in any non-U.S. jurisdictions, as applicable; (vi) fees and disbursements of counsel for the Company, the fees and expenses for independent certified public accountants retained by the Company (including the expenses of any comfort letters, costs associated with the delivery by independent certified public accountants of a comfort letter or comfort letters, and expenses of any special audits incident to or required by any such registration) and the fees and expenses of reserve engineers retained by the Company; (vii) all internal expenses of the Company (including all salaries and expenses of its officers and employees performing legal or accounting duties); (viii) the fees and expenses of any person, including special experts, retained by the Company in connection with the preparation of any Shelf Registration Statement; (ix) printer, messenger, telephone and delivery expenses and (x) the reasonable fees and disbursements of one nationally recognized counsel and one local counsel per applicable jurisdiction, to represent all of the Holders participating in any such registration, Underwritten Offering or Block Trade not to exceed $200,000 per registration, Underwritten Offering or Block Trade.
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“Rule 144 Block Trade” means an offering and/or sale of Registrable Shares made pursuant to Rule 144 on a block trade basis, including a same day trade, overnight trade or similar transaction.
“SEC” shall mean the United States Securities and Exchange Commission.
“Securities Act” shall mean the Securities Act of 1933, as amended, and the rules and regulations of the SEC promulgated thereunder.
“Shares” has the meaning set forth in the recitals to this Agreement.
“Shelf Registration Statement” means a “shelf” registration statement of the Company that covers all the Registrable Shares (and may cover other securities of the Company) on Form S-3 and under Rule 415 under the Securities Act or, if the Company is not then eligible to file on Form S-3, on Form S-1 or any other appropriate form under the Securities Act, or any successor rule that may be adopted by the SEC, including without limitation any such registration statement filed pursuant to Section 2.1, and all amendments and supplements to such “shelf” registration statement, including post-effective amendments, in each case, including the prospectus contained therein, all exhibits thereto and any document incorporated by reference therein.
“Suspension Event” has the meaning set forth in Section 5.1.
“Takedown Holder” has the meaning set forth in Section 2.2(i).
“Takedown Offer Notice” has the meaning set forth in Section 2.2(ii).
“Takedown Request Notice” has the meaning set forth in Section 2.2(ii).
“Underwritten Offering” means an offering (including an offering pursuant to a Shelf Registration Statement) in which shares of Common Stock are sold to one or more underwriters on a firm commitment basis for reoffering to the public.
“Underwritten Shelf Takedown” has the meaning set forth in Section 2.2(i).
“Warburg” means Hawkwood HoldCo, L.P. and any successor entity thereto.
“WildFire” has the meaning set forth in the recitals to this Agreement.
Article II
DEMAND RIGHTS
Section 2.1 Shelf Registration Rights. The Company will prepare and file with the SEC no later than five Business Days following the date of this Agreement, and use its reasonable best efforts to cause to become effective promptly thereafter, a Shelf Registration Statement (which Shelf Registration Statement shall be an Automatic Shelf Registration Statement if the Company is then eligible to file an Automatic Shelf Registration Statement), registering for resale the Registrable Shares under the Securities Act subject to compliance by the Holders of the Registrable Shares with their obligations hereunder, including specifically those obligations set forth in Section 6.2. The plan of distribution set forth in the Shelf Registration Statement will include all such methods of sale as any Holder may reasonably request in writing at least two Business Days prior to the filing of the Shelf Registration Statement and that can be included in the Shelf Registration Statement under the rules and regulations of the SEC. Until such time as all Registrable Shares cease to be Registrable Shares or the Company is no longer eligible to maintain a Shelf Registration Statement, the Company shall use its reasonable best efforts to keep current and effective such Shelf Registration Statement and file such supplements or amendments to such Shelf Registration Statement (or file a new Shelf Registration Statement (which Shelf Registration Statement shall be considered the “Shelf Registration Statement” for purposes of this Agreement and shall be an Automatic Shelf Registration Statement if the Company is then eligible to file an Automatic Shelf Registration Statement) when such preceding Shelf Registration Statement expires pursuant to the rules of the SEC) as may be necessary or appropriate to keep such Shelf Registration Statement continuously effective and useable for the resale of all Registrable Shares under the Securities Act. When effective, (i) any Shelf Registration Statement (including the documents incorporated therein by reference) will comply in all material respects as to form with all applicable requirements of the Securities Act and the Exchange Act and will not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading, and (ii) in the case of any prospectus contained in any Shelf Registration Statement, such prospectus will not include any untrue statement of material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which such statements were made, not misleading.
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Section 2.2 Shelf Take Downs; Request for Underwritten Shelf Takedown.
(i) At any time and from time to time after the effectiveness of a Shelf Registration Statement, any Major Holder with Registrable Shares (each, a “Takedown Holder”) may request to sell all or any portion of its Registrable Shares included thereon in an Underwritten Offering that is registered pursuant to such Shelf Registration Statement (an “Underwritten Shelf Takedown”); provided that in the case of an Underwritten Shelf Takedown such Takedown Holder(s) will be entitled to make (a) in the aggregate, not more than four written requests (a “Takedown Request Notice”), (b) not more than two Underwritten Shelf Takedown in any twelve-month period and (c) only if the Takedown Holder reasonably expects aggregate gross proceeds of at least $100 million for such Underwritten Shelf Takedown (including proceeds attributable to any Registrable Shares expected to be included in such offering pursuant to Section 2.2(ii) and Section 3.1). Notwithstanding the foregoing, the Company is not obligated to effect an Underwritten Shelf Takedown within 60 days after the closing of an Underwritten Shelf Takedown.
(ii) The Takedown Request Notice shall specify the approximate number of Registrable Shares to be sold in the Underwritten Shelf Takedown. Within five Business Days after receipt of any Takedown Request Notice, the Company shall give written notice of the requested Underwritten Shelf Takedown (the “Takedown Offer Notice”) to all other Major Holders and, subject to the provisions of Section 2.2(iii) hereof, shall include in the Underwritten Shelf Takedown all Registrable Shares with respect to which the Company has received written requests for inclusion therein within three Business Days after sending the Takedown Offer Notice.
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(iii) Notwithstanding any other provision of this Section 2.2, if the underwriter advises the Company that in the opinion of such underwriter, the distribution of all of the Registrable Shares requested to be sold pursuant to an Underwritten Shelf Takedown would materially and adversely affect the distribution of all of the securities to be underwritten, then the number of Registrable Shares that may be included in such Underwritten Shelf Takedown shall be allocated (a) first, to the Major Holders electing to participate in the Underwritten Shelf Takedown their Registrable Shares, on a pro rata basis based on the relative number of Registrable Shares then held by each such Major Holder; provided that any such amount thereby allocated to each such Major Holder that exceeds such Major Holder’s request shall be reallocated among the other Major Holders in like manner, as applicable; and (b) second, to the Company, if any, and (c) third, to other persons proposing to participate in the Underwritten Shelf Takedown, if any; provided, however, that the number of Registrable Shares to be included in such underwriting shall not be reduced unless all other securities are entirely excluded from such underwriting.
Section 2.3 Selection of Underwriter. A Takedown Holder shall have the right to select the underwriter or underwriters to administer any Underwritten Shelf Takedown or Block Trade; provided that the Takedown Holder shall obtain the Company’s consent on such selection in the case of an Underwritten Shelf Takedown, such consent shall not be unreasonably withheld, conditioned or delayed.
Section 2.4 Block Trades. Notwithstanding anything contained in this Article II, in the event a Takedown Holder desires to sell any Registrable Shares in a bought deal or overnight offering requiring the involvement of the Company but not involving any “road show,” and which is commonly known as a “block trade” (a “Block Trade”), (i) the Takedown Holder shall (a) give at least three Business Days prior notice in writing (the “Block Trade Notice”) of such transaction to the Company and (b) identify the potential underwriter(s) in such notice with contact information for such underwriter(s); and (ii) the Company shall cooperate with such requesting Takedown Holder(s) to the extent it is reasonably able to effect such Block Trade. The Company shall give written notice (the “Block Trade Offer Notice”) of the proposed Block Trade to the Major Holders holding Registrable Shares as soon as practicable but in no event more than one Business Day following the Company’s receipt of the Block Trade Notice, and such notice shall offer such Major Holders the opportunity to participate in such Block Trade by providing written notice of intent to so participate within one Business Day following receipt of the Block Trade Offer Notice; provided, however, that no Block Trade Offer Notice shall be required in connection with the proposed sale of Registrable Shares in a Rule 144 Block Trade; provided, further, that any Major Holder that fails to deliver written notice of its intent to participate within such one Business Day period shall be deemed to have waived its right to participate in such Block Trade. Any Block Trade shall be subject to the cutbacks set forth in Section 2.2(iii). At any time and from time to time after the effectiveness of a Shelf Registration Statement, any Takedown Holder may request to sell all or any portion of its Registrable Shares in a Block Trade if the Takedown Holder reasonably expects aggregate gross proceeds of at least $75 million for such Block Trade that involves an underwriter conducting due diligence, which they would normally conduct in connection with an offering of securities registered under the Securities Act, including, without limitation, receipt of customary opinions and comfort letters; provided that such registered Block Trade shall constitute as an Underwritten Offering under Section 2.2(i), including with regards to limitations on number of requests.
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Section 2.5 Withdrawals. Even if Registrable Shares held by a Major Holder have been part of an Underwritten Shelf Takedown or Block Trade, such Major Holder 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 Shares being offered for its account; provided, that notwithstanding the foregoing, a withdrawn demand for an Underwritten Shelf Takedown shall count as one of the permitted Underwritten Shelf Takedowns pursuant to Section 2.2.
Section 2.6 Lock-Up. The Holders hereby irrevocably agree that, without the prior written consent of the Company, the Holders will not, during the period commencing on the date of this Agreement and ending on the date that is 30 days after the date of this Agreement (“Lock-Up Period”), (i) lend, offer, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right, or warrant to purchase, or otherwise transfer or dispose of, in each case whether effected directly or indirectly, any Shares; (ii) enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of the Shares, whether any such transaction described in clause (i) or clause (ii) is to be settled by delivery of shares of Common Stock or other securities, in cash, or otherwise; or (iii) publicly announce the intention to effect any of the transactions covered in clause (i) or clause (ii) above. Notwithstanding anything to the contrary, nothing in this Section 2.6 or elsewhere in this Agreement shall restrict or otherwise limit any transfers of shares of Common Stock (i) pursuant to a bona fide tender offer, merger, consolidation or other similar transaction made to all holders of Common Stock, and in the event of such a transfer, the Company shall reasonably promptly provide the applicable documentation to its transfer agent reasonably promptly following the Holders providing advanced written notice of such transfer to the Company, (ii) in connection with pledging or otherwise granting a security interest in any Shares in a bona fide transaction to one or more lending institutions as collateral or security for any margin loan and any transfer in the event of foreclosure upon such Shares as a result of a default on such margin loan, (iii) to the Company pursuant to agreements under which the Company has the option to repurchase such Shares or pursuant to a share repurchase program approved by the Board, (iv) by operation of law or pursuant to a final order of a court or regulatory agency, (v) to Affiliates of a Holder, or (vi) in an in-kind distribution pursuant to Section 11.14; provided that recipients of securities in any transfer in accordance with this Section 2.6 shall execute a customary written joinder in form and substance reasonably satisfactory to the Company providing that such recipient shall be bound by the Lock-Up Period; provided, further that the Company may impose a lock-up legend during the Lock-Up Period for any securities subject to this Section 2.6.
Article III
“PIGGY-BACK” RIGHTS
Section 3.1 Piggy-Back Rights. If the Company or any holder of Common Stock (the “Initiating Holder”) proposes to sell any shares of Common Stock in an Underwritten Offering other than pursuant to Sections 2.2 or 2.4 of this Agreement (a “Piggyback Offering”) other than (i) a registration statement on Form S-8 or any successor form to Form S-8 or in connection with any employee or director welfare, benefit or compensation plan, (ii) in connection with an exchange offer or an offering of securities exclusively to existing security holders of the Company or its subsidiaries or (iii) relating to a transaction pursuant to Rule 145 under the Securities Act, the Company shall give written notice of the proposed Underwritten Offering to all Major Holders holding Registrable Shares at least two Business Days prior to the filing of the preliminary prospectus supplement or the Shelf Registration Statement, as applicable. Each Major Holder holding Registrable Shares shall have the right to request that all or any part of its Registrable Shares be included in the Underwritten Offering by giving written notice to the Company within one Business Day after receipt of the foregoing notice by the Company. Subject to the provisions of Sections 3.2, 3.3 and 4.1 the Company will include all such Registrable Shares requested to be included by the Major Holders in the Piggyback Offering.
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Section 3.2 Withdrawal of Exercise of Rights. If, at any time after giving written notice of its intention to do a Piggyback Offering and prior to when the public offering price and underwriters’ discount are determined with the managing underwriter with respect thereto, the Initiating Holder shall determine for any reason not to proceed with the proposed registration, the Company may at its election (or the election of such Initiating Holder(s), as applicable) give written notice of such determination to the Major Holders and thereupon shall be relieved of its obligation to register any Registrable Shares in connection with such registration (but not from its obligation to pay the Registration Expenses incurred in connection therewith).
Section 3.3 Priority in Piggyback Offerings. If the underwriter advises the Company that in the opinion of such underwriter, the distribution of all of the Registrable Shares requested to be sold pursuant to a Piggyback Offering would materially and adversely affect the distribution of all of the securities to be underwritten, then the number of Registrable Shares that may be included in such Underwritten Shelf Takedown shall be allocated (i) first, all of the securities the Initiating Holder proposes to sell for its own account (and if the Initiating Holder is not the Company, the securities the Company proposes to sell, if any); and (ii) second, such number of Registrable Shares requested to be included in such Underwritten Offering by the Major Holders which, in the opinion of such managing underwriter can be sold without having the adverse effect described above, which number of Registrable Shares shall be allocated pro rata among such Major Holders on the basis of the relative number of Registrable Shares then held by each such Major Holder; provided that any such amount thereby allocated to each such Major Holder that exceeds such Major Holder’s request shall be reallocated among the other Major Holders in like manner, as applicable.
Article IV
OPT-OUT
Section 4.1 Opt-Out Notices. Any Holder may deliver written notice (an “Opt-Out Notice”) to the Company requesting that such Holder not receive notice from the Company of any Underwritten Offering or Block Trade pursuant to Section 2.2, Section 2.4 and Section 3.1 or Suspension Event pursuant to Section 5.1; provided, however, that such Holder may later revoke any such Opt-Out Notice in writing. Following receipt of an Opt-Out Notice from a Holder (unless subsequently revoked), (i) the Company shall not deliver any such notice to such Holder pursuant to Articles II, III and V of this Agreement, and such Holder shall no longer be entitled to the rights associated with any such notice and (ii) each time prior to a Holder’s intended use of an effective Shelf Registration Statement, such Holder will notify the Company in writing at least two Business Days in advance of such intended use, and if a notice of a Suspension Event was previously delivered or would have been delivered but for the provisions of this Section 4.1 and the related suspension period remains in effect, the Company will so notify such Holder, within one Business Day of such Holder’s notification to the Company, by delivering to such Holder a copy of such previous notice of Suspension Event, and thereafter will provide such Holder with the related notice of the conclusion of such Suspension Event immediately upon its availability.
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Article V
SUSPENSION OF OFFERING
Section 5.1 Suspension of Offering. Notwithstanding the provisions of Article II or III, the Company shall be entitled to postpone the effectiveness of the Shelf Registration Statement, or effecting an Underwritten Shelf Takedown or Block Trade, upon written notice (which notice shall not contain any material non-public information regarding the Company) to each Holder whose Registrable Shares are included in the Shelf Registration Statement, if (i) the Company is pursuing a bona fide material acquisition, merger, reorganization, disposition, joint venture, financing or other similar transaction and the Board determines in its reasonable and good faith discretion, that any required disclosure of such transaction in the Shelf Registration Statement or other offering documents would have an adverse effect on any such transaction, (ii) the Company is in possession of material non-public information and the Board determines in its reasonable and good faith discretion that any required disclosure in the Shelf Registration Statement or other offering documents of such information or event would not be in the best interest of the Company or (iii) such filing or use would render the Company unable to comply with the applicable securities laws (each such circumstance, a “Suspension Event”); provided, however, that the Company may not exercise its delay or suspension rights under this Section 5.1 for a period that exceeds sixty (60) consecutive days or ninety (90) days in the aggregate, in each case, in any twelve-month period. The Company shall provide written notice to each Holder promptly (and in any event within two (2) Business Days) following the cessation of the circumstances giving rise to any Suspension Event and the conclusion of the applicable suspension period. Upon receipt of any written notice from the Company of the happening of any Suspension Event, each Holder agrees that it will (i) immediately discontinue offers and sales of the Registrable Shares under the Shelf Registration Statement and (ii) maintain the confidentiality of any information included in such written notice delivered by the Company in accordance with Section 10.1 unless otherwise required by law or subpoena.
Article VI
REGISTRATION PROCEDURES
Section 6.1 Obligations of the Company. When the Company is required to effect the registration of Registrable Shares under the Securities Act pursuant to this Agreement, the Company shall:
(i) use commercially reasonable efforts to register or qualify the Registrable Shares by the time the Shelf Registration Statement is declared effective by the SEC under all applicable state securities or “blue sky” laws of such jurisdictions as any Holder may reasonably request in writing, to keep each such registration or qualification effective during the period such Shelf Registration Statement is required to be kept effective pursuant to this Agreement, and to do any and all other similar acts and things which may be reasonably necessary or advisable to enable the Holders to consummate the disposition of the Registrable Shares owned by the Holders in each such jurisdiction; provided, however, that the Company shall not be required to (a) qualify generally to do business in any jurisdiction or to register as a broker or dealer in such jurisdiction where it would not otherwise be required to qualify but for this Agreement, (b) take any action that would cause it to become subject to any taxation in any jurisdiction where it would not otherwise be subject to such taxation or (c) take any action that would subject it to the general service of process in any jurisdiction where it is not then so subject;
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(ii) prepare and file with the SEC such amendments and supplements as to the Shelf Registration Statement and the prospectus used in connection therewith as may be necessary (a) to keep such Shelf Registration Statement effective and (b) to comply with the provisions of the Securities Act with respect to the disposition of the Registrable Shares covered by such Shelf Registration Statement, in each case for such time as is contemplated in the applicable provisions above;
(iii) promptly furnish, without charge, to the Holders such number of copies of the Shelf Registration Statement, each amendment and supplement thereto (in each case including all exhibits), and the prospectus included in such Shelf Registration Statement (including each preliminary prospectus) in conformity with the requirements of the Securities Act, the documents incorporated by reference in such Shelf Registration Statement or prospectus, and such other documents as the Holders may reasonably request in order to facilitate the public sale or other disposition of the Registrable Shares owned by the Holders;
(iv) promptly notify the Holders: (a) when the Shelf Registration Statement, any pre-effective amendment, the prospectus or any prospectus supplement related thereto or post-effective amendment to the Shelf Registration Statement has been filed, and, with respect to the Shelf Registration Statement or any post-effective amendment, when the same has become effective, (b) of the issuance by the SEC of any stop order suspending the effectiveness of the Shelf Registration Statement or the initiation or threat of any proceedings for that purpose, (c) of any delisting or pending delisting of the Shares by any national securities exchange or market on which the Shares are then listed or quoted, and (d) of the receipt by the Company of any notification with respect to the suspension of the qualification of any Registrable Shares for sale under the securities or “blue sky” laws of any jurisdiction or the initiation of any proceeding for such purpose;
(v) use commercially reasonable efforts to prevent the issuance of any order suspending the effectiveness of a Shelf Registration Statement, and, if any such order suspending the effectiveness of a Shelf Registration Statement is issued, shall promptly use commercially reasonable efforts to obtain the withdrawal of such order at the earliest possible moment;
(vi) until the expiration of the period during which the Company is required to maintain the effectiveness of the Shelf Registration Statement as set forth in the applicable sections hereof, promptly notify the Holders: (a) of the existence of any fact of which the Company is aware or the happening of any event that has resulted, or could reasonably be expected to result, in (1) the Shelf Registration Statement, as is then in effect, containing an untrue statement of a material fact or omitting to state a material fact required to be stated therein or necessary to make any statements therein not misleading or (2) the prospectus included in such Shelf Registration Statement containing an untrue statement of a material fact or omitting to state a material fact required to be stated therein or necessary to make any statements therein, in the light of the circumstances under which they were made, not misleading, and (b) of the Company’s reasonable determination that a post-effective amendment to the Shelf Registration Statement would be appropriate or that there exist circumstances not yet disclosed to the public which make further sales under such Shelf Registration Statement inadvisable pending such disclosure and post-effective amendment;
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(vii) if any event or occurrence giving rise to an obligation of the Company to notify the Holders pursuant to Section 6.1(vi) takes place, subject to Section 5.1, the Company shall prepare and, to the extent the exemption from prospectus delivery requirements in Rule 172 under the Securities Act is not available, furnish to the Holders a reasonable number of copies of a supplement or post-effective amendment to such Shelf Registration Statement or related prospectus or any document incorporated therein by reference or file any other required document, and shall use commercially reasonable efforts to have such supplement or amendment declared effective, if required, as soon as practicable following the filing thereof, so that (a) such Shelf Registration Statement shall not 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 and (b) as thereafter delivered to the purchasers of the Registrable Shares being sold thereunder, such prospectus shall not include an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading;
(viii) use commercially reasonable efforts to cause all such Registrable Shares to be listed or quoted on the national securities exchange or market on which the Shares are then listed or quoted, if the listing or quotation of such Registrable Shares is then permitted under the rules of such national securities exchange or market;
(ix) if requested by any Holder participating in an offering of Registrable Shares, as soon as practicable after such request, but in no event later than five calendar days (or, if earlier, one Business Day, in the context of a Block Trade) after such request, incorporate in a prospectus supplement or post-effective amendment such information concerning the Holder or the intended method of distribution as the Holder reasonably requests to be included therein and is reasonably necessary to permit the sale of the Registrable Shares pursuant to the Shelf Registration Statement, including information with respect to the number of Registrable Shares being sold, the purchase price being paid therefor and any other material terms of the offering of the Registrable Shares to be sold in such offering; provided, however, that the Company shall not be obligated to include in any such prospectus supplement or post-effective amendment any requested information that is not required by the rules of the SEC and is unreasonable in scope compared with the Company’s most recent prospectus or prospectus supplement used in connection with a primary or secondary offering of equity securities by the Company;
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(x) in connection with the preparation and filing of any Shelf Registration Statement, the Company will give the Holders offering and selling thereunder and their respective counsels the opportunity to review and provide comments on such Shelf Registration Statement, each prospectus included therein or filed with the SEC, and each amendment thereof or supplement thereto (other than amendments or supplements that do not make any material change in the information related to the Company) (provided that the Company shall not file any such Shelf Registration Statement including Registrable Shares or an amendment thereto or any related prospectus or any supplement thereto to which such Holders or the managing underwriter or underwriters, if any, shall reasonably object in writing), and give each of them such access to its books and records and such opportunities to discuss the business of the Company and its subsidiaries with its officers, its counsel and the independent public accountants who have certified its financial statements as shall be necessary, in the opinion of the Holder’s and such underwriters’ respective counsel, to conduct a reasonable due diligence investigation within the meaning of the Securities Act;
(xi) provide a transfer agent and registrar, which may be a single entity, and a CUSIP number for the Registrable Shares not later than the effective date of the Shelf Registration Statement filed hereunder;
(xii) in connection with any Underwritten Shelf Takedown or Block Trade, enter into an underwriting agreement in customary form and substance reasonably satisfactory to the Company, the Major Holders and the managing underwriter or underwriters of the public offering of Registrable Shares, if the offering is to be underwritten, in whole or in part; provided that the Major Holders may, at their option, require that any or all of the conditions precedent to the obligations of such underwriters under such underwriting agreement be conditions precedent to the obligations of the Major Holders. The Company shall cooperate and participate in the marketing of Registrable Shares, including participating in customary “roadshow” presentations, as the Major Holders and/or the managing underwriters may reasonably request; provided that the Company and members of its management team will participate in customary investor conference calls related to a contemplated public offering of Registrable Shares (including any Block Trade) reasonably requested by the Major Holders and/or the managing underwriter without regard to the anticipated aggregate gross proceeds of such contemplated offering; and
(xiii) in connection with any Underwritten Shelf Takedown or Block Trade, use commercially reasonable efforts to obtain (a) an opinion, dated such date, of the counsel representing the Company for the purposes of such Underwritten Shelf Takedown or Block Trade, in form and substance as is customarily given to underwriters and (b) comfort letters dated such date, from the independent certified public accountants and reserve engineers of the Company, in form and substance as is customarily given by independent certified public accountants and reserve engineers to underwriters in an underwritten public offering, addressed to the underwriters.
Section 6.2 Obligations of the Holders. In connection with the Shelf Registration Statement utilized by the Company to satisfy the provisions of this Agreement, each Holder agrees to reasonably cooperate with the Company in connection with the preparation of the Shelf Registration Statement, and each Holder agrees that such cooperation shall include (i) responding within two Business Days to any written request by the Company to provide or verify information regarding the Holder or the Holder’s Registrable Shares (including the proposed manner of sale) that may be required to be included in any such Shelf Registration Statement pursuant to the rules and regulations of the SEC, and (ii) providing in a timely manner information regarding the proposed distribution by the Holder of the Registrable Shares and such other information as may be requested by the Company from time to time in connection with the preparation of and for inclusion in any Shelf Registration Statement and related prospectus.
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Section 6.3 Participation in Underwritten Offerings. No Holder may participate in any Underwritten Shelf Takedown or Block Trade hereunder unless such Holder (i) agrees to sell his or its Registrable Shares on the basis provided in the applicable underwriting arrangements (which shall include a customary form of underwriting agreement, which shall provide that the representations and warranties by, and the other agreements on the part of, the Company to and for the benefit of the underwriters shall also be made to and for the benefit of the participating Holders) and (ii) completes and executes all questionnaires, powers of attorney, indemnities, underwriting agreements and other documents in customary form as reasonably required under the terms of such underwriting arrangements; provided, however, that, in the case of each of (x) and (y) above, if the provisions of such underwriting arrangements, or the terms or provisions of such questionnaires, powers of attorney, indemnities, underwriting agreements or other documents, are less favorable in any respect to such Holder than to any other person or entity that is party to such underwriting arrangements, then the Company shall use commercially reasonable best efforts to cause the parties to such underwriting arrangements to amend such arrangements so that such Holder receives the benefit of any provisions thereof that are more favorable to any other person or entity that is party thereto. If any Holder does not approve of the terms of such underwriting arrangements, such Holder may elect to withdraw from such offering by providing written notice to the Company and the underwriter.
Section 6.4 Offers and Sales. All offers and sales by a Holder under any Shelf Registration Statement shall be completed within the period during which the Shelf Registration Statement is required to remain effective pursuant to the applicable provision above and not the subject of any stop order, injunction or other order of the SEC. Upon expiration of such period, no Holder will offer or sell the Registrable Shares under the Shelf Registration Statement. If directed in writing by the Company, each Holder will return or, in each such Holder’s sole discretion destroy, all undistributed copies of the applicable prospectus in its possession upon the expiration of such period.
Section 6.5 Underwritten Offering Lockup. In connection with any Underwritten Offering or Block Trade, whether or not a Major Holder participates, each Major Holder agrees not to effect any sale or distribution, including any sale pursuant to Rule 144, of any Registrable Shares, and not to effect any sale or distribution of other securities of the Company or of any securities convertible into or exchangeable or exercisable for any other securities of the Company (in each case, other than as part of such underwritten public offering), in each case, during such period as the managing underwriter may require (not to exceed 60 calendar days) (or such other period as may be requested by the Company or the managing underwriter to comply with regulatory restrictions on (i) the publication or other distribution of research reports and (ii) analyst recommendations and opinions, including, but not limited to, the restrictions contained in FINRA Rule 2241, or any successor provisions or amendments thereto) beginning on the closing date of the sale of such securities pursuant to such an effective registration statement, except as part of such offering; provided that transfers of shares of Common Stock in connection with pledging or otherwise granting a security interest in any Shares in a bona fide transaction to one or more lending institutions as collateral or security for any margin loan and any transfer in the event of foreclosure upon such Shares as a result of a default on such margin loan shall be permitted; provided, further, that any in-kind distribution by WildFire permitted by Section 11.14 shall be permitted; provided, further, that all executive officers and directors of the Company are bound by and have entered into substantially similar lock-up agreements; provided, further, that any waiver of such lock-up (or substantially similar lock-up agreement) shall apply pro rata to the Major Holders.
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Article VII
INDEMNIFICATION; CONTRIBUTION
Section 7.1 Indemnification by the Company. The Company agrees to indemnify and hold harmless each Holder and each person, if any, who controls any Holder within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act, and any of their partners, members, managers, officers, directors, trustees, employees or representatives, as follows:
(i) against any and all loss, liability, claim, damage, judgment and expense whatsoever, as incurred (including reasonable fees and disbursements of counsel to such Holders), arising out of or based upon any untrue statement or alleged untrue statement of a material fact contained in the Shelf Registration Statement (or any amendment thereto) pursuant to which the Registrable Shares were registered under the Securities Act, including all documents incorporated therein by reference, or the omission or alleged omission therefrom of a material fact required to be stated therein or necessary to make the statements therein not misleading or arising out of or based upon any untrue statement or alleged untrue statement of a material fact included in any issuer free writing prospectus (within the meaning of Rule 433 of the Securities Act, and together with any preliminary prospectus and other information conveyed to the purchaser of Registrable Shares at the time of sale (as such terms are used in Rule 159(a) of the Securities Act), the “General Disclosure Package”), the General Disclosure Package, or any prospectus (or any amendment or supplement thereto), including all documents incorporated therein by reference, or the omission or alleged omission therefrom of a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading;
(ii) against any violation or alleged violation by the Company of the Securities Act, the Exchange Act, any state securities law or any rule or regulation promulgated under the Securities Act, the Exchange Act or any state securities law;
(iii) against any and all loss, liability, claim, damage, judgment and expense whatsoever, as incurred (including reasonable fees and disbursements of counsel to such Holders), and to the extent of the aggregate amount paid in settlement of any litigation, or investigation or proceeding by any governmental agency or body, commenced or threatened, or of any claim whatsoever based upon any such untrue statement or omission, any such alleged untrue statement or omission, or any such violation or alleged violation, if such settlement is effected with the written consent of the Company (which consent shall not be unreasonably withheld or delayed); and
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(iv) against any and all expense whatsoever, as incurred (including reasonable fees and disbursements of counsel to such Holders), reasonably incurred and documented in investigating, preparing, defending against or participating in (as a witness or otherwise) any litigation, arbitration, action, or investigation or proceeding by any governmental agency or body, commenced or threatened, in each case whether or not a party, or any claim whatsoever based upon any such untrue statement or omission, any such alleged untrue statement or omission or any such violation or alleged violation, to the extent that any such expense is not paid under subparagraph (i), (ii) or (iii) above; provided, however, that the indemnity provided pursuant to Sections 7.1 through 7.3 does not apply to any Holder with respect to any loss, liability, claim, damage, judgment or expense to the extent arising out of (a) any untrue statement or omission or alleged untrue statement or omission made in reliance upon and in strict conformity with written information furnished to the Company by such Holder expressly for use in the Shelf Registration Statement (or any amendment thereto) or the prospectus (or any amendment or supplement thereto), or (b) such Holder’s failure to deliver an amended or supplemental prospectus furnished to such Holder by the Company, if required by law to have been delivered, if such loss, liability, claim, damage, judgment or expense would not have arisen had such delivery occurred.
Section 7.2 Indemnification by Holder. Each Holder severally and not jointly agrees to indemnify and hold harmless the Company, and each of its directors and officers (including each director and officer of the Company who signed the Shelf Registration Statement), and each person, if any, who controls the Company within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act, as follows:
(i) against any and all loss, liability, claim, damage, judgment and expense whatsoever, as incurred (including reasonable fees and disbursements of counsel), arising out of or based upon any untrue statement or alleged untrue statement of a material fact contained in the Shelf Registration Statement (or any amendment thereto) pursuant to which the Registrable Shares of such Holder were registered under the Securities Act, including all documents incorporated therein by reference, or the omission or alleged omission therefrom of a material fact required to be stated therein or necessary to make the statements therein not misleading or arising out of or based upon any untrue statement or alleged untrue statement of a material fact included in any issuer free writing prospectus (within the meaning of Rule 433 of the Securities Act), the General Disclosure Package, or any prospectus (or any amendment or supplement thereto), including all documents incorporated therein by reference, or the omission or alleged omission therefrom of a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading;
(ii) against any and all loss, liability, claim, damage, judgment and expense whatsoever, as incurred (including reasonable fees and disbursements of counsel), and to the extent of the aggregate amount paid in settlement of any litigation, or investigation or proceeding by any governmental agency or body, commenced or threatened, or of any claim whatsoever based upon any such untrue statement or omission, or any such alleged untrue statement or omission, if such settlement is effected with the written consent of such Holder; and
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(iii) against any and all expense whatsoever, as incurred (including reasonable fees and disbursements of counsel), reasonably incurred in investigating, preparing, defending or participating in (as a witness or otherwise) against any litigation, or investigation or proceeding by any governmental agency or body, commenced or threatened, in each case whether or not a party, or any claim whatsoever based upon any such untrue statement or omission, or any such alleged untrue statement or omission, to the extent that any such expense is not paid under subparagraph (i) or (ii) above; provided, however, that a Holder shall only be liable under the indemnity provided pursuant to Sections 7.1 through 7.3 with respect to any loss, liability, claim, damage, judgment or expense to the extent arising out of (a) any untrue statement or omission or alleged untrue statement or omission made in reliance upon and in strict conformity with written information furnished to the Company by such Holder expressly for use in the Shelf Registration Statement (or any amendment thereto) or the prospectus (or any amendment or supplement thereto) or (b) such Holder’s failure to deliver an amended or supplemental prospectus furnished to such Holder by the Company, if required by law to have been delivered, if such loss, liability, claim, damage or expense would not have arisen had such delivery occurred. Notwithstanding the provisions of Sections 7.1 through 7.3, a Holder and any permitted assignee shall not be required to indemnify the Company, its officers, directors or control persons with respect to any amount in excess of the amount of the aggregate net cash proceeds received by such Holder or such permitted assignee, as the case may be, from sales of the Registrable Shares of such Holder under the Shelf Registration Statement that is the subject of the indemnification claim.
Section 7.3 Conduct of Indemnification Proceedings. An indemnified party hereunder (the “Indemnified Party”) shall give reasonably prompt notice to the indemnifying party (the “Indemnifying Party”) of any action or proceeding commenced against it in respect of which indemnity may be sought hereunder, but failure to so notify the Indemnifying Party (i) shall not relieve it from any liability which it may have under the indemnity provisions of Section 7.1 or 7.2 above, unless and only to the extent it did not otherwise learn of such action and the lack of notice by the Indemnified Party results in the forfeiture by the Indemnifying Party of substantial rights and defenses, and (ii) shall not, in any event, relieve the Indemnifying Party from any obligations to any Indemnified Party other than the indemnification obligation provided under Section 7.1 or 7.2 above. If the Indemnifying Party so elects within a reasonable time after receipt of such notice, the Indemnifying Party may assume the defense of such action or proceeding at such Indemnifying Party’s own expense with counsel chosen by the Indemnifying Party and approved by the Indemnified Party, which approval shall not be unreasonably withheld or delayed; provided, however, that the Indemnifying Party will not settle, compromise or consent to the entry of any judgment with respect to any such action or proceeding without the written consent of the Indemnified Party unless such settlement, compromise or consent secures the unconditional release of the Indemnified Party; and provided further, that, if the Indemnified Party reasonably determines that a conflict of interest exists where it is advisable for the Indemnified Party to be represented by separate counsel or that, upon advice of counsel, there may be legal defenses available to the Indemnified Party which are different from or in addition to those available to the Indemnifying Party, then the Indemnifying Party shall not be entitled to assume such defense and the Indemnified Party shall be entitled to separate counsel at the Indemnifying Party’s expense. If the Indemnifying Party is not entitled to assume the defense of such action or proceeding as a result of the second proviso to the preceding sentence, the Indemnifying Party’s counsel shall be entitled to conduct the Indemnifying Party’s defense and counsel for the Indemnified Party shall be entitled to conduct the defense of the Indemnified Party, it being understood that both such counsel will cooperate with each other to conduct the defense of such action or proceeding as efficiently as possible. If the Indemnifying Party is not so entitled to assume the defense of such action or does not assume such defense, after having received the notice referred to in the first sentence of this paragraph, the Indemnifying Party will pay the reasonable fees and expenses of counsel for the Indemnified Party. In such event, however, the Indemnifying Party will not be liable for any settlement effected without the written consent of the Indemnifying Party, which consent shall not be unreasonably withheld or delayed. If an Indemnifying Party is entitled to assume, and assumes, the defense of such action or proceeding in accordance with this paragraph, the Indemnifying Party shall not be liable for any fees and expenses of counsel for the Indemnified Party incurred thereafter in connection with such action or proceeding.
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Section 7.4 Contribution.
(i) In order to provide for just and equitable contribution in circumstances in which the indemnity agreement provided for in Sections 7.1 through 7.3 is for any reason held to be unenforceable by the Indemnified Party although applicable in accordance with its terms, the Indemnified Party and the Indemnifying Party shall contribute to the aggregate losses, liabilities, claims, damages and expenses of the nature contemplated by such indemnity agreement incurred by the Indemnified Party and the Indemnifying Party, in such proportion as is appropriate to reflect the relative fault of the Indemnified Party on the one hand and the Indemnifying Party on the other hand, in connection with the statements or omissions which resulted in such losses, claims, damages, liabilities, or expenses. The relative fault of the Indemnifying Party and Indemnified Party shall be determined by reference to, among other things, whether the action in question, including any untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact, has been made by, or relates to information supplied by, the Indemnifying Party or the Indemnified Party, and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such action.
(ii) The parties hereto agree that it would not be just or equitable if contribution pursuant to this Section 7.4 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 immediately preceding paragraph. Notwithstanding the provisions of this Section 7.4, a Holder shall not be required to contribute any amount (together with the amount of any indemnification payments made by such Holder pursuant to Section 7.2) in excess of the amount of the aggregate net cash proceeds received by such Holder from sales of the Registrable Shares of such Holder under the Shelf Registration Statement that is the subject of the indemnification claim.
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(iii) Notwithstanding the foregoing, no person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. For purposes of this Section 7.4, each person, if any, who controls a Holder within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act, and any of their partners, members, officers, directors, trustees, employees or representatives, shall have the same rights to contribution as such Holder, and each director of the Company, each officer of the Company who signed the Shelf Registration Statement and each person, if any, who controls the Company within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act shall have the same rights to contribution as the Company.
Article VIII
EXPENSES
Section 8.1 Expenses. The Company will pay all Registration Expenses in connection with each registration or registered offering of Registrable Shares pursuant to Article II or III. Each Holder shall be responsible for the payment of any and all brokerage and sales commissions, fees and disbursements of the Holder’s counsel that are not Registration Expenses, accountants and other advisors, and any transfer taxes relating to the sale or disposition of the Registrable Shares by such Holder pursuant to any Shelf Registration Statement or otherwise.
Article IX
RULE 144 REPORTING
Section 9.1 Rule 144 Reporting. With a view to making available to the Holders the benefits of Rule 144 and any other rule or regulation of the SEC that may at any time permit a Holder to sell securities of the Company to the public without registration or pursuant to a registration statement, if the Shares of the Company are registered under the Exchange Act, the Company agrees to:
(i) make and keep public information available as those terms are understood and defined in Rule 144;
(ii) file with the SEC in a timely manner all reports and other documents required of the Company under the Securities Act and the Exchange Act; and
(iii) furnish to any Holder, so long as the Holder owns any Registrable Shares, upon request, (a) a written statement by the Company that it has complied with the reporting requirements of Rule 144, the Securities Act and the Exchange Act, or that it qualifies as a registrant whose securities may be resold pursuant to a registration statement (at any time after it so qualifies) and (b) a copy of the most recent annual or quarterly report of the Company and such other reports and documents so filed by the Company, and (c) such other information as may be reasonably requested in availing any Holder of any rule or regulation of the SEC which permits the selling of any such securities without registration or pursuant to such registration statement.
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Article X
CONFIDENTIALITY; REMOVAL OF LEGENDS
Section 10.1 Confidentiality. To the extent that the information and other material in connection with the registration rights contemplated in this Agreement (in any case, whether furnished before, on or after the date hereof) constitutes or contains confidential business, financial or other information of the Company or the Holders or their respective Affiliates, each party hereto covenants for itself and its directors, officers, employees and shareholders that it shall use due care to prevent its officers, directors, partners, employees, counsel, accountants and other representatives from disclosing such information to persons other than to their respective authorized employees, counsel, accountants, advisers, shareholders, partners, limited partners or members (or proposed shareholders, partners, limited partners or members or advisers of such persons), and other authorized representatives, in each case, so long as such person agrees to keep such information confidential in accordance with the terms hereof; provided, however, that each Holder or the Company may disclose or deliver any information or other material disclosed to or received by it should such Holder or the Company be advised by its counsel that such disclosure or delivery is required by law, regulation or judicial or administrative order or process and in any such instance the Holder or the Company, as the case may be, making such disclosure shall use reasonable efforts to consult with the Company prior to making any such disclosure. Notwithstanding the foregoing, a Holder will be permitted to disclose any information or other material disclosed to or received by it hereunder and not be required to provide the aforementioned notice, if such disclosure is in connection with (i) such Holder’s reporting obligations pursuant to Section 13 or Section 16 of the Exchange Act or (ii) a routine audit by a regulatory or self-regulatory authority that maintains jurisdiction over the Holder; provided, however, that such Holder agrees, in the case of (ii) in the preceding clause, to undertake to file an appropriate request seeking to have any information disclosed in connection with such routine audit treated confidentially. For purposes of this Section 10.1, “due care” means at least the same level of care that such Holder would use to protect the confidentiality of its own sensitive or proprietary information. This Section 10.1 shall not apply to information that is or becomes publicly available (other than to a person who by breach of this Agreement has caused such information to become publicly available).
Section 10.2 Removal of Legends. The restrictive legend on any Registrable Shares covered by this Agreement shall be removed if (a) such Registrable Shares are sold pursuant to an effective Shelf Registration Statement, (b) a Shelf Registration Statement covering the resale of such Registrable Shares is effective under the Securities Act and the applicable Holder delivers to the Company a representation letter and/or “will comply” letter, as applicable, in form and substance reasonably acceptable to the Company certifying that such Holder will only transfer such Registrable Shares pursuant to such effective Shelf Registration Statement, (c) such Registrable Shares may be sold by the applicable Holder free of restrictions without regard to Rule 144(b) under the Securities Act (i.e., such Holder is not an affiliate of the Company, and has not been an affiliate of the Company for the previous three months, and has satisfied the one-year holding period under Rule 144), (d) such Registrable Shares are being sold pursuant to Rule 144, or (e) such Registrable Shares may be sold by the applicable Holder pursuant to Rule 144 and the applicable Holder delivers to (i) the Company a representation letter in form and substance reasonably acceptable to the Company and (ii) the Company’s transfer agent an opinion of counsel; provided that the applicable Holder has provided all documentation and evidence as may reasonably be required by the Company or its transfer agent to confirm that the legend may be removed under applicable securities laws. The Company shall cooperate with the applicable Holder to effect removal of the legend on such Registrable Shares as soon as reasonably practicable after delivery of notice from such Holder that the conditions to removal are satisfied. The Company shall bear all direct costs and expenses incurred by the Company associated with the removal of a legend pursuant to this Section. In connection with any sale or transfer of Registrable Shares by any Holder, including any sale or transfer pursuant to Rule 144, the Company shall, to the extent allowed by law, take any and all action necessary or reasonably requested by such Holder in order to permit or facilitate such sale or transfer, including by (i) issuing directions to any transfer agent, registrar or depositary, (ii) delivering such opinions to the transfer agent as are customary and reasonably requested, and (iii) taking such other actions as are reasonably necessary to cause any restrictive legends to be removed and any transfer restrictions to be rescinded.
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Article XI
MISCELLANEOUS
Section 11.1 Waivers. No waiver by a party hereto shall be effective unless made in a written instrument duly executed by the party against whom such waiver is sought to be enforced, and only to the extent set forth in such instrument. Neither the waiver by any of the parties hereto of a breach or a default under any of the provisions of this Agreement, nor the failure of any of the parties, on one or more occasions, to enforce any of the provisions of this Agreement or to exercise any right or privilege hereunder shall thereafter be construed as a waiver of any subsequent breach or default of a similar nature, or as a waiver of any such provisions, rights or privileges hereunder.
Section 11.2 Notices. All notices and communications required or permitted to be given pursuant to this Agreement shall be in writing and shall be delivered personally, sent by courier, sent by certified mail by United States Mail with all postage fully prepaid (provided that an email is sent at the same time by the notifying party to the receiving party notifying the receiving party of the notice), or sent by electronic mail (“email”) transmission, addressed to the appropriate party at the address for such party set forth on the signature pages attached hereto or any Adopting Agreement. Any notice given in accordance herewith shall be deemed to have been given only when delivered to the addressee in person or by courier or transmitted by email transmission (without notice of failed delivery to the required party) during normal business hours on a Business Day (or if delivered or transmitted after normal business hours on a Business Day or on a day other than a Business Day, then on the next Business Day), or upon actual receipt by the addressee during normal business hours on a Business Day after such notice has either been delivered to an overnight courier or deposited in the United States Mail, as the case may be (or if delivered after normal business hours on a Business Day or on a day other than a Business Day, then on the next Business Day). The Parties may change the address and the email address to which such communications are to be addressed by giving written notice to the other Parties in the manner provided in this Section 11.2.
Section 11.3 Headings and Interpretation. All section and subsection headings in this Agreement are for convenience of reference only and are not intended to qualify the meaning, construction or scope of any of the provisions hereof. The Holders hereby disclaim any defense or assertion in any litigation or arbitration that any ambiguity herein should be construed against the draftsman.
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Section 11.4 Entire Agreement; Amendment. This Agreement (including all schedules) constitutes the entire and only agreement among the parties hereto concerning the subject matter hereof and thereof, and supersedes any prior agreements or understandings concerning the subject matter hereof and thereof. Any oral statements or representations or prior written matter with respect thereto not contained herein shall have no force and effect. Except as otherwise expressly provided in this Agreement, no amendment, modification or discharge of this Agreement shall be valid or binding unless set forth in writing and duly executed by the Company and the Holders that, in the aggregate, hold not less than a majority of the then remaining Registrable Shares; provided further that no provision of this Agreement may be amended or modified unless any and each Holder adversely affected by such amendment or modification in a manner different than other Holders has expressly consented in writing to such amendment or modification.
Section 11.5 Assignment; Successors and Assigns. This Agreement and the rights granted hereunder may not be assigned by any Holder without the written consent of the Company; provided, however, that the registration rights granted herein may be transferred only by a Holder (i) to a Permitted Transferee of such Holder’s Registrable Shares or (ii) to a Major Holder in an in-kind distribution by WildFire permitted by Section 11.14; provided further that such transferee or assignee agrees in writing to be bound by and subject to the terms and conditions of this Agreement and executes and delivers to the Company a duly executed Adoption Agreement in substantially the form attached hereto as Exhibit A. This Agreement shall be binding upon, and inure to the benefit of, the parties hereto, their successors, heirs, legatees, devisees, permitted assigns, legal representatives, executors and administrators, except as otherwise provided herein.
Section 11.6 Severability. If any term or other provision of this Agreement is rendered or declared invalid, illegal or incapable of being enforced by any law or by decree of a court of last resort, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any adverse manner to any party. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in an acceptable manner to the end that the transactions contemplated hereby are fulfilled to the extent possible.
Section 11.7 Counterparts. This Agreement may be executed in any number of counterparts, and each such counterpart hereof shall be deemed to be an original instrument, but all of such counterparts shall constitute for all purposes one agreement. Any signature hereto delivered by a party by facsimile or other electronic transmission shall be deemed an original signature hereto.
Section 11.8 Representations. Each of the parties hereto, as to itself only, represents that this Agreement has been duly authorized and executed by it and that all necessary corporate actions have been taken by it in order for this Agreement to be enforceable against it under all applicable laws. Each party hereto, as to itself only, further represents that all persons signing this Agreement on such party’s behalf have been duly authorized to do so.
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Section 11.9 Governing Law; Jurisdiction; Waiver of Jury Trial.
(i) EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN THIS AGREEMENT, THIS AGREEMENT AND ANY CLAIM, CONTROVERSY OR DISPUTE ARISING UNDER OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THE RIGHTS, DUTIES AND RELATIONSHIP OF THE PARTIES HERETO, SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, EXCLUDING ANY CONFLICTS OF LAW, RULE OR PRINCIPLE THAT MIGHT REFER CONSTRUCTION OF PROVISIONS TO THE LAWS OF ANOTHER JURISDICTION.
(ii) EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN THIS AGREEMENT, THE PARTIES ACKNOWLEDGE AND AGREE THAT THE APPROPRIATE, EXCLUSIVE AND CONVENIENT FORUM (THE “FORUM”) FOR ANY ACTIONS BETWEEN THE PARTIES ARISING OUT OF OR RELATED TO THIS AGREEMENT SHALL BE IN THE state and federal courts in Harris County, Texas with respect to any proceeding arising out of or relating to this Agreement; provided, however, that to the extent the Texas Business Court in Harris County, Texas has concurrent jurisdiction over any proceeding arising out of or relating to this Agreement, the parties shall instead submit to the jurisdiction of such Texas Business Court. EACH PARTY IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY SUCH COURT SOLELY FOR THE PURPOSE OF ANY SUCH ACTIONS. NO PARTY SHALL BRING ANY ACTION ARISING OUT OF OR RELATED TO THIS AGREEMENT IN ANY COURT OR JURISDICTION OTHER THAN THE FORUM; PROVIDED, HOWEVER, THAT NOTHING IN THIS Section 11.9 SHALL LIMIT THE RIGHTS OF THE PARTIES TO OBTAIN EXECUTION OF A JUDGMENT IN ANY OTHER JURISDICTION. TO THE EXTENT PERMITTED BY LAW, A FINAL AND NON-APPEALABLE ORDER OR JUDGMENT AGAINST A PARTY IN ANY ACTION CONTEMPLATED BY THIS Section 11.9 SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN ANY OTHER JURISDICTION WITHIN OR OUTSIDE THE UNITED STATES BY SUIT ON SUCH ORDER OR JUDGMENT, A CERTIFIED OR EXEMPLIFIED COPY OF WHICH SHALL BE CONCLUSIVE EVIDENCE OF THE FACT AND AMOUNT OF SUCH ORDER OR JUDGMENT.
(iii) To the extent that any party or any of its Affiliates has acquired, or hereafter may acquire, any immunity from jurisdiction of any court or from any legal process (whether through service or notice, attachment prior to judgment, attachment in aid of execution, execution or otherwise) with respect to itself or its property, such party (on its own behalf and on behalf of its Affiliates) hereby irrevocably (i) waives such immunity in respect of its obligations with respect to this Agreement and (ii) submits to the personal jurisdiction of any court described in Section 11.9(ii).
(iv) EACH OF THE PARTIES HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH THIS AGREEMENT. EACH PARTY ACKNOWLEDGES, AGREES AND CERTIFIES THAT (I) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD, IN THE EVENT OF LITIGATION, SEEK TO PREVENT OR DELAY ENFORCEMENT OF SUCH WAIVER; (II) IT UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF SUCH WAIVER; (III) IT MAKES SUCH WAIVER VOLUNTARILY; AND (IV) IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 11.9(iv).
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Section 11.10 Specific Performance. The parties hereto agree that irreparable damage would occur in the event the provisions of this Agreement were not performed in accordance with the terms hereof, and that the Holders and the Company shall be entitled to specific performance of the terms hereof, in addition to any other remedy at law or equity.
Section 11.11 No Third Party Beneficiaries. It is the explicit intention of the parties hereto that no person or entity other than the parties hereto is or shall be entitled to bring any action to enforce any provision of this Agreement against any of the parties hereto, and the covenants, undertakings and agreements set forth in this Agreement shall be solely for the benefit of, and shall be enforceable only by, the parties hereto or their respective successors, heirs, executors, administrators, legal representatives and permitted assigns.
Section 11.12 General Interpretive Principles. For purposes of this Agreement, except as otherwise expressly provided or unless the context otherwise requires:
(i) the terms defined in this Agreement include the plural as well as the singular, and the use of any gender or neuter form herein shall be deemed to include the other gender and the neuter form;
(ii) references herein to “Sections,” “subsections,” “paragraphs,” and other subdivisions without reference to a document are to designated Sections, paragraphs and other subdivisions of this Agreement;
(iii) a reference to a paragraph without further reference to a Section is a reference to such paragraph as contained in the same Section in which the reference appears, and this rule shall also apply to other subdivisions;
(iv) the words “herein,” “hereof,” “hereunder” and other words of similar import refer to this Agreement as a whole and not to any particular provision;
(v) the term “include,” “includes” or “including” shall be deemed to be followed by the words “without limitation”; and
(vi) the term “person” means any individual, corporation, partnership, limited liability company, association, joint venture, an association, a joint stock company, trust, unincorporated organization, governmental or political subdivision or agency, or any other entity of whatever nature.
Section 11.13 No Inconsistent Agreements. The Company is not currently a party to, and shall not hereafter enter into without the prior written consent of the Holders of a majority of the then-outstanding Registrable Shares, any agreement with respect to its securities that is inconsistent with the rights granted to the Holders by this Agreement, including any such agreement that would allow any current or prospective holder of any securities of the Company to (a) participate on a superior basis (in terms of cutbacks on the advice of underwriters) with a Takedown Holder in an Underwritten Shelf Takedown or Block Trade (or any Major Holder participating therein) or (b) require the Company to include securities in any registration statement filed by, or any underwritten offering undertaken by, the Company on a basis other than expressly pari passu or subordinate to the priority rights of the Holders hereunder.
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Section 11.14 In-Kind Distributions. If any Holder seeks to effectuate an in-kind distribution of all or part of its Shares to its direct or indirect equityholders, the Company will reasonably cooperate with and assist such Holder, such equityholders and the Company’s transfer agent to facilitate such in-kind distribution in the manner reasonably requested by such Holder (including the delivery of instruction letters by the Company or its counsel to the Company’s transfer agent, the delivery of customary legal opinions by counsel to the Company and the delivery of Company Shares without restrictive legends, to the extent no longer applicable).
Section 11.15 Reasonable Assistance. If requested by any Holder in connection with any transaction involving any Registrable Shares (including any sale or other transfer of such securities without registration under the Securities Act, any margin loan with respect to such securities and any pledge of such securities), the Company agrees to provide such Holder with customary and reasonable assistance to facilitate such transaction, including, without limitation, (i) such action as such Holder may reasonably request from time to time to enable such Holder to sell Registrable Shares without registration under the Securities Act and (ii) entering into an “issuer’s agreement” in connection with any margin loan with respect to such securities in customary form.
Section 11.16 Termination. This Agreement shall terminate and be void and of no further force and effect, and all rights and obligations of the parties hereunder shall terminate without any further liability on the part of any party in respect thereof, upon the earlier to occur of (a) the mutual written agreement of each of the parties hereto to terminate this Agreement or (b) such date as no Registrable Shares remain outstanding.
[Signature Page Follows]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first written above.
| COMPANY: | ||
| MAGNOLIA OIL & GAS CORPORATION | ||
| By: | /s/ Christopher Stavros | |
| Name: | Christopher Stavros | |
| Title: | President and Chief Executive Officer | |
| Notice Information: | ||
| Magnolia Oil & Gas Corporation | ||
| Nine Greenway Plaza, Suite 1300 | ||
| Houston, Texas 77046 | ||
| Attention: | Tim Yang and Jordan Benningfield | |
| Email: | [email protected]; [email protected] | |
| With a copy to (which shall not constitute notice): | ||
| Kirkland & Ellis LLP | ||
| 609 Main Street, Suite 4700 | ||
| Houston, Texas 77002 | ||
| Attention: | Michael W. Rigdon, P.C. | |
| Email: | [email protected] | |
Signature Page to
Registration Rights Agreement
| HOLDERS: | ||
| WILDFIRE ENERGY I LLC | ||
| By: | /s/ Steve Habachy | |
| Name: | Steve Habachy | |
| Title: | President & Chief Operating Officer | |
| Notice Information: | ||
| WildFire Energy I LLC | ||
| 920 Memorial City Way, Suite 1400 | ||
| Houston, Texas 77024 | ||
| Attention: | Anthony F. Bahr | |
| Email: | [email protected] | |
| With copies to (which shall not constitute notice): | ||
| Troutman Pepper Locke LLP | ||
| 600 Travis St., Suite 2800 | ||
| Houston, Texas 77002 | ||
| Attention: | Kevin N. Peter; | |
| Jennie Simmons; | ||
| Hunter Summerford | ||
| Email: | [email protected]; | |
| [email protected]; | ||
| [email protected] | ||
| Warburg Pincus LLC | ||
| 450 Lexington Avenue, 32nd Floor | ||
| New York, New York 10017 | ||
| Attention: | Rob Buonanno; | |
| Jeff Luse; | ||
| Alison Heyden Colby; | ||
| Matthew Davis | ||
| Email: | [email protected]; | |
| [email protected]; | ||
| [email protected]; | ||
| [email protected] | ||
Signature Page to
Registration Rights Agreement
| Kayne Anderson Capital Advisors, L.P. | ||
| 2121 Avenue of the Stars | ||
| Los Angeles, California 90067 | ||
| Attention: | Danny Weingeist; | |
| Mark Teshoian; | ||
| Kyle Murphy | ||
| Email: | [email protected]; | |
| [email protected]; | ||
| [email protected] | ||
| Kirkland & Ellis LLP | ||
| 609 Main Street, Suite 4700 | ||
| Houston, Texas 77002 | ||
| Attention: | Julian J. Seiguer, P.C.; | |
| Anthony L. Sanderson | ||
| Email: | [email protected]; | |
| [email protected] | ||
Signature Page to
Registration Rights Agreement
ANNEX A
| 1. | Anthony Bahr |
| 2. | Steve Habachy |
| 3. | Drew Cozby |
EXHIBIT A
This Adoption Agreement (“Adoption Agreement”), dated [●], 20[●] (the “Effective Date”) is executed by the undersigned transferee (“Transferee”) pursuant to the terms of the Registration Rights Agreement, dated September 10, 2026, among Magnolia Oil & Gas Corporation, a Delaware corporation (the “Company”), and the Holders party thereto (as amended from time to time, the “Registration Rights Agreement”). Terms used and not otherwise defined in this Adoption Agreement have the meanings set forth in the Registration Rights Agreement.
By the execution of this Adoption Agreement, the Transferee agrees as follows:
| 1. | Acknowledgement. Transferee acknowledges that Transferee is acquiring the number of shares of Common Stock set forth below its name on the signature page hereto, subject to the terms and conditions of the Registration Rights Agreement. |
| 2. | Agreement. Transferee (i) agrees that the shares of Common Stock acquired by Transferee shall be bound by and subject to the terms of the Registration Rights Agreement, pursuant to the terms thereof, and (ii) hereby adopts the Registration Rights Agreement with the same force and effect as if he, she or it were originally a party thereto. |
| 3. | Notice. Any notice required or permitted by the Registration Rights Agreement shall be given to Transferee at the address listed beside Transferee’s signature below. |
| 4. | Joinder. The spouse of the undersigned Transferee, if applicable, executes this Adoption Agreement to acknowledge its fairness and that it is in such spouse’s best interest, and to bind such spouse’s community interest, if any, in the shares of Common Stock and other securities referred to above and in the Registration Rights Agreement, to the terms of the Registration Rights Agreement. |
[Remainder of Page Left Intentionally Blank]
EXECUTED AND DATED as of the Effective Date.
| TRANSFEREE | ||
| By: | ||
| Name: | ||
| Title: | ||
| Number of Shares of Common Stock: ________ | ||
| Address: | ||
| ACKNOWLEDGED AND AGREED: | ||
| MAGNOLIA OIL & GAS CORPORATION | ||
| By: | ||
| Name: | ||
| Title: | ||
Exhibit 23.1
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We have issued our report dated April 8, 2026, with respect to the consolidated financial statements of WildFire Energy I LLC included in the Current Report of Magnolia Oil & Gas Corporation on Form 8-K filed July 20, 2026. We consent to the incorporation by reference of said report in the Registration Statements of Magnolia Oil & Gas Corporation on Form S-3 (File No. 333-232593) and on Forms S-8 (File No. 333-227722 and File No. 333-256164).
/s/ GRANT THORNTON LLP
Houston, Texas
September 14, 2026
Exhibit 99.1
Magnolia Oil & Gas Completes Acquisition of WildFire Energy
Houston, TX, September 10, 2026 – Magnolia Oil & Gas Corporation (NYSE: MGY) announced today that it has completed its previously announced acquisition of WildFire Energy.
About Magnolia Oil & Gas
Magnolia (MGY) is a publicly traded oil and gas exploration and production company with operations primarily concentrated in South Texas in the core of the Eagle Ford Shale and Austin Chalk formations. Magnolia focuses on generating value for shareholders by delivering steady, moderate annual production growth resulting from its disciplined and efficient philosophy toward capital spending. The Company strives to generate high pre-tax operating margins and consistent free cash flow allowing for strong cash returns to our shareholders. For more information, visit www.magnoliaoilgas.com.
Contacts
Investors
Tom Fitter
713-331-4802
Media
Christina Kuhl
713-314-4849
Exhibit 99.3
WildFire Energy I LLC
Condensed Consolidated Interim Financial Statements
For the quarterly period ended June 30, 2026 and 2025
(Unaudited)
Unaudited Condensed Consolidated Interim Financial Statements:
| Condensed Consolidated Interim Balance Sheets | 3 |
| Condensed Consolidated Interim Statements of Operations | 4 |
| Condensed Consolidated Interim Statements of Unit Holders’ Equity | 5 |
| Condensed Consolidated Interim Statements of Cash Flows | 6 |
| Notes to Condensed Consolidated Interim Financial Statements: | 7 |
| 1. Organization and Significant Accounting Policies | 7 |
| 2. Revenue Recognition | 8 |
| 3. Acquisitions and Divestitures | 8 |
| 4. Oil and Natural Gas Properties | 8 |
| 5. Long–Term Debt | 8 |
| 6. Asset Retirement Obligations | 10 |
| 7. Fair Value Measurements | 10 |
| 8. Derivative Financial Instruments | 12 |
| 9. Commitments and Contingencies | 13 |
| 10. Income Taxes | 13 |
| 11. Defined Contribution Plan | 14 |
| 12. Incentive Units | 14 |
| 13. Related Party Transactions | 14 |
| 14. Supplemental Disclosures | 15 |
| 15. Subsequent Events | 16 |
WildFire Energy I LLC
Condensed Consolidated Interim Balance Sheets
(Unaudited, in thousands)
| June 30, | December 31, | |||||||
| 2026 | 2025 | |||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 30,762 | $ | 2,364 | ||||
| Accounts receivable, net | 151,797 | 96,751 | ||||||
| Inventory | 5,840 | 8,019 | ||||||
| Short-term derivative instruments | 6,103 | 65,083 | ||||||
| Debt issuance cost | 7,246 | 7,212 | ||||||
| Prepaids and other current assets | 5,786 | 6,194 | ||||||
| Total current assets | 207,534 | 185,623 | ||||||
| Oil and natural gas properties, successful efforts method: | ||||||||
| Proved oil and natural gas properties | 4,587,625 | 4,411,357 | ||||||
| Unproved oil and natural gas properties | 11,417 | 11,033 | ||||||
| Other property and equipment | 93,303 | 91,004 | ||||||
| Accumulated depreciation, depletion and impairment | (2,095,208 | ) | (1,957,022 | ) | ||||
| Total property and equipment, net | 2,597,137 | 2,556,372 | ||||||
| Other non-current assets | ||||||||
| Debt issuance costs | 12,467 | 15,984 | ||||||
| Long-term derivative instruments | 4,078 | 48,339 | ||||||
| Right of use lease asset | 5,351 | 6,369 | ||||||
| Other non-current assets | 152 | 152 | ||||||
| TOTAL ASSETS | $ | 2,826,719 | $ | 2,812,839 | ||||
| LIABILITIES AND EQUITY | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 14,417 | $ | 15,158 | ||||
| Revenues and royalties payable | 124,732 | 85,099 | ||||||
| Accrued liabilities | 96,448 | 83,875 | ||||||
| Short-term derivative instruments | 32,159 | — | ||||||
| Asset retirement obligations | 4,462 | 4,462 | ||||||
| Income tax payable | 1,367 | 207 | ||||||
| Current portion of long-term debt | 42,707 | 59,042 | ||||||
| Other current liabilities | 2,475 | 2,390 | ||||||
| Total current liabilities | 318,767 | 250,233 | ||||||
| Non-current liabilities: | ||||||||
| Long-term debt, net | 590,768 | 700,755 | ||||||
| Long-term derivative instruments | 824 | 1,197 | ||||||
| Asset retirement obligations | 126,974 | 122,185 | ||||||
| Deferred income tax | 6,750 | 7,874 | ||||||
| Operating lease liability | 6,976 | 8,024 | ||||||
| Total non-current liabilities | 732,292 | 840,035 | ||||||
| Commitments and Contingencies (Note 9) | ||||||||
| Unit holders’ equity | ||||||||
| Unit holder contributions | 751,574 | 751,574 | ||||||
| Retained earnings | 1,024,086 | 970,997 | ||||||
| Total unit holders’ equity | 1,775,660 | 1,722,571 | ||||||
| TOTAL LIABILITIES AND UNIT HOLDERS’ EQUITY | $ | 2,826,719 | $ | 2,812,839 | ||||
The accompanying notes are an integral part of these condensed consolidated interim financial statements.
| 3 |
WildFire Energy I LLC
Condensed Consolidated Interim Statements of Operations
(Unaudited, in thousands)
| Three months ended | Six months ended | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| REVENUES | ||||||||||||||||
| Oil | $ | 334,467 | $ | 196,869 | $ | 583,535 | $ | 413,000 | ||||||||
| Natural gas | 8,016 | 6,689 | 14,909 | 15,469 | ||||||||||||
| NGLs | 13,676 | 9,379 | 22,707 | 20,217 | ||||||||||||
| Other operating revenues | 9,268 | 10,094 | 21,127 | 18,771 | ||||||||||||
| Total operating revenues | 365,427 | 223,031 | 642,278 | 467,457 | ||||||||||||
| OPERATING COSTS AND EXPENSES | ||||||||||||||||
| Lease operating expenses | 33,304 | 29,628 | 62,127 | 60,176 | ||||||||||||
| Gathering, processing and transportation expense | 87 | 84 | 195 | 198 | ||||||||||||
| Taxes other than income | 23,872 | 18,183 | 43,731 | 37,526 | ||||||||||||
| Other operating expenses | 4,554 | 5,705 | 11,031 | 8,548 | ||||||||||||
| Depreciation, depletion, amortization and accretion | 71,950 | 64,470 | 142,970 | 127,508 | ||||||||||||
| Exploration expenses | 485 | 2,599 | 488 | 3,032 | ||||||||||||
| Transaction costs | 1,783 | 40 | 1,783 | 40 | ||||||||||||
| General and administrative expenses | 6,747 | 6,788 | 14,298 | 13,203 | ||||||||||||
| Total operating costs and expenses | 142,782 | 127,497 | 276,623 | 250,231 | ||||||||||||
| Income from operations | 222,645 | 95,534 | 365,655 | 217,226 | ||||||||||||
| OTHER INCOME (EXPENSE) | ||||||||||||||||
| Gain (loss) on derivative instruments | 43,867 | 94,032 | (229,169 | ) | 94,158 | |||||||||||
| Interest expense | (16,541 | ) | (21,350 | ) | (34,731 | ) | (43,548 | ) | ||||||||
| Other income | 525 | 103 | 619 | 383 | ||||||||||||
| Total other income (expense) | 27,851 | 72,785 | (263,281 | ) | 50,993 | |||||||||||
| Income before income taxes | 250,496 | 168,319 | 102,374 | 268,219 | ||||||||||||
| Income tax expense | (1,440 | ) | (1,363 | ) | (285 | ) | (2,244 | ) | ||||||||
| Net income | $ | 249,056 | $ | 166,956 | $ | 102,089 | $ | 265,975 | ||||||||
The accompanying notes are an integral part of these condensed consolidated interim financial statements.
| 4 |
WildFire Energy I LLC
Condensed Consolidated Interim Statements of Unit Holders’ Equity
(Unaudited, in thousands)
| Unit holders’ contributions | Retained earnings | Total unit holders’ equity | ||||||||||
| Balance, December 31, 2025 | 751,574 | 970,997 | 1,722,571 | |||||||||
| Unit holders’ contributions | - | - | - | |||||||||
| Unit holders’ distributions | - | (49,000 | ) | (49,000 | ) | |||||||
| Net loss | - | (146,967 | ) | (146,967 | ) | |||||||
| Balance, March 31, 2026 | 751,574 | 775,030 | 1,526,604 | |||||||||
| Unit holders’ contributions | - | - | - | |||||||||
| Unit holders’ distributions | - | - | - | |||||||||
| Net income | - | 249,056 | 249,056 | |||||||||
| Balance, June 30, 2026 | 751,574 | 1,024,086 | 1,775,660 | |||||||||
| Unit holders’ contributions | Retained earnings | Total unit holders’ equity | ||||||||||
| Balance, December 31, 2024 | $ | 751,574 | $ | 665,395 | $ | 1,416,969 | ||||||
| Unit holders’ contributions | — | — | — | |||||||||
| Unit holders’ distributions | — | (39,200 | ) | (39,200 | ) | |||||||
| Net income | — | 99,019 | 99,019 | |||||||||
| Balance, March 31, 2025 | 751,574 | 725,214 | 1,476,788 | |||||||||
| Unit holders’ contributions | — | — | — | |||||||||
| Unit holders’ distributions | — | (39,200 | ) | (39,200 | ) | |||||||
| Net income | — | 166,956 | 166,956 | |||||||||
| Balance, June 30, 2025 | 751,574 | 852,970 | 1,604,544 | |||||||||
The accompanying notes are an integral part of these condensed consolidated interim financial statements.
| 5 |
WildFire Energy I LLC
Condensed Consolidated Interim Statements of Cash Flows
(Unaudited, in thousands)
| Six months ended | ||||||||
| June 30, | ||||||||
| 2026 | 2025 | |||||||
| Cash flows from operating activities: | ||||||||
| Net income | $ | 102,089 | $ | 265,975 | ||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
| Depreciation, depletion, amortization and accretion | 142,970 | 127,508 | ||||||
| Write-off expired oil and natural gas leases | 3 | 1,516 | ||||||
| (Gain) loss on derivative instruments | 229,169 | (94,158 | ) | |||||
| Net cash paid in settlement of commodity derivatives contracts | (74,096 | ) | (458 | ) | ||||
| Settlements paid for asset retirement obligations | (883 | ) | (811 | ) | ||||
| Lease amortization | 9 | 161 | ||||||
| Amortization of debt issuance costs | 4,915 | 7,302 | ||||||
| Amortization of deferred acquisition payment | 2,476 | 4,396 | ||||||
| Deferred income tax | (1,124 | ) | 1,389 | |||||
| Changes in assets and liabilities: | ||||||||
| Increase in accounts receivable | (61,344 | ) | (13,086 | ) | ||||
| Decrease (increase) in prepaid expenses | 327 | (1,954 | ) | |||||
| Decrease in inventory | 2,180 | 1,644 | ||||||
| Increase in accounts payable | 44,276 | 15,822 | ||||||
| Decrease in accrued liabilities | (16,766 | ) | (20,197 | ) | ||||
| Net cash provided by operating activities | 374,201 | 295,049 | ||||||
| Cash flows from investing activities: | ||||||||
| Leasehold acquisition | (1,059 | ) | (265 | ) | ||||
| Proved property acquisition | (474 | ) | (15,174 | ) | ||||
| Drilling and development capital expenditures | (162,818 | ) | (128,760 | ) | ||||
| Other property and equipment expenditures | (2,387 | ) | (1,743 | ) | ||||
| Sales of property and equipment | 38 | — | ||||||
| Net cash used in investing activities | (166,700 | ) | (145,942 | ) | ||||
| Cash flows from financing activities: | ||||||||
| Advances on revolving credit facility | 511,000 | 404,000 | ||||||
| Payments on revolving credit facility | (581,000 | ) | (424,000 | ) | ||||
| Payment of deferred acquisition costs | (60,000 | ) | (60,000 | ) | ||||
| Cash paid for deferred financing costs | (103 | ) | (122 | ) | ||||
| Unit holders’ distributions | (49,000 | ) | (78,400 | ) | ||||
| Net cash used in financing activities | (179,103 | ) | (158,522 | ) | ||||
| Net increase (decrease) in cash | 28,398 | (9,415 | ) | |||||
| Cash at beginning of period | 2,364 | 12,009 | ||||||
| Cash at end of period | $ | 30,762 | $ | 2,594 | ||||
The accompanying notes are an integral part of these condensed consolidated interim financial statements.
| 6 |
WildFire Energy I LLC
Notes to the Condensed Consolidated Interim Financial Statements
(Unaudited)
1. Organization and Significant Accounting Policies
Organization
WildFire Energy I LLC, a Delaware limited liability company (“WildFire” and together with its consolidated subsidiaries, the “Company”) is an independent energy company focused on the acquisition, exploration and production of oil and natural gas properties in the United States, primarily targeting the Eagle Ford, Woodbine and Austin Chalk formation in East Texas, through the application of modern technology and production optimization. The Company’s operations are primarily in the upstream segment of the oil and natural gas industry.
As a holding company, WildFire has no operations and conducts all of its business through its consolidated direct wholly owned subsidiary, WildFire Intermediate Holdings LLC, and its consolidated indirect wholly owned subsidiary WildFire Energy Operating LLC.
Basis of Presentation
The unaudited condensed consolidated interim financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial reporting. Accordingly, certain disclosures normally included in our annual audited financial statements have been omitted. The condensed consolidated interim financial statements and related notes included in this report should be read in conjunction with the consolidated financial statements and related notes included in the Company’s audited consolidated financial statements as of and for the year ended December 31, 2025. Except as disclosed herein, there have been no material changes to the information disclosed in the notes to the audited consolidated financial statements as of and for the year ended December 31, 2025.
The condensed consolidated interim financial statements include the accounts of the Company and its subsidiaries after elimination of intercompany transactions and balances. WildFire’s sole material assets consist of ownership interests in its consolidated wholly owned subsidiary, WildFire Intermediate Holdings LLC, and there is no material difference of the operations, cash flows, material assets or liabilities between WildFire and WildFire Intermediate Holdings, LLC.
The accompanying unaudited condensed consolidated interim financial statements, in management’s opinion, reflect all necessary adjustments for the fair presentation of its financial positions, results of operations and cash flows for the periods presented. Such adjustments are of a normal, recurring nature. The consolidated balance sheet as of December 31, 2025, was derived from the audited consolidated financial statements.
Recent Accounting Pronouncements
In March 2024, the FASB issued ASU 2024-01, Compensation-Stock Compensation (Topic 718): Scope Application of Profits Interest and Similar Awards, which provides illustrative guidance to help entities determine whether profits interest and similar awards should be accounted for as share-based payment arrangements within the scope of ASC 718, Compensation-Stock Compensation. The Company adopted this standard on January 1, 2026. The adoption of this guidance did not have a material impact on the Company’s financial statements or disclosures, as the Company’s existing accounting for incentive units is consistent with the clarified scope.
In November 2025, the FASB issued ASU 2025-11, Interim Reporting (Topic 270): Narrow-Scope Improvements, which centralizes and clarifies interim disclosure requirements under GAAP. The Update provides a comprehensive list of required interim disclosures and introduces a disclosure principle requiring entities to report events occurring since the most recent annual period that have a material impact on the entity, regardless of whether such disclosures are specifically listed in Topic 270. Additionally, the amendments clarify the form and content of interim financial statements to ensure reporting consistency. For the Company, the amendments are effective for interim reporting periods within annual reporting periods beginning after December 15, 2028, with early adoption permitted. The Company is currently evaluating the impact of the adoption of this guidance on its financial statement disclosures.
| 7 |
2. Revenue Recognition
The Company’s revenues are comprised of revenue from customers and include the sale of oil, natural gas, NGLs and other operating revenues. The Company believes that the disaggregation of revenue into these four major categories, as presented in the condensed consolidated interim statements of operations, appropriately depicts the nature of each revenue stream. The Company’s “Accounts receivable, net” balance consist mainly of trade receivables from oil and natural gas sales, joint interest billing due from owners, trade receivables from sand mine operations and other receivables. Trade receivables from oil and natural gas sales totaled $143.3 million as of June 30, 2026 and $85.1 million as of December 31, 2025. For further detail regarding the Company’s revenue recognition policies, refer to Note 1 - Organization and Summary of Significant Accounting Policies included in the Company’s audited consolidated financial statements as of and for the year ended December 31, 2025.
3. Acquisitions and Divestitures
2026 Bolt-on Asset Acquisitions
During the six months ended June 30, 2026, WildFire completed two acquisitions of oil and natural gas acreage for a total combined purchase price of approximately $0.7 million. These transactions were accounted for as asset acquisitions in accordance with ASC Topic 805, Business Combinations.
2025 Bolt-on Asset Acquisitions
During 2025, WildFire completed five bolt-on acquisitions of oil and natural gas properties for a cumulative adjusted purchase price of approximately $4.1 million. These transactions were recorded as asset acquisitions in accordance with ASC Topic 805, Business Combinations.
4. Oil and Natural Gas Properties
For the three and six months ended June 30, 2026, depletion expense for oil and gas producing property and related equipment were $68.7 million and $136.6 million, respectively. For the three and six months ended June 30, 2025, depletion expense for oil and gas producing property and related equipment were $61.7 million and $122.0 million, respectively.
5. Long–Term Debt
Long term debt consisted of the following as of June 30, 2026 and December 31, 2025 (in thousands):
| June 30, | December 31, | |||||||
| 2026 | 2025 | |||||||
| Current portion of deferred acquisition costs | $ | 42,707 | $ | 59,042 | ||||
| Current portion of long-term debt | $ | 42,707 | $ | 59,042 | ||||
| Revolving credit facility | $ | — | $ | 70,000 | ||||
| 7.50% Senior Notes due 2029, net, 8.03% effective rate | 590,768 | 589,567 | ||||||
| Deferred acquisition costs, 7.26% effective rate | — | 41,188 | ||||||
| Long-term debt | $ | 590,768 | $ | 700,755 | ||||
| Total debt | $ | 633,475 | $ | 759,797 | ||||
Total interest expense incurred for the three and six months ended June 30, 2026 were $16.5 million and $34.7 million, respectively, net of capitalized interest of $0.5 million and $0.9 million, respectively. Total interest expense incurred for the three and six months ended June 30, 2025 were $21.4 million and $43.5 million, respectively, net of capitalized interest of $0.7 million and $1.2 million, respectively.
Wildfire Revolving Credit Facility
The Company has a credit agreement with a syndicate of banks that provides for a secured revolving credit facility, maturing on March 19, 2029 (the “Credit Agreement”). As of June 30, 2026, the Credit Agreement had a borrowing base and an elected commitment of $1.5 billion. As of June 30, 2026, the Company had no borrowings outstanding and $1.5 billion in available borrowing capacity under the revolving credit facility.
| 8 |
The Credit Agreement contains restrictive covenants and requires the Company to maintain compliance with certain financial ratios. The Company was in compliance with the Credit Agreement’s covenants and the applicable financial ratios as of June 30, 2026 and December 31, 2025. Refer to Note 7 - Long-Term Debt included in the Company’s audited consolidated financial statements as of and for the year ended December 31, 2025 for more details on the Company’s Credit Agreement.
For the three and six months ended June 30, 2026, interest expense and commitment fees incurred on the revolving credit facility were $4.3 million and $9.3 million, respectively, net of capitalized interest of $0.5 million and $0.9 million, respectively. These amounts include amortization of deferred financing costs of $1.8 million and $3.6 million for the three and six months ended June 30, 2026, respectively. For the three and six months ended June 30, 2026, the weighted average interest rate on borrowings under the revolving credit facility averaged 5.98% and 8.08% per annum, respectively, which excluded commitment fees and amortization of deferred financing costs.
For the three and six months ended June 30, 2025, interest expense and commitment fees incurred on the revolving credit facility were $9.7 million and $17.9 million, respectively, net of capitalized interest of $0.7 million and $1.2 million, respectively. These amounts include amortization of deferred financing costs of $4.3 million and $7.3 million for the three and six months ended June 30, 2025, respectively. For the three and six months ended June 30, 2025, the weighted average interest rate on borrowings under the revolving credit facility averaged 6.94% and 6.95% per annum, respectively, which excluded commitment fees and amortization of deferred financing costs.
7.5% Unsecured Senior Notes due 2029
On September 26, 2024, WildFire issued $600 million aggregate principal amount of unsecured 7.5% senior notes, maturing on October 15, 2029 (the “Notes”) for net proceeds of $588.0 million, after deducting commissions and transaction costs (the “Notes Offering”).
In connection with the completion of the Notes Offering, WildFire, entered into an indenture, dated as of September 26, 2024 (the “Indenture”), among WildFire, its subsidiaries (“Guarantors”), and U.S. Bank Trust Company, National Association, as Trustee.
In connection with the offering, the Company incurred commissions and transaction costs of approximately $13.3 million. These costs are capitalized and amortized using the effective interest rate method over the term of the Notes and are included in the condensed consolidated interim statements of operations. The unamortized portion of these deferred financing costs is included as a reduction to the carrying value of the Notes. Refer to Note 7 - Long-Term Debt included in the Company’s audited consolidated financial statements as of and for the year ended December 31, 2025 for more details on the Company’s unsecured senior notes.
For the three and six months ended June 30, 2026, total interest expense associated with the notes, including the amortization of commissions and issuance costs, were $11.9 million and $23.7 million, respectively. For the three and six months ended June 30, 2025, total interest expense associated with the notes, including the amortization of commissions and issuance costs, were $10.7 million and $22.5 million, respectively.
Deferred Acquisition Costs
In connection to the Chesapeake Acquisition, the Company recognized a debt obligation for deferred payments of $60 million due on each of March 1 of 2024, 2025 and 2026, and $45 million due on March 1, 2027. These payments were recorded at their present value, upon the acquisition close date. The present value of the deferred payments was calculated using an appropriate discount rate, reflecting the time value of money. Subsequent to the initial recognition, the balances are being accreted to their face value using the effective interest method, and an interest expense is recognized in the statement of operations. Any changes in the carrying amount of the debt due to accretion are recognized as interest expense in the period incurred. For the three and six months ended June 30, 2026, interest expense incurred on the deferred acquisition costs were $0.8 million and $2.5 million, respectively. For the three and six months ended June 30, 2025, interest expense incurred on the deferred acquisition costs were $1.7 million, and $4.4 million, respectively.
Pursuant to the terms of the Chesapeake Acquisition agreement, the remaining scheduled payments will accelerate and become immediately due upon a change in control. In connection with the definitive purchase and sale agreement entered into by the Company, the remaining $45 million deferred payment is expected to accelerate upon the close of the transaction. See Note 15 - Subsequent Events for further details regarding the pending purchase and sale agreement.
| 9 |
6. Asset Retirement Obligations
The Company’s asset retirement obligations represent the present value of estimated future costs associated with the plugging and abandonment of oil and natural gas wells, removal of equipment and facilities from leased acreage, and land restoration in accordance with applicable local, state and federal laws. The Company determines its asset retirement obligation amounts by calculating the present value of the estimated future cash outflows associated with its plug and abandonment obligations. The associated asset retirement costs are capitalized as part of the carrying amount of proved properties. Subsequent to initial measurement, asset retirement obligations are required to be accreted each period. The following table provides a reconciliation of the Company’s asset retirement obligations (in thousands):
| June 30, | December 31, | |||||||
| 2026 | 2025 | |||||||
| Asset retirement obligation, January 1 | $ | 126,647 | $ | 109,388 | ||||
| Liabilities incurred for new wells and facilities construction | 954 | 9,565 | ||||||
| Liabilities incurred for acquired wells | — | 2,358 | ||||||
| Reduction due to plugged and abandoned wells | (882 | ) | (1,635 | ) | ||||
| Reduction due to sold wells | (17 | ) | (62 | ) | ||||
| Revision of estimates | — | (1,298 | ) | |||||
| Accretion | 4,734 | 8,331 | ||||||
| Asset retirement obligation, end of period | $ | 131,436 | $ | 126,647 | ||||
7. Fair Value Measurements
The Company categorizes assets and liabilities measured at fair value into one of three different levels depending on the observability of the inputs employed in the measurement. The three levels are defined as follows:
Level 1 – Unadjusted, quoted Prices in active markets for Identical assets or liabilities at the measurement date.
Level 2 – Inputs, other than quoted prices within Level 1, that are either directly or indirectly observable for the asset or liability through correlation with market data at the measurement date and for the duration of the instrument’s anticipated life.
Level 3 – Valuations that require inputs that are both unobservable and significant to the fair value measurement. Valuation under Level 3 generally involves a significant degree of judgment from management.
A financial instrument’s categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability. The Company reflects transfers between the three levels at the beginning of the reporting period in which the availability of observable inputs no longer justifies classification in the original level. There were no transfers between fair value hierarchy levels during the six months ended June 30, 2026.
Fair Value on a Recurring Basis
Derivative Financial Instruments
Derivative financial instruments are carried at fair value and measured on a recurring basis. The derivative financial instruments consist primarily of fixed price and basis swap agreements with a limited amount of Henry Hub gas collars. The Company’s commodity price hedges are valued based on discounted future cash flow models that are primarily based on published forward commodity price curves. These inputs are designated as Level 2 within the valuation hierarchy.
| 10 |
The fair values of derivative instruments in asset positions include measures of counterparty nonperformance risk, and the fair values of derivative instruments in liability positions include measures of the Company’s nonperformance risk. These measurements were not material to the condensed consolidated interim financial statements. The following table summarizes the fair value of the Company’s financial assets and liabilities, by level within the fair value hierarchy (in thousands):
| June 30, 2026 | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
| Financial assets | ||||||||||||||||
| Derivative asset - current | $ | — | $ | 6,103 | $ | — | $ | 6,103 | ||||||||
| Derivative asset - non-current | — | 4,078 | — | 4,078 | ||||||||||||
| Total financial assets | — | 10,181 | — | 10,181 | ||||||||||||
| Financial liabilities | ||||||||||||||||
| Derivative liability - current | — | 32,159 | — | 32,159 | ||||||||||||
| Derivative liability - non-current | — | 824 | — | 824 | ||||||||||||
| Total financial liabilities | $ | — | $ | 32,983 | $ | — | $ | 32,983 | ||||||||
| December 31, 2025 | ||||||||||||||||
| Financial assets | ||||||||||||||||
| Derivative asset - current | $ | — | $ | 65,083 | $ | — | $ | 65,083 | ||||||||
| Derivative asset - non-current | — | 48,339 | — | 48,339 | ||||||||||||
| Total financial assets | — | 113,422 | — | 113,422 | ||||||||||||
| Financial liabilities | ||||||||||||||||
| Derivative liability - current | — | — | — | — | ||||||||||||
| Derivative liability - non-current | — | 1,197 | — | 1,197 | ||||||||||||
| Total financial liabilities | $ | — | $ | 1,197 | $ | — | $ | 1,197 | ||||||||
Commodity derivative instrument models consider various assumptions, including quoted forward prices for commodities, time value and volatility. These assumptions are observable in the marketplace throughout the full term of the contract, can be derived from observable data or are supported by observable levels at which transactions are executed in the marketplace, and are therefore designated as Level 2 within the valuation hierarchy. The discount rates used in the fair values of these instruments include a measure of either the Company’s or the counterparty’s nonperformance risk, as appropriate. The Company utilizes its counterparty’s valuations to assess the reasonableness of its own valuations.
Fair Value on a Nonrecurring Basis
The Company applies the provisions of the fair value measurement standard on a non-recurring basis to its non-financial assets and liabilities, including oil and natural gas properties, business combination and asset retirement obligations. These assets and liabilities are not measured at fair value on an ongoing basis but are subject to fair value estimation when acquisitions occur or asset retirement obligations are recorded. These are considered Level 3 valuations. See further discussion in Note 3, “Acquisitions and Divestitures”.
Asset retirement obligations are recorded at fair value in the period in which the liability is incurred. Fair value is determined by calculating the present value of estimated future cash flows related to the liability. To estimate the future asset retirement obligation, management must make judgments and estimates regarding the timing and existence of a liability and what constitutes sufficient restoration under the current regulatory requirements. Fair value calculations inherently involve numerous assumptions and judgments such as the ultimate costs, inflation factors, credit-adjusted discount rates, timing of settlement and changes in the legal, regulatory, environmental and political environments.
Items Not Recorded at Fair Value
The carrying amounts reported on the condensed interim consolidated balance sheets for cash, accounts receivable, prepaid expenses, other current assets, accounts payable, revenues and royalties payable, accrued expenses and other current liabilities approximate their fair values.
The Company has not elected to account for its debt instruments at fair value. Borrowing under the revolving credit facility bear interest at floating market rates, therefore the carrying amount and fair value were approximately equal as of June 30, 2026 and December 31, 2025. The 7.5% Unsecured Senior Notes due 2029 had a carrying value of $590.8 million, net of $9.2 million in deferred financing costs, and an estimated fair value of $615.3 million as of June 30, 2026.
| 11 |
8. Derivative Financial Instruments
The Company is exposed to certain risks relating to its ongoing business operations and uses derivative instruments to manage its commodity price risk.
Commodity Derivative Instruments
The Company may periodically use derivative instruments, such as fixed price swaps, basis swaps, costless collars, and other similar agreements to achieve a more predictable cash flow by reducing its exposure to commodity price volatility. Commodity derivative contracts are thereby used to ensure adequate cash flow to fund the Company’s capital programs and to manage returns on acquisitions and drilling programs. While the use of these instruments limits the downside risk of adverse price changes, their use may also limit future revenues from favorable price changes. The Company does not enter into derivative contracts for speculative or trading purposes. A description of the Company’s derivative financial instruments is provided below:
Fixed price swaps. Derivative instruments designed to establish a fixed price for anticipated future oil and natural gas production.
Basis swaps. Derivative instruments designed to guarantee a price differential for natural gas from a specified delivery point.
Costless collars. Derivative instruments designed to limit the range of natural gas price fluctuations by establishing a floor and a ceiling price, allowing the Company to benefit from favorable market movements while protecting against adverse price declines.
In January 2026, the Company restructured certain of its 2028 crude oil derivative contracts by entering into offsetting purchase contracts and simultaneously executing new crude oil swap contracts for the 2026 calendar year. This transaction was designed to monetize the fair value of the 2028 positions to support 2026 cash flows. The restructuring was completed on a cashless basis and did not result in an other-than-insignificant financing element at inception under ASC 815. Accordingly, the restructured contracts continue to be recognized at fair value on the condensed consolidated interim balance sheets, with changes in fair value recognized in earnings and all associated cash settlements classified within operating activities in the condensed consolidated interim statements of cash flows.
The derivative instruments below are not formally designated for hedge accounting treatment. The Company had the following open crude oil and natural gas derivative contracts as of June 30, 2026:
| 2026 | 2027 | 2028 | 2029 | |||||||||||||
| Crude Oil Derivative Contracts: | ||||||||||||||||
| Fixed price swap contracts | ||||||||||||||||
| Volume (Bbl) | 4,707,175 | 5,810,016 | — | — | ||||||||||||
| Weighted-average fixed price | $ | 64.18 | $ | 65.02 | $ | — | $ | — | ||||||||
| Natural Gas Derivative Contracts: | ||||||||||||||||
| Fixed price swap contracts | ||||||||||||||||
| Volume (MMBtu) | 4,148,609 | 8,399,138 | 4,006,761 | 1,719,975 | ||||||||||||
| Weighted-average fixed price | $ | 4.05 | $ | 3.81 | $ | 3.67 | $ | 3.77 | ||||||||
| Basis swap | ||||||||||||||||
| Volume (MMBtu) | 4,630,959 | 8,445,454 | 3,298,473 | — | ||||||||||||
| Weighted-average fixed price | $ | (0.37 | ) | $ | (0.35 | ) | $ | (0.27 | ) | $ | — | |||||
| Costless Collars | ||||||||||||||||
| Volume (MMBtu) | 95,655 | 46,317 | — | — | ||||||||||||
| Bought Floor | $ | 2.90 | $ | 2.90 | $ | — | $ | — | ||||||||
| Sold Ceiling | $ | 4.85 | $ | 4.85 | $ | — | $ | — | ||||||||
| 12 |
Balance Sheet Presentation
The Company’s commodity derivatives are measured at fair value and are included in the accompanying condensed consolidated balance sheets as a derivative asset or liability. The Company had a net derivative liability of $22.8 million as of June 30, 2026, and a net derivative asset of $112.2 million as of December 31, 2025. The following table summarizes both: (i) the gross fair value of derivative instruments by the appropriate balance sheet classification when the derivative instruments are subject to netting arrangements and qualify for net presentation in the balance sheet and (ii) the net recorded fair value as reflected on the balance sheet as of June 30, 2026 and December 31, 2025 (in thousands). There was no cash collateral received or pledged associated with our derivative instruments since the counterparties to our derivative contracts are lenders under our collective credit agreements.
| Asset Derivatives | Liability Derivatives | |||||||||||||||||
| June 30, | December 31, | June 30, | December 31, | |||||||||||||||
| Type | Balance Sheet Location | 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Commodity contracts | Short-term derivative instruments | $ | 6,896 | $ | 65,586 | $ | 32,952 | $ | 503 | |||||||||
| Netting arrangements | Short-term derivative instruments | (793 | ) | (503 | ) | (793 | ) | (503 | ) | |||||||||
| Net recorded fair value | $ | 6,103 | $ | 65,083 | $ | 32,159 | $ | — | ||||||||||
| Commodity contracts | Long-term derivative instruments | $ | 5,981 | $ | 49,878 | $ | 2,727 | $ | 2,736 | |||||||||
| Netting arrangements | Long-term derivative instruments | (1,903 | ) | (1,539 | ) | (1,903 | ) | (1,539 | ) | |||||||||
| Net recorded fair value | $ | 4,078 | $ | 48,339 | $ | 824 | $ | 1,197 | ||||||||||
None of the Company’s derivative instruments contain credit-risk-related contingent features. The counterparties to the Company’s derivative contracts are high credit-quality financial institutions that are lenders under the Company’s credit agreement. The Company uses only credit agreement participants to hedge with, since these institutions are secured equally with the holders of the Company’s bank debt, which eliminates the potential need to post collateral when the Company is in a derivative liability position.
Gain & (Loss) on Derivatives
All gains and losses, including changes in the derivative instruments’ fair values, are included as a component of “Other income (expense)” in the condensed consolidated statements of operations. The following table details the gains and losses related to derivative instruments for the three and six months ended June 30, 2026 and 2025 (in thousands):
| Three months ended | Six months ended | |||||||||||||||||
| June 30, | June 30, | |||||||||||||||||
| Statement of Operations Location | 2026 | 2025 | 2026 | 2025 | ||||||||||||||
| Realized cash settlement gains (losses) | Gain (loss) on derivative instruments | $ | (72,925 | ) | $ | 9,918 | $ | (94,142 | ) | $ | 180 | |||||||
| Unrealized mark-to-market derivative gains | Gain (loss) on derivative instruments | $ | 116,792 | $ | 84,114 | $ | (135,027 | ) | $ | 93,978 | ||||||||
9. Commitments and Contingencies
Legal
From time to time, the Company may be involved in various legal proceedings and claims in the ordinary course of business. In management’s opinion, the outcome of any such currently pending legal action will not have a material adverse effect on our financial positions or results of operations.
Environmental and Governmental Regulation
Many aspects of the oil and natural gas industry are extensively regulated by federal, state, and local governments in the area in which the Company has operations. Regulations govern such things as drilling permits, environmental protection and pollution control, spacing of wells, the unitization and pooling of properties, reports concerning operations, royalty rates, and various other matters, including taxation. Oil and natural gas industry legislation and administrative regulations are periodically changed for a variety of political, economic, and other reasons. As of June 30, 2026 and December 31, 2025, the Company has not been fined or cited for any violations of governmental regulations that would have a material adverse effect upon its financial condition.
10. Income Taxes
The Company has calculated a state income tax expense of $1.4 million and $0.3 million for the three and six months ended June 30, 2026, respectively, which included a deferred income tax expense of $0.8 million and a benefit of $1.1 million, respectively. For the three and six months ended June 30, 2025, the Company calculated income tax expense of $1.4 million and $2.2 million, respectively, which included a deferred income tax expense of $0.9 million and $1.4 million, respectively.
| 13 |
The Company had no significant uncertain tax positions and has not recorded any liabilities as of June 30, 2026. As of June 30, 2026, the Company made no provision for interest or penalties related to uncertain tax positions.
There are currently no federal or state income tax examinations under way and tax returns for the periods ended December 31, 2019 through the current year are still open to examination.
11. Defined Contribution Plan
The Company sponsors a 401(k) defined contribution plan for the benefit of all employees at the date of hire. The plan allows employees to make contributions of their annual compensation up to the annual limits established by the federal government. The Company makes contributions of 6% of an employee’s compensation up to annual limits established by the federal government and employees are fully vested in the employer contribution upon receipt. The Company contributed $0.2 million and $0.4 million for the three and six months ended June 30, 2026, respectively, and $0.2 million and $0.3 million for the three and six months ended June 30, 2025, respectively. These amounts were recorded as “General and administrative, net” on the accompanying condensed consolidated interim statements of operations.
12. Incentive Units
The Limited Liability Company Agreement (the “Company Agreement”) allows for the sharing of gain upon monetization either through a return of capital contributions, plus multiples of capital, through recapitalization, sale or merger or through a return of capital to the unit holders through other means.
The Company’s Agreement allows for the sharing of gain upon monetization through Series B units (“incentive units”). From time to time, the Board of Directors has and may issue incentive units in consideration of services rendered by employees. The payout is generally dependent upon monetization achieved by the incentive unit holders’, with payments in the form of cash.
The amount of participation by incentive unit holders can vary depending upon the level of monetization achieved by the unit holders. The incentive units are being accounted for as liability-classified awards as achievement of the payout conditions are required for settlement of such awards by transferring cash to the incentive unit holder. Compensation cost is recognized only if the performance condition is probable of being satisfied at each reporting date.
For the three months ended June 30, 2026, the Board of Directors did not authorize any cash distributions to unitholders, while cash distributions authorized as a return of contributed capital were $49.0 million for the six months ended June 30, 2026. For the three and six months ended June 30, 2025, authorized cash distributions were $39.2 million and $78.4 million, respectively. In connection with these distributions, the Board of Directors authorized special advance distributions to incentive unitholders of $1.0 million for the six months ended June 30, 2026, and $0.8 million and $1.6 million for the three and six months ended June 30, 2025, respectively, which were recorded as compensation expense.
13. Related Party Transactions
The Company has not identified any related party transactions during the six months ended June 30, 2026 and 2025.
| 14 |
14. Supplemental Disclosures
Accounts Receivable
The following table summarizes the Company’s accounts receivable as of June 30, 2026 and December 31, 2025 (in thousands):
| June 30, | December 31, | |||||||
| 2026 | 2025 | |||||||
| Accrued oil and natural gas sales, net | $ | 143,298 | $ | 85,112 | ||||
| Joint interest billing | 1,703 | 1,890 | ||||||
| Receivables from sand mine operations | 6,179 | 2,940 | ||||||
| Receivables from midstream operations | 102 | 103 | ||||||
| Accrued derivative contract settlement | 704 | 7,002 | ||||||
| Other receivables | 173 | 66 | ||||||
| Allowance for credit losses | (362 | ) | (362 | ) | ||||
| Accounts receivable, net | $ | 151,797 | $ | 96,751 | ||||
The following table reflects the Company’s beginning and ending balances of its accounts receivables from purchasers of its oil, natural gas and NGLs for the six months ended June 30, 2026 and the year ended December 31, 2025 (in thousands):
| June 30, | December 31, | |||||||
| 2026 | 2025 | |||||||
| Beginning balance of accounts receivable from purchasers of oil, natural gas and NGLs | $ | 85,112 | $ | 104,508 | ||||
| Ending balance of accounts receivable from purchasers of oil, natural gas and NGLs | $ | 143,298 | $ | 85,112 | ||||
Revenue and Royalties Payable
The following table summarizes the Company’s revenues held in suspense and royalties payable as of June 30, 2026 and December 31, 2025 (in thousands):
| June 30, | December 31, | |||||||
| 2026 | 2025 | |||||||
| Revenue held in suspense | $ | 71,577 | $ | 55,488 | ||||
| Revenue and royalties payable | 53,105 | 29,414 | ||||||
| Severance tax payable | 50 | 197 | ||||||
| Total revenue and royalties payable | $ | 124,732 | $ | 85,099 | ||||
| 15 |
Accrued Liabilities
The following table summarizes the Company’s current accrued liabilities as of June 30, 2026 and December 31, 2025 (in thousands):
| June 30, | December 31, | |||||||
| 2026 | 2025 | |||||||
| Accrued capital expenditures | $ | 45,287 | $ | 29,696 | ||||
| Accrued lease operating expenses | 6,285 | 6,217 | ||||||
| Accrued interest | 10,722 | 10,126 | ||||||
| Accrued ad valorem taxes | 15,654 | 31,530 | ||||||
| Accrued general and administrative expense | 1,239 | 407 | ||||||
| Accrued sand mine operating expenses | 1,653 | 1,474 | ||||||
| Accrued derivative contract settlement | 14,424 | 676 | ||||||
| Accrued payroll expenses | 839 | 2,628 | ||||||
| Other | 345 | 1,121 | ||||||
| Total accrued liabilities | $ | 96,448 | $ | 83,875 | ||||
Supplemental Cash Flow Information
The following table provides supplemental disclosures of cash flow information for the six months ended June 30, 2026 and 2025 (in thousands):
| For the six months ended | ||||||||
| June 30, | ||||||||
| 2026 | 2025 | |||||||
| Cash paid for: | ||||||||
| Interest, net of capitalized interest | $ | (26,743 | ) | $ | (34,550 | ) | ||
| Capitalized interest | (875 | ) | (1,214 | ) | ||||
| Interest paid | $ | (27,618 | ) | $ | (35,764 | ) | ||
| Income taxes | $ | (249 | ) | $ | (1,596 | ) | ||
| Non-cash investing activities: | ||||||||
| Change in accrued capital expenditures | $ | 15,591 | $ | 11,048 | ||||
| Additions to right of use assets | $ | 110 | $ | 3,240 | ||||
15. Subsequent Events
The Company evaluated subsequent events occurring after June 30, 2026 through September 14, 2026, the date our condensed consolidated interim financial statements were available for issuance.
On July 19, 2026, WildFire Energy I LLC (“Seller”) entered into a Purchase and Sale Agreement (the “Sale Agreement”) with Magnolia Oil and Gas Corporation (“Buyer”), pursuant to which Buyer agreed to purchase from Seller 100% of the issued and outstanding limited liability company interests (the “Acquired Interests”) of WildFire Intermediate Holdings, LLC (“Target”), for approximately $4.06 billion inclusive of the Target’s debt and subject to customary purchase price adjustments.
| 16 |
Exhibit 99.4
Magnolia Oil & Gas Operating LLC
Unaudited Pro Forma Condensed Combined Financial Information
On September 10, 2026, Magnolia Oil & Gas Corporation, a Delaware corporation (“Magnolia” or the “Company”), and Magnolia Oil & Gas Operating LLC, a Delaware limited liability company (“Buyer”), completed the previously announced purchase and sale agreement (the “Agreement” or the “Transaction”) with WildFire Energy I LLC, a Delaware limited liability company (“Seller”), pursuant to which Buyer agreed to purchase from Seller 100% of the issued and outstanding limited liability company interests (the “Acquisition”) of WildFire Intermediate Holdings, LLC (“WildFire”).
Total consideration, estimated as of August 31, 2026, is approximately $4.1 billion, subject to customary closing and post-closing adjustments. Consideration consists of 32.2 million shares of Magnolia common stock, par value $0.0001 per share (“Class A Common Stock”), and $2.7 billion in cash paid to WildFire, as well as the assumption of $600 million of WildFire’s outstanding 7.500% Senior Notes due 2029. The cash consideration paid to WildFire consists of (i) $271.8 million of cash on hand, (ii) $1.2 billion from the Class A Common Stock offering, net of offering expenses (“Equity Offering”), (iii) $661.8 million drawn under Magnolia’s revolving credit facility, net of debt issuance costs, and (iv) $490.6 million from the issuance of new 6.625% senior notes, net of debt issuance costs ((iii) and (iv) together “Debt Financing”). On a pro forma basis and giving effect to the Transaction, Magnolia shareholders will own approximately 88% of the Company’s outstanding equity, and WildFire will own approximately 12%.
The acquisition of WildFire has been assumed to be accounted for as a business combination in accordance with Accounting Standards Codification Topic 805, Business Combinations (“ASC 805”). The assets acquired and liabilities assumed were recorded at their respective fair values as of the closing date. Any transaction costs were assumed to be expensed as incurred in accordance with ASC 805. The unaudited pro forma condensed combined financial statements presented herein have been prepared to reflect the transaction accounting adjustments to Magnolia’s historical condensed consolidated financial information.
The Unaudited Pro Forma Condensed Combined Balance Sheet as of June 30, 2026 gives effect to the Transaction, together with Equity Offering and Debt Financing, as if it had been completed on June 30, 2026. The Unaudited Pro Forma Condensed Combined Statements of Operations for the six months ended June 30, 2026 and the year ended December 31, 2025 gives effect to the Transaction as if it had been completed on January 1, 2025. The unaudited pro forma condensed combined financial information has been compiled in a manner consistent with the accounting policies adopted by Magnolia.
These pro forma adjustments are described in more detail in the accompanying notes to the unaudited pro forma condensed combined financial statements. Additional assumptions and estimates underlying the pro forma adjustments are also described in the accompanying notes, which should be read in conjunction with the unaudited pro forma condensed combined financial statements.
| 1 |
The unaudited pro forma condensed combined financial information is provided for illustrative purposes only and does not purport to represent what the actual consolidated results of operations or the consolidated financial position of Magnolia would have been had the Transaction occurred on the dates noted above, nor are they necessarily indicative of future consolidated results of operations or consolidated financial position. Future results may vary significantly from the results reflected because of various factors. In Magnolia’s opinion, all adjustments that are necessary to present fairly the unaudited pro forma condensed combined financial information have been made.
The unaudited pro forma condensed combined financial information does not reflect the benefits of potential cost savings or the costs that may be necessary to achieve such savings, opportunities to increase revenue generation or other factors that may result from the Transaction and, accordingly, does not attempt to predict or suggest future results.
The unaudited pro forma financial statements have been developed from and should be read in conjunction with:
| · | The audited consolidated financial statements and accompanying notes of Magnolia contained in Magnolia’s Annual Reports on Form 10-K for the years ended December 31, 2025 and 2024; |
| · | The unaudited consolidated financial statements and accompanying condensed notes contained in Magnolia’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2026; |
| · | The audited consolidated financial statements and related notes of WildFire for the years ended December 31, 2025 and 2024, which are included elsewhere in this filing; and |
| · | The unaudited consolidated financial statements and related notes of WildFire for the quarterly period ended June 30, 2026, which are included elsewhere in this filing. |
| 2 |
Magnolia Oil & Gas Operating, LLC
Unaudited Pro Forma Condensed Combined Balance Sheet
As of June 30, 2026
| Transaction Accounting Adjustments | ||||||||||||||||||||||
| Historical | Conforming and | WildFire | Debt | Pro Forma | ||||||||||||||||||
| Magnolia | WildFire | Reclassifications | Acquisition | Financing | Combined | |||||||||||||||||
| ASSETS | ||||||||||||||||||||||
| CURRENT ASSETS: | ||||||||||||||||||||||
| Cash and cash equivalents | $ | 295,938 | $ | 30,762 | $ | — | $ | 1,265,000 | (g) | $ | 674,211 | (i) | $ | 54,928 | ||||||||
| (2,650,000 | )(g) | 500,000 | (i) | |||||||||||||||||||
| (39,211 | )(g) | (21,772 | )(i) | |||||||||||||||||||
| Trade receivables | 159,465 | — | 150,094 | (a) | (152 | )(k) | — | 309,407 | ||||||||||||||
| Account receivable, net | — | 151,797 | (151,797 | )(a) | — | — | — | |||||||||||||||
| Joint interest receivables | 29,742 | — | 1,703 | (a) | — | — | 31,445 | |||||||||||||||
| Income tax receivable | — | — | — | — | — | — | ||||||||||||||||
| Inventory | — | 5,840 | (5,840 | )(a) | — | — | — | |||||||||||||||
| Short-term derivative instruments | — | 6,103 | — | — | — | 6,103 | ||||||||||||||||
| Debt issuance costs | — | 7,246 | — | (7,246 | )(f) | — | — | |||||||||||||||
| Prepaid and other current assets | — | 5,786 | (5,786 | )(a) | — | — | — | |||||||||||||||
| Other current assets | 3,443 | — | 5,840 | (a) | — | — | 15,069 | |||||||||||||||
| 5,786 | (a) | |||||||||||||||||||||
| Total current assets | 488,588 | 207,534 | — | (1,431,609 | ) | 1,152,439 | 416,952 | |||||||||||||||
| PROPERTY, PLANT AND EQUIPMENT | ||||||||||||||||||||||
| Oil and natural gas properties | 5,359,857 | — | 11,417 | (a) | (11,417 | )(b) | — | 9,622,351 | ||||||||||||||
| 4,587,625 | (a) | (4,587,625 | )(b) | |||||||||||||||||||
| — | 4,154,742 | (c) | ||||||||||||||||||||
| — | 107,752 | (d) | ||||||||||||||||||||
| Unproved oil and natural gas properties | — | 11,417 | (11,417 | )(a) | — | — | — | |||||||||||||||
| Proved oil and natural gas properties | — | 4,587,625 | (4,587,625 | )(a) | — | — | — | |||||||||||||||
| Other property and equipment | — | 93,303 | (93,303 | )(a) | — | — | — | |||||||||||||||
| Other | 23,056 | — | 93,303 | (a) | (11,355 | )(j) | — | 52,494 | ||||||||||||||
| (52,510 | )(b) | |||||||||||||||||||||
| Accumulated depreciation, depletion and impairment | — | (2,095,208 | ) | 2,095,208 | (a) | — | — | — | ||||||||||||||
| Accumulated depreciation, depletion and amortization | (2,783,748 | ) | — | (2,095,208 | )(a) | 2,095,208 | (b) | — | (2,783,748 | ) | ||||||||||||
| Total property, plant and equipment, net | 2,599,165 | 2,597,137 | — | 1,694,795 | — | 6,891,097 | ||||||||||||||||
| OTHER ASSETS | ||||||||||||||||||||||
| Debt issuance cost | — | 12,467 | — | (12,467 | )(f) | — | — | |||||||||||||||
| Long-term derivative instruments | — | 4,078 | — | — | — | 4,078 | ||||||||||||||||
| Right of use lease assets | — | 5,351 | (5,351 | )(a) | — | — | — | |||||||||||||||
| Other long-term assets | 52,831 | 152 | 5,351 | (a) | — | 12,413 | (i) | 70,747 | ||||||||||||||
| TOTAL ASSETS | $ | 3,140,584 | $ | 2,826,719 | $ | — | $ | 250,719 | $ | 1,164,852 | $ | 7,382,874 | ||||||||||
| LIABILITIES AND EQUITY | ||||||||||||||||||||||
| CURRENT LIABILITIES | ||||||||||||||||||||||
| Accounts payable | $ | 173,062 | $ | 14,417 | $ | 124,732 | (a) | $ | (152 | )(k) | $ | — | $ | 312,059 | ||||||||
| Accrued liabilities | — | 96,448 | (96,448 | )(a) | — | — | — | |||||||||||||||
| Revenues and royalties payable | — | 124,732 | (124,732 | )(a) | — | — | — | |||||||||||||||
| Short-term derivative instruments | — | 32,159 | — | — | — | 32,159 | ||||||||||||||||
| Asset retirement obligations | — | 4,462 | (4,462 | )(a) | — | — | — | |||||||||||||||
| Current portion of long-term debt | — | 42,707 | — | (42,707 | )(h) | — | — | |||||||||||||||
| Income tax payable | — | 1,367 | (1,367 | )(a) | — | — | — | |||||||||||||||
| Other current liabilities | 135,489 | 2,475 | 96,448 | (a) | 54,000 | (e) | — | 294,241 | ||||||||||||||
| 1,367 | (a) | |||||||||||||||||||||
| 4,462 | (a) | |||||||||||||||||||||
| Total current liabilities | 308,551 | 318,767 | — | 11,141 | — | 638,459 | ||||||||||||||||
| LONG-TERM LIABILITIES | ||||||||||||||||||||||
| Long-term debt, net | 393,636 | 590,768 | — | — | 500,000 | (i) | 2,158,488 | |||||||||||||||
| 9,232 | (f) | 674,211 | (i) | |||||||||||||||||||
| — | (9,359 | )(i) | ||||||||||||||||||||
| Long-term derivative instruments | — | 824 | — | — | — | 824 | ||||||||||||||||
| Asset retirement obligations, net of current | 189,293 | 126,974 | — | (23,684 | )(d) | — | 292,583 | |||||||||||||||
| Deferred tax liabilities | 65,109 | — | 6,750 | (a) | (6,750 | )(l) | — | 65,109 | ||||||||||||||
| Deferred income tax | — | 6,750 | (6,750 | )(a) | — | — | — | |||||||||||||||
| Operating lease liability | — | 6,976 | (6,976 | )(a) | — | — | — | |||||||||||||||
| Other long-term liabilities | 37,118 | — | 6,976 | (a) | — | — | 44,094 | |||||||||||||||
| Total long-term liabilities | 685,156 | 732,292 | — | (21,202 | ) | 1,164,852 | 2,561,098 | |||||||||||||||
| EQUITY | ||||||||||||||||||||||
| Unit holder contributions | — | 751,574 | — | (751,574 | )(b) | — | — | |||||||||||||||
| Class A Common Stock | 24 | — | — | 8 | (g) | — | 32 | |||||||||||||||
| Additional paid-in capital | 1,971,371 | — | — | 2,129,643 | (g) | — | 4,061,803 | |||||||||||||||
| (39,211 | )(g) | |||||||||||||||||||||
| Treasury stock, at cost | (1,010,065 | ) | — | — | — | — | (1,010,065 | ) | ||||||||||||||
| Retained earnings | 1,187,102 | 1,024,086 | — | (1,001,891 | )(b) | — | 1,133,102 | |||||||||||||||
| (54,000 | )(e) | |||||||||||||||||||||
| (7,246 | )(f) | |||||||||||||||||||||
| (12,467 | )(f) | |||||||||||||||||||||
| (9,232 | )(f) | |||||||||||||||||||||
| 6,750 | (l) | |||||||||||||||||||||
| Accumulated other comprehensive loss | (1,555 | ) | — | — | — | — | (1,555 | ) | ||||||||||||||
| Total equity | 2,146,877 | 1,775,660 | — | 260,780 | — | 4,183,317 | ||||||||||||||||
| TOTAL LIABILITIES AND EQUITY | $ | 3,140,584 | $ | 2,826,719 | $ | — | $ | 250,719 | $ | 1,164,852 | $ | 7,382,874 | ||||||||||
See Accompanying Notes to the Unaudited Pro Forma Condensed Financial Statements.
| 3 |
Magnolia Oil & Gas Operating, LLC
Unaudited Pro Forma Condensed Combined Statements of Operations
For the Six Months Ended June 30, 2026
| Transaction Accounting Adjustments | ||||||||||||||||||||||
| Historical | Conforming and | WildFire | Debt | Pro Forma | ||||||||||||||||||
| Magnolia | WildFire | Reclassifications | Acquisition | Financing | Combined | |||||||||||||||||
| REVENUES | ||||||||||||||||||||||
| Oil revenues | $ | 631,088 | $ | 583,535 | $ | — | $ | — | $ | — | $ | 1,214,623 | ||||||||||
| Natural gas revenues | 91,469 | 14,909 | — | — | — | 106,378 | ||||||||||||||||
| Natural gas liquids revenues | 114,765 | 22,707 | — | — | — | 137,472 | ||||||||||||||||
| Other operating revenues | — | 21,127 | — | (6,108 | )(g) | — | 15,019 | |||||||||||||||
| Total revenues | 837,322 | 642,278 | — | (6,108 | ) | — | 1,473,492 | |||||||||||||||
| OPERATING EXPENSES | ||||||||||||||||||||||
| Lease operating expense | 96,160 | 62,127 | — | — | — | 158,287 | ||||||||||||||||
| Gathering, transportation and processing | 35,410 | 195 | — | — | — | 35,605 | ||||||||||||||||
| Taxes other than income | 39,144 | 43,731 | — | — | — | 82,875 | ||||||||||||||||
| Exploration expenses | 1,955 | 488 | (485 | )(a) | — | — | 1,958 | |||||||||||||||
| Asset retirement obligations accretion | 3,719 | — | 4,734 | (a) | (1,461 | )(b) | — | 6,992 | ||||||||||||||
| Depreciation, depletion and amortization | 229,874 | — | 138,236 | (a) | 8,267 | (b) | — | 376,377 | ||||||||||||||
| Depreciation, depletion, amortization and accretion | — | 142,970 | (142,970 | )(a) | — | — | — | |||||||||||||||
| General and administrative expenses | 60,595 | 14,298 | — | — | — | 74,893 | ||||||||||||||||
| Transaction costs | 3,200 | 1,783 | (4,983 | )(f) | — | |||||||||||||||||
| Other operating expenses | — | 11,031 | — | — | — | 11,031 | ||||||||||||||||
| Total operating expenses | 470,057 | 276,623 | (485 | ) | 1,823 | — | 748,018 | |||||||||||||||
| OPERATING INCOME | 367,265 | 365,655 | 485 | (7,931 | ) | — | 725,474 | |||||||||||||||
| OTHERE EXPENSE | ||||||||||||||||||||||
| Interest expense, net | (12,724 | ) | (34,731 | ) | — | 12,231 | (h) | (23,597 | )(c) | (76,777 | ) | |||||||||||
| (16,252 | )(c) | |||||||||||||||||||||
| (1,704 | )(c) | |||||||||||||||||||||
| Other income (expense), net | (415 | ) | 619 | (485 | )(a) | — | — | (281 | ) | |||||||||||||
| Gain (loss) on derivative instruments | — | (229,169 | ) | — | — | — | (229,169 | ) | ||||||||||||||
| Total other expense, net | (13,139 | ) | (263,281 | ) | (485 | ) | 12,231 | (41,553 | ) | (306,227 | ) | |||||||||||
| INCOME (LOSS) BEFORE INCOME TAXES | 354,126 | 102,374 | — | 4,300 | (41,553 | ) | 419,247 | |||||||||||||||
| Income tax expense (benefit) | 71,514 | 285 | — | 903 | (d) | (8,726 | )(d) | 63,976 | ||||||||||||||
| NET INCOME (LOSS) | 282,612 | 102,089 | — | 3,397 | (32,827 | ) | 355,271 | |||||||||||||||
| Less: Net income attributable to noncontrolling interest | 1,011 | — | — | — | — | 1,011 | ||||||||||||||||
| NET INCOME (LOSS) ATTRIBUTABLE TO CLASS A COMMON STOCK | 281,601 | 102,089 | — | 3,397 | (32,827 | ) | 354,260 | |||||||||||||||
| NET INCOME (LOSS) PER SHARE OF CLASS A COMMON STOCK | ||||||||||||||||||||||
| Basic | $ | 1.51 | $ | (0.21 | )(e) | $ | 1.30 | |||||||||||||||
| Diluted | $ | 1.51 | $ | (0.21 | )(e) | $ | 1.30 | |||||||||||||||
| WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING | ||||||||||||||||||||||
| Basic | 183,924 | 85,466 | (e) | 269,390 | ||||||||||||||||||
| Diluted | 183,936 | 85,466 | (e) | 269,402 | ||||||||||||||||||
See Accompanying Notes to the Unaudited Pro Forma Condensed Financial Statements.
| 4 |
| Magnolia Oil & Gas Operating, LLC | |||||||||||||||||
| Unaudited Pro Forma Condensed Combined Statements of Operations | |||||||||||||||||
| For the Year Ended December 31, 2025 | |||||||||||||||||
| Transaction Accounting Adjustments | ||||||||||||||||||||||
| Historical | Conforming and | WildFire | Debt | Pro Forma | ||||||||||||||||||
| Magnolia | WildFire | Reclassifications | Acquisition | Financing | Combined | |||||||||||||||||
| REVENUES | ||||||||||||||||||||||
| Oil revenues | $ | 918,027 | $ | 795,358 | $ | — | $ | — | $ | — | $ | 1,713,385 | ||||||||||
| Natural gas revenues | 190,252 | 30,018 | — | — | — | 220,270 | ||||||||||||||||
| Natural gas liquids revenues | 203,566 | 39,564 | — | — | — | 243,130 | ||||||||||||||||
| Other operating revenues | — | 33,187 | — | (10,901 | )(g) | — | 22,286 | |||||||||||||||
| Total revenues | 1,311,845 | 898,127 | — | (10,901 | ) | — | 2,199,071 | |||||||||||||||
| OPERATING EXPENSES | ||||||||||||||||||||||
| Lease operating expense | 186,559 | 119,245 | — | — | — | 305,804 | ||||||||||||||||
| Gathering, transportation and processing | 67,096 | 303 | — | — | — | 67,399 | ||||||||||||||||
| Taxes other than income | 76,452 | 70,501 | — | — | — | 146,953 | ||||||||||||||||
| Exploration expenses | 962 | 6,061 | (1,986 | )(a) | — | — | 5,037 | |||||||||||||||
| Asset retirement obligations accretion | 6,800 | — | 8,331 | (a) | (1,784 | )(b) | — | 13,347 | ||||||||||||||
| Depreciation, depletion and amortization | 437,757 | — | 267,032 | (a) | 1,474 | (b) | — | 706,263 | ||||||||||||||
| Depreciation, depletion, amortization and accretion | — | 275,363 | (275,363 | )(a) | — | — | — | |||||||||||||||
| General and administrative expenses | 97,038 | 29,088 | — | — | — | 126,126 | ||||||||||||||||
| Transaction costs | — | 102 | — | 57,200 | (f) | — | 57,302 | |||||||||||||||
| Other operating expenses | — | 15,506 | — | — | — | 15,506 | ||||||||||||||||
| Total operating expenses | 872,664 | 516,169 | (1,986 | ) | 56,890 | — | 1,443,737 | |||||||||||||||
| OPERATING INCOME | 439,181 | 381,958 | 1,986 | (67,791 | ) | — | 755,334 | |||||||||||||||
| OTHER INCOME (EXPENSE) | ||||||||||||||||||||||
| Interest expense, net | (21,617 | ) | (82,700 | ) | — | 37,700 | (h) | (47,195 | )(c) | (149,682 | ) | |||||||||||
| (32,505 | )(c) | |||||||||||||||||||||
| (3,365 | )(c) | |||||||||||||||||||||
| Other income (expense), net | (153 | ) | 287 | (1,986 | )(a) | — | — | (1,852 | ) | |||||||||||||
| Gain on derivative instruments | — | 166,816 | — | — | — | 166,816 | ||||||||||||||||
| Total other income (expense), net | (21,770 | ) | 84,403 | (1,986 | ) | 37,700 | (83,065 | ) | 15,282 | |||||||||||||
| INCOME BEFORE INCOME TAXES | 417,411 | 466,361 | — | (30,091 | ) | (83,065 | ) | 770,616 | ||||||||||||||
| Income tax expense | 80,132 | 3,959 | — | (6,319 | )(d) | (17,444 | )(d) | 60,328 | ||||||||||||||
| NET INCOME | 337,279 | 462,402 | — | (23,772 | ) | (65,621 | ) | 710,288 | ||||||||||||||
| Less: Net income attributable to noncontrolling interest | 12,027 | — | — | — | — | 12,027 | ||||||||||||||||
| NET INCOME ATTRIBUTABLE TO CLASS A COMMON STOCK | 325,252 | 462,402 | — | (23,772 | ) | (65,621 | ) | 698,261 | ||||||||||||||
| NET INCOME PER SHARE OF CLASS A COMMON STOCK | ||||||||||||||||||||||
| Basic | $ | 1.73 | $ | 0.82 | (e) | $ | 2.55 | |||||||||||||||
| Diluted | $ | 1.73 | $ | 0.82 | (e) | $ | 2.55 | |||||||||||||||
| WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING | ||||||||||||||||||||||
| Basic | 185,581 | 85,466 | (e) | 271,047 | ||||||||||||||||||
| Diluted | 185,593 | 85,466 | (e) | 271,059 | ||||||||||||||||||
See Accompanying Notes to the Unaudited Pro Forma Condensed Financial Statements.
| 5 |
Magnolia Oil & Gas Operating LLC
Notes to Unaudited Pro Forma Condensed Combined Financial Information
| 1. | Basis of Presentation |
The accompanying unaudited pro forma condensed combined financial statements were prepared based on the historical consolidated financial statements of Magnolia and the historical consolidated financial statements of WildFire. The Transaction has been assumed to be accounted for as a business combination in accordance with ASC 805. The assets acquired and liabilities assumed are estimated at their respective fair values as of June 30, 2026. Any transaction costs were assumed to be expensed as incurred in accordance with ASC 805.
The Unaudited Pro Forma Condensed Combined Statements of Operations for the six months ended June 30, 2026 and the year ended December 31, 2025 were prepared assuming the Transaction occurred on January 1, 2025. The Unaudited Pro Forma Condensed Combined Balance Sheet as of June 30, 2026 was prepared as if the Transaction had occurred June 30, 2026. These pro forma adjustments are described in more detail in the accompanying notes to the unaudited pro forma condensed combined financial statements.
The unaudited pro forma condensed combined financial information is provided for illustrative purposes only and does not purport to represent what the actual consolidated results of operations or the consolidated financial position of Magnolia would have been had the Transaction occurred on the dates noted above, nor are they indicative of future consolidated results of operations or consolidated financial position. Future results may vary significantly from the results reflected in the unaudited pro forma condensed combined financial statement of operations. In Magnolia’s opinion, all adjustments that are necessary to present fairly the unaudited pro forma condensed combined financial information have been made.
| 2. | Consideration and Purchase Price Allocation |
The preliminary allocation of the total purchase price is based upon management’s estimates of, and assumptions related to, the fair value of assets to be acquired and liabilities to be assumed as of June 30, 2026 using currently available information and market data. Because the unaudited pro forma condensed combined financial information has been prepared based on these preliminary estimates and is therefore incomplete, the final purchase price allocation and the resulting effect on financial position and results of operations may differ significantly from the pro forma amounts included herein. The purchase price allocation will be finalized after closing has occurred, post-close adjustments are determined, and the final valuation of assets acquired and liabilities assumed has been completed.
The preliminary purchase price allocation is subject to change due to several factors, including but not limited to:
| · | Changes in the value of shares of Class A Common Stock of Magnolia up to the close date, which could significantly change the preliminary amount of consideration transferred used in these unaudited pro forma condensed combined financial statements; |
| 6 |
| · | Changes to Magnolia’s assessment as to whether, under ASC 805, the Transaction represents a business combination or asset acquisition, along with changes in estimated direct transaction costs, which could significantly change the preliminary allocation of value to assets acquired and liabilities assumed in these unaudited pro forma condensed combined financial statements; |
| · | Changes in the identified oil and gas properties, specifically related to unevaluated properties not being depleted, which could significantly change the amount of pro forma depletion expense used in these unaudited pro forma condensed combined financial statements; and |
| · | Changes in the estimated fair value of assets acquired and liabilities assumed as of the closing date, which could result from changes in future oil and natural gas commodity prices, reserve estimates, interest rates, as well as other factors, which could significantly change the preliminary values assigned to the assets acquired in these unaudited pro forma condensed combined financial statements. |
The estimated consideration transferred and the fair value of assets acquired and liabilities assumed by Magnolia, as of June 30, 2026, are as follows (in thousands, except shares):
| Consideration: | ||||
| Cash Consideration | $ | 2,650,000 | ||
| Shares of Magnolia Class A Common Stock to be issued | 32,203,000 | |||
| Magnolia Class A Common Stock price at August 31, 2026 | $ | 26.85 | ||
| Common Stock consideration | $ | 864,651 | ||
| Total consideration | $ | 3,514,651 | ||
| 7 |
| Fair value of assets acquired: | ||||
| Cash and cash equivalents | $ | 30,762 | ||
| Trade receivables | 149,942 | |||
| Joint interest receivables | 1,703 | |||
| Derivative instruments | 10,181 | |||
| Other current assets | 11,626 | |||
| Oil and natural gas properties | 4,262,494 | |||
| Other | 29,438 | |||
| Other long-term assets | 5,503 | |||
| Amounts attributable to assets acquired | $ | 4,501,649 | ||
| Fair value of liabilities assumed: | ||||
| Accounts payable | $ | 138,997 | ||
| Derivative instruments | 32,983 | |||
| Other current liabilities | 100,290 | |||
| Asset retirement obligations | 107,752 | |||
| Long-term debt, net | 600,000 | |||
| Other long-term liabilities | 6,976 | |||
| Amounts attributable to liabilities assumed | $ | 986,998 | ||
| Total identifiable net assets | $ | 3,514,651 | ||
Magnolia believes that up to a 30 percent fluctuation in the market price of its Class A Common Stock is reasonably possible based upon historical price fluctuations. The following table shows the effect of changes in Magnolia’s Class A Common Stock price and the resulting impact on total consideration (in thousands):
| Change in Price of Magnolia Common Shares | Magnolia Common Share Price | Estimated Total Consideration | |||||||
| Increase of 20% | $ | 32.22 | $ | 3,687,581 | |||||
| Increase of 30% | $ | 34.91 | $ | 3,774,046 | |||||
| Decrease of 20% | $ | 21.48 | $ | 3,341,720 | |||||
| Decrease of 30% | $ | 18.80 | $ | 3,255,255 | |||||
The fair value measurements of assets acquired and liabilities assumed are based on inputs that are not observable in the market and therefore represent Level 3 inputs. The fair value of oil and gas properties and asset retirement obligations were measured using the discounted cash flow technique of valuation.
Significant unobservable inputs included future commodity prices adjusted for differentials, projections of estimated quantities of recoverable reserves, forecasted production based on decline curve analysis, estimated timing and amount of future operating and development costs, and a weighted average cost of capital.
| 8 |
| 3. | Adjustments to Unaudited Pro Forma Condensed Consolidated Balance Sheet and Unaudited Pro Forma Condensed Consolidated Statements of Operations |
The unaudited pro forma condensed combined financial information has been compiled in a manner consistent with the accounting policies adopted by Magnolia. Actual results may differ materially from the assumptions and estimates contained herein.
The pro forma adjustments are based on currently available information and certain estimates and assumptions that Magnolia believes provide a reasonable basis for presenting the significant effects of the Transaction. General descriptions of the pro forma adjustments are provided below.
Unaudited Pro Forma Condensed Combined Balance Sheet
The following adjustments were made in the preparation of the Unaudited Pro Forma Condensed Combined Balance Sheet as of June 30, 2026:
| (a) | Adjustments necessary to reclassify various assets and liabilities to conform to the presentation of Magnolia. |
| · | Current assets: Reclassifications of (i) accounts receivable of $151.8 million to trade receivables of $150.1 million and joint interest receivables of $1.7 million, and (ii) $5.8 million of prepaid expenses and $5.8 million of inventory to other current assets. |
| · | Property, plant and equipment: Reclassification of (i) $11.4 million of unproved oil and gas properties and $4.6 billion of proved oil and gas properties to oil and natural gas properties, (ii) $2.1 billion of accumulated depreciation, depletion and impairment to accumulated depreciation, depletion and amortization, and (iii) $93.3 million of other property and equipment to other. |
| · | Long-term assets: Reclassification of $5.4 million of right of use lease assets to other long-term assets. |
| · | Current liabilities: Reclassification of $124.7 million of revenue and royalties payable to accounts payable, and reclassification of (i) $96.4 million of accrued liabilities, (ii) $4.5 million of asset retirement obligations and (iii) $1.4 million of income tax payable to other current liabilities. |
| · | Long-term liabilities: Reclassification of (i) $6.8 million of deferred income tax to deferred tax liabilities and (ii) $7.0 million of operating lease liability to other long-term liabilities. |
| (b) | Adjustments necessary to remove the historical book basis of proved oil and natural gas properties, unproved oil and natural gas properties, accumulated depreciation, depletion, and impairment, the gross value of WildFire’s pipeline that was included in the estimated fair value of oil and natural gas properties, fixed assets not assumed by Magnolia, as well as the historical book basis of unit holders’ equity of WildFire. |
| (c) | Adjustments necessary to reflect the estimated fair value of proved and unproved oil and natural gas properties. The fair value of proved oil and natural gas properties was estimated using a discounted cash flow approach and strip oil and natural gas prices as of August 31, 2026. |
| 9 |
| (d) | Adjustments necessary to reflect the estimated fair value of asset retirement obligations assumed as of June 30, 2026. |
| (e) | Adjustment necessary to reflect estimated direct costs for the acquisition of WildFire expected to be incurred subsequent to June 30, 2026. These estimated direct costs will be incurred during the latter part of 2026 and have been retrospectively reflected in the Unaudited Pro Forma Condensed Combined Balance Sheet as though incurred and payable at June 30, 2026. |
| (f) | The outstanding debt of WildFire includes $28.9 million of unamortized debt issuance costs, which will be written off by Magnolia and is shown as a charge against retained earnings. |
| (g) | Adjustment necessary to reflect the issuance to WildFire of 32,203,000 Class A Common Shares of Magnolia, based on the August 31, 2026 closing price of Magnolia of $26.85 per Common Share, or $864.7 million. In July 2026, the Company also received approximately $1.2 billion in net proceeds, after deducting approximately $39.2 million of underwriting discounts, commissions and offering expenses from a Class A Common Stock equity offering of 53,263,158 Common Shares at $23.75, as part of funding the acquisition. Total cash consideration payable to WildFire is $2.7 billion, reconciled as follows (in thousands). |
| Source | Amount | |||
| Cash on hand | $ | 271,772 | ||
| Class A share equity offering | 1,225,789 | |||
| Borrowings under revolver | 661,798 | |||
| Issuance of 6.625% senior notes | 490,641 | |||
| Total cash consideration | $ | 2,650,000 | ||
| (h) | Adjustment necessary to reflect previously recorded acquisition deferred payments of WildFire that will not be transferred over to the buyer as part of the transaction. |
| (i) | Adjustment necessary to reflect (i) the issuance of $500.0 million of 6.625% senior notes and (ii) $674.2 million draw on the Company’s revolver to help fund the acquisition. As part of the debt financing, the Company had debt issuance costs of $12.4 million and $9.4 million related to the revolver draw and the 6.625% senior notes, respectively. |
| (j) | Adjustment to reflect the estimated fair value of the sand mine acquired from WildFire. |
| (k) | Adjustment necessary to reflect the removal of sand accounts receivable on the books of WildFire as they relate to sand sales made to Magnolia. |
| (l) | Adjustment necessary to reflect deferred tax liabilities of WildFire that will not be transferred over to Magnolia as part of the transaction. |
| 10 |
Unaudited Pro Forma Condensed Consolidated Statements of Operations
The following adjustments were made in the preparation of the Unaudited Pro Forma Condensed Combined Statements of Operations for the six months ended June 30, 2026 and the year ended December 31, 2025:
| (a) | Adjustments necessary to reclassify various income and expenses to conform to the presentation of Magnolia. |
| · | June 30, 2026 |
| i. | Operating Expenses: Reclassification of $143.0 million of depreciation, depletion, amortization and accretion of which $4.7 million was reclassed to asset retirement obligation accretion and $138.2 million was reclassed to depreciation, depletion and amortization. Reclassification of $0.5 million loss on ARO plug and abandonment from exploration expenses to other income (expense), net. |
| · | December 31, 2025 |
| i. | Operating Expenses: Reclassification of $275.4 million of depreciation, depletion, amortization and accretion of which $8.3 million was reclassed to asset retirement obligation accretion and $267.0 million was reclassed to depreciation, depletion and amortization. Reclassification of $2.0 million loss on ARO plug and abandonment from exploration expenses to other income (expense), net. |
| (b) | Adjustments necessary to reflect depreciation, depletion, and amortization expense resulting from the change in basis of property and equipment acquired and accretion expense from new asset retirement obligations recognized as a result of the acquisition of WildFire. The depletion adjustment was calculated using the unit-of-production method under the successful efforts method of accounting. |
| (c) | Adjustment necessary to reflect (i) the addition of estimated interest expense in the period presented with respect to the revolver borrowings of $674.2 million and the new $500.0 million 6.625% Senior Notes, and (ii) the amortization of debt issuance costs associated with the revolver borrowing and the new 6.625% Senior Notes. The interest rate utilized on the revolver borrowings was 7.0% per annum. A one-eighth point change in interest rates as of June 30, 2026 would change variable rate interest expense by $0.4 million and $0.8 million, respectively, for the six months ended June 30, 2026 and year ended December 31, 2025. |
| (d) | Adjustment necessary to reflect estimated income taxes from the operations of WildFire. Income taxes were estimated by applying the statutory rate of 21.0% to the transaction accounting adjustments. |
| 11 |
| (e) | The following table reconciles historical and pro forma basic and diluted earnings per share for the period indicated: |
| For the Six Months Ended June 30, 2026 | For the Year Ended December 31, 2025 | |||||||||||||||
| (in thousands, except per share data) | Historical | Pro Forma | Historical | Pro Forma | ||||||||||||
| Basic: | ||||||||||||||||
| Net income (loss) attributable to Class A Common Stock | $ | 281,601 | $ | 354,260 | $ | 325,252 | $ | 698,261 | ||||||||
| Less: Dividends and net income allocated to participating securities | 4,069 | 3,793 | 4,457 | 6,929 | ||||||||||||
| Net income (loss), net of participating securities | $ | 277,532 | $ | 350,467 | $ | 320,795 | $ | 691,332 | ||||||||
| Weighted average number of common shares outstanding during the period - basic | 183,924 | 269,390 | 185,581 | 271,047 | ||||||||||||
| Net income (loss) per share of Class A Common Stock - basic | $ | 1.51 | $ | 1.30 | $ | 1.73 | $ | 2.55 | ||||||||
| Diluted: | ||||||||||||||||
| Net income (loss) attributable to Class A Common Stock | $ | 281,601 | $ | 354,260 | $ | 325,252 | $ | 698,261 | ||||||||
| Less: Dividends and net income allocated to participating securities | 4,069 | 3,793 | 4,457 | 6,929 | ||||||||||||
| Net income (loss), net of participating securities | $ | 277,532 | $ | 350,467 | $ | 320,795 | $ | 691,332 | ||||||||
| Weighted average number of common shares outstanding during the period - basic | 183,924 | 269,390 | 185,581 | 271,047 | ||||||||||||
| Add: Dilutive effect stock based compensation and other | 12 | 12 | 12 | 12 | ||||||||||||
| Weighted average number of common shares outstanding during the period - diluted | 183,936 | 269,402 | 185,593 | 271,059 | ||||||||||||
| Net income (loss) per share of Class A Common Stock - diluted | $ | 1.51 | $ | 1.30 | $ | 1.73 | $ | 2.55 | ||||||||
| (f) | Adjustment necessary to reflect estimated direct costs expected to be incurred subsequent to June 30, 2026 for the acquisition of WildFire. These estimated direct costs will be incurred during the latter part of 2026 and have been retrospectively reflected in the Unaudited Pro Forma Condensed Combined Statement of Operations as though incurred for the year ended December 31, 2025. |
| (g) | Adjustment necessary to eliminate WildFire sand sales made to Magnolia during the six months ended June 30, 2026 and year ended December 31, 2025 of $6.1 million and $10.9 million, respectively. |
| (h) | Adjustment necessary to reflect the removal of interest associated with WildFire’s revolver that was paid off by WildFire prior to closing. |
| 12 |
| 4. | Supplemental Unaudited Pro Forma Combined Oil and Natural Gas Reserves and Standardized Measure Information |
The following tables set forth information with respect to the historical and pro forma combined estimated oil and natural gas reserves as of December 31, 2025 for Magnolia and WildFire. The reserve information of Magnolia has been prepared by Miller and Lents, independent petroleum engineers. WildFire reserve information has been prepared by Netherland, Sewell & Associates, Inc., independent petroleum engineers. The following unaudited pro forma combined proved reserve information is not necessarily indicative of the results that might have occurred had the Transaction taken place on January 1, 2025, nor is it intended to be a projection of future results. The accuracy of any reserve estimate is a function of the quality of available data and of engineering and geological interpretation and judgment. Periodic revisions or removals of estimated reserves and future cash flows may be necessary as a result of a number of factors, including reservoir performance, new drilling, crude oil and natural gas prices, changes in costs, technological advances, new geological or geophysical data, changes in business strategies, or other economic factors. Accordingly, proved reserve estimates may differ significantly from the quantities of crude oil and natural gas ultimately recovered. For both Magnolia and WildFire, the reserve estimates shown below were determined using the average first day of the month price for each of the preceding 12-months for oil and natural gas for the year ended December 31, 2025.
We anticipate WildFire’s total proved undeveloped reserves to be updated due to the timing associated with Magnolia’s current development plan, which will result in WildFire’s proved undeveloped reserves being reduced to reflect a one-year development plan. The combined company will re-evaluate WildFire’s reserves subsequent to the transaction.
| 13 |
| ESTIMATED OIL AND NATURAL GAS RESERVES | ||||||||||||
| As of December 31, 2025 | ||||||||||||
| Magnolia | WildFire | Pro Forma Combined | ||||||||||
| Natural Gas (Bcf) | ||||||||||||
| Balance December 31, 2024 | 336.8 | 174.3 | 511.1 | |||||||||
| Revisions of previous estimates | 46.0 | (6.9 | ) | 39.1 | ||||||||
| Purchases of reserves in place | 5.9 | 0.2 | 6.1 | |||||||||
| Extensions | 84.3 | 52.1 | 136.4 | |||||||||
| Production | (68.9 | ) | (14.3 | ) | (83.2 | ) | ||||||
| Balance December 31, 2025 | 404.1 | 205.4 | 609.5 | |||||||||
| Natural Gas Liquids (MMBbls) | ||||||||||||
| Balance December 31, 2024 | 58.3 | 34.7 | 93.0 | |||||||||
| Revisions of previous estimates | 0.1 | (1.3 | ) | (1.2 | ) | |||||||
| Purchases of reserves in place | 0.9 | — | 0.9 | |||||||||
| Extensions | 14.1 | 9.7 | 23.8 | |||||||||
| Production | (10.4 | ) | (2.6 | ) | (13.0 | ) | ||||||
| Balance December 31, 2025 | 63.0 | 40.5 | 103.5 | |||||||||
| Crude Oil (MMBbls) | ||||||||||||
| Balance December 31, 2024 | 77.2 | 190.9 | 268.1 | |||||||||
| Revisions of previous estimates | (0.9 | ) | (14.0 | ) | (14.9 | ) | ||||||
| Purchases of reserves in place | 1.2 | 0.1 | 1.3 | |||||||||
| Extensions | 16.8 | 31.8 | 48.6 | |||||||||
| Production | (14.5 | ) | (12.4 | ) | (26.9 | ) | ||||||
| Balance December 31, 2025 | 79.8 | 196.4 | 276.2 | |||||||||
| Total (MMboe) | ||||||||||||
| Balance December 31, 2024 | 191.7 | 254.6 | 446.3 | |||||||||
| Revisions of previous estimates | 6.9 | (16.5 | ) | (9.6 | ) | |||||||
| Purchases of reserves in place | 3.1 | 0.2 | 3.3 | |||||||||
| Extensions | 44.9 | 50.3 | 95.2 | |||||||||
| Production | (36.4 | ) | (17.4 | ) | (53.8 | ) | ||||||
| Balance December 31, 2025 | 210.2 | 271.2 | 481.4 | |||||||||
| ESTIMATED OIL AND NATURAL GAS RESERVES | ||||||||||||
| As of December 31, 2025 | ||||||||||||
| Magnolia | WildFire | Pro Forma Combined | ||||||||||
| Proved Developed Reserves: | ||||||||||||
| Crude Oil (MMBbls) | 64.6 | 100.3 | 164.9 | |||||||||
| Natural Gas (Bcf) | 317.3 | 109.0 | 426.3 | |||||||||
| Natural Gas Liquids (MMBbls) | 49.1 | 21.3 | 70.4 | |||||||||
| Total (MMboe) | 166.6 | 139.8 | 306.4 | |||||||||
| Proved Undeveloped Reserves: | ||||||||||||
| Crude Oil (MMBbls) | 15.2 | 96.1 | 111.3 | |||||||||
| Natural Gas (Bcf) | 86.8 | 96.4 | 183.2 | |||||||||
| Natural Gas Liquids (MMBbls) | 13.9 | 19.2 | 33.1 | |||||||||
| Total (MMboe) | 43.6 | 131.4 | 175.0 | |||||||||
The following table presents the Standardized Measure of Discounted Future Net Cash Flows (as defined by FASB Accounting Standards Codification 932) relating to the proved crude oil and natural gas reserves of Magnolia and of WildFire on a pro forma combined basis as of December 31, 2025. The Pro Forma Combined Standardized Measure shown below represents estimates only and should not be construed as the market value of either Magnolia’s crude oil and natural gas reserves or the crude oil and natural gas reserves attributable to WildFire (in thousands).
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| STANDARDIZED MEASURE OF DISCOUNTED FUTURE CASH FLOWS | ||||||||||||
| As of December 31, 2025 | Pro Forma | |||||||||||
| Magnolia | WildFire | Combined | ||||||||||
| Future cash inflows | $ | 7,408,319 | $ | 14,187,714 | $ | 21,596,033 | ||||||
| Future production costs | (2,632,470 | ) | (4,244,624 | ) | (6,877,094 | ) | ||||||
| Future development costs | (372,764 | ) | (2,040,812 | ) | (2,413,576 | ) | ||||||
| Future income tax expenses | (688,729 | ) | (74,486 | ) | (763,215 | ) | ||||||
| Future net cash flows | 3,714,356 | 7,827,792 | 11,542,148 | |||||||||
| 10% discount to reflect timing of cash flows | (1,195,826 | ) | (3,759,423 | ) | (4,955,249 | ) | ||||||
| Standardized measure of discounted future net cash flows | $ | 2,518,530 | $ | 4,068,369 | $ | 6,586,899 | ||||||
The reserve estimates presented above were derived from the historical reserve information of Magnolia and WildFire included in this registration statement. Future development timing, development expenditures, operating costs, reservoir performance as well as commodity prices will affect the reserve volumes attributable to the combined company, which will likely result in material revisions to total proved developed and undeveloped reserves. For example, we anticipate the WildFire’s total proved undeveloped reserves to be updated due to the timing associated with Magnolia’s current development plan, which will result in WildFire’s proved undeveloped reserves being reduced to reflect a one-year development plan. The combined company will re-evaluate these reserves subsequent to the transaction.
The following table sets forth the changes in the Standardized Measure of discounted future net cash flows attributable to estimated net proved crude oil and natural gas reserves of Magnolia and WildFire on a pro forma combined basis for the year ending December 31, 2025 (in thousands):
| CHANGES IN STANDARDIZED MEASURE OF DISCOUNTED FUTURE NET CASH FLOWS | ||||||||||||
| For the Year Ended December 31, 2025 | Pro Forma | |||||||||||
| Magnolia | WildFire | Combined | ||||||||||
| Standardized measure of discounted future net cash flows, beginning of period | $ | 2,581,807 | $ | 4,619,717 | $ | 7,201,524 | ||||||
| Sales of oil, natural gas, and NGLs produced during the period, net of production costs | (981,738 | ) | (675,158 | ) | (1,656,896 | ) | ||||||
| Purchases of reserves in place | 37,491 | 8,478 | 45,969 | |||||||||
| Extensions | 692,547 | 568,645 | 1,261,192 | |||||||||
| Changes in estimated future development costs | (7,667 | ) | 473,677 | 466,010 | ||||||||
| Net change in prices and production costs | (614,037 | ) | (959,978 | ) | (1,574,015 | ) | ||||||
| Previously estimated development costs incurred during the period | 221,064 | (186,202 | ) | 34,862 | ||||||||
| Revisions in quantity estimates | 129,520 | (324,325 | ) | (194,805 | ) | |||||||
| Accretion of discount | 307,682 | 466,101 | 773,783 | |||||||||
| Net change in income taxes | 19,090 | 2,101 | 21,191 | |||||||||
| Net change in timing of production and other | 132,771 | 75,313 | 208,084 | |||||||||
| Standardized measure of discounted future net cash flows, end of period | $ | 2,518,530 | $ | 4,068,369 | $ | 6,586,899 | ||||||
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